DoD awarded $69.6M to ExxonMobil for petroleum refining, with 13 bids received

Contract Overview

Contract Amount: $69,664,288 ($69.7M)

Contractor: Exxon Mobil Corporation

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2012-03-30

Contract Duration: 181 days

Daily Burn Rate: $384.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: JP5&JP8

Place of Performance

Location: ALEXANDRIA, FAIRFAX County, VIRGINIA, 22307

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $69.7 million to EXXON MOBIL CORPORATION for work described as: JP5&JP8 Key points: 1. Contract value represents a significant investment in fuel supply chain resilience. 2. The fixed-price structure with economic price adjustment introduces potential cost volatility. 3. A high number of bids suggests a competitive market for this type of service. 4. The contract duration of 181 days indicates a short-term supply need. 5. This award falls within the broader category of defense logistics and energy security. 6. The use of economic price adjustment warrants close monitoring of market fluctuations.

Value Assessment

Rating: fair

The awarded amount of $69.6 million for 181 days of service appears substantial. Benchmarking against similar petroleum refining contracts is difficult without more specific service details. However, the inclusion of economic price adjustment suggests a strategy to mitigate supplier risk in volatile markets, which can sometimes lead to higher overall costs for the government compared to fixed-price contracts without such adjustments. The number of bids (13) indicates a healthy level of interest, which typically aids in achieving competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with 13 bids received. This indicates a robust bidding process and suggests that the Defense Logistics Agency actively sought proposals from all qualified sources. A higher number of bidders generally leads to better price discovery and potentially more favorable terms for the government, as contractors compete to win the award.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers, as it likely drove down prices and ensured the government received competitive market rates for the petroleum refining services.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring fuel supply. Services delivered include the refining of petroleum products essential for military operations. The geographic impact is likely national, supporting defense readiness across various theaters. Workforce implications include employment within ExxonMobil's refining operations and associated logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to costs exceeding initial projections if fuel prices surge.
Reliance on a single large contractor for a critical resource like refined fuel presents supply chain concentration risk.
The short duration might necessitate frequent re-competition, leading to administrative overhead and potential continuity gaps.

Positive Signals

Awarded under full and open competition, ensuring a broad base of potential suppliers.
The high number of bids (13) suggests strong market interest and competitive dynamics.
ExxonMobil is a major player with established infrastructure, potentially ensuring reliable delivery.

Sector Analysis

The petroleum refining sector is a critical component of the energy industry, providing essential fuels for transportation, industry, and defense. The market is characterized by large, integrated companies with significant capital investment in refining capacity. Defense spending in this sector typically focuses on ensuring a stable and secure supply of fuels for military operations, often through long-term contracts or strategic partnerships. Comparable spending benchmarks are highly dependent on global oil prices and refining margins.

Small Business Impact

This contract was awarded to ExxonMobil Corporation and does not appear to have a small business set-aside component (ss: false, sb: false). There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal, though large prime contractors are often encouraged or required to have subcontracting plans for other types of awards.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA), which manages fuel procurement for the DoD. Accountability measures would be embedded in the contract's performance standards and delivery requirements. Transparency is facilitated by the public nature of contract awards, though specific performance metrics and detailed cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Department of Defense Energy Security Initiatives
Strategic Petroleum Reserve
Aviation Fuel Contracts
Marine Fuel Contracts

Risk Flags

Economic Price Adjustment Clause
Potential for Cost Overruns
Supply Chain Concentration Risk
Short Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.7 million to EXXON MOBIL CORPORATION. JP5&JP8

Who is the contractor on this award?

The obligated recipient is EXXON MOBIL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $69.7 million.

What is the period of performance?

Start: 2011-10-01. End: 2012-03-30.

What is the historical spending pattern for petroleum refining services by the Department of Defense over the last five years?

