DoD's $35.3M Deep Sea Freight Transportation contract awarded to Farrell Lines Inc. for 20 delivery orders

Contract Overview

Contract Amount: $35,258,990 ($35.3M)

Contractor: Farrell Lines Incorporated

Awarding Agency: Department of Defense

Start Date: 2012-10-31

End Date: 2012-10-31

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 $35.3 million to FARRELL LINES INCORPORATED for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS Key points: 1. The contract value represents a significant investment in essential military logistics capabilities. 2. Competition dynamics for this type of specialized transportation service can be limited. 3. Performance history and on-time delivery rates are key indicators of contractor reliability. 4. This contract supports the broader USTRANSCOM mission of global mobility. 5. The fixed-price structure with economic price adjustment aims to manage cost fluctuations. 6. The number of delivery orders suggests a need for flexible and responsive shipping solutions.

Value Assessment

Rating: good

The total award amount of $35.3 million for deep sea freight transportation appears reasonable given the specialized nature of the service and the number of delivery orders (20). Benchmarking against similar large-scale military logistics contracts would provide a more precise value-for-money assessment. However, the fixed-price with economic price adjustment (FPEPA) contract type suggests an effort to balance cost certainty with the volatility of fuel and operating expenses inherent in global shipping.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The fact that 20 delivery orders were issued under this contract suggests that the initial competition likely established a competitive baseline price for the services. The specific number of bidders is not provided, but full and open competition generally promotes price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages a wider range of providers to offer their services, potentially driving down costs and improving service quality through market forces.

Public Impact

Military personnel and equipment deployed globally benefit from reliable and timely transportation. The contract ensures the delivery of critical supplies and materiel to various operational theaters. Geographic impact is global, supporting U.S. military operations worldwide. The contract supports the maritime transportation workforce, including ship crews and logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to economic price adjustment clauses if market conditions fluctuate significantly.
Dependence on a single contractor for critical transportation services could pose a risk if performance issues arise.
Geopolitical instability or unforeseen global events could disrupt shipping routes and impact delivery timelines.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Fixed-price contract type with economic price adjustment provides some cost control while accounting for market volatility.
The issuance of multiple delivery orders indicates the contractor's capacity to meet ongoing demand.

Sector Analysis

Deep sea freight transportation is a critical component of the global logistics and defense sectors. This contract falls under the broader category of transportation services, which is essential for military readiness and power projection. The market for specialized military sealift is relatively concentrated, with a few key players possessing the necessary assets and security clearances. Comparable spending benchmarks would involve analyzing other large-scale Department of Defense transportation contracts.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions or subcontracting requirements for this contract. As a large-scale transportation service, it is likely that the primary contractor is a major industry player, and subcontracting opportunities for small businesses may be limited or indirect, depending on the specific operational needs and supply chains involved.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the U.S. Transportation Command (USTRANSCOM) and potentially the Department of Defense's Inspector General. Mechanisms likely include performance monitoring, delivery tracking, and financial audits to ensure compliance with contract terms and efficient use of funds. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

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

Risk Flags

Potential for cost escalation due to economic price adjustment.
Dependence on contractor performance for critical logistics.
Vulnerability to geopolitical events impacting global shipping.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.3 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 $35.3 million.

What is the period of performance?

Start: 2012-10-31. End: 2012-10-31.

What is the historical spending pattern for deep sea freight transportation by the Department of Defense?

Historical spending on deep sea freight transportation by the Department of Defense (DoD) has been substantial, reflecting the global nature of U.S. military operations. While specific figures fluctuate annually based on operational tempo and geopolitical events, the DoD consistently allocates significant resources to ensure the movement of personnel, equipment, and supplies across oceans. Contracts like the one awarded to Farrell Lines Incorporated are part of a larger framework designed to maintain strategic sealift capabilities. Analyzing past contract awards, including their values, durations, and the number of competitors, reveals trends in market pricing, contractor performance, and the evolving needs for specialized maritime transport. For instance, periods of increased global engagement or specific military campaigns often correlate with higher spending in this category. Furthermore, shifts in naval strategy or the introduction of new technologies can influence the types of contracts awarded and the associated costs.

How does the performance of Farrell Lines Incorporated compare to other providers of deep sea freight transportation for the DoD?

Assessing the performance of Farrell Lines Incorporated requires access to detailed contract performance data, which is not fully available in the provided summary. Typically, such an assessment would involve examining metrics like on-time delivery rates, cargo condition upon arrival, responsiveness to urgent requirements, and adherence to safety and security protocols across all their awarded contracts with the DoD. Comparing these metrics against industry benchmarks and the performance of other major sealift providers would offer a comprehensive view. Factors such as the number of delivery orders fulfilled successfully, any penalties incurred, or positive performance reviews would contribute to this evaluation. Without specific performance reports or comparative data, it is challenging to definitively rank Farrell Lines Incorporated against its peers. However, the repeated award of contracts, especially under full and open competition, suggests a level of consistent performance that meets the DoD's requirements.

What are the primary risks associated with this specific deep sea freight transportation contract?

The primary risks associated with this deep sea freight transportation contract include potential cost escalations due to the economic price adjustment (EPA) clause, especially if fuel prices or other operational costs rise unexpectedly. There's also a risk related to the contractor's performance; any significant disruptions in service, such as delays or damage to cargo, could impact military readiness and operational timelines. Geopolitical instability or unforeseen global events (e.g., piracy, natural disasters, trade disputes) could affect shipping routes, increase transit times, and potentially lead to higher costs or service interruptions. Furthermore, reliance on a single contractor for a substantial portion of deep sea freight needs, even if awarded competitively, could pose a risk if the contractor faces financial difficulties or operational challenges that compromise their ability to fulfill contractual obligations.

What is the typical duration and value range for similar deep sea freight transportation contracts awarded by USTRANSCOM?

The typical duration and value range for similar deep sea freight transportation contracts awarded by USTRANSCOM can vary significantly based on the scope of services, the number of vessels required, and the anticipated operational tempo. Contracts can range from short-term, single-voyage agreements to multi-year, comprehensive service contracts. Multi-year contracts, often including options for extension, are common for ensuring sustained logistical support. The value of these contracts can range from millions to hundreds of millions of dollars annually, depending on the scale of operations and the specific requirements. For instance, contracts supporting major overseas deployments or sustained presence in critical regions tend to be of higher value and longer duration. The $35.3 million awarded to Farrell Lines Incorporated for 20 delivery orders over an unspecified period (though the award and end dates suggest a single year) falls within a moderate range for such specialized services, indicating a need for consistent, but perhaps not continuous, high-volume transport.

How does the fixed-price with economic price adjustment (FPEPA) contract type impact cost certainty for the government?

The Fixed-Price with Economic Price Adjustment (FPEPA) contract type offers a balance between cost certainty and flexibility for both the government and the contractor in environments where costs are volatile, such as the shipping industry. For the government, it provides a baseline fixed price, offering some predictability in budgeting. However, the EPA clause allows for adjustments to the contract price based on pre-defined economic factors, most commonly fuel costs, but potentially also labor rates or currency fluctuations. This means the final cost to the government can exceed the initial fixed price if these economic indicators rise. While this protects the contractor from unforeseen cost increases and ensures service continuity, it introduces an element of uncertainty for the government's final expenditure. The effectiveness of FPEPA in managing costs depends heavily on the specific EPA formula, the accuracy of economic forecasts, and the government's ability to monitor and control the factors triggering adjustments.

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: $35,258,990

Exercised Options: $35,258,990

Current Obligation: $35,258,990

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71109D0034

IDV Type: IDC

Timeline