DoD spent $27.4M on aviation turbine fuel from Equilon Enterprises LLC, awarded under full and open competition

Contract Overview

Contract Amount: $27,407,073 ($27.4M)

Contractor: Equilon Enterprises LLC

Awarding Agency: Department of Defense

Start Date: 2014-06-23

End Date: 2014-06-30

Contract Duration: 7 days

Daily Burn Rate: $3.9M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 26

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: 8501080708!TURBINE FUEL,AVIATI

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77002, UNITED STATES OF AMERICA

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to EQUILON ENTERPRISES LLC for work described as: 8501080708!TURBINE FUEL,AVIATI Key points: 1. The contract value represents a significant investment in a critical aviation fuel supply. 2. Competition dynamics suggest a potentially competitive market for this fuel type. 3. The short duration of the contract may indicate a need for immediate supply or a pilot program. 4. The firm fixed-price contract type shifts risk to the contractor, potentially stabilizing costs. 5. The award to Equilon Enterprises LLC, a known entity in the energy sector, provides some performance context. 6. This spending falls within the broader category of fuel procurement for military operations.

Value Assessment

Rating: good

The contract value of $27.4 million for aviation turbine fuel appears reasonable given the scale of military operations. Benchmarking against similar fuel procurements by the Defense Logistics Agency (DLA) would provide more precise value-for-money insights. The firm fixed-price structure suggests that the government has secured a predictable cost, assuming the contractor's pricing is competitive within the market.

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 26 bids suggests a robust competitive environment for this fuel supply. This level of competition is generally favorable for price discovery and can lead to more advantageous pricing for the government.

Taxpayer Impact: A high number of bidders in a full and open competition typically translates to better value for taxpayers by driving down prices through market forces.

Public Impact

Military aviation units requiring turbine fuel for operational readiness benefit directly from this contract. The services delivered include the supply of essential aviation fuel, supporting flight operations. The geographic impact is primarily within Texas, where the contractor is located, but the fuel supports national defense operations. Workforce implications are indirect, related to the logistics and distribution of fuel within the defense supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the fuel market impacting long-term supply costs.
Dependence on a single contractor for a critical fuel type could pose supply chain risks if not managed proactively.

Positive Signals

Awarded under full and open competition, indicating a competitive market and potential for good pricing.
Firm fixed-price contract type provides cost certainty for the government.
Contractor is a known entity in the energy sector, suggesting established capabilities.

Sector Analysis

The petroleum refineries sector (NAICS 324110) is crucial for supplying refined products, including aviation fuels, to various industries. The defense sector relies heavily on this industry for operational readiness. The market size for aviation fuel is substantial, driven by both commercial and military demand. This contract represents a specific procurement within the broader energy and defense logistics landscape.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. There is no explicit information on subcontracting plans for small businesses. The impact on the small business ecosystem is likely minimal unless small businesses are involved in the downstream distribution or related services.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract, ensuring timely delivery and quality of the fuel. Accountability measures are inherent in the firm fixed-price contract terms, requiring the contractor to meet specifications. Transparency is generally maintained through contract award databases, though specific performance metrics may not be publicly detailed.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Aviation Fuel Supply Contracts
Department of Defense Energy Contracts

Risk Flags

Potential for supply chain disruption if contractor faces operational issues.
Price volatility in the energy market could impact long-term affordability if contracts are renewed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to EQUILON ENTERPRISES LLC. 8501080708!TURBINE FUEL,AVIATI

Who is the contractor on this award?

The obligated recipient is EQUILON ENTERPRISES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.4 million.

What is the period of performance?

Start: 2014-06-23. End: 2014-06-30.

What is the historical spending pattern for aviation turbine fuel by the Department of Defense?

Historical spending on aviation turbine fuel by the Department of Defense (DoD) is substantial and fluctuates based on operational tempo, global events, and fuel market prices. The DoD is one of the largest consumers of fuel globally. Analyzing past contract awards from agencies like the Defense Logistics Agency (DLA) reveals consistent, multi-billion dollar annual expenditures. For instance, in fiscal years preceding and following 2014, the DoD awarded numerous contracts for various fuel types, including JP-8 and Jet A, often through competitive bidding processes. Spending levels are influenced by factors such as deployment schedules, training exercises, and the efficiency of fuel management systems. While specific aggregate figures require detailed data aggregation, it's evident that fuel procurement represents a significant and ongoing budgetary commitment for the department.

How does the price of this contract compare to market rates for aviation turbine fuel in 2014?

Determining the precise market rate for aviation turbine fuel in 2014 requires access to historical commodity pricing data and regional market analyses specific to the contract's delivery location. However, the contract's firm fixed-price nature suggests that Equilon Enterprises LLC priced its bid based on its anticipated costs and desired profit margin at the time of award. Generally, aviation turbine fuel prices are influenced by crude oil prices, refining costs, transportation, and demand. Given that the contract was awarded under full and open competition with 26 bids, it implies that the pricing achieved was likely competitive within the prevailing market conditions. Without specific benchmark data for comparable contracts or spot market prices for that period and region, a definitive comparison is challenging, but the competitive bidding process suggests a reasonable market-based price was sought.

What is Equilon Enterprises LLC's track record with government contracts, particularly for fuel supply?

Equilon Enterprises LLC, often operating under the Shell brand, has a significant history of engaging with government contracts, including those for fuel supply. As a major player in the energy sector, the company possesses the infrastructure and experience necessary to fulfill large-scale fuel procurement requirements. Government databases and contract award histories typically show Equilon (or its parent/affiliated entities) receiving numerous awards across various federal agencies, including the Department of Defense, for a range of petroleum products. These contracts often involve significant dollar values and cover diverse fuel types. While a detailed analysis of their entire government contracting history would require extensive data mining, their consistent presence as a bidder and awardee suggests a generally reliable track record in meeting contractual obligations for fuel provision.

What are the potential risks associated with relying on a single supplier for critical aviation fuel?

Relying on a single supplier for critical aviation fuel, even for a defined contract period, introduces several potential risks. The primary risk is supply chain disruption. Any unforeseen event affecting the supplier's production, refining capacity, or distribution network—such as natural disasters, labor strikes, geopolitical instability, or equipment failures—could lead to shortages. This could directly impact military readiness and operational capabilities. Another risk is reduced bargaining power for future contracts. If a supplier becomes indispensable, they may have leverage to demand higher prices or less favorable terms in subsequent solicitations. Furthermore, a single supplier might have less incentive to innovate or improve service quality if competition is perceived as minimal. Robust contingency planning, including identifying alternative suppliers and maintaining strategic fuel reserves, is crucial to mitigate these risks.

How does the firm fixed-price contract type benefit the government in this scenario?

The firm fixed-price (FFP) contract type offers significant benefits to the government in this scenario involving aviation turbine fuel procurement. Primarily, it provides cost certainty. The contractor, Equilon Enterprises LLC, assumes the risk of cost overruns. This means the government knows the exact price it will pay for the fuel, regardless of fluctuations in raw material costs, labor, or other expenses incurred by the supplier during the contract period. This predictability is invaluable for budgeting and financial planning. By shifting the cost risk to the contractor, the government is protected from unexpected price increases. While FFP contracts may sometimes incorporate a higher initial price to account for the contractor's risk, the competitive bidding process in this case (26 bids) likely ensured that the fixed price was market-driven and represented good value, making it an advantageous structure for the procuring agency.

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: 26

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Shell Deutschland Gmbh (UEI: 423792808)

Address: 910 LOUISIANA ST STE 2, HOUSTON, TX, 77002

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $27,407,073

Exercised Options: $27,407,073

Current Obligation: $27,407,073

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060014D0463

IDV Type: IDC

Timeline