DOD awards $58.8M for Kosovo fuel, highlighting fixed-price with economic adjustment risks
Contract Overview
Contract Amount: $58,782,999 ($58.8M)
Contractor: Mitan Handels AG
Awarding Agency: Department of Defense
Start Date: 2012-09-01
End Date: 2015-09-30
Contract Duration: 1,124 days
Daily Burn Rate: $52.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 7
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: FUELS FOR CAMP BONDSTEEL KOSOVO FOR SUPPORT
Plain-Language Summary
Department of Defense obligated $58.8 million to MITAN HANDELS AG for work described as: FUELS FOR CAMP BONDSTEEL KOSOVO FOR SUPPORT Key points: 1. Contract value of $58.8M for fuel supply over three years. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Fixed-price with economic price adjustment (FPEPA) introduces risk of cost overruns. 4. Spending falls within the Petroleum and Petroleum Products Merchant Wholesalers sector.
Value Assessment
Rating: fair
The contract uses a fixed-price with economic price adjustment structure. While this can protect against market volatility, it introduces risk for the government if fuel prices rise significantly, potentially exceeding initial budget estimates.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which generally promotes competitive pricing. However, the FPEPA clause means the final price is subject to economic adjustments, potentially impacting the true price discovery.
Taxpayer Impact: Taxpayer funds are exposed to potential price increases due to economic adjustments in the FPEPA clause, despite the initial competitive award.
Public Impact
Ensures critical fuel supply for military operations at Camp Bondsteel, Kosovo. Supports logistical readiness for U.S. forces in a strategic region. Potential for increased costs to taxpayers due to fluctuating fuel prices.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause increases cost uncertainty.
- Long contract duration (3 years) amplifies price adjustment risk.
- Geopolitical instability in Kosovo could impact delivery and costs.
Positive Signals
- Full and open competition utilized.
- Contract supports essential military operations.
Sector Analysis
This contract falls under the Petroleum and Petroleum Products Merchant Wholesalers sector. Spending benchmarks for fuel procurement can vary widely based on global market prices and geopolitical factors, making direct comparisons challenging without specific market data.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine small business participation.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a component of the Department of Defense responsible for logistics support. Oversight would typically involve monitoring contract performance, delivery, and adherence to economic price adjustment terms.
Related Government Programs
- Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) risk
- Potential for cost overruns due to market volatility
- Geopolitical risks impacting supply chain
- Lack of specific small business participation data
Tags
petroleum-and-petroleum-products-merchan, department-of-defense, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $58.8 million to MITAN HANDELS AG. FUELS FOR CAMP BONDSTEEL KOSOVO FOR SUPPORT
Who is the contractor on this award?
The obligated recipient is MITAN HANDELS AG.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $58.8 million.
What is the period of performance?
Start: 2012-09-01. End: 2015-09-30.
What was the actual price variance experienced due to the economic price adjustment clause over the contract's life?
Without access to the specific price adjustments applied throughout the contract period, it's impossible to quantify the exact price variance. The effectiveness of the FPEPA clause in protecting against extreme price fluctuations and its ultimate impact on taxpayer cost requires detailed historical price data and comparison against baseline market prices during the contract term.
How did the economic price adjustment clause compare to alternative contract types in managing fuel price volatility for this specific deployment?
The FPEPA clause aims to balance contractor risk and government cost by allowing adjustments based on market indices. Compared to a firm-fixed-price contract, it offers more protection against unforeseen market spikes for the contractor, potentially leading to a lower initial bid but higher final cost for the government. Conversely, a cost-plus contract would offer less price certainty.
What measures were in place to ensure fair market pricing was used for the economic price adjustments?
The contract likely specifies the indices or methodologies to be used for economic price adjustments, often tied to established industry benchmarks or government-published price data. Oversight by the Defense Logistics Agency would be crucial to ensure these mechanisms were applied correctly and transparently, preventing manipulation and ensuring adjustments reflected genuine market changes.
Industry Classification
NAICS: Wholesale Trade › Petroleum and Petroleum Products Merchant Wholesalers › Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060012R0222
Offers Received: 7
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: DUFOURSTRASSE 107, Z¿RICH
Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $58,782,999
Exercised Options: $58,782,999
Current Obligation: $58,782,999
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060012D9410
IDV Type: IDC
Timeline
Start Date: 2012-09-01
Current End Date: 2015-09-30
Potential End Date: 2015-09-30 00:00:00
Last Modified: 2021-10-30
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