DoD's $24.3M petroleum contract for Puerto Rico awarded to TotalEnergies Marketing

Contract Overview

Contract Amount: $24,266,156 ($24.3M)

Contractor: Totalenergies Marketing Puerto Rico Corp.

Awarding Agency: Department of Defense

Start Date: 2012-04-01

End Date: 2015-04-30

Contract Duration: 1,124 days

Daily Burn Rate: $21.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: AWARD FOR DELIVERY OF VARIOUS LINE ITEMS THROUGHOUT PUERTO RICO

Place of Performance

Location: SAN JUAN, SAN JUAN County, PUERTO RICO, 00936, UNITED STATES OF AMERICA

Plain-Language Summary

Department of Defense obligated $24.3 million to TOTALENERGIES MARKETING PUERTO RICO CORP. for work described as: AWARD FOR DELIVERY OF VARIOUS LINE ITEMS THROUGHOUT PUERTO RICO Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces potential for cost fluctuations. 3. Contract duration of 1124 days indicates a significant, long-term supply requirement. 4. Awarded by the Defense Logistics Agency, a key procurement arm for military logistics. 5. The contract supports fuel delivery across Puerto Rico, a critical logistical hub. 6. No small business set-aside was utilized, indicating the primary award was not specifically targeted for small businesses.

Value Assessment

Rating: fair

The total award amount of $24.3 million over approximately three years for petroleum products in Puerto Rico appears to be within a reasonable range for such a large-scale logistical support contract. However, without specific line-item details and market price benchmarks for petroleum products in Puerto Rico during the contract period, a precise value-for-money assessment is challenging. The FPEPA clause introduces a variable that could impact the final cost, making direct comparison to fixed-price contracts difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of 9 bids suggests a healthy level of interest and competition for this requirement. This competitive process is generally expected to drive prices towards market rates and encourage efficient service delivery.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which aims to secure the best possible pricing and terms for the government. The multiple bids received suggest that the government had options, increasing the likelihood of a cost-effective award.

Public Impact

Military operations and readiness in Puerto Rico are supported through the reliable delivery of petroleum products. Personnel and equipment stationed in or transiting through Puerto Rico benefit from sustained fuel availability. The contract ensures the logistical backbone for defense activities within the island territory. Potential indirect benefits to the local economy through fuel distribution and related services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if market prices for petroleum increase significantly.
The fixed-price nature of the base contract, combined with adjustments, requires careful monitoring of market trends.
Reliance on a single awardee for a critical commodity like fuel in a geographically isolated area presents supply chain risks.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
The Defense Logistics Agency's involvement suggests adherence to established procurement standards.
The contract duration implies a stable, predictable supply chain for a critical resource.

Sector Analysis

The petroleum refining and distribution sector is a critical component of the energy industry, essential for powering transportation, industry, and military operations. This contract falls within the broader energy and logistics support sectors. Comparable spending benchmarks for fuel supply contracts can vary widely based on volume, location, and market conditions. The Defense Logistics Agency is a major procurer of fuel for the U.S. military globally.

Small Business Impact

This contract did not include a small business set-aside. The award was made under full and open competition, with 9 bidders participating. This suggests that the primary contract was not specifically structured to reserve a portion for small businesses. There is no explicit information on subcontracting plans for small businesses within the provided data, but given the nature of fuel distribution, opportunities may exist for smaller entities to participate in logistics or delivery roles.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract, ensuring compliance with terms and conditions. As a major contracting agency, DLA has established oversight mechanisms, including contract administration and performance monitoring. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed financial reporting may not be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Department of Defense Energy Procurement
Puerto Rico Logistics Support
Petroleum Product Supply Contracts

Risk Flags

Potential for cost increases due to Economic Price Adjustment clause.
Supply chain vulnerability inherent in single-source award for critical commodity.
Geographic isolation of Puerto Rico can exacerbate logistical challenges.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.3 million to TOTALENERGIES MARKETING PUERTO RICO CORP.. AWARD FOR DELIVERY OF VARIOUS LINE ITEMS THROUGHOUT PUERTO RICO

Who is the contractor on this award?

The obligated recipient is TOTALENERGIES MARKETING PUERTO RICO CORP..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.3 million.

What is the period of performance?

Start: 2012-04-01. End: 2015-04-30.

What was the historical spending pattern for petroleum products in Puerto Rico by the Department of Defense prior to this award?

Analyzing historical spending patterns for petroleum products in Puerto Rico by the Department of Defense prior to this award would provide crucial context for evaluating the $24.3 million contract. Without access to specific historical data, it's difficult to ascertain if this award represents an increase, decrease, or stable level of spending. Factors such as changes in military presence, fuel price volatility, and previous contract vehicles (e.g., different awardees, contract types, or durations) would influence these patterns. A trend analysis could reveal if the government has consistently relied on competitive bidding for these supplies or if sole-source awards have been prevalent. Understanding past spending also helps in identifying potential cost savings or areas where prices may have escalated over time, informing future procurement strategies and budget allocations for fuel in the region.

