DoD's $18.8M Deep Sea Freight Transportation contract awarded to Farrell Lines Inc. for delivery orders

Contract Overview

Contract Amount: $18,845,322 ($18.8M)

Contractor: Farrell Lines Incorporated

Awarding Agency: Department of Defense

Start Date: 2012-11-30

End Date: 2012-11-30

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 $18.8 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 transportation services for the Department of Defense. 2. Farrell Lines Inc. secured this award through full and open competition, suggesting a competitive bidding process. 3. The fixed-price contract with economic price adjustment introduces some cost variability, requiring careful monitoring. 4. This award falls under the broad category of transportation and logistics, a critical support function for military operations. 5. The contract's duration appears to be a single delivery order, indicating a specific, time-bound need. 6. The absence of small business set-asides suggests the primary focus was on specialized capabilities.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without comparable contract data for similar deep-sea freight services. The fixed-price with economic price adjustment (FPEPA) contract type can introduce cost fluctuations, making direct value-for-money assessments complex. However, the full and open competition suggests that pricing was likely scrutinized against market rates. Further analysis would require detailed cost breakdowns and comparison with industry benchmarks for similar shipping volumes and routes.

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 bids. This approach generally fosters a competitive environment, which can lead to more favorable pricing and better service offerings for the government. The number of bidders is not specified, but the open competition suggests multiple entities likely vied for this requirement.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a robust bidding process and encourages market-driven pricing.

Public Impact

The primary beneficiaries are the Department of Defense units requiring the transportation of goods via deep-sea freight. The service delivered is critical for maintaining supply chains and logistical support for military operations. The geographic impact is likely global, depending on the specific deployment needs of the DoD. Workforce implications would include the crewing and operation of vessels, as well as shore-based logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the economic price adjustment clause in a fixed-price contract.
Dependence on a single contractor for a critical transportation service could pose a risk if performance issues arise.
Limited visibility into the specific routes and cargo details without further contract information.

Positive Signals

Awarded through full and open competition, indicating a potentially competitive and fair pricing structure.
The contract addresses a core requirement for the Department of Defense's logistical capabilities.
Fixed-price elements can provide a baseline cost certainty for a portion of the contract value.

Sector Analysis

Deep Sea Freight Transportation is a specialized segment within the broader maritime logistics industry. This sector is characterized by high capital investment in vessels, stringent regulatory compliance, and global operational requirements. The market size is substantial, driven by international trade and military logistics needs. This contract fits within the defense sector's reliance on commercial maritime services for global reach and sustainment. Comparable spending benchmarks would typically involve analyzing rates for chartering vessels, per-ton-mile costs, and service-level agreements for similar military or commercial shipments.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the nature of the requirement, likely involving large-scale deep-sea vessels and complex logistics, may have favored larger, established maritime carriers. There is no explicit information on subcontracting plans, but typically, large prime contractors in this sector may engage smaller specialized service providers. The absence of a small business set-aside means that opportunities for small businesses directly as prime contractors on this specific award were limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the U.S. Transportation Command (USTRANSCOM), the contracting activity's parent organization. Accountability measures would be embedded in the contract's performance standards and delivery requirements. Transparency is facilitated through contract awards databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Military Sealift Command (MSC) contracts
Ocean Transportation Services
Global Freight Movement
Defense Logistics Agency (DLA) transportation contracts

Risk Flags

Potential for cost escalation due to economic price adjustment.
Dependence on a single contractor for critical logistics.
Lack of specific performance metrics in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.8 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 $18.8 million.

What is the period of performance?

Start: 2012-11-30. End: 2012-11-30.

What is the historical spending pattern for Deep Sea Freight Transportation by the Department of Defense?

Analyzing historical spending for Deep Sea Freight Transportation by the Department of Defense requires accessing comprehensive contract databases over several fiscal years. Generally, DoD spending in this area fluctuates based on global geopolitical conditions, deployment requirements, and the operational tempo of military forces. Major operations or sustained presence in distant theaters often lead to increased demand for such services. The use of fixed-price contracts with economic price adjustments is common in this sector due to the volatility of fuel prices and international shipping rates. Trends may also show a shift towards specific types of vessels or service requirements based on evolving military needs and technological advancements in maritime logistics.

How does Farrell Lines Incorporated's track record compare for similar government contracts?

Assessing Farrell Lines Incorporated's track record for similar government contracts would involve reviewing their past performance evaluations, any contract disputes, and their history of successful delivery on previous DoD or other federal agency agreements. Information on past performance is often available through government sources like the Contractor Performance Assessment Reporting System (CPARS). A positive track record typically indicates reliability, quality of service, and adherence to contract terms. Conversely, a history of disputes, late deliveries, or performance deficiencies would raise concerns. Without specific data on Farrell Lines' past performance on comparable deep-sea freight contracts, a definitive assessment cannot be made, but the award suggests they met the government's criteria at the time of selection.

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

The primary risks associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for freight transportation revolve around cost predictability and potential overruns. While the fixed-price component offers some cost certainty, the economic price adjustment (EPA) clause allows for modifications based on fluctuations in specific economic factors, most commonly fuel costs, but potentially also labor or material costs. For the government, the risk is that these adjustments could lead to higher-than-anticipated expenditures, especially if market conditions (like oil prices) rise sharply. For the contractor, the risk lies in underestimating the extent of future price increases or if the EPA formula does not adequately cover their actual cost escalations. Effective risk mitigation involves clearly defining the EPA index, setting reasonable adjustment caps, and robust monitoring of market indicators.

How does the $18.8 million contract value compare to typical spending on deep-sea freight by the DoD?

The $18.8 million contract value for this specific delivery order represents a significant, but not necessarily extraordinary, expenditure for the Department of Defense's deep-sea freight needs. DoD's overall transportation budget is substantial, encompassing a wide array of services including sealift, airlift, and land transport. Individual contracts for deep-sea freight can vary widely in value depending on the duration, scope of services (e.g., chartering specific vessels, transporting particular cargo types, specific routes), and the number of delivery orders issued under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. This $18.8 million figure should be viewed in the context of the total annual spending on maritime logistics, which can run into hundreds of millions or even billions of dollars, depending on global military posture and operational demands.

What are the implications of awarding this contract through 'Full and Open Competition' for price discovery?

Awarding this contract through 'Full and Open Competition' has significant implications for price discovery. This method ensures that all responsible sources are allowed to compete, thereby maximizing the number of potential bidders. A larger pool of bidders typically leads to more competitive pricing as companies strive to offer the most attractive proposals to win the contract. This process allows the government to gauge the market's pricing landscape more accurately, as the bids submitted reflect prevailing market rates and the companies' assessments of their own costs and profit margins. The competitive pressure inherent in this approach encourages efficiency and innovation among bidders, ultimately benefiting the government through potentially lower prices and better service terms than might be achieved through sole-source or limited competition methods.

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: $18,845,322

Exercised Options: $18,845,322

Current Obligation: $18,845,322

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71109D0034

IDV Type: IDC

Timeline