DoD Awards $55.4M Contract for 18M Gallons of JP8 Fuel to HD Hyundai Oilbank
Contract Overview
Contract Amount: $55,419,750 ($55.4M)
Contractor: HD Hyundai Oilbank CO., Ltd
Awarding Agency: Department of Defense
Start Date: 2012-12-05
End Date: 2014-01-30
Contract Duration: 421 days
Daily Burn Rate: $131.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 14
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: AWARDED 18,000,000 USG OF JP8
Plain-Language Summary
Department of Defense obligated $55.4 million to HD HYUNDAI OILBANK CO., LTD for work described as: AWARDED 18,000,000 USG OF JP8 Key points: 1. Significant volume of essential fuel procured for defense operations. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Fixed Price with Economic Price Adjustment contract type introduces some price volatility risk. 4. Petroleum Refineries sector is critical for military readiness and energy security.
Value Assessment
Rating: good
The contract value of $55.4M for 18M gallons of JP8 fuel translates to approximately $3.08 per gallon. This pricing appears reasonable given market fluctuations for petroleum products, especially considering the fixed-price with economic adjustment structure.
Cost Per Unit: $3.08
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders likely participated. This method generally promotes price discovery and can lead to more favorable pricing for the government.
Taxpayer Impact: The competitive award process aims to ensure taxpayer funds are used efficiently for essential fuel procurement.
Public Impact
Ensures sustained operational capability for military assets requiring JP8 fuel. Supports energy independence and supply chain resilience for the Department of Defense. Contributes to the stability of the petroleum refining sector through significant government contracts.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment may lead to costs exceeding initial projections.
- Geopolitical events can impact fuel prices and contract costs.
- Dependence on a single supplier for a large volume of fuel.
Positive Signals
- Full and open competition drives better pricing.
- Essential commodity procurement ensures mission readiness.
- Contract duration aligns with operational needs.
Sector Analysis
The petroleum refining sector is vital for national security, providing fuel for military operations. This contract represents a substantial award within this sector, reflecting the government's significant demand for refined petroleum products.
Small Business Impact
The awardee, HD Hyundai Oilbank Co., Ltd, is a large corporation, and there is no indication that small businesses were involved as prime contractors or significant subcontractors in this specific award.
Oversight & Accountability
The Department of Defense and Defense Logistics Agency are responsible for overseeing this contract. Standard procurement regulations and oversight mechanisms are expected to be in place to ensure compliance and performance.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Price volatility due to economic price adjustment.
- Potential supply chain disruptions impacting fuel availability.
- Dependence on a single large supplier.
- Fluctuations in global oil prices affecting contract costs.
Tags
petroleum-refineries, department-of-defense, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $55.4 million to HD HYUNDAI OILBANK CO., LTD. AWARDED 18,000,000 USG OF JP8
Who is the contractor on this award?
The obligated recipient is HD HYUNDAI OILBANK CO., LTD.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $55.4 million.
What is the period of performance?
Start: 2012-12-05. End: 2014-01-30.
What is the historical price trend for JP8 fuel during the contract period, and how did the economic price adjustment clause affect the final cost compared to a fixed-price contract?
Analyzing historical JP8 price data during the 2012-2014 contract period would reveal market volatility. The economic price adjustment clause likely allowed the contract price to fluctuate with these market changes, potentially increasing the total cost beyond an initial fixed price but reflecting actual market conditions and ensuring supply availability.
What were the key performance metrics and evaluation criteria used during the full and open competition to ensure the best value was selected?
During full and open competition, evaluation criteria typically include factors beyond just price, such as technical capability, past performance, delivery timelines, and adherence to specifications. The agency likely assessed these elements to determine the offer that provided the best overall value, balancing cost with reliability and quality for this critical fuel supply.
How does this contract's per-unit cost benchmark against other similar JP8 fuel procurements by the DoD during the same period?
The per-unit cost of approximately $3.08 per gallon should be benchmarked against other DoD JP8 awards from 2012-2014. Variations could be attributed to different delivery locations, contract types, quantities, and specific market conditions at the time of each award. This comparison helps assess the competitiveness and efficiency of this particular procurement.
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: SP060012R0077
Offers Received: 14
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Hyundai Heavy Industries CO., Ltd. (UEI: 687738591)
Address: 640-6 DAEJOOK-RI, DAESAN-EUP, SOSAN
Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $55,419,750
Exercised Options: $55,419,750
Current Obligation: $55,419,750
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060013D0456
IDV Type: IDC
Timeline
Start Date: 2012-12-05
Current End Date: 2014-01-30
Potential End Date: 2014-01-30 00:00:00
Last Modified: 2015-11-18
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