Navy awards $993,768 contract for marine charter services to Maersk Line, Limited

Contract Overview

Contract Amount: $9,937,680 ($9.9M)

Contractor: Maersk Line, Limited

Awarding Agency: Department of Defense

Start Date: 2006-09-28

End Date: 2010-03-31

Contract Duration: 1,280 days

Daily Burn Rate: $7.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200612!546769!1700!N00033!MILITARY SEALIFT COMMAND !N0003306C5422 !A!N! !N! ! !20060928!20061229!040990913!001665322!305754202!N!MAERSK LINE, LIMITED !ONE COMMERCIAL PL, 20TH FL!NORFOLK !VA!23510!00000! !KS! ! !KOREA, REP!+000004780000!N!N!000004780000!V124!MARINE CHARTER FOR THINGS !S1 !SERVICES !000 !NOT DISCERNABLE !483111!E! !3! ! ! ! ! !99990909!B! ! !B! !A!N!J!2!009!A! !Z!N!Z!B!KS!Y!M!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! !1700!N00033!0001! !

Place of Performance

Location: NORFOLK, NORFOLK (CITY) County, VIRGINIA, 23501

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $9.9 million to MAERSK LINE, LIMITED for work described as: 200612!546769!1700!N00033!MILITARY SEALIFT COMMAND !N0003306C5422 !A!N! !N! ! !20060928!20061229!040990913!001665322!305754202!N!MAERSK LINE, LIMITED !ONE COMMERCIAL PL, 20TH FL!NORFOLK !VA!23510!00000! !KS! ! !KOREA, REP!+000004780000!N!N!000004780000!V124!MARINE CHARTER FOR THI… Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract value of approximately $993,768 is relatively modest for a defense procurement. 3. Fixed-price contract type indicates that the contractor bears the risk of cost overruns. 4. The duration of the contract (over 3 years) suggests a need for sustained services. 5. The service category (Deep Sea Freight Transportation) is critical for logistical support. 6. Contractor, Maersk Line, Limited, is a known entity in the shipping industry.

Value Assessment

Rating: good

The contract value of $993,768 for marine charter services over approximately 3.5 years appears reasonable given the scope. Benchmarking against similar long-term charter agreements for naval support vessels would provide a more precise value-for-money assessment. However, the fixed-price nature of the contract shifts cost risk to the contractor, which is generally favorable for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 9 bids suggests a healthy level of competition for this service. A competitive environment typically leads to better pricing and service offerings for the government.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers, as it likely drove down costs and ensured the government received competitive pricing for essential marine charter services.

Public Impact

The primary beneficiaries are the U.S. Navy and the Department of Defense, who receive critical logistical support for their operations. Services delivered include marine charter for unspecified 'things,' likely related to cargo or personnel transport. The geographic impact is likely global, given the nature of naval operations and deep-sea freight. Workforce implications may include employment for maritime professionals and support staff associated with Maersk Line, Limited.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on 'things' being chartered could obscure the full scope and necessity of the service.
Potential for cost escalation if contract terms are not tightly managed, despite fixed-price nature.
Dependence on a single contractor for a critical service could pose a risk if performance issues arise.

Positive Signals

Awarded through full and open competition, indicating a fair and transparent process.
Fixed-price contract type provides cost certainty for the government.
Contractor has experience in the maritime industry, suggesting operational capability.
Contract duration of over three years implies a stable and predictable service provision.

Sector Analysis

This contract falls within the Defense sector, specifically related to logistics and transportation services. The market for marine charter and freight services is global and highly competitive, involving numerous private shipping companies. The Department of Defense is a significant consumer of such services to support its worldwide operations, with spending often fluctuating based on geopolitical needs and operational tempo. Comparable spending benchmarks would involve analyzing other DoD contracts for similar vessel charters and freight services.

