DoD awards $12.37M petroleum contract to Naughton Energy Corp, raising value concerns
Contract Overview
Contract Amount: $12,368,417 ($12.4M)
Contractor: Naughton Energy Corp
Awarding Agency: Department of Defense
Start Date: 2006-01-10
End Date: 2011-04-30
Contract Duration: 1,936 days
Daily Burn Rate: $6.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 24
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: 200611!009851!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060006D8504 !A!N! !N!B001 !02 !20060228!20110131!051637932!051637932!051637932!N!NAUGHTON ENERGY CORPORATION !RR 940 !POCONO PINES !PA!18350!61768!089!42!POCONO PINES !MONROE !PENN !+000000915325!N!Y!000000000000!9140!FUEL OILS !A8A!PETROLEUM !000 !NOT DISCERNABLE !424720!E! !3!A!S!B! ! !99990909!B! ! !A! !A!U!K!2!006!B! !Z!N!Z! ! !Y!A!Y!N!B! ! ! !A!A!000!A!B!N! ! ! ! ! ! !0001! !
Place of Performance
Location: POCONO PINES, MONROE County, PENNSYLVANIA, 18350
Plain-Language Summary
Department of Defense obligated $12.4 million to NAUGHTON ENERGY CORP for work described as: 200611!009851!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060006D8504 !A!N! !N!B001 !02 !20060228!20110131!051637932!051637932!051637932!N!NAUGHTON ENERGY CORPORATION !RR 940 !POCONO PINES !PA!18350!61768!089!42!POCONO PINES !MONR… Key points: 1. Contract value of $12.37M for petroleum products. 2. Awarded to Naughton Energy Corporation. 3. Concerns regarding value for money due to fixed price with economic adjustment. 4. Sector is Defense Logistics Agency, focusing on petroleum.
Value Assessment
Rating: questionable
The contract value of $12.37M for petroleum products appears high given the duration and fixed-price nature with economic adjustments. Benchmarking against similar fuel contracts is needed to assess if this represents fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the fixed-price with economic price adjustment (FPEPA) structure can sometimes lead to price volatility and may not always result in the lowest possible price discovery.
Taxpayer Impact: The FPEPA clause introduces potential for price increases, impacting taxpayer cost if fuel prices rise significantly.
Public Impact
Military readiness may be impacted by fuel supply chain costs. Taxpayers could face increased costs due to economic price adjustments. Small businesses in the petroleum sector may face competition from larger suppliers.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause can increase costs.
- Contract duration is long (5 years).
- Lack of specific performance metrics.
Positive Signals
- Awarded under full and open competition.
- Established supplier for defense energy.
Sector Analysis
This contract falls within the Defense Logistics Agency's procurement of petroleum products, a critical component for military operations. Spending benchmarks for fuel procurement vary widely based on market conditions and specific product types.
Small Business Impact
While awarded under full and open competition, the contract does not explicitly detail provisions for small business participation. Larger prime contractors may limit subcontracting opportunities for smaller entities in this sector.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for oversight. The contract's fixed-price with economic adjustment structure warrants scrutiny to ensure cost-effectiveness and prevent unwarranted price hikes.
Related Government Programs
- Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost overruns due to economic price adjustment.
- Long contract duration increases exposure to market fluctuations.
- Lack of detailed performance metrics.
- Dependence on a single supplier for a critical commodity.
Tags
petroleum-and-petroleum-products-merchan, department-of-defense, pa, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $12.4 million to NAUGHTON ENERGY CORP. 200611!009851!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060006D8504 !A!N! !N!B001 !02 !20060228!20110131!051637932!051637932!051637932!N!NAUGHTON ENERGY CORPORATION !RR 940 !POCONO PINES !PA!18350!61768!089!42!POCONO PINES !MONROE !PENN !+000000915325!N!Y!000000000000!9140!FUEL OILS !A8A!PETROLEUM !000 !NOT DISCERNABLE !424720!E! !3!A!S!B! ! !999
Who is the contractor on this award?
The obligated recipient is NAUGHTON ENERGY CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $12.4 million.
What is the period of performance?
Start: 2006-01-10. End: 2011-04-30.
What is the specific mechanism for economic price adjustment, and what are the historical price fluctuations for the fuel types procured under this contract?
The economic price adjustment mechanism likely ties the contract price to a specific industry index or benchmark for fuel prices. Understanding the historical volatility of these indices is crucial. If the indices have shown significant upward trends, the government could be exposed to substantial cost increases beyond initial projections, impacting overall value for money.
How does the performance of Naughton Energy Corporation on this contract compare to industry benchmarks for fuel delivery reliability and quality?
Assessing Naughton Energy's performance against industry benchmarks for fuel delivery reliability and quality is vital. Consistent on-time delivery and adherence to fuel specifications are critical for military operations. Any deviations could indicate potential risks to mission readiness and may warrant a review of the contractor's performance history and future contract awards.
What is the projected taxpayer impact considering the contract's duration and the potential for fuel price escalation under the economic price adjustment clause?
The projected taxpayer impact is contingent on the volatility of fuel prices over the contract's five-year term. If fuel prices experience significant increases, the economic price adjustment clause could lead to substantial cost overruns compared to a fixed-price contract without such adjustments. A thorough analysis of historical price trends and market forecasts is necessary to quantify this potential impact.
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: 24
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: RR 940, POCONO PINES, PA, 08
Business Categories: Asian Pacific American Owned Business, Category Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Woman Owned Business
Financial Breakdown
Contract Ceiling: $12,368,417
Exercised Options: $14,583,675
Current Obligation: $12,368,417
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060006D8504
IDV Type: IDC
Timeline
Start Date: 2006-01-10
Current End Date: 2011-04-30
Potential End Date: 2011-04-30 00:00:00
Last Modified: 2010-11-22
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