DoD awards $294.6M contract for 91.3M gallons of JP8 fuel to Placid Refining Company
Contract Overview
Contract Amount: $294,567,750 ($294.6M)
Contractor: Placid Refining Company LLC
Awarding Agency: Department of Defense
Start Date: 2012-09-20
End Date: 2013-12-31
Contract Duration: 467 days
Daily Burn Rate: $630.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 27
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: 91,281,000 USG OF JP8 WITH CORROSION INHIBITOR VIA PIPELINE/BARGE.
Place of Performance
Location: PORT ALLEN, WEST BATON ROUGE County, LOUISIANA, 70767
Plain-Language Summary
Department of Defense obligated $294.6 million to PLACID REFINING COMPANY LLC for work described as: 91,281,000 USG OF JP8 WITH CORROSION INHIBITOR VIA PIPELINE/BARGE. Key points: 1. The contract covers a significant volume of JP8 fuel, essential for military operations. 2. Competition was full and open, suggesting a competitive bidding process. 3. The fixed-price with economic price adjustment contract type introduces some price volatility risk. 4. The sector is Defense Logistics, a critical area for national security.
Value Assessment
Rating: good
The award amount of $294.6 million for approximately 91.3 million gallons of JP8 fuel suggests a per-gallon cost of roughly $3.23. This is within a reasonable range for bulk fuel purchases, especially considering the inclusion of a corrosion inhibitor and the economic price adjustment clause.
Cost Per Unit: $3.23
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This method generally promotes price discovery and can lead to more favorable pricing for the government.
Taxpayer Impact: The competitive nature of the award is expected to yield fair market pricing, maximizing taxpayer value for this essential fuel procurement.
Public Impact
Ensures a steady supply of critical JP8 fuel for Department of Defense operations. Supports the refining industry and related logistics infrastructure in Louisiana. The economic price adjustment clause may lead to fluctuating costs for taxpayers based on market conditions. The contract duration of 467 days (approx. 15.5 months) provides a stable supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment introduces cost uncertainty.
- Potential for supply chain disruptions affecting delivery.
- Dependence on a single supplier for a critical commodity.
Positive Signals
- Full and open competition likely secured competitive pricing.
- Contract addresses a vital operational need for the DoD.
- Includes a corrosion inhibitor, enhancing fuel quality.
Sector Analysis
This contract falls within the Defense Logistics sector, specifically the procurement of petroleum products. Spending benchmarks for fuel contracts can vary widely based on volume, type of fuel, and market conditions. The scale of this award is substantial, reflecting significant operational requirements.
Small Business Impact
The data indicates this contract was not set aside for small businesses, and the prime contractor, Placid Refining Company LLC, is likely a larger entity. There is no direct information on small business subcontracting opportunities within this award.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for overseeing this contract. Standard oversight mechanisms would include performance monitoring, quality assurance, and financial management to ensure compliance with contract terms and taxpayer value.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Potential for supply chain disruptions affecting delivery.
- Dependence on a single supplier for a critical commodity.
- Lack of explicit small business participation noted.
Tags
petroleum-refineries, department-of-defense, la, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $294.6 million to PLACID REFINING COMPANY LLC. 91,281,000 USG OF JP8 WITH CORROSION INHIBITOR VIA PIPELINE/BARGE.
Who is the contractor on this award?
The obligated recipient is PLACID REFINING COMPANY LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $294.6 million.
What is the period of performance?
Start: 2012-09-20. End: 2013-12-31.
What is the potential impact of the economic price adjustment on the final cost to taxpayers?
The economic price adjustment (EPA) clause allows for adjustments to the contract price based on fluctuations in the cost of raw materials, labor, or other economic factors. For this JP8 fuel contract, the EPA could lead to a final cost significantly higher or lower than the initial estimated price, depending on market dynamics for crude oil and refining costs during the contract period. This introduces a degree of cost uncertainty for taxpayers.
What are the primary risks associated with relying on a single supplier for such a large volume of critical fuel?
Relying on Placid Refining Company LLC as the sole supplier for 91.3 million gallons of JP8 presents several risks. These include potential supply chain disruptions due to unforeseen events like natural disasters, refinery issues, or transportation problems. A single point of failure could jeopardize the military's fuel availability. Furthermore, it could limit future competitive opportunities if the supplier's capacity or market position changes.
How effectively does the 'full and open competition' method ensure value for money in this specific fuel procurement?
The 'full and open competition' method is designed to maximize value by encouraging multiple bidders to offer their best prices. For this substantial JP8 fuel contract, it likely resulted in competitive bids that helped establish a fair market price. However, the effectiveness in ensuring long-term value is also influenced by the economic price adjustment clause, which can mitigate some of the initial price advantages gained through competition if market prices rise significantly.
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
Address: 1940 LA HWY 1 N, PORT ALLEN, LA, 06
Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $294,567,750
Exercised Options: $294,567,750
Current Obligation: $294,567,750
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060012D0520
IDV Type: IDC
Timeline
Start Date: 2012-09-20
Current End Date: 2013-12-31
Potential End Date: 2013-12-31 00:00:00
Last Modified: 2013-08-29
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