DoD spent $850M on aviation turbine fuel, with ExxonMobil securing a $23.7M portion
Contract Overview
Contract Amount: $23,703,120 ($23.7M)
Contractor: Exxon Mobil Corporation
Awarding Agency: Department of Defense
Start Date: 2015-05-21
End Date: 2016-07-09
Contract Duration: 415 days
Daily Burn Rate: $57.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 32
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8501942800!TURBINE FUEL,AVIATION
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22037, UNITED STATES OF AMERICA
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $23.7 million to EXXON MOBIL CORPORATION for work described as: 8501942800!TURBINE FUEL,AVIATION Key points: 1. Value for money appears fair given the scale and nature of fuel procurement. 2. Competition dynamics indicate a broad market for aviation fuel, though specific contracts may vary. 3. Risk indicators are moderate, typical for large-scale commodity procurement. 4. Performance context is tied to the Defense Logistics Agency's mission to supply fuel. 5. Sector positioning is within the energy and defense logistics sectors.
Value Assessment
Rating: fair
The contract value of $23.7 million for aviation turbine fuel is substantial, but difficult to benchmark without specific product details and delivery locations. Given the volatile nature of fuel prices, economic price adjustment clauses are common and can impact the final cost. Comparing this to other large-scale fuel procurements by the DoD would provide better context on value, but raw dollar amounts alone are insufficient 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, suggesting multiple bidders likely participated. This level of competition is generally favorable for price discovery and achieving competitive pricing for the government. The number of bidders (32) indicates a healthy market response for this type of commodity.
Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down prices through market forces, ensuring the government is not overpaying for essential goods like aviation fuel.
Public Impact
Military operations across various branches benefit from a consistent supply of aviation turbine fuel. The services delivered include the provision of critical fuel for aircraft. Geographic impact is likely widespread, supporting DoD operations globally. Workforce implications are indirect, supporting jobs within the energy sector and logistics.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price volatility impacting final cost despite economic price adjustments.
- Dependence on a single large supplier for a critical commodity could pose supply chain risks.
- Geopolitical events can significantly influence fuel prices and availability.
Positive Signals
- Awarded under full and open competition, indicating a competitive market.
- Use of economic price adjustment clauses can help mitigate extreme price fluctuations.
- The Defense Logistics Agency has established processes for managing large-scale fuel procurement.
Sector Analysis
The aviation turbine fuel market is a significant segment of the broader energy sector, characterized by global supply chains and fluctuating commodity prices. Defense spending on fuel is a critical component of national security, ensuring operational readiness. Comparable spending benchmarks would involve analyzing other large fuel contracts awarded by government agencies or major commercial airlines.
Small Business Impact
This contract does not appear to have specific small business set-aside provisions. However, large prime contractors like ExxonMobil often engage subcontractors, which could include small businesses for logistics, transportation, or related services. The overall impact on the small business ecosystem depends on the subcontracting plans and execution by the prime.
Oversight & Accountability
Oversight for this contract would fall under the Defense Logistics Agency's contracting and quality assurance personnel. Accountability measures are tied to contract terms, delivery schedules, and fuel quality specifications. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive.
Related Government Programs
- Defense Logistics Agency Fuel Procurement
- Aviation Fuel Contracts
- Department of Defense Energy Spending
- Petroleum Product Procurement
Risk Flags
- Price Volatility Risk
- Supply Chain Disruption Risk
- Geopolitical Instability Impacting Fuel Prices
Tags
energy, defense, aviation-fuel, commodity, fixed-price-economic-price-adjustment, full-and-open-competition, department-of-defense, defense-logistics-agency, exxon-mobil-corporation, large-contract, petroleum-refineries
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $23.7 million to EXXON MOBIL CORPORATION. 8501942800!TURBINE FUEL,AVIATION
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 $23.7 million.
What is the period of performance?
Start: 2015-05-21. End: 2016-07-09.
What is the historical spending trend for aviation turbine fuel by the Department of Defense?
The Department of Defense is a massive consumer of aviation turbine fuel, with annual spending often reaching billions of dollars. Historical data indicates consistent and substantial procurement to support global operations. Factors influencing spending include operational tempo, fuel price fluctuations, and strategic inventory management. For instance, in fiscal years preceding and following this contract, DoD spending on similar fuel types has remained in the multi-billion dollar range, underscoring the critical nature of this commodity for military readiness. Analyzing trends over a decade reveals periods of increased spending during heightened global conflicts and periods of relative stability during lower operational tempos, always subject to the volatility of global oil markets.
How does the awarded price per unit compare to market rates for aviation turbine fuel during the contract period?
Determining the precise per-unit price comparison is challenging without access to the specific economic price adjustment formula and the daily/weekly market benchmarks used during the contract's execution (May 2015 - July 2016). Aviation turbine fuel prices fluctuate significantly based on crude oil prices, refining costs, and regional supply/demand dynamics. However, the contract's 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) clause suggests that the base price was set, with adjustments tied to a recognized market index. To assess value, one would need to compare the adjusted final price against indices like the Platts U.S. Gulf Coast Jet Fuel price or similar benchmarks relevant to the delivery locations. Given the scale, it's plausible the DoD negotiated favorable terms, but a detailed analysis requires specific market data contemporaneous to the contract period.
What are the primary risks associated with this type of large-scale fuel procurement contract?
Large-scale fuel procurement contracts carry several inherent risks. Price volatility is a primary concern; despite economic price adjustments, significant market swings can impact the final cost beyond initial projections. Supply chain disruptions, whether due to geopolitical instability, natural disasters, or logistical failures, pose a substantial risk to operational readiness. Furthermore, quality control is critical; substandard fuel can damage aircraft and compromise missions. Counterparty risk, though often mitigated by vetting large corporations like ExxonMobil, remains a consideration. Finally, the sheer volume of fuel required means that any inefficiencies in procurement or distribution can lead to significant financial losses or operational shortfalls for the Department of Defense.
What is ExxonMobil's track record in supplying fuel to the U.S. military?
ExxonMobil Corporation has a long-standing and extensive track record of supplying fuel, including aviation turbine fuel, to the U.S. military and other government agencies. As one of the world's largest integrated energy companies, it possesses the logistical capabilities and production capacity to meet the demanding requirements of military operations. The company has been a consistent recipient of large federal contracts for petroleum products over many years. While specific performance metrics for individual contracts are not always publicly detailed, ExxonMobil's continued success in winning competitive bids and fulfilling large-volume contracts suggests a generally reliable performance history in meeting quality, quantity, and delivery specifications for the Department of Defense and related entities.
How does the number of bidders (32) impact the potential for cost savings for the government?
A high number of bidders, such as the 32 indicated for this contract, generally signifies robust competition within the market for aviation turbine fuel. This level of participation typically leads to more competitive pricing as companies vie for the contract. When multiple capable suppliers are present, they are incentivized to offer lower prices and more favorable terms to secure the award. This scenario enhances the government's negotiating power and increases the likelihood of achieving cost savings compared to a situation with limited bidders. The presence of 32 bidders suggests that the market is not overly concentrated and that the government could effectively leverage competition to obtain value for its expenditure on this critical commodity.
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: $23,703,120
Exercised Options: $23,703,120
Current Obligation: $23,703,120
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060015D0469
IDV Type: IDC
Timeline
Start Date: 2015-05-21
Current End Date: 2016-07-09
Potential End Date: 2016-07-09 00:00:00
Last Modified: 2015-11-13
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