DoD's $13.4M Turbine Fuel Contract with Calumet Montana Refining: Fixed Price with Economic Adjustment
Contract Overview
Contract Amount: $13,409,768 ($13.4M)
Contractor: Calumet Montana Refining, LLC
Awarding Agency: Department of Defense
Start Date: 2007-09-05
End Date: 2008-10-31
Contract Duration: 422 days
Daily Burn Rate: $31.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 15
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: TURBINE FUEL, AVIATION (JP8)
Place of Performance
Location: GREAT FALLS, CASCADE County, MONTANA, 59404
State: Montana Government Spending
Plain-Language Summary
Department of Defense obligated $13.4 million to CALUMET MONTANA REFINING, LLC for work described as: TURBINE FUEL, AVIATION (JP8) Key points: 1. Contract awarded to Calumet Montana Refining, LLC for aviation turbine fuel (JP8). 2. Utilized full and open competition, indicating a competitive bidding process. 3. The contract type is Fixed Price with Economic Price Adjustment, which can mitigate price volatility. 4. Spending falls within the Petroleum Refineries sector (NAICS 324110).
Value Assessment
Rating: fair
The contract's fixed price with economic adjustment suggests an attempt to balance cost certainty with market fluctuations. Without specific benchmarks for JP8 at the time of award, a precise value assessment is difficult, but the award value of $13.4M for a 422-day duration appears reasonable for bulk fuel procurement.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting multiple bidders likely participated. This method generally promotes price discovery and competitive pricing, although the economic price adjustment clause introduces some variability.
Taxpayer Impact: The use of full and open competition aims to secure the best possible price for taxpayers. The economic price adjustment clause, however, means the final cost could exceed initial projections if fuel prices rise significantly.
Public Impact
Ensures a critical fuel supply for military aviation operations. Supports the refining industry and associated jobs. Potential for price fluctuations impacts budget predictability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment introduces cost uncertainty.
- Contract duration of 422 days is substantial.
Positive Signals
- Awarded through full and open competition.
- Procures a vital defense commodity.
Sector Analysis
The petroleum refining sector is crucial for national security, providing essential fuels for military operations. Spending on aviation fuel is subject to global commodity prices and geopolitical factors, making contract terms like economic price adjustment common.
Small Business Impact
This contract was awarded to Calumet Montana Refining, LLC, a specific company. Analysis of whether this company qualifies as a small business is not provided, but the contract itself does not appear to be specifically set-aside for small businesses.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a major procurement arm of the DoD. Oversight would typically involve monitoring fuel quality, delivery, and adherence to contract terms, including price adjustments.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost overruns due to economic price adjustment.
- Lack of specific per-unit cost benchmark.
- Limited insight into the competitive landscape beyond 'full and open'.
- Contract awarded over a decade ago, market conditions have changed.
Tags
petroleum-refineries, department-of-defense, mt, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $13.4 million to CALUMET MONTANA REFINING, LLC. TURBINE FUEL, AVIATION (JP8)
Who is the contractor on this award?
The obligated recipient is CALUMET MONTANA REFINING, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $13.4 million.
What is the period of performance?
Start: 2007-09-05. End: 2008-10-31.
What was the actual price fluctuation experienced under the economic price adjustment clause for this contract?
The provided data does not detail the specific price adjustments made throughout the contract's life. To assess the true cost impact, one would need to examine contract modification records and compare the final invoiced prices against the initial fixed price components and the relevant economic indices used for adjustment.
How did the final cost compare to bids from other competitors under full and open competition?
The data indicates the contract was awarded under full and open competition, but it does not provide the bid amounts from other participants. A comprehensive analysis would require access to the sealed bid information to compare Calumet Montana Refining's winning bid against the offers submitted by other qualified refineries.
What is the typical market price range for JP8 fuel during the contract period (2007-2008)?
Market prices for JP8 fluctuate based on crude oil prices, refining costs, and demand. During 2007-2008, global oil prices were highly volatile, reaching record highs. Specific historical pricing data for JP8 would be needed to benchmark the contract's economic price adjustment effectiveness.
Industry Classification
NAICS: Manufacturing › Petroleum and Coal Products Manufacturing › Petroleum Refineries
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060007R0161
Offers Received: 15
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Connacher OIL and GAS Limited (UEI: 200160351)
Address: 1900 10TH ST N E, GREAT FALLS, MT, 02
Business Categories: Category Business, Small Business
Financial Breakdown
Contract Ceiling: $13,409,768
Exercised Options: $13,409,768
Current Obligation: $13,409,768
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060007D0506
IDV Type: IDC
Timeline
Start Date: 2007-09-05
Current End Date: 2008-10-31
Potential End Date: 2008-10-31 00:00:00
Last Modified: 2008-07-24
More Contracts from Calumet Montana Refining, LLC
- Contract Award for Montana Under RMW (SP0600-11-R-0161). SET Asides PER Clin ARE Below. Clin 0101 4,256,250 USG Clin 0201 3,225,000 USG Clin 0301 225,000 USG — $26.3M (Department of Defense)
- Turbine Fuel, Aviation (JP8) — $23.0M (Department of Defense)
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)