DoD's $20.2M Jet Fuel Contract Awarded to Lubwell Corporation Shows Fair Competition

Contract Overview

Contract Amount: $20,221,524 ($20.2M)

Contractor: Lubwell Corporation

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2012-10-31

Contract Duration: 1,126 days

Daily Burn Rate: $18.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 17

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: JET A-1 W/O FSII

Plain-Language Summary

Department of Defense obligated $20.2 million to LUBWELL CORPORATION for work described as: JET A-1 W/O FSII Key points: 1. Contract awarded through full and open competition, indicating a competitive marketplace. 2. The contract duration of 1126 days suggests a need for sustained supply. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces some price volatility risk. 4. The award was made by the Defense Logistics Agency, a key procurement entity for military supplies. 5. The North American Industry Classification System (NAICS) code 424720 points to wholesale distribution of petroleum products. 6. No small business set-aside was utilized, suggesting the primary focus was on best value for the government.

Value Assessment

Rating: good

The contract value of $20.2 million over approximately three years for JET A-1 fuel appears reasonable given market conditions for aviation fuel. Benchmarking against similar fuel contracts would provide a more precise value-for-money assessment, but the competitive award process suggests pricing was likely scrutinized. The FPEPA clause allows for adjustments, which can be beneficial in volatile commodity markets but also introduces risk if not managed carefully.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The presence of 17 bids indicates a robust level of competition for this petroleum products contract. A high number of bidders generally supports price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: The strong competition for this contract likely resulted in taxpayer savings by driving down the price of essential jet fuel for the Department of Defense.

Public Impact

The Department of Defense benefits from a reliable supply of JET A-1 fuel for its aviation operations. This contract ensures the availability of critical fuel for military aircraft, supporting national defense readiness. The geographic impact is likely widespread, covering locations where DoD aircraft operate and require refueling. Workforce implications may include jobs in fuel logistics, transportation, and distribution, both within the contractor's organization and supporting industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The use of Fixed Price with Economic Price Adjustment (FPEPA) introduces potential for cost overruns if fuel prices escalate significantly beyond projections.
Reliance on a single contractor, Lubwell Corporation, for this specific award means any performance issues could disrupt supply.
The duration of the contract (over three years) necessitates ongoing monitoring to ensure continued performance and adherence to terms.

Positive Signals

Awarded through full and open competition with 17 bidders, suggesting a healthy market and competitive pricing.
The Defense Logistics Agency's involvement indicates adherence to established procurement processes for critical supplies.
The contract's purpose directly supports essential military aviation operations, a core government function.

Sector Analysis

The market for aviation fuel is a subset of the broader petroleum products industry. This contract falls within the wholesale distribution of petroleum products, specifically catering to the unique specifications and demands of military aviation (JET A-1). The market is characterized by global supply chains, price volatility tied to crude oil markets, and significant logistical requirements. Comparable spending benchmarks would involve analyzing other large-scale government or commercial aviation fuel procurements.

Small Business Impact

This contract did not include a small business set-aside, as indicated by 'sb': false. The award went to Lubwell Corporation, and there is no information provided regarding subcontracting plans specifically for small businesses. This suggests that the primary focus of the competition was on securing the best overall value, and small businesses were not specifically prioritized through set-aside provisions for this particular procurement.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract, ensuring compliance with its terms and conditions. As a component of the Department of Defense, DLA procurement processes are subject to federal acquisition regulations and oversight from the Department of Defense Inspector General. Transparency is generally maintained through contract award databases, though specific performance metrics and ongoing monitoring details may not be publicly disclosed.

Related Government Programs

Defense Fuel Supply Center Contracts
Aviation Fuel Procurement
Petroleum Product Wholesale Distribution
DoD Logistics and Supply Chain Management

Risk Flags

Price Volatility Risk (FPEPA)
Contractor Performance Risk
Supply Chain Disruption Potential

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.2 million to LUBWELL CORPORATION. JET A-1 W/O FSII

Who is the contractor on this award?

The obligated recipient is LUBWELL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.2 million.

What is the period of performance?

Start: 2009-10-01. End: 2012-10-31.

What is Lubwell Corporation's track record with government contracts, particularly for fuel supply?

Lubwell Corporation has a history of receiving government contracts, primarily within the defense sector. Data indicates they have been awarded multiple contracts, often related to fuel supply and distribution. While this specific $20.2 million contract for JET A-1 fuel is a significant award, their broader track record would need to be assessed by examining the volume, value, and performance history across all their federal awards. A review of past performance evaluations and any contract disputes or terminations would provide a more comprehensive understanding of their reliability as a government supplier. Without access to detailed performance metrics for all their contracts, it's difficult to definitively assess their overall track record beyond the fact that they have secured numerous awards.

How does the awarded price compare to market rates for JET A-1 fuel during the contract period?

Determining the precise value for money requires comparing the awarded price against prevailing market rates for JET A-1 fuel during the contract's performance period (October 2009 - October 2012). The contract utilized an Economic Price Adjustment (EPA) clause, meaning the final price paid would fluctuate based on an index or formula tied to market prices. To assess value, one would need to analyze historical Platts or other industry-standard fuel price indices for JET A-1 during that timeframe and apply the contract's specific EPA formula. Without access to the detailed pricing structure and historical market data specific to that period, a direct comparison is challenging. However, the fact that the contract was awarded under full and open competition with 17 bidders suggests that the initial proposed prices were competitive within the market context at the time of award.

What are the primary risks associated with a Fixed Price with Economic Price Adjustment (FPEPA) contract for fuel?

The primary risk associated with an FPEPA contract for fuel lies in price volatility. While the EPA clause is designed to protect both the contractor and the government from extreme market fluctuations, it introduces uncertainty. For the government, there is a risk of paying significantly higher prices if the underlying commodity (crude oil, which impacts jet fuel) experiences a sharp and sustained increase. Conversely, if prices fall, the government might not fully benefit from the lower market rates depending on the EPA's structure. For the contractor, the risk is mitigated, but they still face administrative burdens in tracking price adjustments. The government also bears the risk of potential disputes over the interpretation or application of the EPA formula. Effective oversight is crucial to ensure the adjustments are fair and reflect genuine market changes.

How effective is the Defense Logistics Agency (DLA) in managing fuel supply contracts for the DoD?

The Defense Logistics Agency (DLA) is generally considered highly effective in managing fuel supply contracts for the DoD. DLA is the primary agency responsible for procuring and distributing fuel to military operations worldwide, handling vast quantities and complex logistical challenges. Their expertise in market analysis, contract negotiation, and risk management is substantial. They utilize various contract types, including FPEPA, to balance cost, supply assurance, and market volatility. DLA's established infrastructure and long-standing relationships with suppliers contribute to their ability to maintain a consistent fuel supply, which is critical for national security. While specific contract performance can vary, DLA's overall mission success in fuel logistics is well-recognized within the defense establishment.

What is the typical duration and value range for similar DoD aviation fuel contracts?

The typical duration for DoD aviation fuel contracts can vary significantly based on the specific needs, volume, and strategic importance. Contracts can range from shorter-term, high-volume delivery orders to longer-term agreements spanning several years, often with options for extension. The value range is equally broad, influenced by fluctuating fuel prices, the quantity required, and the geographic scope of delivery. A $20.2 million contract over approximately three years, as seen with Lubwell Corporation, falls within a common range for significant, sustained fuel supply needs. Larger, global supply contracts could easily reach hundreds of millions or even billions of dollars, while smaller, localized requirements might be in the single-digit millions. The 17 bids received suggest this was a substantial procurement opportunity.

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: SP060009R0200

Offers Received: 17

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

Evaluated Preference: NONE

Contractor Details

Address: FACILITY 7550, CARGO HAUS BLDG, CLARK SPECIAL ECONOMIC, PAMPANGA

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $20,221,524

Exercised Options: $20,221,524

Current Obligation: $20,221,524

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0129

IDV Type: IDC

Timeline