DoD spent $718M on turbine fuel (JP8) from Exxon Mobil, awarded via full and open competition

Contract Overview

Contract Amount: $718,382,211 ($718.4M)

Contractor: Exxon Mobil Corporation

Awarding Agency: Department of Defense

Start Date: 2008-03-28

End Date: 2009-04-30

Contract Duration: 398 days

Daily Burn Rate: $1.8M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 23

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: TURBINE FUEL, JP8

Place of Performance

Location: BAYTOWN, HARRIS County, TEXAS, 77520

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $718.4 million to EXXON MOBIL CORPORATION for work described as: TURBINE FUEL, JP8 Key points: 1. The contract represents a significant expenditure for turbine fuel, indicating substantial operational demands within the Department of Defense. 2. Awarded to a single, large corporation, this contract highlights the role of major suppliers in meeting large-scale defense fuel needs. 3. The fixed-price with economic price adjustment structure suggests a mechanism to manage fluctuating fuel market costs. 4. The contract duration of 398 days points to a medium-term supply requirement. 5. The award was made under the 'Defense' sector, specifically supporting the Defense Logistics Agency. 6. The absence of small business set-aside flags suggests this was not specifically targeted for smaller enterprises.

Value Assessment

Rating: fair

The total award amount of $718.38 million for turbine fuel (JP8) is substantial. Benchmarking this against similar fuel contracts is challenging without specific volume and delivery terms. However, the fixed-price with economic price adjustment (FPEPA) contract type suggests an attempt to balance cost certainty with market volatility. The price per unit is not directly provided, making a direct value-for-money assessment difficult without further data on the quantity of fuel procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of 23 bids suggests a competitive marketplace for this type of fuel. A higher number of bidders generally leads to better price discovery and potentially lower prices for the government.

Taxpayer Impact: The robust competition, with 23 bids, likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award.

Public Impact

The primary beneficiaries are the various branches of the Department of Defense, ensuring operational readiness through a consistent supply of turbine fuel. The services delivered include the provision of JP8 turbine fuel, critical for aircraft and other military equipment. The geographic impact is primarily within Texas (st) where the contractor is based, but the fuel is likely distributed to various military installations. The workforce implications are related to the petroleum refining and distribution industry, supporting jobs in these sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if market prices rise significantly.
Dependence on a single large contractor for a critical commodity.
Limited transparency on the exact unit price and profit margins without detailed breakdowns.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Multiple bidders (23) indicate a healthy market for this product.
Contract awarded to a well-established entity in the energy sector.

Sector Analysis

The petroleum refining industry is a mature and critical sector, essential for national security and economic activity. The market for aviation and turbine fuels is dominated by a few large integrated oil companies. This contract fits within the broader category of energy procurement for defense, a significant area of government spending. Comparable spending benchmarks would involve analyzing other large-scale fuel contracts awarded by the DoD or other federal agencies.

Small Business Impact

The contract was not set aside for small businesses, and the 'sb' field is false. This indicates that the procurement was open to all business sizes, and the award went to a large corporation. There is no explicit information on subcontracting plans for small businesses within this data, suggesting that the primary awardee is expected to fulfill the contract directly or through its own established supply chains.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA). Accountability measures are embedded in the contract terms, including performance standards and payment clauses. Transparency is facilitated through contract award databases like FPDS, though detailed operational data may be restricted. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Fuel Supply Center Contracts
Aviation Fuel Procurement
Petroleum Product Contracts
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Economic Price Adjustment Clause Risk
Large Contractor Dependence
Fluctuating Fuel Market Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $718.4 million to EXXON MOBIL CORPORATION. TURBINE FUEL, JP8

Who is the contractor on this award?

The obligated recipient is EXXON MOBIL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $718.4 million.

What is the period of performance?

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

What is the historical spending pattern for JP8 turbine fuel by the Department of Defense over the last five fiscal years?

Analyzing historical spending for JP8 by the DoD requires accessing comprehensive federal procurement data. While this specific contract award is for $718.38 million, understanding the broader trend involves aggregating data across multiple contracts and agencies. Typically, DoD fuel spending fluctuates based on operational tempo, global market prices, and strategic inventory levels. In recent years, there has been a push towards diversifying energy sources and improving fuel efficiency, but traditional fuels like JP8 remain critical. A detailed analysis would involve querying databases like FPDS-NG or USAspending.gov for all JP8 awards to the DoD, filtering by fiscal year, and summing the award amounts. This would reveal if spending has increased, decreased, or remained stable, and identify any significant shifts in contracting strategies or major suppliers.

How does the price per gallon for JP8 under this contract compare to market rates at the time of award?

Determining the precise price per gallon for JP8 under this $718.38 million contract is not possible with the provided data alone, as the total quantity procured is not specified. The contract type, Fixed Price with Economic Price Adjustment (FPEPA), further complicates a direct comparison, as the final price is subject to market fluctuations. To perform this comparison, one would need the total gallons awarded and the average price per gallon derived from the contract. This figure could then be benchmarked against historical Platts or EIA reported prices for jet fuel (JP8 is a type of jet fuel) in the relevant region (Texas, given the contractor's location) around the award date of March 28, 2008. Without the volume, any price per gallon calculation would be speculative.

What are the specific performance metrics and delivery requirements outlined in this contract?

The provided data summary does not detail the specific performance metrics or delivery requirements for this turbine fuel contract. Typically, such contracts would include clauses related to fuel quality standards (e.g., meeting specific military or ASTM specifications), delivery schedules (e.g., just-in-time delivery to specific military installations), lead times for orders, and inventory management responsibilities. Performance would be monitored by the contracting officer's representative (COR) or quality assurance personnel. Failure to meet these requirements could result in contract penalties or termination. A thorough review of the full contract document, including its statement of work (SOW) and attached clauses, would be necessary to ascertain these details.

What is Exxon Mobil Corporation's track record in supplying fuel to the Department of Defense, particularly for JP8?

Exxon Mobil Corporation, as a major global energy company, has a significant track record of supplying petroleum products, including aviation fuels like JP8, to government entities, including the Department of Defense. Their extensive refining capacity and established logistics network position them as a key supplier. Historical data from federal procurement databases would show numerous awards to Exxon Mobil for various fuel types across different military branches and agencies. While this specific contract highlights a substantial award, their broader engagement likely involves numerous other contracts, potentially of varying sizes and durations. Assessing their overall track record would involve examining the volume and value of all fuel contracts awarded to them by the DoD, their performance history on those contracts (e.g., on-time delivery, quality compliance), and any past disputes or contract modifications.

What is the potential impact of the economic price adjustment (EPA) clause on the final cost to taxpayers?

The Economic Price Adjustment (EPA) clause in this contract allows for modifications to the contract price based on fluctuations in specified economic factors, typically related to the cost of raw materials or labor. For turbine fuel, this often means the price is tied to indices reflecting crude oil prices. If oil prices rise significantly during the contract period (March 2008 - April 2009), the EPA clause would allow Exxon Mobil to increase the price charged to the DoD, potentially leading to a higher final cost than initially anticipated under a firm fixed price. Conversely, if oil prices fall, the price could decrease. The impact on taxpayers depends entirely on the direction and magnitude of market price movements for crude oil and refined fuel products during the contract's term. This clause transfers some of the price risk from the contractor to the government.

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

Address: 3225 GALLOWS RD, FAIRFAX, VA, 11

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $718,382,211

Exercised Options: $718,382,211

Current Obligation: $718,382,211

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060008D0485

IDV Type: IDC

Timeline