DoD's $377.6M Deep Sea Freight Contract with Waterman Steamship Corporation: Full and Open Competition

Contract Overview

Contract Amount: $377,663,446 ($377.7M)

Contractor: Waterman Steamship Corporation

Awarding Agency: Department of Defense

Start Date: 2000-07-03

End Date: 2009-10-16

Contract Duration: 3,392 days

Daily Burn Rate: $111.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Transportation

Place of Performance

Location: MOBILE, MOBILE County, ALABAMA, 36602

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $377.7 million to WATERMAN STEAMSHIP CORPORATION for work described as: Key points: 1. Significant contract value of $377.6 million for deep sea freight transportation. 2. Awarded through full and open competition, suggesting a competitive bidding process. 3. Contract duration spans nearly a decade (2000-2009), indicating long-term service needs. 4. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces potential cost volatility. 5. No small business participation noted, which could be a missed opportunity for economic inclusion.

Value Assessment

Rating: fair

The contract value of $377.6 million is substantial for freight services. Benchmarking against similar long-term, large-scale freight contracts would be necessary to assess if this price reflects market rates, especially considering the FPEPA clause.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing. However, the FPEPA clause can complicate price discovery and may lead to higher costs than a firm fixed-price contract if economic conditions fluctuate unfavorably.

Taxpayer Impact: The use of full and open competition is generally beneficial for taxpayers by promoting competitive pricing. However, the economic price adjustment mechanism introduces a risk of increased costs beyond initial projections.

Public Impact

Ensures critical deep sea freight transportation capabilities for the Department of the Navy. Potential for fluctuating costs due to the economic price adjustment clause impacts budget predictability. Lack of small business involvement may limit opportunities for smaller carriers in this sector. Long contract duration suggests stable, ongoing logistical support for military operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause introduces cost uncertainty.
No small business participation.
Long contract duration could mask inefficiencies if not actively managed.

Positive Signals

Awarded via full and open competition.
Significant value indicates critical service provision.
Long-term award provides stability for essential services.

Sector Analysis

This contract falls within the transportation sector, specifically deep sea freight. Spending benchmarks for similar government freight contracts are highly variable based on routes, cargo type, and duration. The $377.6 million over nearly 10 years suggests a substantial, ongoing requirement.

Small Business Impact

The contract data indicates that small businesses were not involved in this award (sb: false). This suggests that the prime contractor, Waterman Steamship Corporation, is likely a large business, and opportunities for subcontracting to small businesses may have been limited or not pursued.

Oversight & Accountability

Oversight would focus on the execution of the FPEPA clause, ensuring that any price adjustments are justified and in line with economic indicators. Monitoring contract performance and adherence to service level agreements is crucial given the long duration and significant value.

Related Government Programs

Deep Sea Freight Transportation
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for cost overruns due to Economic Price Adjustment.
Lack of small business participation.
Long contract duration may reduce flexibility.
Dependence on a single large contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $377.7 million to WATERMAN STEAMSHIP CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is WATERMAN STEAMSHIP CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $377.7 million.

What is the period of performance?

Start: 2000-07-03. End: 2009-10-16.

What was the actual cost impact of the Economic Price Adjustment (EPA) clause over the contract's duration?

The actual cost impact of the EPA clause is not detailed in the provided data. To assess this, one would need access to the contract's financial records and compare the adjusted prices against the base fixed price. Analyzing the specific economic indicators used for adjustment (e.g., fuel costs, labor rates) and their fluctuations during the contract period would reveal the total additional expenditure incurred by the government due to the EPA.

How did the competitive bidding process ensure the best value was achieved despite the FPEPA clause?

Full and open competition aims to achieve best value by soliciting offers from all responsible sources, driving down prices through rivalry. While the FPEPA clause introduces uncertainty, the initial bid prices would have been evaluated against benchmarks and each other. The government likely assessed the risk associated with the EPA and factored it into the overall value determination, potentially favoring bidders who proposed more conservative EPA mechanisms or demonstrated strong cost control capabilities.

What is the strategic importance of securing long-term deep sea freight capacity through a single large contract?

Securing long-term deep sea freight capacity via a single large contract provides the Department of the Navy with predictable and reliable logistical support essential for global operations and power projection. It ensures dedicated resources are available when needed, potentially at a more stable overall cost than relying on ad-hoc chartering. This approach simplifies procurement and management, allowing the Navy to focus on its core mission rather than day-to-day shipping arrangements.

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

Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Contractor Details

Parent Company: International Shipholding Corporation (UEI: 094915493)

Address: 11 NORTH WATER STREET, STE 18290, MOBILE, AL, 02

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

Timeline