How did the pricing of this contract compare to market rates for petroleum products in Puerto Rico during the 2012-2015 period?

Comparing the pricing of this $24.3 million petroleum contract to prevailing market rates in Puerto Rico between 2012 and 2015 is essential for assessing value for money. The contract's 'Fixed Price with Economic Price Adjustment' (FPEPA) clause complicates a direct comparison, as the final price would fluctuate. To conduct a thorough analysis, one would need to examine the base fixed price and the economic price adjustment formula against independent market indices for relevant fuel types (e.g., jet fuel, diesel, gasoline) in the Puerto Rican market during the contract's lifespan. Factors such as transportation costs, import duties, and local taxes specific to Puerto Rico would also need to be considered. A significant deviation from market benchmarks, even with adjustments, could indicate potential overpayment or, conversely, a favorable negotiated rate for the government, especially considering the logistical complexities of supply to the island.

What were the specific line items and quantities included in this contract, and how did they align with DoD's operational needs in Puerto Rico?

The provided data indicates the contract was for 'Delivery of Various Line Items Throughout Puerto Rico' but does not specify these line items or their quantities. Understanding the exact nature of the petroleum products (e.g., different grades of fuel, lubricants, aviation fuel) and the volumes required is critical for assessing the contract's alignment with DoD's operational needs. This information would allow for a more granular analysis of demand, potential usage patterns, and the strategic importance of each fuel type. Without these specifics, it's challenging to determine if the contract adequately supported troop readiness, training exercises, or logistical sustainment activities in Puerto Rico during its term. Furthermore, knowing the quantities would enable a more precise calculation of per-unit costs and comparison against benchmarks for specific fuel types.

What was the track record of TotalEnergies Marketing Puerto Rico Corp. with similar government contracts prior to or during this award?

Investigating the track record of TotalEnergies Marketing Puerto Rico Corp. with similar government contracts is vital for assessing contractor reliability and performance. Information regarding past performance, including adherence to delivery schedules, quality of products, and compliance with contract terms, would provide insights into their capabilities. Specifically, examining previous awards from the Defense Logistics Agency (DLA) or other federal agencies for fuel supply, particularly in geographically challenging regions like Puerto Rico, would be informative. A history of successful contract execution suggests a lower risk of performance issues. Conversely, any documented instances of contract deficiencies, disputes, or poor performance could raise concerns about the contractor's ability to meet the requirements of this $24.3 million award, potentially impacting military readiness and operational continuity.

How did the 'Economic Price Adjustment' clause function, and what was its impact on the final cost compared to a fixed-price contract?

The 'Economic Price Adjustment' (EPA) clause in this contract allowed for modifications to the price based on fluctuations in specific economic indicators, typically related to the cost of raw materials or labor. For petroleum contracts, this often ties adjustments to published indices for crude oil prices or refined product costs. The primary impact of an EPA clause is to shift some of the price risk between the government and the contractor. If market prices for petroleum increased significantly during the contract period (2012-2015), the EPA would likely have resulted in a higher final cost than a purely fixed-price contract. Conversely, if prices decreased, the government might benefit. Without the specific EPA formula and the market data it referenced, it's impossible to quantify the exact impact, but it generally introduces more cost uncertainty compared to a firm fixed price.

What were the specific risks associated with relying on a single supplier for petroleum products in Puerto Rico, and how were they mitigated?

Relying on a single supplier, TotalEnergies Marketing Puerto Rico Corp., for petroleum products in Puerto Rico presented inherent risks, particularly concerning supply chain disruptions. Potential risks include natural disasters (hurricanes are common in the region), transportation issues, geopolitical instability affecting supply routes, or the contractor's own operational failures. Mitigation strategies employed by the Defense Logistics Agency (DLA) likely included robust contract monitoring, requiring the contractor to maintain adequate inventory levels, establishing clear communication protocols for emergencies, and potentially having contingency plans for alternative sourcing if feasible, though the latter is challenging for a sole awardee. The FPEPA clause might also be seen as a partial mitigation for the contractor against extreme price volatility, ensuring their willingness to supply.

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: SP060012R0205

Offers Received: 9

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

Evaluated Preference: NONE

Contractor Details

Address: GALERIA SAN PATRICIO B-5, GUAYNABO, PR, 00968

Business Categories: Category Business, Corporate Entity Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $35,569,877

Exercised Options: $35,569,877

Current Obligation: $24,266,156

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060012D1254

IDV Type: IDC

Timeline