Navy awards $230M+ for deep-sea freight, Hornbeck Offshore Services secures contract

Contract Overview

Contract Amount: $229,673,735 ($229.7M)

Contractor: Hornbeck Offshore Services LLC

Awarding Agency: Department of Defense

Start Date: 2007-12-27

End Date: 2015-02-27

Contract Duration: 2,619 days

Daily Burn Rate: $87.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: BASE PERIOD CHARTER HIRE

Place of Performance

Location: COVINGTON, SAINT TAMMANY County, LOUISIANA, 70433

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $229.7 million to HORNBECK OFFSHORE SERVICES LLC for work described as: BASE PERIOD CHARTER HIRE Key points: 1. Contract value exceeds $230 million over its duration. 2. Deep Sea Freight Transportation services are critical for naval operations. 3. The contract was awarded under full and open competition after exclusion of sources. 4. The duration of the contract is over 2,600 days. 5. The contract type is a definitive contract with a firm fixed price. 6. The primary agency is the Department of the Navy, part of the Department of Defense. 7. The North American Industry Classification System (NAICS) code is 483111.

Value Assessment

Rating: fair

The total award amount of over $230 million for deep-sea freight transportation over approximately seven years suggests a significant investment. Benchmarking this against similar contracts is challenging without more specific service details (e.g., vessel types, routes, cargo capacity). However, the firm fixed-price structure generally aims to control costs for the government. The base period cost alone is substantial, indicating the scale of services required.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources.' This indicates that while the competition was intended to be broad, specific sources may have been excluded for defined reasons, which warrants further investigation into the justification for exclusion. The number of bidders is not specified, but the 'full and open' designation suggests a competitive process was initiated.

Taxpayer Impact: This competitive approach, even with exclusions, is generally favorable for taxpayers as it aims to solicit the best possible pricing and service offerings from the market.

Public Impact

Naval operations requiring deep-sea freight transportation are directly supported. The contract ensures the movement of essential goods and materials for military purposes. The geographic impact is likely global, given the nature of naval deployments. The contract supports the maritime transportation industry and associated workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' clause in the competition type requires scrutiny to ensure it did not unduly limit competition or lead to suboptimal pricing.
Lack of specific details on the services provided makes a thorough value-for-money assessment difficult.
The long contract duration (over 7 years) could present risks related to market changes or technological obsolescence if not managed proactively.

Positive Signals

The use of 'full and open competition' signals an intent to leverage market forces for the best outcome.
The firm fixed-price contract type provides cost certainty for the government.
The contract is awarded to a single entity, Hornbeck Offshore Services LLC, suggesting they possess the specialized capabilities required.

Sector Analysis

The maritime transportation sector, specifically deep-sea freight, is a critical component of global logistics and national defense. This contract falls within the broader transportation and logistics industry, which is characterized by significant capital investment in vessels and infrastructure. Comparable spending benchmarks would depend on the specific type of cargo, routes, and vessel specifications, but the scale of this award indicates a substantial requirement for specialized maritime services.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information on subcontracting plans. Given the specialized nature of deep-sea freight transportation and the large contract value, it is likely that the prime contractor, Hornbeck Offshore Services LLC, possesses significant resources and capabilities. The impact on the small business ecosystem would depend on whether smaller firms can participate as subcontractors.

Oversight & Accountability

Oversight for this contract would typically 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 an agreed-upon price. Transparency would be enhanced by public contract data, but detailed performance metrics and oversight reports are not readily available in this summary.

Related Government Programs

Military Sealift Command Contracts
Ocean Transportation Services
Defense Logistics Agency Contracts
Maritime Freight Services

Risk Flags

Competition Exclusion Justification
Long-Term Contract Risk
Lack of Detailed Service Specification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $229.7 million to HORNBECK OFFSHORE SERVICES LLC. BASE PERIOD CHARTER HIRE

Who is the contractor on this award?

The obligated recipient is HORNBECK OFFSHORE SERVICES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $229.7 million.

What is the period of performance?

Start: 2007-12-27. End: 2015-02-27.

What specific types of cargo and routes are covered under this deep-sea freight transportation contract?

The provided data does not specify the exact types of cargo or the routes covered by this contract. However, given the awarding agency (Department of the Navy) and the NAICS code (483111 - Deep Sea Freight Transportation), it is reasonable to infer that the services involve the transportation of military equipment, supplies, and potentially personnel across significant oceanic distances. These could range from strategic deployment of assets to routine logistical support for naval bases or operations worldwide. Further details would likely be found in the contract's statement of work or performance work statement.

How does the awarded amount of over $230 million compare to historical spending on similar deep-sea freight services by the Navy?

Direct comparison of the $230+ million award to historical spending is difficult without more granular data on the specific services rendered. However, the duration of the contract (over 2,600 days, approximately 7 years) suggests a sustained need for these services. The base period alone represents a significant portion of the total award. To provide a precise comparison, one would need to analyze historical contracts for similar vessel types, cargo capacities, and operational areas managed by the Navy or other Department of Defense components over comparable timeframes. The firm fixed-price nature suggests an attempt to lock in costs.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided summary data does not detail the specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for freight transportation, KPIs would likely include on-time delivery rates, cargo condition upon arrival, vessel operational readiness, fuel efficiency, and compliance with safety and environmental regulations. SLAs would define the expected standards for these metrics. The firm fixed-price nature of the contract implies that meeting these performance standards is a condition of payment, with potential penalties for non-compliance.

What is the track record of Hornbeck Offshore Services LLC in fulfilling large-scale government contracts, particularly for the Department of Defense?

Hornbeck Offshore Services LLC is a known entity in the offshore services industry, often involved in vessel chartering and marine transportation. While specific details on their track record with this particular $230+ million Navy contract are not provided in the summary, the company has historically operated a fleet of vessels serving various sectors, including the energy and defense industries. Assessing their track record would involve reviewing past performance evaluations, any contract disputes or awards, and their experience with similar government procurements. Their ability to secure such a substantial contract suggests a level of capability and past performance deemed satisfactory by the Department of the Navy.

What are the potential risks associated with a firm fixed-price contract of this magnitude and duration?

A firm fixed-price (FFP) contract of this magnitude ($230+ million) and duration (over 7 years) carries several potential risks. For the contractor (Hornbeck Offshore Services LLC), the primary risk is bearing the full cost overrun if expenses exceed projections, especially given potential fluctuations in fuel prices, maintenance costs, and regulatory compliance over such a long period. For the government, the risk lies in potentially paying a premium if market conditions change favorably for the provider after the contract is locked in, or if the contractor inflates the price upfront to account for perceived risks. Additionally, the long duration might lead to the contractor becoming less incentivized to innovate or improve efficiency over time compared to shorter-term contracts.

How does the 'exclusion of sources' in the competition type impact the overall value and fairness of the procurement process?

The 'full and open competition after exclusion of sources' clause indicates that while the competition was initially intended to be broad, certain potential bidders were deliberately excluded. The impact on value and fairness hinges entirely on the justification for these exclusions. If the exclusions were based on legitimate, well-documented reasons (e.g., lack of specific certifications, inability to meet stringent security requirements, or prior performance issues), then the process could still yield fair value by focusing on capable providers. However, if the exclusions were arbitrary or lacked proper justification, it could stifle competition, potentially leading to higher prices and reduced innovation, thereby diminishing the value for taxpayers.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0003306R2007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Hornbeck Offshore Services, Inc. (UEI: 947299590)

Address: 103 NORTH PARK BLVD #300, COVINGTON, LA, 70433

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $229,673,735

Exercised Options: $229,673,735

Current Obligation: $229,673,735

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline