DoD's $220M Federal Express contract for air transportation services shows strong competition and value

Contract Overview

Contract Amount: $220,408,459 ($220.4M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2020-09-30

Contract Duration: 730 days

Daily Burn Rate: $301.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38118

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $220.4 million to FEDERAL EXPRESS CORPORATION for work described as: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract awarded through full and open competition, indicating a robust market. 2. Federal Express's extensive global network likely provides significant operational advantages. 3. Firm Fixed Price contract type mitigates cost overrun risks for the government. 4. Performance period of two years allows for consistent service delivery. 5. The contract's value suggests a substantial need for rapid air cargo and passenger transport. 6. No small business set-aside indicates the primary contractor is a large entity.

Value Assessment

Rating: good

The contract value of over $220 million for two years suggests a significant commitment to air transportation services. While specific per-unit cost benchmarks are not provided, the firm fixed-price nature of the contract implies that the government has negotiated a set price for the services, which is generally favorable for cost control. Comparing this to similar large-scale air cargo contracts would provide further insight into its value proposition, but the scale itself indicates a substantial requirement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which typically means that all responsible sources were permitted to submit a bid. The presence of 9 bidders (no) suggests a healthy level of competition for this significant contract. A competitive bidding process generally leads to better pricing and service offerings for the government.

Taxpayer Impact: The high number of bidders indicates that taxpayers benefit from competitive pricing, ensuring that the government is not overpaying for essential air transportation services.

Public Impact

The Department of Defense (DoD) benefits from reliable and efficient air transportation for personnel and cargo. Federal Express provides critical logistical support, potentially for military operations, personnel deployment, or equipment movement. The services delivered are likely global in scope, given the nature of military operations. Workforce implications include the utilization of Federal Express's extensive pilot, crew, and ground support staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single large contractor could pose risks if service disruptions occur.
Lack of small business participation may limit opportunities for smaller specialized air cargo providers.

Positive Signals

Awarded through full and open competition, ensuring a competitive market.
Firm Fixed Price contract type provides cost certainty.
Federal Express's established global infrastructure suggests reliable service delivery.
Contract duration of two years allows for stable planning and execution.

Sector Analysis

The air transportation sector is a critical component of global logistics and supply chains. This contract falls within the broader defense logistics and transportation services market, which is substantial. Federal Express, as a major player in global air cargo and logistics, operates within a competitive landscape that includes other large carriers and specialized military logistics providers. Benchmarking this contract's value against other large government air mobility contracts would be informative.

Small Business Impact

The contract was not set aside for small businesses (ss: false, sb: false). This indicates that the primary award went to a large corporation, Federal Express. While there are no direct subcontracting requirements for small businesses explicitly stated here, large prime contractors often engage small businesses for various support services. However, the absence of a set-aside suggests that the primary focus was on securing the most capable and cost-effective solution from the broader market, rather than specifically targeting small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the Department of Defense's contracting officers and the U.S. Transportation Command (USTRANSCOM), which is the awarding agency. Accountability measures are inherent in the firm fixed-price contract, requiring delivery of services as specified. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Sealift Command (MSC) Contracts
Air Mobility Command (AMC) Contracts
Logistics and Supply Chain Management Services
Global Freight Transportation

Risk Flags

Potential for service disruption due to reliance on a single large provider.
Future price escalation risk if competition decreases in subsequent contract periods.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $220.4 million to FEDERAL EXPRESS CORPORATION. IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Who is the contractor on this award?

The obligated recipient is FEDERAL EXPRESS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $220.4 million.

What is the period of performance?

Start: 2018-10-01. End: 2020-09-30.

What is the historical spending pattern for air transportation services by the Department of Defense?

The Department of Defense (DoD) has a long history of significant spending on air transportation services to support its global operations. This includes contracts for scheduled airlift, charter flights, cargo transport, and personnel movement. Historically, agencies like the Air Mobility Command (AMC) and U.S. Transportation Command (USTRANSCOM) have managed substantial budgets for these services. Spending can fluctuate based on geopolitical events, deployment needs, and the availability of military assets. For instance, during periods of heightened conflict or major humanitarian aid efforts, spending on charter airlift services often increases. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) reveals consistent, multi-billion dollar annual expenditures across various categories of air transportation, with major carriers and specialized logistics firms being frequent awardees.

How does the pricing of this Federal Express contract compare to similar government air cargo contracts?

Direct per-unit cost comparisons for this Federal Express contract are challenging without access to specific service details (e.g., cost per ton-mile, cost per passenger seat-mile) and the exact scope of services provided. However, the contract's firm fixed-price nature suggests that the government aimed for cost certainty. Federal Express is a major global logistics provider, and its pricing is generally competitive within the industry for large-scale operations. When compared to other large government air cargo contracts, this $220 million award over two years indicates a substantial volume of service. The fact that it was awarded under full and open competition with 9 bidders further suggests that the pricing achieved is likely market-driven and represents good value, as multiple large carriers would have vied for the contract, pushing prices towards competitive levels.

What are the primary risks associated with this contract for the government?

The primary risks associated with this contract include potential service disruptions, dependence on a single large contractor, and the possibility of price escalation in future contract renewals. If Federal Express experiences significant operational issues (e.g., labor strikes, fleet grounding, major weather events impacting hubs), it could disrupt critical military logistics. While the firm fixed-price structure mitigates cost overruns for the current term, the government's reliance on one provider for such a large volume of services could reduce its leverage in future negotiations. Furthermore, if the competitive landscape for large-scale air cargo services shifts, future contract renewals might come at a higher cost. The lack of explicit small business set-asides also means fewer opportunities for smaller, potentially more agile, specialized providers.

What is the track record of Federal Express in performing large government contracts?

Federal Express (FedEx) has a long and extensive track record of performing large government contracts, particularly with the Department of Defense and other federal agencies requiring global logistics and transportation services. They are a primary carrier for many government shipments, including express package delivery, freight, and specialized cargo. FedEx has previously held significant contracts for airlift services, supporting military deployments and operations worldwide. Their established infrastructure, global network, and experience in handling sensitive and time-critical shipments make them a reliable partner for government needs. While specific performance metrics for this particular contract are not detailed here, FedEx's overall reputation and history suggest a strong capability to meet the demands of large federal contracts.

How does the competition level (9 bidders) impact the value received by taxpayers?

A competition level of 9 bidders for this contract is a strong positive signal for taxpayers. It indicates that the market for these air transportation services is robust and that multiple capable companies were willing and able to compete for the government's business. High competition typically drives down prices as bidders strive to offer the most attractive terms to win the contract. This scenario allows the government to secure services at potentially lower costs than if there were only one or two bidders. Furthermore, it encourages innovation and efficiency among the bidders, as they seek to differentiate their offerings. For taxpayers, this means their money is likely being spent more efficiently, securing essential services at a price reflective of a competitive marketplace rather than a monopolistic or oligopolistic one.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Passenger Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp (UEI: 003141970)

Address: 2955 REPUBLICAN DR FL 1, MEMPHIS, TN, 38118

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $220,408,459

Exercised Options: $220,408,459

Current Obligation: $220,408,459

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71118DCC37

IDV Type: IDC

Timeline