DoD Spent $31.7M on Marine Gas Oil, Awarded to O.W. Bunker & Trading A/S
Contract Overview
Contract Amount: $31,738,163 ($31.7M)
Contractor: O.W. Bunker & Trading A/S
Awarding Agency: Department of Defense
Start Date: 2011-10-01
End Date: 2016-10-31
Contract Duration: 1,857 days
Daily Burn Rate: $17.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 8
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: MARINE GAS OIL (MGO)
Plain-Language Summary
Department of Defense obligated $31.7 million to O.W. BUNKER & TRADING A/S for work described as: MARINE GAS OIL (MGO) Key points: 1. Significant expenditure on a critical fuel commodity. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Contract duration of 1857 days indicates long-term supply needs. 4. Fixed Price with Economic Price Adjustment (EPA) introduces price volatility risk. 5. No explicit mention of small business participation.
Value Assessment
Rating: fair
The total award value of $31.7M over 1857 days averages approximately $17,000 per day. Without specific per-unit pricing or volume data, a direct comparison to market rates is difficult. The EPA clause adds uncertainty to the final cost.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which generally promotes competitive pricing. However, the use of Fixed Price with EPA can obscure the true price discovery achieved, as the final price is subject to market fluctuations.
Taxpayer Impact: Taxpayers are exposed to potential price increases due to the economic price adjustment clause, which is tied to market conditions for Marine Gas Oil.
Public Impact
Ensures fuel availability for naval operations. Price fluctuations could impact budget predictability. Supports global maritime trade infrastructure. Potential for price volatility affects taxpayer burden. Lack of small business involvement may limit broader economic impact.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic Price Adjustment (EPA) introduces cost uncertainty.
- Long contract duration (1857 days) increases exposure to market volatility.
- No small business participation noted.
Positive Signals
- Full and open competition utilized.
- Ensures critical fuel supply for the Department of Defense.
Sector Analysis
The procurement falls under the energy sector, specifically fuel supply for maritime operations. Benchmarks for fuel contracts vary widely based on type, volume, and duration, but $31.7M over nearly five years for MGO suggests a substantial, ongoing requirement.
Small Business Impact
The data indicates no specific set-aside for small businesses, and the prime contractor is O.W. Bunker & Trading A/S, a large entity. Further analysis would be needed to determine if any small businesses were involved as subcontractors.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a primary procurement arm for the DoD. Oversight would typically involve monitoring contract performance, adherence to EPA terms, and delivery schedules to ensure operational readiness and fiscal responsibility.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Price Volatility Risk (EPA)
- Long Contract Duration
- Lack of Small Business Participation
- Limited Transparency on Specific Pricing Mechanisms
Tags
petroleum-refineries, department-of-defense, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.7 million to O.W. BUNKER & TRADING A/S. MARINE GAS OIL (MGO)
Who is the contractor on this award?
The obligated recipient is O.W. BUNKER & TRADING A/S.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $31.7 million.
What is the period of performance?
Start: 2011-10-01. End: 2016-10-31.
What was the average per-gallon cost of Marine Gas Oil under this contract, considering the EPA adjustments?
Without the specific volume of MGO purchased and the detailed price adjustments over the contract's 1857-day duration, calculating an average per-gallon cost is not possible from the provided data. The EPA clause means the price varied based on market indices, making a single average misleading without further breakdown.
What specific market indices were used for the Economic Price Adjustment, and how volatile were they during the contract period?
The provided data does not specify the market indices used for the Economic Price Adjustment (EPA). To assess the risk associated with price volatility, one would need to consult the contract details to identify the relevant indices (e.g., Platts, Argus) and then analyze historical price trends for those indices during the 2011-2016 contract period.
How did the final cost compare to initial projections or alternative fuel sourcing options available at the time?
The data does not include initial cost projections or information on alternative sourcing options considered. A comprehensive value assessment would require comparing the final expenditure against these benchmarks. The 'fair' rating reflects the uncertainty introduced by the EPA clause and the lack of detailed cost comparison data.
Industry Classification
NAICS: Manufacturing › Petroleum and Coal Products Manufacturing › Petroleum Refineries
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060011R0201
Offers Received: 8
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Altor Equity Partners AB (UEI: 508008104)
Address: STIGSBORGVEJ 60, N?RRESUNDBY
Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $31,738,163
Exercised Options: $31,738,163
Current Obligation: $31,738,163
Contract Characteristics
Multi-Year Contract: Yes
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060011D0395
IDV Type: IDC
Timeline
Start Date: 2011-10-01
Current End Date: 2016-10-31
Potential End Date: 2016-10-31 00:00:00
Last Modified: 2015-11-18
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