Transportation awards $3.5M for fixed fees to Keystone Shipping Services, Inc. for freight transportation

Contract Overview

Contract Amount: $3,537,012 ($3.5M)

Contractor: Keystone Shipping Services, Inc.

Awarding Agency: Department of Transportation

Start Date: 2024-07-27

End Date: 2025-08-17

Contract Duration: 386 days

Daily Burn Rate: $9.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CAPE DUCATO FY24 FIXED FEES KEY-DCT24-1002B ISSUED TO FUND FIXED FEES THRU 09/30/2024

Place of Performance

Location: NORTH CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29405

State: South Carolina Government Spending

Plain-Language Summary

Department of Transportation obligated $3.5 million to KEYSTONE SHIPPING SERVICES, INC. for work described as: CAPE DUCATO FY24 FIXED FEES KEY-DCT24-1002B ISSUED TO FUND FIXED FEES THRU 09/30/2024 Key points: 1. Contract value appears reasonable for the duration and scope of services. 2. Limited competition due to sole-source award raises concerns about price discovery. 3. Performance risk is moderate, given the nature of shipping services. 4. This contract supports essential maritime operations for the agency. 5. The sector is dominated by a few large players, but specialized services can command premiums. 6. Fixed-price contract shifts risk to the contractor, potentially impacting cost certainty.

Value Assessment

Rating: good

The contract's fixed fee structure for freight transportation services is standard for this type of work. While specific benchmarking data for this exact service is limited, the overall value of $3.5 million over approximately 14 months appears to be within a reasonable range for supporting deep sea freight operations. The absence of detailed cost breakdowns makes a precise value-for-money assessment challenging, but the fixed-price nature suggests the government is paying for a defined outcome.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits competition and may prevent the government from obtaining the best possible pricing through a competitive bidding process. Without multiple bids, it is difficult to ascertain if the awarded price reflects true market value or if a more competitive environment could have yielded savings.

Taxpayer Impact: The sole-source nature of this award means taxpayers may not be benefiting from the cost efficiencies that typically arise from a competitive procurement process. This could lead to higher overall spending for similar services compared to a fully competed contract.

Public Impact

The primary beneficiary is the Department of Transportation, specifically the Maritime Administration, which receives essential freight transportation services. The services delivered are critical for maintaining operational capabilities and logistical support within the agency's mission. The geographic impact is likely global, given the nature of deep sea freight transportation. Workforce implications are primarily for the contractor, Keystone Shipping Services, Inc., which will utilize its personnel and assets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential taxpayer savings.
Lack of detailed cost breakdown hinders precise value-for-money assessment.
Fixed-price contract, while shifting risk, could lead to higher initial costs if not carefully negotiated.

Positive Signals

Fixed-price contract provides cost certainty for the government once awarded.
Contract supports critical agency operations, ensuring service continuity.
Contractor is responsible for performance and associated risks.

Sector Analysis

The deep sea freight transportation sector is a vital component of global commerce and national logistics. It is characterized by significant capital investment in vessels and infrastructure, and often involves complex regulatory environments. While large, established carriers dominate much of the market, specialized services or specific routes can present opportunities for niche providers. This contract fits within the broader category of logistics and transportation services procured by government agencies to support their missions.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to Keystone Shipping Services, Inc., a single entity, suggests a focus on direct service provision rather than fostering a broader ecosystem of small business participation through this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Transportation's Office of the Inspector General, which is responsible for auditing and investigating fraud, waste, and abuse in the department's programs and operations. Transparency is moderate, as contract awards are publicly available, but detailed performance metrics and cost justifications may not be readily accessible to the public.

Related Government Programs

Maritime Administration Operations
Department of Transportation Logistics
Federal Freight Transportation Services
Deep Sea Shipping Contracts

Risk Flags

Sole-source award limits competition.
Potential for overpayment due to lack of competitive bidding.
Limited transparency on cost justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $3.5 million to KEYSTONE SHIPPING SERVICES, INC.. CAPE DUCATO FY24 FIXED FEES KEY-DCT24-1002B ISSUED TO FUND FIXED FEES THRU 09/30/2024

Who is the contractor on this award?

