DoD's $10.5M petroleum contract awarded to ESSO STANDARD OIL SA LTD shows fair value with 5 bidders

Contract Overview

Contract Amount: $10,526,294 ($10.5M)

Contractor: Esso Standard OIL SA Ltd

Awarding Agency: Department of Defense

Start Date: 2005-06-30

End Date: 2010-07-31

Contract Duration: 1,857 days

Daily Burn Rate: $5.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Place of Performance

Location: SAN JUAN, SAN JUAN County, PUERTO RICO, 00936

Plain-Language Summary

Department of Defense obligated $10.5 million to ESSO STANDARD OIL SA LTD for work described as: Key points: 1. The contract demonstrates a competitive award process with multiple bidders vying for the petroleum products supply. 2. Pricing appears reasonable given the market for petroleum products, though specific economic price adjustments warrant scrutiny. 3. The duration of the contract suggests a stable, long-term supply agreement for essential petroleum products. 4. Awarded to a single entity, the contract's success hinges on the contractor's ability to meet demand consistently. 5. The geographic focus on Puerto Rico highlights a specific regional supply chain need for the Department of Defense.

Value Assessment

Rating: good

The contract's total award value of $10.5 million over approximately five years suggests a moderate investment in petroleum products. Benchmarking against similar contracts for fuel supply in the region would provide a clearer picture of value for money. The inclusion of economic price adjustments indicates a mechanism to account for market volatility, which can be beneficial but also introduces potential for cost increases.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with five bidders participating. This level of competition is generally positive, suggesting that multiple suppliers were given the opportunity to bid, which can lead to more competitive pricing and better terms for the government. The presence of five bidders indicates a healthy market for this type of petroleum product supply.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are likely being used efficiently, as the government benefited from a range of offers, potentially driving down costs compared to a sole-source or limited competition scenario.

Public Impact

Military operations in Puerto Rico and surrounding areas benefit from a reliable supply of petroleum products. The contract supports the logistical needs of the Department of Defense, ensuring readiness and operational capability. The geographic impact is concentrated in Puerto Rico, supporting local infrastructure and potentially local employment through the contractor's operations. While not explicitly a workforce-focused contract, it indirectly supports jobs within the petroleum supply and logistics sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation due to economic price adjustment clauses.
Dependence on a single contractor for a critical resource could pose supply chain risks if not managed effectively.
Ensuring consistent quality and timely delivery of petroleum products is crucial for operational continuity.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Contract duration suggests a stable, long-term relationship for consistent supply.
The contractor, ESSO STANDARD OIL SA LTD, likely has established infrastructure for petroleum distribution in the region.

Sector Analysis

This contract falls within the broader energy sector, specifically focusing on the wholesale distribution of petroleum products. The market for such products is global and subject to significant price fluctuations influenced by geopolitical events and supply/demand dynamics. The Department of Defense is a major consumer of petroleum products, and contracts like this are essential for maintaining operational readiness. Comparable spending benchmarks would involve analyzing other fuel supply contracts awarded by various government agencies, particularly those serving remote or strategically important locations.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no explicit information provided regarding subcontracting plans for small businesses. The focus on a large-scale petroleum product supplier suggests that the primary contractor is likely a major entity, and the direct impact on the small business ecosystem may be limited unless subcontracting opportunities are actively pursued.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the Defense Contract Management Agency (DCMA). Accountability measures would include performance monitoring, adherence to delivery schedules, and quality control of the petroleum products supplied. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Fuel Supply Center contracts
Petroleum product procurement
Logistics and transportation services for military
Energy security contracts

Risk Flags

Economic Price Adjustment Clause
Single Source Dependency Risk
Geographic Concentration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.5 million to ESSO STANDARD OIL SA LTD. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ESSO STANDARD OIL SA LTD.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $10.5 million.

What is the period of performance?

Start: 2005-06-30. End: 2010-07-31.

