DoD spent $71.2M on aviation fuel, with 24 bids received, indicating robust competition for this fixed-price contract

Contract Overview

Contract Amount: $71,212,959 ($71.2M)

Contractor: Wynnewood Energy CO LLC

Awarding Agency: Department of Defense

Start Date: 2011-12-19

End Date: 2012-09-30

Contract Duration: 286 days

Daily Burn Rate: $249.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 24

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: TURBINE AVIATION FUEL (JP8) FOB ORIGIN TT EX. WYNNEWOOD, OK

Place of Performance

Location: WYNNEWOOD, GARVIN County, OKLAHOMA, 73098

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $71.2 million to WYNNEWOOD ENERGY CO LLC for work described as: TURBINE AVIATION FUEL (JP8) FOB ORIGIN TT EX. WYNNEWOOD, OK Key points: 1. The contract secured a significant volume of aviation fuel, demonstrating the Defense Logistics Agency's critical supply chain needs. 2. Competition was strong, with 24 bids submitted, suggesting a healthy market for fuel suppliers and potentially favorable pricing. 3. The fixed-price with economic price adjustment structure aims to balance cost certainty with market volatility for fuel prices. 4. The contract's duration of 286 days reflects a short-term need for fuel, likely tied to specific operational requirements. 5. The geographic origin of the fuel from Oklahoma highlights domestic sourcing capabilities within the defense supply chain. 6. The award to Wynnewood Energy Co LLC indicates a specific supplier meeting the stringent requirements for defense fuel.

Value Assessment

Rating: good

The total award amount of $71.2 million for aviation fuel (JP8) appears reasonable given the volume and nature of the product. Benchmarking against similar large-scale fuel procurements by the DoD would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment (FPEPA) contract type suggests an effort to manage price fluctuations inherent in commodity markets, which is a standard practice for fuel contracts. The number of bids (24) further supports the likelihood of competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while the competition was broad, specific sources might have been excluded based on pre-qualification or other criteria. The submission of 24 bids suggests a high level of interest and a competitive marketplace for this type of aviation fuel. A large number of bidders generally leads to better price discovery and potentially lower costs for the government.

Taxpayer Impact: The robust competition, evidenced by 24 bids, is beneficial for taxpayers as it drives down prices and ensures the government is obtaining fuel at a competitive market rate, maximizing the value of taxpayer dollars.

Public Impact

The primary beneficiaries are the U.S. military operations requiring JP8 aviation fuel for aircraft stationed or operating in relevant theaters. The service delivered is the supply of a critical fuel commodity essential for aviation readiness and mission accomplishment. The geographic impact is centered around the origin point in Wynnewood, Oklahoma, and extends to the delivery points for the DoD. Workforce implications include jobs in fuel extraction, refining, transportation, and logistics within the energy sector, particularly in Oklahoma.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to the economic price adjustment clause, which could increase costs if fuel prices surge unexpectedly.
Dependence on a specific geographic origin (Oklahoma) could pose logistical risks if regional supply disruptions occur.
The 'after exclusion of sources' aspect of the competition warrants further review to ensure no qualified suppliers were unfairly excluded.

Positive Signals

Strong competition with 24 bids indicates a healthy market and likely competitive pricing.
The fixed-price component provides a degree of cost certainty for a portion of the contract.
Awarding to a domestic supplier in Oklahoma supports U.S. energy infrastructure and employment.

Sector Analysis

The procurement falls within the energy sector, specifically focusing on the refining and distribution of petroleum products. The North American Industry Classification System (NAICS) code 324110 (Petroleum Refineries) confirms this. The market for aviation fuel is substantial, driven by both commercial and military demand. Defense Logistics Agency (DLA) contracts for fuel are critical for maintaining military readiness, and they often involve large volumes and complex logistical considerations. Benchmarking against other DLA fuel contracts would reveal if this $71.2 million award is within the typical range for similar quantities and types of fuel.

Small Business Impact

The contract details indicate that small business participation was not a primary set-aside consideration (ss: false, sb: false). This suggests the primary focus was on securing the required fuel volume and quality through the most competitive means available. While there's no direct set-aside, the prime contractor, Wynnewood Energy Co LLC, may engage small businesses for subcontracting in areas like transportation or logistics, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the extent of any subcontracting opportunities created.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms, quality standards, and financial accountability. The Defense Logistics Agency (DLA) itself would maintain program oversight. Transparency is facilitated through contract award databases like FPDS. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

Defense Logistics Agency Fuel Procurement
JP8 Aviation Fuel Contracts
Petroleum Refining and Distribution
Fixed-Price with Economic Price Adjustment Contracts
DoD Energy Supply Chain

Risk Flags

Potential supply chain disruption due to single geographic origin.
Price volatility risk associated with economic price adjustment clause.
Justification for 'exclusion of sources' requires scrutiny for fairness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.2 million to WYNNEWOOD ENERGY CO LLC. TURBINE AVIATION FUEL (JP8) FOB ORIGIN TT EX. WYNNEWOOD, OK

Who is the contractor on this award?

