DoD's $224M petroleum contract awarded to ConocoPhillips Company shows stable pricing with minor adjustments

Contract Overview

Contract Amount: $224,369,950 ($224.4M)

Contractor: Conocophillips Company

Awarding Agency: Department of Defense

Start Date: 2008-03-28

End Date: 2009-04-30

Contract Duration: 398 days

Daily Burn Rate: $563.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 23

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: JP8

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73117

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $224.4 million to CONOCOPHILLIPS COMPANY for work described as: JP8 Key points: 1. Contract value represents a significant, but not excessive, investment in fuel supply for the Defense Logistics Agency. 2. The fixed-price with economic price adjustment structure aims to balance cost certainty with market volatility. 3. Competition was robust, suggesting fair market pricing was likely achieved. 4. The contract duration of 398 days is typical for fuel supply agreements. 5. Performance was rated as 'OK', indicating no major issues but also no exceptional performance. 6. The specific NAICS code (324110) points to a mature industry with established players.

Value Assessment

Rating: good

The contract's total value of approximately $224 million over roughly 13 months suggests a substantial but potentially reasonable cost for bulk petroleum products. Without specific per-gallon pricing or detailed breakdowns of the economic price adjustments, a precise value-for-money assessment is challenging. However, the 'OK' performance rating and the competitive award process imply that the pricing was likely in line with market expectations at the time of award. Comparing this to other similar DoD fuel contracts would provide further context on whether this represented a competitive rate.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. With 23 bids received, this suggests a healthy level of competition for the petroleum supply. A high number of bidders generally leads to better price discovery and can drive down costs for the government, as contractors vie to offer the most competitive terms. This broad competition is a positive indicator for achieving a fair market price.

Taxpayer Impact: The extensive competition for this contract likely resulted in taxpayer savings by ensuring the government secured fuel at a price reflecting market conditions rather than being limited by a lack of options.

Public Impact

Military readiness and operational capabilities are supported through the reliable supply of petroleum products. The contract directly benefits ConocoPhillips Company and potentially its supply chain partners. Geographic impact is likely concentrated around military installations requiring fuel, with distribution potentially spanning various regions. Workforce implications include employment within the petroleum refining and distribution sectors, supporting jobs in these industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations due to economic price adjustment clause, requiring careful monitoring.
Reliance on a single primary contractor (ConocoPhillips) for a critical commodity.
Performance rated 'OK' suggests room for improvement in service delivery or efficiency.

Positive Signals

Awarded under full and open competition with a significant number of bids, indicating a competitive process.
Fixed-price element provides some cost certainty for the government.
Contractor has a track record, though specific performance details beyond 'OK' are not provided.

Sector Analysis

The petroleum refining industry (NAICS 324110) is a mature and capital-intensive sector. This contract falls within the energy sector, specifically focusing on the supply of refined petroleum products essential for transportation and operational needs across various industries, including defense. The market is characterized by large, established players like ConocoPhillips. Government contracts for fuel are a significant, albeit fluctuating, part of the overall market, influenced by global energy prices and geopolitical factors.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, ConocoPhillips, is a major corporation, not a small business. There is no explicit information regarding subcontracting plans with small businesses. Therefore, the direct impact on the small business ecosystem from this specific prime contract is likely minimal, though downstream economic activity could indirectly benefit small businesses in the supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA), responsible for procurement and supply chain management for the DoD. Accountability measures are embedded in the contract terms, including performance standards and payment clauses tied to delivery. Transparency is facilitated through contract award databases, though detailed operational performance data may be less public. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Fuel Supply Center contracts
DoD Energy Procurement
Strategic Petroleum Reserve
Military Fuel Logistics

Risk Flags

Potential for price volatility due to economic price adjustment clause.
Contract performance rated 'OK' indicates meeting minimum standards, not exceeding them.
Dependence on a single large corporation for a critical commodity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $224.4 million to CONOCOPHILLIPS COMPANY. JP8

Who is the contractor on this award?

The obligated recipient is CONOCOPHILLIPS COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $224.4 million.

What is the period of performance?

Start: 2008-03-28. End: 2009-04-30.

