On Thursday, the U.S. Department of Defense announced it is awarding a contract worth up to $694 million "for international commercial scheduled air cargo transportation services" to a dozen companies operating in the air cargo space.
The contract in question is classified as "indefinite-delivery/indefinite-quantity" (IDIQ) and fixed-price. It calls for the 12 companies contracted -- Alaska Airlines (NYSE:ALK), Atlas Air (NASDAQ:AAWW), Federal Express (NYSE:FDX), UPS (NYSE:UPS), US Airways (UNKNOWN:LCC.DL), as well as seven smaller, privately held firms -- to provide "time definite, door-to-door transportation service for less than full pallet loads ... including the movement of general, refrigerated, oversized, hazardous material (HAZMAT), and life and death cargo services for both domestic and international shipments."
The contract begins Feb. 1 and its initial period runs through Jan 31, 2014. Four one-year extensions may follow. In the event that all five one-year terms are exercised, DoD said the maximum ceiling value of the program is $694 million across all 12 contractors, with each contractor guaranteed a minimum award amount of $2,500.