DoD's $161M Civil Reserve Air Fleet Contract with FedEx Faces Scrutiny for Potential Overpricing

Contract Overview

Contract Amount: $161,003,344 ($161.0M)

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: $441.1K/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 $161.0 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. The contract awarded to Federal Express Corporation for air transportation services represents a significant expenditure. 2. Competition was limited, raising questions about price discovery and potential value for taxpayer dollars. 3. The lack of small business participation is noted. 4. The sector is critical for national defense logistics, but the specific service is for passenger transport.

Value Assessment

Rating: questionable

The contract's value of $161 million for a one-year period warrants further investigation. Benchmarking against similar air transportation contracts is difficult without more granular data on routes, aircraft types, and service levels provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a limited competition. This method may not have yielded the most competitive pricing, potentially impacting the value achieved for the funds expended.

Taxpayer Impact: The limited competition raises concerns about whether taxpayers received the best possible price for these essential air transportation services.

Public Impact

Taxpayers may have overpaid due to limited competition in awarding this significant contract. The reliance on a single large provider could impact future pricing and service availability. The exclusion of small businesses from this contract limits opportunities for smaller enterprises in the defense supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition
Lack of small business participation
Potential for overpricing

Positive Signals

Essential service for national defense
Contract awarded to a well-established provider

Sector Analysis

This contract falls under air transportation services, a critical component of the Department of Defense's logistics and operational capabilities. Spending in this sector can fluctuate based on global events and operational tempo.

Small Business Impact

The contract data indicates no small business participation (sb: false). This suggests that opportunities for small businesses within this specific air transportation service contract were not pursued or were not feasible under the contract's structure.

Oversight & Accountability

Further oversight is needed to understand the justification for the limited competition and to ensure that the pricing reflects fair market value. Accountability for procurement decisions that limit competition is crucial.

Related Government Programs

Nonscheduled Chartered Passenger Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Limited competition raises concerns about price fairness.
Lack of small business participation.
Potential for overpricing due to limited competition.
Contract awarded as a Delivery Order, suggesting it might be part of a larger IDIQ, but details are scarce.
The 'Nonscheduled Chartered Passenger Air Transportation' service might have more competitive alternatives.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $161.0 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 $161.0 million.

What is the period of performance?

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

What specific factors led to the exclusion of sources in this 'full and open competition after exclusion of sources' award, and how were these justified?

The specific factors leading to the exclusion of sources require detailed review of the solicitation and award documents. Typically, such exclusions are based on unique capabilities, urgent needs, or specific security requirements. Without access to the full justification, it's difficult to assess if these exclusions were appropriate and truly served the government's best interest, or if they inadvertently limited competition and potentially inflated costs.

How does the per-unit cost or overall pricing of this contract compare to similar air transportation services procured by the government or in the commercial sector?

A direct comparison is challenging without detailed service specifications (e.g., aircraft type, capacity, routes, frequency, specific amenities). However, the $161 million expenditure for a single year of service warrants a thorough benchmarking analysis against industry standards and other government contracts. If this contract's pricing is significantly higher, it indicates potential overpayment and a need for improved negotiation or competitive strategies.

What is the strategic importance of the Civil Reserve Air Fleet for passenger transportation, and are there alternative, potentially more cost-effective, methods for meeting these needs?

The Civil Reserve Air Fleet (CRAF) is vital for augmenting airlift capabilities during national emergencies. While primarily known for cargo, its passenger transport role is crucial for deploying personnel. However, the reliance on a single large provider like FedEx for a substantial sum necessitates exploring alternative strategies, such as diversifying providers, leveraging different contract types, or assessing the actual demand versus capacity to ensure cost-effectiveness.

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: 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: $161,003,344

Exercised Options: $161,003,344

Current Obligation: $161,003,344

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71118DCC37

IDV Type: IDC

Timeline