DoD spent $296M on jet fuel, with ConocoPhillips securing the contract via full and open competition

Contract Overview

Contract Amount: $295,891,496 ($295.9M)

Contractor: Conocophillips Company

Awarding Agency: Department of Defense

Start Date: 2011-12-19

End Date: 2012-09-30

Contract Duration: 286 days

Daily Burn Rate: $1.0M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 16

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: JET FUEL, TYPE A (JAA)&TURBINE FUEL, AVIATION (JP8)

Place of Performance

Location: BARTLESVILLE, OSAGE County, OKLAHOMA, 74003

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $295.9 million to CONOCOPHILLIPS COMPANY for work described as: JET FUEL, TYPE A (JAA)&TURBINE FUEL, AVIATION (JP8) Key points: 1. The contract value represents a significant portion of annual jet fuel procurement for the Defense Logistics Agency. 2. Full and open competition suggests a potentially competitive pricing environment, though economic price adjustments add complexity. 3. The fixed-price with economic price adjustment structure introduces risk related to fuel price volatility. 4. The contract duration of 286 days is relatively short, suggesting frequent re-competition or shorter-term needs. 5. The award to a single entity, ConocoPhillips Company, highlights the concentrated nature of aviation fuel supply. 6. The contract's performance in Oklahoma indicates a specific geographic focus for fuel delivery.

Value Assessment

Rating: good

The total award amount of $295.9 million for jet fuel is substantial. Benchmarking this against similar large-scale fuel procurements by the DoD is crucial for a precise value-for-money assessment. However, the fixed-price with economic price adjustment (FP-EPA) contract type introduces a degree of uncertainty in the final cost, as it allows for adjustments based on market fluctuations. Without specific per-unit cost data or comparisons to prevailing market rates at the time of award, a definitive value assessment is challenging, but the competitive bidding process likely aimed to secure favorable terms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 16 bids suggests a robust competitive landscape for this fuel procurement. A high number of bidders generally fosters price discovery and can lead to more competitive pricing for the government. The Defense Logistics Agency's approach here likely aimed to maximize competition to obtain the best value.

Taxpayer Impact: The extensive competition for this fuel contract is beneficial for taxpayers, as it likely drove down the initial bid prices and encouraged efficient cost structures from the bidders.

Public Impact

Military aviation operations across various branches of the Department of Defense benefit from the reliable supply of jet fuel. The contract ensures the availability of Type A and JP8 turbine fuel, critical for aircraft readiness. Fuel delivery is geographically focused within Oklahoma, supporting regional military installations. The contract supports jobs within the petroleum refining and distribution sectors, particularly in Oklahoma.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustments in the FP-EPA contract could lead to costs exceeding initial projections if fuel prices surge.
Reliance on a single primary awardee, ConocoPhillips Company, could pose supply chain risks if unforeseen issues arise with their operations.
The relatively short contract duration might necessitate frequent and potentially costly re-competition processes.

Positive Signals

The award was made under full and open competition, attracting 16 bids, which typically signals a competitive market and potentially better pricing.
The contract specifies fixed-price elements, providing some cost certainty for a portion of the fuel purchased.
The Defense Logistics Agency's procurement process likely included robust evaluation criteria to ensure quality and reliability of the fuel supply.

Sector Analysis

The petroleum refining and distribution sector is critical for national security, providing essential fuels for military operations. The market for aviation fuels is often dominated by a few major suppliers due to the specialized nature of production and distribution infrastructure. This contract falls within the broader energy sector, specifically focusing on refined petroleum products. Comparable spending benchmarks would involve analyzing other large-scale fuel contracts awarded by the DoD or other federal agencies for similar types of aviation fuel.

Small Business Impact

This contract does not appear to have specific small business set-aside provisions, as indicated by 'sb': false. The primary awardee is ConocoPhillips Company, a large corporation. There is no explicit information regarding subcontracting plans for small businesses within this data. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though indirect benefits could arise if ConocoPhillips utilizes small businesses in its broader supply chain.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for overseeing this contract. As a component of the Department of Defense, DLA operates under established procurement regulations and oversight mechanisms. Transparency is generally maintained through contract award databases like FPDS. Inspector General oversight would apply to investigate any potential fraud, waste, or abuse related to the contract's execution. Performance metrics and delivery schedules would be monitored to ensure compliance.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Department of Defense Aviation Fuel Contracts
Petroleum Product Supply Contracts
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Potential for price volatility due to economic price adjustment clause.
Concentration of supply with a single awardee.
Short contract duration may lead to frequent re-competition costs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $295.9 million to CONOCOPHILLIPS COMPANY. JET FUEL, TYPE A (JAA)&TURBINE FUEL, AVIATION (JP8)

Who is the contractor on this award?

