DoD spent $92.5M on naval distillate fuel, with BP West Coast Products LLC awarded the contract

Contract Overview

Contract Amount: $92,513,318 ($92.5M)

Contractor: BP West Coast Products LLC

Awarding Agency: Department of Defense

Start Date: 2010-12-17

End Date: 2011-10-30

Contract Duration: 317 days

Daily Burn Rate: $291.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 20

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FUEL, NAVAL DISTILLATE, F76

Place of Performance

Location: FERNDALE, WHATCOM County, WASHINGTON, 98248

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $92.5 million to BP WEST COAST PRODUCTS LLC for work described as: FUEL, NAVAL DISTILLATE, F76 Key points: 1. Contract value represents a significant investment in a critical fuel supply. 2. Competition dynamics suggest a potentially competitive bidding environment for fuel contracts. 3. Risk indicators include price volatility inherent in petroleum products. 4. Performance context is tied to the consistent supply of fuel for naval operations. 5. Sector positioning places this within the broader energy and defense logistics landscape.

Value Assessment

Rating: good

The contract value of $92.5 million for naval distillate fuel appears reasonable given the scale of defense operations. Benchmarking against similar fuel supply contracts would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure aims to balance cost certainty with market fluctuations, which is a common approach for commodity-based contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This level of competition is generally favorable for achieving competitive pricing and ensuring a broad base of suppliers can participate. The presence of 20 bids suggests a robust market response.

Taxpayer Impact: Full and open competition typically leads to better price discovery and potentially lower costs for taxpayers by leveraging market forces.

Public Impact

Naval forces benefit from a reliable supply of F76 fuel for operational readiness. The contract supports the Department of Defense's logistical capabilities. Geographic impact is likely national, supporting naval bases and operations. Workforce implications include jobs in fuel production, transportation, and distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clauses.
Dependence on a single supplier for a critical fuel type could pose a risk if not managed with robust oversight.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Contract duration of 317 days ensures a defined period of supply.
The Defense Logistics Agency's involvement indicates established procurement processes.

Sector Analysis

This contract falls within the energy sector, specifically the supply of petroleum products to the federal government. The market for naval distillate fuel is specialized, serving military requirements. Comparable spending benchmarks would involve other large-scale fuel procurements by defense agencies or other government entities requiring similar fuel types.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (sb: false). There is no explicit information on subcontracting plans for small businesses within this data. The focus on a large-scale fuel commodity likely means prime contractors are large entities, with potential for small business involvement in downstream logistics or support services.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract, leveraging established procurement and contract management procedures. Accountability is maintained through contract terms and performance monitoring. Transparency is facilitated by the public nature of contract awards, though specific performance details may be sensitive.

Related Government Programs

Defense Fuel Supply Center
Petroleum Product Procurement
Military Fuel Contracts
Naval Operations Support

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Contractor Performance Monitoring
Economic Price Adjustment Clause Scrutiny

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.5 million to BP WEST COAST PRODUCTS LLC. FUEL, NAVAL DISTILLATE, F76

Who is the contractor on this award?

The obligated recipient is BP WEST COAST PRODUCTS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $92.5 million.

What is the period of performance?

Start: 2010-12-17. End: 2011-10-30.

What is the historical spending trend for naval distillate fuel by the Department of Defense?

Analyzing historical spending on naval distillate fuel (F76) by the Department of Defense reveals a consistent need driven by operational requirements. While specific year-over-year figures fluctuate based on global demand, geopolitical events, and fleet readiness levels, the overall expenditure remains substantial. For instance, prior to this $92.5 million award in 2010-2011, the DoD likely awarded similar contracts in preceding years, potentially ranging from tens to hundreds of millions of dollars annually, depending on contract scope and duration. The Defense Logistics Agency (DLA) manages these procurements, aiming for competitive pricing through various contract vehicles. Understanding these trends is crucial for budget forecasting and identifying potential efficiencies or risks associated with fuel price volatility and supply chain security.

How does the price adjustment clause in this contract typically affect the final cost to the government?

The 'Economic Price Adjustment' (EPA) clause in this contract allows for modifications to the base price based on fluctuations in specific economic indicators, typically related to the cost of raw materials or labor. For naval distillate fuel, this often means the price can increase or decrease in line with changes in crude oil prices or refining costs. While EPA clauses are designed to protect both the contractor from unforeseen cost increases and the government from excessively high initial bids, they introduce an element of price uncertainty. The final cost to the government can therefore deviate from the initially awarded price. Effective oversight involves monitoring the indices used for adjustment and ensuring that the adjustments are applied fairly and in accordance with the contract's terms, preventing unwarranted price escalations.

What are the primary risks associated with relying on a single supplier for critical fuel like F76?

Relying on a single supplier for critical fuel like F76 presents several significant risks. Firstly, there's a risk of supply disruption due to unforeseen events affecting the supplier, such as natural disasters, labor strikes, or geopolitical instability impacting their production or distribution capabilities. Secondly, a lack of competition post-award can lead to reduced price pressure, potentially resulting in higher costs for the government in subsequent contract periods or through change orders. Thirdly, the government may have less leverage in negotiating terms or addressing performance issues if alternative suppliers are not readily available or qualified. To mitigate these risks, robust contract management, including performance monitoring, contingency planning, and potentially maintaining relationships with secondary suppliers, is essential.

What is the typical performance standard for fuel suppliers contracted by the Defense Logistics Agency?

Performance standards for fuel suppliers contracted by the Defense Logistics Agency (DLA) are rigorous and multifaceted, ensuring the reliable and timely delivery of mission-critical supplies. Key performance areas typically include on-time delivery rates, fuel quality and specifications adherence (e.g., meeting F76 standards), accurate invoicing, and responsiveness to DLA's logistical requirements. DLA often employs performance metrics and scorecards to evaluate suppliers throughout the contract period. Failure to meet these standards can result in contractual penalties, deductions, or even termination. The agency emphasizes maintaining a consistent and secure fuel supply chain, making supplier reliability a paramount consideration in contract performance evaluations.

How does the geographic location of fuel delivery impact the cost and logistics for this contract?

The geographic location of fuel delivery is a critical factor influencing both the cost and logistics of this contract. Naval distillate fuel (F76) is often required at various naval bases and operational points, which can be geographically dispersed. Transportation costs, including shipping, trucking, and pipeline fees, vary significantly based on distance and mode of transport. Furthermore, the availability of local refining or storage facilities near the delivery points can affect lead times and overall supply chain efficiency. Contracts may specify delivery points, and the supplier's ability to meet these requirements efficiently, potentially through a network of terminals or distribution points, directly impacts their bid price and the government's final expenditure. Proximity to major naval installations or strategic ports is often a key consideration.

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: SP060010R0161

Offers Received: 20

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

Evaluated Preference: NONE

Contractor Details

Parent Company: BP P.L.C. (UEI: 210042669)

Address: 6 CENTERPOINTE DR, LA PALMA, CA, 45

Business Categories: Category Business, Foreign-Owned and U.S.-Incorporated Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $92,513,318

Exercised Options: $92,513,318

Current Obligation: $92,513,318

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0462

IDV Type: IDC

Timeline