Navy charters offshore service vessel for $37.9M, highlighting potential value concerns in a sole-source procurement

Contract Overview

Contract Amount: $37,921,194 ($37.9M)

Contractor: Offshore Service Vessels, L.L.C.

Awarding Agency: Department of Defense

Start Date: 1999-10-01

End Date: 2008-09-05

Contract Duration: 3,262 days

Daily Burn Rate: $11.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 200405!000016!1700!G0233 !MILITARY SEALIFT COMMAND !N0003304C2000 !A!N! !Y! ! !20031001!20040331!064676281!064676281!064676281!N!EDISON CHOUEST OFFSHORE LLC !16201 EAST MAIN STREET !GALLIANO !LA!70354!66042!073!06!SAN DIEGO NS !SAN DIEGO !CALIFORNIA!+000006434252!N!N!000000000000!V124!MARINE CHARTER FOR THINGS !S1 !SERVICES !000 !* !483111!E! !1! ! ! ! ! !99990909!B! ! !N!A!D!U!J!2!001!N!2A!Z!N!Z! ! !Y!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: PEARL HARBOR, HONOLULU County, HAWAII, 96860

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $37.9 million to OFFSHORE SERVICE VESSELS, L.L.C. for work described as: 200405!000016!1700!G0233 !MILITARY SEALIFT COMMAND !N0003304C2000 !A!N! !Y! ! !20031001!20040331!064676281!064676281!064676281!N!EDISON CHOUEST OFFSHORE LLC !16201 EAST MAIN STREET !GALLIANO !LA!70354!66042!073!06!SAN DIEGO NS !SAN … Key points: 1. The contract's sole-source nature raises questions about price competitiveness and potential overpayment. 2. A long contract duration (over 9 years) suggests a need for careful performance monitoring. 3. The absence of competition may limit opportunities for innovation and cost savings. 4. The specific service (offshore service vessel charter) is critical for naval operations, indicating a high-stakes procurement. 5. The firm-fixed-price contract type shifts risk to the contractor, but oversight is still crucial.

Value Assessment

Rating: questionable

Benchmarking the value of this specific offshore service vessel charter is challenging due to the sole-source nature of the award and the long duration of the contract. Without competitive bids, it's difficult to ascertain if the $37.9 million price represents a fair market value. The firm-fixed-price structure is generally favorable for cost control, but the lack of competition means there's no direct market comparison to assess if the price is truly competitive. Further analysis would require understanding the vessel's specifications, operational requirements, and prevailing market rates for similar charters.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The data indicates that only one offer was solicited and received. This approach is typically used when a unique capability or circumstance exists, but it significantly limits price discovery and can lead to higher costs for the government. The lack of multiple bidders means the Navy did not benefit from a competitive environment that could drive down prices or encourage innovative solutions.

Taxpayer Impact: Taxpayers may have paid a premium for this service due to the absence of a competitive bidding process. Without competition, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

Naval operations in the Pacific region benefit from the availability of the chartered offshore service vessel. The vessel supports critical military logistics and readiness, ensuring the Navy can maintain its operational presence. The contract supports jobs within the maritime services industry, particularly in Hawaii where the vessel is stationed. The services provided are essential for maintaining naval infrastructure and supporting fleet movements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement limits price competition, potentially leading to higher costs for taxpayers.
Long contract duration (over 9 years) increases the risk of cost overruns or performance degradation without robust oversight.
Lack of transparency in the sole-source justification could mask inefficiencies or missed opportunities for better value.
The specific nature of offshore vessel chartering can be subject to volatile market conditions, impacting long-term cost-effectiveness.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government, assuming the scope is well-defined.
The contract ensures the availability of a critical asset for naval operations, supporting national security objectives.
The long-term nature of the contract may provide stability for the contractor, potentially ensuring reliable service delivery.

Sector Analysis

The maritime services sector, particularly vessel chartering, is a critical component of logistics and support for various government agencies, including the Department of Defense. This contract falls within the broader category of transportation and logistics services. The market for specialized offshore vessels can be niche, with limited availability of suitable assets. Comparable spending benchmarks are difficult to establish without more specific details on the vessel type and service requirements, but large-scale chartering contracts can run into tens or hundreds of millions of dollars over their lifespan.

Small Business Impact

This contract does not appear to have a small business set-aside. The prime contractor, Edison Chouest Offshore LLC, is a large entity. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The absence of a set-aside or specific subcontracting goals may limit opportunities for small businesses to participate in this significant federal contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the long duration and sole-source nature, robust performance monitoring and financial oversight are crucial. Transparency regarding the justification for the sole-source award and regular performance reviews would be key accountability measures. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Military Sealift Command Contracts
Naval Vessel Charters
Offshore Support Services
Department of Defense Logistics Contracts
Maritime Transportation Services

Risk Flags

Sole-source procurement
Long contract duration
Lack of competition
Potential for price non-competitiveness

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.9 million to OFFSHORE SERVICE VESSELS, L.L.C.. 200405!000016!1700!G0233 !MILITARY SEALIFT COMMAND !N0003304C2000 !A!N! !Y! ! !20031001!20040331!064676281!064676281!064676281!N!EDISON CHOUEST OFFSHORE LLC !16201 EAST MAIN STREET !GALLIANO !LA!70354!66042!073!06!SAN DIEGO NS !SAN DIEGO !CALIFORNIA!+000006434252!N!N!000000000000!V124!MARINE CHARTER FOR THINGS !S1 !SERVICES !000 !* !483111!E! !1! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is OFFSHORE SERVICE VESSELS, L.L.C..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.9 million.

What is the period of performance?

Start: 1999-10-01. End: 2008-09-05.

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

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. Without this specific justification, it is difficult to assess whether the sole-source award was appropriate and if it truly represented the best value for the government. Further investigation into the contract file or agency documentation would be necessary to determine the precise rationale.

How does the contract value compare to similar offshore service vessel charters in the market?

Direct comparison of the $37.9 million contract value to similar offshore service vessel charters is challenging due to the sole-source nature of this award and the extended contract duration (over 9 years). Market rates for vessel charters fluctuate based on vessel type, size, capabilities, operational area, and contract length. Without competitive bidding data or access to market research conducted by the Navy, it's difficult to definitively state whether this price is above, below, or in line with market rates. A comprehensive benchmark would require analyzing rates for comparable vessels chartered through competitive processes over similar periods.

What are the key performance indicators (KPIs) and oversight mechanisms for this contract?

The provided data does not detail the specific Key Performance Indicators (KPIs) or oversight mechanisms for this contract. However, for a long-term, high-value charter of an offshore service vessel, typical KPIs would likely include vessel availability, operational readiness, maintenance schedules, safety compliance, and adherence to mission requirements. Oversight would involve regular performance reviews by the contracting officer's representative (COR), technical inspections, and financial audits. The firm-fixed-price nature suggests the contractor bears most cost risks, but the government must ensure the vessel meets all contractual specifications and operational needs throughout the contract's life.

What is the historical spending pattern for similar offshore service vessel charters by the Department of the Navy?

The provided data focuses on a single contract and does not offer historical spending patterns for similar offshore service vessel charters by the Department of the Navy. To analyze historical spending, one would need to query federal procurement databases for contracts with similar Product Service Codes (PSCs) or keywords related to offshore vessel charters awarded by the Navy over several fiscal years. This would allow for an assessment of trends in contract values, durations, competition levels, and average costs, providing context for the current contract's value and procurement strategy.

What are the potential risks associated with a sole-source award for critical maritime support services?

Sole-source awards for critical maritime support services carry several potential risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a competitive bidding process. Secondly, it may reduce the incentive for the sole-source provider to innovate or improve efficiency, as there is no direct market pressure from competitors. Thirdly, it can limit the government's flexibility; if the sole-source provider fails to perform adequately, finding an alternative solution can be difficult and time-consuming, potentially disrupting critical operations. Finally, it raises concerns about transparency and fairness in the procurement process.

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: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 16201 EAST MAIN STREET, GALLIANO, LA, 01

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline