Transportation contract for deep sea freight valued at $28.3M awarded to Keystone Shipping Co

Contract Overview

Contract Amount: $28,260,226 ($28.3M)

Contractor: Keystone Shipping CO

Awarding Agency: Department of Transportation

Start Date: 2023-07-31

End Date: 2025-07-26

Contract Duration: 726 days

Daily Burn Rate: $38.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Transportation

Official Description: BOB HOPE FY 23 DD A KEY-BHP24-1006A A

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97203

State: Oregon Government Spending

Plain-Language Summary

Department of Transportation obligated $28.3 million to KEYSTONE SHIPPING CO for work described as: BOB HOPE FY 23 DD A KEY-BHP24-1006A A Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. The contract duration of 726 days suggests a significant operational need. 3. The pricing structure (Cost No Fee) requires careful monitoring to ensure cost control. 4. This award represents a portion of the Maritime Administration's broader logistics and transportation support. 5. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: fair

The contract's value of $28.3 million for deep sea freight transportation over two years appears within a reasonable range for such services, though a direct comparison is difficult without more specific service details. The 'Cost No Fee' pricing structure, while common in certain government contracts, offers less incentive for the contractor to minimize costs compared to fixed-price arrangements. Benchmarking this specific per-unit cost is challenging due to the nature of freight services, which depend heavily on cargo type, volume, and specific routes. However, the total value suggests a substantial commitment of resources.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required service, or in specific circumstances where full and open competition is not feasible. The lack of competition means that taxpayers did not benefit from the price discovery and potential cost reductions that competitive bidding can provide. It also raises questions about whether alternative solutions or providers were adequately explored.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not secure the most competitive pricing available in the market. This limits the government's ability to leverage market forces for cost savings.

Public Impact

The primary beneficiary is the U.S. government, specifically the Department of Transportation, which relies on these services for its operational needs. The contract ensures the availability of deep sea freight transportation, crucial for national logistics and potentially for defense or emergency response. Services are likely to impact national supply chains and the movement of goods critical to the U.S. economy. The contract supports the operations of Keystone Shipping Co., potentially impacting its workforce and the broader maritime industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost No Fee structure may reduce contractor incentive for cost efficiency.
Lack of small business participation could limit broader economic impact.

Positive Signals

Ensures critical deep sea freight transportation services are secured.
Award to an established carrier suggests reliability.
Contract duration provides stability for service provision.

Sector Analysis

The maritime transportation sector is vital for global trade and national security, involving the movement of goods via sea. This contract falls within the broader logistics and transportation services industry, which is characterized by significant capital investment and complex operational requirements. Comparable spending benchmarks for deep sea freight can vary widely based on cargo type, route, and duration, but contracts of this magnitude typically support substantial government or commercial operations. The Maritime Administration's role often involves ensuring the availability of U.S.-flagged vessels and supporting national maritime interests.

Small Business Impact

This contract was not competed and did not include specific small business set-asides. The absence of explicit small business participation goals or subcontracting requirements means that opportunities for small businesses to engage in this specific contract may be limited. Further analysis would be needed to determine if Keystone Shipping Co. utilizes small businesses in its supply chain or if there are other avenues for small business involvement within the broader Maritime Administration's contracting activities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Transportation's internal review processes and the Maritime Administration. Given it's a sole-source award, scrutiny may focus on the justification for non-competition and the management of the 'Cost No Fee' structure to ensure costs remain reasonable. Transparency regarding the specific services rendered and the justification for the sole-source award would be key accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Transportation - General Operations
Maritime Administration - Vessel Operations
Deep Sea Freight Services
Government Logistics Contracts

Risk Flags

Sole-source award may limit cost savings.
Cost-reimbursement structure requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $28.3 million to KEYSTONE SHIPPING CO. BOB HOPE FY 23 DD A KEY-BHP24-1006A A

Who is the contractor on this award?

The obligated recipient is KEYSTONE SHIPPING CO.

Which agency awarded this contract?

Awarding agency: Department of Transportation (Maritime Administration).

What is the total obligated amount?

The obligated amount is $28.3 million.

What is the period of performance?

Start: 2023-07-31. End: 2025-07-26.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED' (CT: NOT COMPETED). Typically, sole-source awards are justified when only one responsible source is available to meet the government's needs, or when a compelling urgency, national security, or specific technological requirement prevents full and open competition. For this specific contract, the Maritime Administration would have documented the rationale, likely related to unique vessel capabilities, specialized routes, or existing long-term operational requirements that only Keystone Shipping Co. could fulfill at the time of award. Without access to the contract file or justification documents, the precise reason remains unconfirmed, but it implies a lack of readily available alternatives.

How does the 'Cost No Fee' (CNF) pricing structure compare to other contract types for similar services?

The 'Cost No Fee' (CNF) pricing structure is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs but receives no fee or profit. This structure is often used in situations where the scope of work is uncertain, or when the government wants to ensure a service is performed without the contractor having a profit motive that might influence decisions. Compared to fixed-price contracts, CNF offers less incentive for the contractor to control costs, as their profit is not directly tied to efficiency. However, it provides flexibility and ensures the service is rendered. For deep sea freight, fixed-price contracts might be preferred if routes and cargo are well-defined, potentially leading to lower overall costs through competitive bidding. The CNF structure here suggests a focus on service availability and execution over cost minimization by the contractor.

What are the potential risks associated with a sole-source award for deep sea freight transportation?

The primary risk associated with a sole-source award for deep sea freight transportation is the potential for inflated costs due to the lack of competitive bidding. Without competing offers, the government may not secure the most economically advantageous pricing available in the market. Additionally, sole-source awards can limit innovation and the introduction of new service providers or technologies. There's also a risk that the government may become overly reliant on a single provider, potentially reducing leverage in future negotiations. Transparency and robust oversight are crucial to mitigate these risks, ensuring the awarded price is fair and reasonable and that the service meets all requirements.

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

Analyzing historical spending patterns for deep sea freight transportation by the Maritime Administration requires access to detailed procurement data over multiple fiscal years. This specific contract, valued at approximately $28.3 million over two years, represents a significant but singular award. To understand broader patterns, one would need to examine trends in contract awards for similar services, including the number of competitors, pricing structures used (fixed-price vs. cost-reimbursement), and the average value of contracts. Such an analysis could reveal whether the Maritime Administration typically relies on sole-source awards for these services, its average expenditure in this category, and how this current award compares to historical norms in terms of value and duration.

How does the duration of this contract (726 days) align with typical deep sea freight contracts?

A contract duration of 726 days (approximately two years) for deep sea freight transportation is a substantial commitment, suggesting a long-term, ongoing need for these services rather than a short-term or ad-hoc requirement. Typical deep sea freight contracts can vary significantly in duration, ranging from short-term voyage charters to multi-year service agreements. For government operations that require consistent logistical support, such as maintaining strategic sealift capabilities or supporting sustained overseas operations, longer-term contracts are common. This duration implies that the Maritime Administration has planned for a continuous need for Keystone Shipping Co.'s services, potentially related to specific fleet operations, cargo routes, or strategic maritime initiatives.

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

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 1 BALA PLZ E 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: $28,260,226

Exercised Options: $28,260,226

Current Obligation: $28,260,226

Actual Outlays: $28,187,308

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 693JF721G000002

IDV Type: BOA

Timeline