DoD's $12.38M transportation contract with UPS shows strong competition and value, with a 30-day delivery window

Contract Overview

Contract Amount: $12,385,373 ($12.4M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Defense

Start Date: 2025-08-01

End Date: 2025-08-31

Contract Duration: 30 days

Daily Burn Rate: $412.8K/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 $12.4 million to UNITED PARCEL SERVICE CO. for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. The contract leverages a large incumbent provider, suggesting potential for economies of scale and established service quality. 2. Full and open competition after exclusion of sources indicates a robust bidding process, likely driving competitive pricing. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. A short 30-day duration for this delivery order suggests it addresses immediate or short-term logistical needs. 5. The contract's focus on courier and express delivery services aligns with critical Department of Defense supply chain functions. 6. The significant value of the award, while substantial, needs to be benchmarked against similar large-scale logistics contracts.

Value Assessment

Rating: good

The contract value of $12.38 million for a 30-day delivery period appears substantial but is difficult to assess without specific service metrics. Given the provider is United Parcel Service Co., a major player in the logistics industry, the pricing is likely competitive within the express delivery market. Benchmarking against similar consolidated transportation shipments for the Department of Defense would provide a clearer picture of value for money. The firm fixed-price nature of the contract is a positive indicator for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while competition was sought, certain pre-qualified or specific sources may have been considered. The presence of 3 bids suggests a moderate level of competition. This approach can sometimes limit the pool of potential bidders compared to unrestricted full and open competition, potentially impacting the breadth of price discovery.

Taxpayer Impact: While not fully unrestricted, the competition level still provides a basis for price negotiation and ensures that taxpayers benefit from at least some level of market pressure on pricing.

Public Impact

The Department of Defense benefits from efficient and reliable transportation of consolidated shipments, crucial for operational readiness. Military personnel and supply chains will receive critical goods and materials through this express delivery service. The primary geographic impact is within the United States, supporting domestic logistics operations. The contract supports the logistics and transportation workforce employed by United Parcel Service Co.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for over-reliance on a single large provider for critical logistics needs.
Limited visibility into the specific performance metrics and service level agreements beyond the general contract scope.
The 'after exclusion of sources' clause warrants scrutiny to ensure maximum feasible competition was achieved.

Positive Signals

Award to a well-established and reputable logistics provider (UPS) suggests a high likelihood of reliable service delivery.
Firm fixed-price contract type offers cost certainty to the government.
The existence of multiple bids indicates a competitive process that likely yielded a fair market price.

Sector Analysis

This contract falls within the broader transportation and logistics sector, specifically focusing on courier and express delivery services. This sector is characterized by high volume, time-sensitive shipments and significant infrastructure investment. The Department of Defense is a major consumer of these services to maintain its global supply chain. Comparable spending benchmarks would involve analyzing other large-scale government contracts for expedited shipping and freight services, which often run into millions of dollars annually.

Small Business Impact

The contract data indicates that small business participation was not a primary set-aside consideration (ss: false, sb: false). While UPS is a large business, the subcontracting opportunities for small businesses within this contract are not explicitly detailed. The impact on the small business ecosystem would depend on UPS's subcontracting practices, which are not specified here. Further investigation into UPS's subcontracting plan would be necessary to assess its impact on small businesses.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Defense's contracting officers and the U.S. Transportation Command (USTRanscom). Accountability is established through the firm fixed-price contract terms and delivery schedules. Transparency is facilitated by the contract award data being publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Logistics Services
Federal Express Contracts
DHL Express Government Contracts
Supply Chain Management Services
Express Mail Services

Risk Flags

Limited competition details
Lack of specific performance metrics
Potential for higher costs due to source exclusion

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.4 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 $12.4 million.

What is the period of performance?

Start: 2025-08-01. End: 2025-08-31.

What is the historical spending pattern for consolidated transportation shipments by the Department of Defense with United Parcel Service Co. over the past five years?

Analyzing historical spending data for consolidated transportation shipments between the Department of Defense and United Parcel Service Co. over the past five years would reveal trends in contract value, duration, and scope. This analysis would help determine if the current $12.38 million award for a 30-day period is an anomaly or part of a consistent pattern of high-value, short-term delivery orders. Understanding historical spending can identify potential increases in demand, shifts in service requirements, or changes in pricing strategies. For instance, if past contracts were significantly smaller or longer-term, it might indicate a recent surge in urgent logistical needs or a change in how the DoD procures these services. Conversely, consistent spending at this level would suggest a stable, ongoing requirement for UPS's services.

How does the per-unit cost or cost per shipment for this contract compare to similar contracts awarded to other major carriers like FedEx or DHL?

Benchmarking the per-unit cost or cost per shipment for this $12.38 million contract awarded to UPS against similar contracts for consolidated transportation shipments with carriers such as FedEx or DHL is crucial for assessing value for money. This comparison should account for the specific services rendered, delivery speed, geographic coverage, and volume. If UPS's per-unit cost is significantly higher or lower than competitors for comparable services, it could indicate differences in operational efficiency, pricing strategies, or the specific terms negotiated. A higher cost might suggest less competitive bidding or premium service, while a lower cost could indicate aggressive pricing or economies of scale. This analysis is vital for the DoD to ensure it is obtaining the most cost-effective logistics solutions available in the market.

What are the specific performance metrics and Key Performance Indicators (KPIs) associated with this contract, and how is UPS's performance being measured?

The specific performance metrics and Key Performance Indicators (KPIs) for this contract are essential for evaluating the effectiveness and reliability of the services provided by United Parcel Service Co. While the contract is for consolidated transportation shipments, details on metrics such as on-time delivery rates, package condition upon arrival, tracking accuracy, and response times to service issues are not explicitly provided in the summary data. The Department of Defense likely has established Service Level Agreements (SLAs) within the full contract document that outline these KPIs and the consequences for failing to meet them. Understanding these metrics and how UPS's performance is measured is critical for determining if the $12.38 million investment is yielding the expected operational benefits and ensuring accountability.

What is the risk profile of United Parcel Service Co. as a contractor for the Department of Defense, considering its past performance and financial stability?

Assessing the risk profile of United Parcel Service Co. (UPS) as a contractor for the Department of Defense involves examining its track record, financial stability, and capacity to handle large-scale logistics operations. UPS is a globally recognized logistics leader with extensive experience serving government and commercial clients, suggesting a generally low performance risk. Its robust infrastructure and established processes are designed for reliability. However, potential risks could include service disruptions due to unforeseen events (e.g., labor disputes, natural disasters), cybersecurity vulnerabilities, or challenges in meeting highly specific military requirements that differ from commercial services. Financial stability is typically strong for a company of UPS's size, but a review of its recent financial reports and any past government contract disputes or penalties would provide a more comprehensive risk assessment.

How does the 'Full and Open Competition After Exclusion of Sources' procurement method impact the overall cost-effectiveness and potential for innovation compared to unrestricted full and open competi

The 'Full and Open Competition After Exclusion of Sources' procurement method, used for this $12.38 million contract, implies that while competition was sought, certain sources were excluded from the outset, possibly based on pre-qualification or specific capabilities. This method can lead to cost-effectiveness by focusing competition among known, capable providers, potentially reducing administrative burden and ensuring a baseline level of quality. However, it may limit the pool of bidders compared to unrestricted full and open competition, potentially reducing downward pressure on prices and stifling innovative solutions from new or less-established companies. The exclusion of sources needs careful justification to ensure it serves a legitimate government purpose without unduly restricting competition and potentially increasing costs for taxpayers.

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: $12,385,373

Exercised Options: $12,385,373

Current Obligation: $12,385,373

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline