DoD spent $48.4M on petroleum products via full and open competition, with 4 contracts awarded

Contract Overview

Contract Amount: $48,424,992 ($48.4M)

Contractor: Asia Resource Partners PTE. Ltd.

Awarding Agency: Department of Defense

Start Date: 2010-07-01

End Date: 2014-07-31

Contract Duration: 1,491 days

Daily Burn Rate: $32.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FUEL OIL BURNER (FJ1); GASOLINE, MID UNL (MUM)

Plain-Language Summary

Department of Defense obligated $48.4 million to ASIA RESOURCE PARTNERS PTE. LTD. for work described as: FUEL OIL BURNER (FJ1); GASOLINE, MID UNL (MUM) Key points: 1. Value for money appears reasonable given the fixed-price with economic price adjustment structure, allowing for market fluctuations. 2. Full and open competition suggests a healthy market for petroleum products, potentially driving competitive pricing. 3. The contract duration of nearly 5 years indicates a sustained need for these petroleum products by the Defense Logistics Agency. 4. The award to ASIA RESOURCE PARTNERS PTE. LTD. represents a significant portion of the total contract value. 5. The North American Industry Classification System (NAICS) code 424720 points to a well-defined market segment for petroleum wholesalers. 6. The contract type (FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT) aims to balance cost certainty with market volatility.

Value Assessment

Rating: good

The total contract value of $48.4 million over approximately 5 years for petroleum products appears within a reasonable range for a large government procurement. The fixed-price with economic price adjustment (FPEPA) contract type is standard for commodities subject to market fluctuations, aiming to provide cost stability while accounting for price changes. Benchmarking against similar large-scale fuel procurements by the Department of Defense would provide a more precise value assessment, but the scale and competition level suggest a fair market price was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 4 bids suggests a competitive environment for the supply of these petroleum products. A higher number of bidders generally leads to more robust price discovery and potentially lower prices for the government. The fact that the Defense Logistics Agency opted for full and open competition implies confidence in the market's ability to supply the required goods.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for receiving the best value through competitive bidding, driving down costs and ensuring a wider pool of suppliers can compete for government business.

Public Impact

Military operations and readiness are supported through the reliable supply of essential fuels. The Defense Logistics Agency benefits from a consistent and competitive source for petroleum products. The contract supports the broader logistics and supply chain infrastructure critical for national defense. Workforce implications are likely indirect, supporting jobs within the petroleum distribution and logistics sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to economic price adjustment clause, though mitigated by competition.
Dependence on a single primary contractor (ASIA RESOURCE PARTNERS PTE. LTD.) for a significant portion of the value.
Geopolitical factors impacting global oil prices could affect contract costs.

Positive Signals

Awarded under full and open competition, indicating a robust market.
Fixed-price element provides some cost control for the government.
Long-term contract (nearly 5 years) suggests stable supply chain management.

Sector Analysis

The petroleum and petroleum products merchant wholesalers sector (NAICS 424720) is a critical component of the energy supply chain, supporting various industries including defense, transportation, and commercial operations. The market is characterized by global commodity pricing, significant infrastructure requirements, and susceptibility to geopolitical events. Government procurements, particularly by agencies like the Defense Logistics Agency, represent substantial demand within this sector, often influencing market dynamics and requiring specialized logistical capabilities. Comparable spending benchmarks would typically be assessed against other large-scale fuel contracts awarded by federal agencies.

Small Business Impact

There is no indication that this contract included small business set-asides. The primary awardee, ASIA RESOURCE PARTNERS PTE. LTD., is likely a large entity. Subcontracting opportunities for small businesses may exist within the supply chain or logistics, but are not explicitly detailed in the provided data. The overall impact on the small business ecosystem for petroleum products would depend on the extent to which larger prime contractors engage small businesses for specialized services or supplies.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency's contracting and program management offices. Accountability measures are inherent in the contract terms, including performance standards and payment schedules tied to delivery. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Fuel Supply Center
Military Fuel Procurement
Petroleum Product Contracts
Logistics and Supply Chain Management

Risk Flags

Potential for price escalation due to economic price adjustment.
Concentration of contract value with a single awardee.
Dependence on global petroleum market stability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.4 million to ASIA RESOURCE PARTNERS PTE. LTD.. FUEL OIL BURNER (FJ1); GASOLINE, MID UNL (MUM)

Who is the contractor on this award?

