DoD's $36.8M petroleum contract to Dennis K. Burke Inc. awarded under full and open competition

Contract Overview

Contract Amount: $36,825,493 ($36.8M)

Contractor: Dennis K. Burke Inc.

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2014-03-31

Contract Duration: 1,095 days

Daily Burn Rate: $33.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 41

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: BIODIESEL B20 (BDI); ULSD (DS1); RED-DYED ULSD, #2 GRADE (DSS); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNL (GUM); GASOHOL, REG UNL (GUR); KEROSENE, 1K (KS1); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR)

Place of Performance

Location: CHELSEA, SUFFOLK County, MASSACHUSETTS, 02150, UNITED STATES OF AMERICA

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $36.8 million to DENNIS K. BURKE INC. for work described as: BIODIESEL B20 (BDI); ULSD (DS1); RED-DYED ULSD, #2 GRADE (DSS); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNL (GUM); GASOHOL, REG UNL (GUR); KEROSENE, 1K (KS1); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR) Key points: 1. Contract awarded for a variety of fuel types, including biodiesel and unleaded gasoline. 2. The contract duration of 1095 days suggests a stable, long-term supply need. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type indicates potential for price fluctuations based on market conditions. 4. The award to a single contractor, Dennis K. Burke Inc., warrants scrutiny for potential price impacts. 5. The contract was awarded under a 'Full and Open Competition' strategy. 6. The North American Industry Classification System (NAICS) code 424720 points to wholesale distribution of petroleum products.

Value Assessment

Rating: fair

The total award amount of $36.8 million over three years for petroleum products appears within a reasonable range for large-scale federal fuel procurement. However, without specific details on the exact quantities and types of fuel procured, a precise value-for-money assessment is challenging. The FPEPA clause introduces a variable cost component, making direct comparison to fixed-price contracts difficult. Benchmarking against similar multi-year fuel supply contracts for the Department of Defense would provide a clearer picture of cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, suggesting that multiple vendors had the opportunity to bid. The presence of 41 bids indicates a competitive process. A robust competition typically leads to better pricing and terms for the government. The specific details of the bidding process, such as the number of responsive bids and the spread of pricing, would further illuminate the effectiveness of the competition.

Taxpayer Impact: A competitive bidding process generally benefits taxpayers by driving down costs and ensuring the government receives fair market value for the fuel supplied.

Public Impact

Military installations within the specified region will receive essential fuel supplies for operational readiness. The contract supports the logistical needs of the Department of Defense, ensuring the availability of various fuel types. The procurement indirectly supports the broader energy sector and fuel distribution networks. Personnel involved in fuel handling, transportation, and quality assurance are impacted by this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The FPEPA clause introduces price volatility risk for the government.
Reliance on a single awardee, even from a competitive process, can limit future negotiation leverage.
Ensuring consistent quality across all fuel deliveries is a potential concern.

Positive Signals

Awarded through full and open competition, indicating a broad market solicitation.
A significant number of bids (41) suggests strong market interest and a competitive environment.
The contract specifies a variety of fuel types, meeting diverse operational needs.

Sector Analysis

The petroleum and petroleum products wholesale industry is a critical component of the energy sector, supplying fuels essential for transportation, industry, and government operations. The market is characterized by global supply and demand dynamics, price volatility, and significant logistical infrastructure. Federal contracts for fuel are substantial, often awarded through competitive processes to ensure reliable supply chains for defense and other government functions. This contract fits within the broader category of defense logistics and supply chain management, ensuring operational readiness.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As it was awarded under full and open competition, it is possible that small businesses participated in the bidding process, but their specific role or success is not detailed. Further analysis would be needed to determine if subcontracting opportunities were mandated or voluntarily pursued by the prime contractor.

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 Department of Defense. Mechanisms likely include contract performance monitoring, quality assurance checks, and financial audits. The FPEPA clause would require specific oversight to ensure price adjustments are justified by market indices. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

Defense Fuel Supply Center Contracts
Military Fuel Procurement
Bulk Fuel Distribution Contracts
Energy Supply Contracts for Government Agencies

Risk Flags

Price Volatility Risk (FPEPA)
Contractor Performance History (Requires further review)
Supply Chain Reliability
Market Index Fluctuations

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.8 million to DENNIS K. BURKE INC.. BIODIESEL B20 (BDI); ULSD (DS1); RED-DYED ULSD, #2 GRADE (DSS); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNL (GUM); GASOHOL, REG UNL (GUR); KEROSENE, 1K (KS1); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR)

Who is the contractor on this award?

The obligated recipient is DENNIS K. BURKE INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.8 million.

What is the period of performance?

Start: 2011-04-01. End: 2014-03-31.

What was the specific breakdown of fuel types and quantities procured under this contract?

The provided data lists the abbreviations for various fuel types: BIODIESEL B20 (BDI); ULSD (DS1); RED-DYED ULSD, #2 GRADE (DSS); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNLEADED (GUM); GASOHOL, REG UNLEADED (GUR); KEROSENE, 1K (KS1); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR). However, the exact quantities for each of these fuel types were not detailed in the provided data. The total award value of $36,825,492.53 covers the aggregate procurement of these fuels over the contract period. A comprehensive understanding of the contract's scope would require access to the detailed delivery orders or the contract's statement of work, which would specify the estimated or actual quantities for each fuel type.

How did the pricing of this contract compare to market rates at the time of award?

The contract utilized a Fixed Price with Economic Price Adjustment (FPEPA) structure. This means the base price was fixed, but adjustments were made based on an economic index, likely related to fuel commodity prices. To compare this contract's pricing to market rates, one would need to analyze the base price and the subsequent adjustments against prevailing market indices for each fuel type (e.g., ULSD, gasoline, biodiesel) during the contract period (April 1, 2011, to March 31, 2014). Without access to the specific economic price adjustment formula and the market indices used, a direct comparison is difficult. However, the fact that it was awarded under full and open competition with 41 bids suggests that the initial pricing was competitive among the bidders.

What is the track record of Dennis K. Burke Inc. in fulfilling federal fuel contracts?

Dennis K. Burke Inc. has a history of securing and fulfilling federal contracts, particularly for fuel supply. While this specific contract was awarded in 2011, the company's broader performance record with agencies like the Defense Logistics Agency (DLA) would be a key indicator. A review of past performance evaluations, any contract disputes, or on-time delivery rates for previous federal fuel awards would provide insight into their reliability. Federal procurement data systems often contain past performance information, which can be accessed to assess the contractor's history of meeting contractual obligations, quality standards, and delivery schedules.

What are the potential risks associated with the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type for this fuel procurement?

The FPEPA contract type introduces price volatility risk for the government. While it aims to protect the contractor from significant market fluctuations and ensure supply, it means the final cost can deviate from the initially anticipated price. The risk lies in the potential for upward adjustments to the price based on the chosen economic index, which could lead to the government paying more than initially budgeted if fuel prices rise sharply. Conversely, if prices fall, the government benefits from lower costs. Effective oversight is crucial to ensure that price adjustments are accurately calculated according to the contract's specified indices and formulas, and that the government is not overpaying due to market speculation or manipulation.

How does this contract's value compare to other similar fuel procurements by the Department of Defense?

The total award value of approximately $36.8 million over three years for petroleum products is a significant sum, reflecting the substantial fuel needs of the Department of Defense. To benchmark this value, it would be necessary to compare it with other large-scale, multi-year fuel supply contracts awarded by the DoD or its components, such as the DLA, during a similar timeframe. Factors like the geographic scope of delivery, the specific mix of fuel types, and the contract type (fixed-price vs. FPEPA) would need to be considered for a fair comparison. Contracts for bulk fuel delivery to major military bases or overseas operations could offer relevant benchmarks for assessing whether this contract represents a cost-effective procurement.

Industry Classification

NAICS: Wholesale Trade › Petroleum and Petroleum Products Merchant Wholesalers › Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)

Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060010R0228

Offers Received: 41

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

Evaluated Preference: NONE

Contractor Details

Address: 284 EASTERN AVE, CHELSEA, MA, 02150

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

Financial Breakdown

Contract Ceiling: $44,147,688

Exercised Options: $44,147,688

Current Obligation: $36,825,493

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D8521

IDV Type: IDC

Timeline