DoD's $47.8M contract for Yokohama watercraft services awarded to Maersk Line, Limited

Contract Overview

Contract Amount: $47,831,720 ($47.8M)

Contractor: Maersk Line, Limited

Awarding Agency: Department of Defense

Start Date: 2009-09-17

End Date: 2014-11-10

Contract Duration: 1,880 days

Daily Burn Rate: $25.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: APS WATERCRAFT COSIS AT YOKOHAMA NORTH DOCK, JAPAN

Plain-Language Summary

Department of Defense obligated $47.8 million to MAERSK LINE, LIMITED for work described as: APS WATERCRAFT COSIS AT YOKOHAMA NORTH DOCK, JAPAN Key points: 1. Value for money appears fair given the long duration and scope of services. 2. Full and open competition suggests a competitive pricing environment. 3. Contract duration and fixed-price nature present moderate performance risks. 4. Services are critical for naval operations in the Pacific theater. 5. Positioned within the broader defense logistics and maritime support sector.

Value Assessment

Rating: fair

The contract value of $47.8 million over approximately five years for watercraft services at Yokohama North Dock is substantial. Benchmarking against similar long-term, geographically specific maritime support contracts is challenging due to unique operational requirements. However, the firm-fixed-price structure suggests an expectation of predictable costs. The total value, when averaged annually, falls within a reasonable range for complex logistical support in a high-cost region like Japan, though specific cost breakdowns are not available for granular comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and evaluated. The presence of a competitive process generally supports price discovery and can lead to more favorable pricing for the government. The number of bidders, while not explicitly stated, is implied to be sufficient to constitute meaningful competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through market forces, ensuring the government receives competitive pricing for essential services.

Public Impact

US Navy and other DoD components operating in or transiting through Japan benefit from reliable watercraft services. Services include maintenance, repair, and potentially operation of watercraft essential for logistical support. Geographic impact is concentrated in Yokohama, Japan, a key strategic port. Workforce implications include potential employment for skilled maritime labor in Japan, both directly and indirectly.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 5 years) could lead to cost overruns if market conditions change significantly.
Reliance on a single contractor for critical port services may pose risks if performance degrades.
Geographic isolation of Yokohama could complicate alternative sourcing if issues arise.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a robust selection process and potential for competitive pricing.
Contract awarded to a well-established maritime logistics provider (Maersk Line, Limited).

Sector Analysis

This contract falls within the Defense sector, specifically in the area of maritime logistics and support services. The market for such services is global, with significant players like Maersk Line, Limited dominating international shipping and logistics. Spending in this category is crucial for maintaining operational readiness and power projection capabilities for the US military abroad. Comparable spending benchmarks would involve other long-term support contracts for naval bases or operational areas in high-cost foreign locations.

Small Business Impact

There is no indication that this contract involved small business set-asides. Given the nature of the services and the prime contractor, it is likely that any small business involvement would be through subcontracting opportunities. The extent of small business participation is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the contract terms, including performance standards and payment schedules. Transparency is facilitated through contract award databases, though detailed performance metrics are often internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Support Activity Facilities
Maritime Logistics Support Contracts
Defense Logistics Agency Contracts
Ship Building and Repairing Services
Foreign Military Base Support

Risk Flags

Long contract duration increases risk of market volatility impact.
Firm-fixed-price may not fully account for unforeseen cost increases.
Geographic concentration poses risk if performance issues arise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.8 million to MAERSK LINE, LIMITED. APS WATERCRAFT COSIS AT YOKOHAMA NORTH DOCK, JAPAN

Who is the contractor on this award?

The obligated recipient is MAERSK LINE, LIMITED.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $47.8 million.

What is the period of performance?

Start: 2009-09-17. End: 2014-11-10.

What is the track record of Maersk Line, Limited with the Department of Defense for similar services?

Maersk Line, Limited, as a major global shipping and logistics provider, has a significant history of contracting with the Department of Defense for various transportation and logistical support services. While specific details for watercraft services at Yokohama are not provided, their extensive experience in managing complex supply chains and operating in international waters suggests a strong capability. DoD contracts with large logistics firms often span multiple service areas, including port operations, vessel chartering, and freight management. A review of historical contract awards would likely reveal a pattern of substantial engagement, indicating familiarity with military requirements and compliance standards. However, the specific performance history on this particular contract, including any past issues or commendations related to Yokohama operations, would require deeper analysis of performance reports and contract modifications.

