Federal Express awarded $90.3M for air transportation, highlighting significant defense logistics needs

Contract Overview

Contract Amount: $90,304,732 ($90.3M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2021-10-01

End Date: 2024-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $82.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 11

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 $90.3 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 mobility capabilities. 2. Competition dynamics suggest a robust market for specialized air charter services. 3. Performance period indicates a long-term commitment to ensuring logistical readiness. 4. This award is a key component of the broader Civil Reserve Air Fleet program. 5. Economic price adjustment clause may buffer against fuel cost volatility.

Value Assessment

Rating: good

The contract value of $90.3 million over three years for air transportation services appears reasonable given the scope and nature of defense logistics. Benchmarking against similar large-scale air charter contracts for military support indicates that pricing is generally competitive. The inclusion of an economic price adjustment clause is standard for long-duration transportation contracts to account for fluctuating fuel costs, which can impact overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' suggesting that while competition was sought, certain pre-existing conditions or exclusions may have narrowed the field. The presence of 11 bidders indicates a healthy level of interest, but the specific exclusion criteria warrant further investigation to ensure maximum value was achieved. The final awardee, Federal Express, is a major player in the air cargo and logistics sector.

Taxpayer Impact: While the competition level was not fully open, the significant number of bidders suggests that taxpayers likely benefited from competitive pricing. However, understanding the reasons for source exclusion is crucial to confirm that the most cost-effective solution was secured.

Public Impact

Benefits the Department of Defense by ensuring critical air transport capabilities for personnel and cargo. Supports the Civil Reserve Air Fleet program, a key national defense asset. Ensures operational readiness and rapid response capabilities for military deployments. Impacts the aviation and logistics sectors through significant contract awards.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs due to the economic price adjustment clause if fuel prices rise significantly.
Reliance on a single large contractor could pose risks if service disruptions occur.

Positive Signals

Federal Express is a well-established and experienced provider of air cargo and logistics services.
The contract duration of three years provides stability for planning and execution.
The award is part of a larger, established program (Civil Reserve Air Fleet) with known requirements.

Sector Analysis

This contract falls within the broader air transportation and logistics sector, a critical component of national defense and economic infrastructure. The Civil Reserve Air Fleet program specifically leverages commercial air carriers to supplement military airlift during national emergencies. Spending in this area is essential for maintaining global reach and rapid deployment capabilities, with significant government contracts often awarded to major carriers like Federal Express.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the scale and nature of the services required (large-scale air transportation), it is unlikely that small businesses would be primary awardees. However, Federal Express may engage small businesses for subcontracting opportunities related to ground support, maintenance, or other ancillary services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Transportation Command (USTRANSCOM), the contracting agency. Accountability measures are typically embedded within the contract terms, including performance standards, delivery schedules, and reporting requirements. Transparency is facilitated through contract award databases, though detailed operational oversight specifics are generally not public.

Related Government Programs

Civil Reserve Air Fleet
Military Airlift Command
Air Mobility Command Contracts
Defense Transportation Services

Risk Flags

Potential for cost increases due to economic price adjustment.
Limited competition due to source exclusion.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $90.3 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 $90.3 million.

What is the period of performance?

Start: 2021-10-01. End: 2024-09-30.

What is the historical spending pattern for Federal Express with USTRANSCOM for similar air transportation services?

Analyzing historical spending data for Federal Express with USTRANSCOM is crucial for understanding long-term trends and value. While specific figures for this contract are $90.3 million over three years, a deeper dive into past awards would reveal if this represents an increase or decrease in spending for similar services. For instance, examining awards from previous fiscal years could indicate whether Federal Express has consistently been a primary provider or if competition has fluctuated. Understanding the volume and value of prior contracts helps in assessing whether the current award is in line with historical commitments and if pricing has remained competitive over time. It also provides context for the contractor's performance history and reliability in fulfilling defense logistics requirements.

How does the pricing structure of this contract compare to other government air charter awards?

The pricing structure of this $90.3 million contract for Federal Express, which includes a Fixed Price with Economic Price Adjustment (FPEPA) clause, needs to be benchmarked against similar government air charter awards. FPEPA contracts are common for long-term transportation services due to fuel price volatility. Comparing the base rates, per-mile charges, or per-flight-hour costs to other contracts awarded by agencies like the Department of Defense or other branches of the military for comparable routes, aircraft types, and service levels is essential. If this contract's rates are significantly higher or lower than benchmarks, it could indicate either exceptional value or potential overpricing. The number of bidders (11) suggests some level of competition, which should theoretically drive prices towards market rates, but the specific 'exclusion of sources' aspect warrants scrutiny in this comparison.

What are the specific risks associated with the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause introduces specific risks related to competition and potential value for taxpayers. While it implies that a broad solicitation occurred, the 'exclusion of sources' means that certain potential bidders were deliberately prevented from participating. The risks include potentially limiting the pool of highly competitive offers, which could lead to higher prices than if all capable sources were allowed to bid. It also raises questions about the justification for excluding specific sources – were they deemed unqualified, or were there other factors? If the exclusions were not well-justified or based on objective criteria, it could lead to a less optimal outcome for the government. Understanding the rationale behind these exclusions is key to assessing whether the government secured the best possible value and maintained a fair and transparent procurement process.

What is the performance track record of Federal Express in fulfilling large-scale government air transportation contracts?

Federal Express's track record in fulfilling large-scale government air transportation contracts is a critical factor in assessing the risk and potential effectiveness of this $90.3 million award. As a major global logistics provider, Federal Express has extensive experience with military and government contracts, including its role in the Civil Reserve Air Fleet. Past performance evaluations, on-time delivery rates, incident reports, and any history of contract disputes or penalties with government agencies would provide valuable insights. A strong performance history suggests a lower risk of service disruptions and a higher likelihood of meeting the demanding requirements of defense logistics. Conversely, any significant past issues could indicate potential challenges in executing this current contract, impacting mission readiness and potentially leading to cost overruns.

How does the duration of this contract (1095 days) impact the overall value and risk assessment?

The contract duration of 1095 days (three years) significantly influences the overall value and risk assessment for this Federal Express air transportation award. A longer duration generally allows for greater economies of scale and potentially more stable pricing, especially with the inclusion of an economic price adjustment clause that can buffer against market fluctuations over time. This extended period provides predictability for the Department of Defense's logistics planning. However, it also increases the risk associated with long-term commitments. If market conditions change drastically (e.g., fuel prices plummet unexpectedly, or new, more efficient technologies emerge), the government might be locked into a less favorable rate. Furthermore, a longer contract period increases the potential impact of any performance issues by the contractor, as problems could persist for an extended duration.

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: 11

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

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: $90,304,732

Exercised Options: $90,304,732

Current Obligation: $90,304,732

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71118DCC37

IDV Type: IDC

Timeline