Marine Management LLC awarded $209M for charter hire services, raising questions about competition and value

Contract Overview

Contract Amount: $209,203,696 ($209.2M)

Contractor: U.S. Marine Management, LLC

Awarding Agency: Department of Defense

Start Date: 2021-04-15

End Date: 2026-03-14

Contract Duration: 1,794 days

Daily Burn Rate: $116.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: N105C / PM4 D. POWER MSV 2 CHARTER HIRE

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23513

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $209.2 million to U.S. MARINE MANAGEMENT, LLC for work described as: N105C / PM4 D. POWER MSV 2 CHARTER HIRE Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (1794 days) suggests a long-term need for these services. 3. The firm fixed-price structure provides cost certainty but may not incentivize efficiency. 4. Lack of competition raises concerns about whether the government secured the best possible value. 5. The contract's value is substantial, warranting close scrutiny of performance and pricing. 6. Services are critical for Marine Corps operations, highlighting the importance of reliable delivery.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized service. Without competitive bids, it's difficult to ascertain if the $209 million price tag represents a fair market value. The U.S. Marine Management, LLC's performance history and the specific operational requirements would need to be thoroughly reviewed to assess value for money. The duration of the contract also means that any overpayment would be amplified over time.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no other bidders to compare against, and the government did not benefit from a competitive bidding process that could drive down prices.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without alternative offers, the government had limited leverage to negotiate the lowest possible price.

Public Impact

The U.S. Marine Corps benefits directly from the charter hire of vessels, ensuring operational readiness and logistical support. Services provided are essential for deep-sea freight transportation, supporting military deployments and supply chains. The contract's geographic impact is likely global, given the nature of naval operations. Workforce implications include employment opportunities for mariners and support staff employed by U.S. Marine Management, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value assessment.
Long contract duration increases exposure to potential cost inefficiencies over time.
Lack of transparency in the procurement process due to sole-source award.

Positive Signals

Firm fixed-price contract provides budget certainty for the government.
Contract supports critical U.S. Marine Corps operational needs.
Long-term award indicates a stable, ongoing requirement for these services.

Sector Analysis

The maritime transportation sector is crucial for global logistics and defense. This contract falls under deep-sea freight transportation, a segment characterized by high capital investment and specialized operational expertise. The U.S. government, particularly the Department of Defense, is a significant consumer of such services for its global operations. Benchmarking against other government or commercial charter hire contracts would be necessary for a comprehensive value assessment, but the sole-source nature here complicates direct comparisons.

Small Business Impact

This contract was not awarded to a small business, nor does it appear to have specific small business set-aside provisions. There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, unless U.S. Marine Management, LLC voluntarily engages small businesses for support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given it's a sole-source award, scrutiny may be heightened to ensure the contractor is meeting all performance requirements and that the pricing remains justified throughout the contract's life. Transparency could be enhanced through regular performance reviews and public reporting on contract execution, though specific mechanisms are not detailed here.

Related Government Programs

Military Sealift Command Chartering
Department of Defense Transportation Services
Naval Vessel Charter Contracts
Deep Sea Freight Services

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Long contract duration increases long-term financial exposure.
Limited transparency in procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $209.2 million to U.S. MARINE MANAGEMENT, LLC. N105C / PM4 D. POWER MSV 2 CHARTER HIRE

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 $209.2 million.

What is the period of performance?

Start: 2021-04-15. End: 2026-03-14.

What is the track record of U.S. Marine Management, LLC in fulfilling similar government contracts?

Information regarding U.S. Marine Management, LLC's specific track record with government contracts, particularly those involving deep-sea freight transportation and vessel chartering, would require a detailed review of past performance databases and contract awards. Without access to this specific data, it is difficult to definitively assess their reliability and past success in meeting government requirements. However, the award of a significant, long-term contract by the Department of the Navy suggests a level of confidence in their capabilities. Further investigation into any past performance issues, awards, or terminations would be necessary for a comprehensive understanding of their contractor performance history.

How does the pricing of this contract compare to similar services procured competitively?

Direct comparison of this contract's pricing to competitively procured services is challenging due to its sole-source nature. Competitive bidding typically results in lower prices as vendors vie for the contract. Without competitive bids for this specific charter hire, it's impossible to establish a precise benchmark. To assess value, one would need to analyze the specific vessel types, duration, operational scope, and market rates for comparable commercial charters. If available, data from the U.S. Government Accountability Office (GAO) or internal DoD cost analyses might offer insights, but such information is not publicly detailed here. The absence of competition inherently limits the ability to confirm cost-effectiveness.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract include potential overpayment due to the lack of competitive pricing, reduced incentive for the contractor to innovate or improve efficiency, and a potential lack of flexibility if the government's needs change significantly. There's also a risk that the government may not be receiving the best available technology or service options on the market. Furthermore, sole-source awards can sometimes face public scrutiny regarding fairness and justification. Ensuring robust oversight and performance management becomes critical to mitigate these risks and ensure the government receives adequate value for its investment over the contract's lifespan.

How effective is the firm fixed-price (FFP) contract type in managing costs for deep-sea freight transportation?

A Firm Fixed-Price (FFP) contract type is generally favored by the government for services where the scope of work is well-defined, as it shifts most of the cost risk to the contractor. For deep-sea freight transportation, an FFP contract provides budget certainty, allowing the Department of the Navy to know the exact cost of the service upfront. This structure incentivizes the contractor to control costs and operate efficiently to maximize profit. However, if the scope of work is not perfectly defined or if unforeseen circumstances arise, the contractor may seek adjustments, or the government might end up paying a premium if the initial price was set too high due to the lack of competition. The long duration of this contract means that initial pricing accuracy is crucial.

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

Historical spending patterns for deep-sea freight transportation by the Department of the Navy are likely substantial and fluctuate based on global operational tempo, geopolitical events, and specific mission requirements. The Navy relies heavily on maritime transport for logistics, troop movement, and equipment deployment worldwide. While specific aggregate spending figures for this category are not provided in the data, the existence of a $209 million, multi-year contract indicates a significant and ongoing investment. Analyzing past contracts, including those awarded to different entities or through competitive processes, would reveal trends in pricing, service providers, and the overall scale of the Navy's reliance on chartered vessels for freight.

Are there any specific performance metrics or key performance indicators (KPIs) defined for this contract?

The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) associated with this contract. However, for a critical service like deep-sea freight transportation for the U.S. Marine Corps, it is highly probable that performance standards are defined within the contract's statement of work. These would likely include metrics related to on-time delivery, vessel operational readiness, safety compliance, fuel efficiency, and adherence to navigational routes and schedules. Robust KPIs are essential for monitoring the contractor's performance, ensuring mission success, and justifying the expenditure, especially in a sole-source context where oversight is paramount.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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: 140 CORPORATE BLVD, NORFOLK, VA, 23502

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

Financial Breakdown

Contract Ceiling: $209,203,696

Exercised Options: $209,203,696

Current Obligation: $209,203,696

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline