Navy awards $45.8M contract for long-term charter of SURTASS-E vessel, ensuring deep-sea surveillance capabilities

Contract Overview

Contract Amount: $45,847,682 ($45.8M)

Contractor: Hornbeck Offshore Operators LLC

Awarding Agency: Department of Defense

Start Date: 2021-03-15

End Date: 2026-02-27

Contract Duration: 1,810 days

Daily Burn Rate: $25.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: N103B - J . BIBOUM - PM2 - SURTASS-E LONG TERM CHARTER

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23511

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $45.8 million to HORNBECK OFFSHORE OPERATORS LLC for work described as: N103B - J . BIBOUM - PM2 - SURTASS-E LONG TERM CHARTER Key points: 1. The contract value of $45.8 million over its duration suggests a significant investment in maintaining critical national security infrastructure. 2. Competition dynamics for this specialized service appear robust, with five bids received, indicating a healthy market for such assets. 3. The firm-fixed-price contract type aims to provide cost certainty for the government, transferring some risk to the contractor. 4. This award supports the Navy's ongoing intelligence, surveillance, and reconnaissance (ISR) mission requirements. 5. The duration of the contract (1810 days) points to a long-term strategic need for the chartered vessel. 6. The absence of small business set-aside flags suggests the nature of the service requires large-scale, specialized capabilities.

Value Assessment

Rating: good

The contract's value of $45.8 million for a 1810-day charter of a specialized vessel like SURTASS-E appears reasonable given the unique operational requirements and the high cost associated with maintaining and operating such assets. Benchmarking against similar long-term vessel charters for military purposes would provide a more precise value-for-money assessment, but the firm-fixed-price structure suggests an effort to control costs. The number of bidders (5) also indicates a competitive environment that likely contributed to a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with five bids received. This indicates that the solicitation was widely advertised, and multiple qualified contractors had the opportunity to compete. The presence of five bidders suggests a competitive market for this specialized service, which generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: A competitive bidding process for this essential service helps ensure that taxpayer dollars are used efficiently, securing the necessary capabilities at a market-driven price.

Public Impact

The primary beneficiaries are the U.S. Navy and the broader national security apparatus, which gain sustained access to vital intelligence and surveillance capabilities. The service delivered is the long-term charter of a vessel equipped for the Surveillance Towed Array Sensor System (SURTASS-E), crucial for deep-sea acoustic monitoring. The geographic impact is global, as SURTASS-E operations are conducted in international waters to monitor submarine activity. Workforce implications include the employment of specialized maritime personnel for vessel operation and maintenance, as well as the personnel required for the surveillance equipment itself.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen operational challenges arise, though mitigated by firm-fixed-price.
Dependence on a single contractor for a critical, long-duration service.
Risk of technological obsolescence if the SURTASS-E system requires significant upgrades during the charter period.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Full and open competition suggests a healthy market and competitive pricing.
Long contract duration indicates a stable, predictable requirement and operational support.
Award to an established operator (Hornbeck Offshore) suggests experience and reliability.

Sector Analysis

This contract falls within the maritime logistics and defense support sector, specifically focusing on specialized vessel chartering for intelligence gathering. The market for such services is niche, requiring contractors with specific expertise in operating and maintaining vessels equipped for advanced surveillance systems. Comparable spending benchmarks would involve other long-term charters of specialized military or research vessels, which typically represent significant investments due to the unique capabilities and operational demands.

Small Business Impact

The contract was not set aside for small businesses, which is typical for highly specialized, large-scale maritime contracts requiring significant capital investment and operational infrastructure. This suggests that the primary contractors in this domain are likely larger, established companies. There is no explicit information on subcontracting plans, but it is possible that smaller firms could be involved in providing specific components or services related to the vessel's operation or the surveillance equipment.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring the contractor to deliver the specified service within the agreed-upon price. Transparency is generally maintained through contract award databases, though specific operational details of SURTASS-E missions are classified. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Naval Intelligence Programs
Maritime Surveillance
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Deep Sea Operations
Fleet Support Services

Risk Flags

Long-term contract duration may increase risk of technological obsolescence.
Specialized nature of service limits the pool of potential contractors.
Dependence on a single vessel for critical surveillance capability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.8 million to HORNBECK OFFSHORE OPERATORS LLC. N103B - J . BIBOUM - PM2 - SURTASS-E LONG TERM CHARTER

Who is the contractor on this award?

