DoD spent $91.6M on aviation turbine fuel, with BP West Coast Products LLC securing the contract

Contract Overview

Contract Amount: $91,315,661 ($91.3M)

Contractor: BP West Coast Products LLC

Awarding Agency: Department of Defense

Start Date: 2015-05-20

End Date: 2016-06-17

Contract Duration: 394 days

Daily Burn Rate: $231.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8502132665!TURBINE FUEL,AVIATION

Place of Performance

Location: BLAINE, WHATCOM County, WASHINGTON, 98230

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $91.3 million to BP WEST COAST PRODUCTS LLC for work described as: 8502132665!TURBINE FUEL,AVIATION Key points: 1. The contract value represents a significant investment in a critical aviation fuel supply. 2. Competition dynamics for this fuel contract warrant further examination given the specialized nature of the product. 3. Potential risks include price volatility and supply chain disruptions inherent in the petroleum market. 4. Performance context is tied to ensuring uninterrupted aviation operations for the Defense Logistics Agency. 5. This spending falls within the broader energy and logistics sectors supporting military readiness.

Value Assessment

Rating: good

The awarded amount of $91.6 million for aviation turbine fuel appears reasonable given the scale and duration of the contract. Benchmarking against similar fuel supply contracts for the Department of Defense would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure aims to mitigate some market fluctuation risks for both parties.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of 16 bids suggests a competitive marketplace for aviation turbine fuel. This level of competition is generally favorable for price discovery and achieving market-based pricing.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down costs for essential fuel supplies.

Public Impact

The primary beneficiaries are the various branches of the U.S. military relying on aviation turbine fuel for operational readiness. The service delivered is the supply of critical aviation fuel, essential for flight operations. The geographic impact is likely nationwide, supporting air bases and operations across the United States. Workforce implications include support for logistics personnel involved in fuel handling and distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clauses in volatile fuel markets.
Dependence on a single supplier for a critical commodity could pose supply chain risks if not managed proactively.

Positive Signals

Awarded under full and open competition, suggesting a robust market and competitive pricing.
The contract duration and value indicate a stable, long-term supply arrangement.
The fixed-price component provides some cost certainty for a portion of the contract.

Sector Analysis

The petroleum refineries sector (NAICS 324110) is a foundational industry providing essential fuels. The market for aviation turbine fuel is substantial, driven by both commercial and military demand. This contract represents a significant portion of government spending within this specialized segment of the energy market, ensuring a critical supply chain for national defense.

Small Business Impact

Information regarding small business participation or subcontracting was not explicitly detailed in the provided data. However, given the nature of large-scale fuel supply contracts, prime contractors often have established subcontracting programs, though specific set-asides for small businesses may not always be feasible for such specialized commodities.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency's contracting and quality assurance personnel. Accountability measures are embedded in the contract terms, including delivery schedules and fuel quality specifications. Transparency is generally maintained through contract award databases, though specific performance metrics may be internal.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Aviation Fuel Procurement
Petroleum Product Supply Contracts
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Economic Price Adjustment Clause Impact

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $91.3 million to BP WEST COAST PRODUCTS LLC. 8502132665!TURBINE FUEL,AVIATION

Who is the contractor on this award?

The obligated recipient is BP WEST COAST PRODUCTS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $91.3 million.

What is the period of performance?

Start: 2015-05-20. End: 2016-06-17.

What is the historical spending trend for aviation turbine fuel by the Department of Defense over the last five years?

Analyzing historical spending trends for aviation turbine fuel by the Department of Defense over the last five years would reveal fluctuations tied to geopolitical events, global oil prices, and changes in operational tempo. For instance, periods of increased military engagement or higher fuel prices would likely correlate with increased spending. Conversely, budget reductions or shifts towards more fuel-efficient aircraft could lead to decreased expenditures. Without specific historical data, it's difficult to pinpoint exact figures, but the general trend is often influenced by a combination of market dynamics and strategic defense priorities. The $91.6 million awarded in this instance should be viewed within this broader context of fluctuating demand and pricing.

How does the unit price of aviation turbine fuel in this contract compare to market benchmarks or other government contracts?

A direct comparison of the unit price for aviation turbine fuel in this contract to market benchmarks or other government contracts is challenging without access to the specific pricing details and economic price adjustment formulas. Market benchmarks fluctuate daily based on global supply and demand. Government contracts often include economic price adjustment clauses that allow for modifications based on published indices, making direct comparisons complex. To assess value, one would need to analyze the base price, the adjustment mechanism, and compare the effective price paid over the contract's life against prevailing market rates and similar DLA or DoD fuel contracts awarded during the same period. The 'good' rating suggests that initial assessments indicate reasonable pricing, but a deeper dive into the price adjustment mechanism is crucial for a definitive value assessment.

What are the primary risks associated with the supply chain for aviation turbine fuel, and how are they mitigated in this contract?

The primary risks associated with the supply chain for aviation turbine fuel include geopolitical instability affecting crude oil production, refinery disruptions, transportation bottlenecks (pipeline, rail, ship), and sudden spikes in global demand. For this contract, the 'fixed price with economic price adjustment' (FPEPA) structure is a key mitigation strategy. While the fixed price component offers some cost certainty, the economic price adjustment allows the price to fluctuate with market indices, protecting the contractor from significant losses due to uncontrollable price volatility and ensuring continued supply. Additionally, the Defense Logistics Agency likely has contingency plans and multiple sourcing strategies to ensure fuel availability even if one supplier faces challenges. The large number of bidders also suggests a competitive market with multiple potential sources.

What is the track record of BP West Coast Products LLC in fulfilling large-scale government fuel contracts?

BP West Coast Products LLC, as a major energy company, has a significant track record in supplying fuel products, including to government entities. While specific performance details for this particular $91.6 million contract are not provided, large energy firms typically have established logistics and quality control systems to manage substantial fuel deliveries. Assessing their track record would involve reviewing past contract performance data, any reported instances of delivery failures, quality issues, or contract disputes with government agencies. Generally, companies of this size are accustomed to the rigorous requirements of government contracting, including stringent specifications, delivery schedules, and reporting obligations. Their continued participation in competitive bidding suggests a generally satisfactory performance history.

How does the competition level (16 bidders) impact the overall value and efficiency of this contract for taxpayers?

A high level of competition, such as the 16 bidders in this case, generally leads to better value and efficiency for taxpayers. When numerous companies vie for a contract, they are incentivized to offer more competitive pricing and favorable terms to win the award. This intense competition helps drive down the price closer to the actual cost of production plus a reasonable profit margin, reducing the potential for overpayment. Furthermore, a competitive environment can spur innovation and encourage suppliers to maintain high standards of quality and service to differentiate themselves. For taxpayers, this translates to more effective use of public funds, ensuring that the government procures essential goods like aviation turbine fuel at the best possible price available in the market.

Industry Classification

NAICS: Manufacturing › Petroleum and Coal Products Manufacturing › Petroleum Refineries

Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 16

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: BP P.L.C. (UEI: 210042669)

Address: 4519 GRANDVIEW RD, BLAINE, WA, 98230

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

Financial Breakdown

Contract Ceiling: $91,315,661

Exercised Options: $91,315,661

Current Obligation: $91,315,661

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060014D0508

IDV Type: IDC

Timeline