DoD's $128.5M Petroleum Contract with ExxonMobil Raises Questions on Competition and Value

Contract Overview

Contract Amount: $213,267,629 ($213.3M)

Contractor: Exxon Mobil Corporation

Awarding Agency: Department of Defense

Start Date: 2005-11-08

End Date: 2010-06-30

Contract Duration: 1,695 days

Daily Burn Rate: $125.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 200611!008504!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060005D0508 !A!N! !N!B001 !02 !20051108!20060630!128519233!128519233!001213214!N!EXXON MOBIL CORPORATION !3225 GALLOWS ROAD - RM 5D2!FAIRFAX !VA!22037!00000! !IT! ! !ITALY !+000030420972!N!N!000000000000!9130!LIQUID PROPELLANTS & FUEL, PETROLEUM BASE !A8A!PETROLEUM !000 !NOT DISCERNABLE !324110!E! !3!B!S!B! !D!20060630!B! ! !A! !D!U!K!1!001!N!1G!Z!N!Z!B!IT!Y!L!U! ! ! ! ! !A!A!000!A!B!N! ! ! ! ! ! !0001! !

Plain-Language Summary

Department of Defense obligated $213.3 million to EXXON MOBIL CORPORATION for work described as: 200611!008504!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060005D0508 !A!N! !N!B001 !02 !20051108!20060630!128519233!128519233!001213214!N!EXXON MOBIL CORPORATION !3225 GALLOWS ROAD - RM 5D2!FAIRFAX !VA!22037!00000! !IT! ! … Key points: 1. The contract awarded to ExxonMobil for liquid propellants and fuel totals $128.5 million. 2. Awarded as 'Not Competed', raising concerns about price discovery and potential overpayment. 3. The fixed-price contract with economic price adjustment introduces risk of fluctuating costs. 4. Sector context: Petroleum products are critical for defense operations, but competition is vital for cost efficiency.

Value Assessment

Rating: questionable

The contract value of $128.5 million for petroleum products needs benchmarking against similar DoD contracts. Without competitive bidding, it's difficult to assess if this price represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was not competed, indicating a sole-source award. This limits price discovery and may lead to higher costs for taxpayers as there was no market pressure to offer the best price.

Taxpayer Impact: The lack of competition on this significant contract could result in taxpayers paying more than necessary for essential petroleum products.

Public Impact

Taxpayers may be overpaying for critical fuel supplies due to a lack of competitive bidding. Dependence on a single supplier for essential defense fuels could pose a supply chain risk. The economic price adjustment clause adds uncertainty to the final cost, potentially increasing the burden on taxpayers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Sole-Source Award
Economic Price Adjustment

Positive Signals

Essential Service Provided
Long-Term Contract

Sector Analysis

This contract falls within the petroleum industry, specifically for liquid propellants and fuel. Defense spending in this sector is crucial but often subject to price volatility and supply chain risks, making competitive procurement essential.

Small Business Impact

There is no indication in the provided data whether small businesses were involved in this contract, either as prime contractors or subcontractors. The sole-source nature of the award further suggests limited opportunities for small business participation.

Oversight & Accountability

The 'Not Competed' status warrants further investigation by oversight bodies to ensure the government obtained the best possible value and that the justification for sole-source procurement was sound.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Lack of Competition
Sole-Source Award
Economic Price Adjustment Clause
Potential for Overpayment
Limited Oversight Visibility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $213.3 million to EXXON MOBIL CORPORATION. 200611!008504!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060005D0508 !A!N! !N!B001 !02 !20051108!20060630!128519233!128519233!001213214!N!EXXON MOBIL CORPORATION !3225 GALLOWS ROAD - RM 5D2!FAIRFAX !VA!22037!00000! !IT! ! !ITALY !+000030420972!N!N!000000000000!9130!LIQUID PROPELLANTS & FUEL, PETROLEUM BASE !A8A!PETROLEUM !000 !NOT DISCERNABLE !324110!E! !3!B!S!B! !D!200

Who is the contractor on this award?

The obligated recipient is EXXON MOBIL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $213.3 million.

What is the period of performance?

Start: 2005-11-08. End: 2010-06-30.

What was the specific justification for awarding this contract on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award typically involves circumstances where only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, or urgent and compelling needs. Without further documentation, the specific rationale remains unclear, but it is a critical point for oversight.

How does the economic price adjustment clause impact the final cost and taxpayer exposure?

The economic price adjustment (EPA) clause allows for changes in contract price based on fluctuations in specified economic factors, such as material costs or labor rates. For petroleum products, this often means the price can increase if market prices for crude oil or refined products rise, directly impacting the final cost to the government and taxpayers.

What are the potential risks associated with a long-term, sole-source contract for essential fuel supplies?

The primary risks include potential overpayment due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and vulnerability to supply chain disruptions if the sole source faces issues. It also limits the government's ability to leverage market competition for better pricing or terms over the contract duration.

Industry Classification

NAICS: Manufacturing › Petroleum and Coal Products Manufacturing › Petroleum Refineries

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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

Evaluated Preference: NONE

Contractor Details

Address: 3225 GALLOWS ROAD - RM 5D2, FAIRFAX, VA, 11

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060005D0508

IDV Type: IDC

Timeline