Federal Express awarded $77.4M for air transportation, highlighting significant defense logistics needs

Contract Overview

Contract Amount: $77,424,807 ($77.4M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-01

End Date: 2020-09-30

Contract Duration: 365 days

Daily Burn Rate: $212.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 12

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: 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 $77.4 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract value represents a substantial investment in critical air transport capabilities. 2. Competition dynamics suggest a robust market for specialized air cargo services. 3. Performance risks are mitigated by fixed-price terms and a defined delivery period. 4. This contract supports essential military readiness and rapid deployment operations. 5. The award positions Federal Express as a key player in defense logistics. 6. Spending aligns with broader government efforts to ensure global reach and supply chain resilience.

Value Assessment

Rating: good

The $77.4 million award for air transportation services appears reasonable given the scope and duration. While direct comparisons are difficult without specific service details, the firm fixed-price structure suggests a predictable cost for the government. Benchmarking against similar large-scale charter contracts would provide further insight into value for money, but the scale of this award indicates a significant operational requirement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources,' indicating that while the competition was broad, specific exclusions were applied. This suggests a deliberate process to ensure a wide range of potential offerors were considered while potentially meeting specific technical or security requirements. The number of bids received (12) points to a healthy level of interest and competition for this type of service.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer funds are used efficiently by driving down prices and encouraging innovative solutions from multiple providers.

Public Impact

The Department of Defense benefits from reliable and rapid air transport for personnel and potentially cargo. Services delivered include nonscheduled chartered passenger air transportation, crucial for troop movement and logistical support. The geographic impact is global, supporting U.S. military operations worldwide. Workforce implications include employment for pilots, crew, and support staff within Federal Express and related industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if additional services beyond initial charter needs arise.
Dependence on a single large contractor could create vulnerabilities in service continuity.
Geopolitical events could impact flight availability and operational costs.

Positive Signals

Federal Express's established global network and experience are significant positive signals.
The firm fixed-price contract provides cost certainty for the government.
Multiple bids indicate a competitive market, potentially leading to better service quality.

Sector Analysis

This contract falls within the broader air transportation and logistics sector, a critical component of national defense and global commerce. The market for specialized charter services, particularly for government and military use, is characterized by high barriers to entry due to regulatory, safety, and operational requirements. Federal Express, as a major player, leverages its extensive infrastructure to meet these demands. Comparable spending benchmarks would involve analyzing other large-scale government air charter awards.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, and Federal Express is a large corporation. There is no explicit information on subcontracting plans for small businesses within this award. The impact on the small business ecosystem is likely indirect, potentially through competition for ancillary services or by Federal Express utilizing smaller suppliers for specific needs.

Oversight & Accountability

Oversight is likely managed by USTRANSCOM, the contracting agency, through performance monitoring and adherence to contract terms. Accountability measures are embedded in the firm fixed-price contract, linking payment to successful service delivery. Transparency is facilitated by public contract databases, though specific performance metrics may be internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command (MSC) Charter Services
Air Mobility Command (AMC) Airlift Services
Department of State - Diplomatic Air Transport
Logistics and Transportation Services

Risk Flags

Potential for geopolitical instability impacting flight operations.
Dependence on a single large contractor for critical services.
Need for robust oversight to ensure service quality and compliance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.4 million to FEDERAL EXPRESS CORPORATION. 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 $77.4 million.

What is the period of performance?

Start: 2019-10-01. End: 2020-09-30.

What is Federal Express's track record with similar government contracts, particularly within the Department of Defense?

Federal Express has a long-standing history of supporting government logistics and transportation needs, including significant contracts with the Department of Defense. Their experience encompasses global delivery networks, specialized cargo handling, and rapid deployment capabilities. While this specific award is for air transportation services, Federal Express has previously been involved in contracts related to mail delivery, package express, and broader logistical support for military operations. Their extensive infrastructure and proven operational capacity make them a frequent choice for large-scale government transportation requirements. Analyzing past performance data and any reported issues on federal procurement databases would provide a more granular view of their specific track record on similar DoD contracts.

How does the $77.4 million value compare to historical spending on similar air transportation services by the DoD?

The $77.4 million award represents a significant but not unprecedented level of spending for large-scale air transportation services by the Department of Defense. Historical data reveals substantial annual expenditures on airlift and charter services to maintain global reach and operational readiness. For instance, contracts for troop transport, cargo movement, and specialized charter flights often run into tens or hundreds of millions of dollars annually. The specific value of this contract should be contextualized by the number of aircraft, flight hours, routes, and duration covered. Benchmarking against similar 'Nonscheduled Chartered Passenger Air Transportation' awards from USTRANSCOM or Air Mobility Command over the past five years would provide a clearer picture of whether this represents a typical, higher, or lower investment for comparable services.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential operational disruptions due to unforeseen global events (e.g., weather, political instability, health crises), aircraft availability issues, and the possibility of cost overruns if the scope expands beyond the initial requirements, although the firm fixed-price structure aims to mitigate this. Mitigation strategies likely involve robust contingency planning by Federal Express, including maintaining backup aircraft and crew, adhering to strict flight scheduling and safety protocols, and clear communication channels with USTRANSCOM. The government's mitigation also includes the competitive bidding process, which selects a capable provider, and performance monitoring to ensure adherence to the contract's terms and conditions. The defined delivery period also limits the government's long-term exposure.

What is the expected program effectiveness and impact of these air transportation services on military readiness?

The expected program effectiveness is high, as these services are critical for maintaining military readiness and enabling rapid global deployment. Nonscheduled chartered passenger air transportation ensures that personnel can be moved efficiently to operational theaters, training exercises, or support locations worldwide. This capability is vital for projecting power, responding to crises, and maintaining a forward presence. The reliability and speed offered by Federal Express's services directly contribute to the DoD's ability to execute its missions effectively. Without such contracted services, the military would rely solely on its organic airlift capabilities, which may be insufficient for surge requirements or specific mission profiles, potentially impacting response times and overall operational effectiveness.

How does this contract align with overall federal spending trends in the transportation and logistics sector?

This contract aligns with consistent and significant federal spending trends in the transportation and logistics sector, particularly within the Department of Defense. The government relies heavily on both organic assets and contracted services to manage its vast logistical requirements, which span global supply chains, personnel movement, and equipment transport. Spending in this sector is driven by national security imperatives, international commitments, and the need for flexible, responsive support capabilities. The $77.4 million award to Federal Express is indicative of the substantial resources allocated annually to ensure the seamless operation of military logistics, reflecting a strategic investment in maintaining global reach and operational readiness. Trends often show a mix of long-term contracts and task orders for specific needs, similar to this delivery order.

Industry Classification

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

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRAVEL, LODGING, RECRUITMENT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 12

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: $77,424,807

Exercised Options: $77,424,807

Current Obligation: $77,424,807

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71118DCC37

IDV Type: IDC

Timeline