DoD spent $27.7M on ULSD fuel from Eagle Aviation, Inc. over 5 years

Contract Overview

Contract Amount: $27,748,305 ($27.7M)

Contractor: Eagle Aviation, Inc.

Awarding Agency: Department of Defense

Start Date: 2004-08-24

End Date: 2009-06-30

Contract Duration: 1,771 days

Daily Burn Rate: $15.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 42

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: ULSD FUEL

Place of Performance

Location: KALISPELL, FLATHEAD County, MONTANA, 59901

State: Montana Government Spending

Plain-Language Summary

Department of Defense obligated $27.7 million to EAGLE AVIATION, INC. for work described as: ULSD FUEL Key points: 1. Contract awarded through full and open competition, suggesting a competitive market. 2. Fixed-price contract with economic price adjustment indicates potential for cost fluctuations. 3. Contract duration of 1771 days (approx. 5 years) suggests a long-term need. 4. The North American Industry Classification System (NAICS) code 424720 points to wholesale distribution of petroleum products. 5. Awarded by the Defense Logistics Agency, a key agency for procuring fuel and other supplies for the military. 6. The contract was awarded as 'Other Direct Costs' (ODC), which can sometimes lead to less predictable spending.

Value Assessment

Rating: fair

The total award amount of $27.7 million over nearly five years for ULSD fuel appears to be within a reasonable range for a large federal contract of this nature. However, without specific per-gallon pricing or detailed breakdowns of the economic price adjustment mechanism, a precise value-for-money assessment is challenging. Benchmarking against similar fuel contracts awarded by the Defense Logistics Agency or other military branches would provide a clearer picture of whether the pricing was competitive and reflected market conditions at the time of award.

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 42 bids suggests a robust competitive environment for this fuel supply requirement. A high number of bidders generally leads to better price discovery and can drive down costs for the government, although the specific impact depends on the quality and competitiveness of the bids received.

Taxpayer Impact: The extensive competition for this contract likely resulted in taxpayer savings by ensuring the government secured the most favorable pricing available in the market for ULSD fuel.

Public Impact

Military operations and readiness are supported through the reliable supply of ULSD fuel. The contract ensures the availability of a critical energy resource for defense logistics. Geographic impact is focused on Montana, where the contract was performed. The contract supports the petroleum products wholesale distribution sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if fuel prices increase significantly.
The long contract duration may not fully capture the benefits of potential future market price decreases.
Reliance on a single contractor for a significant fuel supply could pose a risk if the contractor faces operational issues.

Positive Signals

Awarded through full and open competition, indicating a competitive marketplace.
The Defense Logistics Agency has established processes for managing fuel contracts.
The contract duration suggests a stable and predictable supply chain for a critical resource.

Sector Analysis

The petroleum and petroleum products merchant wholesalers sector is crucial for the nation's energy infrastructure, including supporting federal agencies. This contract falls within the wholesale distribution segment, focusing on Ultra-Low Sulfur Diesel (ULSD) fuel. The Defense Logistics Agency is a major procurer of fuel, and its spending in this sector is significant, often benchmarked against commercial market prices and other government contracts to ensure value.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a large business, and the direct impact on the small business ecosystem for this specific contract is likely minimal unless the prime contractor engages in significant small business subcontracting, which is not detailed here.

Oversight & Accountability

The Defense Logistics Agency (DLA) typically has robust oversight mechanisms for fuel contracts, including performance monitoring and quality assurance. As a fixed-price contract with economic price adjustment, the DLA would monitor fuel price indices to manage the adjustment component. Inspector General oversight would apply to ensure compliance with contract terms and prevent fraud, waste, and abuse.

Related Government Programs

Defense Logistics Agency Fuel Contracts
ULSD Fuel Procurement
Petroleum Product Wholesale Distribution
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Potential for cost escalation due to economic price adjustment
Long contract duration may not capture future price decreases
Reliance on a single contractor for a critical supply

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.7 million to EAGLE AVIATION, INC.. ULSD FUEL

Who is the contractor on this award?

