DoD Awards $413M for Petroleum Products to Equilon Enterprises LLC, with Fixed Price Adjustment
Contract Overview
Contract Amount: $1,358,320,746 ($1.4B)
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: $2.7M/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 JP5 CLIN 0101 FOR 82,349,000 FOB ORIGIN DEER PARK, TX BY TANKER CLIN 0201 FOR 212,860,000 FOB ORIGIN DEER PARK, TX BY PIPELINE AWARD JP8 CLIN 0301 FOR 118,701,000 FOB ORIGIN DEER PARK, TX BY PIPELINE
Place of Performance
Location: HOUSTON, HARRIS County, TEXAS, 77002
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $1.36 billion to EQUILON ENTERPRISES LLC for work described as: AWARD JP5 CLIN 0101 FOR 82,349,000 FOB ORIGIN DEER PARK, TX BY TANKER CLIN 0201 FOR 212,860,000 FOB ORIGIN DEER PARK, TX BY PIPELINE AWARD JP8 CLIN 0301 FOR 118,701,000 FOB ORIGIN DEER PARK, TX BY PIPELINE Key points: 1. Significant award for essential petroleum products supporting defense operations. 2. Competition was full and open, suggesting a potentially competitive pricing environment. 3. Fixed Price with Economic Price Adjustment (FPEPA) introduces risk of cost escalation. 4. Spending concentrated in the Petroleum Refineries sector, with a focus on Texas.
Value Assessment
Rating: good
The total award value of $413,210,000 for petroleum products appears substantial. Benchmarking against similar large-scale fuel contracts would be necessary for a definitive pricing assessment, but the FPEPA clause warrants close monitoring.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple bidders likely participated. This method generally promotes competitive pricing, though the FPEPA clause allows for adjustments based on market fluctuations.
Taxpayer Impact: Taxpayers are exposed to potential price increases due to economic adjustments tied to market conditions for petroleum products.
Public Impact
Ensures a steady supply of critical fuel for Department of Defense operations. Economic price adjustment clause could lead to higher costs for taxpayers if fuel prices rise significantly. Concentration of award in Texas highlights regional economic impact and logistical considerations. The use of both tanker and pipeline delivery methods suggests flexibility in supply chain management.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Risk of cost escalation due to Economic Price Adjustment.
- Dependence on a single contractor for a significant volume of fuel.
- Potential for supply chain disruptions affecting delivery.
Positive Signals
- Awarded through full and open competition.
- Ensures critical fuel supply for national defense.
- Multiple delivery methods (tanker, pipeline) offer logistical flexibility.
Sector Analysis
This award falls within the Petroleum Refineries sector (NAICS 324110). Spending in this sector is crucial for national security and economic stability, with prices often subject to global market volatility and geopolitical factors.
Small Business Impact
The data indicates this award was not set aside for small businesses, and the contractor, Equilon Enterprises LLC, is a large entity. There is no indication of small business participation in this specific award.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key procurement arm for the DoD. Oversight would focus on contract performance, delivery schedules, and the accurate application of the economic price adjustment clause.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (FPEPA) introduces cost escalation risk.
- Potential for supply chain disruptions affecting delivery.
- Dependence on a single large contractor for critical fuel supply.
- Lack of small business participation noted.
Tags
petroleum-refineries, department-of-defense, tx, do, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.36 billion to EQUILON ENTERPRISES LLC. AWARD JP5 CLIN 0101 FOR 82,349,000 FOB ORIGIN DEER PARK, TX BY TANKER CLIN 0201 FOR 212,860,000 FOB ORIGIN DEER PARK, TX BY PIPELINE AWARD JP8 CLIN 0301 FOR 118,701,000 FOB ORIGIN DEER PARK, TX BY PIPELINE
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 $1.36 billion.
What is the period of performance?
Start: 2012-09-20. End: 2014-01-30.
What is the historical performance of Equilon Enterprises LLC on similar DoD contracts, particularly regarding delivery and adherence to pricing adjustments?
Assessing Equilon Enterprises LLC's past performance is crucial. Reviewing previous contracts for timeliness, quality of product, and the accuracy of their economic price adjustment calculations can provide insight into their reliability and potential risks. Data on disputes or contract modifications would also be valuable for a comprehensive risk assessment.
How sensitive is the total contract value to potential fuel price fluctuations under the FPEPA clause over the contract period?
The sensitivity of the contract value to fuel price fluctuations depends heavily on the specific indices and formulas used in the Economic Price Adjustment (EPA) clause. A thorough analysis would require examining the contract's EPA terms and comparing them against historical and projected fuel price trends to estimate the potential range of cost increases.
What is the strategic importance of securing petroleum products from this specific region (Texas) and through these delivery methods (tanker, pipeline)?
Securing petroleum products from Texas, a major hub for refining and logistics, offers strategic advantages in terms of proximity to production and established transportation infrastructure. The combination of tanker and pipeline delivery provides redundancy and flexibility, ensuring supply chain resilience even if one method faces disruption.
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: $1,358,320,746
Exercised Options: $1,358,320,746
Current Obligation: $1,358,320,746
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060012D0510
IDV Type: IDC
Timeline
Start Date: 2012-09-20
Current End Date: 2014-01-30
Potential End Date: 2014-01-30 00:00:00
Last Modified: 2013-09-04
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