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Liner Service Contracts

Liner Service is commercial ocean carrier service that operates on a fixed route calling the same ports on a regularly scheduled basis, i.e, weekly, etc. Vessel loading/discharge is handled by carrier at commercial terminals. The Military Surface Deployment and Distribution Command (SDDC) Operations Center negotiates contracts for liner container and breakbulk service. Military Surface Deployment & Distribution Command (SDDC), a component of USTRANSCOM, arranges for common user ocean services by either establishing new contracts or utilizing existing contracts with commercial carriers offering liner service on scheduled trade routes. The liner service established by these contracts may be for container or break bulk service responding to either unit or sustainment requirements. The Military Sealift Command (MSC) provides support for most exercises, ammunition, and shipments not within the capability of liner carriers.

The fundamental transportation policy of the Department of Defense (DoD) is that DoD transportation requirements shall be met, to the maximum extent possible, through the use ofcommercial transportation resources. Therefore, the acquisition of transportation and related services is integral to DoD's overall force deployment capabilities and logistics processes. The Transportation Acquisition Policy achieves a balance between our acquisition reform and readiness goals, enabling the DoD to reap the benefits of a flexible, efficient acquisition process, while simultaneously enhancing transportation readiness. It will improve the quality of transportation services provided to the DoD enhance transportation readiness, and reduce administrative costs by streamlining and bringing consistency to the varied transportation acquisition processes currently in place.

The Military Surface Deployment & Distribution Command has streamlined the processes involved in soliciting, evaluating, awarding and administering contracts for Intermodal Sealift. The process maintains a competitive environment, while considering the needs of both customers and suppliers, focuses on reducing costs and implementing performance- based contracts. SDDC is responsible for leasing commercial intermodal surface containers that support DoD, and is responsible for contracting carrier services for delivery of surface container and breakbulk cargo from US ports of origin to ports of destination.

Cargo distribution and port management are the two critical process components of the surface distribution mission. To meet this mission, SDDC Global Distribution professionals develop best value transportation contracts and container-leasing agreements, which support the transportation management of freight such as tanks, fuel, ammunition, combat vehicles, food and other commodities to locations within CONUS and throughout the world. In support of the port management function, SDDC serves as the single port manager (SPM) at 25 locations worldwide and as such is responsible for all aspects of the ship loading and un-loading process. Beyond providing SPM support, the SDDC can establish port operations anywhere and anytime that there is a need. These two capabilities combined provide SDDC with the ability to execute an "End-to-End" distribution mission, which facilitates in-transit visibility and total asset visibility throughout the logistics pipeline.

Maintaining a strong U.S. flag maritime industry is an essential element of this Nation's rapid force projection strategy. The strategic importance of this industry has long been recognized and continues to be reflected in our Nation's cargo preference laws. These laws require use of U.S. flag vessels for movement of Department of Defense (DOD) cargo. The Cargo Preference Act of 1904 requires all items procured for or owned by U.S. Military departments and defense agencies be carried exclusively (100 percent) on U.S. flag vessels available at reasonable rates. The Cargo Preference Act of 1954 requires that at least 50 percent of the gross tonnage of all Government-generated cargo be transported on privately owned, US flag commercial vessels to the extent such vessels are available at fair and reasonable rates.

It is SDDC's policy to strictly adhere to US cargo preference laws and to use US flag vessels in accordance with Voluntary Intermodal Sealift Agreement (VISA) priorities to the maximum extent possible. DFARS Section 247.572-2 authorizes the use of foreign flag vessels as an exception to the requirements of the Cargo Preference Act of 1904 when the contracting officer determines that no US flag vessels are available. On 3 Feb 1997, the authorization to approve the use of foreign flag vessels was delegated from the Commander, Military Sealift Command to SDDC for ocean and intermodal transportation of DOD and DOD sponsored cargoes under contracts issued by SDDC. The Commander, SDDC, has further delegated authority to authorize the use of foreign flag vessels to the SDDC Operations Center for cargo booked by the Operations Center.

Universal Service Contract (USC)

USTRANSCOM and its industry partners have streamlined the processes involved in soliciting, evaluating, awarding and administering contracts for Intermodal sealift. A strategy was developed that maintains a competitive environment, while considering the needs of both customers and suppliers, focuses on reducing costs and implementing performance-based contracts.

This contract is to provide international cargo transportation services using ocean common or contract carriers offering regularly scheduled commercial liner service for requirements that may arise in any part of the world and involve ocean movement for the routes covered herein. Contractors under contract must be capable of providing ocean, intermodal and related transportation services to support their offered services as required herein. This contract is primarily for US Department of Defense (DoD) sponsored requirements. Other organizations may fill their requirements through this contract only as designated by the Procurement Contracting Officer (PCO).