Analyzing historical spending patterns for petroleum refining services by the Department of Defense (DoD) reveals a consistent need for fuel supply, though specific contract values fluctuate based on market conditions, geopolitical events, and operational tempo. The DoD, primarily through the Defense Logistics Agency (DLA), procures vast quantities of fuel annually. While the exact figures for 'petroleum refining' as a distinct service category can be complex to isolate from broader fuel procurement, DLA's overall fuel budget typically runs into the tens of billions of dollars. Spending in this area is sensitive to global oil prices, refining capacity utilization, and the demand from military operations. Periods of increased conflict or heightened global tensions often correlate with higher spending to ensure strategic reserves and operational readiness. The contract awarded to ExxonMobil for $69.6 million in 2011-2012 represents a specific instance within this larger spending context, likely addressing a particular refining need or capacity gap at that time.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other DoD fuel contracts?

The Fixed Price with Economic Price Adjustment (FP-EPA) pricing structure is common for DoD fuel contracts, particularly when dealing with volatile commodity markets like petroleum. This structure aims to protect both the government and the contractor from extreme price fluctuations. The 'fixed price' component provides a baseline, while the 'economic price adjustment' allows for modifications based on pre-defined indices, typically tied to crude oil prices or other market indicators. Compared to simple Fixed Price (FP) contracts, FP-EPA can offer more stable supplier participation by mitigating the contractor's risk of unforeseen cost increases. However, it also means the final cost to the government is not fully known at the time of award and can exceed initial projections if market prices rise significantly. Conversely, it protects against the government benefiting from price drops if the adjustment clause is structured to allow for downward revisions as well. Other DoD fuel contracts might use different structures, such as Firm Fixed Price (FFP) for shorter-term, stable-price environments, or Cost-Plus contracts for research and development where costs are highly uncertain.

What is ExxonMobil's track record with the Department of Defense for similar petroleum contracts?

ExxonMobil Corporation, as one of the world's largest integrated oil and gas companies, has a long-standing and extensive track record of doing business with the Department of Defense (DoD) and other government agencies. They are a major supplier of fuels, lubricants, and other petroleum products critical to military operations. Their history with the DoD includes numerous contracts for fuel supply, transportation, and potentially refining services, often awarded through competitive bidding processes. Given their scale and infrastructure, ExxonMobil is a key player in the defense industrial base for energy. While specific performance details for individual contracts are not always publicly detailed, their continued engagement with the DoD suggests a generally satisfactory performance history in meeting the demanding requirements of military logistics. Any concerns or significant issues would typically be reflected in past performance evaluations used in future source selections.

What are the potential risks associated with relying on a single large contractor like ExxonMobil for critical fuel refining services?

Relying on a single large contractor like ExxonMobil for critical fuel refining services presents several potential risks. Firstly, there's the risk of supply chain disruption. If ExxonMobil experiences operational issues—such as refinery downtime due to maintenance, accidents, or natural disasters—it could directly impact the DoD's fuel supply, potentially affecting military readiness. Secondly, a lack of robust competition in future contract renewals could lead to reduced price leverage for the government. If ExxonMobil becomes the incumbent with unique capabilities or if the market shrinks, future bids might be less competitive, leading to higher costs. Thirdly, there's a strategic risk: over-reliance on one entity for a vital resource could create dependencies that are difficult to break, especially in times of national security concern. Finally, while ExxonMobil is a large entity, any significant financial distress or shifts in their corporate strategy could indirectly impact their ability to fulfill long-term defense contracts.

How does the number of bidders (13) influence the perceived value for money in this contract?

The fact that 13 bids were received for this petroleum refining contract strongly suggests a competitive marketplace and generally indicates good potential for value for money. A higher number of bidders typically means that contractors are motivated to offer competitive pricing and favorable terms to secure the award. This level of competition reduces the likelihood of the government overpaying, as contractors must price their proposals realistically to win against numerous rivals. It also implies that the barriers to entry for qualified firms were not prohibitively high, allowing a diverse set of companies to participate. While value for money is ultimately determined by the quality of service received relative to the price paid, a robust competition like this provides a strong foundation for achieving favorable outcomes. The Defense Logistics Agency likely benefited from this competitive dynamic in negotiating the terms and price of the contract.

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

Offers Received: 13

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

Evaluated Preference: NONE

Contractor Details

Address: 3225 GALLOWS RD, FAIRFAX, VA, 11

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: $69,664,288

Exercised Options: $69,664,288

Current Obligation: $69,664,288

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0527

IDV Type: IDC

Timeline