The obligated recipient is CONOCOPHILLIPS COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $295.9 million.

What is the period of performance?

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

What was the historical spending pattern for jet fuel by the Defense Logistics Agency prior to this award?

Analyzing historical spending patterns for jet fuel by the Defense Logistics Agency (DLA) prior to December 2011 would provide crucial context for this $296 million award. This would involve examining DLA's procurement data over several preceding fiscal years to identify trends in volume, price per unit, and the number of awarded contracts. Understanding if this award represents an increase or decrease in spending, or a shift in procurement strategy (e.g., from multiple smaller contracts to a larger one), is vital. For instance, if DLA typically spent $200 million annually on similar fuels and this contract is $296 million, it might indicate increased demand, higher prices, or a consolidation of requirements. Conversely, if historical spending was consistently higher, this award might represent a cost-saving measure or a reduction in fuel needs. Without access to that specific historical data, it's difficult to definitively assess the scale and significance of this particular contract in the broader context of DLA's fuel budget and operational tempo.

How did the economic price adjustment (EPA) clause impact the final cost compared to a fixed-price contract?

The economic price adjustment (EPA) clause in this fixed-price contract allows for modifications to the contract price based on fluctuations in specified economic factors, typically related to the cost of raw materials or labor. In the context of jet fuel, this clause is highly sensitive to global oil market prices. If oil prices increased significantly between the contract award date (December 2011) and the delivery period (ending September 2012), the EPA clause would have likely resulted in a higher final cost for the government than if it had been a firm fixed-price contract. Conversely, if oil prices decreased, the EPA could have led to a lower final cost. Without the specific indices used for adjustment and the price data over the contract period, it's impossible to quantify the exact impact. However, the purpose of an EPA is generally to protect both the contractor from unforeseen cost increases and the government from potentially inflated fixed prices that anticipate future cost rises. The risk is that the government might pay more than anticipated if market conditions are unfavorable.

What is ConocoPhillips Company's track record in supplying aviation fuel to the Department of Defense?

ConocoPhillips Company has a significant history as a major global energy producer and supplier, including aviation fuels. Their track record in supplying aviation fuel to the Department of Defense (DoD) is generally extensive, given their scale and market position. They are a known entity in the defense logistics supply chain. To assess their specific performance on this particular contract (awarded in late 2011), one would ideally look at DLA's performance records, any contractor performance assessment reporting (CPARs), and any past issues related to delivery, quality, or pricing. Given the 'OK' status noted for both 'st' (status) and 'sn' (state) in the provided data, it suggests the contract was likely performed without major reported issues at the time of data capture. However, a comprehensive assessment would require delving into more detailed performance evaluations and potentially examining other contracts they hold with the DoD.

Were there any specific performance metrics or quality standards outlined in the contract?

While the provided data snippet does not detail the specific performance metrics or quality standards, federal contracts for critical supplies like jet fuel invariably include stringent requirements. For aviation fuel (Jet Fuel, Type A and JP8), these standards are typically governed by military specifications (e.g., MIL-DTL-83133 for JP-8) and industry standards (like ASTM D1655 for Jet A). The contract would likely stipulate requirements for fuel purity, additive levels, testing protocols, and delivery procedures to ensure safety and operational reliability. Performance metrics would likely focus on on-time delivery, adherence to quantity specifications, and compliance with all quality assurance provisions. Failure to meet these standards could result in penalties, contract termination, or impact the contractor's future eligibility for awards. The 'st': 'OK' and 'sn': 'OKLAHOMA' likely indicate the contract was performed satisfactorily and the state of performance, respectively.

How does the PSC code (or lack thereof) for this contract inform its classification?

The absence of a specific Product or Service Code (PSC) in the provided data, indicated by 'psc': '', is noteworthy. PSC codes are used by the federal government to classify the goods and services being procured. For petroleum products, common PSC codes might fall under the 'Petroleum, Fuels, and Lubricants' group (e.g., FU series). The fact that this field is blank might suggest a data entry oversight or that the system used to generate this snippet did not populate it. However, the description 'JET FUEL, TYPE A (JAA)&TURBINE FUEL, AVIATION (JP8)' clearly identifies the nature of the procurement. The NAICS code '324110' (Petroleum Refineries) provides industry classification, but PSC is more specific to the transaction itself. Without a PSC, it's harder to directly aggregate this spending with other similar fuel procurements using standard government reporting tools that rely heavily on PSC codes for categorization and analysis.

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: Conocophillips (UEI: 118819478)

Address: 930 PHILLIPS BLDG, BARTLESVILLE, OK, 02

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: $295,891,496

Exercised Options: $295,891,496

Current Obligation: $295,891,496

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060012D0537

IDV Type: IDC

Timeline