The Universal Services Contract 05 (USC 05) is a multi-use shipping contract offering liner service for the shipment of DOD assets worldwide. The contract is administered through SDDC and covers a wide range of commodities including Arms, Ammunition and Explosive (AA&E) and related hazardous materials. In this capacity, USC 05 provides the government with ocean lift to move DOD assets to meet mission requirements.

SDDC proposed numerous changes in the USC 05 contract. Many of these changes affect safety and security and impact carrier performance standards. Additionally, SDDC has proposed expanding the scope of carrier services without increasing cost to the service customers. In an effort to continually improve the quality of service to their customers, SDDC has solicited comments from Service stakeholders regarding changes made to the contract that involve attempts to improving asset visibility and accountability.

Compared with the previous USC 04 contract, the new contract, dated January 2005, contains sweeping changes designed to improve the safety and security and the effectiveness of DOD distribution processes. Some of these changes include automated web based tracking of shipments, expanding the number of qualified carriers by establishing carrier pools, as well as new user agreements between carriers and customers. One of the most promising of these new initiatives is the use of web based automated tracking tools. Use of web based systems will allow customers to run reports and receive valuable in-transit data concerning their shipments over the web. Service stakeholders discussed and provided comments to SDDC concerning the new contract as part of SDDC's continuous improvement process. Service stakeholders met with SDDC and the ocean carriers to discuss these changes and to explore new ways of improving carrier performance and accountability. SDDC consolidated Service inputs and has since successfully negotiated a number of expanded services without increasing the Services accessorial costs.

The USC has a dollar value of $400 million per year -- $1.2 billion for base period and options. Performance Periods include the Base period: 1 Mar 2006 to 28 Feb 2007; Option #1: 1 Mar 2007 to 29 Feb 2008; and Option #2: 1 Mar 2008 to 28 Feb 2009.

A "container" Contractor must reserve 10% of vessel capacity for the booking of Government cargo on each U.S. flag vessel sailing from CONUS on designated routes. A "breakbulk/RORO" Contractor must reserve 10% of vessel capacity for the booking of Government cargo on each U.S. flag vessel sailing from CONUS on designated routes.

Cargo will be offered to awardees to ensure compliance with awarded cargo minimums by route/zone. On designated routes with award to multiple carriers, all cargo will be booked to contractors at the discretion of Ordering Officers based on a tradeoff analysis of technical capability/service, past performance and price, subject to VISA priorities. On non-designated routes, cargo will be offered to the low price technically acceptable carrier, as determined by the Ordering Officer at the time of booking based on cargo requirements, subject to VISA priorities. Awarded contract minimums for the base period or the option period must be satisfied by the expiration date of the base or option period.

The act of God, enemies, fire, restraint of princes, rulers of people, and all dangers and accidents of the seas, rivers, machinery, boilers and steam navigation, and errors of navigation constitute Force Majeure. The vessel shall have the liberty to deviate for the purpose of saving life and property, to tow or to be towed, to sail with or without pilots, or to go into dry dock or into ways with or without cargo on board. However, in no case shall the contractor be entitled to extra compensation for such a deviation and the contractor shall not be relieved of responsibility for delivery of cargo to the destination.

Solicitation No. DAMT01-02-R-0066 resulted in the award of the following contracts. All rates awarded are contained in the following contracts awarded by carrier regardless of the type of service. CONTRACTOR CONTRACT NUMBER AMERICAN PRESIDENT LINES LTD (APLS) DAMT01-03-D-0129 AMERICAN ROLL ON ROLL OFF CARRIER (AROF) DAMT01-03-D-0136 CENTRAL GULF LINES, INC (CEGL) DAMT01-03-D-0134 COLUMBUS LINE USA, INC (CLIW) DAMT01-03-D-0132 CROWLEY LINER SERVICES (CAMN) DAMT01-03-D-0137 CSX LINES LLC (CSXL) DAMT01-03-D-0127 FARRELL LINES, INC (POCL) DAMT01-03-D-0138 HYUNDAI AMERICAN SHIPPING AGENCY (HDMU) DAMT01-03-D-0131 LYKES LINES LIMITED, LLC (LYKL) DAMT01-03-D-0125 MAERSK LINE LIMITED (MAEU) DAMT01-03-D-0124 MATSON NAVIGATION COMPANY (MATS) DAMT01-03-D-0126 POLYNESIA LINE LTD (PLLU) DAMT01-03-D-0133 SAMSKIP GMBH (SKII) DAMT01-03-D-0130 TOHO SHIPPING CO., LTD. (TOHO) DAMT01-03-D-0135 TRANSATLANTIC LINES LLC (TALS) DAMT01-03-D-0128 VAN OMMEREN SHIPPING (USA) (VOSH) DAMT01-03-D-0139

