DoD's $23.9M Naval Distillate Purchase from ExxonMobil: Fixed Price with Economic Adjustment
Contract Overview
Contract Amount: $23,902,410 ($23.9M)
Contractor: Exxon Mobil Corporation
Awarding Agency: Department of Defense
Start Date: 2014-09-09
End Date: 2014-09-25
Contract Duration: 16 days
Daily Burn Rate: $1.5M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 21
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8501341822!DISTILLATE,NAVAL
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22037
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $23.9 million to EXXON MOBIL CORPORATION for work described as: 8501341822!DISTILLATE,NAVAL Key points: 1. Significant contract value for a specific fuel type. 2. Sole awardee is a major energy corporation. 3. Risk of price volatility due to economic adjustment clause. 4. Sector: Energy (Petroleum Refineries).
Value Assessment
Rating: fair
The contract price is fixed but subject to economic adjustments, making direct comparison difficult. However, the base price appears reasonable given market conditions at the time of award.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the use of an economic price adjustment clause may have limited the final price certainty for the government.
Taxpayer Impact: The government secured a competitive price for a critical fuel, but the economic adjustment clause introduces potential for increased costs beyond the initial bid.
Public Impact
Ensures supply of essential fuel for naval operations. Supports a major energy provider, impacting the broader energy market. Potential for fluctuating costs impacts defense budget predictability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause introduces cost uncertainty.
- Reliance on a single large supplier for a critical commodity.
Positive Signals
- Awarded through full and open competition.
- Ensures critical fuel supply for defense needs.
Sector Analysis
This contract falls within the Petroleum Refineries sector, a critical component of the energy industry. Spending benchmarks for such specialized fuels are highly dependent on global commodity prices and geopolitical factors.
Small Business Impact
This contract was awarded to a large corporation (ExxonMobil) and does not appear to have specific provisions or set-asides for small businesses.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key procurement arm for the DoD. Oversight would focus on adherence to the economic price adjustment terms and delivery performance.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost overruns due to economic price adjustment.
- Concentration of supply with a single large entity.
- Dependence on volatile global energy markets.
- Lack of small business participation.
Tags
petroleum-refineries, department-of-defense, va, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $23.9 million to EXXON MOBIL CORPORATION. 8501341822!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 $23.9 million.
What is the period of performance?
Start: 2014-09-09. End: 2014-09-25.
What was the total price paid after economic adjustments compared to the initial award value?
Without access to the final delivery order details and the specific economic adjustment indices used, it's impossible to determine the total price paid. The initial award value was $23,902,410, but the final cost could be higher or lower depending on fluctuations in the price of crude oil and refining costs during the contract period.
What were the key factors considered during the full and open competition that led to this award?
During the full and open competition, factors likely included the bidder's capacity to supply the specified naval distillate, adherence to quality standards, proposed pricing structure (including the economic price adjustment mechanism), and past performance. The Defense Logistics Agency would have evaluated these elements to ensure the best value for the government.
How effectively did the economic price adjustment clause protect the government from price volatility?
The effectiveness of the economic price adjustment clause in protecting the government is uncertain without knowing the specific indices and the market's price movements. While intended to balance risk, such clauses can lead to higher-than-anticipated costs if commodity prices surge, potentially negating the initial competitive advantage.
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: 21
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: $23,902,410
Exercised Options: $23,902,410
Current Obligation: $23,902,410
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060014D0480
IDV Type: IDC
Timeline
Start Date: 2014-09-09
Current End Date: 2014-09-25
Potential End Date: 2014-09-25 00:00:00
Last Modified: 2018-12-01
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