DoD spent over $434M on turbine fuel (JP8) from ConocoPhillips, awarded via full and open competition

Contract Overview

Contract Amount: $434,199,769 ($434.2M)

Contractor: Conocophillips Company

Awarding Agency: Department of Defense

Start Date: 2009-03-24

End Date: 2010-04-30

Contract Duration: 402 days

Daily Burn Rate: $1.1M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 26

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: TURBINE FUEL, JP8

Place of Performance

Location: PONCA CITY, KAY County, OKLAHOMA, 74601

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $434.2 million to CONOCOPHILLIPS COMPANY for work described as: TURBINE FUEL, JP8 Key points: 1. The contract value represents a significant investment in aviation fuel for defense operations. 2. Full and open competition suggests a potentially competitive pricing environment. 3. The fixed-price with economic price adjustment (EPA) structure introduces some cost volatility risk. 4. The contract duration of 402 days indicates a medium-term supply need. 5. The award was made by the Defense Logistics Agency, a key procurement arm for military supplies. 6. The North American Industry Classification System (NAICS) code 324110 points to petroleum refining activities.

Value Assessment

Rating: good

The total award amount of $434.2 million for turbine fuel is substantial. Benchmarking this against similar fuel contracts is challenging without more specific contract details and market conditions at the time of award. However, the fixed-price with EPA structure aims to balance cost certainty for the government with market fluctuations for the contractor, which is a common approach for commodity-based contracts. The contract's performance status ('OK') suggests it met expectations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of 26 bids suggests a robust competitive landscape for this fuel supply. A high number of bidders generally supports price discovery and can lead to more favorable pricing for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: The extensive competition for this fuel contract likely resulted in taxpayer savings by driving down the price through market forces. It ensured that the Department of Defense received competitive offers, maximizing the value of taxpayer dollars.

Public Impact

This contract directly supports the operational readiness of Department of Defense aircraft by ensuring a supply of critical turbine fuel (JP8). The primary beneficiaries are military personnel and units relying on aviation assets for national security missions. The geographic impact is likely widespread, supporting flight operations across various bases and deployment locations. The contract ensures the continued functioning of the defense supply chain for aviation fuels.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause introduces potential for cost increases beyond initial fixed price.
Reliance on a single contractor for a large volume of fuel could pose supply chain risks if not managed proactively.
The fixed-price nature, even with EPA, requires careful monitoring to ensure the government isn't overpaying due to market volatility.

Positive Signals

Awarded under full and open competition with 26 bids, indicating strong market interest and potential for competitive pricing.
The Defense Logistics Agency's involvement suggests established procurement processes and oversight for fuel acquisition.
The contract status is 'OK', implying satisfactory performance during its term.

Sector Analysis

The petroleum refining sector (NAICS 324110) is a critical component of the energy industry, responsible for processing crude oil into various fuels, including aviation turbine fuel. The market for military fuels is substantial, driven by the operational needs of defense agencies. This contract fits within the broader category of energy and logistics support for government operations. Comparable spending benchmarks would depend on the specific type of fuel, volume, and prevailing market conditions at the time of award.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the scale and nature of fuel procurement, it is common for large prime contractors to fulfill such requirements. There is no explicit information on subcontracting plans for small businesses within this data, but large defense contracts often include provisions for small business participation, which would need further investigation.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a major procurement agency, DLA has established procedures for contract management, performance monitoring, and financial oversight. The 'OK' status suggests that performance was deemed acceptable. Further transparency would involve reviewing DLA's internal audit reports or Inspector General findings related to fuel procurement during the contract period.

Related Government Programs

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

Risk Flags

Economic Price Adjustment (EPA) clause may lead to cost overruns if not carefully managed.
Potential for supply chain disruption if the primary contractor faces unforeseen operational issues.
Lack of specific per-unit cost data makes direct value-for-money assessment difficult without further analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $434.2 million to CONOCOPHILLIPS COMPANY. TURBINE FUEL, JP8

Who is the contractor on this award?

The obligated recipient is CONOCOPHILLIPS COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $434.2 million.

