DoD awards $355.8M for deep sea freight, with American Overseas Marine LLC securing the contract

Contract Overview

Contract Amount: $355,766,023 ($355.8M)

Contractor: American Overseas Marine CO. LLC

Awarding Agency: Department of Defense

Start Date: 2000-07-03

End Date: 2011-10-13

Contract Duration: 4,119 days

Daily Burn Rate: $86.4K/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: QUINCY, NORFOLK County, MASSACHUSETTS, 02171

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $355.8 million to AMERICAN OVERSEAS MARINE CO. LLC for work described as: Key points: 1. Contract value of $355.8 million over 11 years suggests significant long-term service needs. 2. The fixed-price with economic price adjustment structure aims to manage cost fluctuations in a volatile market. 3. Full and open competition indicates a broad market search, potentially leading to better pricing. 4. The contract's duration of over 11 years points to a strategic, ongoing requirement for freight services. 5. The award to American Overseas Marine LLC highlights a key player in the deep sea freight sector for the Navy. 6. The contract's primary service code (483111) relates to deep sea freight transportation, a critical logistical function.

Value Assessment

Rating: good

The total award amount of $355.8 million over approximately 11 years averages to about $32.3 million annually. Benchmarking this against similar large-scale, long-term freight contracts is challenging without more specific service details. However, the fixed-price with economic price adjustment (EPA) clause suggests an attempt to balance cost certainty with market volatility. The contract's value appears substantial, reflecting the complexity and scale of deep sea freight operations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that the Department of the Navy sought bids from all responsible sources. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and terms. The presence of two bids suggests a moderate level of competition for this specific requirement.

Taxpayer Impact: Full and open competition generally benefits taxpayers by promoting a wider range of offers and potentially driving down costs through market forces.

Public Impact

The Department of the Navy benefits from reliable deep sea freight transportation services, crucial for global operations and supply chain management. This contract ensures the movement of goods and equipment across vast oceanic distances, supporting military readiness and deployment. The services delivered are essential for maintaining logistical support for naval forces stationed or operating worldwide. The geographic impact is global, covering all areas accessible by deep sea freight routes utilized by the Navy. While not directly a workforce creation contract, it supports jobs within the maritime shipping industry, including mariners and shore-based logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost increases beyond initial projections if market prices rise significantly.
Long-term contracts of over 11 years carry inherent risks related to changing geopolitical landscapes and evolving military requirements.
Reliance on a single primary contractor for such a critical service could pose risks if performance issues arise.
The fixed-price nature, even with EPA, may not fully insulate the government from unexpected cost escalations in a volatile shipping market.

Positive Signals

Full and open competition suggests a thorough market assessment and a commitment to achieving competitive pricing.
The contract's substantial value indicates a recognized and sustained need for these critical freight services.
The fixed-price structure, despite EPA, provides a baseline cost control mechanism for the government.
The long duration implies a stable, predictable partnership for essential logistical support.

Sector Analysis

The deep sea freight transportation sector is a critical component of global logistics and supply chains, underpinning international trade and military operations. This contract falls within the broader transportation and logistics industry, which is characterized by significant capital investment, complex regulatory environments, and sensitivity to global economic conditions. The market size for military-related freight is substantial, driven by the need for reliable and secure transport of goods worldwide. This specific award represents a significant portion of the Navy's expenditure in securing specialized maritime freight capabilities.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, as indicated by 'sb': false. The primary contractor, American Overseas Marine Co. LLC, is likely a large business. There is no explicit information regarding subcontracting plans for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though the prime contractor's overall supply chain may involve small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the contract terms, including performance standards and payment schedules. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

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

Risk Flags

Long-term contract duration
Economic Price Adjustment clause
Potential for cost overruns due to market volatility
Reliance on a single prime contractor for critical services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $355.8 million to AMERICAN OVERSEAS MARINE CO. LLC. See the official description on USAspending.

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 $355.8 million.

What is the period of performance?

Start: 2000-07-03. End: 2011-10-13.

What is the historical spending pattern for deep sea freight transportation by the Department of the Navy?

Analyzing historical spending requires access to comprehensive contract databases beyond this single award. However, the Department of the Navy, through entities like the Military Sealift Command (MSC), consistently allocates significant funds towards maritime transportation. This includes chartering vessels, securing freight services, and managing complex global logistics. Annual spending can fluctuate based on operational tempo, geopolitical events, and specific mission requirements. The $355.8 million awarded here over more than a decade suggests a sustained, substantial investment in this capability, aligning with the Navy's global presence and operational needs. Without granular historical data, it's difficult to pinpoint precise trends, but the consistent need for such services implies ongoing, significant budgetary allocations.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other similar freight contracts?

The Fixed Price with Economic Price Adjustment (FPEPA) structure is common in long-term contracts for services where input costs (like fuel, labor, and materials) are subject to significant market volatility. For deep sea freight, fuel costs are a major component, making EPA clauses essential for managing risk. Compared to pure Fixed Price (FP) contracts, FPEPA offers more flexibility to the contractor to adjust prices based on predefined economic indicators, potentially leading to slightly higher initial bids but reducing the risk of contractor default or requests for contract modification due to unforeseen cost increases. Conversely, it offers less cost certainty to the government than a pure FP contract. Cost Plus contracts, which reimburse the contractor for allowable costs plus a fee, are generally used for R&D or services with highly uncertain costs, and would likely result in higher overall government expenditure.

What is the track record of American Overseas Marine Co. LLC with government contracts, particularly with the Department of Defense?

American Overseas Marine Co. LLC (AOM) has a significant history of performing maritime services for the U.S. government, primarily through the Military Sealift Command (MSC). Their contract portfolio often includes vessel chartering, operation, and maintenance, as well as specialized transportation services. A review of public contract databases typically shows AOM as a frequent awardee for large-scale maritime support contracts. While specific performance metrics for past contracts are not detailed here, their repeated success in securing substantial awards from the DoD suggests a generally positive track record and established capability in meeting government requirements. However, like any large contractor, past performance reviews would need to be consulted for a complete picture, including any instances of disputes or performance deficiencies.

What are the key performance indicators (KPIs) typically used to measure the success of deep sea freight contracts?

Key performance indicators for deep sea freight contracts often revolve around reliability, timeliness, cost-effectiveness, and safety. Specific KPIs might include on-time delivery rates, vessel operational readiness (uptime), fuel efficiency, adherence to cargo handling protocols, compliance with maritime regulations and environmental standards, and incident rates (accidents, spills). For this contract, the Department of the Navy would likely monitor metrics related to the successful and timely transport of goods, the operational status of the chartered vessels, and adherence to the contract's financial terms, including the proper application of economic price adjustments. Performance clauses within the contract would detail these expectations and potential remedies for non-compliance.

How does the competition level (2 bids) for this contract compare to the average for similar large-scale DoD freight services?

The average number of bids for large-scale Department of Defense (DoD) service contracts can vary widely depending on the specificity of the requirement, the market size, and the complexity of the service. For highly specialized services like deep sea freight transportation, particularly those requiring specific vessel types or extensive operational experience, the pool of qualified bidders might be smaller than for more common services. Receiving two bids under a full and open competition suggests a moderate level of interest. While more bids are generally preferable for maximizing competition, two bids indicate that at least two capable companies were willing and able to compete. This is often considered a baseline acceptable level of competition, though analysis would be needed to determine if the market could support more bidders.

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: General Dynamics Corp (UEI: 001381284)

Address: 100 NEWPORT AVENUE EXT, QUINCY, MA, 08

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

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