DoD spent $24.6M on jet fuel, with Energizar S.A. winning a fixed-price contract

Contract Overview

Contract Amount: $24,559,590 ($24.6M)

Contractor: Energizar, S.A.

Awarding Agency: Department of Defense

Start Date: 2011-08-01

End Date: 2014-08-31

Contract Duration: 1,126 days

Daily Burn Rate: $21.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: JET FUEL AVIATION (JET A1)

Plain-Language Summary

Department of Defense obligated $24.6 million to ENERGIZAR, S.A. for work described as: JET FUEL AVIATION (JET A1) Key points: 1. Contract value represents a significant investment in aviation fuel for defense operations. 2. The contract was awarded through full and open competition, suggesting a competitive market. 3. Fixed-price with economic price adjustment indicates potential for cost fluctuations based on market conditions. 4. The duration of the contract (over 3 years) suggests a stable, long-term supply need. 5. The award to Energizar, S.A. warrants a review of their performance and market position. 6. The absence of small business set-asides means opportunities for smaller fuel suppliers were not prioritized.

Value Assessment

Rating: fair

Benchmarking the value of this contract requires detailed analysis of jet fuel market prices during the award period (2011-2014). Without specific unit price data and comparison to prevailing market rates for JET A1 at the time and location of delivery, it's difficult to definitively assess value for money. The economic price adjustment clause introduces variability, making a fixed value assessment challenging. However, the total obligated amount of $24.6 million over approximately three years suggests a substantial but potentially market-aligned expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The solicitation resulted in 10 offers, suggesting a healthy level of interest and competition for this defense logistics requirement. This broad competition is generally favorable for price discovery and achieving competitive pricing, as multiple vendors vied for the contract.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible price for essential aviation fuel, reducing the risk of overpayment.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation units, ensuring operational readiness. The service delivered is the supply of JET A1 aviation fuel, critical for aircraft operations. The geographic impact is likely concentrated around military bases or operational areas where the fuel was supplied. Workforce implications are indirect, supporting the logistics and supply chain sector for defense procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to the economic price adjustment clause.
Dependence on a single contractor, Energizar, S.A., for a critical supply chain component.
Lack of specific performance metrics or quality assurance details in the provided summary.

Positive Signals

Awarded through full and open competition, indicating market responsiveness.
Contract duration suggests a stable and predictable supply chain for the DoD.
The existence of 10 offers points to a competitive landscape for aviation fuel suppliers.

Sector Analysis

The aviation fuel market is a critical component of the broader energy and transportation sectors. This contract falls within the petroleum products and fuels category, specifically serving the defense industry's unique logistical needs. The market is characterized by global supply chains, fluctuating commodity prices, and significant regulatory oversight. Comparable spending benchmarks would involve analyzing other large-scale government or commercial aviation fuel procurements, considering factors like volume, location, and contract type.

Small Business Impact

This contract was not set aside for small businesses, and the provided data indicates no small business subcontracting requirements were specified. This means that opportunities for small businesses in the fuel supply chain were not explicitly mandated through this particular award. The focus was on securing the most competitive offer from the broader market, potentially favoring larger, established suppliers.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. Transparency is facilitated through contract award databases like FPDS. Inspector General (IG) jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Defense Fuel Supply Center Contracts
Aviation Fuel Procurement
Department of Defense Logistics
Energy Commodity Contracts

Risk Flags

Price Volatility Risk
Supply Chain Dependency
Contractor Performance Uncertainty

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.6 million to ENERGIZAR, S.A.. JET FUEL AVIATION (JET A1)

Who is the contractor on this award?

The obligated recipient is ENERGIZAR, S.A..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.6 million.

What is the period of performance?

Start: 2011-08-01. End: 2014-08-31.

What was Energizar, S.A.'s track record prior to this award?

Information regarding Energizar, S.A.'s specific track record prior to this 2011 award is not detailed in the provided data. A comprehensive assessment would require reviewing their past performance on government contracts, including any history of on-time delivery, quality compliance, and financial stability. Government contract databases and past performance reviews would be necessary to fully evaluate their suitability and reliability as a supplier for this significant defense contract.

How does the awarded price compare to market rates for JET A1 during 2011-2014?

The provided data does not include the specific unit price or the economic price adjustment formula used, making a direct comparison to market rates impossible. To assess value, one would need to obtain the contract's pricing details and compare them against historical Platts or other industry benchmarks for JET A1 fuel during the contract's validity (August 2011 - August 2014). The 'fair' rating reflects this lack of specific pricing data for a definitive value assessment.

What are the primary risks associated with a fixed-price contract with economic price adjustment for fuel?

The primary risk with a fixed-price contract with economic price adjustment (FP-EPA) for fuel lies in price volatility. While the 'fixed-price' element provides some cost certainty, the 'economic price adjustment' clause allows for changes based on market indices (e.g., commodity prices, inflation). This means the government could end up paying more than initially anticipated if fuel prices rise significantly. Conversely, the contractor is protected from losses due to market downturns, shifting some risk away from them. This structure requires careful monitoring of market trends and the adjustment formula to manage taxpayer exposure.

How effective was this contract in ensuring a consistent supply of jet fuel for DoD operations?

The effectiveness of this contract in ensuring a consistent supply cannot be fully determined from the summary data alone. Key indicators would include delivery performance records, any instances of supply disruptions, and feedback from the end-users within the DoD. The contract's duration (over three years) and the competitive award suggest an intent to establish a reliable supply chain. However, without specific performance metrics or incident reports, its actual effectiveness remains an assumption based on the award process.

What was the total spending on JET FUEL AVIATION (JET A1) by the DoD in the years surrounding this contract?

The provided data focuses solely on this specific contract awarded to Energizar, S.A. It does not offer a broader picture of the Department of Defense's total spending on JET FUEL AVIATION (JET A1) during the period of 2011-2014 or surrounding years. To determine total spending, one would need to aggregate data from all similar contracts awarded by the DoD for aviation fuel during that timeframe, likely using comprehensive federal procurement databases.

What is the significance of the 'DO' award type?

The 'DO' award type typically signifies a 'Defense Order' under the Defense Priorities and Allocations System (DPAS). This means the contract is assigned a priority rating, allowing the contractor (Energizar, S.A.) to receive preferential treatment for materials and production necessary to fulfill the contract. For a critical item like jet fuel for the Department of Defense, this priority ensures timely production and delivery, even during periods of high demand or potential shortages in the civilian market.

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: SP060011R0200

Offers Received: 10

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

Evaluated Preference: NONE

Contractor Details

Address: CARRERA 69 NO. 25B-44, OFICINA 1001C, BOGOTA

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations

Financial Breakdown

Contract Ceiling: $24,559,590

Exercised Options: $24,559,590

Current Obligation: $24,559,590

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D1264

IDV Type: IDC

Timeline