DoD's $78.4M Civil Reserve Air Fleet Contract with FedEx Raises Questions on Value and Competition

Contract Overview

Contract Amount: $78,437,034 ($78.4M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2020-10-01

End Date: 2022-09-30

Contract Duration: 729 days

Daily Burn Rate: $107.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 9

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Transportation

Official Description: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Place of Performance

Location: SCOTT AFB, SAINT CLAIR County, ILLINOIS, 62225

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $78.4 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. While the contract was awarded under 'Full and Open Competition After Exclusion of Sources,' the specifics of this exclusion warrant scrutiny. 3. Potential risks include the lack of true open competition and the impact of economic price adjustments on the final cost. 4. The sector is air transportation, a critical component of defense logistics.

Value Assessment

Rating: fair

The contract's total award value is $78.4 million over two years. Without specific benchmarks for similar air transportation services, it's difficult to definitively assess if this price is optimal. The 'Fixed Price with Economic Price Adjustment' clause introduces variability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This suggests that while competition was sought, certain sources were excluded, potentially limiting the competitive landscape and impacting price discovery.

Taxpayer Impact: The exclusion of sources may have led to a higher price than if all potential providers had been allowed to compete, impacting taxpayer funds.

Public Impact

Taxpayers are funding critical air transportation services for the military. The reliance on a single large provider, FedEx, could impact service availability during peak demand. The 'Economic Price Adjustment' clause means the final cost could exceed the initial $78.4 million estimate.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition due to source exclusion
Potential for cost overruns due to economic price adjustment
Lack of transparency in the exclusion of sources

Positive Signals

Contract supports essential civil reserve air fleet capabilities
Awarded to a well-established transportation provider

Sector Analysis

The air transportation sector is vital for national defense logistics, enabling rapid deployment of personnel and equipment. Spending benchmarks for similar services are often influenced by fuel costs, aircraft availability, and geopolitical factors.

Small Business Impact

This contract was awarded to Federal Express Corporation, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award, suggesting missed opportunities for small business participation.

Oversight & Accountability

The contract was awarded by USTRANSCOM, a component of the Department of Defense. Oversight would involve monitoring performance, adherence to contract terms, and managing the economic price adjustment clause to ensure fair pricing.

Related Government Programs

Nonscheduled Chartered Passenger Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Lack of transparency regarding excluded sources
Potential for cost escalation due to economic price adjustment
Limited competitive landscape
No apparent small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.4 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 $78.4 million.

What is the period of performance?

Start: 2020-10-01. End: 2022-09-30.

What specific criteria were used to exclude sources in this 'Full and Open Competition After Exclusion of Sources' award, and how did this impact the final price?

The specific criteria for excluding sources are not detailed in the provided data. Typically, such exclusions might be based on security clearances, specialized capabilities, or past performance issues. However, without this information, it's impossible to determine the precise impact on the final price. A more competitive process could potentially drive down costs, but the exclusion might have been justified by unique requirements.

What is the projected risk associated with the 'Fixed Price with Economic Price Adjustment' clause, and how will it be managed to protect taxpayer interests?

The primary risk is that the final cost could significantly exceed the initial $78.4 million award due to fluctuations in economic factors like fuel prices or labor costs. Effective management requires clear indices for adjustment, regular reviews of the economic factors, and potentially a cap on the adjustment percentage to mitigate excessive cost increases and safeguard taxpayer funds.

How does the performance of Federal Express Corporation under this contract align with the operational needs and cost-effectiveness benchmarks for the Civil Reserve Air Fleet?

Assessing alignment requires performance data not present in the award details. Key metrics would include on-time delivery rates, aircraft availability, incident reports, and comparison of actual costs against pre-defined benchmarks or alternative service providers. Without this performance data, it's difficult to ascertain if the contract is delivering optimal value and meeting the strategic needs of the Civil Reserve Air Fleet effectively.

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: 9

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

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: $78,437,034

Exercised Options: $78,437,034

Current Obligation: $78,437,034

Actual Outlays: $73,022,684

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71118DCC37

IDV Type: IDC

Timeline