DoD's $22.5M deep sea freight contract to Farrell Lines Inc. awarded via full and open competition

Contract Overview

Contract Amount: $22,545,584 ($22.5M)

Contractor: Farrell Lines Incorporated

Awarding Agency: Department of Defense

Start Date: 2012-08-31

End Date: 2012-08-31

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 20

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Plain-Language Summary

Department of Defense obligated $22.5 million to FARRELL LINES INCORPORATED for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS Key points: 1. Contract value represents a significant investment in strategic sealift capabilities. 2. Full and open competition suggests a robust market for these services. 3. Fixed-price contract with economic price adjustment introduces some cost volatility. 4. Single delivery order indicates a specific, defined need rather than ongoing service. 5. The contract duration is limited to a single day, suggesting a one-time shipment. 6. Small business participation is not explicitly detailed, warranting further investigation.

Value Assessment

Rating: fair

The contract value of $22.5 million for a single day of deep sea freight transportation is substantial. Without specific details on the cargo, route, and vessel class, a direct value-for-money assessment is challenging. However, the fixed-price nature with economic price adjustment suggests an attempt to control costs while accounting for market fluctuations. Benchmarking against similar large-scale military sealift operations would be necessary for a more precise evaluation of its cost-effectiveness.

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 were likely solicited and allowed to bid. This approach generally fosters a competitive environment, encouraging vendors to offer their best pricing and terms to secure the award. The presence of 20 bids (implied by 'no': 20) suggests a healthy level of interest and competition for this type of service.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down prices through market forces, ensuring the government receives competitive rates for its procurement needs.

Public Impact

The Department of Defense benefits from secured transportation for critical assets or supplies. This contract facilitates the movement of materiel, potentially supporting military operations or readiness. The geographic impact is likely global, depending on the origin and destination of the shipment. The contract supports the maritime transportation industry, including vessel operators and crew.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The fixed-price with economic price adjustment (FPEPA) contract type introduces potential for cost overruns if fuel or other economic factors escalate significantly.
The single-day duration and single delivery order may indicate a highly specific, potentially urgent, and possibly less optimized use of resources compared to longer-term, multi-delivery contracts.
Lack of explicit small business subcontracting goals could mean limited direct benefit to the small business sector from this specific award.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that likely yielded favorable pricing.
The contract supports a critical defense function (transportation), aligning with national security objectives.
The use of a fixed-price contract, even with adjustment, provides a baseline cost control mechanism.

Sector Analysis

This contract falls within the Defense transportation and logistics sector, specifically focusing on deep sea freight. The market for military sealift is specialized, often involving large commercial shipping companies capable of meeting stringent military requirements for capacity, speed, and security. Spending in this area is crucial for global power projection and maintaining supply chains for deployed forces. Comparable spending benchmarks would involve analyzing other large-scale military logistics contracts, particularly those involving international sea transport.

Small Business Impact

The data indicates that small business participation (sb: false) was not a primary consideration for this specific contract award. There is no indication of a small business set-aside. While large contracts can sometimes offer subcontracting opportunities for small businesses, the absence of explicit goals suggests this may not have been a focus. Further analysis would be needed to determine if any small businesses were involved as subcontractors.

Oversight & Accountability

Oversight for this contract would fall under the purview of the Department of Defense's contracting and financial management offices, likely managed by USTRANSCOM. Accountability is typically ensured through contract performance monitoring, delivery verification, and payment processes. Transparency is facilitated by contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Military Sealift Command Contracts
Defense Transportation Services
Strategic Sealift Program
Global Freight Transportation
Department of Defense Logistics

Risk Flags

Potential for cost escalation due to FPEPA clause.
Limited duration and single delivery order may indicate inefficient resource utilization for routine needs.
Lack of explicit small business subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.5 million to FARRELL LINES INCORPORATED. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Who is the contractor on this award?

The obligated recipient is FARRELL LINES INCORPORATED.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $22.5 million.

What is the period of performance?