The obligated recipient is ASIA RESOURCE PARTNERS PTE. LTD..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $48.4 million.

What is the period of performance?

Start: 2010-07-01. End: 2014-07-31.

What is the track record of ASIA RESOURCE PARTNERS PTE. LTD. with the Department of Defense?

ASIA RESOURCE PARTNERS PTE. LTD. has been awarded multiple contracts by the Department of Defense, including this significant procurement for petroleum products. Analyzing their contract history reveals a pattern of supplying fuel and related services. Further investigation into past performance reviews, any past disputes, or contract modifications would provide a more comprehensive understanding of their reliability and performance with the DoD. The existence of this large contract suggests a level of trust and proven capability in meeting the agency's requirements, but a deeper dive into specific past performance metrics is recommended for a complete assessment.

How does the $48.4 million total contract value compare to similar petroleum procurements by the DoD?

The $48.4 million total contract value for petroleum products over approximately five years is a substantial procurement, indicative of significant operational needs. To benchmark this value effectively, it would be compared against other large-scale fuel contracts awarded by the Defense Logistics Agency (DLA) or other DoD components for similar product types (e.g., jet fuel, diesel, gasoline) and contract durations. Factors such as geographic scope, specific product grades, and market conditions at the time of award influence comparability. Without direct access to a database of comparable contracts, it's challenging to provide an exact comparison, but the scale suggests it aligns with major federal fuel supply agreements.

What are the primary risks associated with the 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' contract type for this procurement?

The primary risk associated with the 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) contract type for petroleum products lies in the potential for significant price increases due to market volatility. While the fixed-price component offers some cost certainty, the economic price adjustment (EPA) clause allows the contractor to pass on increases in the cost of raw materials (crude oil, refining costs) and other economic factors. This can lead to higher-than-anticipated expenditures for the government if global energy prices surge. Conversely, the government benefits if prices decrease, as the EPA can also lead to price reductions. The risk is managed through careful negotiation of the EPA formula and monitoring of market indices.

How effective has the Defense Logistics Agency been in managing its petroleum supply contracts over the past decade?

The Defense Logistics Agency (DLA) is the primary entity responsible for procuring and supplying fuel to the U.S. military. Over the past decade, DLA has generally been effective in ensuring fuel availability, which is critical for national security and global operations. They manage a complex global supply chain and utilize various contract types, including FPEPA, to balance cost and availability. Effectiveness can be measured by metrics such as on-time delivery rates, cost efficiency relative to market benchmarks, and the ability to adapt to supply disruptions. While specific performance data for every contract isn't publicly detailed, DLA's consistent ability to fuel military operations suggests a high degree of operational effectiveness in managing these critical procurements.

What is the historical spending trend for petroleum products by the Department of Defense?

Historical spending on petroleum products by the Department of Defense has consistently been in the billions of dollars annually, reflecting the vast fuel requirements of military operations worldwide. Spending fluctuates based on global oil prices, geopolitical events, and the level of military engagement. Agencies like the Defense Logistics Agency manage these procurements, and their total outlays for fuel represent a significant portion of the DoD's operational budget. Analyzing historical data from sources like the Federal Procurement Data System (FPDS) would show trends, peaks, and troughs in spending, often correlating with major conflicts or shifts in energy markets.

What are the implications of awarding a large portion of the contract value to ASIA RESOURCE PARTNERS PTE. LTD.?

Awarding a significant portion of the $48.4 million contract value to ASIA RESOURCE PARTNERS PTE. LTD. implies that this company was deemed the most capable or offered the best value for the specified petroleum products. This concentration of value with one contractor can streamline management and ensure a consistent supply chain partner. However, it also increases reliance on that single entity. If ASIA RESOURCE PARTNERS PTE. LTD. faces performance issues, supply disruptions, or financial instability, it could directly impact the DoD's fuel availability. The government mitigates this by including performance clauses and potentially having contingency plans, but the concentration itself represents a specific risk factor.

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

Offers Received: 4

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

Evaluated Preference: NONE

Contractor Details

Parent Company: ARP Holdings PTE. Ltd. (UEI: 595310437)

Address: 16 RAFFLES QUAY, SINGAPORE

Business Categories: Category Business, Foreign Owned, International Organization, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $48,424,992

Exercised Options: $48,424,992

Current Obligation: $48,424,992

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060010D1259

IDV Type: IDC

Timeline