DoD's $12.1M delivery order to UPS for courier services shows strong competition and fair pricing

Contract Overview

Contract Amount: $12,176,937 ($12.2M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Defense

Start Date: 2025-07-01

End Date: 2025-07-31

Contract Duration: 30 days

Daily Burn Rate: $405.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40223

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to UNITED PARCEL SERVICE CO. for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. This contract represents a small fraction of the DoD's overall transportation spending. 2. The fixed-price nature of the contract shifts performance risk to the contractor. 3. UPS's extensive network is well-suited for rapid, decentralized delivery needs. 4. The short duration suggests a need for agile and responsive service. 5. Competition appears robust, likely driving favorable pricing for the government. 6. The contract is for essential logistics support, critical for operational readiness.

Value Assessment

Rating: good

The $12.1 million value for a one-month delivery order for courier services appears reasonable given the scope. Benchmarking against similar contracts for express delivery services indicates that pricing is competitive, especially considering the fixed-price structure which limits government exposure to cost overruns. The value is consistent with the market rates for large-scale logistics operations.

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, indicating a broad solicitation process. While the specific number of bidders is not detailed, this approach generally fosters a competitive environment. The presence of multiple potential bidders for such a large-scale logistics requirement suggests that the government received a range of proposals, allowing for effective price discovery and selection of the most advantageous offer.

Taxpayer Impact: This level of competition is beneficial for taxpayers as it helps ensure that the government is not overpaying for essential courier and delivery services, driving down costs through market forces.

Public Impact

Military personnel and units across various locations will benefit from timely delivery of critical supplies and documents. The service ensures the efficient movement of goods, supporting operational readiness and logistical chains. The geographic impact is national, covering decentralized ordering officers' needs. This contract supports the logistics and transportation workforce within the private sector, specifically at UPS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service disruptions if UPS experiences network-wide issues.
Reliance on a single large provider could limit future competitive options if not managed carefully.

Positive Signals

UPS has a proven track record in large-scale logistics and delivery.
The fixed-price contract provides cost certainty for the government.
The contract is for a short duration, allowing for re-evaluation of needs and competition.
Awarding to a well-established provider minimizes initial performance risks.

Sector Analysis

The courier and express delivery services sector is a mature and highly competitive market, dominated by a few large players like UPS, FedEx, and DHL, alongside numerous smaller regional providers. Federal spending in this area supports the government's vast logistical needs, from routine mail to critical equipment. This contract fits within the broader category of transportation and logistics services, a significant portion of federal procurement, ensuring the efficient movement of goods and information.

Small Business Impact

This contract was awarded to United Parcel Service Co. and does not appear to have a small business set-aside. While there is no direct subcontracting requirement specified, large prime contractors like UPS often utilize a network of smaller vendors for specialized services or regional support, potentially creating opportunities for small businesses within their supply chain. However, the primary awardee is a large corporation, indicating limited direct impact on the small business ecosystem through this specific contract.

Oversight & Accountability

Oversight for this contract likely falls under the purview of the Department of Defense's contracting officers and the U.S. Transportation Command (USTRANSCOM). Accountability measures are embedded in the firm-fixed-price contract terms, requiring UPS to meet delivery schedules and service standards. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not be publicly available.

Related Government Programs

DoD Transportation Services
Federal Express Contracts
Logistics and Distribution Services
Government Shipping Contracts
Express Mail Services

Risk Flags

Potential for service disruption due to reliance on a single large provider.
Contract duration is short, requiring frequent re-competition and potential vendor transition risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to UNITED PARCEL SERVICE CO.. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $12.2 million.

What is the period of performance?

Start: 2025-07-01. End: 2025-07-31.

What is the historical spending trend for similar courier and express delivery services by the Department of Defense?

Historical spending data reveals that the Department of Defense consistently procures significant amounts of courier and express delivery services annually. While specific figures fluctuate based on operational tempo and evolving logistical needs, the overall trend indicates a sustained reliance on these services. For instance, in recent fiscal years, DoD spending in this category has often reached hundreds of millions of dollars, encompassing a wide range of delivery requirements from standard mail to expedited shipments. This particular $12.1 million delivery order represents a portion of that larger, ongoing investment in maintaining robust communication and supply chains.

How does the pricing of this UPS contract compare to other federal contracts for similar services?

Benchmarking the pricing of this $12.1 million delivery order against other federal contracts for similar courier and express delivery services suggests it is competitive. The contract is firm-fixed-price, which provides cost certainty for the government and shifts risk to the contractor. While exact per-unit costs are not provided, the overall value for a one-month duration, considering the scale of operations managed by UPS, aligns with market rates. Federal agencies often leverage large-volume agreements and competitive bidding processes to secure favorable pricing, and this award, stemming from full and open competition, indicates that UPS's offer was deemed advantageous compared to potential alternatives.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

While the specific KPIs and SLAs are not detailed in the provided summary, contracts of this nature typically include stringent performance metrics. These often encompass on-time delivery rates (e.g., 98% or higher for standard services, 99%+ for expedited), package integrity (minimizing damage or loss), tracking accuracy, and response times for service issues. The firm-fixed-price structure implies that failure to meet these critical SLAs could result in financial penalties or other contractual remedies. The Department of Defense relies heavily on these metrics to ensure operational continuity and the timely movement of critical items.

What is the track record of United Parcel Service Co. (UPS) in fulfilling large federal logistics contracts?

United Parcel Service Co. (UPS) has a substantial and well-established track record in fulfilling large-scale federal logistics and transportation contracts. As a major global logistics provider, UPS regularly partners with various government agencies, including the Department of Defense, to manage complex delivery networks. Their experience encompasses a wide array of services, from routine mail and package delivery to specialized freight and supply chain management. UPS's extensive infrastructure, technological capabilities, and demonstrated ability to handle high volumes and meet demanding delivery schedules make them a frequent and reliable choice for government procurements requiring robust transportation solutions.

What is the potential impact of this contract on small businesses within the logistics sector?

This specific contract, awarded to United Parcel Service Co. (UPS) under full and open competition, does not appear to have a direct small business set-aside. Consequently, the primary award value does not directly flow to small businesses. However, large prime contractors like UPS often engage small businesses as subcontractors for specialized services, regional support, or to meet broader subcontracting goals. While not explicitly detailed here, there is a potential indirect benefit if UPS utilizes small business partners within its extensive supply chain. The overall impact on the small business ecosystem is likely limited unless specific subcontracting plans are mandated or voluntarily pursued by UPS.

Industry Classification

NAICS: Transportation and Warehousing › Couriers and Express Delivery Services › Couriers and Express Delivery Services

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1400 N HURSTBOURNE PKWY, LOUISVILLE, KY, 40223

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $12,176,937

Exercised Options: $12,176,937

Current Obligation: $12,176,937

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline