Defense Logistics Agency spent $82.3M on turbine fuel (JP8) from Placid Refining Company LLC

Contract Overview

Contract Amount: $82,327,101 ($82.3M)

Contractor: Placid Refining Company LLC

Awarding Agency: Department of Defense

Start Date: 2009-03-25

End Date: 2010-04-30

Contract Duration: 401 days

Daily Burn Rate: $205.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 26

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: TURBINE FUEL, JP8

Place of Performance

Location: PORT ALLEN, WEST BATON ROUGE County, LOUISIANA, 70767

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $82.3 million to PLACID REFINING COMPANY LLC for work described as: TURBINE FUEL, JP8 Key points: 1. The contract utilized a fixed-price structure with economic price adjustment, allowing for cost fluctuations. 2. Competition was conducted under 'full and open competition after exclusion of sources,' indicating a specific reason for source exclusion. 3. The contract duration was 401 days, with a start date in March 2009 and an end date in April 2010. 4. The awarded amount of $82.3 million represents a significant expenditure for turbine fuel procurement. 5. The contract was awarded to Placid Refining Company LLC, a single entity for this specific award. 6. The North American Industry Classification System (NAICS) code 324110 points to petroleum refineries as the sector.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging without comparable JP8 fuel contracts from the same period. The fixed-price with economic price adjustment structure introduces variability. However, the total award of $82.3 million for a 401-day supply suggests a substantial volume of fuel was procured. Further analysis would require access to historical fuel market data and competitor pricing during the award period to assess if the price was competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'full and open competition after exclusion of sources.' This designation implies that while the competition was intended to be broad, specific sources were excluded for reasons not detailed in the provided data. The number of bids received (26) indicates a degree of interest, but the exclusion of certain sources may have limited the overall competitive landscape and potentially impacted price discovery.

Taxpayer Impact: The exclusion of sources, even if justified, could mean that taxpayers did not benefit from the lowest possible price that might have been achieved with unrestricted competition. The presence of 26 bidders suggests some level of market interest, but the ultimate price paid is influenced by the specific conditions of the competition.

Public Impact

Military operations and readiness across various branches of the Department of Defense benefit from the reliable supply of JP8 turbine fuel. The services delivered include the provision of essential fuel for aircraft, vehicles, and other equipment requiring JP8. The geographic impact is primarily within Louisiana (st) where the contractor is located, but the fuel is likely distributed to various military installations. The contract supports jobs within the petroleum refining sector, specifically at Placid Refining Company LLC in Louisiana.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' clause requires further investigation to ensure it did not unduly restrict competition or lead to inflated prices.
The economic price adjustment mechanism introduces uncertainty in final costs and requires robust monitoring to prevent excessive price increases.
Lack of detailed performance metrics makes it difficult to assess the efficiency and effectiveness of the fuel delivery.

Positive Signals

The award to a single contractor for a significant amount indicates a successful procurement for a critical resource.
The high number of bids (26) suggests a competitive market for this type of fuel, even with source exclusions.
The contract was awarded to Placid Refining Company LLC, contributing to the economic activity in Louisiana.

Sector Analysis

The petroleum refining industry (NAICS 324110) is a critical component of the energy sector, providing essential fuels for transportation, industry, and defense. The market for aviation and turbine fuels like JP8 is influenced by global oil prices, refining capacity, and geopolitical factors. This contract represents a significant procurement within the defense logistics supply chain, ensuring operational readiness for military assets that rely on this specific fuel type. Comparable spending benchmarks would involve analyzing other large-scale military fuel contracts or commercial bulk fuel purchases.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. The primary contractor, Placid Refining Company LLC, is likely a larger entity. The impact on the broader small business ecosystem would be indirect, potentially through supply chain relationships if small businesses are suppliers to the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA) for performance and financial oversight, respectively. The Inspector General of the Department of Defense would have jurisdiction over investigations of fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, which provide basic award information. However, detailed performance reports and audit findings are often not publicly accessible.

Related Government Programs

Defense Fuel Support Center (DFSC) procurements
JP5 Jet Fuel contracts
Bulk Petroleum purchases by DoD
Energy contracts for military readiness
Fixed-price with economic price adjustment contracts

Risk Flags

Potential for price volatility due to Economic Price Adjustment
Limited transparency on source exclusion justification
Dependence on a single contractor for a critical resource

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.3 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 $82.3 million.

