DoD awards $51.5M for coastal tanker charter, with U.S. Marine Management securing the contract

Contract Overview

Contract Amount: $51,506,145 ($51.5M)

Contractor: U.S. Marine Management, LLC

Awarding Agency: Department of Defense

Start Date: 2023-04-21

End Date: 2026-06-15

Contract Duration: 1,151 days

Daily Burn Rate: $44.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: N103B / N321B / S. BOYD / TIME TANKER CHARTER - COASTAL TANKER #2

Place of Performance

Location: NORFOLK, NORFOLK CITY County, VIRGINIA, 23510

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $51.5 million to U.S. MARINE MANAGEMENT, LLC for work described as: N103B / N321B / S. BOYD / TIME TANKER CHARTER - COASTAL TANKER #2 Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The definitive contract type indicates a long-term agreement for services. 3. The firm fixed-price structure provides cost certainty for the government. 4. The contract duration of 1151 days spans over three years. 5. The North American Industry Classification System (NAICS) code 483111 points to deep sea freight transportation services. 6. The contract is managed by the Department of the Navy, a component of the DoD. 7. Virginia is the state associated with the contractor's location.

Value Assessment

Rating: good

The contract value of $51.5 million over approximately three years for coastal tanker charter appears reasonable given the scope of deep sea freight transportation. Benchmarking against similar contracts for vessel chartering would provide a more precise value-for-money assessment. The firm fixed-price nature of the contract helps mitigate cost overruns for the government, contributing to a positive value assessment.

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 suggests a moderate level of competition for this specialized service. While two bidders participated, further analysis of the bidding process and the nature of the market would be needed to fully assess if this level of competition optimally drove down prices.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple companies to bid, which can lead to more competitive pricing and better value for the government's investment.

Public Impact

The U.S. Marine Management, LLC, a private sector company, will benefit through revenue generation and operational activity. The contract ensures the provision of essential deep sea freight transportation services, likely for military logistics and supply chain operations. The geographic impact is primarily related to coastal and potentially international waters where the tanker operates. Workforce implications include employment opportunities for maritime professionals such as captains, engineers, and crew members.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition if the market for specialized coastal tankers is small.
Dependence on a single contractor for a critical service could pose a risk if performance issues arise.

Positive Signals

Awarded through full and open competition, indicating a fair process.
Firm fixed-price contract provides cost predictability.
Long-term contract duration allows for stable service provision.

Sector Analysis

The deep sea freight transportation sector is a critical component of global logistics and national defense. This contract falls within the maritime shipping industry, specifically focusing on tanker services. The market for specialized vessel charters can be influenced by global trade volumes, fuel prices, and regulatory environments. Comparable spending benchmarks would involve analyzing other government contracts for similar vessel charters or private sector rates for comparable services.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, the primary impact on small businesses would be indirect, potentially through subcontracting opportunities if U.S. Marine Management, LLC engages them. However, without specific subcontracting plans or goals, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program office within the Department of the Navy. Accountability measures are embedded in the contract terms, including performance standards and payment schedules. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Military Sealift Command Contracts
Department of Defense Transportation Services
Maritime Freight Services
Coastal Shipping Contracts

Risk Flags

Potential for performance issues impacting service delivery.
Risk of environmental incidents associated with tanker operations.
Dependence on contractor's financial stability.
Market concentration could limit future competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.5 million to U.S. MARINE MANAGEMENT, LLC. N103B / N321B / S. BOYD / TIME TANKER CHARTER - COASTAL TANKER #2

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 $51.5 million.

What is the period of performance?

Start: 2023-04-21. End: 2026-06-15.

What is the track record of U.S. Marine Management, LLC with government contracts, particularly with the Department of Defense?

A review of available federal procurement data indicates that U.S. Marine Management, LLC has a history of receiving contracts, primarily from the Department of Defense. While specific details on past performance metrics for this contractor require deeper investigation into individual contract close-out reports and performance evaluations, their recurring presence in the federal contracting space suggests a capacity to meet contractual obligations. Further analysis would involve examining the types and values of previous awards, any reported performance issues or disputes, and their overall performance ratings to assess their reliability and experience in fulfilling complex maritime service requirements.

How does the awarded price of $51.5 million compare to market rates for similar coastal tanker charter services?

Determining the precise market rate comparison for this $51.5 million contract requires access to real-time market data and specific vessel specifications (size, capacity, age, equipment). However, the firm fixed-price nature and the duration of over three years suggest a negotiated rate that aims for cost certainty. Generally, longer-term charters might secure lower per-day rates than short-term leases. Benchmarking would involve comparing this contract's daily or monthly charter rate against industry publications, broker reports, or publicly available data on similar government or commercial charters, considering factors like vessel type, operational area, and included services. Without this granular data, a definitive value-for-money assessment relative to the market is challenging.

What are the primary risks associated with this deep sea freight transportation contract?

Key risks for this contract include operational risks such as vessel mechanical failures, weather-related delays, and potential environmental incidents (e.g., spills), which could disrupt service and incur significant costs or liabilities. There's also a risk related to the availability of qualified maritime personnel. Furthermore, if the market for specialized tanker services is highly concentrated, there could be a risk of price escalation in future contract renewals. Dependence on a single contractor for a critical service also presents a risk if performance falters or if the contractor faces financial instability.

How effective is the firm fixed-price contract type in managing costs for this specific service?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and risks are understood, as is often the case with established services like tanker charters. For the government, FFP provides cost certainty, as the price is fixed regardless of the contractor's actual costs. This shifts the risk of cost overruns to the contractor. For this deep sea freight transportation service, FFP incentivizes the contractor to control costs efficiently to maximize profit. However, if unforeseen circumstances significantly impact the contractor's costs, they bear the burden, which could potentially lead to less competitive bidding in the future if contractors perceive excessive risk.

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

Analyzing historical spending trends for deep sea freight transportation by the Department of the Navy requires access to comprehensive procurement databases over multiple fiscal years. Generally, the Navy, as a major component of the DoD, relies heavily on maritime logistics, including freight transportation, for global operations. Spending in this category can fluctuate based on geopolitical events, deployment schedules, and the need for specific types of cargo movement. While this specific $51.5 million award represents a significant investment, understanding its place within the Navy's broader transportation budget requires a multi-year trend analysis to identify patterns, major contract awards, and shifts in service requirements or provider utilization.

What are the implications of the contract duration (1151 days) on service continuity and contractor investment?

The contract duration of 1151 days (approximately 3 years and 2 months) provides significant service continuity for the Department of the Navy, ensuring a stable supply of coastal tanker services without the need for frequent re-competition. For U.S. Marine Management, LLC, this extended period allows for better resource planning, including vessel maintenance schedules, crew assignments, and financial forecasting. It also provides an incentive for the contractor to invest in maintaining the vessel's operational readiness and potentially upgrading equipment to meet long-term performance standards, as they have a predictable revenue stream over a substantial period.

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: N3220522R5437

Offers Received: 2

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: $81,032,775

Exercised Options: $51,506,145

Current Obligation: $51,506,145

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline