Navy awards $6.14M for 96 days of tanker charter, exceeding benchmark by 10%

Contract Overview

Contract Amount: $6,140,000 ($6.1M)

Contractor: Overseas Shipholding Group Inc

Awarding Agency: Department of Defense

Start Date: 2025-12-31

End Date: 2026-04-06

Contract Duration: 96 days

Daily Burn Rate: $64.0K/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 60-DAY TANKER TIME CHARTER

Plain-Language Summary

Department of Defense obligated $6.1 million to OVERSEAS SHIPHOLDING GROUP INC for work described as: 60-DAY TANKER TIME CHARTER Key points: 1. Contract value appears high relative to duration, suggesting potential overpayment. 2. Limited competition data available, making a definitive value-for-money assessment challenging. 3. Risk indicators include potential for cost overruns due to fixed-price nature and market volatility. 4. Performance context is a short-term charter, implying immediate operational needs. 5. Sector positioning is within defense logistics, a critical but often costly area.

Value Assessment

Rating: fair

The awarded price of $6.14 million for 96 days equates to approximately $63,958 per day. This daily rate is 10% higher than the provided benchmark of $63,958, indicating a potentially unfavorable price. While the contract is firm fixed-price, which limits cost escalation risk for the government, the initial price appears to be above market expectations. Further analysis of market rates for similar charters during the contract period would be beneficial.

Cost Per Unit: $63,958 per day (benchmark comparison)

Competition Analysis

Competition Level: unknown

The contract was competed under SAP (Simplified Acquisition Procedures), suggesting a less robust competition process than full and open competition. The number of bidders is not specified, but SAP is typically used for smaller procurements, which can sometimes result in fewer offers. The limited information on the competition level makes it difficult to assess if the price achieved represents optimal market discovery.

Taxpayer Impact: The use of SAP and potentially limited bidder pool may have resulted in a higher price for taxpayers than could have been achieved through a more extensive competitive process.

Public Impact

The primary beneficiary is the Department of the Navy, ensuring operational readiness. Services delivered include essential deep-sea freight transportation via tanker. Geographic impact is likely global, supporting naval operations wherever deployed. Workforce implications are minimal for the government, with the contractor providing vessel and crew.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price to be above market due to limited competition.
Lack of detailed competition data hinders thorough value assessment.
Firm fixed-price contract may not fully account for fluctuating market conditions.

Positive Signals

Contract awarded to Overseas Shipholding Group Inc., a known entity in the maritime sector.
Firm fixed-price contract provides cost certainty once awarded.
Contract duration is clearly defined, allowing for planning.

Sector Analysis

The defense logistics sector relies heavily on specialized transportation services, including maritime charters. The market for tanker time charters is influenced by global shipping rates, geopolitical events, and demand from military and commercial entities. This contract fits within the broader category of defense transportation services, where spending can fluctuate based on operational tempo and strategic needs. Benchmarking against similar government or commercial charters is crucial for assessing value.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of deep-sea tanker charters, it is unlikely that small businesses would be primary bidders for such a specialized and high-value service. Subcontracting opportunities for small businesses are not specified but could potentially arise for support services if utilized by the prime contractor.

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 structure, requiring the contractor to deliver the service as specified. Transparency is limited by the available data, particularly regarding the competitive process. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Maritime Transportation
Military Sealift Command (MSC) Chartering
Naval Fleet Auxiliary Force

Risk Flags

Potential for above-benchmark pricing.
Limited transparency on competition level.
Use of Simplified Acquisition Procedures may limit competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.1 million to OVERSEAS SHIPHOLDING GROUP INC. 60-DAY TANKER TIME CHARTER

Who is the contractor on this award?

The obligated recipient is OVERSEAS SHIPHOLDING GROUP INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $6.1 million.

What is the period of performance?

Start: 2025-12-31. End: 2026-04-06.

What is the track record of Overseas Shipholding Group Inc. with the Department of Defense?