What is the historical spending pattern for petroleum products by the Department of Defense in Puerto Rico?

Analyzing historical spending patterns for petroleum products by the Department of Defense in Puerto Rico requires access to detailed procurement data over multiple fiscal years. While this specific contract awarded to ESSO STANDARD OIL SA LTD amounts to approximately $10.5 million over its duration, understanding the broader trend involves looking at all fuel-related awards in the region. Factors such as changes in military presence, operational tempo, and fuel price volatility would influence these patterns. Without access to a comprehensive database of past awards and expenditures specifically for this region and commodity, a precise historical analysis is challenging. However, it is reasonable to infer that consistent demand for fuel in a strategic location like Puerto Rico would lead to recurring procurement actions, potentially with varying award values based on market conditions and competition.

How does the pricing structure of this contract compare to similar petroleum supply contracts in other regions?

Comparing the pricing structure of this contract to similar petroleum supply contracts in other regions requires detailed analysis of contract terms, including the base price, economic price adjustment (EPA) clauses, and delivery terms. This contract includes an EPA, which means the final price can fluctuate based on market indices for petroleum products. Benchmarking would involve identifying contracts with similar delivery volumes, product specifications, and geographic scope, ideally in regions with comparable logistical challenges and market dynamics. Without access to specific pricing data from other comparable contracts, a direct quantitative comparison is difficult. However, the presence of an EPA suggests a strategy to mitigate risk for both the government and the contractor against volatile fuel prices, a common practice in long-term energy supply agreements.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance under this agreement?

Key Performance Indicators (KPIs) for a petroleum supply contract typically focus on reliability, quality, and timeliness of delivery. For ESSO STANDARD OIL SA LTD under this Department of Defense contract, likely KPIs would include on-time delivery rates, fuel quality compliance (meeting specific military standards), accuracy of invoicing, and responsiveness to any emergent needs or changes in demand. The contract's duration and value suggest that consistent performance is critical. Performance evaluations would likely involve regular reviews by the contracting officer's representative (COR) or a similar oversight official, who would track adherence to delivery schedules and product specifications. Failure to meet these KPIs could result in contract modifications, penalties, or non-renewal.

What is the track record of ESSO STANDARD OIL SA LTD with Department of Defense contracts, particularly for fuel supply?

Assessing the track record of ESSO STANDARD OIL SA LTD with Department of Defense contracts, especially for fuel supply, requires a review of their past performance history. This includes examining previous awards, contract values, durations, and any reported performance issues or successes. Companies that regularly win fuel supply contracts with the DoD typically demonstrate a proven ability to meet stringent requirements for quality, reliability, and logistical support. Information on past performance is often maintained within government databases and can influence future award decisions. A history of successful contract completion, timely deliveries, and adherence to specifications would indicate a strong track record, while a pattern of issues could raise concerns about future performance.

What are the potential risks associated with relying on a single supplier for petroleum products in Puerto Rico?

Relying on a single supplier like ESSO STANDARD OIL SA LTD for petroleum products in Puerto Rico presents several potential risks. The primary risk is supply chain disruption; any issue with the contractor's operations, such as production problems, transportation failures, or labor disputes, could directly impact fuel availability for military operations. Geopolitical events or natural disasters affecting the region could also exacerbate these risks. Furthermore, a lack of ongoing competition might reduce the incentive for the contractor to offer the most competitive pricing or innovative solutions over the long term. The government mitigates these risks through robust contract oversight, performance monitoring, and potentially by maintaining strategic fuel reserves.

Industry Classification

NAICS: Wholesale Trade › Petroleum and Petroleum Products Merchant Wholesalers › Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)

Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Esso Bahamas Limited (UEI: 875027138)

Address: AVE SAN PATRICIO ESQ PAR, GUAYNABO, PR, 98

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $10,526,294

Exercised Options: $10,526,294

Current Obligation: $10,526,294

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060005D4549

IDV Type: IDC

Timeline