DoD's $25.3M delivery order to UPS for courier services was awarded under full and open competition

Contract Overview

Contract Amount: $25,303,166 ($25.3M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Defense

Start Date: 2019-08-31

End Date: 2019-08-31

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40223

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $25.3 million to UNITED PARCEL SERVICE CO. for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. The contract value represents a small fraction of the overall federal spending on courier and express delivery services. 2. Awarded to a single, well-established provider, suggesting a focus on reliability and established performance. 3. The fixed-price nature of the contract shifts performance risk to the contractor. 4. Delivery orders under larger IDIQs can offer flexibility but may lack the granular oversight of standalone contracts. 5. The geographic scope appears limited to Kentucky, indicating a potentially localized need. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

Benchmarking the value of a single delivery order is challenging without knowing the specific services rendered and their duration. However, given the scale and the provider, the price is likely competitive for express delivery services. The fixed-price contract type suggests the government secured a predictable cost for the services. Compared to similar ad-hoc delivery needs, this order appears to be within a reasonable range, assuming the scope of work was met.

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,' indicating that while the initial solicitation may have had restrictions, the final award was open to all eligible bidders. The presence of 3 bidders suggests a moderate level of competition for this specific delivery order. This level of competition is generally sufficient to ensure fair pricing and prevent excessive costs.

Taxpayer Impact: The competitive award process helps ensure that taxpayer dollars are used efficiently by obtaining services at market-driven prices.

Public Impact

Military personnel and civilian employees within the Department of Defense in Kentucky likely benefited from timely and reliable delivery of critical documents and packages. The service provided is essential for the operational readiness and administrative functions of the DoD. The geographic impact is concentrated in Kentucky, supporting local DoD installations and operations. While not a large-scale job creator, the contract supports the existing workforce of United Parcel Service.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency regarding the specific services procured under this delivery order.
Potential for limited visibility into the cost-effectiveness of individual deliveries without detailed service metrics.
Absence of explicit small business subcontracting goals may limit opportunities for smaller firms.

Positive Signals

Award to a reputable and experienced provider (UPS) suggests a high likelihood of successful service delivery.
The fixed-price contract structure provides cost certainty for the government.
The competitive bidding process, even with 3 bidders, indicates a degree of market validation for the price.

Sector Analysis

The courier and express delivery services sector is a mature and highly competitive market, dominated by a few large players like UPS, FedEx, and DHL, alongside numerous smaller regional and specialized providers. Federal spending in this sector supports a wide range of government functions, from administrative mail to critical logistics. This contract fits within the broader category of logistics and transportation services, essential for maintaining government operations.

Small Business Impact

The contract was not awarded as a small business set-aside, and the data indicates no explicit small business subcontracting goals were mandated. This suggests that the primary contractor, UPS, will likely handle the majority of the work with its own resources. While large contracts can sometimes include subcontracting opportunities, the absence of specific set-asides or goals means that the direct impact on the small business ecosystem for this particular award is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's USTRANSCOM. As a delivery order under a larger contract vehicle, oversight might be less granular than for a standalone contract. Accountability is ensured through the terms of the firm-fixed-price contract, requiring UPS to deliver services as specified. Transparency is moderate, with basic award details available, but specific performance metrics and detailed cost breakdowns may not be publicly accessible.

Related Government Programs

Federal Express Corporation
XPO Logistics
DHL Express

Risk Flags

Lack of detailed service scope
Limited public performance data
Potential for vendor lock-in if this is a recurring need

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 million to UNITED PARCEL SERVICE CO.. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $25.3 million.

What is the period of performance?

Start: 2019-08-31. End: 2019-08-31.

What was the specific scope of services provided under this $25.3 million delivery order?

The provided data indicates the contract was for 'CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS' under NAICS code 492110 (Couriers and Express Delivery Services). However, the specific nature, volume, and types of shipments (e.g., express packages, freight, mail) are not detailed. This lack of specificity makes it difficult to fully assess the value or necessity of the expenditure. Further details would likely be found in the contract's statement of work, which is not publicly available in this dataset.

How does the pricing of this delivery order compare to market rates for similar services?

Directly comparing the total value of a single delivery order to market rates is difficult without knowing the exact services rendered, volume, and service levels (e.g., overnight, ground). However, United Parcel Service (UPS) is a major commercial carrier, and its participation suggests the pricing is intended to be competitive within the express delivery market. The firm-fixed-price nature implies the government agreed to a set rate. Benchmarking would require analyzing the per-package or per-pound rates against UPS's commercial tariffs or other government contracts for similar volumes and service types.

What are the potential risks associated with awarding a large delivery order to a single provider like UPS?

The primary risks associated with awarding a large delivery order to a single provider include potential over-reliance and reduced negotiating leverage in the future. If UPS were to experience service disruptions (e.g., labor strikes, natural disasters), it could significantly impact the Department of Defense's operations. While competition existed for this specific order (3 bidders), a pattern of awarding large volumes to a single incumbent could stifle future competition. However, the use of a firm-fixed-price contract mitigates cost overrun risks for the government.

What is the historical spending pattern for courier and express delivery services by the Department of Defense?

The provided data only reflects a single delivery order from 2019. To understand historical spending patterns, a broader analysis of DoD's contracts within NAICS code 492110 over multiple fiscal years would be necessary. This would reveal trends in contract types (e.g., IDIQs, delivery orders), awardees, competition levels, and overall expenditure. Without this broader context, it's impossible to determine if this $25.3 million order is typical, an outlier, or part of a larger strategic sourcing effort.

How does the 'full and open competition after exclusion of sources' procurement method impact cost and efficiency?

This procurement method suggests that while initial solicitations might have had specific requirements or limitations (potentially excluding certain types of firms or requiring specific capabilities), the final award phase was open to all responsible sources that could meet those requirements. This approach aims to balance the need for specialized services with the benefits of broad competition. It can lead to cost efficiencies by allowing a wider pool of vendors to compete, potentially driving down prices compared to a more restrictive process. However, it requires careful definition of the 'excluded sources' to ensure it doesn't unduly limit competition.

What oversight mechanisms are in place for delivery orders issued under larger contract vehicles like the one this order falls under?

Oversight for delivery orders typically involves contract specialists and program managers within the issuing agency (USTRANSCOM in this case). They monitor performance against the terms of the delivery order and the parent contract. For firm-fixed-price contracts, the primary oversight focuses on ensuring the contractor meets the defined scope, schedule, and quality standards. While detailed public reporting on individual delivery orders is often limited, agencies maintain internal records and performance evaluations. Inspector General offices may also conduct audits or investigations if specific concerns arise regarding waste, fraud, or abuse.

Industry Classification

NAICS: Transportation and Warehousing › Couriers and Express Delivery Services › Couriers and Express Delivery Services

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

Solicitation ID: HTC71117RCC01

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Parcel Service Inc (UEI: 006991681)

Address: 1400 N HURSTBOURNE PKWY, LOUISVILLE, KY, 40223

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

Financial Breakdown

Contract Ceiling: $25,303,166

Exercised Options: $25,303,166

Current Obligation: $25,303,166

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71117DC003

IDV Type: IDC

Timeline