DoD spent $32.8M on aviation turbine fuel from ExxonMobil, highlighting reliance on major suppliers for critical energy needs

Contract Overview

Contract Amount: $32,860,910 ($32.9M)

Contractor: Exxon Mobil Corporation

Awarding Agency: Department of Defense

Start Date: 2015-07-15

End Date: 2015-08-04

Contract Duration: 20 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 32

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 8501942800!TURBINE FUEL,AVIATION

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22037

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $32.9 million to EXXON MOBIL CORPORATION for work described as: 8501942800!TURBINE FUEL,AVIATION Key points: 1. Contract value represents a significant portion of annual fuel procurement, underscoring its importance to military operations. 2. Sole-source nature of some fuel contracts can limit price competition and potentially increase costs. 3. Geographic concentration in Virginia for this specific order suggests logistical dependencies. 4. Fixed-price with economic price adjustment indicates exposure to market volatility in fuel prices. 5. The duration of the order (20 days) points to short-term, immediate operational requirements. 6. Contractor's established presence in the energy sector suggests a strong capability to meet demand.

Value Assessment

Rating: fair

The $32.8 million award for aviation turbine fuel is substantial, but direct comparison is difficult without knowing the specific grade and delivery location. The fixed-price with economic price adjustment (FPEPA) contract type introduces price volatility risk. Benchmarking against similar large-volume fuel procurements by the Defense Logistics Agency (DLA) would be necessary to fully assess value for money, as fuel prices fluctuate significantly based on market conditions and contract terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of 32 bidders suggests a robust competitive environment for this fuel procurement. A high number of bidders generally supports price discovery and can lead to more favorable pricing for the government, although specific pricing details are not provided here.

Taxpayer Impact: The full and open competition for this significant fuel purchase is beneficial for taxpayers, as it likely drove down prices through competitive bidding, ensuring a better return on investment for defense spending.

Public Impact

Military aviation units operating within or requiring support from the Virginia region benefit from the availability of this critical fuel. The delivery order ensures the continuous operation of aircraft, supporting national defense missions. The contract supports the broader energy sector by engaging a major supplier like ExxonMobil. Workforce implications are indirect, primarily supporting logistics and supply chain operations within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Reliance on a single large corporation for a critical commodity like aviation fuel can create systemic risk if supply chains are disrupted.
The economic price adjustment clause exposes the government to potential cost increases due to market fluctuations in oil and gas prices.
The short delivery window (20 days) might indicate a reactive procurement process rather than proactive, long-term strategic sourcing.

Positive Signals

Awarding to a well-established energy provider like ExxonMobil suggests a high likelihood of reliable supply and quality product.
The large number of bidders (32) in the full and open competition indicates a healthy market and competitive pressure on pricing.
The contract type (FPEPA) allows for adjustments based on market conditions, which can be advantageous in volatile fuel markets if managed effectively.

Sector Analysis

The aviation turbine fuel market is a critical segment of the broader energy and defense industrial base. This contract falls under the Petroleum Refineries (NAICS 324110) sector. The global market for jet fuel is substantial, driven by commercial aviation and significant military demand. Defense Logistics Agency (DLA) is a primary procurer of fuel for the U.S. military, managing complex global supply chains. Benchmarks for fuel pricing are highly dynamic, influenced by crude oil prices, refining capacity, and geopolitical events.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, as indicated by 'sb': false. The primary contractor, ExxonMobil, is a large corporation. While large prime contracts often have subcontracting goals, the details of any small business participation are not specified in this data. The focus is on securing a large volume of a critical commodity from a major supplier.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), which manages fuel procurement for the Department of Defense. DLA has established quality assurance and contract administration processes. Transparency is generally maintained through contract award databases like FPDS. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Military Aviation Fuel Services
Petroleum Product Contracts
Energy Supply Chain Management
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Price Volatility Risk
Supply Chain Dependency
Market Power Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.9 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 $32.9 million.

What is the period of performance?

Start: 2015-07-15. End: 2015-08-04.

What is ExxonMobil's historical performance record with the Defense Logistics Agency for fuel contracts?

ExxonMobil has a long-standing relationship with the Defense Logistics Agency (DLA) as a major supplier of petroleum products, including aviation turbine fuel. Historical data indicates consistent performance in meeting delivery schedules and product specifications for numerous contracts. While specific performance metrics for every contract are not publicly detailed, their continued selection for significant awards suggests a generally positive track record. DLA's vendor performance management system likely tracks on-time delivery, quality compliance, and responsiveness. Any significant performance issues would typically result in corrective actions or potential debarment, neither of which appears to be the case given their ongoing role as a prime contractor.

How does the price of aviation turbine fuel awarded under this contract compare to market benchmarks at the time of award?

Determining the precise price comparison requires access to the specific economic price adjustment (EPA) formula and the underlying market indices used at the time of the award (July 2015). However, aviation turbine fuel prices are closely tied to the price of crude oil and refined product benchmarks like the NYMEX futures contracts. In mid-2015, crude oil prices were experiencing a significant downturn. The FPEPA contract type suggests that the final price paid would have tracked these market movements. Without the specific EPA details and the actual price paid per gallon or barrel, a direct benchmark is challenging. Generally, DLA aims to secure competitive pricing through its procurement processes, but the EPA clause inherently builds in market volatility.

What are the primary risks associated with relying on a single large corporation like ExxonMobil for critical fuel supplies?

The primary risks associated with relying on a single large corporation for critical fuel supplies include supply chain disruptions, price volatility, and potential market power abuse. A disruption at one of ExxonMobil's refineries or distribution hubs, whether due to operational issues, natural disasters, or geopolitical events, could impact delivery. The economic price adjustment clause, while necessary in volatile markets, means the government's costs can increase significantly if market prices rise. Furthermore, a dominant supplier might have less incentive to offer deeply competitive pricing compared to a more fragmented market, although the full and open competition mitigates this to some extent. National security implications arise if such a critical resource becomes compromised.

What is the estimated total annual spending by the Department of Defense on aviation turbine fuel, and how does this contract fit within that?

The Department of Defense (DoD) is one of the largest consumers of aviation fuel globally. While precise, up-to-the-minute total annual spending figures can fluctuate based on operational tempo and global deployments, historical data suggests DoD's annual fuel bill runs into the tens of billions of dollars. This specific $32.8 million delivery order represents a relatively small fraction of the overall annual DoD fuel expenditure. However, it is a significant amount for a single delivery order and highlights the ongoing need for consistent fuel supply to support aviation readiness across various commands and installations, particularly within specific geographic regions like Virginia.

How does the 'Fixed Price with Economic Price Adjustment' contract type impact the government's budget predictability for fuel procurement?

The 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type introduces a degree of uncertainty into budget predictability for fuel procurement. While a base price is established, the economic price adjustment clause allows for modifications to the contract price based on fluctuations in specified economic factors, typically market-based indices for commodities like fuel. This means that the final cost can deviate from the initial fixed price. In periods of stable or declining fuel prices, FPEPA can be advantageous, protecting the government from excessive costs. However, during periods of high market volatility or rapid price increases, the government's expenditure can exceed initial budget projections, making precise financial planning more challenging compared to a firm fixed-price contract.

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: $32,860,910

Exercised Options: $32,860,910

Current Obligation: $32,860,910

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060015D0469

IDV Type: IDC

Timeline