DoD's $125.5M JP8 Turbine Fuel Contract Awarded to Wynnewood Energy Co LLC
Contract Overview
Contract Amount: $125,524,679 ($125.5M)
Contractor: Wynnewood Energy CO LLC
Awarding Agency: Department of Defense
Start Date: 2008-04-01
End Date: 2009-04-30
Contract Duration: 394 days
Daily Burn Rate: $318.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 23
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: TURBINE FUEL, JP8
Place of Performance
Location: WYNNEWOOD, GARVIN County, OKLAHOMA, 73098
State: Oklahoma Government Spending
Plain-Language Summary
Department of Defense obligated $125.5 million to WYNNEWOOD ENERGY CO LLC for work described as: TURBINE FUEL, JP8 Key points: 1. Significant expenditure on a critical fuel type for defense operations. 2. Competition method was 'Full and Open', suggesting potential for competitive pricing. 3. Fixed Price with Economic Price Adjustment contract type introduces some price volatility risk. 4. The sector is energy/petroleum, vital for military readiness.
Value Assessment
Rating: good
The contract value of $125.5M for a 13-month period appears reasonable given the commodity and market conditions of 2008-2009. Benchmarking against similar fuel procurements would provide a more precise assessment.
Cost Per Unit: $10,041,974.30 per month average
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically drives competitive pricing. The fixed-price with economic price adjustment structure allows for market fluctuations, potentially impacting the final cost to the government.
Taxpayer Impact: While competition was utilized, the economic price adjustment clause means taxpayers are exposed to potential increases in fuel costs over the contract term.
Public Impact
Ensures a steady supply of JP8 fuel for Department of Defense aircraft and equipment. Supports military readiness and operational capabilities. Impacts the energy market, particularly for specialized fuels. Potential for price fluctuations affects budget predictability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause can lead to cost overruns.
- Dependence on a single supplier for a critical resource.
- Geopolitical factors can influence fuel prices.
Positive Signals
- Awarded under full and open competition.
- Contract supports essential defense operations.
- Established supplier with a history of performance.
Sector Analysis
The procurement falls within the energy sector, specifically petroleum refining and distribution. Defense spending in this area is crucial for maintaining global operational capabilities, with benchmarks often tied to global oil prices and refining margins.
Small Business Impact
This contract does not appear to have specific provisions or set-asides for small businesses. The awardee, Wynnewood Energy Co LLC, is likely a larger entity given the contract value.
Oversight & Accountability
The Defense Logistics Agency is responsible for this procurement. Oversight would focus on contract performance, delivery schedules, and adherence to the economic price adjustment formula to ensure fair pricing.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Price volatility due to economic price adjustment.
- Potential supply chain disruptions affecting fuel availability.
- Dependence on a single contractor for a critical resource.
- Fluctuations in global energy markets impacting cost.
Tags
petroleum-refineries, department-of-defense, ok, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $125.5 million to WYNNEWOOD ENERGY CO LLC. TURBINE FUEL, JP8
Who is the contractor on this award?
The obligated recipient is WYNNEWOOD ENERGY CO LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $125.5 million.
What is the period of performance?
Start: 2008-04-01. End: 2009-04-30.
What was the basis for the economic price adjustment formula, and how did it compare to market indices at the time?
The economic price adjustment formula likely tracked a specific market index for crude oil or refined products, plus a fixed margin. Understanding the chosen index and its historical performance relative to actual market prices would reveal if the government overpaid or benefited from the adjustment mechanism during the contract period.
What was the competitive landscape for JP8 fuel supply during the 2008-2009 period?
Assessing the number of bidders and their respective market shares for JP8 fuel during this period is crucial. If Wynnewood Energy Co LLC was one of few qualified suppliers, the 'full and open' competition might have been less robust, potentially impacting price discovery and leading to higher costs than if a more competitive market existed.
How did the actual price paid compare to the initial fixed price component of the contract?
Analyzing the split between the fixed price and the economically adjusted portion of the contract payments is key. If the economic adjustment significantly increased the total cost beyond the initial fixed price, it indicates a substantial pass-through of market volatility to the government, impacting overall cost-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: SP060008R0061
Offers Received: 23
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: THE Gary-Williams Company (UEI: 836503003)
Address: 370 17TH ST STE 5300, DENVER, CO, 90
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $125,524,679
Exercised Options: $125,524,679
Current Obligation: $125,524,679
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060008D0477
IDV Type: IDC
Timeline
Start Date: 2008-04-01
Current End Date: 2009-04-30
Potential End Date: 2009-04-30 00:00:00
Last Modified: 2009-10-30
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