The obligated recipient is EAGLE AVIATION, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.7 million.

What is the period of performance?

Start: 2004-08-24. End: 2009-06-30.

What was the average per-gallon price of ULSD fuel under this contract, considering the economic price adjustment?

The provided data does not include the specific per-gallon price or the detailed mechanism for the economic price adjustment (EPA). The total award of $27.7 million over approximately 1771 days (roughly 4.85 years) suggests an average annual spending of about $5.7 million. To determine the average per-gallon price, one would need the total quantity of fuel purchased and the specific price indices used for the EPA. Without this granular data, it's impossible to calculate the exact per-gallon cost or how it fluctuated over the contract's life. However, the fixed-price nature with adjustment implies the base price was set, and then modified based on market indicators, aiming to balance cost certainty for the government with the contractor's risk of price volatility.

How did the pricing of this contract compare to prevailing market rates for ULSD fuel during the contract period?

A direct comparison of this contract's pricing to prevailing market rates for ULSD fuel during its 2004-2009 performance period is not possible with the given data. The contract utilized a 'Fixed Price with Economic Price Adjustment' (FP-EPA) structure. This means the base price was set, but actual costs would have varied based on an agreed-upon economic index (e.g., a Department of Energy or EIA fuel price index). To assess value, one would need to analyze the specific index used, the frequency of adjustments, and compare the adjusted prices to benchmark commercial fuel prices in the relevant geographic region (Montana). The high number of bidders (42) suggests competitive pressure, which generally leads to prices closer to market rates, but the EPA clause introduces variability.

What were the primary risks associated with this fixed-price contract with economic price adjustment?

The primary risk for the government in a Fixed Price with Economic Price Adjustment (FP-EPA) contract like this is cost escalation due to fluctuations in the underlying commodity price (ULSD fuel). While the fixed-price component provides some cost certainty, the economic price adjustment clause allows the contractor to pass on increases in fuel costs, potentially leading to higher-than-anticipated spending for the government. Conversely, the contractor bears the risk if fuel prices fall below the adjusted price, but the EPA mechanism is designed to mitigate this for the contractor as well. Other risks include potential supply disruptions if the contractor faces operational issues, and ensuring the chosen economic index accurately reflects market conditions.

What was the historical spending trend for ULSD fuel by the Defense Logistics Agency prior to this contract?

The provided data focuses solely on this specific contract (awarded August 2004) and does not include historical spending trends for ULSD fuel by the Defense Logistics Agency (DLA) prior to this award. To analyze historical spending, one would need access to DLA's procurement records for previous years, identifying similar fuel contracts, their values, durations, and quantities. Such an analysis would help establish baseline spending levels, identify any significant increases or decreases in demand or price, and understand how this $27.7 million contract fits into the broader DLA fuel procurement strategy over time.

How effective was Eagle Aviation, Inc. in fulfilling the terms and delivery requirements of this contract?

The provided data does not contain information regarding the performance or effectiveness of Eagle Aviation, Inc. in fulfilling this contract. Contract performance is typically assessed through contractor performance evaluation reports (e.g., CPARS - Contractor Performance Assessment Reporting System), which are not included here. To evaluate effectiveness, one would need to review these reports, look for any contract modifications, disputes, or terminations for default, and assess whether the fuel was delivered on time, met quality specifications, and if there were any significant issues raised by the contracting officer or end-users.

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

Solicitation ID: SP060004R0042

Offers Received: 42

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

Evaluated Preference: NONE

Contractor Details

Address: 690 N MERIDIAN, KALISPELL, MT, 01

Business Categories: Category Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations

Financial Breakdown

Contract Ceiling: $27,748,305

Exercised Options: $27,748,305

Current Obligation: $27,748,305

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060004D4508

IDV Type: IDC

Timeline