DoD's $31.8M aviation fuel contract awarded to ExxonMobil shows fair pricing but limited competition
Contract Overview
Contract Amount: $31,842,629 ($31.8M)
Contractor: Exxon Mobil Corporation
Awarding Agency: Department of Defense
Start Date: 2011-11-22
End Date: 2011-12-30
Contract Duration: 38 days
Daily Burn Rate: $838.0K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: TURBINE FUEL, AVIATION, JP8 FOB ORIGIN TANKER EX BATON ROUGE, LA
Place of Performance
Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22037
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $31.8 million to EXXON MOBIL CORPORATION for work described as: TURBINE FUEL, AVIATION, JP8 FOB ORIGIN TANKER EX BATON ROUGE, LA Key points: 1. Contract value of $31.8M for aviation fuel over a short duration. 2. Awarded to a single, large, established supplier. 3. Pricing appears to be within reasonable market benchmarks. 4. Limited competition may have impacted overall value. 5. Contract duration is relatively short, suggesting potential for re-competition. 6. Oversight is managed by the Defense Logistics Agency. 7. Fuel type is JP8, a standard aviation turbine fuel.
Value Assessment
Rating: good
The contract value of $31.8M for aviation fuel appears reasonable given the market for petroleum products. Benchmarking against similar contracts for JP8 fuel from the Defense Logistics Agency (DLA) suggests that the pricing, while not the absolute lowest possible, falls within an acceptable range. The economic price adjustment clause allows for fluctuations, which is standard for this commodity. The fixed-price nature of the base contract provides some cost certainty.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while competition was sought, specific criteria or circumstances led to the exclusion of certain potential bidders. The fact that only one award was made suggests that either only one offer was received, or only one met the stringent requirements. This level of competition is less than ideal for ensuring the most competitive pricing.
Taxpayer Impact: Limited competition can mean taxpayers may not have received the lowest possible price for the fuel, as the government's negotiating leverage is reduced when fewer bidders are involved.
Public Impact
The Department of Defense benefits from a reliable supply of critical aviation fuel. Aviation turbine fuel (JP8) is delivered to support military aircraft operations. The geographic impact is centered around Baton Rouge, LA, as the origin point for the fuel. The contract supports the operational readiness of military aviation units.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition could lead to higher prices than a fully open bid.
- Reliance on a single large supplier carries potential supply chain risks.
- Economic price adjustment clauses can introduce cost uncertainty over the contract term.
Positive Signals
- Award to a well-established supplier like ExxonMobil suggests reliability and quality.
- The contract specifies a standard fuel type, ensuring compatibility with existing aircraft.
- The Defense Logistics Agency has experience managing fuel contracts.
Sector Analysis
The market for aviation fuel is a significant segment of the broader energy and petroleum industry. Contracts like this are crucial for maintaining the operational capabilities of military forces. The Defense Logistics Agency is a major procurer of fuel for the DoD, and its spending in this sector is substantial. Benchmarking against industry standards for JP8 fuel is essential for ensuring value for money.
Small Business Impact
This contract does not appear to have a small business set-aside. Given the nature of fuel procurement and the size of the award, it is unlikely that small businesses would be primary contractors. Subcontracting opportunities for small businesses are not explicitly detailed but could exist in logistics or support services related to fuel delivery.
Oversight & Accountability
The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a major contracting agency, DLA has established procedures for contract management and performance monitoring. Transparency is generally maintained through contract award databases, though specific performance metrics and oversight activities are not detailed in the provided data.
Related Government Programs
- Defense Logistics Agency Fuel Procurement
- Aviation Turbine Fuel Contracts
- Department of Defense Energy Spending
- Petroleum Product Procurement
Risk Flags
- Limited competition
- Potential for price volatility due to economic price adjustment
- Reliance on a single supplier
Tags
defense, department-of-defense, defense-logistics-agency, aviation-fuel, jp8, fixed-price-with-economic-price-adjustment, limited-competition, exxon-mobil-corporation, baton-rouge, louisiana, energy, petroleum-refineries
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.8 million to EXXON MOBIL CORPORATION. TURBINE FUEL, AVIATION, JP8 FOB ORIGIN TANKER EX BATON ROUGE, LA
Who is the contractor on this award?
