DoD's $363M Deep Sea Freight contract to American Overseas Marine awarded under full and open competition

Contract Overview

Contract Amount: $363,433,915 ($363.4M)

Contractor: American Overseas Marine CO. LLC

Awarding Agency: Department of Defense

Start Date: 2000-07-03

End Date: 2011-01-15

Contract Duration: 3,848 days

Daily Burn Rate: $94.4K/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 $363.4 million to AMERICAN OVERSEAS MARINE CO. LLC for work described as: Key points: 1. Contract awarded for deep sea freight transportation services, indicating a critical logistical need. 2. The duration of the contract (over 10 years) suggests a long-term requirement for these services. 3. Awarded by the Department of the Navy, highlighting its importance within naval operations. 4. The contract type, Fixed Price with Economic Price Adjustment, aims to balance cost certainty with market fluctuations. 5. The significant value suggests a substantial operational footprint and reliance on external providers. 6. The use of full and open competition is a positive indicator for achieving competitive pricing.

Value Assessment

Rating: good

The contract value of $363.4 million over its lifespan is substantial for deep sea freight transportation. Benchmarking against similar large-scale logistics contracts is challenging without more specific service details. However, the fixed-price with economic price adjustment structure suggests an attempt to manage costs while accounting for potential fuel and operational cost increases. The long duration implies a consistent need, and the competitive award process should have driven a reasonable price, though specific value-for-money assessments require deeper analysis of performance metrics and market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that all responsible sources were permitted to submit bids. The fact that it was competed suggests that the Department of the Navy actively sought multiple proposals to ensure the best value. The number of bidders is not specified, but the open competition framework is generally conducive to price discovery and potentially lower costs for the government.

Taxpayer Impact: Full and open competition typically benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and a wider range of service options, ultimately maximizing the value of taxpayer dollars.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units requiring global sea lift capabilities. Services delivered include essential deep sea freight transportation, crucial for military deployment and supply chain management. The geographic impact is global, supporting naval operations and logistical needs across various theaters of operation. Workforce implications include support for maritime logistics personnel and potentially related shore-based support roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency or reduced incentive for innovation if not managed proactively.
Economic price adjustment clauses, while necessary, can introduce cost volatility if market conditions fluctuate significantly.
Dependence on a single contractor for critical deep sea freight could pose risks in case of contractor default or geopolitical disruptions.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process and potential for competitive pricing.
The contract's significant value indicates a strategic importance and likely a well-defined scope of work.
The fixed-price element provides some level of cost control for the government.

Sector Analysis

Deep sea freight transportation is a critical component of the logistics and transportation sector, particularly for government and defense applications. This sector involves specialized vessels, complex routing, and adherence to international maritime regulations. The market is characterized by large, established players with significant capital investment in fleets and infrastructure. The $363 million value places this contract within the upper tier of government transportation procurements, reflecting the scale and strategic importance of the services provided.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. Given the nature and scale of deep sea freight transportation, it is likely that the primary awardee is a large business. Subcontracting opportunities for small businesses may exist in ancillary services, such as port operations, maintenance, or specialized equipment, but the core service is typically handled by larger entities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be embedded in the contract's performance work statement, including delivery schedules, cargo integrity, and operational standards. Transparency is generally maintained through contract award databases and reporting requirements, 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
Ocean Transportation Services
Global Logistics Support
Department of Defense Transportation Contracts

Risk Flags

Long contract duration
Economic price adjustment clause
Dependence on single contractor for critical service

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $363.4 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 $363.4 million.

What is the period of performance?

Start: 2000-07-03. End: 2011-01-15.

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

Historical spending data for deep sea freight transportation by the Department of the Navy reveals a consistent and significant investment in logistical capabilities. While specific figures fluctuate year-to-year based on operational tempo and global commitments, the Navy has historically relied on substantial contracts to ensure the movement of personnel, equipment, and supplies across vast distances. This particular contract, valued at over $363 million, aligns with the long-term trend of significant expenditure in this area. Analyzing past contracts of similar scope and duration would provide further context on pricing trends and the evolution of service requirements. For instance, comparing the per-day or per-mile rates of this contract against historical benchmarks could reveal cost efficiencies or increases over time, influenced by factors such as fuel prices, geopolitical stability, and the availability of commercial shipping assets.

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

The Fixed Price with Economic Price Adjustment (FPEPA) structure is common for long-term, large-scale transportation contracts where input costs, particularly fuel, are subject to significant market volatility. Compared to pure Fixed Price contracts, FPEPA offers the government some protection against extreme price hikes while allowing the contractor to remain solvent by adjusting for unavoidable cost increases. Conversely, it provides less cost certainty than a firm Fixed Price contract. Other large-scale freight contracts might utilize different structures, such as Cost Plus Incentive Fee (CPIF) for services with highly uncertain performance requirements, or Time and Materials (T&M) for less predictable, shorter-term needs. The FPEPA here suggests a balance: the government wants a predictable base cost but acknowledges the inherent risks in global shipping markets over a multi-year period.

What are the key performance indicators (KPIs) typically associated with deep sea freight transportation contracts of this magnitude?

Key performance indicators (KPIs) for deep sea freight transportation contracts of this magnitude typically focus on reliability, timeliness, and cargo integrity. Essential KPIs include On-Time Delivery (OTD) rates, ensuring that cargo reaches its destination within the agreed-upon schedules, which is critical for military operations. Cargo Damage Rate (CDR) is another vital metric, measuring the percentage of shipments that arrive without damage, reflecting the contractor's handling and stowage procedures. Vessel Availability and Operational Readiness ensure that the required shipping capacity is consistently available and seaworthy. Fuel Efficiency and adherence to environmental regulations are also increasingly important KPIs. Furthermore, compliance with security protocols and reporting requirements for tracking and visibility of shipments are crucial for national security.

What is the track record of American Overseas Marine LLC in fulfilling similar government contracts?

American Overseas Marine LLC (AOM) has a significant track record with the U.S. government, particularly the Department of Defense and Military Sealift Command (MSC), for providing vital ocean transportation services. They have historically operated a fleet of vessels, including tankers and specialized cargo ships, supporting military deployments and logistical needs worldwide. Past performance reviews and contract awards indicate AOM's experience in managing complex, long-term maritime contracts. While specific details of past performance on every contract are not publicly detailed, their sustained engagement with MSC suggests a generally positive performance history. Any assessment of their current track record would involve reviewing recent performance evaluations, any past performance issues or disputes, and their ability to adapt to evolving regulatory and operational requirements in the maritime industry.

What are the potential risks associated with a sole-source or limited competition award for deep sea freight, and how does full and open competition mitigate these?

Sole-source or limited competition awards for deep sea freight can carry significant risks. A sole-source award, by definition, means only one company was considered, eliminating any possibility of competitive pricing and potentially leading to inflated costs. It also concentrates risk, as the government has no alternative if the sole provider fails to perform. Limited competition, while involving more than one bidder, still restricts the pool of potential providers, which can result in higher prices than under full and open competition. Full and open competition mitigates these risks by allowing any qualified vendor to bid. This broadens the supplier base, increases the likelihood of receiving competitive bids that reflect market value, and encourages innovation. It also provides the government with greater leverage and alternatives should performance issues arise with the selected contractor.

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

Timeline