The obligated recipient is WYNNEWOOD ENERGY CO LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $71.2 million.

What is the period of performance?

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

What is the historical spending trend for JP8 aviation fuel by the Defense Logistics Agency?

Analyzing historical spending data for JP8 aviation fuel by the DLA reveals a consistent and substantial requirement driven by global military operations. Over the past decade, DLA has awarded billions of dollars annually for various types of aviation fuels, including JP8. Spending fluctuates based on geopolitical events, operational tempo, and global fuel market prices. For instance, periods of increased military engagement in regions like the Middle East have historically correlated with higher fuel procurement volumes and costs. The use of contracts with economic price adjustment clauses is a common strategy to mitigate the impact of market volatility on these large-volume, long-term requirements. Understanding these trends helps contextualize the $71.2 million award as part of a larger, ongoing strategic procurement effort essential for national defense readiness.

How does the price per gallon for this contract compare to market benchmarks for JP8 fuel during the contract period?

Determining the precise price per gallon for this specific contract is challenging without the detailed pricing structure, as it's a Fixed Price with Economic Price Adjustment (FPEPA) contract. The 'economic price adjustment' component means the final price per gallon would have varied based on an agreed-upon index or formula tied to market fuel prices during the contract's performance period (December 2011 - September 2012). To compare, one would need to access historical JP8 spot prices or average contract prices for that period from sources like the Energy Information Administration (EIA) or specialized defense contract databases. Generally, FPEPA contracts aim to provide a base price that is competitive, with adjustments intended to reflect actual market conditions, thus protecting both the government from excessive price hikes and the contractor from losses due to unforeseen market surges.

What are the specific risks associated with relying on a single geographic origin for this fuel supply?

Relying on a single geographic origin, such as Wynnewood, Oklahoma, for a significant fuel supply like this $71.2 million contract introduces several potential risks. Firstly, supply chain disruptions due to localized events like severe weather (tornadoes are common in Oklahoma), natural disasters, or infrastructure failures (pipeline issues, refinery problems) could halt or delay deliveries. Secondly, transportation costs and lead times could increase if demand spikes or if regional transportation networks become strained. Thirdly, geopolitical or regulatory changes affecting the specific region or its energy infrastructure could impact availability or price. While the Defense Logistics Agency likely has contingency plans and multiple sourcing strategies, a heavy reliance on one origin point inherently concentrates risk, making the supply chain more vulnerable to localized threats compared to a geographically diversified sourcing approach.

What is the track record of Wynnewood Energy Co LLC in fulfilling large federal fuel contracts?

Information regarding Wynnewood Energy Co LLC's specific track record in fulfilling large federal fuel contracts, beyond this $71.2 million award, is not readily available in the provided data snippet. To assess their reliability, a deeper dive into federal procurement databases (like FPDS or SAM.gov) would be necessary to identify other contracts awarded to them, their performance ratings, any past issues or disputes, and the scale of those previous awards. Their ability to win a competitive bid for a substantial amount like this suggests they possess the necessary capabilities and capacity. However, a comprehensive understanding of their track record would involve examining their history across multiple contracts, agencies, and contract types to gauge their consistency and performance reliability in meeting federal requirements.

How does the 'Full and Open Competition After Exclusion of Sources' clause impact the fairness and competitiveness of the bidding process?

The 'Full and Open Competition After Exclusion of Sources' clause is a nuanced aspect of federal procurement. It signifies that the solicitation was initially intended for all responsible sources (full and open competition), but certain sources were subsequently excluded. The reasons for exclusion must be justified and documented, often relating to specific technical requirements, security clearances, or pre-qualification criteria that only a subset of potential bidders could meet. While it maintains a degree of openness, the exclusion means the competition might not be as broad as truly 'full and open.' The impact on fairness and competitiveness depends heavily on the justification for the exclusions. If the exclusions were reasonable and necessary to meet stringent defense requirements, the process can still be fair and yield competitive pricing. However, if exclusions were arbitrary or overly restrictive, it could limit competition and potentially lead to higher costs for the government.

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: SP060011R0061

Offers Received: 24

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

Evaluated Preference: NONE

Contractor Details

Parent Company: CVR Energy, Inc. (UEI: 795416135)

Address: 370 17TH ST STE 5300, DENVER, CO, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $71,212,959

Exercised Options: $71,212,959

Current Obligation: $71,212,959

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060012D0534

IDV Type: IDC

Timeline