Regional Domestic Contract (RDC)

On 24 March 2003 the Military Traffic Management Command Global Intermodal Domestic Division released DAMT01-03-R-0023, for the Regional Domestic Contract-03 for commercial regularly scheduled liner service transporting DOD cargo from CONUS points and ports to Alaska and Puerto Rico (Jones Act trade lanes). The requirement was an indefinite delivery-indefinite quantity contract for one base year and two-one year option period. The Regional Domestic Contracts (RDC-03) DAMT01-03-D-0175 through 0182 were awarded on 3 July 2003 with a performance Period 1 August 2003 through 31 July 2006. The 2nd Option Year Period of Services under the Regional Domestic Contract (RDC) was exercised, effective 1 August 2005 through 31 July 2006.

The Contractor, a vessel-operating ocean Carrier, provides all resources necessary to perform the Performance Work Statement (PWS). This performance shall be provided through ocean and intermodal transportation by Jones Act U.S. flagships and/or barge/tug systems. The Contractor shall maintain regularly scheduled liner term service between continental U.S. (CONUS) points and ports to the port of San Juan, Puerto Rico, and the U.S. Virgin Islands and points and ports in Alaska, throughout the period of the contract. The Contractor agrees to offer space in each of its vessels engaged in Contractor's service on the routes under this contract, consistent with its obligations as a common or contract Carrier.

The majority of containerized military cargo shipped to Puerto Rico moves under the provisions of a MTMC Regional Domestic Contract. The contract establishes rates, terms, and conditions for services that are provided for intermodal movements and other special contract provisions such as allowable time for the use of carrier equipment (such as container or chassis) and detention rates charged if allowable time is exceeded.

The Government commited to ship a minimum of 716 forty-foot equivalent units (FEUs) northbound to Alaska from Continental United States (CONUS), (excluding vehicles) and 23 FEU's southbound to (CONUS) (excluding vehicles) under the non-Customer Service Section during the term of this contract. Cargo moved in a container of forty (40) feet or longer will be counted as one (1) FEU and cargo in a container of twenty (20) feet will be counted as one-half (0.5) FEU. The Government also commited to ship a minimum of 2221 measurement tons of non-Customer Service Section breakbulk cargo northbound to Alaska from CONUS and 2318 measurement tons southbound to CONUS from Alaska during the term of this contract. In the case where the Government failed to ship the minimum guaranteed cargo, the Government will pay the Contractor two hundred fifty (250) dollars per FEU shortfall for containers and seven (7) dollars per MT shortfall for breakbulk in place of actual damages.

The Government commited to ship one (1) measurement ton (MT) or one (1) FEU container as appropriate for awardees of inbound service from Alaska to CONUS. The same commitment applies separately to the option period.

The Government commited to ship a minimum of 724 forty-foot equivalent units (FEUs) southbound to Puerto Rico and US Virgin Islands from Continental United States (CONUS), (excluding vehicles) under the non-Customer Service Section and 227 FEU's northbound from Puerto Rico/US Virgin Islands to (CONUS) (excluding vehicles) during the term of this contract. Cargo moved in a container of forty (40) feet or longer will be counted as one (1) FEU and cargo in a container of twenty (20) feet will be counted as one-half (0.5) FEU. The Government also commits to ship a minimum of 2927 measurement tons of breakbulk cargo southbound to Puerto Rico/US Virgin Islands from CONUS and 782 measurement tons of non-Customer Service Section during the term of this contract. In the case where the Government fails to ship the minimum guaranteed cargo, the Government will pay the Contractor two hundred fifty (250) dollars per FEU shortfall for containers and seven (7) dollars per MT shortfall for breakbulk in place of actual damages.

The Government commited to ship one (1) measurement ton (MT) or one (1) FEU container as appropriate for awardees of inbound service from Puerto Rico/Virgin Islands to CONUS. The same commitment applies separately to the option period.

Guantanamo

Contract W81GYE-06-D-0117, issued 18 May 2006 to GUDMUNDUR KJAERNESTED, DBA TRANSATLANTIC LINES LLC, provided for a dedicated liner service for containerized and break bulk cargo between U.S. Naval Station Guantanamo Bay, Cuba (GTMO) and Jacksonville, Florida (JaxPort). All services for required cargo will be provided according to the rates established in CARE II -SM.