What is the period of performance?

Start: 2009-03-24. End: 2010-04-30.

What was the average price per gallon of JP8 fuel under this contract, and how did it compare to market benchmarks at the time?

The provided data does not include the quantity of fuel purchased, making it impossible to calculate a precise average price per gallon. The total award amount was $434,199,976.21. To determine the price per gallon, the total volume procured would be necessary. Furthermore, comparing this to market benchmarks would require access to historical fuel price indices (e.g., Platts, EIA data) specific to JP8 or similar jet fuels during the contract period (March 2009 - April 2010). The Economic Price Adjustment (EPA) clause suggests that the price was subject to change based on market fluctuations, complicating a single average price comparison.

What were the specific economic factors that triggered the Economic Price Adjustment (EPA) clause in this contract?

The Economic Price Adjustment (EPA) clause in this contract likely tied price changes to fluctuations in the cost of crude oil or refined petroleum products, which are the primary inputs for JP8 turbine fuel. Specific triggers would be detailed in the contract's terms and conditions, often referencing published indices such as the West Texas Intermediate (WTI) or Brent crude oil prices, or specific petroleum product price assessments from industry reporting agencies. The goal of the EPA is to allow for price adjustments that reflect genuine market shifts, protecting both the contractor from unrecoverable cost increases and the government from paying inflated prices if input costs decrease.

How did the performance of ConocoPhillips Company on this contract align with its broader track record in supplying military fuels?

The contract status is listed as 'OK', indicating satisfactory performance by ConocoPhillips Company during the contract period (March 2009 - April 2010). To assess this against their broader track record, one would need to examine other contracts awarded to ConocoPhillips for similar fuel products by the Department of Defense or other government agencies. A review of past performance evaluations, any documented disputes or contract terminations, and the volume and criticality of other fuel supply contracts they have managed would provide a more comprehensive picture of their reliability and capabilities in the military fuel supply chain.

What was the total spending on JP8 fuel by the Department of Defense in the fiscal years surrounding this contract (FY2009-FY2010)?

The provided data focuses solely on this specific $434.2 million contract awarded in March 2009. To determine total DoD spending on JP8 fuel in FY2009 and FY2010, a broader analysis of federal procurement databases (like FPDS-NG or USAspending.gov) would be required. This would involve querying for all contracts with the relevant Product Service Codes (PSCs) or keywords related to JP8 or turbine fuel, awarded by DoD agencies during those fiscal years. This contract represents a significant portion of spending, but other contracts, potentially with different awardees or under different competition types, would also contribute to the total.

Were there any significant supply disruptions or quality issues reported for JP8 fuel procured under this contract?

The provided data indicates the contract status as 'OK', which generally implies that performance was satisfactory and no major disruptions or quality issues were formally reported or led to contract modifications or disputes. However, 'OK' is a broad assessment. To ascertain if there were any minor issues, localized disruptions, or quality concerns that were resolved without impacting the overall contract status, one would need to consult DLA's contract performance files, quality assurance reports, or any official correspondence related to the contract's execution. Such details are typically not available in summary data.

How does the number of bidders (26) on this contract compare to typical competition levels for large-volume fuel procurements by the DLA?

A total of 26 bids for this turbine fuel contract suggests a highly competitive environment, which is generally favorable for the government. To determine if this is typical for DLA's large-volume fuel procurements, comparative data would be needed. Analysis of other DLA fuel contracts, particularly those for similar products (like JP5 or diesel) and award values, would reveal the average number of bids received. If 26 bids is significantly higher than the average, it could indicate strong market interest, effective solicitation strategies by DLA, or perhaps a period of ample supply capacity among potential bidders. Conversely, if it's within the typical range, it suggests standard market dynamics for these types of essential commodities.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060009R0061

Offers Received: 26

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Conocophillips (UEI: 118819478)

Address: 930 PHILLIPS BLDG, BARTLESVILLE, OK, 02

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $434,199,769

Exercised Options: $434,199,769

Current Obligation: $434,199,769

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0466

IDV Type: IDC

Timeline