DoD's $19M Deep Sea Freight Transportation Contract Awarded to Hapag-Lloyd USA, LLC

Contract Overview

Contract Amount: $19,028,691 ($19.0M)

Contractor: Hapag-Lloyd USA, LLC

Awarding Agency: Department of Defense

Start Date: 2012-02-29

End Date: 2012-02-29

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 20

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Transportation

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Plain-Language Summary

Department of Defense obligated $19.0 million to HAPAG-LLOYD USA, LLC for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS Key points: 1. Significant contract value of $19 million for deep sea freight. 2. Awarded under full and open competition, suggesting market availability. 3. Fixed price with economic price adjustment contract type introduces some cost fluctuation risk. 4. Transportation sector spending is a critical component of defense logistics.

Value Assessment

Rating: fair

The contract value is substantial. Without specific per-unit cost data or benchmarks for similar deep sea freight services, a precise value assessment is difficult. The fixed price with economic price adjustment introduces potential for cost increases.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating that multiple vendors had the opportunity to bid. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: The use of full and open competition is positive for taxpayers, as it aims to secure the best possible prices through market forces.

Public Impact

Ensures critical transportation services for Department of Defense operations. Supports global logistics and supply chain resilience for military readiness. Potential for economic price adjustments could impact final taxpayer cost.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause may lead to cost overruns.
Limited contract duration (single day) suggests a specific, potentially short-term need.

Positive Signals

Awarded under full and open competition.
Contract supports essential defense logistics.

Sector Analysis

This contract falls within the transportation sector, specifically deep sea freight. Government spending in this area is crucial for military deployment and supply chain management, often benchmarked against commercial shipping rates.

Small Business Impact

The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine small business participation.

Oversight & Accountability

The contract was a delivery order under a larger agreement, suggesting existing oversight mechanisms. However, the specific oversight for this single delivery order needs further examination to ensure accountability and proper execution.

Related Government Programs

Deep Sea Freight Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Economic Price Adjustment (EPA) clause introduces cost uncertainty.
Contract duration is extremely short (one day), raising questions about the scope and necessity.
Lack of detail on specific services rendered for the $19 million cost.
Potential for cost overruns due to market volatility in shipping rates.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.0 million to HAPAG-LLOYD USA, LLC. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Who is the contractor on this award?

The obligated recipient is HAPAG-LLOYD USA, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $19.0 million.

What is the period of performance?

Start: 2012-02-29. End: 2012-02-29.

What is the typical cost range for similar deep sea freight services to establish a better benchmark for this contract's value?

Establishing a precise cost range for similar deep sea freight services requires detailed market research, considering factors like vessel size, route, cargo type, and duration. Benchmarking against publicly available commercial shipping indices or historical government contracts for comparable services would be necessary. Without this, assessing whether $19 million represents a competitive price is challenging.

How significant is the risk associated with the economic price adjustment (EPA) clause in this contract, given the fluctuating nature of fuel and other shipping costs?

The risk associated with the EPA clause depends on the specific indexation formula and the volatility of the underlying cost components (e.g., fuel, labor, port fees). For deep sea freight, fuel costs are a major driver, and their fluctuations can be substantial. A poorly structured EPA could lead to significant cost increases for the government, impacting the overall value of the contract.

What was the specific operational need that necessitated this $19 million deep sea freight transportation service on a single day?

The single-day duration for a $19 million contract suggests a highly specific and potentially urgent operational requirement, such as the rapid deployment of critical assets or supplies. Understanding the exact nature of the cargo and the urgency would clarify the necessity and justify the expenditure, providing insight into the effectiveness of this particular award.

Industry Classification

NAICS: Transportation and Warehousing › Deep Sea, Coastal, and Great Lakes Water Transportation › Deep Sea Freight Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HTC71108R0011

Offers Received: 20

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hamburgische Seefahrtsbeteiligung Albert Ballin Gmbh & CO. (UEI: 341016317)

Address: 401 E JACKSON ST STE 3300, TAMPA, FL, 33602

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,028,691

Exercised Options: $19,028,691

Current Obligation: $19,028,691

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71109D0036

IDV Type: IDC

Timeline