DoD's $38.7M Civil Reserve Air Fleet contract with FedEx faces scrutiny over potential value concerns

Contract Overview

Contract Amount: $38,695,765 ($38.7M)

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: $35.3K/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 $38.7 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. The contract value of $38.7M for air transportation services is significant. 2. Competition was full and open after exclusion of sources, suggesting some market engagement. 3. Potential risks include economic price adjustments and the lack of small business participation. 4. The sector is critical for national defense logistics, requiring reliable air transport.

Value Assessment

Rating: fair

The contract value of $38.7M appears substantial for air transportation services. Benchmarking against similar contracts for charter passenger air transportation is difficult without more granular data on routes, capacity, and service levels. The fixed-price with economic price adjustment structure introduces potential for cost overruns.

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.' This suggests that while competition was sought, certain sources were initially excluded, which could impact the breadth of price discovery and potentially limit the most competitive offers.

Taxpayer Impact: The economic price adjustment clause could lead to higher costs for taxpayers if fuel prices or other economic factors increase significantly over the contract period.

Public Impact

Ensures critical air transport capacity for national defense needs. Potential for increased costs to taxpayers due to economic price adjustments. Lack of small business participation may limit broader economic benefits. Reliability of service is paramount for military operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause can increase costs.
No small business participation noted.
Contract type (Fixed Price with EPA) can lead to cost uncertainty.

Positive Signals

Full and open competition (after source exclusion) indicates some market engagement.
Long-term contract provides service stability.
Essential service for national defense.

Sector Analysis

This contract falls within the air transportation services sector, crucial for government logistics and defense operations. Spending benchmarks for similar services can vary widely based on aircraft type, route, and duration, making direct comparison challenging without specific operational details.

Small Business Impact

The data indicates no small business participation in this contract. This is a missed opportunity to leverage the capabilities of small businesses and distribute economic benefits more broadly within the sector.

Oversight & Accountability

The contract is managed by USTRANSCOM, a key component of the Department of Defense responsible for global mobility. Oversight would focus on ensuring service delivery meets mission requirements and managing the economic price adjustment provisions effectively.

Related Government Programs

Nonscheduled Chartered Passenger Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Potential for cost overruns due to Economic Price Adjustment.
Lack of small business participation.
Limited competitive pool due to source exclusion.
Reliance on a single large contractor (FedEx) for a critical service.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.7 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 $38.7 million.

What is the period of performance?

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

What is the specific impact of the 'exclusion of sources' on the final price and service quality compared to a truly unrestricted full and open competition?

The exclusion of specific sources, even if justified, can limit the competitive landscape. This may result in a less aggressive pricing environment than if all potential providers were allowed to bid. While the awarded price might still be deemed fair, it's possible that a broader competition could have yielded even better terms or innovative solutions, impacting overall value for taxpayers.

How are the economic price adjustments calculated, and what is the historical volatility of the underlying indices that could impact taxpayer cost?

The specific methodology for economic price adjustments (EPAs) is critical. If based on volatile indices like fuel prices, significant fluctuations can occur, potentially inflating the contract's final cost beyond initial projections. Analyzing historical data for these indices and the contract's EPA formula is necessary to quantify the potential risk to taxpayer funds.

What are the key performance indicators (KPIs) for this contract, and how effectively is FedEx meeting them to ensure mission-critical air transportation?

Understanding the KPIs is essential to assess effectiveness. These likely include on-time performance, aircraft availability, safety standards, and response times. Regular performance reviews and audits by USTRANSCOM are crucial to ensure FedEx is consistently meeting these critical requirements for national defense logistics.

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: $38,695,765

Exercised Options: $38,695,765

Current Obligation: $38,695,765

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