Petroleum Traders Corp awarded $15.96M contract for fuel oils, highlighting fixed-price adjustments and full competition

Contract Overview

Contract Amount: $15,959,732 ($16.0M)

Contractor: Petroleum Traders Corp

Awarding Agency: Department of Defense

Start Date: 2006-01-04

End Date: 2011-04-30

Contract Duration: 1,942 days

Daily Burn Rate: $8.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 45

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 200611!009839!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060006D8509 !A!N! !N!B001 !02 !20060221!20110131!021640487!021640487!021640487!N!PETROLEUM TRADERS CORPORATION !7110 POINTE INVERNESS WAY !FORT WAYNE !IN!46804!42390!005!34!MCGUIRE AFB !BURLINGTON !NEW JERSEY!+000000378518!N!Y!000000000000!9140!FUEL OILS !A8A!PETROLEUM !000 !NOT DISCERNABLE !424720!E! !3!A!S!B! ! !99990909!B! ! !A! !A!U!K!2!045!B! !Z!N!Z! ! !Y!B!N!N! ! !D! !A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: HANSCOM AFB, MIDDLESEX County, MASSACHUSETTS, 01731

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $16.0 million to PETROLEUM TRADERS CORP for work described as: 200611!009839!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060006D8509 !A!N! !N!B001 !02 !20060221!20110131!021640487!021640487!021640487!N!PETROLEUM TRADERS CORPORATION !7110 POINTE INVERNESS WAY !FORT WAYNE !IN!46804!42390!005!34!MCGUIRE AFB !BURL… Key points: 1. Contract value of $15.96 million for fuel oils demonstrates significant procurement in the energy sector. 2. The fixed-price contract with economic price adjustment indicates a strategy to manage fluctuating fuel costs. 3. Full and open competition suggests a robust bidding process, potentially leading to better pricing. 4. The contract duration of 1942 days (over 5 years) points to a long-term need for these petroleum products. 5. Awarded by the Defense Logistics Agency, this contract supports critical military logistics and operations. 6. The North American Industry Classification System (NAICS) code 424720 places this within petroleum product wholesale.

Value Assessment

Rating: good

The contract value of $15.96 million for fuel oils over approximately five years appears reasonable given the nature of petroleum products and their price volatility. Without specific benchmarks for fuel oil contracts of this size and duration, a direct per-unit cost comparison is difficult. However, the use of economic price adjustments suggests an effort to balance cost certainty for the government with market realities for the contractor, which is a common and often effective approach for commodity-based contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This suggests a competitive environment where multiple companies likely vied for the contract. The number of bids received (45) is substantial and reinforces the notion of a healthy competition, which typically drives down prices and encourages innovation.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a marketplace where the most competitive offers are selected, leading to potentially lower costs and better value for the government's expenditure on essential fuel supplies.

Public Impact

Military installations and personnel requiring fuel for operations and transportation are the primary beneficiaries. Ensures the continuous supply of fuel oils, critical for maintaining readiness and operational capabilities of defense forces. The contract's geographic impact is likely widespread, supporting military bases across various locations where McGuire AFB is situated. Supports jobs within the petroleum supply and logistics industry, including those involved in transportation and storage of fuel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clauses if market prices for fuel oils rise significantly.
Dependence on a single contractor for a critical commodity like fuel oils could pose a supply chain risk if not managed proactively.
Long contract duration might lead to less flexibility in adopting newer, potentially more efficient fuel types or technologies if they emerge.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
The use of fixed-price with economic price adjustment is a standard and often effective method for managing volatile commodity costs.
The contract duration of over five years provides stability and predictability for both the government and the contractor.
The Defense Logistics Agency's involvement indicates robust management and oversight of critical supply chains.
A substantial number of bids (45) indicates a healthy market and strong contractor interest.

Sector Analysis

This contract falls within the broader energy sector, specifically focusing on the wholesale distribution of petroleum products. The market for fuel oils is characterized by global supply and demand dynamics, geopolitical influences, and significant price volatility. The Defense Logistics Agency, as a major procurer, plays a crucial role in ensuring the energy security of military operations. Comparable spending benchmarks would typically involve analyzing other large-scale fuel supply contracts awarded by government agencies or major industrial consumers.

Small Business Impact

This contract does not appear to have a specific small business set-aside. The award to Petroleum Traders Corporation, a large entity, suggests that the primary competition was likely among larger firms. There is no explicit information regarding subcontracting plans for small businesses within the provided data, which could be an area for further investigation to understand the broader economic impact.

