DoD spent $17.7M on fuel, with Falcon Fuels Inc. securing the contract under full and open competition

Contract Overview

Contract Amount: $17,715,555 ($17.7M)

Contractor: Falcon Fuels, Inc.

Awarding Agency: Department of Defense

Start Date: 2009-12-01

End Date: 2012-08-31

Contract Duration: 1,004 days

Daily Burn Rate: $17.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 48

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: GASOLINE AND DIESEL FUEL FOR VARIOUS LOCATIONS IN CA

Place of Performance

Location: PARAMOUNT, LOS ANGELES County, CALIFORNIA, 90723

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $17.7 million to FALCON FUELS, INC. for work described as: GASOLINE AND DIESEL FUEL FOR VARIOUS LOCATIONS IN CA Key points: 1. The contract value of $17.7 million over nearly three years suggests a significant but not excessive annual spend for fuel procurement. 2. Full and open competition indicates a potentially robust market for fuel suppliers, which can drive competitive pricing. 3. The fixed-price contract with economic price adjustment introduces some risk of cost escalation due to market fluctuations. 4. The contract's duration of approximately 1004 days (around 2.75 years) is a moderate term for a supply contract. 5. The North American Industry Classification System (NAICS) code 424720 points to a specialized wholesale distribution market for petroleum products. 6. The contract was awarded under the 'Other Direct Costs' (ODC) category, suggesting it's part of a larger project or service.

Value Assessment

Rating: good

The total award of $17.7 million for fuel over approximately 1004 days averages to about $5.7 million annually. This figure needs to be benchmarked against similar fuel supply contracts for military installations in California to fully assess value. Without specific per-gallon pricing or volume data, a precise value-for-money assessment is challenging, but the competitive nature of the award suggests a reasonable market price was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The data indicates 48 offers were received, demonstrating a highly competitive environment. This level of competition is generally favorable for price discovery and ensures the government receives proposals from a wide range of qualified vendors.

Taxpayer Impact: A competitive bidding process for fuel procurement helps ensure taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Military operations and readiness in California benefit from a reliable supply of gasoline and diesel fuel. The contract supports the logistical needs of the Department of Defense, ensuring fuel availability for vehicles and equipment. The geographic impact is concentrated in California, where the fuel will be delivered and utilized. The contract supports jobs within the petroleum distribution and logistics sector, primarily at Falcon Fuels, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if fuel prices increase significantly beyond projections.
Reliance on a single primary contractor, even if competitively selected, can create vulnerabilities if supply chains are disrupted.
The 'Other Direct Costs' classification might obscure the full scope and cost of the fuel within a larger program.

Positive Signals

Full and open competition with 48 offers suggests a healthy market and likely competitive pricing.
The fixed-price component provides some cost certainty, with adjustments only for documented economic factors.
The Defense Logistics Agency's involvement indicates adherence to established procurement and oversight processes for essential supplies.

Sector Analysis

The petroleum and petroleum products wholesale distribution sector is critical for supplying energy to various industries, including government and defense. This contract falls within the merchant wholesale segment, focusing on the distribution of fuels. Market size for fuel distribution is substantial, driven by transportation and industrial demand. This contract represents a specific, albeit significant, procurement within this broader market, serving a key government customer.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Falcon Fuels, Inc. is not explicitly identified as a small business in the provided data. Therefore, the direct impact on small business set-asides is nil. However, the prime contractor may engage small businesses for subcontracting opportunities related to fuel delivery, logistics, or maintenance, though this is not detailed.

Oversight & Accountability

The contract is managed by the Defense Logistics Agency (DLA), a primary agency for logistics support within the DoD. DLA has established oversight mechanisms for supply contracts, including performance monitoring and compliance checks. The fixed-price with economic price adjustment structure requires careful monitoring of market price indices to ensure fair adjustments. Transparency is generally maintained through contract award databases, though specific performance metrics are not detailed here.

