DoD's $346M Deep Sea Freight Contract Awarded to American Overseas Marine LLC

Contract Overview

Contract Amount: $345,889,310 ($345.9M)

Contractor: American Overseas Marine CO. LLC

Awarding Agency: Department of Defense

Start Date: 2000-07-03

End Date: 2010-09-30

Contract Duration: 3,741 days

Daily Burn Rate: $92.5K/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 $345.9 million to AMERICAN OVERSEAS MARINE CO. LLC for work described as: Key points: 1. Significant contract value of $345.9 million over 10 years. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces some cost escalation risk. 4. The contract falls under the Transportation sector, specifically freight and logistics.

Value Assessment

Rating: good

The contract's $345.9 million value over 10 years averages to approximately $34.6 million annually. Benchmarking against similar large-scale, long-term freight transportation contracts would be necessary for a precise value assessment, but the duration and scope suggest a substantial, albeit potentially competitive, price point.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This method generally promotes price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The competitive nature of the award is positive for taxpayers, as it likely resulted in a more efficient use of funds than a non-competitive process.

Public Impact

Ensures critical deep-sea freight transportation services for the Department of the Navy. Supports military readiness and logistical operations by providing essential shipping capabilities. The long-term nature of the contract offers stability for both the government and the contractor. Potential impact on global shipping rates and availability due to the scale of the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to cost overruns.
Long contract duration may not reflect evolving market conditions or technological advancements.
Reliance on a single contractor for such a critical service poses a risk if performance issues arise.

Positive Signals

Full and open competition suggests a robust bidding process.
Contract supports essential military logistics and national security.
Contractor has a long-term commitment, potentially ensuring service continuity.

Sector Analysis

This contract is within the Transportation sector, specifically focusing on deep-sea freight. Spending in this area is crucial for military logistics and global supply chain operations. Benchmarks for similar large-scale, long-term freight contracts are typically in the tens to hundreds of millions of dollars annually, depending on scope and duration.

Small Business Impact

The data indicates that this contract was not awarded to small businesses (sb: false). The scale and nature of deep-sea freight transportation often favor larger, established companies with significant infrastructure and capital.

Oversight & Accountability

The contract's long duration (over 10 years) necessitates robust oversight to ensure performance standards are met and that the economic price adjustment clause is managed effectively. Regular performance reviews and audits would be critical for accountability.

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.
Long contract duration may not align with future needs or technological advancements.
Single contractor dependency for critical service.
Lack of small business participation.
Geopolitical and market volatility impacting shipping costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $345.9 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 $345.9 million.

What is the period of performance?

Start: 2000-07-03. End: 2010-09-30.

How does the awarded price compare to market rates for similar deep-sea freight services, considering the economic price adjustment?

A comprehensive comparison requires detailed market analysis of freight rates, fuel costs, and geopolitical factors influencing shipping during the contract period. The economic price adjustment (EPA) clause allows for modifications based on specific indices, typically related to fuel and labor. While EPA aims to protect both parties from extreme market volatility, it introduces uncertainty in the final cost. A thorough review would involve comparing the base price against historical and projected market rates, and scrutinizing the EPA's triggers and caps to assess potential overpayment.

What are the specific risks associated with the Fixed Price with Economic Price Adjustment (FPEPA) contract type for this service?

The FPEPA structure introduces a risk of cost escalation for the government. While it protects the contractor from unforeseen increases in operating costs (like fuel or labor), it means the final price could significantly exceed the initial fixed price. This necessitates careful monitoring of the economic indicators tied to the EPA to ensure adjustments are justified and do not lead to excessive spending. The long duration amplifies this risk, as market conditions can change dramatically over a decade.

Given the full and open competition, what was the competitive landscape, and how did it influence the final price?

Full and open competition suggests that multiple qualified vendors were invited to bid, fostering a competitive environment. This typically drives down prices as companies vie for the contract. The specific number of bids received and the variance in their pricing would provide insight into the intensity of competition. A highly competitive scenario likely resulted in a more favorable price for the government than if the contract had been awarded with limited or sole-source justification. The final price reflects the outcome of this competitive process.

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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