DoD awards $172.6M for petroleum products in Alaska, highlighting long-term supply needs

Contract Overview

Contract Amount: $172,607,711 ($172.6M)

Contractor: Crowley Petroleum Distribution, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-10-05

End Date: 2015-10-30

Contract Duration: 1,486 days

Daily Burn Rate: $116.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: AWARD

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99518

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $172.6 million to CROWLEY PETROLEUM DISTRIBUTION, INC. for work described as: AWARD Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Fixed-price contract with economic price adjustment indicates potential for cost fluctuations. 3. Long duration of 1486 days suggests a significant, ongoing requirement for petroleum products. 4. Awarded by the Defense Logistics Agency, responsible for global logistics support. 5. The contract's value is substantial, reflecting the scale of military operations in Alaska. 6. Focus on petroleum products points to critical energy infrastructure support for the region.

Value Assessment

Rating: good

The award of over $172 million for petroleum products over a four-year period represents a significant investment. While specific cost benchmarks are not provided, the fixed-price with economic price adjustment structure suggests an attempt to balance cost certainty with market volatility. Comparing this to similar long-term fuel supply contracts for remote or strategically important locations would provide further insight into its value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 13 bidders (no=13) suggests a healthy level of competition for this requirement, which typically drives more competitive pricing and better value for the government.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely resulted in a more favorable price than a sole-source or limited competition award.

Public Impact

Provides essential fuel for Department of Defense operations and personnel stationed in Alaska. Ensures the continuity of critical energy supplies for military readiness in a remote region. Supports the economic activity of the region through the provision of fuel. Impacts the logistical capabilities of the Defense Logistics Agency in supporting Arctic operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if fuel prices rise significantly.
Long-term contracts may not always reflect the most current market pricing if not managed effectively.
Dependence on a single contractor for a critical resource in a remote location poses supply chain risks.

Positive Signals

Full and open competition with multiple bidders suggests a competitive pricing environment.
The long contract duration indicates a stable and predictable supply chain for a critical resource.
Awarding to Crowley Petroleum Distribution, Inc., a known entity in fuel supply, suggests reliability.

Sector Analysis

This contract falls within the Petroleum Refineries (NAICS 324110) sector, specifically focusing on the distribution and supply of petroleum products. The market for such products is global and highly sensitive to geopolitical events and supply/demand dynamics. The Defense Logistics Agency's role highlights the strategic importance of securing fuel supplies for military operations, particularly in geographically challenging areas like Alaska.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. Given the scale and nature of petroleum distribution, it is unlikely that small businesses would be primary awardees for the prime contract, though they may participate as subcontractors.

Oversight & Accountability

The Defense Logistics Agency has established oversight mechanisms for its contracts, including performance monitoring and financial accountability. The fixed-price nature of the contract, even with economic adjustments, provides a degree of cost control. Transparency is generally maintained through contract award databases, though specific performance metrics are not detailed here.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Alaska Military Fuel Supply
Petroleum Product Procurement
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Potential for cost overruns due to economic price adjustments.
Supply chain vulnerability in a remote geographic location.
Contractor performance risk over a long contract duration.
Dependence on a single source for critical fuel supply.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $172.6 million to CROWLEY PETROLEUM DISTRIBUTION, INC.. AWARD

Who is the contractor on this award?

The obligated recipient is CROWLEY PETROLEUM DISTRIBUTION, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $172.6 million.

What is the period of performance?

Start: 2011-10-05. End: 2015-10-30.

What is the historical spending pattern for petroleum products by the Defense Logistics Agency in Alaska?

Historical spending data for petroleum products by the Defense Logistics Agency (DLA) in Alaska would reveal trends in demand, pricing, and contractor performance over time. Analyzing past awards, including their values, durations, and competition levels, can help benchmark the current $172.6 million contract. For instance, if previous contracts were significantly smaller or awarded under different terms, it might indicate an increase in operational tempo or a shift in procurement strategy. Conversely, consistent spending patterns could suggest a stable, long-term requirement. Without specific historical data, it's difficult to definitively assess if this award represents an increase or decrease in overall spending, but its substantial value points to a significant and ongoing need for fuel in the region.

How does the pricing structure (Fixed Price with Economic Price Adjustment) typically impact cost certainty for the government?

The Fixed Price with Economic Price Adjustment (FPEPA) contract type aims to provide a degree of cost certainty while acknowledging potential fluctuations in market prices, particularly for commodities like petroleum. The 'fixed price' component establishes a base cost, while the 'economic price adjustment' allows for modifications to this price based on pre-defined economic factors, such as changes in the cost of raw materials or labor. For the government, this means the final cost can vary from the initial estimate. While it protects against extreme market volatility that could disrupt supply, it also means the final expenditure might exceed the initially budgeted amount if those economic factors trend upwards. Effective management and clear indexing mechanisms are crucial to ensure that the adjustments are fair and do not lead to excessive costs for taxpayers.

What are the potential risks associated with a long-duration contract (1486 days) for critical fuel supplies in a remote location like Alaska?

Long-duration contracts for critical fuel supplies in remote locations like Alaska present several potential risks. Firstly, supply chain disruptions, whether due to natural disasters, geopolitical events, or logistical failures, can have a magnified impact given the limited alternative sources in remote areas. Secondly, the extended timeframe might lead to contractor complacency or a decrease in proactive performance management if oversight is not rigorous. Thirdly, market price volatility, even with economic price adjustments, can lead to significant cost overruns over such a long period. Finally, technological advancements or changes in operational requirements might render the contracted fuel type or delivery method less optimal over time, but the long duration makes adaptation difficult and potentially costly.

How does the Defense Logistics Agency ensure contractor performance and accountability for such a large-value, long-term contract?

The Defense Logistics Agency (DLA) employs various mechanisms to ensure contractor performance and accountability for large-value, long-term contracts. These typically include establishing clear performance standards and metrics within the contract itself, such as delivery timelines, fuel quality specifications, and reporting requirements. DLA contracting officers and contract specialists monitor contractor performance throughout the contract's lifecycle, conducting regular reviews and site visits where applicable. Performance evaluations are often documented, influencing future contracting decisions. Furthermore, the DLA utilizes contract clauses that allow for remedies in case of non-performance, including potential termination for default. Financial oversight is also critical, ensuring that payments are tied to satisfactory performance and that economic price adjustments are applied correctly according to the contract terms.

What is the significance of awarding this contract through 'Full and Open Competition' with 13 bidders?

Awarding this contract through 'Full and Open Competition' signifies that the Defense Logistics Agency (DLA) sought bids from all responsible sources, maximizing the potential pool of offerors. The fact that 13 bidders submitted proposals indicates a robust and competitive market for providing petroleum products to the Department of Defense in Alaska. This high level of competition is generally advantageous for the government as it tends to drive down prices, encourage innovation, and ensure that the selected contractor offers the best overall value in terms of price, technical capability, and past performance. It reduces the risk of awarding to a contractor who may have had less incentive to offer competitive terms if the competition had been limited or sole-source.

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: SP060011R0210

Offers Received: 13

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

Evaluated Preference: NONE

Contractor Details

Address: 201 ARCTIC SLOPE AVE, ANCHORAGE, AK, 00

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

Financial Breakdown

Contract Ceiling: $172,607,711

Exercised Options: $172,607,711

Current Obligation: $172,607,711

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D4004

IDV Type: IDC

Timeline