DoD's $529M LMSR Vessel O&M Contract Awarded to American Overseas Marine LLC

Contract Overview

Contract Amount: $529,477,025 ($529.5M)

Contractor: American Overseas Marine CO. LLC

Awarding Agency: Department of Defense

Start Date: 2010-04-15

End Date: 2017-10-25

Contract Duration: 2,750 days

Daily Burn Rate: $192.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: OPERATION AND MAINTENANCE OF 7 LARGE, MEDIUM-SPEED, ROLL-ON ROLL-OFF (LMSR) VESSELS

Place of Performance

Location: QUINCY, NORFOLK County, MASSACHUSETTS, 02171

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $529.5 million to AMERICAN OVERSEAS MARINE CO. LLC for work described as: OPERATION AND MAINTENANCE OF 7 LARGE, MEDIUM-SPEED, ROLL-ON ROLL-OFF (LMSR) VESSELS Key points: 1. Contract awarded for operation and maintenance of 7 large, medium-speed, roll-on/roll-off (LMSR) vessels. 2. The contract value of over $529 million indicates significant investment in strategic sealift capabilities. 3. Full and open competition was utilized, suggesting a robust bidding process. 4. The firm-fixed-price contract type aims to control costs for the government. 5. This contract supports the Department of the Navy's logistical and sealift requirements. 6. The duration of the contract (2750 days) points to a long-term need for these services.

Value Assessment

Rating: good

The total contract value of $529,477,024.74 for the operation and maintenance of 7 LMSR vessels over approximately 7.5 years appears reasonable given the strategic nature of the assets. Benchmarking against similar large-scale maritime support contracts is challenging due to the specialized nature of LMSR vessels. However, the firm-fixed-price structure suggests an effort to ensure predictable costs for the government, which is a positive indicator of value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The presence of 8 bids (no) suggests a competitive environment, which typically drives better pricing and service offerings for the government. The extensive competition likely contributed to achieving a fair market price for the complex services required.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible price and terms for essential sealift vessel operations.

Public Impact

The primary beneficiaries are the U.S. military, ensuring the availability of critical sealift assets for deployment and sustainment operations. Services delivered include the operation and maintenance of 7 large, medium-speed, roll-on/roll-off vessels, vital for transporting equipment and personnel. The geographic impact is national, supporting global military logistics, with potential deployment to various theaters of operation. Workforce implications include employment for maritime professionals, engineers, and support staff involved in vessel operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen maintenance issues arise beyond the scope of the fixed-price agreement.
Dependence on a single contractor for a critical national security asset could pose risks if performance falters.
The long-term nature of the contract may limit flexibility to adapt to evolving technological or strategic requirements.

Positive Signals

The firm-fixed-price contract structure provides cost certainty for the government.
Full and open competition suggests a well-contested award, likely resulting in a competitive price.
The contractor's experience in operating similar vessels is implied by winning a competitive bid for this specialized service.
The contract supports a critical component of the U.S. military's strategic sealift capability.

Sector Analysis

The maritime shipping industry, particularly the segment focused on specialized government contracts, is characterized by high capital investment and stringent regulatory requirements. This contract for the operation and maintenance of LMSR vessels fits within the broader defense logistics and transportation sector. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of LMSR vessels, but the scale of this award reflects the significant cost associated with maintaining such strategic assets.

Small Business Impact

This contract does not appear to have a specific small business set-aside component (ss: false, sb: false). The prime contractor, American Overseas Marine Co. LLC, is likely a large business. There is no explicit information provided regarding subcontracting plans for small businesses, which could represent missed opportunities for the small business ecosystem to participate in this significant federal spending.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring the contractor to meet specific performance standards. Transparency is generally maintained through contract award databases, though detailed operational performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command Operations
Strategic Sealift Capability
Maritime Transportation Services
U.S. Navy Logistics Support
Roll-on/Roll-off Vessel Operations

Risk Flags

Potential for cost growth if unforeseen major repairs are required.
Contractor performance risk impacting vessel availability.
Long-term reliance on a single provider for critical assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $529.5 million to AMERICAN OVERSEAS MARINE CO. LLC. OPERATION AND MAINTENANCE OF 7 LARGE, MEDIUM-SPEED, ROLL-ON ROLL-OFF (LMSR) VESSELS

Who is the contractor on this award?

