DoD's $26.1M deep sea freight contract awarded to HAPAG-LLOYD USA, LLC for transportation services

Contract Overview

Contract Amount: $26,104,297 ($26.1M)

Contractor: Hapag-Lloyd USA, LLC

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: Transportation

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS

Plain-Language Summary

Department of Defense obligated $26.1 million to HAPAG-LLOYD USA, LLC for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. Fixed-price contract with economic price adjustment indicates potential for cost fluctuations. 3. The contract was a delivery order, suggesting it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 4. The duration of the contract is not specified, but the award and effective dates are the same, implying a short-term or completed service. 5. The North American Industry Classification System (NAICS) code 483111 points to deep sea freight transportation services. 6. The contractor, HAPAG-LLOYD USA, LLC, is a significant player in the global shipping industry.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without knowing the total value of the parent IDIQ contract or the specific services rendered. However, the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility. Comparing this to other deep sea freight contracts awarded by USTRANSCOM or other DoD components would provide better context on pricing and value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' indicating that all responsible sources were permitted to submit a bid. This suggests a robust competitive environment, which typically leads to better price discovery and potentially lower costs for the government. The number of bidders is not specified, but the designation implies a fair and open process.

Taxpayer Impact: A full and open competition generally benefits taxpayers by ensuring that the government receives the best possible pricing through market forces, rather than being limited to a select few providers.

Public Impact

The Department of Defense benefits from reliable and competitive deep sea freight transportation services. This contract supports the movement of goods and equipment critical for military operations and logistics. The services provided are essential for maintaining global supply chains and projecting military power. The contract likely impacts the maritime transportation workforce, including sailors, logistics personnel, and port operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the 'economic price adjustment' clause, which allows for changes in price based on economic factors.
Lack of specific performance metrics or outcome data makes it difficult to assess the true effectiveness and efficiency of the service provided.
The contract being a delivery order might obscure the overall spending and performance trends if the parent IDIQ contract is extensive.

Positive Signals

Awarded through full and open competition, suggesting a competitive market and potentially favorable pricing.
The contractor, HAPAG-LLOYD USA, LLC, is a well-established entity in the shipping industry, implying experience and capability.
The contract addresses a critical need for deep sea freight transportation for the Department of Defense.

Sector Analysis

The deep sea freight transportation sector is a vital component of global commerce and national security logistics. This contract falls within the broader transportation and logistics industry, which is characterized by significant capital investment, complex regulatory environments, and global reach. Spending in this sector by the DoD is crucial for maintaining operational readiness and supporting overseas missions. Comparable spending benchmarks would involve analyzing other large-scale freight contracts awarded by military branches for international shipping.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting requirements. The nature of deep sea freight transportation typically involves large vessels and extensive infrastructure, which may favor larger, established companies. Further analysis of the parent IDIQ contract, if applicable, would be needed to determine any small business participation goals or achievements.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the U.S. Transportation Command (USTRANSCOM), which is responsible for managing the global７transportation and logistics enterprise for the DoD. Accountability measures would be tied to the terms and conditions of the fixed-price contract, including delivery schedules and service standards. Transparency is generally facilitated through contract databases like FPDS, though detailed performance reports are often internal.

Related Government Programs

Military Sealift Command Contracts
Global Freight Forwarding Services
Department of Defense Logistics Support
Ocean Freight Services
USTRANSCOM Transportation Contracts

Risk Flags

Economic Price Adjustment Clause
Delivery Order under IDIQ
Potential for Cost Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.1 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 $26.1 million.

What is the period of performance?

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

What is the track record of HAPAG-LLOYD USA, LLC with the Department of Defense?

HAPAG-LLOYD USA, LLC, as part of the global Hapag-Lloyd AG, has a significant history in providing shipping and logistics services worldwide. While specific details on their past DoD contracts require deeper database searches, their established presence in the industry suggests a capacity to handle large-scale government transportation needs. Their experience likely encompasses compliance with military shipping regulations, security protocols, and performance standards. Further investigation into FPDS or other government contract databases would reveal the extent and nature of their previous awards from DoD and other federal agencies, including contract values, performance ratings, and any past issues or commendations.

How does the $26.1 million value compare to similar deep sea freight contracts?

The $26.1 million value for this specific delivery order represents a substantial, but not exceptionally large, sum for a single transportation contract. To benchmark effectively, it needs to be compared within the context of the parent IDIQ contract's total potential value and duration, as well as the specific lanes and services covered. USTRANSCOM manages numerous large-scale transportation contracts, some of which can reach hundreds of millions or even billions of dollars over their lifespan. This particular award appears to be for a defined scope of services within a broader framework. Comparing it to other deep sea freight contracts awarded by DoD or other agencies for similar routes and cargo types would provide a more accurate assessment of its relative value.

What are the primary risks associated with this contract type?

The primary risks associated with this 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' contract include potential cost increases due to fluctuating fuel prices, labor costs, or other economic factors that are subject to the adjustment clause. While fixed-price contracts aim for cost certainty, the EPA introduces a degree of unpredictability. Another risk is performance-related, such as delays in delivery, damage to cargo, or failure to meet service level agreements, which could impact military readiness. The fact that this is a delivery order under a potentially larger IDIQ means that the overall risk profile is also tied to the structure and management of the parent contract.

How effective is full and open competition in ensuring value for deep sea freight services?

Full and open competition is generally considered the most effective method for ensuring value in government contracting, including for deep sea freight services. By allowing all responsible sources to bid, it fosters a competitive environment that drives down prices and encourages innovation. For complex services like international shipping, it allows the government to solicit proposals that meet specific operational requirements and compare them based on price, performance, and capability. However, the effectiveness can be influenced by the number of actual bidders, the clarity of the solicitation, and the government's ability to evaluate proposals rigorously. In this case, the designation indicates the intent to maximize competition.

What is the historical spending pattern for deep sea freight transportation by the DoD?

The Department of Defense is a major consumer of deep sea freight transportation services, consistently spending billions of dollars annually to support global operations, deployments, and supply chains. Historical spending patterns show a significant reliance on large shipping companies and logistics providers, often through large IDIQ contracts that allow for task orders like the one awarded to HAPAG-LLOYD USA, LLC. Spending fluctuates based on geopolitical events, troop deployments, and the overall defense budget. USTRANSCOM plays a central role in consolidating and managing this spending to achieve economies of scale and operational efficiency. Analyzing historical data reveals a steady demand for these services, underscoring their critical importance to national security.

What are the implications of the 'delivery order' award type?

The 'DELIVERY ORDER' award type signifies that this contract is a specific order placed against a pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract. This means that the overarching terms, conditions, and pricing structure were established previously, likely through a competitive process for the IDIQ itself. The delivery order then specifies the quantity, delivery location, and delivery date for a particular requirement. This approach allows the government to procure services flexibly and efficiently as needs arise, without needing to re-compete the entire requirement each time. However, it can sometimes make it harder to assess the total value and performance of a specific service without examining the parent IDIQ contract.

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: $26,104,297

Exercised Options: $26,104,297

Current Obligation: $26,104,297

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71109D0036

IDV Type: IDC

Timeline