What is the period of performance?

Start: 2009-03-25. End: 2010-04-30.

What was the specific justification for excluding certain sources in this 'full and open competition after exclusion of sources' award?

The provided data does not specify the exact reasons for excluding certain sources. This designation typically implies that while the solicitation was broadly advertised, specific potential bidders were deemed ineligible or their bids were not considered due to pre-defined criteria, such as national security concerns, proprietary technology, or specific performance requirements that only a limited number of entities could meet. Without further documentation from the Defense Logistics Agency (DLA) or the contracting officer's justification, the precise rationale remains unknown. Understanding this justification is crucial for assessing whether the exclusion was appropriate and if it potentially limited competitive pricing for taxpayers.

How did the economic price adjustment (EPA) clause impact the final cost of the JP8 fuel compared to the initial fixed price?

The economic price adjustment (EPA) clause in this contract allowed for modifications to the price based on fluctuations in specified economic factors, likely related to the cost of crude oil or refined petroleum products. The initial fixed price serves as a baseline, but the EPA would adjust this baseline upwards or downwards as market conditions changed during the contract period (March 2009 - April 2010). To determine the final cost impact, one would need access to the contract's specific EPA formula, the baseline price, and the market indices used for adjustment throughout the contract's duration. Without this detailed information, it's impossible to quantify the precise difference between the initial fixed price and the final amount paid due to EPA adjustments.

What was the average price per gallon or liter of JP8 fuel under this contract, and how does it compare to market rates at the time?

Calculating the average price per unit requires dividing the total award amount ($82,327,101.30) by the total quantity of fuel procured. The total quantity is not provided in the data. Assuming a standard volume for such contracts or accessing delivery records would be necessary. Furthermore, comparing this price to market rates at the time (2009-2010) would involve consulting historical fuel price indices (e.g., EIA data for jet fuel or military-specific fuel price reports). Without the quantity, a precise per-unit cost cannot be determined, making direct market comparison impossible from the given data alone.

What is the track record of Placid Refining Company LLC in fulfilling large-scale government fuel contracts, particularly for the Department of Defense?

Placid Refining Company LLC's track record in fulfilling large-scale government fuel contracts, especially for the Department of Defense, can be assessed by reviewing their contract history in public databases like FPDS. This specific contract award of $82.3 million in 2009-2010 indicates they have experience supplying significant volumes of critical fuel. Further investigation would involve searching for other DoD contracts awarded to Placid Refining, examining their performance ratings (if available), and looking for any past issues related to delivery, quality, or pricing on similar government contracts. A history of successful, on-time deliveries and competitive pricing would indicate reliability.

How does the $82.3 million award compare to historical spending on JP8 fuel by the Defense Logistics Agency?

To compare this $82.3 million award to historical spending, one would need to analyze the Defense Logistics Agency's (DLA) total expenditure on JP8 fuel over several preceding years. Publicly available data often shows annual spending trends for major categories. If DLA consistently spends hundreds of millions or billions annually on JP8, then this single contract, while substantial, might represent a typical portion of their overall fuel procurement. Conversely, if historical spending was significantly lower, this award could indicate an increase in demand, a change in procurement strategy, or a price escalation. Accessing DLA's historical budget and procurement reports would be necessary for a meaningful comparison.

What are the potential risks associated with relying on a single contractor for a significant portion of turbine fuel supply, even with competition?

Even with initial competition, relying heavily on a single contractor like Placid Refining Company LLC for a significant portion of turbine fuel supply carries inherent risks. These include potential supply chain disruptions due to unforeseen events affecting the contractor (e.g., refinery issues, labor strikes, natural disasters), price volatility if the economic price adjustment mechanism heavily favors the supplier, and reduced leverage for the government in future negotiations if the contractor becomes indispensable. While 26 bidders were initially considered, the actual performance relies on one entity. Monitoring the contractor's financial stability, operational capacity, and adherence to contract terms is crucial to mitigate these risks.

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 AFTER EXCLUSION OF SOURCES

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, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $82,327,101

Exercised Options: $82,327,101

Current Obligation: $82,327,101

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0482

IDV Type: IDC

Timeline