DLA awarded $11.6M for fuel products to Highlands Fuel Delivery LLC over 5 years

Contract Overview

Contract Amount: $11,637,411 ($11.6M)

Contractor: Highlands Fuel Delivery LLC

Awarding Agency: Department of Defense

Start Date: 2006-01-26

End Date: 2011-06-30

Contract Duration: 1,981 days

Daily Burn Rate: $5.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 45

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FUEL OIL, BURNER #2 (FS2); DIESEL FUEL, LS #1 (DYED) (LSW); DIESEL FUEL, LS #2 (DYED) (LSS); DIESEL FUEL #1, LOW SULF (LS1); GASOLINE, MID UNL (MUM); DIESEL FUEL #1 (DL1); DIESEL FUEL #2 (DL2); DIESEL FUEL #2, (DYED) (DLS); DIESEL FUEL #2, LOW SULF (LS2)

Place of Performance

Location: PORTSMOUTH, ROCKINGHAM County, NEW HAMPSHIRE, 03801

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $11.6 million to HIGHLANDS FUEL DELIVERY LLC for work described as: FUEL OIL, BURNER #2 (FS2); DIESEL FUEL, LS #1 (DYED) (LSW); DIESEL FUEL, LS #2 (DYED) (LSS); DIESEL FUEL #1, LOW SULF (LS1); GASOLINE, MID UNL (MUM); DIESEL FUEL #1 (DL1); DIESEL FUEL #2 (DL2); DIESEL FUEL #2, (DYED) (DLS); DIESEL FUEL #2, LOW SULF (LS2) Key points: 1. The contract utilized a fixed-price structure with economic price adjustments, allowing for flexibility in response to market fluctuations. 2. Competition was full and open, indicating a broad market engagement for these essential fuel products. 3. The contract duration of 1981 days suggests a long-term need for these petroleum products within the Department of Defense. 4. The award was made to a single contractor, Highlands Fuel Delivery LLC, for a significant dollar value. 5. The North American Industry Classification System (NAICS) code 424720 points to wholesale distribution of petroleum products. 6. The contract was awarded under the 'Other' category, likely due to its focus on commodity supply rather than a specific service or project.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific unit pricing data and market comparisons for the exact fuel types and delivery locations. However, the total award of $11.6 million over approximately five years suggests a substantial commitment of resources for fuel procurement. The fixed-price with economic price adjustment clause indicates an attempt to balance cost control with market volatility, which can be a reasonable approach for commodity contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The data does not specify the number of bids received, but the 'full and open' designation implies a competitive process was intended. This approach generally aims to secure the best possible pricing and terms for the government by leveraging market forces.

Taxpayer Impact: A full and open competition process is generally favorable for taxpayers as it is designed to drive down costs through market competition, ensuring the government is not overpaying for goods or services.

Public Impact

Military installations within the Department of Defense, particularly those served by the Defense Logistics Agency, benefit from a reliable supply of essential fuel products. The contract ensures the availability of various fuel types, including burner fuel, diesel, and gasoline, critical for operational readiness. The geographic impact is likely concentrated in New Hampshire, as indicated by the 'SN' field, where the contractor is based. The contract supports the logistics and supply chain workforce involved in the distribution and delivery of petroleum products.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to the economic price adjustment clause, which could increase costs if market prices surge.
Reliance on a single contractor for a significant volume of fuel could pose supply chain risks if the contractor faces operational issues.
Lack of specific details on the number of bidders limits the assessment of the true competitive intensity.

Positive Signals

The 'full and open' competition designation suggests a robust process aimed at achieving competitive pricing.
The long contract duration indicates a stable and predictable supply chain for essential fuels.
The fixed-price element provides some level of cost certainty, despite the economic price adjustment.

Sector Analysis

This contract falls within the broader energy sector, specifically focusing on the wholesale distribution of refined petroleum products. The market for such commodities is global and subject to significant price fluctuations driven by geopolitical events, supply and demand, and refining capacity. The Defense Logistics Agency (DLA) is a major procurer of fuels for military operations, and contracts like this are crucial for maintaining readiness. Comparable spending benchmarks would involve analyzing other large-scale fuel procurement contracts by government agencies or major commercial entities.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (SS: false, SB: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary focus was on securing the required fuel products through the most competitive means available.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA) through contract officers and quality assurance personnel. Accountability measures would include adherence to delivery schedules, fuel quality standards, and pricing terms as stipulated in the contract. Transparency is generally maintained through contract award databases, although specific performance metrics might not be publicly detailed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Department of Defense Energy Supply Chain
Federal Petroleum Product Contracts
Commodity Procurement by Government Agencies

Risk Flags

Potential for price increases due to economic price adjustment clause.
Reliance on a single contractor for a significant volume of fuel.
Lack of specific competition metrics (number of bidders) limits full assessment of price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.6 million to HIGHLANDS FUEL DELIVERY LLC. FUEL OIL, BURNER #2 (FS2); DIESEL FUEL, LS #1 (DYED) (LSW); DIESEL FUEL, LS #2 (DYED) (LSS); DIESEL FUEL #1, LOW SULF (LS1); GASOLINE, MID UNL (MUM); DIESEL FUEL #1 (DL1); DIESEL FUEL #2 (DL2); DIESEL FUEL #2, (DYED) (DLS); DIESEL FUEL #2, LOW SULF (LS2)

Who is the contractor on this award?

