DoD's $11.6M petroleum contract with Tesoro Alaska Petroleum Company awarded under full and open competition
Contract Overview
Contract Amount: $11,648,370 ($11.6M)
Contractor: Tesoro Alaska Petroleum Company
Awarding Agency: Department of Defense
Start Date: 2006-08-25
End Date: 2009-12-31
Contract Duration: 1,224 days
Daily Burn Rate: $9.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 10
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Place of Performance
Location: SAN ANTONIO, BEXAR County, TEXAS, 78216
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $11.6 million to TESORO ALASKA PETROLEUM COMPANY for work described as: Key points: 1. Contract awarded to Tesoro Alaska Petroleum Company for petroleum products. 2. The contract was competed using full and open competition. 3. The contract duration was 1224 days. 4. The contract was awarded by the Defense Logistics Agency. 5. The contract type was Fixed Price with Economic Price Adjustment. 6. The contract was awarded in Texas.
Value Assessment
Rating: fair
The contract value of $11.6 million over approximately 3.4 years for petroleum products appears to be within a reasonable range for bulk fuel procurement. However, without specific details on the type and quantity of petroleum products, a precise value-for-money assessment is challenging. Benchmarking against similar DLA contracts for fuel in the same region would provide a clearer picture of whether the pricing was competitive.
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 fact that 10 bids were received suggests a healthy level of competition for this petroleum supply requirement. This broad competition is generally expected to drive down prices and ensure the government receives fair market value.
Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it maximizes the pool of potential offerors, leading to more competitive pricing and potentially lower overall costs for the government.
Public Impact
This contract supports the Department of Defense's logistical needs by ensuring a supply of petroleum products. The services delivered are critical for military operations and readiness. The contract was awarded in Texas, indicating a potential impact on the regional economy and workforce in that state. The procurement of petroleum products directly supports the transportation and operational capabilities of military forces.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clauses can introduce cost volatility if not carefully managed.
- Reliance on a single awardee for a critical commodity like petroleum carries inherent supply chain risks.
- The specific type and grade of petroleum products procured are not detailed, making it difficult to assess precise value.
Positive Signals
- Awarded under full and open competition, maximizing potential for competitive pricing.
- Multiple bids (10) indicate a competitive marketplace for this requirement.
- The contract duration of over three years suggests a stable supply chain was established.
Sector Analysis
The procurement of petroleum products falls under the broader energy and logistics sectors. The Defense Logistics Agency (DLA) is a major procurer of fuel for military operations worldwide. The market for petroleum products is global and subject to significant price fluctuations based on geopolitical events, supply and demand, and refining capacity. DLA's spending in this category is substantial, aiming to secure reliable and cost-effective fuel sources to maintain military readiness.
Small Business Impact
There is no indication that this contract was specifically set aside for small businesses, nor is there information on subcontracting plans. Given the nature of petroleum supply, it is possible that larger, established companies were the primary bidders. Further analysis would be needed to determine if small businesses had opportunities to participate as subcontractors.
Oversight & Accountability
The Defense Logistics Agency is responsible for the oversight of this contract. As a fixed-price contract with economic price adjustment, the agency would monitor price changes and ensure compliance with the contract terms. Transparency would be facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Defense Logistics Agency Fuel Procurement
- Department of Defense Energy Contracts
- Petroleum Product Supply Contracts
- Fixed Price with Economic Price Adjustment Contracts
Risk Flags
- Potential for price volatility due to Economic Price Adjustment clause.
- Supply chain risk associated with reliance on a single supplier for critical fuel.
- Lack of detailed product specification hinders precise value assessment.
Tags
defense, department-of-defense, defense-logistics-agency, petroleum-products, fixed-price-economic-price-adjustment, full-and-open-competition, texas, large-contract, energy, logistics
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $11.6 million to TESORO ALASKA PETROLEUM COMPANY. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is TESORO ALASKA PETROLEUM COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $11.6 million.
What is the period of performance?
Start: 2006-08-25. End: 2009-12-31.
What was the specific type and quantity of petroleum products procured under this contract?
The provided data indicates the North American Industry Classification System (NAICS) code as 424720, which covers 'Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)'. However, the specific types (e.g., jet fuel, diesel, gasoline) and exact quantities of petroleum products procured under this particular $11.6 million contract with Tesoro Alaska Petroleum Company are not detailed in the summary data. This level of specificity is crucial for a comprehensive value-for-money analysis, as different petroleum products have vastly different market prices and are used for distinct military applications. Without this information, it is difficult to benchmark the unit costs effectively against market rates or similar government procurements.
How did the final price compare to the initial estimated cost, considering the economic price adjustment?
The contract utilized a 'Fixed Price with Economic Price Adjustment' (FP-EPA) structure. This means the base price was fixed, but adjustments were allowed based on pre-defined economic factors, typically related to fluctuations in the cost of raw materials or labor. The provided summary data does not include information on the initial estimated cost or the specific economic indicators used for adjustment. Therefore, a direct comparison between the final price paid and the initial estimate, or an analysis of how the economic price adjustments impacted the total cost, cannot be performed with the available data. Understanding the magnitude and frequency of these adjustments would be key to assessing the cost certainty and overall value achieved.
What was the historical spending pattern for similar petroleum products by the Defense Logistics Agency in Texas?
The provided data focuses on a single contract awarded in 2006. To establish a historical spending pattern for similar petroleum products by the Defense Logistics Agency (DLA) in Texas, a broader dataset encompassing multiple contracts over several fiscal years would be necessary. This would involve querying DLA contract awards for petroleum products within the specified geographic region (Texas) and analyzing the total dollar amounts, contract types, and awardees over time. Such an analysis would help identify trends in pricing, identify key suppliers, and understand the typical scale of DLA's petroleum procurements in the region, providing context for the $11.6 million award to Tesoro Alaska Petroleum Company.
What is the track record of Tesoro Alaska Petroleum Company in fulfilling government contracts, particularly for petroleum products?
The provided data confirms Tesoro Alaska Petroleum Company as the awardee for this specific $11.6 million Department of Defense contract. However, it does not offer details on the company's broader track record with government contracts. To assess their performance history, one would need to examine past contract awards to Tesoro Alaska Petroleum Company, including their duration, value, type, and any performance evaluations or past performance questionnaires (PPQs) associated with them. Information on whether they have a history of on-time delivery, quality compliance, and adherence to contract terms for similar petroleum procurements would be essential for a thorough risk assessment.
Were there any performance issues or contract disputes associated with this specific $11.6 million award?
The summary data for this contract does not contain information regarding performance issues, disputes, or contract modifications beyond the initial award details. Typically, such information would be found in more detailed contract files, performance reports, or contract modification logs. Without access to these records, it is impossible to determine if Tesoro Alaska Petroleum Company encountered any significant challenges in fulfilling the terms of this $11.6 million petroleum supply contract or if the Defense Logistics Agency experienced any issues with the contractor's performance. The absence of reported issues does not necessarily guarantee flawless execution but suggests no major, publicly documented problems.
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: 10
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Tesoro Corporation (UEI: 008133480)
Address: 300 CONCORD PLAZA DR, SAN ANTONIO, TX, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $6,030,475
Exercised Options: $6,030,475
Current Obligation: $11,648,370
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060006D1267
IDV Type: IDC
Timeline
Start Date: 2006-08-25
Current End Date: 2009-12-31
Potential End Date: 2010-01-31 00:00:00
Last Modified: 2009-11-19
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