DoD's $23.6M Jet Fuel Contract with ST-AIRPORT SERVICES PTE LTD Raises Questions on Value and Competition

Contract Overview

Contract Amount: $23,566,982 ($23.6M)

Contractor: St-Airport Services PTE Ltd

Awarding Agency: Department of Defense

Start Date: 2009-10-01

End Date: 2012-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $21.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 17

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: JET PETROLEUM 8

Plain-Language Summary

Department of Defense obligated $23.6 million to ST-AIRPORT SERVICES PTE LTD for work described as: JET PETROLEUM 8 Key points: 1. The contract awarded to ST-AIRPORT SERVICES PTE LTD for $23.6 million represents a significant expenditure in petroleum products. 2. The sector is characterized by established players and fluctuating global prices, impacting cost predictability. 3. The use of Fixed Price with Economic Price Adjustment (FP-EPA) introduces risk related to price volatility. 4. Limited information on the specific services and performance metrics makes a comprehensive value assessment challenging.

Value Assessment

Rating: questionable

The contract's total value of $23.6 million over three years, with an average annual value of approximately $7.85 million, needs to be benchmarked against similar fuel supply contracts. Without specific performance data or detailed service breakdowns, it's difficult to definitively assess if this pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific details of the bidding and the number of bidders are not provided, making it hard to ascertain the extent of price discovery achieved.

Taxpayer Impact: The total taxpayer impact is the full $23.6 million, but the efficiency of this spending depends on the competitive landscape and price adjustments.

Public Impact

Taxpayers are funding the procurement of essential jet fuel for Department of Defense operations. The economic price adjustment clause means taxpayers could bear the brunt of significant fuel price increases. The contract's duration and value suggest a substantial commitment of resources that could be allocated elsewhere if not optimally managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause introduces cost uncertainty.
Lack of detailed performance metrics hinders value assessment.
Limited insight into the competitive landscape beyond 'full and open'.

Positive Signals

Awarded under full and open competition.
Contract addresses a critical operational need for the DoD.

Sector Analysis

The defense sector relies heavily on fuel suppliers like ST-AIRPORT SERVICES PTE LTD. Spending benchmarks for petroleum products can vary widely based on global market prices, geopolitical factors, and contract terms. This contract's value appears substantial within its specific niche.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. The focus appears to be on larger, specialized petroleum suppliers.

Oversight & Accountability

Oversight would typically involve contract performance monitoring by the Defense Logistics Agency and potentially audits by the DoD Inspector General. The effectiveness of this oversight is not detailed in the provided data.

Related Government Programs

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

Risk Flags

Economic Price Adjustment (EPA) clause.
Lack of specific performance metrics.
Limited detail on competitive bidding outcomes.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.6 million to ST-AIRPORT SERVICES PTE LTD. JET PETROLEUM 8

Who is the contractor on this award?

The obligated recipient is ST-AIRPORT SERVICES PTE LTD.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $23.6 million.

What is the period of performance?

Start: 2009-10-01. End: 2012-09-30.

How does the economic price adjustment mechanism in this contract compare to industry standards for fuel procurement, and what safeguards are in place to mitigate excessive price increases?

The economic price adjustment (EPA) clause allows for contract price changes based on fluctuations in specified economic factors, typically fuel market indices. Standard practice involves defining clear indices and caps on adjustments to protect the government. Without the specific EPA formula and any caps, it's difficult to assess if this contract's terms are reasonable or if they expose taxpayers to undue risk from volatile fuel prices.

What was the competitive landscape during the bidding process for this contract, and how many bids were received to ensure optimal price discovery?

While the contract states 'full and open competition,' the number of bids received and the details of the evaluation process are crucial for assessing price discovery. A robust competition typically involves multiple qualified bidders submitting competitive offers. Knowing the number of bids helps determine if the government secured the best possible price or if there were opportunities for better value through more intense competition.

What specific performance metrics and service level agreements were established for ST-AIRPORT SERVICES PTE LTD, and how was performance monitored to ensure effective delivery of petroleum products?

Effective contract performance relies on clearly defined metrics and diligent monitoring. For a fuel supply contract, this could include on-time delivery rates, fuel quality standards, and responsiveness to demand fluctuations. Without insight into these metrics and the agency's monitoring processes, it's challenging to evaluate whether the DoD received optimal value and service for the $23.6 million spent.

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

Parent Company: Toll Holdings Limited (UEI: 753741792)

Address: 5 CLEMENTI LOOP, SINGAPORE

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

Financial Breakdown

Contract Ceiling: $23,566,982

Exercised Options: $23,566,982

Current Obligation: $23,566,982

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0140

IDV Type: IDC

Timeline