The obligated recipient is AMERICAN OVERSEAS MARINE CO. 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 $529.5 million.

What is the period of performance?

Start: 2010-04-15. End: 2017-10-25.

What is the track record of American Overseas Marine Co. LLC in operating and maintaining large, medium-speed, roll-on/roll-off (LMSR) vessels?

American Overseas Marine Co. LLC (AOME) has a significant history in operating and maintaining U.S. government-owned and chartered vessels, including LMSRs. They have been a key player in providing sealift services for the Department of Defense for many years. Their experience encompasses the full spectrum of vessel operations, including crewing, navigation, maintenance, repair, and compliance with maritime regulations. Winning this substantial contract under full and open competition suggests a demonstrated capability and a competitive pricing structure that aligns with the government's requirements for these specialized assets. A review of past performance evaluations and contract awards would provide further detail on their specific track record with LMSRs.

How does the $529 million contract value compare to similar maritime support contracts for strategic sealift vessels?

Direct comparisons for the operation and maintenance of LMSR vessels are challenging due to their unique design and strategic role. However, the $529 million value over approximately 7.5 years (2750 days) translates to roughly $70 million per year. This figure encompasses crewing, maintenance, insurance, and operational costs for seven specialized vessels. When considering the high operational tempo, complex maintenance needs, and the critical nature of these assets for national defense, this annual cost appears within a reasonable range for large-scale maritime support contracts. Contracts for similar strategic assets, such as specialized tankers or troop transports, often fall into similar multi-million dollar annual expenditure categories.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential cost overruns due to unforeseen major maintenance or repair needs, performance failures impacting vessel availability, and the long-term dependence on a single contractor. Mitigation strategies are embedded within the contract structure. The firm-fixed-price (FFP) nature of the contract shifts much of the cost risk to the contractor, incentivizing efficient operations and proactive maintenance. Performance standards and delivery requirements are stipulated, with potential penalties for non-compliance. The government also retains oversight through contract administration and may have options for contract termination for default if performance is severely deficient. Furthermore, the competitive award process itself helps mitigate risks by selecting a contractor with a proven track record.

How effective is the firm-fixed-price contract type in ensuring value for money for the government in this context?

The firm-fixed-price (FFP) contract type is generally considered effective in ensuring value for money when the scope of work is well-defined and the risks are manageable. For the operation and maintenance of LMSR vessels, where the requirements are relatively predictable, FFP provides cost certainty for the government. It incentivizes the contractor to control costs and operate efficiently to maximize profit. This structure minimizes the risk of cost growth for the government compared to cost-reimbursement contracts. However, it requires careful initial pricing by the contractor, and if unforeseen major issues arise, the contractor may seek contract modifications or face financial strain, potentially impacting long-term performance if not managed properly.

What are the historical spending patterns for LMSR vessel operations and maintenance within the Department of Defense?

Historical spending on LMSR vessel operations and maintenance within the Department of Defense has been substantial, reflecting the significant investment required to maintain these strategic assets. Military Sealift Command (MSC), which manages these vessels, consistently allocates significant portions of its budget to vessel operations, maintenance, and readiness. While specific historical figures for LMSR O&M can fluctuate based on operational tempo, maintenance cycles, and contract awards, the overall trend indicates a sustained and considerable expenditure. This $529 million contract represents a significant portion of that historical spending for a defined period, underscoring the ongoing commitment to maintaining this critical capability.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0003308R5302

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 100 NEWPORT AVENUE EXT STE 3, QUINCY, MA, 02171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $529,477,025

Exercised Options: $529,477,025

Current Obligation: $529,477,025

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline