DOT awards $3.37M for FY25 repairs to BOB HOPE, a vessel with a history of significant operational costs

Contract Overview

Contract Amount: $3,373,000 ($3.4M)

Contractor: Keystone Shipping CO

Awarding Agency: Department of Transportation

Start Date: 2025-01-23

End Date: 2026-08-31

Contract Duration: 585 days

Daily Burn Rate: $5.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Transportation

Official Description: BOB HOPE FY25 REPAIRS A KEY-BHP25-1005 A

Place of Performance

Location: PORTLAND, MULTNOMAH County, OREGON, 97203

State: Oregon Government Spending

Plain-Language Summary

Department of Transportation obligated $3.4 million to KEYSTONE SHIPPING CO for work described as: BOB HOPE FY25 REPAIRS A KEY-BHP25-1005 A Key points: 1. The contract's cost-plus-no-fee structure may incentivize higher spending without direct cost savings. 2. Limited competition raises concerns about achieving the best possible price for taxpayer funds. 3. The contract duration of 585 days suggests a substantial scope of work or potential for extended operational needs. 4. The vessel's classification as a Deep Sea Freight Transporter indicates its role in critical supply chain operations. 5. The absence of small business set-asides means opportunities for smaller firms in this sector are not explicitly prioritized.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the cost-plus-no-fee (CPNF) pricing structure, which offers limited incentive for cost control. Without a fixed price or performance-based elements, it's difficult to assess if the $3.37 million represents a fair market value for the repairs and services. Comparing it to similar vessel repair contracts would require detailed knowledge of the specific repair needs and the vessel's condition, which are not publicly available. The CPNF structure inherently carries a higher risk of cost overruns for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one contractor was solicited or deemed capable of performing the required services. This lack of competition means that the government did not explore alternative providers or pricing structures, potentially leading to a less favorable outcome in terms of cost and innovation. The rationale for the sole-source award, such as unique expertise or critical timing, would need to be thoroughly justified to ensure it served the government's best interest.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competitive market forces, potentially resulting in higher costs for taxpayers compared to a fully competed contract.

Public Impact

The primary beneficiary is the Maritime Administration (MARAD), ensuring the operational readiness of the vessel BOB HOPE. Services delivered include repairs and maintenance essential for the vessel's continued operation as a Deep Sea Freight Transporter. The geographic impact is primarily related to the vessel's operational routes, which are likely global or significant domestic shipping lanes. Workforce implications include employment for skilled maritime labor, mechanics, and support staff involved in vessel maintenance and repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-no-fee structure may lead to uncontrolled spending.
Sole-source award limits price discovery and potential savings.
Lack of performance metrics makes value assessment difficult.
Potential for cost overruns due to CPNF pricing.
Limited transparency on specific repair needs and justifications.

Positive Signals

Ensures operational readiness of a critical government asset.
Supports specialized maritime repair capabilities.
Addresses immediate maintenance needs for the BOB HOPE.

Sector Analysis

The maritime transportation sector is vital for global trade and national security, involving significant government investment in vessel acquisition, maintenance, and operation. Contracts for vessel repair and maintenance are common within this sector, often requiring specialized expertise and facilities. The size of this contract, at $3.37 million, is moderate for major vessel repairs, but the cost-plus-no-fee structure warrants scrutiny. Comparable spending benchmarks would depend on the specific type of vessel and the extent of repairs required, but this award falls within the typical range for significant maintenance cycles.

Small Business Impact

This contract was not competed and did not include any small business set-aside provisions. The sole-source nature of the award means that opportunities for small businesses to participate as prime contractors or subcontractors were not actively pursued through this specific procurement. While the prime contractor, Keystone Shipping Co., may engage small businesses for subcontracting, there is no explicit requirement or incentive within this contract to do so, potentially limiting the direct economic benefit to the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Transportation's Maritime Administration. Given the cost-plus-no-fee structure, rigorous financial oversight and auditing will be crucial to monitor expenditures and ensure that costs are reasonable and allocable to the contract. Transparency regarding the specific repair items and justifications for the sole-source award would enhance accountability. The Inspector General of the Department of Transportation may have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Maritime Security Program
Sealift Support Vessels
Government Fleet Maintenance
Deep Sea Freight Operations
Vessel Repair and Maintenance Contracts

Risk Flags

Cost-plus-no-fee pricing structure
Sole-source award without full and open competition
Lack of specific performance metrics in contract details
Potential for cost overruns due to pricing model
Limited transparency on repair scope and justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Transportation awarded $3.4 million to KEYSTONE SHIPPING CO. BOB HOPE FY25 REPAIRS A KEY-BHP25-1005 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 $3.4 million.