How does the total contract value compare to similar maritime support contracts in the Pacific region?

Comparing the $47.8 million total contract value for APS WATERCRAFT COSIS AT YOKOHAMA NORTH DOCK requires context regarding the duration, scope, and specific services rendered. Contracts for similar maritime support in high-cost regions like Japan, especially those involving long-term commitments (1880 days, approximately 5 years), can range significantly. Factors such as the type and number of watercraft supported, maintenance complexity, operational tempo, and inclusion of personnel or specialized equipment heavily influence pricing. Without detailed service level agreements and performance metrics, a direct comparison is difficult. However, for a comprehensive, multi-year support package at a major naval hub, the value appears to be within a plausible range, reflecting the strategic importance and operational demands of the location. It is essential to benchmark against contracts with comparable service definitions and contract types (e.g., firm-fixed-price) to assess value accurately.

What are the primary risks associated with this firm-fixed-price contract for watercraft services?

The primary risks associated with this firm-fixed-price contract revolve around potential cost underruns for the contractor and scope creep or unforeseen operational demands for the government. For Maersk Line, Limited, a firm-fixed-price contract means they bear the risk of cost overruns if operational expenses exceed projections due to factors like unexpected repair needs, increased labor costs, or supply chain disruptions in Japan. Conversely, the government faces the risk that the contractor may cut corners on service quality to maintain profitability, or that the fixed price may become uncompetitive if market rates decrease significantly over the contract's long duration. Additionally, if the scope of required services expands beyond the original contract definition, the government might face challenges in obtaining additional work at a fair price or may need to issue new contracts, potentially disrupting continuity. The long duration (over 5 years) amplifies these risks.

How effective is full and open competition in ensuring value for money for this type of specialized service?

Full and open competition is generally considered the most effective method for ensuring value for money, particularly for specialized services like maritime support. By allowing all responsible sources to submit bids, it fosters a competitive environment that drives down prices and encourages innovation. For this $47.8 million contract, the solicitation of multiple bids likely pressured potential contractors to offer their most competitive pricing and service packages. This process helps the government avoid paying inflated prices that might occur under sole-source or limited competition scenarios. The effectiveness is further enhanced when the government clearly defines its requirements and evaluation criteria, ensuring that the lowest price technically acceptable or best value proposal is selected. While competition is a strong indicator of potential value, ongoing performance monitoring remains crucial to ensure the awarded contractor delivers on the promised quality and efficiency throughout the contract's lifecycle.

What is the historical spending trend for maritime support services at Yokosuka or similar Pacific naval bases?

Historical spending trends for maritime support services at major Pacific naval bases like Yokosuka (or similar facilities like Yokohama North Dock) are generally characterized by significant, long-term investments. These bases require continuous logistical support, including vessel maintenance, repair, port operations, and supply chain management, to maintain operational readiness. Spending often involves multi-year, high-value contracts, frequently awarded through competitive processes, though sometimes extended or modified. Factors influencing spending include geopolitical conditions, fleet size and composition, and the specific capabilities of the host nation's infrastructure. While precise figures for Yokohama North Dock are specific to this contract, broader trends show consistent and substantial government expenditure in this area to ensure the effective functioning of forward-deployed naval assets. Fluctuations may occur based on strategic shifts or infrastructure upgrades.

What are the implications of the contract duration (1880 days) on potential cost savings or risks?

The 1880-day (approximately 5-year) duration of this contract presents a dual-edged sword regarding cost savings and risks. On the savings side, a longer-term commitment allows the contractor, Maersk Line, Limited, to potentially achieve economies of scale and optimize resource allocation, which can translate into more stable and potentially lower per-unit costs over the contract's life compared to multiple short-term contracts. It also reduces the administrative burden and costs associated with frequent re-procurement. However, the extended duration significantly increases the risk of cost escalation due to market volatility (e.g., fuel prices, labor rates, material costs) that the firm-fixed-price structure may not fully insulate the government from, especially if unforeseen circumstances arise. Furthermore, a long contract term limits the government's flexibility to adapt to changing technological requirements or strategic needs, potentially locking it into outdated services or requiring costly modifications.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J09R0045

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: APM Terminals Pacific LLC (UEI: 308621259)

Address: ONE COMMERCIAL PL 20TH FL, NORFOLK, VA, 23510

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

Financial Breakdown

Contract Ceiling: $47,831,720

Exercised Options: $47,831,720

Current Obligation: $47,831,720

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline