IRS contract for domestic delivery services awarded to UPS for over $21.7M, highlighting courier and express delivery market dynamics

Contract Overview

Contract Amount: $21,775,085 ($21.8M)

Contractor: United Parcel Service, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2015-04-01

End Date: 2017-01-18

Contract Duration: 658 days

Daily Burn Rate: $33.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF DOMESTIC DELIVERY SERVICES (MAIL)

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20003

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $21.8 million to UNITED PARCEL SERVICE, INC. for work described as: IGF::OT::IGF DOMESTIC DELIVERY SERVICES (MAIL) Key points: 1. The contract value represents a significant investment in essential mail and package delivery for the IRS. 2. Competition dynamics for this contract are crucial for ensuring cost-effectiveness in a specialized service sector. 3. Performance metrics and delivery timelines are key indicators of service reliability and value. 4. This contract positions UPS as a key provider for federal government logistics needs. 5. The fixed-price nature of the contract aims to provide cost certainty for the IRS.

Value Assessment

Rating: good

The contract value of over $21.7 million for domestic delivery services appears reasonable given the duration and scope. Benchmarking against similar large-scale federal contracts for courier and express delivery services would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an effort to control costs, but actual value depends on the efficiency and reliability of the services rendered by United Parcel Service, Inc.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a competitive environment, which typically drives better pricing and service offerings. This level of competition is generally favorable for the government, as it allows for a wider selection of qualified providers and encourages innovation.

Taxpayer Impact: Full and open competition ensures that taxpayer dollars are used efficiently by fostering a marketplace where the best value is sought, preventing potential overpricing associated with less competitive solicitations.

Public Impact

Taxpayers benefit from the efficient processing and delivery of tax-related documents and communications. The IRS receives reliable mail and package delivery services essential for its operations. The contract supports the logistics infrastructure within the District of Columbia and potentially nationwide. The contract supports jobs within the courier and express delivery services sector, primarily through the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased delivery costs if market rates for courier services rise significantly during the contract period.
Dependence on a single contractor for critical delivery services could pose a risk if performance issues arise.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Firm fixed-price contract type helps to control costs and provides budget certainty.
Contractor has a significant track record in logistics and delivery services.

Sector Analysis

The contract falls within the Couriers and Express Delivery Services sector, a critical component of the broader logistics and transportation industry. This sector is characterized by high volume, time-sensitive deliveries, and significant infrastructure investment. Federal spending in this area supports the operational needs of various government agencies, ensuring timely communication and document transfer. Comparable spending benchmarks would involve analyzing other large federal contracts for similar delivery services across different agencies.

Small Business Impact

While this contract was awarded to a large prime contractor (United Parcel Service, Inc.), there is no explicit indication of small business set-asides within the provided data. However, large federal contracts often include subcontracting requirements, which could potentially create opportunities for small businesses within the logistics and delivery ecosystem. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program officials within the Internal Revenue Service. The firm fixed-price nature provides a degree of accountability by linking payment to delivery. Transparency is generally maintained through contract award databases, though specific performance reports may not always be publicly accessible. The Inspector General for the Department of the Treasury would have jurisdiction for audits and investigations related to potential fraud or mismanagement.

Related Government Programs

USPS Mail Services
Federal Express Delivery Contracts
DHL Express Services
Government Logistics Contracts

Risk Flags

Potential for performance degradation over contract duration.
Reliance on a single large provider for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $21.8 million to UNITED PARCEL SERVICE, INC.. IGF::OT::IGF DOMESTIC DELIVERY SERVICES (MAIL)

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE, INC..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $21.8 million.

What is the period of performance?

Start: 2015-04-01. End: 2017-01-18.

What is the historical spending pattern for domestic delivery services by the IRS?

Historical spending data for the IRS on domestic delivery services prior to this contract would provide valuable context. Analyzing trends over several fiscal years would reveal whether this $21.7 million award represents an increase, decrease, or stable level of investment. Understanding past spending helps in assessing the long-term commitment to outsourced delivery and identifying any significant shifts in procurement strategy. Without prior data, it is difficult to ascertain if this contract is part of a sustained effort or a new initiative. It is also important to consider if the IRS has utilized multiple vendors in the past or relied heavily on a single provider, as this impacts competition and potential cost efficiencies.

How does the per-unit cost of delivery under this contract compare to market rates?

Determining the per-unit cost of delivery requires breaking down the total contract value by the number of deliveries or packages. Since this information is not provided, a direct comparison to market rates is challenging. However, the firm fixed-price nature suggests that UPS has calculated its per-unit costs to be competitive. To perform a true benchmark, one would need to know the average cost per package or per pound for similar services offered by UPS and its competitors in the commercial market, adjusted for federal contract overhead and profit margins. The number of bids received (2) might suggest that the pricing was competitive enough to attract multiple offers, but not so low as to deter potential bidders.

What are the key performance indicators (KPIs) for this contract and how has UPS performed against them?

Key performance indicators for a domestic delivery services contract typically include on-time delivery rates, package condition upon arrival, tracking accuracy, and customer service responsiveness. The provided data does not detail these specific KPIs or UPS's performance against them. However, federal contracts usually include performance clauses and potential remedies for non-compliance. For a comprehensive assessment, one would need to review performance reports, any issued cure notices, or award fee determinations associated with this contract. Consistent high performance against established KPIs would indicate good value for money and reliable service delivery for the IRS.

What is the track record of United Parcel Service, Inc. in fulfilling federal government contracts?

United Parcel Service, Inc. (UPS) has a substantial track record of fulfilling federal government contracts, often serving as a primary logistics provider for various agencies. Their extensive experience in commercial package delivery translates to a strong capability in meeting government requirements for speed, reliability, and security. Past performance data, available through federal procurement databases, would detail their history with on-time delivery, contract compliance, and overall satisfaction ratings across different agencies. Generally, large, established companies like UPS are awarded significant contracts due to their proven infrastructure and operational capacity, though specific contract performance can vary.

What is the potential impact of this contract on small businesses in the courier and express delivery sector?

This contract, awarded to a large prime contractor, has indirect implications for small businesses. While not a direct small business set-aside, federal regulations often mandate subcontracting goals for prime contractors. Therefore, UPS may be required to subcontract a portion of the work to small businesses, creating opportunities for them in areas like last-mile delivery, specialized transport, or regional services. The extent of this impact depends on the specific subcontracting plan negotiated for this contract. Small businesses that can offer niche services or operate efficiently in specific geographic areas might find opportunities through UPS's supply chain.

How does the contract type (Firm Fixed Price) influence risk and value for the IRS?

The Firm Fixed Price (FFP) contract type is generally advantageous for the government, especially for services with well-defined scopes like delivery. It shifts the risk of cost overruns to the contractor (UPS), providing the IRS with budget certainty. The price is fixed regardless of the contractor's actual costs. This structure incentivizes the contractor to manage costs efficiently to maximize profit. For the IRS, this means predictable expenditures, making financial planning easier. The value is realized if UPS delivers the required services at the agreed-upon price without compromising quality or performance, thereby achieving cost-effectiveness.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Parcel Service Inc (UEI: 006991681)

Address: 316 PENNSYLVANIA AVE SE STE 300, WASHINGTON, DC, 20003

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $57,062,249

Exercised Options: $21,775,085

Current Obligation: $21,775,085

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS23F0282L

IDV Type: FSS

Timeline