DoD's $24.78M Jet Fuel Contract with Freeman Holdings: Fixed Price with Economic Adjustment
Contract Overview
Contract Amount: $24,782,491 ($24.8M)
Contractor: Freeman Holdings of Louisiana LLC
Awarding Agency: Department of Defense
Start Date: 2011-04-01
End Date: 2015-03-31
Contract Duration: 1,460 days
Daily Burn Rate: $17.0K/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/ FSII
Place of Performance
Location: ALEXANDRIA, RAPIDES County, LOUISIANA, 71303
Plain-Language Summary
Department of Defense obligated $24.8 million to FREEMAN HOLDINGS OF LOUISIANA LLC for work described as: JET A W/ FSII Key points: 1. Significant spending on essential aviation fuel. 2. Competition method was full and open, suggesting potential for competitive pricing. 3. Contract type (fixed price with economic adjustment) introduces price volatility risk. 4. Sector is petroleum products, a critical but often volatile commodity market.
Value Assessment
Rating: fair
The contract value of $24.78M over 4 years is substantial. Benchmarking against similar fuel contracts is difficult without specific volume and grade data, but the fixed price with economic adjustment suggests a strategy to manage fluctuating market prices.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically drives competitive pricing. However, the economic price adjustment clause allows for price increases based on market fluctuations, potentially mitigating some of the initial competitive advantage.
Taxpayer Impact: Taxpayers are exposed to potential price increases due to market volatility, as the contract includes economic price adjustments for fuel costs.
Public Impact
Ensures availability of critical jet fuel for military operations. Potential for price fluctuations impacts budget predictability. Supports businesses within the petroleum products wholesale sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause
- Lack of specific per-unit cost benchmark
- Long contract duration (4 years)
Positive Signals
- Full and open competition awarded
- Essential commodity procured
Sector Analysis
This contract falls within the Petroleum and Petroleum Products Merchant Wholesalers sector. Spending benchmarks for jet fuel can vary widely based on geopolitical factors, crude oil prices, and demand. DoD's reliance on such contracts highlights the strategic importance of fuel supply chains.
Small Business Impact
The data does not indicate if small businesses were involved in this contract, either as prime contractors or subcontractors. Further investigation would be needed to assess small business participation.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key entity for procuring goods and services for the DoD. Oversight would focus on adherence to contract terms, particularly the economic price adjustment provisions 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
- Price volatility risk due to economic price adjustment
- Potential for cost overruns
- Dependence on a single supplier for a critical commodity
- Limited transparency on per-unit cost benchmarks
Tags
petroleum-and-petroleum-products-merchan, department-of-defense, la, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $24.8 million to FREEMAN HOLDINGS OF LOUISIANA LLC. JET A W/ FSII
Who is the contractor on this award?
The obligated recipient is FREEMAN HOLDINGS OF LOUISIANA LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $24.8 million.
What is the period of performance?
Start: 2011-04-01. End: 2015-03-31.
What was the actual price escalation experienced under the economic price adjustment clause throughout the contract's life?
The economic price adjustment clause allows for changes in price based on market conditions, typically tied to indices for crude oil or refined products. Understanding the actual price increases experienced would reveal the true cost impact beyond the initial fixed price and provide insight into the effectiveness of this clause in managing volatility versus its impact on the final expenditure.
How did the final total cost compare to initial projections, considering the economic price adjustments?
Comparing the final expenditure to initial projections is crucial for assessing budget performance. If the final cost significantly exceeded projections due to price adjustments, it indicates a higher-than-anticipated risk exposure for the government. Conversely, if adjustments were minimal or even resulted in lower costs, the contract structure proved effective in navigating market fluctuations.
Were there any performance issues or delivery delays reported during the contract period?
Performance and delivery are key metrics for any supply contract. Any reported issues or delays would impact operational readiness and potentially indicate underlying problems with the contractor's supply chain or management. Analyzing performance records is essential to gauge the overall effectiveness and reliability of the awarded contract.
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: 1303 BILLY MITCHELL BLVD, ALEXANDRIA, LA, 06
Business Categories: Category Business, Limited Liability Corporation, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business
Financial Breakdown
Contract Ceiling: $24,782,491
Exercised Options: $24,782,491
Current Obligation: $24,782,491
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060011D0119
IDV Type: IDC
Timeline
Start Date: 2011-04-01
Current End Date: 2015-03-31
Potential End Date: 2015-03-31 00:00:00
Last Modified: 2011-03-17
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