Department of Defense awarded $107.8M for petroleum products, with a fixed-price contract type and full and open competition

Contract Overview

Contract Amount: $107,829,434 ($107.8M)

Contractor: Petroleum Traders Corp

Awarding Agency: Department of Defense

Start Date: 2004-08-26

End Date: 2009-06-30

Contract Duration: 1,769 days

Daily Burn Rate: $61.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 40

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 200611!002690!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060004D4532 !A!N! !N!B001 !29 !20060302!20090630!021640487!021640487!021640487!N!PETROLEUM TRADERS CORPORATION !7110 POINTE INVERNESS WAY !FORT WAYNE !IN!46804!25000!003!18!FORT WAYNE !ALLEN !INDIANA !+000000351115!N!Y!000000000000!9130!LIQUID PROPELLANTS & FUEL, PETROLEUM BASE !A8A!PETROLEUM !000 !NOT DISCERNABLE !424720!E! !3!A!S!A! ! !99990909!B! ! !A! !A!U!K!2!002!B! !Z!N!Z! ! !Y!B!N!N! ! !C! !A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46804

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $107.8 million to PETROLEUM TRADERS CORP for work described as: 200611!002690!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060004D4532 !A!N! !N!B001 !29 !20060302!20090630!021640487!021640487!021640487!N!PETROLEUM TRADERS CORPORATION !7110 POINTE INVERNESS WAY !FORT WAYNE !IN!46804!25000!003!18!FORT WAYNE !ALLE… Key points: 1. Contract awarded for petroleum products, indicating a critical need for fuel and lubricants within the Defense sector. 2. The contract utilized a fixed-price structure with economic price adjustments, suggesting an attempt to mitigate market volatility. 3. Full and open competition was employed, implying a robust bidding process and potential for competitive pricing. 4. The contract duration of approximately 5 years suggests a long-term requirement for these essential supplies. 5. The awardee, Petroleum Traders Corporation, is a significant player in the petroleum wholesale market. 6. The contract's value of over $100 million highlights the substantial financial commitment to securing these resources.

Value Assessment

Rating: good

The contract value of $107.8 million for petroleum products over nearly five years appears reasonable given the scale and nature of the requirement. While specific per-unit pricing is not detailed, the fixed-price with economic price adjustment structure aims to balance cost certainty with market fluctuations. Benchmarking against similar large-scale fuel procurements by the DoD would provide further context, but the overall value seems aligned with the strategic importance of maintaining fuel supplies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and terms. The presence of 40 bids suggests a healthy level of interest and competition for this significant petroleum supply contract.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces, ensuring the government receives the best possible value for its expenditure on essential petroleum products.

Public Impact

Military operations and readiness are directly supported through the reliable supply of petroleum products. The contract ensures the availability of liquid propellants and fuel, critical for aviation, ground vehicles, and other defense assets. The geographic impact is national, as fuel is a ubiquitous requirement for military installations and deployments. Workforce implications include support for logistics personnel involved in the distribution and management of these fuel supplies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to economic price adjustment clause, which could increase costs if market prices surge.
Dependence on a single primary contractor for a critical resource like fuel could pose supply chain risks if not managed proactively.
Ensuring consistent quality and timely delivery of petroleum products across various operational theaters requires robust oversight.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment and broad market engagement.
Fixed-price contract type provides a degree of cost predictability, despite the economic price adjustment.
The substantial number of bids (40) indicates a competitive market and a strong pool of potential suppliers.
The contract duration suggests a stable, long-term relationship, potentially leading to efficiencies in procurement and logistics.

Sector Analysis

This contract falls within the Defense sector, specifically concerning the procurement of petroleum products, a vital component of military logistics and operations. The market for petroleum wholesalers is large and competitive, with significant government spending allocated to fuel and energy needs. This contract represents a substantial portion of spending within the 'Liquid Propellants & Fuel, Petroleum Base' category, highlighting its strategic importance.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. While there's no direct indication of subcontracting opportunities for small businesses within the provided data, large defense contracts often include provisions or expectations for small business participation in the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and logistics commands, likely including the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the fixed-price contract structure, with performance metrics and delivery schedules being key. Transparency is facilitated through contract award databases, though detailed operational oversight specifics are not publicly disclosed.