GTMO is a United States Government controlled facility. The reconstructed GTMO pier supports single and dual axles up to a maximum of 500 pounds per square foot load-bearing capacity. No Government crane, ramp, yard tractors, or any other equipment is available at NAVSTA GTMO for use by the Carrier. Water depths at pier side are normally 34 feet. Harbor seas between one to three feet are not unusual. All transportation of and intermodal equipment to be furnished at GTMO is at Carrier's expense. Port services in GTMO are contractor operated. Barge/vessel discharge and loading operations can be conducted 24 hours if prior authorization has been approved from the Quality Assurance Evaluator (QAE). Discharge and loading operations will normally be conducted, as required, on recognized U.S. Holidays. There are no Government stevedore services available. GTMO is a minimum manned contractor-serviced port. One Navy Harbor Pilot and three 2000SHP Tugs are available, NAVBASE provides linehandlers. U S Navy units are the only units to receive routine BROW support. USCG and commercial vessels provide their own support.

The Contractor ("Carrier"), a Vessel Operating Common Carrier (VOCC), provides transportation of lawful cargo by U.S. flag ships or tug/barge systems between points in the Continental United States of America (CONUS) and GTMO, as established in Carrier Analysis and Rate Evaluation (CARE) Service Module, also known as CARE II-SM. The Carrier shall maintain a dedicated, regularly scheduled, self-sustaining liner term service on this route throughout the period of the Contract.

Types of cargo to be carried are military cargo, personal property, privately owned vehicles, mail, and any other cargo shipped by the Department of Defense (DoD) in the Defense Transportation System (DTS). The Carrier will not transship or relay cargo. The Carrier shall provide both break bulk and intermodal container service, including terminal handling, all stevedoring, loading and discharging in CONUS and GTMO. At Jacksonville, the cargo shall be loaded and discharged at in JaxPort/Blount Island. At GTMO, the cargo shall be loaded and discharged with carrier provided equipment at Wharf Bravo, except when the COR/ACOR designates Wharf Uniform as an alternate. All inland points at GTMO are within 10 miles of the wharf.

The minimum space available to the Government for each outbound (CONUS to GTMO) or inbound ( GTMO to CONUS) sailing shall be seventy-five (75) FEU's, which includes space adequate to accept a minimum of fifteen (15) refrigerated containers; and 2000 square feet of break bulk cargo. Each of the 40' spaces offered must be able to accommodate two 20' containers, or the vessel(s) must have additional space to accommodate the 20' container shortfall.

Antigua and Ascension Island Transportation Services

The Contractor, a vessel operating ocean Carrier, shall provide transportation of lawful cargo by U.S. flag ships between points in the Continental United States of America (CONUS) (specified in CARE-SM II), Port of Embarkment of Cape Canaveral, Antigua and Detachment 2-45th OG at Ascension Island, South Atlantic. The Carrier shall maintain door-to-door service to Antigua and door-to-port service to Ascension Island throughout the period of the Contract via a self-sustaining geared vessel(s). The Carrier shall provide both breakbulk and intermodal container service, including terminal handling, all stevedoring, loading and discharging in Antigua, Ascension Island and CONUS. The minimum acceptable frequency of service shall be a vessel call at Antigua and Ascension Island at intervals not to exceed sixty (60) days between deliveries/sailings. Actual cargo transit time will not exceed eighteen (18) days from Cape Canaveral to Antigua and Ascension Island. Subsequently, CONUS departures shall occur at two-month intervals on the first Wednesday of each sailing month.

Ascension Island is a British owned, controlled facility. Water depths at pier side are normally 12 feet. Harbor seas between 10 to 14 feet are not unusual. Port operations: Port operations are provided by the Air Force contractors. Antigua is located in the northeastern part of the island of Antigua in the Leeward Islands of the West Indies, 1,250 nautical mile southeast of Cape Canaveral. Port operations are provided by commercial port agents. Normal base support services at Antigua AS are performed by the Range Contractor, which includes logistics and transportation. Appropriate equipment is available on the air station for discharge and loading operations.

Azores Transportation Services

Contract DAMT01-03-D-0169-P00006 issued 23 May 2003 to STRONG VESSEL OPERATORS LLC, a vessel operating ocean Carrier, to provide transportation of lawful cargo by U.S. flag ships between points in the Continental United States of America (CONUS) as specified in CARE-SM II System and the commercial terminal in Port of Praia, Azores. The Carrier shall maintain regularly scheduled liner term service on this route throughout the period of the Contract via a self-sustaining or self-geared vessel(s).

The services being procured by this contract provide the primary logistical support for the American Forces stationed in the Azores and the sole means of surface transportation between the U.S. and the Azores. The Carrier will transport over 90% of all supplies used at the base, including food, other necessities, and amenities providing quality of life. Reliability of service in all weather conditions is paramount. Sea State 4 or higher is frequent on the annual schedule. Maintenance of the schedule has allowed the Air Base to move to a just-in-time delivery system, resulting in significant savings, including being able to eliminate the requirement to maintain redundant/spare equipment. Minimum exposure to intransit damages will result in further reducing or eliminating the need for untimely replacement from stateside sources with resulting loss of capability and unacceptable time delays in restoring that capability.