DoD's $28.1M Naval Distillate Fuel Contract Awarded to ExxonMobil Amidst Fixed Price with EPA
Contract Overview
Contract Amount: $28,109,464 ($28.1M)
Contractor: Exxon Mobil Corporation
Awarding Agency: Department of Defense
Start Date: 2013-12-18
End Date: 2014-01-20
Contract Duration: 33 days
Daily Burn Rate: $851.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 14
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8500535497!DISTILLATE,NAVAL
Place of Performance
Location: SPRING, HARRIS County, TEXAS, 77389
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $28.1 million to EXXON MOBIL CORPORATION for work described as: 8500535497!DISTILLATE,NAVAL Key points: 1. Contract awarded to a single, large corporation (ExxonMobil). 2. Fixed Price with Economic Price Adjustment (EPA) introduces potential cost volatility. 3. Competition type is 'Full and Open', suggesting a competitive bidding process. 4. Spending is within the Defense sector, specifically for fuel procurement.
Value Assessment
Rating: fair
The award amount of $28.1M for naval distillate fuel appears reasonable given the fixed-price structure with economic adjustments. Benchmarking against similar fuel contracts would be necessary for a definitive assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple bidders likely participated. This method generally promotes price discovery and competitive pricing.
Taxpayer Impact: Taxpayer funds are utilized for essential defense fuel procurement. The economic price adjustment clause could lead to costs exceeding initial projections if market prices rise significantly.
Public Impact
Ensures a critical fuel supply for naval operations. Potential for price fluctuations due to the economic price adjustment clause. Supports a major energy corporation, impacting the broader energy market. Procurement process aims for competitive pricing through open bidding.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic Price Adjustment clause introduces cost uncertainty.
- Single awardee may limit future competitive opportunities if not managed.
- Short contract duration (33 days) may not reflect long-term market trends.
Positive Signals
- Full and open competition utilized.
- Awarded to a well-established supplier.
- Fixed price component provides some cost certainty.
Sector Analysis
This contract falls within the energy sector, specifically the procurement of refined petroleum products for defense. Spending benchmarks for fuel are highly variable based on global market conditions and geopolitical factors.
Small Business Impact
The data indicates the award went to ExxonMobil Corporation, a large business. There is no indication of small business participation in this specific contract award.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for this procurement. Oversight would focus on contract compliance, delivery, and adherence to pricing adjustments.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Potential for price volatility in a critical commodity.
- Reliance on a single large supplier.
- Short contract duration may not reflect long-term market stability.
- Lack of explicit small business participation noted.
Tags
petroleum-refineries, department-of-defense, tx, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $28.1 million to EXXON MOBIL CORPORATION. 8500535497!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 $28.1 million.
What is the period of performance?
Start: 2013-12-18. End: 2014-01-20.
What is the historical price trend for naval distillate fuel over the contract period and how did the EPA clause impact the final cost?
Analyzing historical price data for naval distillate fuel during the contract's short duration (December 2013 - January 2014) is crucial. The Economic Price Adjustment (EPA) clause allows for price changes based on market indices. Understanding the specific index used and its fluctuations during this period would reveal how much the final cost deviated from the initial fixed price, directly impacting the value realized by the Department of Defense.
What specific risks are associated with relying on a single large corporation for a critical fuel supply, especially with an EPA clause?
Relying on a single large corporation like ExxonMobil for critical fuel supply carries risks of supply chain disruption due to unforeseen events affecting the supplier. The EPA clause adds another layer of risk, as significant price increases could strain the defense budget unexpectedly. Furthermore, a lack of sustained competition could potentially lead to less favorable pricing in future solicitations if the incumbent's position becomes entrenched.
How effective was the 'full and open competition' in achieving optimal pricing for this naval distillate fuel given the EPA adjustment?
The effectiveness of 'full and open competition' in achieving optimal pricing is partially mitigated by the Economic Price Adjustment (EPA) clause. While competition likely drove down the initial fixed price, the EPA introduces uncertainty about the final cost. Assessing effectiveness requires comparing the final, adjusted price against market benchmarks and potentially against bids received if the EPA had been structured differently or excluded.
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: 14
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Exxon Mobil Corp (UEI: 001213214)
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: $28,109,464
Exercised Options: $28,109,464
Current Obligation: $28,109,464
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060013D0474
IDV Type: IDC
Timeline
Start Date: 2013-12-18
Current End Date: 2014-01-20
Potential End Date: 2014-01-20 00:00:00
Last Modified: 2018-10-17
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