Small Business Impact

There is no indication that this contract was set aside for small businesses. Given the nature of deep-sea freight transportation and the scale of operations typically required by the Department of Defense, it is common for such contracts to be awarded to larger, established companies with significant fleet capacity. Subcontracting opportunities for small businesses are not explicitly detailed but could potentially arise if Maersk Line, Limited requires specialized support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver services at the agreed-upon price. Transparency is facilitated by the contract award being publicly available, though specific performance metrics and oversight reports are not detailed here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command Contracts
Department of Defense Freight Transportation Services
Naval Vessel Charter Agreements
Deep Sea Freight Transportation Services

Risk Flags

Ambiguity in service description ('FOR THINGS').
Potential for unstated risks associated with chartering services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $9.9 million to MAERSK LINE, LIMITED. 200612!546769!1700!N00033!MILITARY SEALIFT COMMAND !N0003306C5422 !A!N! !N! ! !20060928!20061229!040990913!001665322!305754202!N!MAERSK LINE, LIMITED !ONE COMMERCIAL PL, 20TH FL!NORFOLK !VA!23510!00000! !KS! ! !KOREA, REP!+000004780000!N!N!000004780000!V124!MARINE CHARTER FOR THINGS !S1 !SERVICES !000 !NOT DISCERNABLE !483111!E! !3! ! ! ! ! !99990909!B! ! !B! !A!N!J!2!009!A! !Z!N!Z!B!KS!Y!M!N! ! ! ! ! !A!A!000!A!B!N! ! ! ! !1700!N00033!0001! !

Who is the contractor on this award?

The obligated recipient is MAERSK LINE, LIMITED.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $9.9 million.

What is the period of performance?

Start: 2006-09-28. End: 2010-03-31.

What specific 'things' were being chartered under this contract, and what was their strategic importance to the Navy?

The contract specifies 'MARINE CHARTER FOR THINGS' without further elaboration. This ambiguity makes it difficult to assess the precise nature of the cargo or personnel being transported and their strategic importance. Typically, such charters could involve the transport of equipment, supplies, or even specialized personnel. Without more detail, it's challenging to determine if the chartered items were routine logistical support or critical mission assets. Further investigation into the contract's statement of work or related documentation would be necessary to clarify the specific 'things' and their role in supporting naval operations.

How does the per-day or per-mile cost of this charter compare to industry benchmarks for similar vessels and routes?

The total contract value is $993,768 over a period of approximately 1280 days (from Sept 28, 2006, to March 31, 2010). This equates to roughly $776 per day. However, this is a very broad average and doesn't account for the specific type of vessel, its capacity, the routes traveled, or the services included (e.g., crewing, fuel, maintenance). To accurately benchmark, one would need to compare this daily rate against market rates for similar commercial charter agreements during that period, considering factors like vessel size, age, type (e.g., container ship, tanker, general cargo), and the specific trade lanes utilized by the Navy. Without these specifics, a precise comparison is not feasible, but the daily rate appears relatively low for a dedicated charter, suggesting it might be for a specific type of service or vessel.

What was the track record of Maersk Line, Limited with the Department of Defense prior to this award?

Maersk Line, Limited, as part of the A.P. Moller-Maersk Group, is a major global shipping company with extensive experience in commercial and military logistics. Prior to this specific award in 2006, Maersk had a well-established history of providing transportation and shipping services to various government agencies, including the Department of Defense. They have historically been a key player in supporting military deployments and supply chains through their commercial fleet and specialized government contracting arms. Their significant presence in the commercial shipping market suggests a robust operational capability and a track record of managing large-scale logistics, which would have been a key consideration for the Navy during the procurement process.

Were there any performance issues or contract modifications during the life of this contract?

The provided data indicates the contract was awarded on September 28, 2006, and was set to expire on March 31, 2010, with a duration of 1280 days. There is no immediate flag in the provided data snippet indicating significant performance issues or major contract modifications that drastically altered the scope or value. However, standard contract administration often involves minor modifications for administrative purposes or adjustments to delivery schedules. A thorough review of the contract's official file, including any modification history and performance reports, would be necessary to definitively confirm the absence of significant issues or changes.

How does this contract's value and duration compare to other similar marine charter contracts awarded by the Navy around the same period?

The contract value of approximately $993,768 over roughly 3.5 years is on the smaller side for major naval support contracts, especially those involving dedicated vessel charters. Many naval charter agreements, particularly for larger vessels or longer durations, can run into millions or tens of millions of dollars. This contract's value suggests it might have been for a specific, perhaps less intensive, service, or potentially a smaller vessel, or a shorter-term need within the overall period. Comparing it to other contracts would require analyzing the specific services rendered, vessel types, and operational requirements. However, its full and open competition and fixed-price nature are common elements across various DoD procurement types.

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: SEALED BID

Offers Received: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Address: ONE COMMERCIAL PL, 20TH FL, NORFOLK, VA, 03

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline