DoD spent $54M on fuel oil and diesel, with MABANAFT DEUTSCHLAND GMBH & CO. KG winning a full and open competition

Contract Overview

Contract Amount: $54,009,637 ($54.0M)

Contractor: Mabanaft Deutschland Gmbh & CO. KG

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2014-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $49.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: FUEL OIL, BURNER #2, DIESEL FUEL

Plain-Language Summary

Department of Defense obligated $54.0 million to MABANAFT DEUTSCHLAND GMBH & CO. KG for work described as: FUEL OIL, BURNER #2, DIESEL FUEL Key points: 1. The contract value of $54 million over three years suggests a significant demand for fuel oil and diesel by the Department of Defense. 2. Full and open competition was utilized, indicating a potentially robust bidding process and competitive pricing. 3. The contract type, Fixed Price with Economic Price Adjustment, introduces some risk related to fluctuating fuel costs. 4. The Defense Logistics Agency's role suggests a centralized procurement strategy for essential fuel supplies. 5. The duration of 1095 days (3 years) points to a long-term need for these petroleum products. 6. The absence of small business set-aside flags indicates this was not specifically targeted for small business participation.

Value Assessment

Rating: good

The total award of $54 million over three years for fuel oil and diesel appears reasonable given the scale of military operations. Benchmarking against similar large-scale fuel procurements by the DoD would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure, while common for commodities, introduces a variable cost element that needs careful monitoring to ensure continued value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The fact that there were 6 bids received suggests a healthy level of competition for this fuel supply contract. This broad competition is generally favorable for price discovery and achieving competitive pricing for the government.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining the best possible price through a wide range of offers.

Public Impact

Military operations globally benefit from a reliable supply of fuel oil and diesel. The contract ensures the availability of essential energy resources for the Department of Defense's logistical needs. The geographic impact is likely widespread, supporting deployments and operations wherever the DoD operates. The contract supports the petroleum refining and distribution sector, indirectly impacting jobs within that industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause introduces potential for cost overruns if fuel prices escalate significantly.
Reliance on a single primary contractor (MABANAFT DEUTSCHLAND GMBH & CO. KG) for a critical commodity could pose supply chain risks if not managed proactively.
The fixed-price nature, even with adjustments, requires diligent oversight to ensure contract terms are met and no undue price increases occur.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
The Defense Logistics Agency's involvement suggests established procurement processes and expertise in managing fuel contracts.
The contract duration of three years provides stability and predictability for fuel supply planning.

Sector Analysis

This contract falls within the Petroleum Refineries sector, specifically addressing the supply of burner fuel oil and diesel. The market for these commodities is global and subject to significant price volatility. The DoD is a major consumer of such fuels, and contracts like this are crucial for maintaining operational readiness. Comparable spending benchmarks would involve analyzing other large government fuel procurements and private sector energy contracts.

Small Business Impact

The contract details indicate that small business participation was not a specific set-aside requirement. This suggests that the primary focus was on securing the best value through open competition, rather than specifically directing a portion of the work to small businesses. There is no explicit information on subcontracting plans for small businesses within this award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA), which is responsible for procuring and distributing fuel for the DoD. Accountability measures would include performance monitoring, adherence to delivery schedules, and compliance with contract terms, including the economic price adjustment clauses. Transparency is generally maintained through contract award databases, though specific performance details may be less public.

Related Government Programs

Defense Fuel Supply Center
DoD Energy Procurement
Petroleum Product Contracts
Logistics and Transportation Services

Risk Flags

Price Volatility Risk due to Economic Price Adjustment
Supply Chain Dependency
Potential for Cost Overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.0 million to MABANAFT DEUTSCHLAND GMBH & CO. KG. FUEL OIL, BURNER #2, DIESEL FUEL

Who is the contractor on this award?

The obligated recipient is MABANAFT DEUTSCHLAND GMBH & CO. KG.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $54.0 million.

What is the period of performance?

