DoD spent $37M on petroleum products, with Petroleum Traders Corp. winning a fixed-price contract

Contract Overview

Contract Amount: $37,080,309 ($37.1M)

Contractor: Petroleum Traders Corp

Awarding Agency: Department of Defense

Start Date: 2011-04-01

End Date: 2014-03-31

Contract Duration: 1,095 days

Daily Burn Rate: $33.9K/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 (DS2); RED-DYED ULSD #2 GRADE (DSS); ETHANOL E8 (E85); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNL (GUM); GASOHOL, REG UNL (GUR); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR)

Place of Performance

Location: FORT WAYNE, ALLEN County, INDIANA, 46804

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $37.1 million to PETROLEUM TRADERS CORP for work described as: BIODIESEL B20 (BDI); ULSD (DS2); RED-DYED ULSD #2 GRADE (DSS); ETHANOL E8 (E85); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNL (GUM); GASOHOL, REG UNL (GUR); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR) Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Fixed-price contract with economic price adjustment introduces potential for cost overruns. 3. Contract duration of 3 years suggests a need for consistent fuel supply. 4. Geographic focus on Indiana for fuel distribution. 5. No small business set-aside, indicating a focus on larger prime contractors.

Value Assessment

Rating: fair

The total award amount of $37.1 million over three years for various fuel types appears to be within a reasonable range for a large federal contract of this nature. However, without specific unit pricing benchmarks or comparisons to similar contracts awarded during the same period, a definitive value-for-money assessment is challenging. The inclusion of economic price adjustments introduces a variable that could impact the final cost, making it difficult to ascertain the true value at the outset.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. However, the data indicates only one award was made to Petroleum Traders Corp. The number of bids received is not specified, which limits the ability to fully assess the level of competition. A robust competition typically involves several responsive bids to ensure competitive pricing.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best possible prices through market forces. However, if the competition was not robust (e.g., few bidders), taxpayers may not have received the full benefit of competitive pricing.

Public Impact

Military operations in and around Indiana benefit from a reliable supply of various fuel types. The contract supports the logistical needs of the Department of Defense, ensuring readiness. Indirectly supports the transportation and logistics workforce involved in fuel delivery. Ensures availability of specialized fuels like B20 biodiesel alongside standard diesel and gasoline.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to costs exceeding initial projections.
Lack of specific bid count makes it hard to confirm the extent of competition.
Contract awarded to a single entity may limit future competitive opportunities if market concentration occurs.

Positive Signals

Awarded under full and open competition, theoretically allowing for broad market participation.
Contract duration of three years provides stability for both the government and the contractor.
Includes a variety of fuel types, meeting diverse operational needs.

Sector Analysis

This contract falls within the Petroleum and Petroleum Products Merchant Wholesalers sector, specifically for fuels used by the Department of Defense. The market for wholesale fuel distribution is large and competitive, with numerous suppliers. Federal contracts for fuel are common, supporting military readiness and operations across various agencies. Benchmarking this contract's value requires comparison against other large-volume fuel procurements, considering factors like fuel type, delivery location, and contract terms.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary focus was on securing the necessary fuel supply from established, likely larger, wholesale distributors capable of meeting the volume and logistical demands of the Department of Defense.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA), which is responsible for procuring and distributing a wide range of supplies for the DoD. Accountability measures would include performance monitoring against contract terms, delivery schedules, and fuel quality standards. Transparency is generally maintained through contract award databases, though specific performance details might be less publicly accessible.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Department of Defense Fuel Procurement
Federal Petroleum Product Supply Contracts
Bulk Fuel Distribution Contracts

Risk Flags

Potential for cost overruns due to Economic Price Adjustment
Limited visibility into the number of bidders for competitive assessment
Single awardee may indicate limited market competition or specific capabilities required

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.1 million to PETROLEUM TRADERS CORP. BIODIESEL B20 (BDI); ULSD (DS2); RED-DYED ULSD #2 GRADE (DSS); ETHANOL E8 (E85); FUEL OIL, BURNER #2, LS (FL2); GASOHOL, MID UNL (GUM); GASOHOL, REG UNL (GUR); RFG MIDGRADE UNLEADED (MMR); RFG REGULAR UNLEADED (MRR)

Who is the contractor on this award?

The obligated recipient is PETROLEUM TRADERS CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.1 million.

What is the period of performance?

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

What was the historical spending pattern for similar fuel contracts by the Department of Defense in Indiana?

Analyzing historical spending for similar fuel contracts by the Department of Defense in Indiana would require access to historical contract databases. Generally, the DoD procures significant volumes of fuel annually to support its global operations. Spending patterns can fluctuate based on geopolitical events, operational tempo, and fluctuations in global oil prices. Contracts like this one, awarded over a multi-year period, aim to provide a stable supply chain. Without specific historical data for this region and fuel types, it's difficult to provide precise figures, but it's reasonable to assume consistent, substantial spending on fuel to maintain military readiness.

How does the unit price of fuel under this contract compare to market rates during the contract period?

Comparing the unit price of fuel under this contract to market rates would necessitate accessing the specific pricing data within the contract and cross-referencing it with prevailing market indices for diesel, gasoline, and other fuels during the 2011-2014 period. The contract's 'Economic Price Adjustment' (EPA) clause indicates that prices were designed to track market fluctuations, but the exact spread between contract price and market rate is crucial. A detailed analysis would involve examining the EPA formula and comparing actual invoiced prices against benchmarks like the NYMEX futures or Department of Energy price reports for the relevant regions and timeframes. Without this granular data, a definitive comparison is not possible.

What is the track record of Petroleum Traders Corp. in fulfilling large federal fuel contracts?

Petroleum Traders Corp. has a history of engaging in federal fuel contracts. Information regarding their specific track record, including past performance ratings, on-time delivery rates, and any past disputes or contract terminations, would typically be available through federal procurement data systems like the Federal Procurement Data System (FPDS) or Contractor Performance Assessment Reporting System (CPARS). A thorough review would involve examining their performance on previous DoD or other agency contracts to assess their reliability, capacity, and adherence to contract terms. Their ability to secure this $37 million contract suggests a level of established capability and experience in the federal fuel supply market.

What are the potential risks associated with the economic price adjustment (EPA) clause in this contract?

The primary risk associated with the Economic Price Adjustment (EPA) clause is the potential for costs to exceed initial budget projections. While EPAs are intended to reflect fluctuations in market prices for commodities like fuel, they can lead to higher-than-anticipated expenditures for the government if market prices rise significantly. This introduces budget uncertainty and can strain agency funding. Conversely, if prices fall, the government benefits, but the unpredictability remains a risk factor for financial planning. The specific formula used in the EPA clause dictates the extent of this risk.

How does the geographic concentration in Indiana impact the overall efficiency and cost of fuel delivery for the DoD?

Concentrating fuel delivery within Indiana for this specific contract could offer efficiencies in terms of logistics and transportation costs, assuming there is a significant DoD presence or operational requirement in that region. Reduced transit distances and optimized delivery routes can lower per-unit transportation expenses. However, it also presents a risk if there are disruptions within Indiana (e.g., natural disasters, transportation network issues) that could impact supply. For broader DoD operations, a geographically dispersed supply chain is typically more resilient, but for specific regional needs, a concentrated approach can be cost-effective.

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: 7120 POINTE INVERNESS WY, FORT WAYNE, IN, 03

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

Financial Breakdown

Contract Ceiling: $48,642,751

Exercised Options: $48,642,751

Current Obligation: $37,080,309

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D8530

IDV Type: IDC

Timeline