Federal Express awarded $54.7M for air transportation, highlighting significant defense logistics needs

Contract Overview

Contract Amount: $54,698,241 ($54.7M)

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: $50.0K/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 $54.7 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. Sole-source award suggests potential market concentration or specific capability requirements. 3. Long-term contract duration indicates ongoing strategic importance of these services. 4. Fixed-price with economic adjustment pricing may expose the government to cost fluctuations. 5. Performance period spans multiple fiscal years, requiring sustained oversight. 6. The award is a key component of the broader defense transportation network.

Value Assessment

Rating: good

The $54.7 million contract for air transportation services appears reasonable given the scope and duration. Benchmarking against similar large-scale, long-term defense logistics contracts is challenging without more granular data on specific routes and service levels. However, the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility. The number of bids (10) indicates some level of market interest, but the final price relative to estimated costs would provide a clearer picture of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were excluded. With 10 bidders, there was a moderate level of competition. The exclusion of specific sources warrants further investigation to understand if it limited the competitive landscape unnecessarily and potentially impacted price discovery. The number of bidders suggests that the market for these specialized services is not overly concentrated, but the exclusion criteria are key.

Taxpayer Impact: The moderate competition level, despite source exclusions, suggests that taxpayers likely received a fair price, but the exclusion of potential bidders could have led to a less competitive outcome than a truly open process.

Public Impact

The Department of Defense (DoD) benefits through enhanced airlift capabilities for personnel and cargo. Services provided include nonscheduled chartered passenger air transportation, crucial for operational flexibility. Geographic impact is national, supporting military operations and readiness across various locations. Workforce implications include support for pilots, crew, and ground support personnel within Federal Express. The contract ensures the availability of critical transportation assets during peacetime and contingency operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the 'economic price adjustment' clause.
Risk of reduced competition in future procurements if source exclusions become a pattern.
Dependence on a single contractor for critical air transport services could pose a risk.
Ensuring compliance with all safety and operational regulations over the contract's long term.

Positive Signals

Award to a well-established carrier like Federal Express suggests reliability and experience.
The contract duration indicates a stable, long-term need being met.
Multiple bidders participated, showing a degree of market responsiveness.
The fixed-price component provides some cost predictability.

Sector Analysis

The air transportation sector is vital for national defense, providing essential logistical support. This contract falls within the broader defense logistics and transportation market, which is characterized by large, complex contracts often awarded to major carriers. Spending in this area is driven by global military operations, readiness requirements, and the need for rapid deployment of personnel and equipment. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of chartered services, but overall defense transportation spending runs into billions annually.

Small Business Impact

This contract does not appear to have a specific small business set-aside component (ss: false, sb: false). While Federal Express is a large corporation, the subcontracting opportunities for small businesses are not explicitly detailed in the provided data. Analysis would be needed to determine if Federal Express is meeting broader subcontracting goals or if small businesses are being utilized in supporting roles for these services.

Oversight & Accountability

Oversight is likely managed by USTRANSCOM, the contracting agency, through performance monitoring, audits, and adherence to delivery schedules. Accountability measures would include contractual penalties for non-performance and regular reviews of operational effectiveness. Transparency is facilitated through contract awards databases, though specific performance metrics and detailed cost breakdowns may be less publicly accessible.

Related Government Programs

Military Sealift Command (MSC) Contracts
Air Mobility Command (AMC) Operations
Logistics Readiness Contracts
Defense Transportation Services
Global Freight and Cargo Services

Risk Flags

Potential for cost increases due to economic price adjustment.
Limited competition due to source exclusion.
Long-term contract duration requires sustained oversight.
Dependence on contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.7 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 $54.7 million.

What is the period of performance?

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

What is the historical spending trend for similar air transportation services by USTRANSCOM?

Analyzing historical spending for similar air transportation services by USTRANSCOM requires access to historical contract databases. Generally, defense transportation spending fluctuates based on global operational tempo, geopolitical events, and strategic priorities. Contracts for nonscheduled chartered passenger and cargo air transport are often awarded on an as-needed basis or through longer-term agreements to ensure readiness. Without specific historical data for this exact service category, it's difficult to pinpoint a precise trend. However, overall defense logistics spending has remained substantial, reflecting the continuous need for global mobility. Factors like the COVID-19 pandemic or specific military deployments could have influenced short-term spending patterns in air charter services.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other government air charter contracts?

The 'Fixed Price with Economic Price Adjustment' (FPEPA) pricing structure is common for long-term service contracts where input costs (like fuel and labor) are subject to market volatility. Compared to pure Fixed Price (FP) contracts, FPEPA offers the government some cost predictability while allowing the contractor to adjust for significant economic changes, potentially preventing contract failure or excessive change orders. Other government air charter contracts might use FP for shorter durations or more predictable routes. For extensive, multi-year operations like this one, FPEPA is often preferred to balance risk between the government and the contractor, ensuring service continuity despite fluctuating market conditions. The effectiveness hinges on the fairness of the adjustment formula.

What specific criteria led to the exclusion of certain sources in this 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award?

The specific criteria leading to the exclusion of sources in a 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award are typically detailed in the solicitation documents and justifications for exclusion. Common reasons include failure to meet mandatory technical qualifications, inability to provide required security clearances, lack of necessary certifications or operational history, or specific past performance issues. In some cases, exclusions might relate to national security concerns or specific regulatory requirements. Without access to the detailed justification documents for this particular contract, the exact reasons remain unknown. However, the agency must provide a rationale that demonstrates the exclusion was necessary and in the government's best interest.

What are the key performance indicators (KPIs) used to evaluate Federal Express's performance under this contract?

Key Performance Indicators (KPIs) for air transportation services typically focus on operational reliability, safety, and responsiveness. For this contract, likely KPIs would include on-time performance for departures and arrivals, flight completion rates, adherence to safety regulations (e.g., FAA compliance), passenger and cargo handling efficiency, and response times to scheduling changes or emergencies. The contract likely specifies acceptable performance thresholds and potential remedies or penalties for failing to meet them. USTRANSCOM would monitor these KPIs through flight tracking data, debriefings, and potentially passenger/cargo manifests to ensure Federal Express is meeting the required service levels throughout the contract period.

What is the potential impact of this contract on the broader defense logistics and airlift readiness posture?

This contract significantly bolsters the defense logistics and airlift readiness posture by securing dedicated nonscheduled air transportation services. It ensures that the Department of Defense has access to flexible and responsive airlift capabilities beyond its organic (military-owned) fleet, which is crucial for augmenting capacity during surge operations, contingencies, or when specialized aircraft are required. By contracting with a major civilian carrier like Federal Express, the DoD can maintain a higher state of readiness and operational flexibility, ensuring personnel and critical assets can be moved efficiently across various theaters of operation. This partnership is a key element of the Civil Reserve Air Fleet (CRAF) program, enhancing national security by providing surge airlift capacity when needed.

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: 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: $54,698,241

Exercised Options: $54,698,241

Current Obligation: $54,698,241

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