DoD's $251M JP8 Aviation Fuel Contract Awarded to Equilon Enterprises LLC Under Full and Open Competition

Contract Overview

Contract Amount: $251,439,189 ($251.4M)

Contractor: Equilon Enterprises LLC

Awarding Agency: Department of Defense

Start Date: 2011-12-20

End Date: 2012-09-30

Contract Duration: 285 days

Daily Burn Rate: $882.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 24

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: AVIATION FUEL, TURBINE JP8 CLIN 0101 31,601,000 BY BARGE CLIN 0201 9,979,000 BY BARGE CLIN 0301 5,546,000 BY TRUCK

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77002

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $251.4 million to EQUILON ENTERPRISES LLC for work described as: AVIATION FUEL, TURBINE JP8 CLIN 0101 31,601,000 BY BARGE CLIN 0201 9,979,000 BY BARGE CLIN 0301 5,546,000 BY TRUCK Key points: 1. The contract covers a significant volume of JP8 aviation fuel, indicating substantial operational needs. 2. Equilon Enterprises LLC secured the award, suggesting strong market presence and competitive bidding. 3. The fixed-price with economic price adjustment (EPA) structure introduces potential cost volatility. 4. The contract falls within the Petroleum Refineries sector, a critical component of national defense logistics.

Value Assessment

Rating: good

The total award amount of $251,439,189.14 for aviation fuel appears reasonable given the large quantity and the fixed-price with EPA structure. Benchmarking against similar large-volume fuel contracts would provide further context on pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing. The presence of multiple bidders, though not explicitly stated, is implied by this method, leading to a more efficient price discovery process.

Taxpayer Impact: Full and open competition generally ensures taxpayers receive fair value for goods and services, minimizing the risk of overpayment compared to less competitive methods.

Public Impact

Ensures the availability of critical aviation fuel for Department of Defense operations. Supports military readiness and logistical capabilities through a reliable fuel supply chain. The economic price adjustment clause may lead to fluctuations in the final cost to taxpayers. The contract's duration and volume suggest a significant impact on the regional fuel market.

Waste & Efficiency Indicators

Waste Risk Score: 88 / 10

Warning Flags

Economic price adjustment clause introduces cost uncertainty.
Large contract value presents a significant financial commitment.
Dependence on a single supplier for a critical resource.

Positive Signals

Awarded through full and open competition.
Secured by a known entity in the fuel market.
Addresses a critical operational requirement for the DoD.

Sector Analysis

This contract is within the Petroleum Refineries sector, specifically for turbine fuel. Spending in this sector is crucial for national defense and transportation infrastructure, with benchmarks often tied to global oil prices and refining capacity.

Small Business Impact

The data indicates this contract was not set aside for small businesses and was awarded to Equilon Enterprises LLC, a large corporation. There is no indication of small business participation in this specific award.

Oversight & Accountability

The contract was awarded by the Defense Logistics Agency, a key component of DoD oversight for supply chain management. The use of full and open competition suggests adherence to standard procurement regulations, but ongoing monitoring of the EPA clause is necessary.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to Economic Price Adjustment (EPA).
Significant financial commitment for a single fuel type.
Dependence on Equilon Enterprises LLC for a critical supply.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $251.4 million to EQUILON ENTERPRISES LLC. AVIATION FUEL, TURBINE JP8 CLIN 0101 31,601,000 BY BARGE CLIN 0201 9,979,000 BY BARGE CLIN 0301 5,546,000 BY TRUCK

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 $251.4 million.

What is the period of performance?

Start: 2011-12-20. End: 2012-09-30.

What is the historical price trend for JP8 fuel during the contract period, and how did the economic price adjustment impact the final cost compared to a fixed price?

Analyzing historical JP8 price data from 2011-2012 would reveal market volatility. The economic price adjustment (EPA) clause allows for price changes based on an index, typically tied to fuel market fluctuations. If fuel prices rose significantly during the contract period, the EPA would increase the final cost to the DoD, potentially exceeding what a fixed price might have been. Conversely, if prices fell, the EPA could result in savings.

What specific risks are associated with the economic price adjustment (EPA) clause in this contract, and how were they mitigated?

The primary risk of an EPA clause is cost escalation for the government if market prices increase significantly. This can lead to budget overruns and reduced purchasing power. Mitigation strategies could include caps on the EPA, clear indexation methodologies, and robust market monitoring by the contracting agency to ensure adjustments are fair and reflect actual market conditions, not just supplier profit.

How does the volume of JP8 fuel procured under this contract compare to typical annual consumption for the relevant DoD components, and does it indicate any strategic stockpiling or surge capacity?

The total volume of 31,601,000 (CLIN 0101) + 9,979,000 (CLIN 0201) + 5,546,000 (CLIN 0301) = 47,126,000 gallons of JP8 fuel is substantial. Comparing this to typical annual consumption for the specific DoD units supported by the Defense Logistics Agency would determine if it aligns with standard operational needs, accounts for potential surge requirements, or suggests strategic reserve building.

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: 24

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: $251,439,189

Exercised Options: $251,439,189

Current Obligation: $251,439,189

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060012D0540

IDV Type: IDC

Timeline