DoD's $12M Petroleum Contract with Mid-Atlantic Cooperative Solutions Raises Questions on Value and Competition
Contract Overview
Contract Amount: $12,013,115 ($12.0M)
Contractor: Mid-Atlantic Cooperative Solutions, Inc.
Awarding Agency: Department of Defense
Start Date: 2005-09-30
End Date: 2010-07-31
Contract Duration: 1,765 days
Daily Burn Rate: $6.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 43
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: PETROLEUM
Place of Performance
Location: ABERDEEN PROVING GROUND, HARFORD County, MARYLAND, 21005
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $12.0 million to MID-ATLANTIC COOPERATIVE SOLUTIONS, INC. for work described as: PETROLEUM Key points: 1. Contract awarded for petroleum products, a critical but volatile commodity. 2. Mid-Atlantic Cooperative Solutions, Inc. secured the award. 3. The contract spans over 4 years, indicating significant duration. 4. Lack of small business participation noted. 5. Fixed Price with Economic Price Adjustment (EPA) contract type introduces price volatility risk.
Value Assessment
Rating: questionable
The contract's value of $12M over nearly 5 years suggests a substantial commitment. Without specific benchmarks for petroleum products under similar EPA clauses, assessing the pricing's fairness relative to market fluctuations and competitor offerings is difficult. The fixed-price with EPA structure inherently carries risk for the government if market prices surge.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is generally positive for price discovery. However, the specific details of the bidding process and the number of bids received are not provided, making it hard to fully assess the competitive pressure applied and its impact on the final price.
Taxpayer Impact: The use of an economic price adjustment clause could lead to higher taxpayer costs if petroleum prices increase significantly over the contract's duration, potentially exceeding initial budget estimates.
Public Impact
Ensures supply of essential petroleum products for Department of Defense operations. Potential for increased costs to taxpayers due to economic price adjustments. Lack of small business involvement may limit broader economic impact. Long contract duration could lock in potentially unfavorable pricing if market conditions change.
Waste & Efficiency Indicators
Waste Risk Score: 68 / 10
Warning Flags
- Economic Price Adjustment (EPA) clause introduces price volatility risk.
- No small business participation.
- Long contract duration (1765 days).
Positive Signals
- Awarded under Full and Open Competition.
- Ensures critical supply chain for defense.
Sector Analysis
The petroleum and petroleum products wholesale sector is vital for national infrastructure and defense. Spending benchmarks vary widely based on commodity prices, geopolitical factors, and contract types. This contract's value is moderate within the context of large government procurement, but the EPA clause warrants close monitoring.
Small Business Impact
The contract explicitly states no small business participation (ss: false, sb: false). This indicates that the prime contractor did not subcontract to small businesses or that the solicitation did not prioritize or require small business involvement, potentially missing opportunities to support smaller enterprises.
Oversight & Accountability
The contract was awarded in 2005 and ended in 2010, suggesting it is a historical contract. Oversight would have focused on monitoring the economic price adjustments and ensuring timely delivery of petroleum products. Accountability for the pricing mechanism and contractor performance would have been managed by the Defense Logistics Agency.
Related Government Programs
- Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause risk
- No small business participation
- Long contract duration
- Potential for price escalation
- Lack of detailed competition metrics
Tags
petroleum-and-petroleum-products-merchan, department-of-defense, md, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $12.0 million to MID-ATLANTIC COOPERATIVE SOLUTIONS, INC.. PETROLEUM
Who is the contractor on this award?
The obligated recipient is MID-ATLANTIC COOPERATIVE SOLUTIONS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $12.0 million.
What is the period of performance?
Start: 2005-09-30. End: 2010-07-31.
What was the actual price variance experienced due to the Economic Price Adjustment (EPA) clause throughout the contract's life?
Determining the actual price variance due to the EPA clause requires access to the contract's payment history and historical petroleum market data. Without this, it's impossible to quantify the exact impact on taxpayer cost. Analyzing this would reveal if the EPA protected the government from price drops or exposed it to significant increases, impacting overall value.
Were there specific market conditions or justifications that led to the selection of an EPA clause over a fixed-price contract?
The selection of an EPA clause typically stems from anticipated high volatility in the underlying commodity prices, in this case, petroleum. This allows the contract price to adjust with market fluctuations, theoretically protecting both the buyer from excessive price hikes and the seller from losses due to unforeseen cost increases, aiming for a stable supply chain.
How many bids were received, and what was the competitive landscape like for this specific petroleum product category during the solicitation period?
While the contract was awarded under 'Full and Open Competition,' the number of bids received is crucial for assessing the true level of competition. A low number of bids, even in a full and open environment, could indicate limited market interest or barriers to entry, potentially impacting the government's ability to secure the most favorable pricing.
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: SP060005R0031
Offers Received: 43
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: 230 LINCOLN WAY E, NEW OXFORD, PA, 13
Business Categories: Category Business, Small Business
Financial Breakdown
Contract Ceiling: $12,013,115
Exercised Options: $12,013,115
Current Obligation: $12,013,115
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060005D4051
IDV Type: IDC
Timeline
Start Date: 2005-09-30
Current End Date: 2010-07-31
Potential End Date: 2010-07-31 00:00:00
Last Modified: 2010-09-22
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