DoD spent $25M on diesel fuel, with 7 bids received for this fixed-price contract

Contract Overview

Contract Amount: $24,973,892 ($25.0M)

Contractor: C a M International USA, Inc

Awarding Agency: Department of Defense

Start Date: 2008-05-30

End Date: 2011-08-31

Contract Duration: 1,188 days

Daily Burn Rate: $21.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: DIESEL FUEL PRODUCT

Place of Performance

Location: LAWRENCEVILLE, GWINNETT County, GEORGIA, 30043

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $25.0 million to C A M INTERNATIONAL USA, INC for work described as: DIESEL FUEL PRODUCT Key points: 1. The contract value of $25 million represents a significant investment in fuel supply for the Defense Logistics Agency. 2. Competition dynamics indicate a healthy market for diesel fuel supply, with multiple bidders vying for the contract. 3. The fixed-price structure with economic price adjustment introduces some risk related to fuel price volatility. 4. This contract falls within the broader category of petroleum product wholesale, a critical sector for military operations. 5. The contract duration of nearly 10 years suggests a long-term need for reliable fuel sourcing.

Value Assessment

Rating: good

The total contract value of $24,973,891.80 for diesel fuel over its nearly 10-year term appears reasonable given the scale and duration. Benchmarking against similar large-scale fuel procurements by the DoD would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment (EPA) clause allows for adjustments based on market fluctuations, which is standard for fuel contracts but introduces some pricing risk. Without specific per-unit cost data or comparison to current market rates at the time of award, a definitive assessment of pricing efficiency is challenging, but the competitive nature of the award suggests a degree of price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was broad, specific sources may have been excluded for defined reasons. Seven bids were received, suggesting a competitive marketplace for diesel fuel supply. The presence of multiple bidders generally supports price discovery and can lead to more favorable pricing for the government. The exclusion of certain sources, if justified and transparent, should not significantly detract from the competitive nature.

Taxpayer Impact: A competitive award process with multiple bidders helps ensure that taxpayer dollars are used efficiently by driving down prices through market forces. The government likely secured a more competitive price than it would have through a sole-source or limited competition approach.

Public Impact

Military operations and readiness are directly supported by the consistent supply of diesel fuel. The contract benefits the Department of Defense by ensuring a critical resource is available for its fleet and equipment. The geographic impact is likely widespread, supporting military installations and operations across various regions where diesel fuel is required. The contract supports the petroleum products merchant wholesale sector, contributing to the economic activity within this industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause introduces potential for cost overruns if fuel prices escalate significantly.
Contract duration of nearly 10 years may lock the government into pricing that becomes unfavorable if market prices decrease substantially.
The specific reasons for 'Exclusion of Sources' in an otherwise 'Full and Open' competition warrant further scrutiny to ensure fairness and prevent potential collusion.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Receipt of 7 bids suggests strong market interest and a competitive environment.
The fixed-price nature, even with EPA, provides a baseline cost control mechanism.
Long contract duration can offer stability and predictability in fuel supply for the DoD.

Sector Analysis

The procurement of diesel fuel falls under the broader energy and logistics sector, specifically within the wholesale distribution of petroleum products. This market is characterized by global supply chains, price volatility influenced by geopolitical events and economic factors, and significant infrastructure requirements. The Defense Logistics Agency (DLA) is a major player in procuring fuel for military operations, often awarding large, long-term contracts to ensure supply chain security and operational readiness. Comparable spending benchmarks would involve analyzing other large fuel contracts awarded by DLA or other federal agencies for similar products and durations.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. The 'aw' field shows 'DO', which typically signifies 'Department of Defense' and not a small business designation. There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal unless the prime contractor voluntarily engages small businesses in their supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and financial accountability. The Defense Logistics Agency (DLA) Contracting Command would also have oversight responsibilities. Transparency is facilitated through contract databases like FPDS-NG (Federal Procurement Data System - Next Generation). Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Department of Defense Energy Contracts
Petroleum Product Supply Contracts
Fixed-Price Contracts with Economic Price Adjustment
Federal Fuel Purchasing

Risk Flags

Potential for cost escalation due to Economic Price Adjustment clause.
Long contract duration may lead to unfavorable pricing if market conditions change.
Lack of transparency regarding 'Exclusion of Sources' in competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.0 million to C A M INTERNATIONAL USA, INC. DIESEL FUEL PRODUCT

Who is the contractor on this award?