The obligated recipient is HIGHLANDS FUEL DELIVERY LLC.

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: 2006-01-26. End: 2011-06-30.

What was the historical spending pattern for similar fuel products by the Defense Logistics Agency prior to this contract?

Analyzing historical spending patterns for similar fuel products by the Defense Logistics Agency (DLA) prior to this contract (awarded 2006) would involve examining DLA's procurement data for fiscal years preceding 2006. This would likely reveal trends in fuel types procured, average prices paid, and the number of contractors utilized. For instance, DLA's mission involves procuring vast quantities of fuel, and historical data might show fluctuations in demand based on global events or military operations. Understanding past spending helps contextualize the $11.6 million award, indicating whether it represents an increase, decrease, or stable level of expenditure for these specific fuel products. It also informs whether DLA has historically relied on full and open competition or other contracting methods for such procurements.

How did the economic price adjustment (EPA) clause impact the final cost of this contract compared to a fixed-price contract?

The economic price adjustment (EPA) clause in this contract allowed for modifications to the fixed price based on fluctuations in specified economic factors, typically related to the cost of raw materials or labor. If market prices for fuel increased significantly during the contract period (2006-2011), the EPA would have likely led to a higher final cost than a simple fixed-price contract. Conversely, if prices decreased, the EPA could have resulted in a lower cost. Without access to the specific EPA formula and the actual market price data for the fuel types procured, it's impossible to quantify the exact difference. However, the purpose of an EPA is to protect both the contractor from unforeseen cost increases and the government from paying inflated prices if market conditions improve, aiming for a fairer price over the contract's life.

What was the track record of Highlands Fuel Delivery LLC with government contracts before and during this award?

Assessing the track record of Highlands Fuel Delivery LLC requires examining their past performance on federal contracts, particularly with the Department of Defense and the Defense Logistics Agency. This would involve searching contract databases for previous awards, their values, and performance reviews. A positive track record might include on-time deliveries, adherence to quality standards, and competitive pricing on prior contracts. Conversely, any history of contract disputes, performance issues, or overpricing would be a concern. For this specific $11.6 million contract, understanding their performance during the 2006-2011 period is crucial. Did they meet all delivery requirements? Were there any quality issues with the fuel? Were there any disputes related to the economic price adjustments? A thorough review of their performance history provides insight into their reliability as a government supplier.

How does the $11.6 million award compare to the total annual fuel spending by the Defense Logistics Agency?

The $11.6 million awarded to Highlands Fuel Delivery LLC represents a portion of the Defense Logistics Agency's (DLA) overall fuel procurement budget. DLA is responsible for supplying fuel to all branches of the U.S. military worldwide, and its annual fuel spending can reach billions of dollars. Therefore, this specific contract, while substantial in absolute terms, is likely a component of a much larger procurement strategy. To compare, one would need to find DLA's total annual fuel expenditure reports for the fiscal years 2006 through 2011. This comparison would help determine the relative significance of this contract within DLA's broader fuel acquisition efforts and assess if DLA is diversifying its supplier base or consolidating significant portions of its fuel needs with specific vendors.

What were the primary risks identified by the DLA when awarding this contract, and how were they mitigated?

Primary risks associated with awarding a large fuel contract like this often include supply chain disruptions, price volatility, quality control issues, and contractor performance failures. For this contract, the supply chain risk might be mitigated by the contractor's established distribution network and DLA's contingency planning. Price volatility was addressed through the economic price adjustment (EPA) clause, which aimed to balance cost fluctuations. Quality control would be managed through DLA's inspection and testing protocols for fuel deliveries. Contractor performance risks are typically mitigated by pre-award vetting, performance monitoring throughout the contract, and clear contractual remedies for non-performance. The 'full and open' competition itself serves as a risk mitigation strategy by fostering a competitive environment that encourages reliable performance.

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: SP060005R0037

Offers Received: 45

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Ocean Investments Corporation (UEI: 144270295)

Address: 190 COMMERCE WAY, PORTSMOUTH, NH, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $11,637,411

Exercised Options: $11,637,411

Current Obligation: $11,637,411

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060006D8506

IDV Type: IDC

Timeline