Related Government Programs

Defense Fuel Supply Center
Military Fuel Procurement
Petroleum Logistics
Strategic Petroleum Reserve
Energy Security Contracts

Risk Flags

Potential for price escalation due to economic price adjustment clause.
Supply chain vulnerability if contractor faces disruptions.
Ensuring consistent quality and timely delivery across diverse operational needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.8 million to PETROLEUM TRADERS CORP. 200611!002690!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060004D4532 !A!N! !N!B001 !29 !20060302!20090630!021640487!021640487!021640487!N!PETROLEUM TRADERS CORPORATION !7110 POINTE INVERNESS WAY !FORT WAYNE !IN!46804!25000!003!18!FORT WAYNE !ALLEN !INDIANA !+000000351115!N!Y!000000000000!9130!LIQUID PROPELLANTS & FUEL, PETROLEUM BASE !A8A!PETROLEUM !000 !NOT DISCERNABLE !424720!E! !3!A!S!A! ! !999

Who is the contractor on this award?

The obligated recipient is PETROLEUM TRADERS CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $107.8 million.

What is the period of performance?

Start: 2004-08-26. End: 2009-06-30.

What is the historical spending pattern for petroleum products by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is a major procurer of petroleum products, essential for military operations worldwide. Historical spending data reveals a consistent and significant allocation of resources towards fuel and lubricants, often exceeding billions of dollars annually. This spending fluctuates based on global market prices, geopolitical events, and the intensity of military operations. DLA's procurement strategies aim to ensure supply chain resilience and cost-effectiveness through various contract types, including fixed-price and cost-plus, often leveraging competitive bidding processes. Analyzing past DLA spending on petroleum provides crucial context for evaluating the current contract's value and the agency's ongoing commitment to energy security for the armed forces.

How does the economic price adjustment (EPA) clause typically impact the final cost of petroleum contracts?

An Economic Price Adjustment (EPA) clause in a fixed-price contract allows for adjustments to the contract price based on fluctuations in specific economic factors, such as the cost of raw materials or labor. For petroleum contracts, EPA clauses are often tied to published indices for crude oil or refined product prices. This mechanism aims to protect both the contractor from unforeseen market escalations and the government from excessively high initial bids designed to hedge against price volatility. While EPA can provide cost certainty by preventing extreme price swings, it also means the final cost is not fixed and can increase if the referenced economic indicators rise. The specific formula and indices used in the EPA clause are critical in determining the extent of potential price changes and the overall value realized by the government.

What are the primary risks associated with a sole-source or limited competition contract for essential supplies like fuel?

Sole-source or limited competition contracts for essential supplies like fuel carry significant risks. Primarily, the lack of robust competition can lead to inflated prices, as the government may not benefit from the cost-saving pressures inherent in a broader bidding process. This can result in taxpayers paying a premium for goods and services. Furthermore, limited competition can reduce innovation and the incentive for contractors to improve efficiency or quality. There's also an increased risk of supply chain disruptions if the single or limited number of suppliers faces operational issues, as there are fewer alternative sources. Ensuring fair pricing and performance in such scenarios requires intensive government oversight and negotiation.

What is the typical performance track record of Petroleum Traders Corporation in government contracting?

Petroleum Traders Corporation has a history of engaging in government contracts, particularly within the defense and energy sectors, related to the supply of petroleum products. While specific performance metrics for every contract are not always publicly detailed, their continued participation in bidding processes and award of contracts suggest a generally satisfactory track record in meeting government requirements. Companies in this sector are typically evaluated on their ability to ensure reliable supply, meet stringent quality standards, and adhere to delivery schedules. Analyzing past contract performance, including any documented issues or successes, provides insight into their reliability as a government supplier.

How does the PSC code '424720' relate to the broader defense procurement landscape?

The Product and Service Code (PSC) '424720' specifically designates 'Petroleum and Petroleum Products, Bulk'. This code is crucial within the defense procurement landscape as it identifies a critical category of supplies essential for military operations. Defense agencies, including the Department of Defense and its various branches, rely heavily on these products for everything from aviation fuel to vehicle lubricants and heating oil for installations. Contracts awarded under this PSC code represent significant investments aimed at ensuring energy security and operational readiness. The volume and value of contracts associated with PSC 424720 underscore its strategic importance in maintaining the logistical backbone of the armed forces.

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: 40

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

Evaluated Preference: NONE

Contractor Details

Address: 7110 POINTE INVERNESS WAY, FORT WAYNE, IN, 03

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $107,829,434

Exercised Options: $107,829,434

Current Obligation: $107,829,434

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060004D4532

IDV Type: IDC

Timeline