Start: 2011-10-01. End: 2014-09-30.

What is the historical spending pattern for fuel oil and diesel by the Department of Defense?

Historical spending data for fuel oil and diesel by the Department of Defense is extensive, reflecting the continuous need for these commodities to support global operations. While specific figures for every year are not provided here, the $54 million awarded to MABANAFT DEUTSCHLAND GMBH & CO. KG over three years (2011-2014) represents a significant but not necessarily anomalous expenditure. The DoD procures vast quantities of fuel annually, with spending fluctuating based on geopolitical events, operational tempo, and global market prices. Analyzing past contract awards for similar fuel types and quantities would reveal trends in pricing, competition levels, and the dominant suppliers over time. This particular contract's value should be viewed within the broader context of the DoD's multi-billion dollar annual energy budget.

How does the economic price adjustment (EPA) clause typically impact the final cost of fuel contracts?

The Economic Price Adjustment (EPA) clause in fuel contracts is designed to account for fluctuations in market prices of the underlying commodities, such as crude oil or refined products. It allows for adjustments to the contract price based on a pre-defined index or formula, mitigating risks for both the contractor and the government. For taxpayers, an EPA clause can lead to higher costs if market prices rise significantly above the initial contract price. Conversely, it can protect the government from paying inflated prices if market prices fall. The effectiveness of an EPA in ensuring value depends on the fairness of the adjustment mechanism and diligent oversight to prevent unwarranted price increases. In this $54 million contract, the EPA would have allowed MABANAFT DEUTSCHLAND GMBH & CO. KG to pass on documented increases in fuel costs, impacting the final expenditure beyond the initial fixed price.

What is MABANAFT DEUTSCHLAND GMBH & CO. KG's track record with federal contracts?

Information on MABANAFT DEUTSCHLAND GMBH & CO. KG's specific track record with federal contracts, beyond this $54 million award, is not detailed in the provided data. However, being awarded a contract of this magnitude by the Department of Defense, especially through full and open competition, suggests a capacity to meet stringent government requirements. A comprehensive assessment would involve reviewing their performance on other federal contracts, including on-time delivery, quality of products, adherence to pricing, and any history of disputes or contract terminations. Companies that regularly win large government contracts often have established processes for compliance and performance management.

How does the competition level (6 bidders) for this fuel contract compare to typical DoD fuel procurements?

Receiving 6 bids for this fuel oil and diesel contract under full and open competition is generally considered a healthy level of engagement. For large-scale commodity procurements like fuel, a higher number of bidders typically indicates a competitive market and increases the likelihood of favorable pricing for the government. While 'typical' competition levels can vary based on the specific commodity, geographic scope, and market dynamics, 6 bidders suggests that the Defense Logistics Agency successfully attracted a reasonable number of interested parties. Lower competition (e.g., 1-2 bidders) might raise concerns about price discovery and potential overpayment, whereas 6 bidders suggests a more robust marketplace was accessed for this procurement.

What are the potential risks associated with a 3-year fixed-price contract with economic price adjustment for fuel?

A 3-year fixed-price contract with economic price adjustment (EPA) for fuel carries inherent risks, primarily related to price volatility. The 'fixed-price' component provides a baseline, but the EPA allows for adjustments based on market indices. The primary risk for the government (taxpayers) is that fuel prices could increase substantially over the contract period, leading to higher-than-anticipated expenditures. Conversely, if prices fall, the EPA might offer less savings than a purely fixed-price contract without adjustments. For the contractor, the risk is that prices might fall, reducing their profit margin if the EPA formula doesn't fully compensate. Effective risk management requires robust monitoring of market trends and ensuring the EPA formula accurately reflects cost changes without being overly generous or punitive.

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: 6

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Marquard & Bahls AG (UEI: 316958537)

Address: ADMIRALITATSTR. 55, HAMBURG

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $54,009,637

Exercised Options: $54,009,637

Current Obligation: $54,009,637

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D1270

IDV Type: IDC

Timeline