Navy awards $367M for Deep Sea Freight Transportation, highlighting long-term service needs

Contract Overview

Contract Amount: $367,311,422 ($367.3M)

Contractor: American Overseas Marine CO. LLC

Awarding Agency: Department of Defense

Start Date: 2000-07-01

End Date: 2009-10-16

Contract Duration: 3,394 days

Daily Burn Rate: $108.2K/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 $367.3 million to AMERICAN OVERSEAS MARINE CO. LLC for work described as: Key points: 1. Contract value indicates significant, long-term demand for specialized freight services. 2. Fixed Price with Economic Price Adjustment (FP/EPA) contract type suggests potential for cost fluctuations over its duration. 3. The contract was awarded under Full and Open Competition, implying a robust bidding process. 4. Duration of 3394 days (over 9 years) points to a stable, ongoing requirement. 5. The award to AMERICAN OVERSEAS MARINE CO. LLC suggests a concentration of this specific service with a single provider. 6. The North American Industry Classification System (NAICS) code 483111 points to a niche within the transportation sector.

Value Assessment

Rating: good

The total award amount of $367.3 million over approximately 9 years suggests a substantial investment in deep sea freight transportation. Benchmarking this against similar long-term, specialized transportation contracts is challenging without more specific service details. However, the fixed-price with economic price adjustment structure aims to balance cost certainty with the need to account for market volatility in fuel and operating expenses. The duration and value indicate a significant commitment by the Department of the Navy.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition,' indicating that all responsible sources were permitted to submit a bid. The presence of two bids (no: 2) suggests a competitive process, though the exact number of bidders can influence price discovery. A higher number of bidders typically leads to more competitive pricing for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and encourage innovation. This ensures the government is likely receiving fair market value for the services rendered.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense entities requiring deep sea freight transportation for logistical support. Services delivered include the transportation of goods and materials via deep sea freight, crucial for military operations and supply chains. The geographic impact is likely global, given the nature of deep sea freight, supporting naval deployments and operations worldwide. Workforce implications may include employment for maritime professionals, logistics personnel, and support staff associated with AMERICAN OVERSEAS MARINE CO. LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 9 years) with economic price adjustment clauses could lead to cost overruns if market conditions change unfavorably.
Sole awardee for this specific contract, AMERICAN OVERSEAS MARINE CO. LLC, may reduce future competitive pressure if market entry is difficult.
The nature of deep sea freight is subject to geopolitical risks, piracy, and international trade regulations that could impact service delivery and cost.

Positive Signals

Awarded under full and open competition, suggesting a fair and transparent procurement process.
The fixed-price component provides some cost control, with adjustments managed through the economic price adjustment clause.
The long duration indicates a stable and reliable service provider for critical logistical needs.

Sector Analysis

The transportation sector, specifically maritime freight, is a critical component of global logistics and national defense. Deep sea freight transportation involves the movement of goods across oceans, often for large-scale industrial or military purposes. The NAICS code 483111 specifically covers Deep Sea Freight Transportation. This contract represents a significant portion of government spending within this specialized niche, likely supporting the strategic sealift capabilities of the U.S. military.

Small Business Impact

This contract does not appear to have a small business set-aside (sb: false). Given the scale and specialized nature of deep sea freight transportation, it is unlikely that small businesses would be primary bidders or subcontractors for such a large-scale, long-term requirement. Subcontracting opportunities for smaller firms may exist in ancillary services, but the primary award is to a large entity.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The contract type (FP/EPA) necessitates monitoring of economic factors influencing price adjustments. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command Contracts
Strategic Sealift Program
Department of Defense Transportation Services
Ocean Freight Services
Maritime Transportation Contracts

Risk Flags

Long-term contract duration
Economic Price Adjustment clause
Single awardee for the contract period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $367.3 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 $367.3 million.

What is the period of performance?

Start: 2000-07-01. End: 2009-10-16.

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

Historical spending on deep sea freight transportation by the Department of the Navy, particularly through entities like the Military Sealift Command, has been substantial and consistent over the years. This contract, awarded in 2000 and ending in 2009, represents a significant investment during that period. Analyzing past contracts under NAICS code 483111 and related categories would reveal trends in contract values, durations, and awardees. Fluctuations in spending are often tied to geopolitical events, deployment tempos, and changes in military logistics strategies. Without access to a comprehensive historical database filtered for this specific service, precise year-over-year spending figures are difficult to ascertain, but the consistent need for strategic sealift implies ongoing, significant budgetary allocation.

How does the pricing structure (Fixed Price with Economic Price Adjustment) typically impact cost for the government in long-term transportation contracts?

The Fixed Price with Economic Price Adjustment (FP/EPA) structure aims to provide a baseline cost certainty while allowing for adjustments based on specific economic factors, such as fuel prices, labor costs, or currency exchange rates. For the government, this means the initial price is fixed, but there's a mechanism to account for uncontrollable market fluctuations. This can be beneficial in long-term contracts where significant cost volatility is expected, preventing the contractor from incurring unsustainable losses or demanding renegotiation. However, it also introduces a risk that costs could increase beyond the initial fixed price, potentially leading to higher overall expenditures than a purely fixed-price contract if market conditions trend upwards. Effective monitoring of the economic indicators used for adjustment is crucial for the government to ensure fairness and prevent excessive price increases.

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

Key performance indicators for deep sea freight transportation contracts typically revolve around reliability, timeliness, cost-effectiveness, and safety. Specific KPIs might include: On-Time Delivery Rate (ensuring cargo arrives within the scheduled timeframe), Cargo Condition upon Arrival (minimizing damage or loss), Fuel Efficiency (monitoring consumption against benchmarks), Vessel Availability and Uptime (ensuring vessels are operational when needed), Adherence to Safety and Environmental Regulations (compliance with maritime laws and standards), and Cost Variance (tracking actual costs against budgeted or adjusted prices). For military contracts, additional KPIs related to security protocols and mission support effectiveness would also be critical. Performance is often evaluated through regular reporting, audits, and potentially vessel inspections.

What is the typical profit margin for companies providing deep sea freight transportation services to the government?

Determining the exact profit margin for companies providing deep sea freight transportation services to the government is complex, as it depends on numerous factors including contract type, specific services rendered, operational efficiencies, market competition, and the contractor's own cost structure. Contracts with economic price adjustments might allow for slightly different margin expectations compared to purely fixed-price contracts. Generally, government contracts aim for fair and reasonable pricing, which implies a reasonable profit margin rather than excessive gains. Industry benchmarks for transportation and logistics services can provide a general range, but specific profit margins are often considered proprietary information. The government's procurement process, including cost realism analyses, is designed to ensure that the awarded price allows for a reasonable profit while remaining competitive.

How does the duration of this contract (over 9 years) compare to typical government contracts for similar services?

A contract duration of over 9 years for deep sea freight transportation is considered quite long, especially for a single award. While multi-year contracts are common in government procurement to ensure continuity of services and potentially achieve economies of scale, durations exceeding 5-7 years often require specific justifications and may be subject to statutory limitations or require additional funding authorizations. Shorter-term contracts (1-3 years) with options for renewal are more frequent, allowing for periodic re-competition and adaptation to changing needs or market conditions. The extended duration of this particular contract suggests a stable, long-term strategic requirement for the Navy and potentially a strong, established relationship with the awarded contractor, AMERICAN OVERSEAS MARINE CO. LLC.

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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