DoD Spends $14.9M on Diesel Fuel #2 with Talley Petroleum, Facing Potential Price Volatility
Contract Overview
Contract Amount: $14,900,103 ($14.9M)
Contractor: Talley Petroleum Enterprises, Inc
Awarding Agency: Department of Defense
Start Date: 2006-01-11
End Date: 2011-04-30
Contract Duration: 1,935 days
Daily Burn Rate: $7.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 45
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: DIESEL FUEL #2 (DL2)
Place of Performance
Location: GRANTVILLE, DAUPHIN County, PENNSYLVANIA, 17028
Plain-Language Summary
Department of Defense obligated $14.9 million to TALLEY PETROLEUM ENTERPRISES, INC for work described as: DIESEL FUEL #2 (DL2) Key points: 1. Contract awarded to Talley Petroleum Enterprises, Inc. for Diesel Fuel #2. 2. The contract spans over 5 years, indicating a long-term need. 3. Fixed Price with Economic Price Adjustment (EPA) introduces risk of price increases. 4. The wholesale trade sector for petroleum products is competitive, but specific contract terms matter.
Value Assessment
Rating: fair
The contract's fixed price with economic price adjustment suggests potential for cost increases beyond initial projections. Benchmarking against market prices for DL2 during the contract period would be necessary for a full assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Full and open competition was utilized, which is generally positive for price discovery. However, the economic price adjustment clause can mitigate some of the competitive benefits by allowing price increases based on market fluctuations.
Taxpayer Impact: Taxpayers are exposed to potential price increases due to the economic price adjustment clause, despite the initial competitive award.
Public Impact
Ensures supply of essential fuel for Department of Defense operations. Potential for increased costs impacts overall defense budget allocation. Economic price adjustment mechanism requires monitoring to prevent excessive inflation.
Waste & Efficiency Indicators
Waste Risk Score: 77 / 10
Warning Flags
- Economic Price Adjustment (EPA) clause
- Long contract duration (1935 days)
- Fixed Price contract type
Positive Signals
- Full and Open Competition
- Awarded to a known entity in the petroleum sector
Sector Analysis
This contract falls within the Petroleum and Petroleum Products Merchant Wholesalers sector. Spending benchmarks for fuel procurement vary significantly based on volume, type, and geopolitical factors. The $14.9M value over 5 years is substantial for a single contract.
Small Business Impact
The data does not indicate if small businesses were involved in this specific contract, either as prime contractors or subcontractors. Further investigation would be needed to determine small business participation.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key procurement arm for the DoD. Oversight would focus on adherence to contract terms, particularly the economic price adjustment provisions and delivery schedules.
Related Government Programs
- Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Long contract duration may not align with fluctuating fuel market conditions.
- Lack of specific per-unit cost data hinders direct price comparison.
- Potential for contractor to benefit disproportionately from market price spikes.
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 $14.9 million to TALLEY PETROLEUM ENTERPRISES, INC. DIESEL FUEL #2 (DL2)
Who is the contractor on this award?
The obligated recipient is TALLEY PETROLEUM ENTERPRISES, INC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $14.9 million.
What is the period of performance?
Start: 2006-01-11. End: 2011-04-30.
What was the actual price increase experienced due to the Economic Price Adjustment (EPA) clause over the contract's life?
The provided data does not detail the specific price adjustments made under the EPA clause. To assess the true cost impact, one would need to analyze historical fuel price indices relevant to Diesel Fuel #2 (DL2) and compare them against the contract's baseline pricing and any subsequent adjustments.
How did the final awarded price compare to the initial bid prices and the government's estimate?
The data indicates the total award amount ($14.9M) but does not provide details on the initial bid prices submitted by competitors or the government's independent cost estimate. A comparison would require access to the bid solicitation and award documents to evaluate the effectiveness of the full and open competition.
What is the typical market volatility for Diesel Fuel #2, and how does the EPA clause mitigate or exacerbate this risk for the DoD?
Diesel Fuel #2 prices are subject to market volatility influenced by crude oil prices, refinery capacity, and seasonal demand. The EPA clause is intended to protect the contractor from significant price increases, but it transfers that risk to the government, potentially leading to higher overall spending than a fixed-price contract without adjustments.
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: 10046 ALLENTOWN BLVD, GRANTVILLE, PA, 90
Business Categories: Category Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Woman Owned Business
Financial Breakdown
Contract Ceiling: $14,900,103
Exercised Options: $14,900,103
Current Obligation: $14,900,103
Contract Characteristics
Multi-Year Contract: Yes
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060006D8519
IDV Type: IDC
Timeline
Start Date: 2006-01-11
Current End Date: 2011-04-30
Potential End Date: 2011-04-30 00:00:00
Last Modified: 2010-11-22
More Contracts from Talley Petroleum Enterprises, Inc
- Fuel OIL, Burner #2, LS (FL2); Gasohol, REG UNL (GUR); (army, Navy, Afng, DOD, Usps) — $20.7M (Department of Defense)
View all Talley Petroleum Enterprises, Inc federal contracts →
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)