DOE awards $3.69M contract for Northeast Home Heating Oil Reserve storage in Maine
Contract Overview
Contract Amount: $3,690,000 ($3.7M)
Contractor: Portland Terminals, LLC
Awarding Agency: Department of Energy
Start Date: 2024-03-29
End Date: 2027-03-31
Contract Duration: 1,097 days
Daily Burn Rate: $3.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR) STORAGE OF 200,000 ULSD IN SOUTH PORTLAND, ME.
Place of Performance
Location: SOUTH PORTLAND, CUMBERLAND County, MAINE, 04106
State: Maine Government Spending
Plain-Language Summary
Department of Energy obligated $3.7 million to PORTLAND TERMINALS, LLC for work described as: THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR) STORAGE OF 200,000 ULSD IN SOUTH PORTLAND, ME. Key points: 1. Contract value represents a significant investment in strategic energy reserves. 2. The firm-fixed-price structure aims to control costs for the government. 3. A single award suggests a focused approach to meeting specific storage needs. 4. The contract duration of three years allows for sustained reserve management. 5. This initiative supports energy security and price stability in the Northeast region. 6. The chosen location in South Portland, Maine, is critical for regional distribution.
Value Assessment
Rating: good
The contract value of $3.69 million for storing 200,000 barrels of ultra-low sulfur diesel (ULSD) appears reasonable given the strategic importance and duration. While direct comparisons are difficult without more specific market data for similar reserve storage contracts, the price per barrel for storage services is a key metric. The firm-fixed-price nature of the contract provides cost certainty for the Department of Energy, mitigating risks associated with fluctuating market conditions for storage providers.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of four bids suggests a competitive environment, which typically leads to better pricing and terms for the government. This level of competition is a positive sign for price discovery and ensures that the award was made to the most advantageous offer.
Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and ensuring that government funds are used efficiently.
Public Impact
Residents and businesses in the Northeast region benefit from enhanced energy security and potential price stabilization during winter months. The contract ensures the availability of 200,000 barrels of ULSD, a critical fuel for heating and power generation. The geographic impact is focused on Maine and the broader Northeast, a region historically vulnerable to heating fuel supply disruptions. The contract supports the warehousing and storage sector workforce in the South Portland, Maine area.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price volatility in the fuel market impacting the long-term cost-effectiveness of the reserve.
- Dependence on a single contractor for critical reserve storage could pose a risk if performance issues arise.
Positive Signals
- Awarded through full and open competition, indicating a robust bidding process.
- Firm-fixed-price contract provides cost certainty for the government.
- Strategic location in Maine enhances regional energy security.
- Contract duration allows for sustained management of the reserve.
Sector Analysis
The contract falls within the warehousing and storage sector, specifically related to energy commodities. The market for specialized fuel storage is influenced by regulatory requirements, geopolitical events, and seasonal demand. The Department of Energy's investment in the Northeast Home Heating Oil Reserve (NEHHOR) is a strategic allocation of resources to mitigate risks associated with energy supply chain disruptions, particularly during peak demand periods in colder climates.
Small Business Impact
There is no indication that this contract was specifically set aside for small businesses. Given the nature of large-scale fuel storage, it is likely that larger, specialized companies were the primary bidders. Subcontracting opportunities for small businesses may exist in areas such as maintenance, security, or logistics, but are not explicitly detailed in the provided data.
Oversight & Accountability
The Department of Energy is responsible for the oversight of this contract. As a definitive contract awarded through full and open competition, it is subject to standard government contracting regulations and oversight mechanisms. Transparency is maintained through contract databases and reporting requirements. The Inspector General's office within the DOE would have jurisdiction for audits and investigations if any irregularities were suspected.
Related Government Programs
- Strategic Petroleum Reserve
- Northeast Energy Security
- Strategic Fuel Storage
- Department of Energy Contracts
Risk Flags
- Potential for fuel degradation over long-term storage.
- Environmental risks associated with fuel storage (e.g., leaks).
- Security risks to the stored fuel reserve.
- Dependence on a single contractor for critical infrastructure.
Tags
energy-storage, fuel-reserve, department-of-energy, northeast, maine, definitive-contract, firm-fixed-price, full-and-open-competition, warehousing-and-storage, strategic-reserve, ulsd
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $3.7 million to PORTLAND TERMINALS, LLC. THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR) STORAGE OF 200,000 ULSD IN SOUTH PORTLAND, ME.