What is the period of performance?

Start: 2025-01-23. End: 2026-08-31.

What is the historical spending pattern for the vessel BOB HOPE, and how does this $3.37M award compare?

Historical spending data for the vessel BOB HOPE is not readily available in the provided context. However, the contract's duration of 585 days and its cost-plus-no-fee (CPNF) structure suggest a potentially significant scope of work or ongoing operational needs. CPNF contracts can sometimes lead to higher overall expenditures compared to fixed-price contracts if not managed very closely, as the contractor is reimbursed for all allowable costs plus a fee, without a strong incentive to minimize costs. Without prior year spending figures or details on the specific repairs, a direct comparison is difficult, but the award amount indicates a substantial investment in the vessel's upkeep for the upcoming fiscal year.

What are the specific risks associated with the Cost Plus No Fee (CPNF) pricing structure for this contract?

The primary risk of a CPNF contract is the lack of incentive for the contractor to control costs. The contractor is reimbursed for all allowable expenses incurred in performing the work, plus a predetermined fee. This means that the government bears the financial risk of cost overruns. Without a strong performance incentive tied to cost savings, the contractor may not prioritize efficiency, potentially leading to higher overall project costs for the government. Effective oversight and detailed auditing are critical to mitigate these risks and ensure that costs are reasonable and necessary.

What is the justification for awarding this contract on a sole-source basis, and what are the implications for price discovery?

The justification for a sole-source award typically stems from unique capabilities, urgent needs, or the unavailability of other qualified sources. Without specific details on the rationale for this contract, it's presumed that Keystone Shipping Co. possesses specialized knowledge, facilities, or a unique relationship with the vessel BOB HOPE that makes them the only viable option. The implication for price discovery is significant: the absence of competition means the government cannot leverage market forces to obtain the best possible price. This can lead to higher costs for taxpayers, as there is no competitive pressure on the contractor to offer competitive pricing or innovative cost-saving solutions.

How does the Maritime Administration typically compete contracts for vessel repair and maintenance?

The Maritime Administration (MARAD) typically competes contracts for vessel repair and maintenance through various methods, depending on the scope, urgency, and complexity of the work. For routine or smaller-scale maintenance, they might use simplified acquisition procedures or solicit bids from a pre-qualified list of contractors. For larger, more complex projects, full and open competition is generally preferred, involving public solicitations and evaluation of multiple proposals based on technical merit and price. However, sole-source awards, like this one, are used when specific circumstances, such as unique technical requirements or urgent operational needs, preclude full competition.

What is the track record of Keystone Shipping Co. in managing government contracts, particularly those with cost-plus structures?

Information regarding Keystone Shipping Co.'s specific track record with government contracts, especially those utilizing cost-plus structures, is not provided in the current data. A comprehensive assessment would require reviewing their past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any past disputes or contract modifications, and their history of delivering similar services on time and within budget. Without this data, it is difficult to definitively assess their reliability and efficiency in managing government funds under such contract types.

What are the potential performance risks for the vessel BOB HOPE if these repairs are not completed effectively or on time?

If the repairs for the BOB HOPE are not completed effectively or on time, the primary performance risk is the vessel's reduced operational readiness. This could impact its ability to fulfill its role as a Deep Sea Freight Transporter, potentially disrupting critical supply chains or national security operations that rely on its services. Delays could also lead to increased costs, as extended maintenance periods often incur additional overhead and may necessitate the chartering of replacement vessels, which can be expensive. Furthermore, ineffective repairs could lead to recurring issues, requiring further costly interventions and potentially compromising the vessel's long-term seaworthiness.

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: $3,373,000

Exercised Options: $3,373,000

Current Obligation: $3,373,000

Actual Outlays: $392,200

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 693JF721G000002

IDV Type: BOA

Timeline