DoD spent $12.3M on Fuel System Icing Inhibitor, with Chemical Specialists and Development, LLC winning a fixed-price contract

Contract Overview

Contract Amount: $12,318,478 ($12.3M)

Contractor: Chemical Specialists and Development, LLC

Awarding Agency: Department of Defense

Start Date: 2006-11-30

End Date: 2008-01-30

Contract Duration: 426 days

Daily Burn Rate: $28.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FUEL SYSTEM ICING INHIBITOR (FSII)

Place of Performance

Location: CONROE, MONTGOMERY County, TEXAS, 77305

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $12.3 million to CHEMICAL SPECIALISTS AND DEVELOPMENT, LLC for work described as: FUEL SYSTEM ICING INHIBITOR (FSII) Key points: 1. Contract awarded through full and open competition, suggesting a competitive market for this product. 2. The contract duration was 426 days, indicating a relatively short-term need. 3. The award was made to a single vendor, Chemical Specialists and Development, LLC. 4. The contract type is Fixed Price with Economic Price Adjustment, which can introduce cost volatility. 5. The base contract value was $2.89M, with the total award reaching $12.3M, showing significant growth. 6. The contract was awarded in Texas, a key state for defense logistics and chemical industries.

Value Assessment

Rating: fair

The total award of $12.3M significantly exceeded the base contract value of $2.89M, indicating substantial growth or modifications. Without comparable contract data for Fuel System Icing Inhibitor (FSII), it's difficult to definitively benchmark value for money. The Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces a degree of risk for the government due to potential price increases over the contract term. The contract was awarded in 2006, so current market prices may differ.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which typically involves a broad solicitation to all responsible sources. The data indicates two bids were received. While two bidders suggest some level of competition, it is on the lower end and may not represent the full competitive landscape for this type of product. This limited competition could potentially impact price discovery and lead to less favorable pricing for the government compared to a scenario with more bidders.

Taxpayer Impact: The use of full and open competition is generally beneficial for taxpayers as it aims to secure the best possible prices through market forces. However, with only two bids, taxpayers may not have realized the full cost savings that could have been achieved with a more robust bidding process.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical fuel additive for its aircraft and ground vehicles. This contract ensures the availability of Fuel System Icing Inhibitor (FSII), which prevents fuel line freeze-ups in cold weather operations. The contract was awarded to a vendor located in Texas, potentially impacting the local economy through employment and supply chain activities. The services delivered are the supply of a specialized chemical product essential for military readiness and operational effectiveness in various climates.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The contract type (FPEPA) carries inherent risk of price escalation, potentially increasing costs beyond initial projections.
Limited competition (2 bids) may have resulted in a higher price than if more vendors had participated.
The significant increase from the base award to the total award warrants scrutiny to understand the drivers of this growth.

Positive Signals

Awarded under full and open competition, indicating an effort to leverage market forces for best value.
The vendor, Chemical Specialists and Development, LLC, was selected, suggesting they met the technical and performance requirements.
The contract was awarded by the Defense Logistics Agency, a key entity for ensuring supply chain efficiency for the DoD.

Sector Analysis

The market for Fuel System Icing Inhibitor (FSII) falls within the broader chemical manufacturing and distribution sector, specifically serving the defense industry's need for specialized additives. This sector is characterized by stringent quality control, specific performance requirements, and often, long-term supply agreements with government entities. While precise market size data for FSII alone is not readily available, the chemical industry is a multi-billion dollar sector globally. This contract represents a specific procurement within the defense logistics segment of this industry, ensuring operational readiness for the Department of Defense.

Small Business Impact

This contract does not appear to have been specifically set aside for small businesses, as indicated by 'sb': false. There is no explicit information provided regarding subcontracting plans or their impact on the small business ecosystem. Given the nature of the product (specialized chemical), it's possible that larger, established chemical suppliers or distributors were the primary participants in the competition.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms, quality standards, and financial accountability. The Defense Logistics Agency (DLA) would also maintain oversight of the overall program and vendor performance. Transparency is facilitated through contract award databases like FPDS-NG. Inspector General investigations could be initiated if specific allegations of fraud, waste, or abuse arise.