Oversight & Accountability

The contract is managed by the Defense Logistics Agency (DLA), which has established oversight mechanisms for its procurements. Accountability is typically ensured through performance metrics, delivery schedules, and quality control. Transparency is facilitated by contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to this contract.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Military Fuel Supply Chain Management
Petroleum Product Procurement
Fixed-Price Contracts with Economic Price Adjustment
Energy Security for Defense Operations

Risk Flags

Economic Price Adjustment Clause
Long Contract Duration
Commodity Price Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 million to PETROLEUM TRADERS CORP. 200611!009839!97AS!SP0600!DEFENSE ENERGY SUPPORT CENTER !SP060006D8509 !A!N! !N!B001 !02 !20060221!20110131!021640487!021640487!021640487!N!PETROLEUM TRADERS CORPORATION !7110 POINTE INVERNESS WAY !FORT WAYNE !IN!46804!42390!005!34!MCGUIRE AFB !BURLINGTON !NEW JERSEY!+000000378518!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 PETROLEUM TRADERS CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $16.0 million.

What is the period of performance?

Start: 2006-01-04. End: 2011-04-30.

What is the historical spending pattern for fuel oils by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is a significant procurer of fuel oils to support military operations globally. Historical spending patterns reveal a consistent and substantial investment in this category, driven by the continuous need for energy across various branches of the armed forces. DLA's procurement strategies often involve long-term contracts with economic price adjustment clauses to mitigate the impact of volatile global oil markets. Analyzing past awards, such as this $15.96 million contract, alongside other similar fuel procurements, would show fluctuations tied to geopolitical events, market trends, and strategic defense needs. The agency aims to balance cost-effectiveness with supply chain resilience, often utilizing competitive bidding processes to secure favorable terms. Understanding these patterns is crucial for assessing the value and efficiency of current and future fuel acquisitions.

How does the per-unit cost of fuel oils in this contract compare to market rates or similar government contracts?

Determining the exact per-unit cost for fuel oils under this contract is complex due to the 'economic price adjustment' clause. This clause means the final price per unit can fluctuate based on market indices for petroleum products, rather than being a fixed amount. Therefore, a direct, static comparison to market rates or other government contracts is challenging without knowing the specific price adjustments applied over the contract's duration. However, the fact that it was awarded under full and open competition with 45 bids suggests that the initial pricing and the framework for adjustments were deemed competitive by the Defense Logistics Agency. To perform a true benchmark, one would need to track the actual prices paid under this contract against prevailing market prices for the specific type of fuel oil and compare these to similar contracts awarded by DLA or other federal agencies during the same period.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance on this fuel oils contract?

While specific KPIs are not detailed in the provided data, government contracts for fuel oils typically include stringent performance metrics. Key indicators likely focus on timely delivery to designated military installations, adherence to quality specifications for the fuel (e.g., octane rating, purity), and accurate invoicing. For a contract with economic price adjustments, monitoring the transparency and accuracy of the price adjustment calculations would also be critical. The Defense Logistics Agency (DLA) would likely track on-time delivery rates, any instances of non-conforming product, and the contractor's responsiveness to delivery orders. Performance evaluations might also consider the contractor's ability to maintain supply chain integrity and provide necessary documentation, such as certificates of analysis. Failure to meet these KPIs could result in penalties or impact future contract awards.

What is the track record of Petroleum Traders Corporation with federal contracts, particularly in the energy sector?

Petroleum Traders Corporation has a history of engaging with federal contracts, primarily within the energy and fuel supply sector. As indicated by this award, they are a recognized supplier of petroleum products to government agencies, including the Department of Defense. Their track record would typically involve numerous awards for fuel delivery, often through competitive bidding processes. Analyzing their past performance would involve reviewing contract histories for on-time delivery, quality compliance, and any instances of disputes or contract terminations. Companies like Petroleum Traders Corporation often specialize in navigating the complexities of government procurement regulations and logistics for bulk commodities. Their continued success in securing contracts suggests a generally positive performance history and capability to meet the demanding requirements of federal agencies for critical supplies like fuel oils.

What are the potential risks associated with a long-duration contract (1942 days) for fuel oils?

Long-duration contracts for fuel oils, like this 1942-day award, present several potential risks. Firstly, market volatility in petroleum prices is a significant concern; while economic price adjustments mitigate some risk, extreme price swings can still impact budget predictability. Secondly, there's a risk of technological obsolescence or shifts in energy policy. Over five years, alternative fuels or more energy-efficient technologies might become viable, potentially making the contracted fuel less strategically important or efficient. Thirdly, contractor performance can degrade over time, or the company's financial stability could be jeopardized, posing a supply chain risk. Finally, long contracts may offer less flexibility for the government to adapt to changing operational needs or to capitalize on new, more advantageous market opportunities that arise during the contract period.

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

Address: 7110 POINTE INVERNESS WAY, FORT WAYNE, IN, 03

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $15,959,724

Exercised Options: $15,959,732

Current Obligation: $15,959,732

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060006D8509

IDV Type: IDC

Timeline