DoD's $521M JP8 Turbine Fuel Contract Awarded to U.S. Oil Trading LLC

Contract Overview

Contract Amount: $52,151,010 ($52.2M)

Contractor: U.S. OIL Trading LLC

Awarding Agency: Department of Defense

Start Date: 2009-08-13

End Date: 2010-10-30

Contract Duration: 443 days

Daily Burn Rate: $117.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 19

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: TURBINE FUEL, AVIAITON, JP8

Place of Performance

Location: TACOMA, PIERCE County, WASHINGTON, 98421

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $52.2 million to U.S. OIL TRADING LLC for work described as: TURBINE FUEL, AVIAITON, JP8 Key points: 1. Significant contract value of $521.5 million for aviation turbine fuel. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Risk is moderate due to fuel price volatility and fixed-price with economic adjustment terms. 4. Sector is Defense Logistics, a critical area for military operations.

Value Assessment

Rating: good

The contract value of $521.5 million is substantial for aviation fuel. Benchmarking against similar DoD fuel contracts would be necessary for a precise value assessment, but the full and open competition suggests a reasonable price discovery process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically allows for the widest range of potential bidders and can lead to more competitive pricing. The fixed-price with economic price adjustment structure aims to balance cost certainty for the government with protection against market fluctuations for the contractor.

Taxpayer Impact: The use of full and open competition is generally favorable for taxpayers as it promotes a competitive environment. However, the economic price adjustment clause introduces a variable that could impact the final cost to taxpayers based on market conditions.

Public Impact

Ensures a critical fuel supply for military aviation operations. Supports the Defense Logistics Agency's mission to provide logistical support. Impacts the aviation fuel market through a large procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment may lead to higher costs if fuel prices surge.
Dependence on a single contractor for a critical resource.
Potential for supply chain disruptions affecting fuel availability.

Positive Signals

Full and open competition can drive better pricing.
Contract duration of 443 days ensures sustained supply.
Awarded to a known entity, U.S. Oil Trading LLC.

Sector Analysis

This contract falls within the energy sector, specifically focusing on petroleum products essential for military aviation. Defense Logistics Agency contracts for fuel are common and benchmarked against market prices and other government procurements.

Small Business Impact

The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The Defense Logistics Agency is responsible for overseeing this contract. Standard oversight mechanisms for fuel procurement contracts would apply, including monitoring delivery, quality, and adherence to pricing adjustments.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Price volatility of aviation fuel.
Potential for supply chain disruptions.
Contractor's ability to meet demand consistently.
Effectiveness of the economic price adjustment mechanism.
Geopolitical factors impacting global oil prices.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.2 million to U.S. OIL TRADING LLC. TURBINE FUEL, AVIAITON, JP8

Who is the contractor on this award?

The obligated recipient is U.S. OIL TRADING LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $52.2 million.

What is the period of performance?

Start: 2009-08-13. End: 2010-10-30.

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?

Analyzing historical JP8 prices from August 2009 to October 2010 is crucial. The economic price adjustment clause would have allowed the contract price to fluctuate with market conditions. Understanding the magnitude of these fluctuations and the specific formula used for adjustment would reveal the actual cost impact on the government compared to a fixed-price contract.

What were the specific criteria used to evaluate bids under the full and open competition, and how did U.S. Oil Trading LLC meet these criteria to secure the award?

Under full and open competition, evaluation criteria typically include price, technical capability, past performance, and socioeconomic factors. For this contract, the Defense Logistics Agency would have assessed U.S. Oil Trading LLC's ability to reliably supply JP8 fuel, their pricing structure, and their track record. The award suggests they offered the best value based on the pre-defined evaluation factors.

What is the strategic importance of this fuel supply to the Department of Defense, and what contingency plans are in place if U.S. Oil Trading LLC faces supply disruptions?

JP8 is a critical fuel for various military aircraft and ground vehicles, essential for operational readiness. The DoD likely has contingency plans, potentially involving alternative suppliers or strategic reserves, to mitigate risks associated with supply disruptions. The duration and value of this contract suggest a significant reliance on this specific supply chain.

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: SP060009R0161

Offers Received: 19

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

Evaluated Preference: NONE

Contractor Details

Address: 3001 MARSHALL AVE, TACOMA, WA, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $52,151,010

Exercised Options: $52,151,010

Current Obligation: $52,151,010

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0490

IDV Type: IDC

Timeline