The obligated recipient is KEYSTONE SHIPPING SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Transportation (Maritime Administration).

What is the total obligated amount?

The obligated amount is $3.5 million.

What is the period of performance?

Start: 2024-07-27. End: 2025-08-17.

What is the track record of Keystone Shipping Services, Inc. with federal contracts, particularly with the Department of Transportation?

A review of federal procurement data indicates that Keystone Shipping Services, Inc. has received federal contracts primarily from the Department of Transportation, specifically the Maritime Administration. These contracts have generally been for shipping and freight-related services. While the company has a history of receiving awards, the specific performance history, including any past issues with delivery, cost overruns, or contract disputes, would require a deeper dive into contract performance reports and agency evaluations. The current contract's sole-source nature might suggest a pre-existing relationship or specialized capability that the agency deemed necessary, potentially based on past performance or unique qualifications.

How does the $3.5 million fixed fee compare to similar deep sea freight transportation contracts awarded by the government?

Benchmarking this $3.5 million fixed fee against similar deep sea freight transportation contracts is challenging without more specific details on the scope of services, routes, vessel types, and duration. Government contracts for freight services can vary widely in cost based on these factors. However, given the contract duration of approximately 14 months (from August 2024 to August 2025), the average monthly cost is around $250,000. This figure needs to be contextualized against the specific demands of the services provided. A sole-source award, as in this case, often means the price is based on the contractor's proposed costs and the agency's negotiation, rather than direct market comparison through competition, making external validation difficult.

What are the primary risks associated with this sole-source fixed-price contract for freight transportation?

The primary risks associated with this sole-source fixed-price contract include potential overpayment due to lack of competition and the contractor potentially cutting corners on service quality to maximize profit under the fixed price. Since it's sole-source, the government may not be achieving the best possible price. If unforeseen circumstances significantly increase the contractor's costs (e.g., fuel price spikes, unexpected port fees), the contractor might face financial strain, potentially impacting service delivery, although the fixed-price nature aims to place this risk on them. Conversely, if the contractor's costs are significantly lower than anticipated, the government may have overpaid. The lack of transparency inherent in sole-source awards also increases the risk of inadequate oversight.

How effective is the Maritime Administration in leveraging competition for its freight transportation needs?

The Maritime Administration's effectiveness in leveraging competition for freight transportation needs appears mixed, as evidenced by this sole-source award. While competitive procurements are generally preferred to ensure best value and price discovery, agencies may opt for sole-source awards when a specific capability, urgent need, or unique situation warrants it. Without a broader analysis of MarAd's contracting history, it's difficult to definitively assess their overall approach to competition. However, this instance highlights a situation where competition was bypassed, suggesting that either a competitive process was deemed impractical or unsuccessful in identifying suitable alternatives for this particular requirement.

What is the historical spending pattern for deep sea freight transportation by the Maritime Administration?

Historical spending patterns for deep sea freight transportation by the Maritime Administration would reveal trends in contract values, types of services procured, and the extent of competition over time. Analyzing past awards could indicate whether sole-source procurements are common for these services or if competitive bidding is the norm. Significant fluctuations in spending could be linked to specific agency initiatives, national security needs, or changes in global shipping markets. Understanding this history provides context for the current $3.5 million award, helping to determine if it aligns with established spending levels or represents an outlier.

Industry Classification

NAICS: Transportation and Warehousing › Deep Sea, Coastal, and Great Lakes Water Transportation › Deep Sea Freight Transportation

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 BALA PLZ STE 600, BALA CYNWYD, PA, 19004

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

Financial Breakdown

Contract Ceiling: $3,537,012

Exercised Options: $3,537,012

Current Obligation: $3,537,012

Actual Outlays: $3,537,012

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 693JF724D000009

IDV Type: IDC

Timeline