DoD's $137.7M Turbine Fuel Contract Awarded to ConocoPhillips Amidst Fixed Price Adjustments

Contract Overview

Contract Amount: $137,747,276 ($137.7M)

Contractor: Conocophillips Company

Awarding Agency: Department of Defense

Start Date: 2011-05-19

End Date: 2011-11-30

Contract Duration: 195 days

Daily Burn Rate: $706.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 25

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: IEG SUPPLMENTAL (SP060010R00610001) AWARDED CONTRACT SP0600-11-D-0499 TO CONOCOPHILLIPS FOR PURCHASE OF TURBINE FUEL, AVIATION (JP8).

Place of Performance

Location: BARTLESVILLE, OSAGE County, OKLAHOMA, 74003

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $137.7 million to CONOCOPHILLIPS COMPANY for work described as: IEG SUPPLMENTAL (SP060010R00610001) AWARDED CONTRACT SP0600-11-D-0499 TO CONOCOPHILLIPS FOR PURCHASE OF TURBINE FUEL, AVIATION (JP8). Key points: 1. Contract value of $137.7 million for aviation turbine fuel (JP8). 2. Awarded through full and open competition, suggesting a competitive bidding process. 3. Fixed Price with Economic Price Adjustment (FP/EPA) contract type introduces price volatility. 4. Contract duration of 195 days indicates a short-term supply need. 5. Awarded by the Defense Logistics Agency, a key logistics provider for the DoD. 6. ConocoPhillips Company is the sole awardee, indicating a single supplier for this specific award. 7. The contract was awarded in May 2011 and expired in November 2011.

Value Assessment

Rating: fair

The contract's value of $137.7 million for aviation turbine fuel (JP8) over a 195-day period requires careful benchmarking against market prices for similar fuel types and quantities. The Fixed Price with Economic Price Adjustment (FP/EPA) clause introduces a layer of uncertainty in the final cost, as it allows for adjustments based on economic factors. Without specific details on the economic price adjustment formula, it is difficult to definitively assess value for money. However, the use of full and open competition suggests an attempt to secure competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit bids. The data shows 25 bids were received, suggesting a robust level of interest and competition for this fuel supply requirement. A higher number of bids generally correlates with better price discovery and potentially more favorable pricing for the government.

Taxpayer Impact: The full and open competition and the receipt of 25 bids are positive indicators for taxpayers, as they suggest the government sought the best possible price through a broad solicitation process.

Public Impact

The primary beneficiaries are the Department of Defense (DoD) and its aviation units, ensuring the availability of critical turbine fuel (JP8). The service delivered is the supply of aviation-grade turbine fuel, essential for military aircraft operations. The geographic impact is likely focused on military installations or operational areas where the fuel was needed during the contract period. Workforce implications are minimal for the government, as this is a supply contract, but it supports jobs within the petroleum refining and distribution sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The FP/EPA clause introduces price risk for the government, as fuel prices can fluctuate significantly.
The short contract duration (195 days) may lead to less favorable pricing compared to longer-term, more predictable contracts.
Reliance on a single awardee (ConocoPhillips) for this specific contract, though competition was open.

Positive Signals

Awarded through full and open competition, maximizing potential bidder participation.
Receipt of 25 bids indicates a healthy competitive environment for this requirement.
The Defense Logistics Agency's involvement suggests established procurement processes for fuel.

Sector Analysis

This contract falls within the Petroleum Refineries (NAICS 324110) sector, specifically dealing with the supply of aviation fuel. The market for aviation fuel is large and complex, influenced by global oil prices, refining capacity, and demand from both commercial and military sectors. The DoD is a significant consumer of fuel, and contracts like this are crucial for maintaining operational readiness. Comparable spending benchmarks would involve analyzing other DoD fuel contracts and market prices for JP8 during the 2011 period.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no explicit mention of subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award appears limited, with the primary benefit likely going to the large prime contractor, ConocoPhillips.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA) contracting officers and program managers. Accountability measures would be tied to the delivery of fuel meeting specified quality standards and within the agreed-upon timeframe. Transparency is generally provided through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Contracts
JP8 Aviation Fuel Procurement
Department of Defense Energy Purchases
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Price Volatility Risk (FP/EPA)
Short Contract Duration
Dependence on Market Fuel Prices

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $137.7 million to CONOCOPHILLIPS COMPANY. IEG SUPPLMENTAL (SP060010R00610001) AWARDED CONTRACT SP0600-11-D-0499 TO CONOCOPHILLIPS FOR PURCHASE OF TURBINE FUEL, AVIATION (JP8).

Who is the contractor on this award?

The obligated recipient is CONOCOPHILLIPS COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $137.7 million.

What is the period of performance?

Start: 2011-05-19. End: 2011-11-30.

What was the specific economic price adjustment formula used in this contract, and how did it impact the final cost compared to a fixed-price contract?

The specific economic price adjustment (EPA) formula used in contract SP0600-11-D-0499 is not detailed in the provided data. Typically, FP/EPA clauses are tied to published indices for fuel prices, such as those from the Energy Information Administration (EIA) or other recognized market benchmarks. The purpose of the EPA is to allow for price changes based on fluctuations in the cost of raw materials or other economic factors beyond the contractor's control. Without the exact formula and the corresponding index values during the contract period (May-November 2011), it's impossible to quantify the exact impact on the final cost. However, if fuel prices rose significantly during this period, the EPA would have increased the total cost to the government compared to a firm fixed-price contract. Conversely, if prices fell, the EPA could have resulted in a lower cost. The risk associated with price volatility is borne by the government to some extent under this contract type.

How does the price per gallon for JP8 under this contract compare to the average market price during the contract period?

To compare the price per gallon under this contract to the average market price, we would need to calculate the effective price per gallon from the total award amount and the quantity of fuel purchased. The total award was $137,747,276.39. However, the quantity of fuel (in gallons) is not provided in the data. Assuming a standard volume for such contracts or obtaining the actual quantity would be necessary. Once the price per gallon is determined, it could be benchmarked against historical JP8 prices reported by the Defense Logistics Agency (DLA) or the Energy Information Administration (EIA) for the period of May to November 2011. Given the FP/EPA clause, the price may have varied throughout the contract. A preliminary assessment would require knowing the total gallons procured to derive an average price per gallon for comparison.

What is ConocoPhillips' track record with the Defense Logistics Agency for fuel supply contracts?

ConocoPhillips Company has a significant history of supplying fuel products to government agencies, including the Defense Logistics Agency (DLA). While this specific contract (SP0600-11-D-0499) was awarded in 2011, ConocoPhillips has been a consistent participant in DLA fuel solicitations over many years. Their track record generally involves large-scale fuel deliveries, often through competitive bidding processes. DLA relies on major fuel suppliers like ConocoPhillips to meet its global energy demands. Assessing their overall track record would involve reviewing performance metrics on past contracts, including on-time delivery, quality compliance, and any past disputes or contract modifications. Generally, large energy companies like ConocoPhillips are experienced in meeting the stringent requirements of government fuel contracts.

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

The primary risks associated with this contract include price volatility due to the Fixed Price with Economic Price Adjustment (FP/EPA) clause, potential supply chain disruptions affecting fuel availability, and ensuring the quality of the JP8 fuel meets stringent military specifications. Price volatility risk is inherent in FP/EPA contracts, where the government may pay more if market prices increase. This risk is partially mitigated by the fact that the adjustments are tied to specific economic indices, providing some predictability. Supply chain risks are managed through the Defense Logistics Agency's extensive network and contingency planning. Fuel quality is managed through rigorous testing and inspection protocols mandated by the contract. The short duration of the contract (195 days) also presents a risk of less favorable pricing compared to longer-term agreements, but it also limits the government's exposure to prolonged price fluctuations.

How does this contract's value compare to other DLA aviation fuel procurements in the same fiscal year?

To compare this contract's value ($137.7 million) to other DLA aviation fuel procurements in Fiscal Year 2011, we would need access to DLA's contract spending data for that year. This would involve identifying other contracts awarded by DLA for similar aviation fuels (like JP8 or Jet A) and summing their award values. The $137.7 million represents a substantial award for a single contract, especially one with a short duration. However, DLA manages a vast portfolio of fuel contracts globally to support military operations. Without comparative data, it's difficult to definitively state whether this contract was large, average, or small relative to DLA's overall fuel spending in FY2011. It is reasonable to assume that DLA procures billions of dollars worth of fuel annually, making this one significant award within that larger context.

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: SP060010R0061

Offers Received: 25

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Conocophillips (UEI: 118819478)

Address: 930 PHILLIPS BLDG, BARTLESVILLE, OK, 02

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

Financial Breakdown

Contract Ceiling: $137,747,276

Exercised Options: $137,747,276

Current Obligation: $137,747,276

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0499

IDV Type: IDC

Timeline