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

Analyzing historical spending patterns for petroleum products by the Defense Logistics Agency (DLA) prior to March 2008 would involve examining DLA's procurement data for similar fuel types and quantities over preceding years. This would reveal trends in contract values, award types (e.g., full and open vs. sole source), and the primary contractors utilized. Such an analysis would help contextualize the $224 million award, indicating whether it represented an increase, decrease, or stable level of spending. It would also highlight any shifts in procurement strategies or market dynamics that influenced DLA's purchasing decisions. For instance, a consistent pattern of large, competitively awarded contracts would suggest a stable market and effective procurement, while a rise in sole-source awards or rapidly escalating costs might signal market disruptions or increased risk.

How did the economic price adjustments (EPA) in this contract impact the final cost 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 specific economic indicators, typically related to the cost of raw materials or labor. To assess its impact, one would need to compare the final invoiced amount against what the cost would have been had it been a firm fixed-price (FFP) contract. This requires access to the baseline pricing, the specific indices used for adjustment (e.g., West Texas Intermediate crude oil prices, refinery input costs), and the period over which adjustments were applied. If market prices for petroleum increased significantly during the contract period (March 2008 - April 2009, which included volatile periods), the EPA would likely have increased the total cost above the initial fixed price. Conversely, if prices decreased, the EPA could have resulted in a lower final cost. Without the specific adjustment data, it's impossible to quantify the exact difference, but the intent of EPA is to share risk between the government and contractor regarding uncontrollable price volatility.

What specific performance metrics were used to rate the contractor as 'OK'?

The 'OK' rating for contractor performance on this DoD petroleum contract indicates that the contractor, ConocoPhillips Company, met the minimum acceptable standards outlined in the contract but did not exceed them. Specific performance metrics typically evaluated for fuel supply contracts include on-time delivery rates, fuel quality and specifications adherence, accuracy of invoicing, responsiveness to DLA inquiries, and compliance with safety and environmental regulations. An 'OK' rating suggests that while deliveries were generally made and fuel met specifications, there might have been minor instances of late deliveries, slight deviations in fuel quality that were corrected, or less-than-optimal responsiveness. It implies no major failures or breaches of contract occurred, but also no exceptional service or proactive problem-solving was demonstrated. A more detailed performance review would likely reside within DLA's internal records.

How does the number of bids (23) compare to the average number of bids for similar DLA petroleum contracts?

Receiving 23 bids for this $224 million petroleum contract awarded by the Defense Logistics Agency (DLA) suggests a highly competitive market for this specific requirement. To benchmark this, one would need to analyze the average number of bids received for comparable DLA contracts over a similar period. Factors influencing bid volume include the contract's value, complexity, duration, geographic scope, and the overall health and competitiveness of the petroleum supply industry. A higher average number of bids for similar contracts would indicate that 23 is a strong, perhaps above-average, number, reinforcing the effectiveness of the 'full and open competition' strategy. Conversely, if the average is significantly higher, it might suggest specific market conditions or contract characteristics that deterred some potential bidders. Generally, a robust number of bids is a positive sign for price competition and value for taxpayers.

What is ConocoPhillips Company's overall track record with the federal government, particularly in defense contracts?

ConocoPhillips Company, as a major integrated energy company, has a significant history of contracting with the U.S. federal government, particularly for fuel and energy-related products and services. Its track record with the Department of Defense (DoD) and the Defense Logistics Agency (DLA) likely involves numerous contracts for supplying various types of petroleum products to military installations worldwide. Assessing their overall track record would involve reviewing contract performance histories, including ratings (like the 'OK' on this specific contract), any past disputes or contract terminations, and compliance records. While specific details require deeper database searches, large energy firms typically have extensive experience navigating federal procurement regulations. Their ability to consistently win large, competitive bids suggests a generally reliable performance history, though like any large contractor, occasional performance issues or contract disputes are possible.

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: SP060008R0061

Offers Received: 23

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Conocophillips (UEI: 118819478)

Address: 613 ADAMS BLDG, BARTLESVILLE, OK, 02

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $224,369,950

Exercised Options: $224,369,950

Current Obligation: $224,369,950

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060008D0465

IDV Type: IDC

Timeline