DoD's $36M Deep Sea Freight Contract with Maersk Line, Limited Shows Strong Competition

Contract Overview

Contract Amount: $36,165,847 ($36.2M)

Contractor: Maersk Line, Limited

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2015-09-30

Contract Duration: 1,460 days

Daily Burn Rate: $24.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: WHEAT FIRM PERIOD REIMBURSABLES

Place of Performance

Location: NORFOLK, NORFOLK (CITY) County, VIRGINIA, 23510, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $36.2 million to MAERSK LINE, LIMITED for work described as: WHEAT FIRM PERIOD REIMBURSABLES Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. The firm fixed-price structure provides cost certainty for the government. 3. The duration of the contract (1460 days) suggests a long-term need for these services. 4. The contract value of $36.17 million over four years implies significant operational scale. 5. The award to Maersk Line, Limited, a known entity in shipping, suggests a focus on reliable service providers. 6. The absence of small business set-aside indicates the nature of the service likely requires large-scale capabilities.

Value Assessment

Rating: good

The contract value of $36.17 million over approximately four years for deep sea freight transportation appears reasonable given the scale of military logistics. Benchmarking against similar large-scale freight contracts is challenging without more specific service details, but the firm fixed-price nature suggests predictable costs. The number of bids (8) indicates a healthy level of interest and potential for competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 8 bids received. This suggests a competitive marketplace for deep sea freight transportation services required by the Department of Defense. The high number of bidders generally leads to better price discovery and potentially lower costs for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The robust competition in this procurement is beneficial for taxpayers, as it likely drove down prices and ensured the government received competitive rates for essential freight services.

Public Impact

This contract directly supports the Department of Defense's logistical operations, ensuring the timely and efficient movement of goods and equipment via deep sea freight. Military personnel and units relying on deployed equipment and supplies benefit from the reliable transportation services provided. The contract's geographic impact is global, facilitating the movement of assets to various operational theaters worldwide. The services provided are critical for maintaining military readiness and operational effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the global shipping market impacting long-term cost-effectiveness despite fixed-price structure.
Dependence on a single large contractor for critical logistics could pose risks if service disruptions occur.
Ensuring compliance with all international shipping regulations and security protocols requires diligent oversight.

Positive Signals

Awarded through full and open competition, maximizing potential for competitive pricing.
Firm fixed-price contract provides budget certainty for the Department of Defense.
The contractor, Maersk Line, Limited, is a well-established global shipping provider, suggesting reliability.
The significant number of bids received indicates a healthy and competitive market for these services.

Sector Analysis

The deep sea freight transportation sector is a critical component of global commerce and military logistics. This contract falls within the broader transportation and logistics industry, which is characterized by large-scale operations, significant capital investment, and complex international regulations. The market is dominated by a few major global carriers, but competition for government contracts can be robust, especially for services requiring extensive capacity and reliability.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the nature of deep sea freight transportation, requiring large vessels and extensive global networks, is primarily handled by large corporations. The lack of small business involvement in this specific contract does not necessarily reflect the broader small business participation within the Department of Defense's supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and logistics commands. Accountability measures would include performance monitoring, adherence to delivery schedules, and compliance with contract terms. Transparency is generally maintained through contract award databases, though specific operational details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command Contracts
Global Freight Transportation Services
Department of Defense Logistics Support
Ocean Freight Services
International Shipping Contracts

Risk Flags

Potential for service disruption due to global shipping complexities.
Reliance on a single large provider for critical logistics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.2 million to MAERSK LINE, LIMITED. WHEAT FIRM PERIOD REIMBURSABLES

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 $36.2 million.

What is the period of performance?

Start: 2011-10-01. End: 2015-09-30.

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 military operations. While specific figures for this exact service category can fluctuate annually based on operational tempo and geopolitical events, the DoD consistently relies on significant investments in shipping and logistics. Contracts like this one, valued in the tens of millions over several years, are indicative of the ongoing need. Past awards often show a mix of firm-fixed-price and cost-plus contracts, depending on the service specifics and risk allocation. The trend generally points towards a sustained requirement for reliable, large-scale freight capacity to support deployments, exercises, and sustainment operations worldwide. Analyzing aggregated spending data across similar contracts can reveal trends in pricing, carrier utilization, and the overall cost of maintaining global logistical chains.

How does the pricing of this contract compare to similar government freight contracts?

Directly comparing the pricing of this $36.17 million contract for deep sea freight transportation to similar government contracts is challenging without detailed service specifications, such as cargo types, routes, frequency, and service level agreements. However, the contract's firm fixed-price nature suggests that the price was determined upfront and is intended to remain stable. The fact that it was awarded under full and open competition with 8 bidders implies that the market provided competitive rates. Generally, firm fixed-price contracts are preferred when risks are well-understood. If this contract represents a standard service offering, the pricing would be benchmarked against other awarded contracts for similar volumes and durations. Deviations from established benchmarks could indicate unique service requirements, higher risk, or potentially less competitive pricing, though the number of bidders here suggests otherwise.

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

The primary risks associated with this deep sea freight transportation contract include potential disruptions to global shipping lanes (e.g., geopolitical instability, piracy, natural disasters), fluctuations in fuel prices (though mitigated by the fixed-price structure, it can impact carrier profitability and future bidding), and the potential for delays in delivery due to port congestion or vessel issues. There's also a risk related to the contractor's financial stability or operational capacity over the contract's four-year duration. For the government, a key risk is ensuring consistent service quality and compliance with all international maritime regulations and security protocols. Over-reliance on a single large provider for critical logistics can also pose a risk if the provider faces unforeseen operational challenges.

What is the track record of Maersk Line, Limited with government contracts?

Maersk Line, Limited has a significant track record of performing government contracts, particularly within the Department of Defense and other federal agencies requiring global shipping and logistics services. As a major player in the international maritime industry, they possess the extensive fleet, infrastructure, and expertise necessary to handle large-scale government requirements. Their history often includes contracts for troop and equipment transport, cargo movement, and specialized maritime services. While specific performance metrics for individual contracts are not always publicly detailed, their continued success in winning competitive bids for substantial government work suggests a generally positive performance history and a demonstrated ability to meet the demanding requirements of federal agencies. Government contract databases often list their awards, providing a basis for assessing their experience.

How does the scale of this contract compare to the overall defense budget or transportation spending?

This contract, valued at approximately $36.17 million, represents a relatively small fraction of the overall Department of Defense (DoD) budget, which typically runs into hundreds of billions of dollars annually. Within the DoD's transportation and logistics spending, which is a significant component, this contract is substantial for deep sea freight but likely one among many contracts supporting various modes of transport (air, land, sea). To put it in perspective, the total annual budget for the DoD is often over $700 billion. Transportation and logistics spending within that budget can amount to tens of billions. Therefore, while $36 million is a considerable sum for a single contract, it is a component of a much larger logistical enterprise necessary to maintain global military operations.

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: N0003309R3316

Offers Received: 8

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, 23510

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

Financial Breakdown

Contract Ceiling: $36,165,847

Exercised Options: $36,165,847

Current Obligation: $36,165,847

Contract Characteristics

Cost or Pricing Data: NO

Timeline