Who is the contractor on this award?
The obligated recipient is PORTLAND TERMINALS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $3.7 million.
What is the period of performance?
Start: 2024-03-29. End: 2027-03-31.
What is the historical spending pattern for the Northeast Home Heating Oil Reserve (NEHHOR)?
The provided data focuses on a single, recent contract award for the NEHHOR. Historical spending patterns for this specific reserve are not detailed. However, the establishment and maintenance of such reserves are typically long-term strategic initiatives funded through annual appropriations. The Department of Energy manages various energy security programs, and NEHHOR represents a component of its broader efforts to ensure energy reliability. Analyzing past appropriations and contract awards related to similar storage or reserve initiatives would provide a more comprehensive view of historical spending trends for this type of program.
How does the cost per barrel for storage compare to industry benchmarks?
The provided data does not include the specific cost per barrel for storage services, making a direct comparison to industry benchmarks challenging. The total contract value is $3.69 million for storing 200,000 barrels over approximately three years. To calculate a rough cost per barrel per year, one would divide the total contract value by the number of barrels and the duration in years. However, this calculation would not account for all associated costs or profit margins. Industry benchmarks for fuel storage vary significantly based on location, tank size, security measures, and the type of fuel. Without more granular cost breakdowns or specific market data for comparable storage facilities in the Northeast, a precise benchmark assessment is not feasible.
What are the key performance indicators (KPIs) for this contract?
The provided data does not explicitly list the Key Performance Indicators (KPIs) for this contract. However, for a contract involving the storage of a strategic fuel reserve, typical KPIs would likely include: 1. Maintaining the specified quantity and quality of ULSD (e.g., purity, temperature). 2. Ensuring the integrity and security of the storage facility. 3. Timely response to any potential release or withdrawal orders from the government. 4. Compliance with all environmental and safety regulations. 5. Availability of the stored fuel for rapid deployment if needed. The firm-fixed-price nature of the contract implies that the contractor is responsible for meeting these performance standards within the agreed-upon price.
What is the track record of Portland Terminals, LLC in managing government contracts, particularly for fuel storage?
The provided data identifies Portland Terminals, LLC as the contractor. Information regarding their specific track record with government contracts, especially for fuel storage, is not included. A thorough assessment would require reviewing their past performance on federal contracts, including any awards, past performance evaluations, and any history of disputes or contract terminations. Understanding their experience with similar large-scale storage operations and their financial stability would be crucial for evaluating their capability to fulfill this contract effectively and reliably.
What are the potential risks associated with the long-term storage of ULSD in this facility?
Potential risks associated with the long-term storage of Ultra-Low Sulfur Diesel (ULSD) include fuel degradation over time, requiring potential treatment or replacement. There are also environmental risks, such as potential leaks or spills, which necessitate robust containment and emergency response plans. Security risks, including theft or sabotage, must also be managed. Furthermore, market risks exist if the cost of maintaining the reserve exceeds the benefit of having it available, or if the stored fuel becomes obsolete due to changes in fuel standards or energy technologies. The contractor's operational procedures and the government's oversight are critical in mitigating these risks.
How does this contract contribute to the overall energy security strategy of the Northeast region?
This contract directly contributes to the energy security strategy of the Northeast by ensuring a readily available supply of heating oil, a critical commodity during winter months. The Northeast is particularly vulnerable to supply disruptions due to its high reliance on imported fuels and its susceptibility to extreme weather. By maintaining a reserve of 200,000 barrels of ULSD, the Department of Energy aims to mitigate the impact of potential supply shortages, price spikes, or infrastructure failures. This reserve acts as a buffer, providing a critical resource to maintain essential services and prevent widespread hardship during energy emergencies.
Industry Classification
NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage
Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: 89243524RCR000014
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 175 FRONT ST, SOUTH PORTLAND, ME, 04106
Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $4,980,000
Exercised Options: $3,690,000
Current Obligation: $3,690,000
Actual Outlays: $2,225,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2024-03-29
Current End Date: 2027-03-31
Potential End Date: 2028-03-31 00:00:00
Last Modified: 2026-03-27
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