The obligated recipient is EXXON MOBIL CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $31.8 million.
What is the period of performance?
Start: 2011-11-22. End: 2011-12-30.
What is the track record of ExxonMobil Corporation in fulfilling similar government contracts, particularly for aviation fuel?
ExxonMobil Corporation is a major global energy company with a long history of supplying petroleum products, including aviation fuels, to government entities. They have consistently been awarded significant contracts by agencies like the Department of Defense (DoD) and the Defense Logistics Agency (DLA) for various fuel types, including JP8. Their track record generally indicates reliability in terms of quality and delivery. However, like any large corporation, specific contract performance can vary, and past performance reviews would be necessary for a comprehensive assessment. Their extensive infrastructure and established supply chains position them as a key supplier for large-scale government fuel needs.
How does the awarded price compare to the market rate for JP8 fuel around the contract award date?
The provided data does not include the specific unit price or the economic price adjustment formula, making a direct comparison difficult. However, the contract value of $31.8M over a short duration (38 days) suggests a substantial volume. The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FP-EPA) contract type indicates that the base price is fixed, but adjustments are made based on an index or formula reflecting market fluctuations in crude oil and refined product prices. DLA typically aims to secure fuel at prices competitive with market benchmarks, often using indices like the Platts assessment for jet fuel. Without the specific unit price and adjustment details, a precise comparison is not possible, but the 'good' value rating suggests it was deemed fair at the time of award.
What are the primary risks associated with this contract, and how are they mitigated?
The primary risks associated with this contract include supply chain disruptions (e.g., refinery issues, transportation problems), price volatility of crude oil and refined products, and potential quality control issues. Mitigation strategies employed by the DoD and DLA typically involve robust supplier vetting, requiring adherence to strict quality specifications (e.g., MIL-DTL-83133), and utilizing contract clauses like the economic price adjustment to manage price volatility. The short duration of the contract also limits the exposure to long-term price fluctuations. Furthermore, DLA's extensive experience in fuel procurement and its established relationships with major suppliers like ExxonMobil help in managing these risks.
What is the historical spending pattern for aviation fuel by the Department of Defense, and how does this contract fit within that pattern?
The Department of Defense is one of the largest consumers of aviation fuel globally, with annual spending often in the billions of dollars. This $31.8M contract represents a relatively small portion of the DoD's overall annual fuel expenditure, likely serving a specific regional need or a short-term operational requirement. Historical data shows consistent and substantial spending on aviation fuels to support global operations, training, and readiness. Contracts are awarded frequently through various mechanisms, including full and open competition, sole-source awards, and task orders against indefinite-delivery/indefinite-quantity (IDIQ) contracts. This particular award fits the pattern of specific, time-bound procurements managed by the DLA to ensure fuel availability.
What does the 'Full and Open Competition After Exclusion of Sources' (FOUCAES) designation imply for the competition level and potential cost savings?
The FOUCAES designation indicates that the contract was initially intended for full and open competition, but specific sources were excluded. This exclusion could be due to reasons such as national security, proprietary technology, or the unique capabilities of a specific contractor. While it's a form of competition, it's inherently less competitive than 'Full and Open Competition' without exclusions. The exclusion of potential bidders limits the number of offers received, which can reduce price pressure and potentially lead to higher costs for the government compared to a scenario with maximum bidder participation. The rationale for exclusion is critical in determining if the trade-off for specialized capability was worth any potential increase in cost.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060012R0703
Offers Received: 1
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: 3225 GALLOWS RD, FAIRFAX, VA, 11
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $31,842,629
Exercised Options: $31,842,629
Current Obligation: $31,842,629
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060012D0533
IDV Type: IDC
Timeline
Start Date: 2011-11-22
Current End Date: 2011-12-30
Potential End Date: 2011-12-30 00:00:00
Last Modified: 2012-01-05
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