Petro Star Inc. awarded $42.6M contract for petroleum refining services by the Defense Logistics Agency

Contract Overview

Contract Amount: $42,644,991 ($42.6M)

Contractor: Petro Star Inc.

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2015-09-30

Contract Duration: 1,460 days

Daily Burn Rate: $29.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: AWARD

Place of Performance

Location: FAIRBANKS, FAIRBANKS NORTH STAR County, ALASKA, 99701

State: Alaska Government Spending

Plain-Language Summary

Department of Defense obligated $42.6 million to PETRO STAR INC. for work described as: AWARD Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of 1460 days (4 years) indicates a significant, long-term need for these services. 3. The firm fixed-price contract type suggests that Petro Star Inc. bears the risk of cost overruns. 4. The award was made by the Defense Logistics Agency, a key provider of logistics support to the military. 5. The North American Industry Classification System (NAICS) code 324110 points to petroleum refineries as the service provider. 6. The contract was awarded as a standard award, not a small business set-aside, indicating large business participation.

Value Assessment

Rating: fair

The award amount of $42.6 million over four years averages to approximately $10.65 million per year. Without specific benchmarks for petroleum refining services for the Department of Defense, it is difficult to definitively assess value for money. However, the firm fixed-price nature of the contract shifts cost risk to the contractor, which can be a positive indicator for the government if the contractor manages costs effectively. Further analysis would require comparison to similar contracts for similar services and quantities.

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 a bid. The presence of 13 bids (indicated by 'no': 13) suggests a healthy level of competition for this requirement. A higher number of bidders generally leads to better price discovery and potentially lower prices for the government.

Taxpayer Impact: The robust competition for this contract is beneficial for taxpayers as it likely drove down the final award price, ensuring a more cost-effective use of public funds.

Public Impact

The primary beneficiaries of this contract are the various branches of the U.S. military, which rely on refined petroleum products for operational readiness. The services delivered include the refining of petroleum, crucial for fuel production. The contract's geographic scope is Alaska (ST: AK, SN: ALASKA), indicating a focus on supporting military operations or infrastructure in that region. The contract supports the industrial base involved in petroleum refining, potentially sustaining jobs within that sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the petroleum market impacting long-term costs, despite fixed-price structure.
Dependence on a single contractor for a critical resource in a specific geographic region.
Geopolitical factors affecting global oil prices could indirectly influence the contractor's operational costs and stability.

Positive Signals

Firm fixed-price contract structure transfers cost overrun risk to the contractor.
Awarded under full and open competition with multiple bidders, indicating a competitive market.
Contract duration suggests a stable, long-term relationship for a critical defense need.

Sector Analysis

The petroleum refining industry is a mature sector characterized by significant capital investment and complex operational processes. This contract falls within the industrial sector focused on transforming crude oil into usable petroleum products. The Defense Logistics Agency (DLA) is a major consumer of petroleum products, procuring fuels and lubricants to support global military operations. Benchmarking this contract's value would require comparing its per-barrel refining costs or overall value against industry standards and other government contracts for similar refined products, considering the specific logistical challenges and market conditions in Alaska.

Small Business Impact

This contract was not awarded as a small business set-aside, and the contractor, Petro Star Inc., is likely a large business given the scale of the award. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Petro Star Inc. voluntarily engages small businesses for support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which incentivizes the contractor to meet performance standards within the agreed-upon price. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Department of Defense Energy Procurement
Petroleum Product Supply Contracts
Military Fuel Infrastructure Support

Risk Flags

Geographic concentration of service delivery
Potential for supply chain disruptions in remote locations
Market volatility impacting contractor's cost structure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.6 million to PETRO STAR INC.. AWARD

Who is the contractor on this award?

The obligated recipient is PETRO STAR INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $42.6 million.

What is the period of performance?

Start: 2011-10-01. End: 2015-09-30.

What is Petro Star Inc.'s track record with the federal government, particularly with the Department of Defense and Defense Logistics Agency?

Petro Star Inc. has a history of receiving contracts from the federal government, primarily through the Defense Logistics Agency. Data indicates multiple awards for fuel and petroleum-related services, often in Alaska. While specific performance reviews are not detailed here, the consistent awarding of contracts suggests a satisfactory performance history. However, a deeper dive into past performance evaluations, any contract disputes, or terminations would be necessary for a comprehensive assessment of their track record. Examining the number and value of previous awards can also provide insight into their experience and capacity to handle large-scale government contracts.

How does the awarded price of $42.6 million compare to market rates for petroleum refining services in Alaska over the 2011-2015 period?

Comparing the $42.6 million award to market rates for petroleum refining services in Alaska between 2011 and 2015 requires access to specific market data for that period, which is not provided. However, the fact that the contract was awarded under full and open competition with 13 bids suggests that the price was competitive within the market. The firm fixed-price nature also implies that Petro Star Inc. believed they could profitably meet the government's requirements at the agreed-upon price. To conduct a precise benchmark, one would need to analyze the volume of refined products, the specific types of products, and prevailing market prices for refining capacity in Alaska during the contract's performance period.

What are the key performance indicators (KPIs) for this contract, and how was Petro Star Inc.'s performance measured against them?

Specific Key Performance Indicators (KPIs) for this contract are not detailed in the provided data. However, for a petroleum refining contract supporting the Defense Logistics Agency, typical KPIs would likely include on-time delivery of refined products, product quality and specifications adherence, operational efficiency, safety compliance, and environmental standards. Performance would be measured through DLA's quality assurance and contract administration processes, potentially involving site inspections, product testing, and delivery tracking. The firm fixed-price structure inherently incentivizes meeting delivery and quality requirements to avoid financial penalties or contract breaches.

What is the historical spending pattern for similar petroleum refining services by the Department of Defense, and how does this award fit within that trend?

Historical spending by the Department of Defense (DoD) on petroleum refining services is substantial, given the military's extensive reliance on fuel. The DoD procures vast quantities of refined petroleum products globally. This $42.6 million award to Petro Star Inc. for services in Alaska represents a specific regional allocation of that broader spending. Without access to historical spending data broken down by region, service type, and specific contractors, it's difficult to place this award precisely within a trend. However, such contracts are a recurring necessity for maintaining military readiness, especially in strategically important or logistically challenging areas like Alaska.

What are the potential risks associated with relying on Petro Star Inc. for petroleum refining in Alaska, considering its geographic isolation and market dynamics?

Potential risks associated with relying on Petro Star Inc. in Alaska include the geographic isolation, which can lead to higher transportation costs for raw materials and finished products, and potential supply chain disruptions due to weather or limited infrastructure. The market dynamics in Alaska might also involve fewer competitors, potentially increasing reliance on a single provider. Furthermore, fluctuations in global crude oil prices, even with a fixed-price contract, can impact the contractor's profitability and long-term viability. The government's risk is ensuring consistent supply, quality, and price stability in a potentially volatile environment.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Arctic Slope Regional Corporation (UEI: 076637073)

Address: 3900 C ST STE 802, ANCHORAGE, AK, 00

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Minority Owned Business, Native American Owned Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $42,644,991

Exercised Options: $42,644,991

Current Obligation: $42,644,991

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D4011

IDV Type: IDC

Timeline