DoD's $108M Civil Reserve Air Fleet Contract with FedEx Faces Scrutiny Over Competition and Value

Contract Overview

Contract Amount: $108,118,904 ($108.1M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2022-10-01

End Date: 2024-09-30

Contract Duration: 730 days

Daily Burn Rate: $148.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Plain-Language Summary

Department of Defense obligated $108.1 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract awarded to a single, well-known provider, raising questions about competitive pricing. 2. The firm fixed-price structure offers cost certainty but may limit savings. 3. Potential for higher costs due to limited competition and specific service needs. 4. Sector context suggests significant spending in air transportation services for defense logistics.

Value Assessment

Rating: fair

The contract's value of $108 million over two years appears substantial. Benchmarking against similar large-scale air charter services is difficult without more specific data on routes and aircraft types, but the lack of direct competition suggests potential for overpayment.

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 approach. This method, while potentially efficient for specific needs, can restrict price discovery and may lead to higher costs compared to broader competitive solicitations.

Taxpayer Impact: Taxpayer funds are utilized for essential defense logistics. The limited competition structure warrants careful review to ensure the price paid reflects fair market value and avoids unnecessary expenditure.

Public Impact

Ensures critical airlift capacity for national defense during emergencies. Supports a major private sector logistics provider, potentially impacting its operational capacity. Provides essential transportation services that underpin military readiness and deployment capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may inflate costs.
Lack of detailed performance metrics.
Reliance on a single provider for critical services.

Positive Signals

Secures vital air transport for defense needs.
Utilizes established private sector infrastructure.
Firm fixed-price contract provides budget predictability.

Sector Analysis

The defense sector heavily relies on air transportation services for global logistics and rapid deployment. Spending benchmarks for similar contracts are often proprietary, but large-scale agreements like this represent significant investments in maintaining strategic airlift capabilities.

Small Business Impact

This contract does not appear to directly benefit small businesses, as it is awarded to a large corporation, Federal Express. There is no indication of subcontracting opportunities for small businesses within the provided data.

Oversight & Accountability

Oversight is crucial to ensure the Department of Defense receives adequate value for its investment. Regular performance reviews and market analysis should be conducted to validate the pricing and service delivery against evolving industry standards.

Related Government Programs

Nonscheduled Chartered Passenger Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Potential for inflated costs due to limited competition.
Lack of transparency in the source exclusion process.
Dependence on a single large contractor for critical national security assets.
Risk of service disruption if the contractor faces operational challenges.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $108.1 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 $108.1 million.

What is the period of performance?

Start: 2022-10-01. End: 2024-09-30.

What specific criteria led to the exclusion of other potential sources, and how was the fair market price determined under this limited competition?

The justification for excluding other sources and the methodology for price determination are critical for assessing value. Without this information, it's difficult to ascertain if the 'firm fixed price' truly reflects competitive market rates or if it includes a premium due to the limited bidding pool. Further analysis would require access to the contract's source selection justification.

What are the contingency plans if Federal Express is unable to fulfill its obligations under this contract?

Given the critical nature of the Civil Reserve Air Fleet, the government must have robust contingency plans. This includes identifying alternative providers or government-owned assets that can be activated if FedEx fails to meet its contractual obligations. The risk lies in the potential disruption of essential military logistics during a national emergency.

How does the cost of this contract compare to historical spending on similar airlift services, and what efficiency gains, if any, are expected?

Comparing this $108 million contract to historical data is essential for evaluating cost-effectiveness. While firm fixed-price contracts offer budget certainty, they may not always yield the best value if the initial price is not aggressively negotiated. Efficiency gains are typically measured by on-time performance, cost per mile, and mission success rates, which need to be tracked.

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: 10

Pricing Type: FIRM FIXED PRICE (J)

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: $108,118,904

Exercised Options: $108,118,904

Current Obligation: $108,118,904

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