DoD's $24.7M Naval Distillate Contract Awarded to Exxon Mobil Corporation

Contract Overview

Contract Amount: $24,703,102 ($24.7M)

Contractor: Exxon Mobil Corporation

Awarding Agency: Department of Defense

Start Date: 2015-04-03

End Date: 2015-04-29

Contract Duration: 26 days

Daily Burn Rate: $950.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 32

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8501976044!DISTILLATE,NAVAL

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22037, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $24.7 million to EXXON MOBIL CORPORATION for work described as: 8501976044!DISTILLATE,NAVAL Key points: 1. Contract value represents a significant investment in fuel supply for naval operations. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. Fixed-price contract with economic price adjustment indicates potential for cost fluctuations. 4. Duration of 26 months suggests a medium-term supply agreement. 5. Contractor's established presence in the petroleum industry implies operational capacity. 6. Geographic focus on Virginia points to strategic importance for East Coast naval bases.

Value Assessment

Rating: good

The contract value of $24.7 million for naval distillate fuel appears reasonable given the scale and duration. 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 is common for commodity-based contracts, allowing for market volatility but requiring careful monitoring of price adjustments to ensure fair pricing over the contract term.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With 32 bids received, the competition level was robust, suggesting that the Defense Logistics Agency actively sought competitive pricing. A high number of bidders generally leads to better price discovery and potentially lower costs for the government.

Taxpayer Impact: The extensive competition for this contract likely resulted in taxpayer savings by driving down the price of naval distillate fuel compared to a less competitive scenario.

Public Impact

Naval forces operating from East Coast bases benefit from a reliable supply of essential fuel. The contract supports the operational readiness of the U.S. Navy. Geographic impact is concentrated in Virginia, supporting critical defense infrastructure. The contract indirectly supports jobs within the petroleum refining and distribution sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause.
Dependence on a single large supplier for a critical fuel commodity.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
Contractor is a major player in the energy sector with proven capabilities.
Contract duration of 26 months provides supply stability.

Sector Analysis

This contract falls within the energy sector, specifically the refining and distribution of petroleum products. The market for naval distillate fuel is specialized, serving military requirements. The value of $24.7 million is moderate for a federal fuel supply contract, with larger contracts often involving broader distribution networks or longer durations. The industry is characterized by significant capital investment and regulatory oversight.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, though large prime contractors may engage small businesses for support services not detailed in this award.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a fixed-price contract with economic price adjustment, DLA contracting officers would monitor fuel prices and the application of the adjustment clause to ensure fairness. Transparency is maintained through contract award databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Naval Fuel Supply
Petroleum Product Procurement
Fixed-Price Economic Price Adjustment Contracts

Risk Flags

Economic Price Adjustment Clause
Commodity Price Volatility
Single Large Prime Contractor Reliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.7 million to EXXON MOBIL CORPORATION. 8501976044!DISTILLATE,NAVAL

Who is the contractor on this award?

The obligated recipient is EXXON MOBIL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.7 million.

What is the period of performance?

Start: 2015-04-03. End: 2015-04-29.

What is Exxon Mobil Corporation's track record with the Department of Defense for fuel supply contracts?

Exxon Mobil Corporation, as a major integrated oil company, has a long-standing history of supplying petroleum products to government agencies, including the Department of Defense. While specific details on all past fuel contracts are not provided here, their extensive experience in refining, logistics, and government contracting suggests a significant capacity to meet DoD requirements. Past performance reviews and contract databases would offer a more granular view of their reliability, pricing history, and compliance with previous DoD fuel awards. Their established infrastructure and market position generally indicate a strong capability to fulfill large-scale fuel demands.

How does the $24.7 million contract value compare to similar naval distillate fuel contracts awarded by the DoD?

Without access to a comprehensive database of all historical DoD fuel contracts, a direct comparison of the $24.7 million value is challenging. However, this figure represents a substantial award for a specific fuel type over a 26-month period. Contracts for bulk fuel supply can vary widely based on volume, duration, delivery locations, and market conditions at the time of award. Given that this is for naval distillate and awarded under full and open competition with 32 bids, the price is likely competitive. Further analysis would involve comparing the price per gallon or barrel, adjusted for economic factors, against similar awards to assess value for money.

What are the primary risks associated with a fixed-price contract with economic price adjustment for fuel?

The primary risk with a Fixed Price with Economic Price Adjustment (FPEPA) contract for fuel lies in the potential for price volatility. While the fixed-price component provides a baseline, the economic price adjustment clause allows the contract price to fluctuate based on an index or formula tied to market prices of crude oil, refined products, or other economic indicators. This means the government could end up paying more than initially anticipated if fuel prices rise significantly. Conversely, the contractor bears the risk if prices fall substantially below the adjusted price. Effective oversight involves closely monitoring the index used for adjustments and ensuring the formula is applied correctly to mitigate excessive cost increases for the government.

How effective is full and open competition in ensuring competitive pricing for commodity fuel contracts?

Full and open competition is generally highly effective in ensuring competitive pricing for commodity fuel contracts, especially when there is a robust market with multiple capable suppliers. The solicitation of bids from all responsible sources, as indicated by the 32 bids received for this contract, creates a competitive environment. This encourages bidders to offer their most favorable pricing to secure the award. The Defense Logistics Agency's (DLA) use of this procurement method for naval distillate fuel suggests a strategy to leverage market forces to achieve the best possible value for taxpayers. The high number of bids further strengthens the likelihood of competitive outcomes.

What is the historical spending pattern for naval distillate fuel by the Defense Logistics Agency?

Historical spending patterns for naval distillate fuel by the Defense Logistics Agency (DLA) would typically show consistent procurement to support ongoing naval operations. DLA is the primary agency responsible for procuring and distributing fuel for the U.S. military. Spending levels can fluctuate year-to-year based on operational tempo, fleet size, global deployment requirements, and prevailing market prices for fuel. Analyzing DLA's historical obligations for fuel, specifically naval distillate, would reveal trends in volume purchased and average costs, providing context for the $24.7 million award. This data is crucial for forecasting future needs and budgeting.

What are the implications of awarding this contract to a single large corporation like Exxon Mobil?

Awarding a significant fuel contract to a single large corporation like Exxon Mobil Corporation has several implications. On the positive side, it leverages the contractor's extensive infrastructure, logistical capabilities, and proven experience in large-scale fuel supply, which can ensure reliability and efficiency. However, it also concentrates a critical supply function with one entity, potentially reducing redundancy and increasing dependence. From a competition standpoint, while this specific award was competitive, future procurements might face challenges if the market becomes more consolidated. The government must ensure robust contract management and performance monitoring to mitigate risks associated with relying on a single major supplier for essential resources.

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: 32

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

Evaluated Preference: NONE

Contractor Details

Address: 3225 GALLOWS RD, FAIRFAX, VA, 22037

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

Financial Breakdown

Contract Ceiling: $24,703,102

Exercised Options: $24,703,102

Current Obligation: $24,703,102

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060015D0469

IDV Type: IDC

Timeline