DoD spent $23M on aviation fuel, with Calumet Montana Refining securing the contract

Contract Overview

Contract Amount: $23,008,551 ($23.0M)

Contractor: Calumet Montana Refining, LLC

Awarding Agency: Department of Defense

Start Date: 2008-09-19

End Date: 2009-10-30

Contract Duration: 406 days

Daily Burn Rate: $56.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 16

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

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 $23.0 million to CALUMET MONTANA REFINING, LLC for work described as: TURBINE FUEL, AVIATION (JP8) Key points: 1. The contract value of $23 million for aviation fuel indicates significant demand within the Department of Defense. 2. The fixed-price with economic price adjustment structure suggests a need to account for market volatility in fuel costs. 3. The award to a single entity, Calumet Montana Refining, warrants a closer look at the competitive landscape. 4. The contract duration of 406 days points to a medium-term supply requirement. 5. The North American Industry Classification System (NAICS) code 324110 places this within the petroleum refining sector.

Value Assessment

Rating: fair

The total award amount of $23,008,550.80 for aviation fuel (JP8) appears to be a standard expenditure for military-grade fuel. Without specific per-gallon pricing or comparison to other similar contracts for JP8 from the Defense Logistics Agency (DLA), it is difficult to definitively benchmark the value for money. The economic price adjustment clause introduces variability, making a fixed value assessment challenging. However, the scale of the award suggests a substantial quantity of fuel was procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the competition was intended to be broad, specific sources may have been excluded for reasons not detailed in this summary. The presence of 16 bids suggests a reasonably competitive process, which is generally positive for price discovery. However, the exclusion of certain sources could potentially limit the full extent of competition.

Taxpayer Impact: The broad competition, despite potential exclusions, likely resulted in a more favorable price for taxpayers compared to a sole-source award. The 16 bids indicate that multiple suppliers were interested and capable of meeting the requirement.

Public Impact

The primary beneficiaries are the U.S. military operations requiring aviation fuel (JP8) for aircraft. The service delivered is the supply of critical aviation fuel, essential for flight readiness and mission execution. The geographic impact is likely concentrated around military bases or operational areas where the fuel was delivered, though the specific delivery locations are not provided. Workforce implications are minimal for the contracting agency but support jobs within the petroleum refining and logistics sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to the economic price adjustment clause, impacting budget predictability.
The exclusion of sources, even if justified, might have limited the overall competitive pressure on pricing.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
A significant number of bids (16) indicates market interest and potential for competitive pricing.
The contract addresses a critical operational need for the Department of Defense.

Sector Analysis

This contract falls within the petroleum refining industry, specifically serving the niche market for military-grade aviation fuels. The market for such specialized fuels is often dominated by a few large refineries capable of meeting stringent military specifications and production volumes. The Defense Logistics Agency (DLA) is a major procurer in this sector, ensuring the supply chain for national defense. Comparable spending benchmarks would involve analyzing other DLA fuel contracts or large-scale commercial aviation fuel procurements.

Small Business Impact

The contract details indicate that small business participation was not a primary set-aside consideration for this award (sb: false). There is no explicit mention of subcontracting goals for small businesses. Therefore, the direct impact on the small business ecosystem for this specific contract appears limited, with the primary award going to a larger entity.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Defense Logistics Agency (DLA) contracting officers and potentially the Department of Defense Inspector General. Accountability measures would include performance monitoring against delivery schedules and fuel quality standards. Transparency is facilitated by contract award databases, though detailed performance metrics are not publicly available.

Related Government Programs

Defense Logistics Agency Fuel Procurement
JP8 Aviation Fuel Supply Contracts
Department of Defense Energy Procurement
Petroleum Product Contracts

Risk Flags

Economic Price Adjustment Clause
Exclusion of Sources
Potential for Market Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.0 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 $23.0 million.

What is the period of performance?

Start: 2008-09-19. End: 2009-10-30.

What was the specific per-gallon price of JP8 fuel under this contract, and how does it compare to market rates at the time?

The provided data does not include the specific per-gallon price or the total quantity of fuel procured, making a direct calculation impossible. The total award was $23,008,550.80. To determine the per-gallon price, we would need the total gallons purchased. Market rates for JP8 fluctuate based on crude oil prices, refining costs, and geopolitical factors. Benchmarking would require accessing historical market data for JP8 during the contract period (September 2008 - October 2009) and comparing it to the implied price from this contract, assuming the total quantity could be estimated or was provided elsewhere.

What factors led to the exclusion of certain sources in this 'full and open competition after exclusion of sources' award?

The specific reasons for excluding certain sources are not detailed in the provided data. Typically, exclusions in 'full and open competition after exclusion of sources' can stem from various factors such as national security concerns, proprietary technology, specific security requirements, or the inability of certain potential sources to meet stringent technical or logistical requirements. The Defense Logistics Agency (DLA) would have had to justify these exclusions based on the nature of the requirement for aviation fuel and the capabilities of potential offerors. Without further documentation, the exact rationale remains speculative.

How did the economic price adjustment (EPA) clause impact the final cost of the fuel compared to a fixed-price contract?

The economic price adjustment (EPA) clause allows for adjustments to the contract price based on fluctuations in specified economic factors, such as the cost of raw materials (crude oil) or labor. In the context of fuel procurement, an EPA is often used to protect both the contractor from unexpected cost increases and the government from paying excessively if market prices drop significantly. During the contract period (2008-2009), global oil prices experienced considerable volatility. The EPA would have allowed the price to increase if fuel costs rose and potentially decrease if they fell, relative to a baseline price. The final cost would therefore be dependent on the specific indexation formula within the EPA and the actual market movements during the contract's duration.

What is the typical volume of JP8 fuel procured by the DLA annually, and how does this $23 million contract fit into that overall spending?

The Defense Logistics Agency (DLA) is the primary entity responsible for procuring fuel for the U.S. military. Annual fuel procurement volumes can vary significantly based on global operations, troop levels, and strategic needs. While specific annual figures for JP8 are not provided here, DLA's total fuel spending often runs into billions of dollars annually. A $23 million contract represents a significant, but likely not a dominant, portion of DLA's overall fuel budget for a given period. It addresses a specific requirement, potentially for a particular region or type of operation, within the larger framework of DLA's extensive fuel supply chain management.

What are the key performance indicators (KPIs) typically used by the DLA to evaluate the performance of fuel suppliers like Calumet Montana Refining?

Key performance indicators (KPIs) for DLA fuel contracts generally focus on reliability, timeliness, quality, and cost-effectiveness. For aviation fuel like JP8, critical KPIs would include on-time delivery to specified locations, adherence to fuel quality standards (e.g., meeting military specifications like MIL-DTL-83133), accurate invoicing, and responsiveness to DLA's logistical requirements. Performance might also be assessed based on the contractor's ability to manage inventory and provide necessary documentation. DLA likely uses a performance management system to track these metrics and inform future contracting decisions.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060008R0161

Offers Received: 16

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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,008,551

Exercised Options: $23,008,551

Current Obligation: $23,008,551

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060008D0510

IDV Type: IDC

Timeline