DoD's $186M JP8 Turbine Fuel Contract Awarded to Placid Refining Company LLC
Contract Overview
Contract Amount: $185,822,035 ($185.8M)
Contractor: Placid Refining Company LLC
Awarding Agency: Department of Defense
Start Date: 2009-03-24
End Date: 2010-05-30
Contract Duration: 432 days
Daily Burn Rate: $430.1K/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: PORT ALLEN, WEST BATON ROUGE County, LOUISIANA, 70767
Plain-Language Summary
Department of Defense obligated $185.8 million to PLACID REFINING COMPANY LLC for work described as: TURBINE FUEL, JP8 Key points: 1. Significant contract value of $185.8 million for turbine fuel. 2. Awarded under full and open competition, indicating market availability. 3. Potential risk associated with fixed-price contracts with economic price adjustments. 4. Spending falls within the Petroleum Refineries sector (NAICS 324110).
Value Assessment
Rating: good
The contract value of $185.8 million is substantial. Benchmarking against similar fuel contracts would be necessary to fully assess pricing, but the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, suggesting multiple capable vendors could have bid. This method generally promotes competitive pricing and ensures the government receives fair market value.
Taxpayer Impact: The competitive award process aims to secure the best possible price for taxpayers, although the economic price adjustment clause introduces some uncertainty regarding the final cost.
Public Impact
Ensures critical fuel supply for Department of Defense operations. Supports the petroleum refining industry and related jobs. Potential for price fluctuations impacting the final taxpayer cost.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause can lead to cost overruns.
- Dependence on a single supplier for a critical commodity.
Positive Signals
- Awarded through full and open competition.
- Significant contract value may indicate economies of scale.
Sector Analysis
This contract falls under the Petroleum Refineries sector, specifically for turbine fuel (JP8). Spending in this sector is crucial for national security and transportation infrastructure, with prices often influenced by global oil markets and geopolitical factors.
Small Business Impact
The data does not indicate whether small businesses were involved as subcontractors. The primary awardee, Placid Refining Company LLC, is not explicitly identified as a small business in this context.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key agency for procurement within the DoD. Oversight would involve monitoring contract performance, adherence to terms, and managing the economic price adjustment mechanism.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Potential for supply chain disruptions in the petroleum industry.
- Dependence on a single supplier for a critical fuel.
- Geopolitical factors influencing global fuel prices.
Tags
petroleum-refineries, department-of-defense, la, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $185.8 million to PLACID REFINING COMPANY LLC. TURBINE FUEL, JP8
Who is the contractor on this award?
The obligated recipient is PLACID REFINING COMPANY LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $185.8 million.
What is the period of performance?
Start: 2009-03-24. End: 2010-05-30.
What is the historical price trend for JP8 fuel during the contract period, and how did the economic price adjustment clause affect the final cost compared to a fixed-price contract?
Analyzing historical JP8 price data during the 2009-2010 contract period is crucial. The economic price adjustment (EPA) clause would have allowed for increases (or decreases) in the contract price based on fluctuations in the cost of raw materials or other specified economic factors. Understanding these market movements and how the EPA was applied is key to determining if the final cost was higher or lower than it would have been under a firm fixed price, and whether the government effectively managed the risk associated with price volatility.
Were there any performance issues or delivery delays reported by the Defense Logistics Agency for Placid Refining Company LLC during this contract period?
Assessing performance requires reviewing contract performance reports, delivery records, and any documented issues or disputes between the Defense Logistics Agency (DLA) and Placid Refining Company LLC. Any reported problems, such as late deliveries, quality concerns, or non-compliance with specifications, would indicate potential risks to operational readiness and could necessitate corrective actions or impact future contracting decisions. The absence of such reports would suggest satisfactory performance.
How does the unit price of JP8 under this contract compare to benchmark prices for similar military-grade fuels purchased by other government agencies or allies during the same period?
Benchmarking the unit price against comparable contracts is essential for evaluating cost-effectiveness. This involves identifying similar JP8 or equivalent fuel procurements by other government entities (e.g., other military branches, allied nations) within the same timeframe. Analyzing these benchmarks helps determine if the price paid under this contract was competitive and represented good value for the taxpayer, considering factors like volume, delivery locations, and contract terms.
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
Address: 1940 LA HWY 1 N, PORT ALLEN, LA, 06
Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $185,822,035
Exercised Options: $185,822,035
Current Obligation: $185,822,035
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060009D0473
IDV Type: IDC
Timeline
Start Date: 2009-03-24
Current End Date: 2010-05-30
Potential End Date: 2010-05-30 00:00:00
Last Modified: 2010-05-21
More Contracts from Placid Refining Company LLC
- 91,281,000 USG of JP8 With Corrosion Inhibitor VIA Pipeline/Barge — $294.6M (Department of Defense)
- JP8 — $139.2M (Department of Defense)
- Turbine Fuel, Aviation JP8 Small Business Set-Aside Quantity 40,440,000 USG of 46,456,000 USG IS AT Placid's OWN Price of $1.728350 Under the Small Business Set-Aside Program Totaling $69,894,474.00. Other Set-Aside Quantities Include 4,230,000 USG AT $1.685973 = $7,131,665.79; 2,700,000 USG AT $1.696821 = $4,581,416.70 and 9,000,000 USG AT $1.706384 = $15,357,456.00. the Overall Set-Aside Total IS $96,965,012.49 — $107.4M (Department of Defense)
- Turbine Fuel, JP8 — $82.3M (Department of Defense)
- 1,369,000 USF of Clin 0101 (JP8) and 11,700,000 USG of Clin 0201 (JP5) ARE Set-Aside Quantities. Total Set-Aside Volumej IS 13,069,000 USG of Total Award Quantity 18,900,000 USG — $63.5M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)