Navy Awards $10M Jones Act Tanker Charter for U.S. West Coast Operations
Contract Overview
Contract Amount: $10,055,000 ($10.1M)
Contractor: Fairwater Commercial Management LLC
Awarding Agency: Department of Defense
Start Date: 2025-05-16
End Date: 2025-10-15
Contract Duration: 152 days
Daily Burn Rate: $66.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Transportation
Official Description: 85-DAY JONES ACT, TANKER TIME CHARTER, U.S. WEST COAST
Place of Performance
Location: SAN DIEGO, SAN DIEGO County, CALIFORNIA, 92107
Plain-Language Summary
Department of Defense obligated $10.1 million to FAIRWATER COMMERCIAL MANAGEMENT LLC for work described as: 85-DAY JONES ACT, TANKER TIME CHARTER, U.S. WEST COAST Key points: 1. Contract awarded to Fairwater Commercial Management LLC for tanker time charter services. 2. The contract is for a firm fixed price, with a duration of 152 days. 3. Competition was full and open, suggesting a competitive bidding process. 4. The service falls under Deep Sea Freight Transportation, a critical logistics sector.
Value Assessment
Rating: fair
The awarded amount of $10,055,000 for a 152-day charter appears reasonable given the market for Jones Act compliant tankers. Benchmarking against similar time charters would provide a clearer picture of value.
Cost Per Unit: $66,151 per day
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple bidders likely participated. This method generally promotes price discovery and competitive pricing.
Taxpayer Impact: Taxpayer funds are being used for essential maritime transportation services, with competition aiming to ensure efficient use of these funds.
Public Impact
Ensures U.S. West Coast fuel and cargo transport capabilities. Supports U.S. maritime industry and Jones Act compliance. Provides critical logistical support for Department of Defense operations.
Waste & Efficiency Indicators
Waste Risk Score: 66 / 10
Warning Flags
- Potential for price fluctuations in the tanker market.
- Dependence on a single vessel for the charter duration.
Positive Signals
- Full and open competition utilized.
- Firm fixed price contract structure.
- Clear service period and location.
Sector Analysis
This contract falls within the maritime transportation sector, specifically deep-sea freight. Spending benchmarks for similar tanker charters can vary significantly based on vessel size, type, and market conditions.
Small Business Impact
The data does not indicate if small businesses were involved in this specific contract award. Further analysis would be needed to determine small business participation in the bidding process or as subcontractors.
Oversight & Accountability
The award was made by the Department of the Navy, a component of the Department of Defense, which has established oversight mechanisms for contract awards and execution. The definitive contract type suggests a thorough review process.
Related Government Programs
- Deep Sea Freight Transportation
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Potential for market volatility impacting charter rates.
- Dependence on a single vessel for critical transportation.
- Geopolitical factors affecting fuel prices and availability.
- Operational risks associated with maritime transport.
Tags
deep-sea-freight-transportation, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $10.1 million to FAIRWATER COMMERCIAL MANAGEMENT LLC. 85-DAY JONES ACT, TANKER TIME CHARTER, U.S. WEST COAST
Who is the contractor on this award?
The obligated recipient is FAIRWATER COMMERCIAL 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 $10.1 million.
What is the period of performance?
Start: 2025-05-16. End: 2025-10-15.
What is the historical cost performance of similar Jones Act tanker time charters awarded by the Navy?
Historical data on similar Jones Act tanker time charters is crucial for a comprehensive value assessment. Analyzing past awards, including duration, vessel specifications, and final prices, can reveal trends and identify potential cost savings or overruns. This context helps determine if the current $66,151 per diem rate is competitive and aligns with market expectations for such services.
What are the specific risks associated with chartering a single tanker for a 152-day period on the U.S. West Coast?
Chartering a single tanker for an extended period introduces several risks. These include potential vessel downtime due to mechanical issues or maintenance, which could disrupt supply chains. Furthermore, unforeseen geopolitical events or changes in fuel prices could impact operational costs and the availability of the vessel. The reliance on one asset also means any single point of failure has a significant impact.
How effectively does this firm fixed-price contract mitigate cost overruns for the Department of the Navy?
A firm fixed-price contract is designed to provide cost certainty for the buyer by shifting most of the financial risk to the contractor. This structure effectively mitigates cost overruns related to fluctuating market conditions or contractor inefficiencies. However, it does not protect against scope creep or unforeseen circumstances outside the contractor's control, which might necessitate contract modifications.
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: N3220525R4070
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 2200 ELLER DR, FORT LAUDERDALE, FL, 33316
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $10,055,000
Exercised Options: $10,055,000
Current Obligation: $10,055,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2025-05-16
Current End Date: 2025-10-15
Potential End Date: 2025-10-15 00:00:00
Last Modified: 2025-12-02
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