DoD spent $24.6M on aviation turbine fuel from Equilon Enterprises LLC, awarded under full and open competition

Contract Overview

Contract Amount: $24,645,462 ($24.6M)

Contractor: Equilon Enterprises LLC

Awarding Agency: Department of Defense

Start Date: 2015-02-24

End Date: 2016-05-06

Contract Duration: 437 days

Daily Burn Rate: $56.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 26

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: 8501842906!TURBINE FUEL,AVIATION

Place of Performance

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

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $24.6 million to EQUILON ENTERPRISES LLC for work described as: 8501842906!TURBINE FUEL,AVIATION Key points: 1. The contract value represents a significant investment in aviation fuel for defense operations. 2. Competition dynamics suggest a potentially competitive market for this essential commodity. 3. The firm fixed-price contract type indicates a defined cost structure, potentially mitigating cost overrun risks. 4. The duration of the contract (437 days) provides a reasonable timeframe for sustained fuel supply. 5. The award was made by the Defense Logistics Agency, a key entity for military supply chain management. 6. The North American Industry Classification System (NAICS) code 324110 points to petroleum refineries as the sector.

Value Assessment

Rating: good

The contract value of $24.6 million for aviation turbine fuel appears reasonable given the scale of defense operations. Benchmarking against similar contracts would provide a more precise value-for-money assessment. The firm fixed-price structure helps control costs, but the specific unit price relative to market rates is crucial for a definitive value judgment. Without detailed unit pricing data, a comprehensive comparison is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 26 bids suggests a robust competitive environment for aviation turbine fuel. A high number of bidders generally leads to better price discovery and potentially lower prices for the government, as contractors vie for the award.

Taxpayer Impact: The extensive competition for this fuel contract likely resulted in favorable pricing for taxpayers, as multiple suppliers were incentivized to offer their best terms.

Public Impact

The primary beneficiaries are the U.S. Department of Defense and its aviation units, ensuring operational readiness. The service delivered is the supply of critical aviation turbine fuel, essential for aircraft operations. The geographic impact is likely nationwide, supporting various military bases and deployment needs. Workforce implications are indirect, supporting jobs within the petroleum refining and fuel distribution industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the fuel market impacting long-term costs.
Dependence on a specific set of petroleum refineries 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.
Firm fixed-price contract type helps manage cost certainty.
The Defense Logistics Agency's involvement suggests established procurement processes.

Sector Analysis

The petroleum refining industry (NAICS 324110) is a mature sector critical to national infrastructure and defense. The market size for aviation turbine fuel is substantial, driven by both commercial and military demand. This contract fits within the broader category of energy and fuel procurement for government operations. Comparable spending benchmarks would involve analyzing aggregate DoD fuel expenditures or similar large-scale energy contracts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Equilon Enterprises LLC, is a large entity. There is no explicit information on subcontracting plans for small businesses within this award, suggesting that the primary focus was on securing fuel supply from established large-scale providers.

Oversight & Accountability

The contract was awarded by the Defense Logistics Agency (DLA), which has established oversight mechanisms for its procurement processes. The firm fixed-price nature of the contract provides a degree of cost control. Transparency is generally maintained through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Fuel Supply Center
Aviation Fuel Procurement
Department of Defense Energy Contracts
Petroleum Product Supply

Risk Flags

Potential for price volatility
Supply chain disruption risk
Dependence on large refiners

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.6 million to EQUILON ENTERPRISES LLC. 8501842906!TURBINE FUEL,AVIATION

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 $24.6 million.

What is the period of performance?

Start: 2015-02-24. End: 2016-05-06.

What is Equilon Enterprises LLC's track record with the Department of Defense for fuel supply contracts?

Equilon Enterprises LLC, operating under the Shell Oil brand, has a history of supplying fuel products to various government agencies, including the Department of Defense. Their track record typically involves large-scale fuel distribution and refining capabilities. While this specific contract was for aviation turbine fuel, their broader experience encompasses a range of petroleum products. Analyzing past performance reviews, on-time delivery rates, and any documented disputes or contract modifications would provide a more granular understanding of their reliability and performance in fulfilling government requirements. The Defense Logistics Agency, as the awarding agency, would maintain records of past performance that could be consulted for a comprehensive assessment.

How does the awarded price compare to market rates for aviation turbine fuel during the contract period?

Determining the precise comparison of the awarded price to market rates requires access to specific unit pricing data from the contract and historical market price indices for aviation turbine fuel (e.g., Platts, Argus). The contract value of $24.6 million is an aggregate figure. If the contract specified a fixed price per gallon or barrel, that rate could be benchmarked against prevailing market prices during the February 2015 to May 2016 period. Factors such as delivery location, volume discounts, and specific fuel grades would influence both the contract price and market rates. Without these granular details, a definitive value-for-money assessment based on pricing is limited.

What are the primary risks associated with relying on a single contractor for such a large volume of aviation fuel?

The primary risks associated with relying on a single contractor, even one as large as Equilon Enterprises LLC, include potential supply chain disruptions due to unforeseen events (e.g., refinery issues, natural disasters, labor strikes), price gouging if market competition weakens, and reduced leverage for the government in negotiating future contracts. While this contract was awarded through full and open competition, the ongoing supply relies on the contractor's sustained operational capacity. Diversification of suppliers, where feasible, can mitigate these risks by providing alternative sources in case of primary supplier failure.

How effective is the firm fixed-price contract type in managing costs for aviation fuel procurement?

The firm fixed-price (FFP) contract type is generally effective in managing costs for aviation fuel procurement because it shifts the risk of cost overruns to the contractor. The government agrees to pay a set price, regardless of the contractor's actual costs. This provides cost certainty for the buyer and incentivizes the contractor to manage its expenses efficiently. For a commodity like aviation fuel, where market price fluctuations can be significant, an FFP contract locks in a price, protecting the government from unexpected price increases during the contract term. However, if market prices fall substantially, the government may end up paying a premium compared to a contract with price adjustment clauses.

What is the historical spending pattern for aviation turbine fuel by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is the primary entity responsible for procuring and distributing fuel for the Department of Defense. Historical spending patterns for aviation turbine fuel by DLA are substantial, reflecting the continuous operational needs of the U.S. military's aviation assets. Annual expenditures can run into billions of dollars, varying based on global fuel prices, operational tempo, and strategic requirements. Analyzing DLA's historical spending data, often available through government spending transparency websites and agency reports, would reveal trends in contract awards, average prices paid, and the volume of fuel procured over time.

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: $24,645,462

Exercised Options: $24,645,462

Current Obligation: $24,645,462

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060014D0463

IDV Type: IDC

Timeline