Related Government Programs

Defense Logistics Agency Procurements
Chemical and Chemical Products
Fuel Additives
Department of Defense Supply Chain Management
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Potential for price escalation due to FPEPA contract type.
Limited competition may impact price discovery.
Significant growth from base to total award requires further investigation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.3 million to CHEMICAL SPECIALISTS AND DEVELOPMENT, LLC. FUEL SYSTEM ICING INHIBITOR (FSII)

Who is the contractor on this award?

The obligated recipient is CHEMICAL SPECIALISTS AND DEVELOPMENT, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $12.3 million.

What is the period of performance?

Start: 2006-11-30. End: 2008-01-30.

What is the track record of Chemical Specialists and Development, LLC in securing government contracts, particularly with the Department of Defense?

Chemical Specialists and Development, LLC has a history of receiving government contracts, primarily with the Department of Defense. Data from contract databases indicates multiple awards, often for chemical products and related services. While this specific contract for Fuel System Icing Inhibitor (FSII) was a significant award, their broader portfolio includes various chemical supplies. A deeper analysis would involve examining the volume, value, and types of contracts awarded to the company over time, as well as their performance history, including any past performance issues or awards of excellence. Understanding their specialization and capacity is key to assessing their reliability as a supplier for critical defense needs.

How does the final award value of $12.3M compare to the initial base contract value of $2.89M for this FSII procurement?

The final award value of $12.3 million represents a substantial increase, approximately 325%, over the initial base contract value of $2.89 million. This significant growth suggests that the contract likely involved substantial modifications, option exercises, or significant price adjustments due to the economic price adjustment clause. It is crucial to investigate the reasons behind this expansion. Potential factors include increased demand, unforeseen market price fluctuations for raw materials, changes in contract scope, or the exercise of additional contract line items not fully defined at the outset. Understanding these drivers is essential for assessing whether the increased expenditure represented continued value for money or potential cost overruns.

What are the specific risks associated with the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type for this FSII procurement?

The FPEPA contract type introduces a degree of uncertainty and potential risk for the government regarding cost predictability. While it aims to protect the contractor from significant market fluctuations in raw material costs, it exposes the government to potential price increases over the contract's duration. For FSII, which relies on specific chemical components, fluctuations in the prices of these precursors or energy costs could lead to higher final costs for the government. The risk is that the economic price adjustment mechanism might allow for cost increases that exceed what might have been achieved under a firm fixed-price contract, especially if market conditions stabilize or decrease after the contract is awarded. Careful monitoring of the adjustment indices and negotiation of caps on adjustments are critical mitigation strategies.

Given the limited competition (2 bids), what is the potential impact on the long-term availability and pricing of FSII for the DoD?

Limited competition, such as the two bids received for this FSII contract, can have several long-term implications for the Department of Defense. Firstly, it may signal a concentrated market with few suppliers capable of meeting the stringent requirements for military-grade FSII, potentially leading to higher baseline prices in future procurements. Secondly, it could reduce the incentive for existing suppliers to innovate or reduce costs aggressively if they perceive less competitive pressure. Over time, this could lead to a less dynamic market, making it harder for the DoD to secure competitive pricing and potentially impacting the long-term availability if one of the few suppliers faces production issues or exits the market. Encouraging broader participation or exploring alternative solutions could be strategies to mitigate these risks.

How does the geographic location of the award (Texas) potentially influence the supply chain and cost-effectiveness of this FSII contract?

The award to a vendor in Texas (ST: TX) for FSII could have implications for the supply chain and cost-effectiveness. Texas has a significant presence in the chemical industry, which might provide advantages in terms of access to raw materials, specialized labor, and established logistics networks. Proximity to ports or major transportation hubs could reduce shipping costs and lead times for both inbound materials and outbound product delivery to DoD facilities. However, the specific location within Texas and the contractor's own facilities would determine the extent of these benefits. Conversely, if the primary points of consumption for the FSII are geographically distant from Texas, transportation costs could increase. The state's regulatory environment for chemical production and distribution might also play a role in operational costs.

Industry Classification

NAICS: Wholesale Trade › Chemical and Allied Products Merchant Wholesalers › Other Chemical and Allied Products Merchant Wholesalers

Product/Service Code: CHEMICALS AND CHEMICAL PRODUCTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060006R0067

Offers Received: 2

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

Evaluated Preference: NONE

Contractor Details

Address: 9733 MEADOR RD, CONROE, TX, 08

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $12,318,478

Exercised Options: $12,318,478

Current Obligation: $12,318,478

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060007D0750

IDV Type: IDC

Timeline