Overseas Shipholding Group Inc. (OSG) has a long history of providing maritime services to government entities, including the Department of Defense. OSG operates a diverse fleet and has secured numerous contracts for various transportation needs, ranging from oil tankers to specialized vessels. Their experience includes supporting military logistics and sealift operations. While specific performance details for individual contracts are not publicly detailed, OSG's sustained presence in the government contracting space suggests a generally satisfactory performance history. However, a deeper dive into past performance reviews and any documented issues or commendations would provide a more comprehensive understanding of their reliability and quality of service for the Navy.

How does the daily rate compare to historical Navy tanker charter rates?

The daily rate of approximately $63,958 for this 96-day charter is noted as being 10% above the provided benchmark. To provide a more robust historical comparison, data on similar Navy tanker time charters over the past 3-5 years would be necessary. Factors such as vessel size, age, specific capabilities (e.g., ice-class, cargo capacity), and the prevailing market conditions at the time of award significantly influence daily rates. Without access to a broader dataset of comparable contracts, it is difficult to definitively state whether this rate is an anomaly or reflective of a rising market trend. However, any deviation above established benchmarks warrants scrutiny.

What are the primary risks associated with this firm fixed-price charter contract?

The primary risks associated with this firm fixed-price charter contract, despite its cost certainty for the government, revolve around the initial pricing and potential market shifts. If the fixed price was set too high based on inflated market projections or insufficient competitive pressure, the government could overpay for the service. Conversely, if market rates for tanker charters were to significantly decrease after the contract award, the contractor would still be obligated to provide the service at the agreed-upon higher rate, but the government would not benefit from the lower market prices. Additionally, unforeseen operational issues or delays caused by the contractor could lead to disputes or performance failures, although the firm fixed-price nature aims to place the responsibility for operational success on the contractor.

What is the expected effectiveness of this contract in supporting Navy operations?

This contract is expected to be highly effective in supporting specific Navy operational requirements by providing dedicated tanker capacity for a defined period. The firm fixed-price nature ensures that the Navy has secured the necessary transportation resource at a known cost, facilitating budget predictability. The effectiveness hinges on the contractor's ability to consistently provide a seaworthy vessel, a competent crew, and reliable delivery of fuel or other cargo as required by the Navy's mission. Assuming the contractor, Overseas Shipholding Group Inc., fulfills its obligations, this charter will directly contribute to the Navy's logistical chain, enabling sustained operations at sea by ensuring the availability of essential supplies.

How does this contract's value compare to the total annual spending on maritime transportation by the Navy?

The awarded value of $6.14 million for this specific 96-day tanker charter represents a fraction of the Navy's overall annual spending on maritime transportation. The Navy, through entities like the Military Sealift Command (MSC), manages a vast fleet and charters numerous vessels annually for diverse purposes, including troop transport, cargo delivery, and specialized services like fuel resupply. Annual spending on maritime transportation can easily run into the hundreds of millions, if not billions, of dollars, depending on operational tempo and global commitments. Therefore, while $6.14 million is a significant sum for a single charter, it is likely a relatively small component within the Navy's total annual maritime logistics budget. A precise comparison would require access to the Navy's complete annual budget breakdown for transportation services.

What are the implications of using Simplified Acquisition Procedures (SAP) for this contract?

The use of Simplified Acquisition Procedures (SAP) for this contract, valued at $6.14 million, implies that the procurement process was streamlined to expedite the acquisition of goods or services. SAP is generally intended for purchases below the simplified acquisition threshold (which can vary but is often around $250,000, though higher thresholds exist for certain categories like construction or services). However, for certain types of services or under specific circumstances, higher dollar values might be processed under SAP if justified. The key implication is that the competition requirements are less stringent than those for full and open competition. This can lead to faster award times but potentially less robust price competition and a reduced pool of potential offerors, which could impact the final price achieved for the government.

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: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: N3220526R6032

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 302 KNIGHTS RUN AVE STE 1200, TAMPA, FL, 33602

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

Financial Breakdown

Contract Ceiling: $6,140,000

Exercised Options: $6,140,000

Current Obligation: $6,140,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline