DoD Spent $19.9M on Jet Fuel with Alliance Aviation Management Ltd, Facing Potential Price Volatility

Contract Overview

Contract Amount: $19,903,191 ($19.9M)

Contractor: Alliance Aviation Management Ltd

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2015-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $13.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 158

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: JET A W/FSII

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76177

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $19.9 million to ALLIANCE AVIATION MANAGEMENT LTD for work described as: JET A W/FSII Key points: 1. Significant expenditure on a critical aviation fuel, JET A W/FSII. 2. Contract awarded under full and open competition, suggesting a competitive market. 3. Fixed Price with Economic Price Adjustment (EPA) introduces risk of price increases. 4. The sector is Petroleum and Petroleum Products Merchant Wholesalers, indicating a specialized market.

Value Assessment

Rating: fair

The total award of $19.9M over 4 years for jet fuel suggests a substantial volume. Without specific unit pricing benchmarks or comparison to similar contracts, assessing value is difficult. The EPA clause introduces uncertainty in the final cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Awarded under full and open competition, indicating multiple bidders participated. However, the Fixed Price with Economic Price Adjustment (EPA) clause may have limited the effectiveness of price discovery, as the final price is subject to market fluctuations.

Taxpayer Impact: Taxpayers are exposed to potential price increases due to the EPA clause, which could lead to spending exceeding initial projections if fuel prices rise significantly.

Public Impact

Ensures availability of essential jet fuel for Department of Defense operations. Competition potentially drove down initial pricing, though EPA adds future risk. Transparency in contracting is maintained through full and open competition. Economic price adjustments can shield the government from unexpected market downturns but expose it to upward trends.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause introduces price volatility risk.
Contract duration of 4 years may not fully capture market shifts.
Lack of specific unit cost data hinders precise value assessment.

Positive Signals

Awarded through full and open competition.
Contract supports critical defense logistics.
Established vendor with a history of performance (implied by contract award).

Sector Analysis

The petroleum products wholesale sector is subject to global commodity prices and geopolitical factors. A $19.9M contract for jet fuel represents a significant portion of spending within this niche, requiring careful monitoring of market trends.

Small Business Impact

The data does not indicate if 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 contract was awarded by the Defense Logistics Agency, a key entity for managing supply chains. Oversight would focus on monitoring fuel price indices and ensuring compliance with the EPA terms to manage taxpayer exposure.

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 (EPA) clause.
Potential for market price volatility in petroleum products.
Lack of detailed unit cost data for granular analysis.
Contract awarded during a period of fluctuating global energy prices.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.9 million to ALLIANCE AVIATION MANAGEMENT LTD. JET A W/FSII

Who is the contractor on this award?

The obligated recipient is ALLIANCE AVIATION MANAGEMENT LTD.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $19.9 million.

What is the period of performance?

Start: 2011-04-01. End: 2015-03-31.

What was the average per-unit cost of JET A W/FSII under this contract, and how does it compare to market benchmarks at the time of award and throughout the contract period?

The provided data does not include the average per-unit cost. To assess value, one would need to analyze the quantity of fuel purchased against the total award amount and compare this to prevailing market prices for JET A W/FSII during the contract's lifespan (2011-2015). The EPA clause complicates direct comparison, as the final price varied.

What specific economic factors are tied to the Economic Price Adjustment (EPA) clause, and what was the realized price variance due to these adjustments over the contract's duration?

The EPA clause likely ties adjustments to published fuel price indices (e.g., Platts, EIA data). Understanding the specific indices used is crucial. Analyzing historical fuel price data during the 2011-2015 period would reveal the extent to which the EPA increased or decreased the contract cost beyond the initial fixed price, highlighting the realized risk or benefit.

How effectively did the full and open competition process ensure competitive pricing, considering the inherent price volatility of petroleum products and the inclusion of an EPA clause?

Full and open competition theoretically maximizes the number of bidders, driving down initial prices. However, the EPA clause introduces future uncertainty. While competition may have secured a favorable base price, the long-term cost-effectiveness is contingent on how well the EPA formula reflects actual market movements and prevents excessive price escalations.

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: SP060010R0230

Offers Received: 158

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

Evaluated Preference: NONE

Contractor Details

Address: 2221 ALLIANCE BLVD STE 100, FORT WORTH, TX, 90

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

Financial Breakdown

Contract Ceiling: $19,903,191

Exercised Options: $19,903,191

Current Obligation: $19,903,191

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0045

IDV Type: IDC

Timeline