DoD's $39.4M Jet Fuel Contract Awarded to EPIC AVIATION, LLC Shows Moderate Price Variance

Contract Overview

Contract Amount: $39,429,386 ($39.4M)

Contractor: Epic Aviation, LLC

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2015-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $27.0K/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/O FSII JET A W/FSII

Place of Performance

Location: MESA, MARICOPA County, ARIZONA, 85212

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $39.4 million to EPIC AVIATION, LLC for work described as: JET A W/O FSII JET A W/FSII Key points: 1. The contract utilized a fixed-price structure with economic price adjustments, allowing for fluctuations based on market conditions. 2. Competition was robust, with 158 bids received, suggesting a healthy market for aviation fuel supply. 3. The contract duration of 1460 days (4 years) indicates a significant, long-term commitment by the Defense Logistics Agency. 4. The award was made under full and open competition, ensuring the widest possible participation. 5. The geographic location of the award in Arizona (AZ) may reflect strategic positioning for military operations in the region. 6. The absence of small business set-aside flags suggests this contract did not prioritize small business participation directly.

Value Assessment

Rating: fair

The contract's total value of $39.4 million over four years averages to approximately $9.85 million annually. Without specific benchmarks for JET A fuel prices with and without FSII (Fuel System Icing Inhibitor) in Arizona during the contract period (2011-2015), a precise value-for-money assessment is challenging. However, the presence of economic price adjustments indicates an expectation of market volatility. Further analysis would require comparing the actual price paid per gallon against prevailing market rates and other government contracts for similar fuel types and delivery locations during the same period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, a process designed to solicit bids from all responsible sources. The high number of bids received (158) strongly suggests a competitive marketplace for aviation fuel. This level of competition is generally favorable for price discovery, as it incentivizes bidders to offer their most competitive pricing to secure the award. The agency likely benefited from a wide range of offers, potentially leading to a more favorable final price than if competition had been limited.

Taxpayer Impact: The extensive competition indicates that taxpayer dollars were likely used efficiently, as multiple companies vied to provide the fuel at the best possible terms. This broad participation helps prevent price inflation that can occur in less competitive environments.

Public Impact

Military aviation units operating in or transiting through Arizona and surrounding regions likely benefited from a reliable supply of essential jet fuel. The contract supported the operational readiness of Department of Defense aircraft by ensuring fuel availability. The primary service delivered was the provision of JET A fuel, with and without FSII, meeting specific military grade requirements. The geographic impact is centered in Arizona, potentially supporting air bases and logistical hubs within the state. The contract supported jobs within the fuel supply and logistics sector, particularly for the awarded contractor, EPIC AVIATION, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if market prices surged significantly.
Reliance on a single contractor for a critical fuel supply could pose a risk if the contractor faced operational disruptions.
Geographic concentration in Arizona might limit surge capacity or alternative sourcing options in emergencies outside the immediate area.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
High number of bids (158) suggests a robust and responsive market for aviation fuel.
Contract duration of 4 years provides stability and predictability for fuel supply planning.
The Defense Logistics Agency's involvement suggests adherence to established procurement and logistical standards.

Sector Analysis

The petroleum and petroleum products wholesale sector is critical for supporting numerous industries, including aviation. The Defense Logistics Agency (DLA) is a major procurer of fuel for military operations worldwide. This contract falls within the broader category of energy and logistics services, where government agencies often rely on large-scale contracts to ensure supply chain security and operational capability. Benchmarking this contract's value against other DLA fuel procurements or similar commercial aviation fuel contracts would provide further context on its economic efficiency.

Small Business Impact

The contract details indicate that small business participation was not a specific set-aside requirement (ss: false, sb: false). This suggests that the primary focus was on securing the best value through open competition rather than reserving a portion for small businesses. While EPIC AVIATION, LLC may utilize small businesses as subcontractors, the contract itself does not mandate it. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's subcontracting decisions rather than a direct set-aside.

