DoD's $32.7M Jet Fuel Contract with Jaron Corporation: Fixed Price with Economic Adjustment
Contract Overview
Contract Amount: $32,709,050 ($32.7M)
Contractor: Jaron Corporation
Awarding Agency: Department of Defense
Start Date: 2009-06-08
End Date: 2012-06-30
Contract Duration: 1,118 days
Daily Burn Rate: $29.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 48
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: JET FUEK
Place of Performance
Location: SOUTH BEND, ST. JOSEPH County, INDIANA, 46660
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $32.7 million to JARON CORPORATION for work described as: JET FUEK Key points: 1. Contract awarded to Jaron Corporation for jet fuel, totaling $32.7 million. 2. Utilized full and open competition, suggesting a competitive bidding process. 3. Fixed Price with Economic Price Adjustment (EPA) contract type introduces potential price volatility. 4. The contract falls within the Petroleum and Petroleum Products Merchant Wholesalers sector.
Value Assessment
Rating: fair
The contract's fixed price with economic price adjustment introduces uncertainty in final cost. Benchmarking against similar fuel contracts is difficult without specific EPA clauses and market conditions at the time of award.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically fosters competitive pricing. However, the EPA clause may have limited the extent of price discovery by allowing adjustments based on market fluctuations.
Taxpayer Impact: Taxpayer exposure is influenced by the effectiveness of the EPA clause in managing fuel price volatility and the initial competitive bid.
Public Impact
Ensures supply of critical jet fuel for Department of Defense operations. Potential for increased costs to taxpayers due to economic price adjustments. Competition mechanism aimed to secure favorable pricing, but EPA introduces risk. Contract duration of over 3 years (1118 days) indicates a significant, long-term need.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic Price Adjustment clause can lead to cost overruns.
- Lack of specific unit cost benchmark makes direct comparison difficult.
- Contract awarded in 2009, market conditions may have significantly changed.
Positive Signals
- Awarded through full and open competition.
- Contract supports essential defense logistics.
Sector Analysis
This contract is within the Petroleum and Petroleum Products Merchant Wholesalers sector. Spending in this sector is critical for national defense and transportation infrastructure, with prices often subject to global commodity market fluctuations.
Small Business Impact
The data does not indicate whether small businesses were involved as subcontractors or prime contractors. Further analysis would be needed to determine small business participation.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a component of the DoD. Oversight would typically involve monitoring contract performance, adherence to EPA terms, and delivery schedules.
Related Government Programs
- Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment introduces cost uncertainty.
- Lack of detailed performance data.
- Contract awarded over a decade ago.
- No explicit mention of small business participation.
Tags
petroleum-and-petroleum-products-merchan, department-of-defense, in, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.7 million to JARON CORPORATION. JET FUEK
Who is the contractor on this award?
The obligated recipient is JARON CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $32.7 million.
What is the period of performance?
Start: 2009-06-08. End: 2012-06-30.
What was the actual price impact of the Economic Price Adjustment clause over the contract's life?
The actual price impact of the EPA clause is not detailed in the provided data. To assess this, one would need to examine the contract's specific adjustment formula and compare the final awarded prices against the initial fixed price components and prevailing market rates for jet fuel during the contract period (2009-2012).
How did the competitive bidding process influence the initial fixed price component?
The full and open competition likely drove down the initial fixed price component of the contract. However, the inclusion of an EPA clause might have allowed bidders to incorporate a higher baseline fixed price to mitigate their own risk associated with potential future price increases, potentially offsetting some of the competitive advantage.
What is the risk associated with the 'Petroleum and Petroleum Products Merchant Wholesalers' sector for government contracts?
The primary risk in this sector is price volatility due to global supply and demand, geopolitical events, and currency fluctuations. For government contracts, this translates to potential budget overruns if not adequately managed through contract clauses like EPA, and the need for robust market monitoring to ensure fair pricing.
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: ROSELAND SQUARE, SOUTH BEND, IN, 02
Business Categories: Category Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $32,709,050
Exercised Options: $32,709,050
Current Obligation: $32,709,050
Contract Characteristics
Multi-Year Contract: Yes
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060009D4529
IDV Type: IDC
Timeline
Start Date: 2009-06-08
Current End Date: 2012-06-30
Potential End Date: 2012-06-30 00:00:00
Last Modified: 2009-10-05
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