DoD's $24M petroleum contract to Associated Petroleum Products, Inc. awarded under full and open competition

Contract Overview

Contract Amount: $24,096,838 ($24.1M)

Contractor: Associated Petroleum Products, Inc.

Awarding Agency: Department of Defense

Start Date: 2005-12-16

End Date: 2010-06-30

Contract Duration: 1,657 days

Daily Burn Rate: $14.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 27

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Place of Performance

Location: TACOMA, PIERCE County, WASHINGTON, 98421

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $24.1 million to ASSOCIATED PETROLEUM PRODUCTS, INC. for work described as: Key points: 1. Contract awarded for petroleum products, a critical component for military operations. 2. The contract was competed after excluding specific sources, indicating a potentially narrowed but still competitive field. 3. A fixed-price contract with economic price adjustment suggests potential for cost fluctuations based on market conditions. 4. The duration of the contract (over 5 years) implies a long-term need for these supplies. 5. The award to a single entity, Associated Petroleum Products, Inc., warrants scrutiny regarding market concentration. 6. The contract's value of approximately $24 million over its term requires benchmarking against similar fuel supply agreements.

Value Assessment

Rating: fair

The contract value of $24 million over nearly five and a half years averages around $4.3 million annually. Benchmarking this against similar petroleum supply contracts for the Department of Defense is crucial. Without specific unit pricing or volume data, a precise value-for-money assessment is challenging. However, the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This indicates that while the competition was not entirely unrestricted, it did involve a competitive process. The exclusion of certain sources suggests specific criteria were applied, potentially limiting the pool of eligible bidders. The number of bids received (27) is a positive sign of competition, but the nature of the exclusion needs further examination to understand its impact on price discovery.

Taxpayer Impact: The competitive process, even with exclusions, likely resulted in a more favorable price for taxpayers than a sole-source award. However, understanding the rationale behind the source exclusions is key to ensuring maximum taxpayer benefit.

Public Impact

Military readiness and operational capability are directly supported by the reliable supply of petroleum products. Personnel and equipment across various DoD installations benefit from the fuel provided under this contract. The contract supports the logistics and supply chain infrastructure essential for national defense. Geographic impact is likely widespread, covering installations where the awarded petroleum products are required.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause.
Limited competition due to exclusion of sources may impact optimal pricing.
Dependence on a single contractor for critical fuel supplies could pose supply chain risks.

Positive Signals

Awarded through a competitive process, indicating some level of market engagement.
Contract duration suggests a stable and predictable supply chain for essential resources.
The large number of bids (27) suggests significant market interest and potential for competitive pricing.

Sector Analysis

The petroleum and petroleum products wholesale sector is a critical component of the energy industry, supporting numerous downstream activities, including transportation and industrial operations. The Defense Logistics Agency (DLA) is a major procurer of fuel for military operations, often awarding large, long-term contracts. This contract fits within the broader landscape of government procurement for essential commodities, where price stability and reliable delivery are paramount. Benchmarks for similar fuel contracts would typically consider volume, product type, delivery location, and contract duration.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities, which are not detailed here. Without explicit set-aside goals or reporting on subcontracting, it's difficult to assess the direct impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. The Defense Contract Audit Agency (DCAA) would likely audit pricing and costs, especially given the economic price adjustment clause. Transparency is facilitated through contract databases like FPDS-NG, though detailed performance metrics may not always be publicly available.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Department of Defense Energy Procurement
Petroleum Product Supply Agreements
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Economic Price Adjustment Clause
Exclusion of Sources in Competition
Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.1 million to ASSOCIATED PETROLEUM PRODUCTS, INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ASSOCIATED PETROLEUM PRODUCTS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.1 million.

What is the period of performance?

Start: 2005-12-16. End: 2010-06-30.

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

The Defense Logistics Agency (DLA) is a significant consumer of petroleum products, consistently awarding multi-billion dollar contracts annually to ensure fuel availability for military operations worldwide. Historical spending data reveals a trend of large, long-term contracts, often utilizing fixed-price structures with economic price adjustments to manage market volatility. The DLA's procurement strategy aims to balance cost-effectiveness with the critical need for uninterrupted supply. Analyzing past awards can provide context for the $24 million contract, highlighting typical contract values, durations, and the competitive landscape for fuel suppliers serving the Department of Defense. Fluctuations in global oil prices and geopolitical events often influence DLA's spending levels and contract terms.

How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause impact price discovery and taxpayer value?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' clause signifies a competitive procurement process that, however, intentionally excluded certain potential bidders. While it's more competitive than a sole-source award, the exclusion of specific entities could limit the breadth of competition. The impact on price discovery depends heavily on the rationale for the exclusions and the number of remaining bidders. If the excluded sources were significant market players or if the exclusion criteria were overly restrictive, it might lead to less aggressive bidding and potentially higher prices for taxpayers. Conversely, if the exclusions were based on specific technical requirements or past performance issues, and a robust number of qualified bidders remained, the competition could still yield favorable pricing. The 27 bids received suggest a reasonably competitive market despite the exclusions.

What are the risks associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for petroleum products?

A Fixed Price with Economic Price Adjustment (FPEPA) contract for petroleum products presents a dual-edged risk profile. For the government, the primary risk is potential cost escalation. While the base price is fixed, the economic price adjustment clause allows for increases tied to specific economic indicators, such as commodity price indices or inflation rates. This can lead to higher-than-anticipated expenditures if market prices surge unexpectedly. For the contractor, the risk lies in the potential for prices to decrease significantly, eroding profit margins if the adjustment mechanism doesn't fully compensate for market downturns. Effective oversight is crucial to ensure that the economic adjustments are applied fairly and in accordance with the contract's defined parameters, preventing unwarranted cost increases for the taxpayer.

What is the typical track record of Associated Petroleum Products, Inc. in government contracting?

Information regarding the specific track record of Associated Petroleum Products, Inc. in government contracting is not detailed in the provided data. A comprehensive assessment would require reviewing their past performance on federal contracts, including on-time delivery, product quality, adherence to contract terms, and any history of disputes or contract terminations. Government contracting databases and past performance reviews are essential resources for evaluating a contractor's reliability and suitability for fulfilling critical supply needs. Without this information, it is difficult to definitively assess their track record in relation to this $24 million petroleum contract.

How does the geographic scope of this contract impact its overall value and complexity?

The geographic scope of this contract significantly influences its complexity and potential value. If the petroleum products are required at multiple, dispersed military installations, the logistics of delivery, storage, and distribution become more intricate. This can increase transportation costs and require a more robust supply chain management system. Associated Petroleum Products, Inc. would need to demonstrate the capacity to serve various locations efficiently. The value proposition is also affected; contracts covering wider geographic areas often command higher prices due to the increased operational demands. Conversely, a contract focused on a single, large installation might offer economies of scale in delivery. The specific locations and delivery requirements are critical factors in assessing the overall value and operational success of this award.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060005R0042

Offers Received: 27

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

Evaluated Preference: NONE

Contractor Details

Address: 2320 MILWAUKEE WAY, TACOMA, WA, 90

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $24,096,838

Exercised Options: $24,096,838

Current Obligation: $24,096,838

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060006D4504

IDV Type: IDC

Timeline