Oversight & Accountability

The contract was managed by the Defense Logistics Agency (DLA), a primary combat support agency responsible for providing logistics, acquisition, and sustainment services. DLA has established oversight mechanisms for fuel contracts, including quality assurance and performance monitoring. The use of a fixed-price contract with economic price adjustments requires careful monitoring of market indices to ensure fair pricing. Inspector General oversight within the Department of Defense would apply to ensure compliance and prevent fraud, waste, and abuse throughout the contract lifecycle.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Department of Defense Aviation Fuel Procurement
JET A Fuel Supply Contracts
Petroleum Products Merchant Wholesalers Contracts

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.4 million to EPIC AVIATION, LLC. JET A W/O FSII JET A W/FSII

Who is the contractor on this award?

The obligated recipient is EPIC AVIATION, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $39.4 million.

What is the period of performance?

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

What was the track record of EPIC AVIATION, LLC prior to this award?

Information regarding EPIC AVIATION, LLC's specific track record prior to this 2011 award is not detailed in the provided data snippet. However, as a recipient of a significant Department of Defense contract, it can be inferred that the company met the necessary qualifications and demonstrated the capacity to fulfill the requirements. Government contracting databases and past performance reviews would typically contain more granular details on a contractor's history, including previous awards, performance ratings, and any disputes or challenges encountered. For a comprehensive understanding, a review of federal procurement records and contractor performance systems would be necessary.

How does the average annual value of this contract compare to similar DoD fuel contracts?

The average annual value of this contract is approximately $9.85 million ($39.4M / 4 years). To compare this to similar DoD fuel contracts, one would need access to a database of historical DLA or DoD fuel procurements. Key comparison points would include the type of fuel (JET A with/without FSII), the delivery location (e.g., specific bases or regions), the contract type (fixed-price with EPA), and the contract duration. Without this comparative data, it's difficult to definitively state whether $9.85 million annually represents a high, low, or average expenditure for such services. Factors like volume requirements, market fluctuations, and specific service level agreements also play a crucial role in determining value.

What were the primary risks associated with this contract, and how were they mitigated?

Primary risks associated with this contract likely included fuel price volatility, supply chain disruptions, and ensuring consistent quality and delivery. The 'economic price adjustment' clause was a mechanism to mitigate the risk of price fluctuations for both the government and the contractor, allowing prices to adjust based on market indices. Supply chain risks might be mitigated by the contractor's established logistics network and the DLA's contingency planning. Quality assurance protocols and performance monitoring would address risks related to fuel specifications and delivery timeliness. The large number of bidders also potentially mitigates risk by ensuring alternative sources if the primary contractor falters.

How effective was the 'full and open competition' strategy in achieving the best value for this contract?

The 'full and open competition' strategy, evidenced by 158 bids, is generally considered highly effective in achieving best value for commodity procurements like fuel. This approach maximizes the pool of potential offerors, fostering a competitive environment where contractors are incentivized to submit their most aggressive pricing and favorable terms. The high number of bids suggests that the market had sufficient capacity and interest, allowing the DLA to select from a wide array of proposals. While the specific price achieved isn't detailed, the process itself is designed to drive down costs and ensure a fair market price is obtained, thereby maximizing value for the taxpayer.

What were the historical spending patterns for JET A fuel by the Defense Logistics Agency around the period of this contract?

Historical spending patterns for JET A fuel by the Defense Logistics Agency (DLA) around the 2011-2015 period would likely show significant and consistent expenditure, given the critical role of aviation fuel in military operations. DLA is the primary agency responsible for procuring and distributing fuel to DoD components. Annual spending would fluctuate based on global military operations, fuel prices, and inventory management strategies. To provide specific figures, one would need to consult DLA's historical budget documents, annual reports, or contract award databases. It's reasonable to assume that DLA manages billions of dollars in fuel contracts annually, with JET A being a substantial component of that spending.

What is the significance of the 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' contract type for fuel procurement?

The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) contract type is commonly used for goods like fuel where market prices are volatile. It establishes a base fixed price but includes a mechanism to adjust that price based on an objective economic indicator, such as a published fuel price index. This protects both the government and the contractor from extreme price fluctuations. For the government, it provides a degree of cost certainty while acknowledging market realities. For the contractor, it mitigates the risk of losses due to unforeseen market price increases, ensuring a stable supply. The key is that the adjustments are tied to verifiable market data, not arbitrary changes.

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: 1790 16TH ST SE, SALEM, OR, 06

Business Categories: Category Business, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $39,429,386

Exercised Options: $39,429,386

Current Obligation: $39,429,386

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0102

IDV Type: IDC

Timeline