The obligated recipient is C A M INTERNATIONAL USA, INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.0 million.

What is the period of performance?

Start: 2008-05-30. End: 2011-08-31.

What was the specific rationale for excluding certain sources in this 'Full and Open Competition After Exclusion of Sources' award?

The provided data indicates the contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES'. This specific award type suggests that while the solicitation was broadly advertised, certain potential offerors were intentionally excluded from bidding. The reasons for such exclusions typically stem from specific government requirements, such as national security concerns, proprietary technology limitations, or the need to ensure compliance with specific regulations or standards that only a subset of potential contractors could meet. Without access to the detailed solicitation documents or award justification, the precise rationale for excluding sources remains unknown. However, such exclusions must be legally justified and documented by the contracting agency to ensure fairness and prevent anti-competitive practices. Further investigation into the contract file or agency justifications would be necessary to understand the specific exclusions.

How does the economic price adjustment (EPA) clause typically function in long-term fuel contracts, and what are the potential risks for the government?

An Economic Price Adjustment (EPA) clause in a fixed-price contract allows for modifications to the contract price based on fluctuations in specific economic factors, such as the cost of raw materials, labor, or in this case, fuel market prices. For long-term fuel contracts, EPAs are crucial for managing price volatility and ensuring a stable supply. They typically reference an established index or formula to determine price changes, often tied to published fuel indices. The primary risk for the government is potential cost escalation if fuel prices rise significantly above the initial contract price, leading to higher overall expenditures than initially budgeted. Conversely, if prices fall, the government may benefit from lower costs, though the fixed-price component provides some baseline.

What is the typical market size and competitive landscape for wholesale diesel fuel supply to the Department of Defense?

The market for wholesale diesel fuel supply to the Department of Defense is substantial, driven by the military's vast logistical needs across global operations. It involves large, established petroleum companies and specialized fuel distributors capable of meeting stringent quality, quantity, and delivery requirements. The competitive landscape can vary depending on the geographic region and specific delivery points. While major players dominate, there is often competition, especially for large-volume, long-term contracts like this one, as evidenced by the seven bids received. Factors influencing competition include the availability of infrastructure, regulatory compliance, and the ability to secure financing for large-scale operations. The DoD often utilizes mechanisms like 'Full and Open Competition' to maximize market participation and achieve favorable pricing.

Given the contract's duration of nearly 10 years, what are the implications for the contractor's performance and potential for price gouging?

A contract duration of nearly 10 years provides the contractor, C A M INTERNATIONAL USA, INC, with significant revenue stability and predictability, reducing their business risk. This long-term commitment can incentivize the contractor to invest in infrastructure and processes to ensure reliable delivery. Regarding price gouging, the 'Full and Open Competition' award mechanism and the receipt of seven bids serve as primary deterrents. The competitive bidding process at the outset establishes a baseline price. Furthermore, the Economic Price Adjustment (EPA) clause, if structured appropriately with reference to objective market indices, should prevent arbitrary price increases. However, ongoing oversight by the Defense Contract Management Agency (DCMA) and the potential for contract review or renegotiation under specific circumstances are crucial to ensure fair pricing throughout the contract's life.

How does the 'Petroleum and Petroleum Products Merchant Wholesalers' NAICS code (424720) relate to the services provided under this contract?

The North American Industry Classification System (NAICS) code 424720, 'Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals),' accurately categorizes the services provided under this contract. This code encompasses businesses primarily engaged in the wholesale distribution of petroleum and petroleum products, such as diesel fuel. Merchant wholesalers take title to the goods they sell and are involved in the distribution process, which aligns with the nature of supplying fuel to the Department of Defense. This classification helps in understanding the industry context, identifying potential competitors, and analyzing market trends within the petroleum wholesale sector.

Industry Classification

NAICS: Wholesale Trade › Petroleum and Petroleum Products Merchant Wholesalers › Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)

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: SP060008R0022

Offers Received: 7

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

Evaluated Preference: NONE

Contractor Details

Address: 3084 BAYMOUNT WAY, LAWRENCEVILLE, GA, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $24,973,892

Exercised Options: $24,973,892

Current Obligation: $24,973,892

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060008D1255

IDV Type: IDC

Timeline