Navy awards $373M contract for deep sea freight transportation to American Overseas Marine LLC

Contract Overview

Contract Amount: $373,032,203 ($373.0M)

Contractor: American Overseas Marine CO. LLC

Awarding Agency: Department of Defense

Start Date: 2000-07-01

End Date: 2011-01-15

Contract Duration: 3,850 days

Daily Burn Rate: $96.9K/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 $373.0 million to AMERICAN OVERSEAS MARINE CO. LLC for work described as: Key points: 1. Contract value represents significant investment in long-term freight services. 2. Full and open competition suggests a potentially competitive bidding process. 3. Fixed-price with economic price adjustment indicates risk sharing between government and contractor. 4. Contract duration spans over a decade, implying a need for sustained service. 5. The contract's scale suggests a substantial role for the awarded company in naval logistics. 6. Economic price adjustments warrant close monitoring to ensure cost containment.

Value Assessment

Rating: good

The contract value of $373 million over its period of performance is substantial for deep sea freight transportation. Benchmarking against similar long-term, large-scale logistics contracts is challenging without more specific service details. However, the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility. The duration of the contract implies a stable, albeit potentially escalating, cost structure that needs careful management.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a degree of competition, though the exact number of interested parties and the rigor of the evaluation process are not detailed. A competitive process is generally expected to yield better pricing and terms for the government.

Taxpayer Impact: Full and open competition is favorable for taxpayers as it typically drives down costs through market forces, ensuring the government receives competitive pricing for essential services.

Public Impact

The U.S. Navy benefits from reliable and sustained deep sea freight transportation services. This contract ensures the movement of goods and equipment critical to naval operations. The services provided likely have a broad geographic impact, supporting global naval deployments. The contract supports jobs within the maritime transportation and logistics sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustments could lead to costs exceeding initial projections if market conditions fluctuate unfavorably.
The long duration of the contract may reduce flexibility to adapt to changing logistical needs or technological advancements.
Reliance on a single contractor for such a critical service could pose risks if performance issues arise.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
The fixed-price component provides a baseline cost certainty.
The contract's length indicates a stable, long-term partnership for essential services.

Sector Analysis

This contract falls within the broader transportation and logistics sector, specifically focusing on maritime freight. The deep sea freight market is characterized by large vessels, global routes, and significant capital investment. Comparable spending benchmarks would involve analyzing other large-scale government contracts for similar services, as well as private sector shipping rates, though direct comparisons are difficult due to the specialized nature of military logistics.

Small Business Impact

The provided data indicates that small business participation was not a primary set-aside consideration for this contract (sb: false). There is no explicit information on subcontracting plans for small businesses. This suggests that the primary contractor, American Overseas Marine LLC, is likely a large entity, and the contract's scale may not lend itself to significant subcontracting opportunities for smaller firms within this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is generally facilitated through contract award databases, though detailed performance metrics and oversight reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command Contracts
Ocean Transportation Services
Logistics and Support Services
Department of Defense Freight Transportation

Risk Flags

Long contract duration may limit flexibility.
Economic price adjustments introduce potential cost overruns.
Dependence on a single contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $373.0 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 $373.0 million.

What is the period of performance?

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

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 has been substantial, driven by global operational requirements. While specific figures for this contract are $373 million over its life, the Navy, often through its Military Sealift Command (MSC), consistently allocates significant funds to ensure the movement of personnel, equipment, and supplies across oceans. This spending fluctuates based on geopolitical events, deployment tempos, and strategic priorities. Analyzing past contracts reveals a trend towards long-term agreements to secure reliable capacity, often utilizing fixed-price or cost-plus structures with economic price adjustments to manage the inherent volatility of the shipping market. The Navy's reliance on commercial maritime services means that spending in this area is also influenced by global shipping rates and vessel availability.

How does the pricing of this contract compare to similar deep sea freight contracts?

Directly comparing the pricing of this $373 million contract to similar deep sea freight contracts is challenging without detailed service specifications, route information, and the exact duration of comparable awards. However, the contract's structure as a Fixed Price with Economic Price Adjustment (FPEPA) is common for long-term transportation services. This structure aims to provide a degree of cost certainty while allowing for adjustments based on fluctuating fuel, labor, and other operational costs. The fact that it was awarded under full and open competition with two bids suggests that the pricing was considered competitive within the market at the time of award. Benchmarking would ideally involve analyzing the per-mile or per-ton rates against other government or commercial contracts for similar vessel types and service levels, which is not possible with the provided data.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this contract?

Key performance indicators (KPIs) for a deep sea freight transportation contract typically include on-time delivery rates, cargo condition upon arrival, vessel operational readiness, fuel efficiency, and compliance with safety and environmental regulations. While specific KPIs for this contract are not detailed, the Department of the Navy would establish these to ensure service effectiveness. Risk mitigation strategies are inherent in the contract type and terms. The FPEPA structure mitigates some price volatility risk for the government by capping potential increases. The requirement for full and open competition helps mitigate risks associated with contractor performance by selecting a capable provider. Furthermore, contract clauses likely address default, termination for convenience, and performance penalties, providing recourse for the government should the contractor fail to meet obligations. Regular performance reviews and audits would also be part of the oversight process.

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

American Overseas Marine LLC (AOM) has a significant track record with the U.S. government, particularly the Department of the Navy and Military Sealift Command (MSC), in providing maritime services. They have historically operated various types of vessels, including tankers and cargo ships, often under long-term contracts similar to this one. Their experience typically involves complex logistical operations, including deep sea transportation. While specific performance details for every contract are not publicly itemized, AOM's continued success in securing large, long-duration contracts suggests a generally positive performance history and capability to meet the demanding requirements of military sealift. However, like any large contractor, past performance reviews would be crucial for a comprehensive assessment.

How does this contract align with the Navy's broader strategic objectives for logistics and sealift?

This contract directly aligns with the Navy's strategic objectives by ensuring the availability of critical deep sea freight transportation capabilities. The Navy relies heavily on sealift assets to project power globally, sustain deployed forces, and respond to crises. Long-term contracts like this one provide the predictable capacity and operational readiness necessary to meet these demands. By securing dedicated or readily available commercial shipping, the Navy can maintain flexibility in its force projection and logistical support, reducing reliance on potentially less predictable or available organic assets for certain types of cargo. This contract supports the overarching goal of maintaining a robust and responsive global presence.

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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