DoD's $37.3M fuel contract with Petroleum Traders Corp awarded under full and open competition

Contract Overview

Contract Amount: $37,344,775 ($37.3M)

Contractor: Petroleum Traders Corp

Awarding Agency: Department of Defense

Start Date: 2009-06-01

End Date: 2012-05-31

Contract Duration: 1,095 days

Daily Burn Rate: $34.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 48

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: GASOHOL REGULAR UNLEADED, SUMMER ULTRA LOW SULFUR DIESEL, WINTER ULTRA LOW SULFUR DIESEL, TEXAS LOW EMISSION ULTRA LOW SULFUR DIESEL, BIODIESEL B20, RED-DYED ULTRA LOW SULFUR DIESEL

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46804

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $37.3 million to PETROLEUM TRADERS CORP for work described as: GASOHOL REGULAR UNLEADED, SUMMER ULTRA LOW SULFUR DIESEL, WINTER ULTRA LOW SULFUR DIESEL, TEXAS LOW EMISSION ULTRA LOW SULFUR DIESEL, BIODIESEL B20, RED-DYED ULTRA LOW SULFUR DIESEL Key points: 1. Contract awarded to a single entity for a broad range of fuel products. 2. Fixed-price contract with economic price adjustment suggests potential for cost fluctuations. 3. Contract duration of 1095 days indicates a significant, long-term supply agreement. 4. Awarded by the Defense Logistics Agency, a key procurement arm for military logistics. 5. Geographic scope limited to Indiana, suggesting a regional fuel supply focus. 6. No small business set-aside, indicating the primary award was not specifically targeted for small businesses.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific unit pricing and market data for the period. The fixed-price with economic price adjustment (FPEPA) structure can introduce volatility, making direct comparisons difficult. However, the scale of the award suggests a substantial volume of fuel was procured, and the competition level (full and open) should theoretically drive competitive pricing. Further analysis would require detailed historical fuel price data for Indiana during the contract period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of 48 bids suggests a robust competitive environment for this fuel supply requirement. A high number of bidders generally supports price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: The extensive competition for this fuel contract likely resulted in a more cost-effective outcome for taxpayers, as multiple suppliers vied to win the award.

Public Impact

Military installations in Indiana likely benefited from a reliable supply of various fuel types. Services delivered include the provision of regular unleaded gasoline and multiple grades of diesel fuel. Geographic impact is concentrated within Indiana, supporting regional fuel needs. Workforce implications are indirect, primarily supporting the logistics and distribution of petroleum products.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause introduces uncertainty in final cost.
Contract duration of three years may not fully capture market price shifts.
Limited geographic scope might exclude potentially more competitive suppliers outside Indiana.

Positive Signals

Full and open competition with 48 bids indicates a healthy market.
Award to a specialized petroleum wholesaler suggests expertise in fuel supply.
Fixed-price element provides some cost certainty before adjustments.

Sector Analysis

The petroleum and petroleum products merchant wholesalers sector is critical for energy supply chains. This contract falls within the wholesale distribution of fuels, a segment characterized by fluctuating commodity prices and significant logistical operations. The Defense Logistics Agency (DLA) is a major player in procuring fuel for military operations globally, and contracts like this are essential for maintaining readiness. Comparable spending benchmarks would involve analyzing other DLA fuel contracts or large-scale commercial fuel procurement agreements.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary award was made to a large business or that small business participation was not a specific contractual objective for this procurement. The impact on the small business ecosystem is likely minimal unless Petroleum Traders Corp engages them as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency's contracting officers and quality assurance personnel. Accountability measures are embedded in the contract terms, including delivery schedules and fuel quality specifications. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Department of Defense Energy Procurement
Petroleum Product Wholesale Distribution
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Economic Price Adjustment Clause
Long-Term Contract Duration
Single Award to Large Business

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.3 million to PETROLEUM TRADERS CORP. GASOHOL REGULAR UNLEADED, SUMMER ULTRA LOW SULFUR DIESEL, WINTER ULTRA LOW SULFUR DIESEL, TEXAS LOW EMISSION ULTRA LOW SULFUR DIESEL, BIODIESEL B20, RED-DYED ULTRA LOW SULFUR DIESEL

Who is the contractor on this award?

The obligated recipient is PETROLEUM TRADERS CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.3 million.

What is the period of performance?

Start: 2009-06-01. End: 2012-05-31.

What was the historical spending pattern for fuel by the Defense Logistics Agency in Indiana prior to this contract?

Analyzing historical spending patterns for fuel by the Defense Logistics Agency (DLA) in Indiana before June 2009 would require access to detailed procurement data from sources like the Federal Procurement Data System (FPDS). Generally, DLA's fuel procurement is substantial and consistent, driven by the continuous operational needs of military bases. Spending levels can fluctuate based on geopolitical events, global oil prices, and specific military exercises or deployments. Without specific historical data for Indiana, it's difficult to provide precise figures, but DLA consistently ranks as one of the largest federal buyers of petroleum products, with significant regional distribution networks.

How did the economic price adjustment (EPA) clause impact the final cost of fuel under this contract compared to a fixed-price contract?

The economic price adjustment (EPA) clause in this contract allowed for modifications to the price based on fluctuations in specified market indices, typically related to fuel costs. If market prices for the types of fuel procured increased significantly during the contract period (June 2009 - May 2012), the EPA would have led to higher final costs for the government compared to a firm fixed-price contract. Conversely, if prices decreased, the EPA could have resulted in lower costs. The primary impact is the transfer of some price risk from the contractor to the government, providing the contractor with a degree of protection against volatile market conditions while potentially increasing the government's expenditure.

What is the typical profit margin for petroleum wholesalers like Petroleum Traders Corp on government contracts?

Determining the exact profit margin for Petroleum Traders Corp on this specific government contract is not publicly available. However, profit margins in the wholesale petroleum distribution sector can vary widely based on market conditions, operational efficiency, volume, and the specific terms of the contract. Government contracts, especially those with full and open competition and fixed-price elements (even with EPA), often aim for competitive pricing that may yield moderate profit margins. Industry averages for wholesale fuel distribution might range from low single digits to potentially higher percentages for specialized services or riskier markets, but government contracts often prioritize cost-effectiveness for the buyer.

Were there any performance issues or disputes reported by the Defense Logistics Agency with Petroleum Traders Corp during the contract period?

Information regarding specific performance issues or disputes between the Defense Logistics Agency (DLA) and Petroleum Traders Corp under this particular contract (Award ID: 424720) is not readily available in public databases. Contract performance is typically monitored by DLA contracting officers and quality assurance representatives. While most government contracts are executed without significant issues, disputes can arise over delivery, quality, or pricing adjustments. If major issues occurred, they might be documented in contract performance reports or legal filings, but such details are often not publicly disseminated unless they lead to significant contractual actions or litigation.

How does the volume of fuel procured under this contract compare to the total fuel needs of the DoD in Indiana?

The provided data indicates a total award amount of $37,344,775 for fuel over a 1095-day period (approximately 3 years). To compare this to the total fuel needs of the DoD in Indiana, one would need to estimate the daily or annual fuel consumption of all DoD installations within the state. This includes fuel for vehicles, aircraft, generators, and heating systems. Given the significant number of bids (48) and the substantial award value, it suggests this contract likely covered a major portion, if not the entirety, of the DoD's bulk fuel requirements in Indiana for the specified period, particularly for ground transportation and potentially some operational support.

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: SP060008R0217

Offers Received: 48

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

Evaluated Preference: NONE

Contractor Details

Address: 7120 POINTE INVERNESS WY, FORT WAYNE, IN, 03

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

Financial Breakdown

Contract Ceiling: $37,345,634

Exercised Options: $37,345,634

Current Obligation: $37,344,775

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D4519

IDV Type: IDC

Timeline