The obligated recipient is HORNBECK OFFSHORE OPERATORS 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 $45.8 million.

What is the period of performance?

Start: 2021-03-15. End: 2026-02-27.

What is the historical spending pattern for SURTASS-E long-term charters?

Historical spending data for SURTASS-E long-term charters is not publicly detailed in a readily accessible format. However, the nature of such specialized, long-duration contracts suggests consistent, significant annual expenditures by the Department of Defense to maintain these critical intelligence-gathering capabilities. Previous awards for similar services would likely show multi-year commitments in the tens of millions of dollars, reflecting the high operational costs, specialized equipment, and personnel required. Analyzing trends in contract duration, number of bidders, and award values over time would reveal the government's evolving strategy and market conditions for these niche services. The current award of approximately $45.8 million over roughly five years aligns with expectations for sustained investment in this area.

How does the contractor's track record influence the risk assessment for this contract?

Hornbeck Offshore Operators LLC has a significant track record in providing offshore support and marine transportation services, including to government entities. Their experience in operating complex vessels in demanding environments is a positive signal, suggesting a lower risk of operational failures or delays. A history of successful contract performance with the Navy or other defense agencies would further mitigate concerns regarding their ability to meet the technical and logistical requirements of the SURTASS-E charter. However, any past performance issues, such as cost overruns on previous fixed-price contracts or safety incidents, would warrant closer scrutiny. The government's source selection process would have evaluated Hornbeck's past performance as a key factor in determining their suitability and the overall risk associated with awarding them this contract.

Can the value of this contract be benchmarked against other similar deep-sea surveillance vessel charters?

Benchmarking the value of this $45.8 million, 1810-day SURTASS-E charter against directly comparable deep-sea surveillance vessel charters is challenging due to the highly specialized and often classified nature of such services. Publicly available data on similar contracts is scarce. However, general maritime industry benchmarks for long-term chartering of specialized offshore vessels can provide a rough comparison. Factors such as vessel size, age, specialized equipment (like sonar arrays), crew costs, maintenance, and operational support all contribute to the overall cost. Given the unique capabilities of SURTASS-E and its critical national security role, the price per day or per year is likely higher than standard commercial vessel charters. The firm-fixed-price structure and the competitive bidding process suggest the Navy sought to achieve the best possible value within these constraints.

What are the potential risks associated with the long duration (1810 days) of this contract?

The long duration of 1810 days (approximately five years) for this SURTASS-E charter introduces several potential risks. Firstly, there's the risk of technological obsolescence; the SURTASS-E system or the vessel itself might require upgrades or modifications during the contract period to remain effective, potentially leading to change orders or increased costs if not adequately planned for. Secondly, market conditions for specialized maritime services could change, impacting the contractor's ability to maintain profitability or operational efficiency, which could indirectly affect service delivery. Thirdly, personnel retention for highly specialized maritime roles can be challenging over extended periods, potentially impacting crew experience and stability. Finally, unforeseen geopolitical events or changes in defense priorities could alter the operational tempo or requirements for SURTASS-E, necessitating contract adjustments. The firm-fixed-price nature aims to mitigate cost risks for the government, but scope changes or performance issues could still arise.

How does the firm-fixed-price (FFP) contract type impact cost control and risk for the Navy?

The firm-fixed-price (FFP) contract type is generally favored by the government for services where the scope of work is well-defined and risks can be reasonably anticipated. For this SURTASS-E charter, an FFP contract means the contractor, Hornbeck Offshore Operators LLC, is obligated to perform the specified services for a predetermined price. This provides the Navy with significant cost certainty, as the total expenditure is fixed unless the contract is formally modified. The primary financial risk is shifted to the contractor; they bear the responsibility for managing costs associated with vessel operation, maintenance, crewing, and any unforeseen operational challenges. If the contractor's costs exceed the fixed price, their profit margin decreases. Conversely, if they manage costs effectively, their profit increases. This structure incentivizes the contractor to be efficient and control expenses, benefiting the Navy's budget.

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: N3220520R4041

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 103 NORTHPARK BLVD STE 300, COVINGTON, LA, 70433

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

Financial Breakdown

Contract Ceiling: $45,847,682

Exercised Options: $45,847,682

Current Obligation: $45,847,682

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline