Navy's $158M Deep Sea Freight Contract Awarded to TOTE Services, LLC Under Full and Open Competition

Contract Overview

Contract Amount: $158,378,787 ($158.4M)

Contractor: Tote Services, LLC

Awarding Agency: Department of Defense

Start Date: 2011-11-03

End Date: 2018-09-30

Contract Duration: 2,523 days

Daily Burn Rate: $62.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: PER DIEM - FIRM PERIOD

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32256

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $158.4 million to TOTE SERVICES, LLC for work described as: PER DIEM - FIRM PERIOD Key points: 1. The contract represents a significant investment in deep sea freight transportation services for the Navy. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The firm fixed-price contract type provides cost certainty for the government. 4. The duration of the contract (2523 days) indicates a long-term need for these services. 5. The award to TOTE Services, LLC, a single entity, highlights the specialized nature of the services required. 6. The contract's focus on freight transportation is critical for logistical support of naval operations.

Value Assessment

Rating: good

Benchmarking the value of this contract is challenging without specific service delivery metrics or comparable contract data. However, the total award amount of over $158 million over approximately seven years suggests a substantial commitment to deep sea freight. The firm fixed-price structure is generally favorable for the government, providing cost predictability. Further analysis would require understanding the scope of services, vessel types, and operational tempo to assess true value for money against market rates for similar long-term freight agreements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bids suggests a competitive environment, which typically benefits price discovery and can lead to more favorable terms for the government. The level of competition is a positive sign for ensuring that the selected contractor offers a competitive price and quality of service.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it encourages multiple companies to bid, driving down costs and ensuring the government receives the best possible value for its investment in deep sea freight services.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational units, which rely on timely and efficient deep sea freight for logistical support. The services delivered include essential deep sea freight transportation, crucial for moving personnel, equipment, and supplies across vast distances. The contract has a geographic impact primarily related to naval deployment routes and operational areas, likely involving global shipping lanes. Workforce implications include employment opportunities within TOTE SERVICES, LLC and potentially related maritime industries, such as crewing, maintenance, and port operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to potential cost overruns if market conditions change significantly.
Reliance on a single awardee for a critical service like deep sea freight could pose risks if the contractor faces operational or financial difficulties.
The specific nature of 'Deep Sea Freight Transportation' may limit the pool of qualified bidders in future competitions.

Positive Signals

Firm fixed-price contract provides cost certainty and limits the government's exposure to cost overruns.
Full and open competition indicates a thorough vetting process and likely competitive pricing.
The award to an established entity like TOTE Services, LLC suggests a degree of confidence in their capability and reliability.

Sector Analysis

The maritime transportation sector, particularly deep sea freight, is a critical component of global commerce and national defense logistics. This contract falls within the broader transportation and logistics industry, which is characterized by significant capital investment in vessels, infrastructure, and specialized personnel. The Navy's reliance on such services underscores the strategic importance of maintaining robust domestic and international shipping capabilities. Comparable spending benchmarks would involve analyzing other large-scale government or commercial freight contracts to assess cost-effectiveness.

Small Business Impact

The contract details indicate that small business participation was not a primary set-aside consideration (ss: false, sb: false). This suggests the primary focus was on securing specialized deep sea freight capabilities from large, established providers. While there is no direct set-aside, TOTE Services, LLC may engage small businesses for subcontracting opportunities related to specific services or supplies, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the extent of any subcontracting efforts.

Oversight & Accountability

Oversight for this definitive contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver services within the agreed-upon price. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance or award.

Related Government Programs

Military Sealift Command Contracts
Ocean Transportation Services
Defense Logistics Agency Contracts
Strategic Sealift Program
Maritime Administration Contracts

Risk Flags

Long-term contract duration
Single awardee for critical service
Potential for market volatility impacting fixed price

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $158.4 million to TOTE SERVICES, LLC. PER DIEM - FIRM PERIOD

Who is the contractor on this award?

The obligated recipient is TOTE SERVICES, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $158.4 million.

What is the period of performance?

Start: 2011-11-03. End: 2018-09-30.

What is the historical spending pattern for deep sea freight transportation by the Department of the Navy?

Analyzing historical spending patterns for deep sea freight transportation by the Department of the Navy requires access to comprehensive contract databases over multiple fiscal years. While this specific contract awarded $158,378,787.19 to TOTE SERVICES, LLC, understanding the broader trend involves looking at the total obligated amounts for similar services across different contracts and fiscal periods. Factors such as geopolitical events, deployment tempos, and changes in naval strategy can influence spending. For instance, periods of increased global military engagement often correlate with higher demand and spending on logistical support, including freight. Conversely, periods of reduced operational tempo or shifts towards different transportation modes might see decreased spending. Without specific historical data, it's difficult to definitively categorize this award as an increase, decrease, or continuation of a trend, but its substantial value suggests a consistent and significant requirement for these services.

