VA Spends $831M on Mail Manifesting Services, Awarded to FedEx Supply Chain

Contract Overview

Contract Amount: $831,480,867 ($831.5M)

Contractor: Fedex Supply Chain Distribution System, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2014-09-29

End Date: 2020-12-31

Contract Duration: 2,285 days

Daily Burn Rate: $363.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF FOR MAIL MANIFESTING SERVICES FOR 7 CMOP LOCATIONS

Place of Performance

Location: PITTSBURGH, ALLEGHENY County, PENNSYLVANIA, 15238

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $831.5 million to FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC. for work described as: IGF::OT::IGF FOR MAIL MANIFESTING SERVICES FOR 7 CMOP LOCATIONS Key points: 1. Significant contract value of over $831 million for mail manifesting services. 2. FedEx Supply Chain Distribution System, Inc. is the sole awardee. 3. Contract duration spans from 2014 to 2020, indicating a long-term need. 4. The service falls under 'All Other Business Support Services' (NAICS 561499).

Value Assessment

Rating: questionable

The contract value is substantial, but without specific performance metrics or comparable contract data, assessing its value for money is difficult. The fixed-price nature suggests cost certainty, but the sheer scale warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the award to a single entity for such a long duration and high value raises questions about ongoing competition and potential for price creep.

Taxpayer Impact: The significant expenditure of over $831 million represents a considerable use of taxpayer funds for essential but potentially unoptimized services.

Public Impact

Ensures efficient mail processing for 7 VA CMOP locations, impacting prescription delivery to veterans. The reliance on a single provider for a critical logistical function could pose a risk if service disruptions occur. Transparency in how this large sum was allocated and managed is crucial for public trust. Potential for cost savings through competitive re-bidding or service optimization should be explored.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value with limited transparency on cost-effectiveness.
Long contract duration without clear evidence of ongoing competitive pressure.
Sole awardee for a critical service.

Positive Signals

Awarded under full and open competition.
Addresses a critical need for veteran healthcare services.
Firm fixed-price contract provides cost predictability.

Sector Analysis

The 'Business Support Services' sector is broad, encompassing various operational functions. Benchmarking this specific mail manifesting service against similar government or private sector contracts is challenging without more granular data on service scope and volume.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as 'sb' is false. Further analysis would be needed to determine if subcontracting opportunities were provided to small businesses.

Oversight & Accountability

The contract's long duration and significant value necessitate robust oversight from the Department of Veterans Affairs to ensure performance, cost control, and compliance with federal acquisition regulations. Regular performance reviews and audits are essential.

Related Government Programs

All Other Business Support Services
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

High contract value.
Long contract duration.
Sole awardee.
Lack of detailed performance and cost-effectiveness data.
Potential for uncompetitive pricing over time.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $831.5 million to FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC.. IGF::OT::IGF FOR MAIL MANIFESTING SERVICES FOR 7 CMOP LOCATIONS

Who is the contractor on this award?

The obligated recipient is FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $831.5 million.

What is the period of performance?

Start: 2014-09-29. End: 2020-12-31.

What specific metrics were used to evaluate the value and effectiveness of FedEx's mail manifesting services throughout the contract period?

The provided data does not detail specific performance metrics or value assessments conducted by the VA during the contract's lifecycle. A thorough review would require access to performance reports, quality assurance evaluations, and any post-award contract reviews to understand how the $831 million expenditure translated into tangible benefits and achieved desired outcomes for the VA's mail manifesting operations.

Given the full and open competition, why was the contract awarded to a single entity for such an extended period without apparent re-competition?

While initially awarded under full and open competition, the long duration (2014-2020) suggests a potential lack of subsequent competitive solicitations or a strategy to consolidate services. Factors could include the complexity of transitioning providers, the perceived stability of the incumbent, or specific contract structures. Further investigation into the VA's procurement strategy and market analysis during this period is warranted.

How does the per-unit cost of FedEx's services compare to industry benchmarks for mail manifesting, and what is the estimated taxpayer impact of any difference?

Without specific per-unit cost data or detailed service scope, a direct comparison to industry benchmarks is not feasible. The total contract value of $831 million represents a significant investment. If the per-unit costs were found to be higher than market rates, the cumulative impact on taxpayers over the contract's duration could be substantial, highlighting the importance of ongoing price analysis and competitive sourcing.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › All Other Business Support 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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 700 CRANBERRY WOODS DR, CRANBERRY TOWNSHIP, PA, 16066

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

Financial Breakdown

Contract Ceiling: $1,640,111,691

Exercised Options: $841,740,410

Current Obligation: $831,480,867

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS03F0169X

IDV Type: FSS

Timeline