Related Government Programs

Defense Logistics Agency Fuel Contracts
DoD Petroleum Procurement
California Fuel Supply Contracts
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Potential for cost overruns due to economic price adjustment clause.
Dependence on a single supplier for critical fuel needs.
Lack of specific per-unit cost data for detailed value analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.7 million to FALCON FUELS, INC.. GASOLINE AND DIESEL FUEL FOR VARIOUS LOCATIONS IN CA

Who is the contractor on this award?

The obligated recipient is FALCON FUELS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.7 million.

What is the period of performance?

Start: 2009-12-01. End: 2012-08-31.

What is the historical spending pattern for gasoline and diesel fuel by the Department of Defense in California?

Analyzing historical spending requires access to broader contract databases. However, the $17.7 million awarded to Falcon Fuels, Inc. for a period of approximately 1004 days (ending August 31, 2012) suggests an average annual expenditure of roughly $5.7 million for this specific contract. To understand the overall pattern, one would need to aggregate spending across all DoD fuel contracts in California over multiple fiscal years, identifying trends in volume, price per unit, and the number of awarded contracts. This would reveal if current spending is consistent with past levels or if there are significant deviations indicating changes in demand, pricing strategies, or supplier base.

How does the price per gallon for this contract compare to market rates during the contract period?

The provided data does not include the price per gallon or the total volume of fuel procured under this contract, making a direct comparison to market rates impossible. The contract type, 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA), suggests that the base price was fixed, but adjustments were allowed based on fluctuations in specified economic indicators (e.g., fuel price indices). To assess value, one would need to obtain the contract's specific economic price adjustment formula and compare the adjusted prices paid against benchmark indices like the EIA's retail gasoline and diesel prices for California during the contract's term (December 1, 2009 - August 31, 2012). Without this granular data, assessing the fairness of the price paid is speculative.

What is Falcon Fuels, Inc.'s track record with government contracts, particularly with the Defense Logistics Agency?

Falcon Fuels, Inc. was awarded this $17.7 million contract by the Defense Logistics Agency (DLA) for fuel supply in California. A comprehensive track record analysis would involve searching federal procurement databases (like FPDS or SAM.gov) for all contracts awarded to Falcon Fuels, Inc. This would reveal the total value of contracts held, the agencies involved, contract types, performance history (if available through ratings or past performance reviews), and any instances of contract disputes or terminations. Understanding their history with DLA specifically would indicate their reliability and experience in meeting the agency's demanding logistical requirements for fuel.

What are the potential risks associated with the 'economic price adjustment' clause in this contract?

The primary risk associated with the 'economic price adjustment' (EPA) clause is cost escalation for the government. While intended to protect the contractor from unforeseen market volatility, it allows the contract price to increase if specified economic indicators rise. If fuel prices experience significant upward trends during the contract period (December 2009 - August 2012), the total cost to the DoD could exceed the initial estimated value. Conversely, if prices fall, the EPA clause might limit the government's ability to benefit from lower market rates, depending on the specific terms. Effective oversight requires diligent monitoring of the relevant price indices to ensure adjustments are calculated correctly and are justified.

How does the number of bids (48) impact the perceived value and risk for this fuel supply contract?

Receiving 48 bids for this contract signifies a highly competitive procurement process under 'full and open competition.' This large number of offers generally suggests that the market is robust and that Falcon Fuels, Inc. likely submitted a competitive bid to win the award. From a value perspective, strong competition typically drives prices down, increasing the likelihood that the government secured a fair market price. In terms of risk, a broad base of bidders reduces the risk of vendor lock-in or supply disruption, as there are numerous potential alternative suppliers should issues arise with the primary contractor. It also indicates a healthy ecosystem of fuel suppliers capable of meeting DoD requirements.

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: SP060009R0203

Offers Received: 48

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

Evaluated Preference: NONE

Contractor Details

Address: 7300 ALONDRA BLVD STE 204, PARAMOUNT, CA, 44

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Nonprofit Organization, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,715,555

Exercised Options: $17,715,555

Current Obligation: $17,715,555

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060010D4513

IDV Type: IDC

Timeline