How does the per-unit cost of this contract compare to similar deep sea freight contracts?

Determining a precise per-unit cost for this contract is challenging without detailed service delivery metrics. The provided data indicates a total award of $158,378,787.19 for 'Deep Sea Freight Transportation' over 2523 days. To benchmark per-unit costs, we would need to define a standard unit, such as cost per ton-mile, cost per container moved, or cost per vessel-day. Comparing this to similar contracts requires identifying contracts with comparable scope, vessel types, routes, and service levels. For example, if this contract primarily involves large cargo ships on long-haul routes, its per-unit cost might differ significantly from contracts focused on smaller vessels or shorter, more frequent routes. Given the 'firm fixed price' nature, the contractor has assumed the risk of cost fluctuations. A thorough comparison would involve analyzing publicly available data on other Department of Defense or commercial freight contracts to identify average rates and assess whether TOTE SERVICES, LLC's pricing falls within a reasonable market range, considering the specific operational requirements and duration.

What is TOTE Services, LLC's track record with government contracts, particularly in maritime logistics?

TOTE Services, LLC has a significant track record with government contracts, particularly within the maritime sector. As a subsidiary of TOTE Inc., the company has extensive experience in operating and managing various types of vessels, including Jones Act qualified vessels, which are crucial for domestic U.S. shipping. Their portfolio often includes services related to government logistics, vessel management, and specialized maritime operations. For the Department of Defense, TOTE has historically been involved in providing sealift capabilities, including chartering vessels and providing operational support. Their experience often spans various agencies, including the U.S. Navy's Military Sealift Command. A review of their contract history would likely reveal numerous awards for vessel operations, maintenance, and transportation services, demonstrating a capacity to handle large-scale, long-term government requirements. This specific contract for deep sea freight transportation aligns with their core competencies and established government service history.

What are the primary risks associated with this deep sea freight transportation contract?

Several risks are associated with this deep sea freight transportation contract. Firstly, the long duration of 2523 days (approximately 7 years) exposes the contract to market volatility. Fluctuations in fuel prices, crew costs, insurance rates, and geopolitical instability could impact the contractor's profitability or necessitate future adjustments if not adequately managed within the firm fixed-price structure. Secondly, operational risks are inherent in maritime transport, including potential delays due to weather, port congestion, mechanical failures, or regulatory changes. The reliance on a single contractor, TOTE SERVICES, LLC, for a critical service like deep sea freight introduces a concentration risk; any disruption to their operations could have significant logistical consequences for the Navy. Finally, ensuring consistent service quality and compliance with stringent military requirements over such an extended period requires robust management and oversight from both the contractor and the government.

How does the competition level (full and open with 5 bidders) impact the value for money received by the taxpayer?

A full and open competition with five bidders generally enhances value for money for taxpayers. This level of competition signals that the market has sufficient capacity and interest to bid on the requirement, preventing a situation where a single or limited number of providers can dictate terms. The presence of multiple bids allows the government to compare offerings and select the most advantageous proposal based on price, technical capability, and other evaluation factors. For taxpayers, this translates into a higher likelihood of securing services at a competitive market rate, reducing the risk of overpayment. The process encourages bidders to offer their best terms to win the contract, potentially leading to cost savings compared to sole-source or limited-source awards. Furthermore, a competitive process can drive innovation and efficiency as contractors strive to differentiate themselves.

What are the potential performance implications of a firm fixed-price contract for deep sea freight?

A firm fixed-price (FFP) contract for deep sea freight transportation places the primary cost risk on the contractor, TOTE SERVICES, LLC. This means the contractor is obligated to perform the work for the agreed-upon price, regardless of unforeseen cost increases related to fuel, labor, maintenance, or other operational expenses. For the government, this offers significant budget certainty and predictability, as the total cost is established upfront. However, the contractor may build in a contingency premium to account for potential risks, which could result in a higher initial price compared to cost-reimbursement contracts. From a performance perspective, an FFP contract incentivizes the contractor to manage costs efficiently and deliver services reliably to maintain profitability. Conversely, if the contractor faces significant cost overruns, they might be tempted to cut corners on service quality or maintenance, although contract terms and oversight mechanisms are designed to mitigate this. The government's role shifts towards ensuring compliance with the contract's scope and quality standards.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0003311R2500

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Saltchuk Resources, Inc. (UEI: 075108902)

Address: 302 HARPER DR STE 200, MOORESTOWN, NJ, 08057

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

Financial Breakdown

Contract Ceiling: $158,378,787

Exercised Options: $158,378,787

Current Obligation: $158,378,787

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline