DoD awards $341.9M contract for fuel, with significant portion for barge delivery

Contract Overview

Contract Amount: $341,958,772 ($342.0M)

Contractor: Equilon Enterprises LLC

Awarding Agency: Department of Defense

Start Date: 2012-09-20

End Date: 2014-01-30

Contract Duration: 497 days

Daily Burn Rate: $688.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 27

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: AWARD JP8 CLIN 0101 FOR 8,340,000 FOB ORIGIN MOBILE, AL, BY BARGE CLIN 0201 FOR 98,970,000 FOB ORIGIN MOBILE, AL BY BARGE

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77002

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $342.0 million to EQUILON ENTERPRISES LLC for work described as: AWARD JP8 CLIN 0101 FOR 8,340,000 FOB ORIGIN MOBILE, AL, BY BARGE CLIN 0201 FOR 98,970,000 FOB ORIGIN MOBILE, AL BY BARGE Key points: 1. Contract awarded to Equilon Enterprises LLC for petroleum products. 2. Significant portion of the award value is allocated for barge transportation. 3. The contract utilized full and open competition. 4. The contract duration was approximately 1.6 years. 5. The contract was awarded by the Defense Logistics Agency. 6. The North American Industry Classification System (NAICS) code is 324110 (Petroleum Refineries).

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the fuel type, volume, and delivery terms. The fixed-price with economic price adjustment structure suggests an attempt to manage price volatility, but can sometimes lead to higher initial bids. The contract's total value of over $341 million indicates a substantial procurement, and the breakdown between CLINs suggests a significant cost associated with transportation, particularly via barge.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of 27 bids suggests a competitive environment, which generally benefits price discovery and can lead to more favorable pricing for the government. The specific details of the bidding process and the number of responsive bids would provide further insight into the level of competition.

Taxpayer Impact: Full and open competition generally leads to better value for taxpayers by encouraging a wider range of offers and potentially driving down prices through market forces.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the supply of essential petroleum products for its operations. The services delivered include the provision of fuel, with a notable emphasis on transportation logistics via barge. The geographic impact is centered around Mobile, Alabama, as the origin point for delivery. Workforce implications are likely within the petroleum refining and transportation sectors, particularly for barge operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can introduce uncertainty in final costs if not carefully managed.
Reliance on barge transportation may be subject to weather and waterway conditions, potentially impacting delivery schedules.

Positive Signals

Awarded under full and open competition, suggesting a robust bidding process.
The contract was awarded to Equilon Enterprises LLC, a known entity in the energy sector.
The Defense Logistics Agency's involvement indicates a strategic procurement for military readiness.

Sector Analysis

This contract falls within the petroleum refining and distribution sector, a critical component of the energy industry. The NAICS code 324110 specifically points to petroleum refineries. The significant value and the inclusion of transportation services highlight the logistical complexities and costs associated with supplying fuel to government entities. Comparable spending benchmarks would depend on the specific type and volume of fuel procured and the prevailing market prices at the time of award.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears limited based on this information. Further investigation into subcontracting plans would be necessary to fully assess any indirect effects.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a component of the Department of Defense, DLA adheres to established procurement regulations and oversight mechanisms. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Fuel Supply Center contracts
Petroleum product procurement
Logistics and transportation services for DoD
Energy sector contracts

Risk Flags

Potential for price volatility due to Economic Price Adjustment clause.
Dependence on barge transportation introduces logistical risks (weather, waterway conditions).

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $342.0 million to EQUILON ENTERPRISES LLC. AWARD JP8 CLIN 0101 FOR 8,340,000 FOB ORIGIN MOBILE, AL, BY BARGE CLIN 0201 FOR 98,970,000 FOB ORIGIN MOBILE, AL BY BARGE

Who is the contractor on this award?

The obligated recipient is EQUILON ENTERPRISES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $342.0 million.

What is the period of performance?

Start: 2012-09-20. End: 2014-01-30.

What specific types of petroleum products were procured under this contract?

The provided data does not specify the exact types of petroleum products procured. However, given the NAICS code 324110 (Petroleum Refineries), it is highly probable that the contract covered refined fuels such as diesel, jet fuel, or gasoline. The Defense Logistics Agency typically procures a wide range of fuels to support military operations globally. Further details would be available in the contract's statement of work or CLIN descriptions.

How does the cost of barge transportation compare to other modes of delivery for similar fuel types?

Barge transportation is often one of the most cost-effective methods for moving large volumes of bulk commodities, including petroleum products, over long distances, especially when waterways are accessible. However, its speed is generally slower than rail or truck, and it is dependent on navigable waterways and port infrastructure. The specific cost comparison would depend on factors like distance, volume, fuel prices, and the availability and cost of alternative transportation modes in the Mobile, Alabama region. The significant allocation for barge delivery in this contract suggests it was deemed the most economical or practical solution for the required quantities and delivery points.

What is the typical track record of Equilon Enterprises LLC with DoD contracts?

Equilon Enterprises LLC, often associated with Shell Oil Company, has a history of engaging in large-scale energy-related contracts, including those with government entities. While specific details of their track record with the DoD are not provided in this data snippet, companies of this size and nature typically have experience fulfilling complex supply chain and fuel provision requirements. A comprehensive review would involve examining past performance evaluations, contract history, and any reported issues or successes in prior dealings with the Department of Defense.

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

An Economic Price Adjustment (EPA) clause in a contract allows for adjustments to the contract price based on fluctuations in specific economic factors, such as the cost of raw materials or labor. For fuel contracts, EPA clauses are often tied to published indices for crude oil or refined product prices. While intended to protect both the contractor from unforeseen cost increases and the government from excessive pricing during market volatility, EPA clauses can lead to final costs that are higher or lower than the initially negotiated price. The specific impact depends on the index used, the adjustment formula, and the market conditions during the contract period.

What are the potential risks associated with relying on barge delivery for critical fuel supplies?

Relying on barge delivery for critical fuel supplies introduces several potential risks. These include delays due to weather conditions (e.g., storms, ice), waterway closures or restrictions (e.g., maintenance, accidents), and port congestion. Furthermore, the security of barge shipments can be a concern in certain regions. For military operations, disruptions in fuel supply can have significant operational consequences. Mitigation strategies often involve maintaining strategic reserves, diversifying transportation methods, and robust logistical planning to account for potential delays.

How does the Defense Logistics Agency manage fuel supply chains to ensure readiness?

The Defense Logistics Agency (DLA) manages the DoD's global fuel supply chain through a complex network of contracts, storage facilities, and transportation assets. DLA employs strategies such as strategic sourcing, demand forecasting, inventory management, and risk assessment to ensure fuels are available when and where needed. They work with industry partners to secure reliable supply lines, often utilizing multiple modes of transportation and diverse sources. DLA also monitors global energy markets and geopolitical factors that could impact supply. Their objective is to provide a resilient and responsive fuel support system that underpins military readiness across all operational environments.

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: SP060012R0061

Offers Received: 27

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Shell Deutschland Gmbh (UEI: 423792808)

Address: 910 LOUISIANA ST STE 2, HOUSTON, TX, 90

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

Financial Breakdown

Contract Ceiling: $341,958,772

Exercised Options: $341,958,772

Current Obligation: $341,958,772

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060012D0498

IDV Type: IDC

Timeline