DoD awards $668M for Deep Sea Freight Transportation, with 7 bidders competing

Contract Overview

Contract Amount: $667,957,951 ($668.0M)

Contractor: U.S. Marine Management, LLC

Awarding Agency: Department of Defense

Start Date: 2017-09-15

End Date: 2023-09-30

Contract Duration: 2,206 days

Daily Burn Rate: $302.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: IGF::OT::IGF OBERG/N103/ CONTRACT AWARD FOR BOB HOPE CLASS LMSR SHIPS.

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23513

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $668.0 million to U.S. MARINE MANAGEMENT, LLC for work described as: IGF::OT::IGF OBERG/N103/ CONTRACT AWARD FOR BOB HOPE CLASS LMSR SHIPS. Key points: 1. Contract awarded to U.S. Marine Management, LLC for LMSR ship services. 2. Significant duration of 2206 days indicates long-term operational needs. 3. Firm Fixed Price contract type suggests cost certainty for the government. 4. Competition level of 7 bidders indicates a healthy market for these services. 5. No small business set-aside, raising questions about broader economic impact. 6. Virginia is the state of performance, potentially impacting regional employment.

Value Assessment

Rating: good

The contract value of $667.96 million over approximately six years represents a substantial investment in maritime logistics. Benchmarking this against similar contracts for fleet support and operation is challenging without more specific service details. However, the firm fixed-price nature suggests an attempt to control costs. The number of bidders (7) implies a competitive environment that likely contributed to a reasonable price, though a direct value-for-money assessment requires deeper analysis of the scope of work and performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with seven bids received. This level of competition is generally positive, suggesting that multiple capable vendors were aware of and interested in the opportunity. A robust bidding process typically leads to better price discovery and can result in more favorable terms for the government. The presence of seven bidders indicates a reasonably competitive market for these specialized maritime services.

Taxpayer Impact: The full and open competition with multiple bidders is beneficial for taxpayers as it increases the likelihood of securing services at a competitive market rate, preventing potential overpayment.

Public Impact

The U.S. Marine Corps and other Department of Defense entities benefit from reliable deep-sea freight transportation. Services include the operation and management of Bob Hope Class LMSR (Large, Medium, Speed, Roll-on/Roll-off) ships. Geographic impact is primarily related to the operational routes of these vessels, supporting global military deployments. Workforce implications include employment for mariners, logistics personnel, and support staff associated with U.S. Marine Management, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of small business participation noted, potentially limiting opportunities for smaller firms in this sector.
Long contract duration could lead to vendor lock-in if not managed carefully.
Dependence on a single contractor for critical LMSR operations poses a risk if performance issues arise.

Positive Signals

Awarded under full and open competition, indicating a broad search for qualified vendors.
Firm Fixed Price contract type provides cost predictability for the government.
Seven bidders participated, suggesting a healthy level of market interest and capability.
Long contract duration (2206 days) suggests a stable, long-term partnership for essential services.

Sector Analysis

The maritime logistics sector is critical for global trade and military operations. This contract falls within the deep-sea freight transportation sub-sector, specifically supporting the U.S. Navy's strategic sealift capabilities. The market for such services is specialized, requiring significant capital investment in vessels and experienced personnel. Comparable spending benchmarks are difficult to ascertain without detailed service scope, but the scale of this award reflects the high cost of operating and maintaining large transport vessels for military purposes.

Small Business Impact

This contract was not awarded as a small business set-aside, and the data indicates no explicit subcontracting goals for small businesses were mandated. This suggests that the primary focus was on securing the most capable large-scale provider. While this ensures operational capacity, it may limit the direct economic benefit to the small business ecosystem within the maritime support industry. Further investigation into subcontracting opportunities would be needed to fully assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract structure, which penalizes cost overruns by the contractor. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Military Sealift Command Operations
Strategic Sealift Program
Maritime Transportation Services
Fleet Support Contracts
Logistics and Mobility Support

Risk Flags

Potential for cost overruns if unforeseen maintenance issues arise.
Dependence on a single contractor for critical strategic assets.
Geopolitical risks affecting global shipping routes and fuel costs.
Cybersecurity risks associated with vessel navigation and communication systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $668.0 million to U.S. MARINE MANAGEMENT, LLC. IGF::OT::IGF OBERG/N103/ CONTRACT AWARD FOR BOB HOPE CLASS LMSR SHIPS.

Who is the contractor on this award?

The obligated recipient is U.S. MARINE MANAGEMENT, 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 $668.0 million.

What is the period of performance?

Start: 2017-09-15. End: 2023-09-30.

What is the specific operational history and performance record of U.S. Marine Management, LLC with similar government contracts?

U.S. Marine Management, LLC has a history of managing government maritime contracts, including those related to sealift operations. While specific performance metrics for past contracts are not detailed here, their selection for this significant award suggests a satisfactory track record with the Department of Defense. Further analysis would involve reviewing past performance evaluations, any documented disputes or contract modifications, and their experience with the specific class of vessels (Bob Hope Class LMSR ships) to fully assess their capabilities and reliability.

How does the per-day operating cost of this contract compare to industry benchmarks for similar LMSR vessel operations?

Calculating a precise per-day operating cost requires dividing the total contract value ($667,957,950.77) by the contract duration in days (2206). This yields approximately $302,791 per day. Benchmarking this figure against industry standards for LMSR operations is complex due to variations in crewing, maintenance, fuel, insurance, and specific mission requirements. However, this daily rate appears substantial, reflecting the specialized nature and high operational costs associated with maintaining and operating large, militarily significant vessels. A more accurate comparison would necessitate access to detailed cost breakdowns and data from comparable commercial or military contracts.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

The provided data does not specify the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for maritime logistics contracts of this nature, KPIs would likely include vessel readiness rates, on-time delivery performance, fuel efficiency, safety incident rates, and compliance with environmental regulations. SLAs would define the expected standards for response times, maintenance schedules, and crew qualifications. These metrics are crucial for assessing the contractor's performance and ensuring the government receives the required level of service for its investment.

What is the historical spending trend for Deep Sea Freight Transportation services by the Department of the Navy over the last five fiscal years?

Historical spending data for 'Deep Sea Freight Transportation' by the Department of the Navy over the last five fiscal years is not directly available in the provided snippet. However, the award of a $668 million contract for LMSR ship services indicates a continued and significant investment in this capability. To analyze trends, one would need to query comprehensive federal procurement databases (like FPDS or USASpending.gov) for relevant NAICS codes (e.g., 483111) and contract types awarded by the Navy over the specified period. This would reveal whether spending in this category is increasing, decreasing, or remaining stable.

Are there any identified risks related to the contractor's financial stability or past performance issues that could impact contract execution?

The provided data does not contain specific information regarding the financial stability or past performance issues of U.S. Marine Management, LLC. However, the award of a large, long-term contract by the Department of Defense typically involves a thorough vetting process, including assessments of financial health and past performance. Any significant red flags would likely have been addressed during the procurement phase. Nonetheless, ongoing monitoring by the contracting agency is standard practice to mitigate risks throughout the contract's lifecycle. A deeper dive into contractor performance databases and financial reports would be necessary for a comprehensive risk assessment.

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

Solicitation ID: N3220516R3000

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: A.P. Møller OG Hustru Chastine Mc-Kinney Møllers Fond TIL Almene Formaal

Address: 2510 WALMER AVE STE C, NORFOLK, VA, 23513

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

Financial Breakdown

Contract Ceiling: $667,957,951

Exercised Options: $667,957,951

Current Obligation: $667,957,951

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline