DoD's $18.8M Jet Fuel Contract with Trajen Flight Support Faces Scrutiny Over Pricing and Competition

Contract Overview

Contract Amount: $18,812,354 ($18.8M)

Contractor: Trajen Flight Support LP

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2015-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $12.9K/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 AND JET A W/O FSII.

Place of Performance

Location: PLANO, COLLIN County, TEXAS, 75093

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $18.8 million to TRAJEN FLIGHT SUPPORT LP for work described as: JET A W/ FSII AND JET A W/O FSII. Key points: 1. The contract awarded to Trajen Flight Support LP for jet fuel represents a significant expenditure within the Defense Logistics Agency. 2. While awarded under full and open competition, the fixed-price with economic price adjustment structure warrants close examination for potential cost overruns. 3. The petroleum products wholesale sector is generally competitive, but specific fuel types and delivery locations can influence market dynamics. 4. Potential risks include fluctuating fuel prices impacting the economic adjustment clause and ensuring consistent supply chain integrity.

Value Assessment

Rating: fair

The contract's total value of $18.8M over four years suggests a substantial volume of fuel. Benchmarking per-unit costs against market rates for JET A with and without FSII, considering regional variations and delivery terms, is crucial for assessing value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, indicating multiple bids were solicited. However, the fixed-price with economic price adjustment (EPA) mechanism means the final price is not fully determined at award, potentially limiting price discovery and increasing risk if fuel prices escalate significantly.

Taxpayer Impact: Taxpayer funds are exposed to market volatility through the EPA clause, potentially leading to higher-than-anticipated costs if fuel prices rise substantially.

Public Impact

Military readiness and operational capabilities depend on reliable access to jet fuel. Fluctuations in global oil prices directly impact the cost of this contract and, consequently, taxpayer burden. The economic price adjustment mechanism requires careful monitoring to ensure fair pricing and prevent excessive profit for the contractor. Ensuring a robust supply chain for critical aviation fuel is paramount for national security.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) risk
Potential for price volatility
Limited price certainty at award

Positive Signals

Awarded under full and open competition
Long-term contract provides supply stability

Sector Analysis

This contract falls within the Petroleum and Petroleum Products Merchant Wholesalers sector. Spending in this area is directly tied to military operational tempo and global energy market conditions. Benchmarks would typically compare unit prices against industry averages for bulk fuel purchases, adjusted for specific additives like FSII and delivery logistics.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as the 'sb' field is false. Analysis of the prime contractor's subcontracting plan, if applicable, would be necessary to determine if small businesses were involved in fulfilling this contract.

Oversight & Accountability

Oversight of this contract should focus on the administration of the economic price adjustment clause, ensuring that any price increases are justified by market data and that the contractor is not unduly benefiting from price volatility. Regular audits of fuel pricing and delivery records are recommended.

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 introduces price uncertainty.
Potential for contractor to benefit from market volatility.
Lack of specific per-unit cost benchmark for comparison.
Contract awarded to a single entity, limiting ongoing competitive pressure.
Dependence on external market indices for price adjustments.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.8 million to TRAJEN FLIGHT SUPPORT LP. JET A W/ FSII AND JET A W/O FSII.

Who is the contractor on this award?

The obligated recipient is TRAJEN FLIGHT SUPPORT LP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $18.8 million.

What is the period of performance?

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

What is the historical trend of JET A fuel prices (with and without FSII) in Texas during the contract period, and how did these trends compare to the economic price adjustments made under this contra

Analyzing historical fuel price data from reliable sources like the EIA or industry indices for the specified period and region is crucial. This data should be compared against the actual price adjustments applied by Trajen Flight Support LP. Significant deviations could indicate potential overcharges or inadequate justification for price increases, necessitating a deeper dive into the contractor's cost substantiation and the DLA's oversight.

Given the fixed-price with economic price adjustment structure, what mechanisms are in place to mitigate the risk of significant cost overruns due to unforeseen spikes in fuel prices?

The primary mitigation lies in the contract's specific EPA clause, which should clearly define the indices used for adjustment and any caps or floors on price changes. Robust oversight by the Defense Logistics Agency is essential to ensure these mechanisms are strictly adhered to and that any price increases are legitimate. Furthermore, exploring alternative fuel sources or hedging strategies could be considered for future contracts to buffer against extreme price volatility.

How effectively did the 'full and open competition' process ensure competitive pricing for JET A fuel, considering the economic price adjustment component?

While 'full and open competition' ensures a broad solicitation, the EPA clause introduces price uncertainty post-award. The effectiveness hinges on whether the initial bids adequately factored in potential price escalations and if the chosen indices accurately reflect market conditions. A thorough review of the bid evaluation process and the competitiveness of the initial fixed-price component, alongside post-award price monitoring, is needed to assess true pricing effectiveness.

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: 6504 INTERNATIONAL PKWY STE 2400, PLANO, TX, 90

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

Financial Breakdown

Contract Ceiling: $18,812,354

Exercised Options: $18,812,354

Current Obligation: $18,812,354

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0124

IDV Type: IDC

Timeline