DOD's $23M Jet Fuel Contract with Jacksonville Jetport LLC Faces Scrutiny Over Pricing and Competition

Contract Overview

Contract Amount: $23,030,832 ($23.0M)

Contractor: Jacksonville Jetport LLC

Awarding Agency: Department of Defense

Start Date: 2009-04-01

End Date: 2013-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $15.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: JET A W/FSII, INTO-TRUCK&JET A W/FSII

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32218

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $23.0 million to JACKSONVILLE JETPORT LLC for work described as: JET A W/FSII, INTO-TRUCK&JET A W/FSII Key points: 1. The contract for Jet A fuel with FSII awarded to Jacksonville Jetport LLC represents a significant expenditure in the petroleum products sector. 2. Competition was full and open, but the fixed-price with economic price adjustment structure warrants attention for potential cost overruns. 3. The lack of small business participation is noted, suggesting potential missed opportunities for smaller enterprises. 4. The contract duration of 4 years (1460 days) indicates a long-term commitment for fuel supply.

Value Assessment

Rating: fair

The contract's fixed price with economic price adjustment (EPA) introduces variability. Without specific unit cost data and benchmark comparisons for JET A with FSII, assessing value is challenging. The EPA mechanism can protect against market fluctuations but also risks higher costs if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the fixed-price with EPA structure can obscure true market pricing over the contract's life, potentially leading to higher-than-expected costs if fuel prices escalate significantly.

Taxpayer Impact: The use of economic price adjustments, while necessary for volatile commodities like fuel, means taxpayers are exposed to market price fluctuations, potentially increasing the overall cost beyond initial projections.

Public Impact

Taxpayers are indirectly affected by fluctuating fuel prices due to the economic price adjustment clause. The defense sector's reliance on fuel supply chains is critical, making this contract essential for operational readiness. The absence of small business involvement in this significant contract may limit broader economic participation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) risks cost escalation.
No small business participation.
Long contract duration (4 years) increases exposure to market volatility.

Positive Signals

Awarded under full and open competition.
Essential commodity for defense operations.

Sector Analysis

This contract falls under the Petroleum and Petroleum Products Merchant Wholesalers sector. Spending in this area is crucial for national defense logistics. Benchmarks for fuel contracts vary widely based on type, volume, and economic conditions, making direct comparison difficult without more granular data.

Small Business Impact

The contract data indicates that small businesses were not involved in this award (ss: false, sb: false). This suggests that the prime contractor, Jacksonville Jetport LLC, did not subcontract to small businesses or that the solicitation did not prioritize or include specific set-asides for them.

Oversight & Accountability

The contract was awarded in 2009 and expired in 2013. Oversight would have focused on adherence to the economic price adjustment formula and delivery schedules. Post-award audits and performance reviews would be standard oversight mechanisms.

Related Government Programs

Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to EPA.
Lack of small business participation.
Long contract duration increases market risk exposure.
Limited insight into competitive intensity despite 'full and open' status.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.0 million to JACKSONVILLE JETPORT LLC. JET A W/FSII, INTO-TRUCK&JET A W/FSII

Who is the contractor on this award?

The obligated recipient is JACKSONVILLE JETPORT 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: 2009-04-01. End: 2013-03-31.

What was the actual price escalation experienced under the EPA clause during the contract period, and how did it compare to market benchmarks?

To assess the true value and taxpayer impact, it's crucial to analyze the historical price data for JET A with FSII during the 2009-2013 period. Comparing the contract's adjusted prices against independent market indices for aviation fuel would reveal if the EPA clause resulted in significantly higher costs than a fixed-price contract might have, or if it effectively shielded the government from even greater price spikes.

Were there specific reasons Jacksonville Jetport LLC was the sole awardee under full and open competition, and did this limit competitive pressure?

While the award was 'full and open,' understanding the specific requirements and the number of bids received is key. If only one or a few entities could meet the stringent logistical and quality demands for supplying specialized jet fuel at a specific location, it could limit the competitive pressure despite the open nature of the solicitation. This warrants further investigation into the bidding landscape.

How effectively did the fixed-price with economic price adjustment structure balance cost control with ensuring supply continuity for critical defense operations?

The EPA structure is designed to ensure supply continuity by allowing price adjustments for volatile commodities. However, it shifts some cost risk to the government. Evaluating the contract's effectiveness requires analyzing whether the price adjustments were reasonable and justified by market conditions, and if the government secured a stable fuel supply without excessive cost overruns compared to alternative contract types.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060008R0229

Offers Received: 2

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

Evaluated Preference: NONE

Contractor Details

Address: 13365 AERONAUTICAL CIR, JACKSONVILLE, FL, 90

Business Categories: Category Business, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,030,832

Exercised Options: $23,030,832

Current Obligation: $23,030,832

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0059

IDV Type: IDC

Timeline