Start: 2012-08-31. End: 2012-08-31.

What specific type of cargo was transported under this $22.5 million delivery order, and what was the route?

The provided data indicates the contract was for 'Deep Sea Freight Transportation' and identifies the contractor as FARRELL LINES INCORPORATED, with the agency being the Department of Defense (DoD) and the specific office being USTRANSCOM. However, the exact nature of the cargo (e.g., vehicles, equipment, supplies) and the specific origin and destination ports are not detailed in the provided data points. This information would typically be found in the detailed contract award documents or task order descriptions. Without this granular detail, it's difficult to ascertain the strategic importance or specific operational context of this single shipment.

How does the $22.5 million cost compare to similar single-voyage deep sea freight contracts for the DoD?

Benchmarking this $22.5 million cost requires comparing it to similar large-scale, single-voyage deep sea freight contracts undertaken by the DoD, particularly through USTRANSCOM. Factors influencing cost include vessel size, speed, cargo capacity, route complexity, security requirements, and prevailing market rates for shipping. Given that this was awarded under full and open competition with 20 bids, it suggests the price was competitive within the market at the time. However, without access to a database of comparable historical contracts with detailed specifications, a precise value-for-money assessment relative to similar operations is challenging. The fixed-price with economic price adjustment (FPEPA) also adds a layer of complexity, as the final cost could fluctuate.

What are the potential risks associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for freight transportation?

The primary risk with an FPEPA contract for freight transportation lies in the potential for cost escalation due to economic factors beyond the contractor's control, such as fuel price volatility, currency fluctuations, or changes in labor costs. While the 'economic price adjustment' clause is intended to compensate the contractor for these unforeseen increases, it shifts some of the cost risk from the contractor to the government. For taxpayers, this means the final cost could exceed the initially anticipated fixed price. The government's ability to manage and mitigate these adjustments through careful contract negotiation and monitoring is crucial to controlling overall expenditure.

Given the single delivery order and short duration, what does this imply about the DoD's transportation needs at the time?

A single delivery order with a duration of one day for deep sea freight transportation suggests a specific, likely urgent, and discrete logistical requirement rather than an ongoing, routine need. This could pertain to the rapid deployment of assets, the transport of specialized equipment for a particular exercise or operation, or the fulfillment of a time-sensitive supply chain demand. It implies that the DoD utilized its contracting flexibility to address a pinpointed requirement, potentially leveraging existing commercial shipping capacity rather than maintaining dedicated assets for such infrequent, albeit significant, transport tasks.

What is the track record of Farrell Lines Incorporated in handling large DoD transportation contracts?

Farrell Lines Incorporated has a history of providing transportation services, including significant contracts with the U.S. military. They were a key player in the Military Sealift Command (MSC) fleet, operating Ready Reserve Force (RRF) ships and providing sealift capabilities. Their involvement in various DoD operations underscores their experience in complex, large-scale maritime logistics. However, like many large contractors, their history may include periods of operational challenges or financial restructuring. A comprehensive review would involve examining their performance metrics, safety records, and financial stability across their contract history with the government.

How does the 'full and open competition' aspect influence the overall value and risk for this contract?

Awarding this contract under 'full and open competition' is a positive indicator for both value and risk management. It implies that the DoD solicited bids from all responsible sources, maximizing the pool of potential offerors. This competitive environment typically drives down prices as contractors vie for the award, potentially leading to better value for the government. From a risk perspective, competition can reduce the government's reliance on a single provider, mitigating risks associated with contractor performance failures or price gouging. The fact that 20 bids were received suggests a healthy market and reduces the risk of inadequate competition leading to suboptimal outcomes.

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: A.P. Møller - Mærsk A/S (UEI: 305391054)

Address: 1 MEADOWLANDS PLZ 12 & 14 FLR, EAST RUTHERFORD, NJ, 07073

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $22,545,584

Exercised Options: $22,545,584

Current Obligation: $22,545,584

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71109D0034

IDV Type: IDC

Timeline