DoD's $452.8M Petroleum Contract Awarded to Equilon Enterprises LLC Under Full and Open Competition

Contract Overview

Contract Amount: $452,792,036 ($452.8M)

Contractor: Equilon Enterprises LLC

Awarding Agency: Department of Defense

Start Date: 2011-12-19

End Date: 2012-09-30

Contract Duration: 286 days

Daily Burn Rate: $1.6M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: CLIN 0101 JP5, FOB ORIGIN, DEER PARK, TX; CLIN 0201 JP5 FOB ORIGIN, DEER PARK, TX; CLIN 0301 JP8, FOB ORIGIN, DEER PARK, TX; CLIN 0401 JP8, FOB ORIGIN, DEER PARK, TX

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77002

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $452.8 million to EQUILON ENTERPRISES LLC for work described as: CLIN 0101 JP5, FOB ORIGIN, DEER PARK, TX; CLIN 0201 JP5 FOB ORIGIN, DEER PARK, TX; CLIN 0301 JP8, FOB ORIGIN, DEER PARK, TX; CLIN 0401 JP8, FOB ORIGIN, DEER PARK, TX Key points: 1. The contract, valued at $452.8 million, covers the supply of JP5 and JP8 fuels. 2. Awarded to Equilon Enterprises LLC, a significant player in the petroleum industry. 3. Full and open competition was utilized, suggesting a robust price discovery process. 4. The sector is critical for defense operations, with petroleum refineries being a key industry.

Value Assessment

Rating: good

The contract's fixed-price with economic price adjustment structure aims to mitigate market volatility. The total award amount of $452.8M for a 286-day duration appears reasonable given the nature of fuel procurement for defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition is a positive indicator for achieving competitive pricing. This method allows all responsible sources to submit offers, driving down costs through market forces.

Taxpayer Impact: The competitive nature of the award is expected to result in fair market pricing, minimizing unnecessary taxpayer expenditure for essential fuel supplies.

Public Impact

Ensures a steady supply of critical fuels for Department of Defense operations. Supports the petroleum refining industry and associated supply chains. Potential for price fluctuations due to economic price adjustment clauses. Geographic concentration of delivery points in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if not carefully monitored.
Dependence on a single supplier for a large volume of fuel.

Positive Signals

Awarded under full and open competition, indicating competitive pricing.
Contract supports critical national defense logistics.

Sector Analysis

This contract falls within the Petroleum Refineries sector (NAICS 324110), a vital industry supporting national infrastructure and defense. The award amount is substantial, reflecting the high volume and critical nature of fuel supply for military operations.

Small Business Impact

The data indicates that small business participation was not a primary consideration in this large-scale fuel procurement, as the contract was awarded to Equilon Enterprises LLC, a major corporation. Further analysis would be needed to determine if any subcontracting opportunities exist for small businesses within the supply chain.

Oversight & Accountability

The contract was awarded by the Defense Logistics Agency, a key component of DoD's supply chain management. Oversight would focus on delivery performance, fuel quality, and the administration of economic price adjustments to ensure taxpayer value.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost escalation due to EPA.
Geographic concentration of delivery points.
Dependence on a single large supplier.
Lack of explicit small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $452.8 million to EQUILON ENTERPRISES LLC. CLIN 0101 JP5, FOB ORIGIN, DEER PARK, TX; CLIN 0201 JP5 FOB ORIGIN, DEER PARK, TX; CLIN 0301 JP8, FOB ORIGIN, DEER PARK, TX; CLIN 0401 JP8, FOB ORIGIN, DEER PARK, TX

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 $452.8 million.

What is the period of performance?

Start: 2011-12-19. End: 2012-09-30.

What is the potential impact of the economic price adjustment clause on the final cost to taxpayers?

The economic price adjustment (EPA) clause allows for modifications to the contract price based on fluctuations in specified economic factors, such as the cost of raw materials or labor. While intended to protect both parties from unforeseen market shifts, it introduces a risk of increased costs for taxpayers if these factors rise significantly. Careful monitoring and transparent application of the EPA are crucial to mitigate this risk and ensure fair pricing.

How does the concentration of delivery points in Texas affect logistical risks and costs?

Concentrating delivery points in Texas simplifies logistics for the supplier but could pose risks if regional disruptions occur (e.g., weather events, infrastructure issues). While potentially reducing transportation costs for this specific award, it might increase vulnerability to supply chain interruptions. The government should ensure contingency plans are in place to address potential localized issues affecting fuel delivery.

What mechanisms are in place to ensure the quality and timely delivery of fuels under this contract?

The contract likely includes specific quality assurance provisions and delivery schedules managed by the Defense Logistics Agency. These would typically involve inspection protocols, performance metrics, and potential penalties for non-compliance. Robust oversight by the contracting officer and quality assurance representatives is essential to ensure fuels meet stringent military specifications and are delivered on time to support operational readiness.

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: SP060011R0061

Offers Received: 16

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: $452,792,036

Exercised Options: $452,792,036

Current Obligation: $452,792,036

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060012D0532

IDV Type: IDC

Timeline