DoD awards $75M for aviation turbine fuel, with fixed-price adjustments and no small business participation

Contract Overview

Contract Amount: $75,031,308 ($75.0M)

Contractor: U.S. OIL Trading LLC

Awarding Agency: Department of Defense

Start Date: 2013-06-25

End Date: 2014-06-30

Contract Duration: 370 days

Daily Burn Rate: $202.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 14

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: TURBINE FUEL, AVIATION JAA - 22,500,000 USG FOR DESTINATION PIPELINE DELIVERY TO MCCHORD AFB EX TACOMA, WA. TURBINE FUEL, AVIATION - 3,408,750 USG FOR FOB ORIGIN TRUCK DELIVERY EX TACOMA, WA. TURBINE FUEL, AVIATION, JAA - 5,000,000 USG FOR FOB ORIGIN TRUCT DELIVERY EX TACOMA, WA.

Place of Performance

Location: TACOMA, PIERCE County, WASHINGTON, 98421

State: Washington Government Spending

Plain-Language Summary

Department of Defense obligated $75.0 million to U.S. OIL TRADING LLC for work described as: TURBINE FUEL, AVIATION JAA - 22,500,000 USG FOR DESTINATION PIPELINE DELIVERY TO MCCHORD AFB EX TACOMA, WA. TURBINE FUEL, AVIATION - 3,408,750 USG FOR FOB ORIGIN TRUCK DELIVERY EX TACOMA, WA. TURBINE FUEL, AVIATION, JAA - 5,000,000 USG FOR FOB ORIGIN TRUCT DELIVERY EX TACOMA, W… Key points: 1. Significant volume of aviation fuel procured for key Air Force bases. 2. Contract utilizes fixed-price with economic price adjustment, potentially exposing taxpayers to fuel price volatility. 3. No small business participation noted in this large-volume fuel award. 4. Competition was full and open, suggesting a competitive market for this commodity.

Value Assessment

Rating: fair

The total award amount is $75,031,308.49. Without specific unit pricing or historical data for this exact fuel type and delivery method, a direct comparison is difficult. However, the fixed-price with economic price adjustment clause warrants scrutiny regarding potential overpayment if fuel prices rise significantly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. This method generally promotes price discovery and competitive pricing, although the economic price adjustment clause can mitigate some of the cost certainty.

Taxpayer Impact: The use of fixed-price with economic price adjustment introduces risk to taxpayers, as they may bear the brunt of increased fuel costs over the contract period.

Public Impact

Ensures critical aviation fuel supply for military operations at McChord AFB. Potential for increased costs to taxpayers due to economic price adjustments on fuel. Lack of small business involvement may limit opportunities for smaller enterprises in this sector. Supports the logistical needs of the Department of Defense's aviation fleet.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause exposes taxpayers to fuel price volatility.
No small business participation.

Positive Signals

Full and open competition utilized.
Secures essential fuel for military aviation.

Sector Analysis

This contract falls within the petroleum refining sector, specifically for aviation fuel. The Department of Defense is a major consumer of such fuels, and benchmark pricing can vary significantly based on global oil markets, refining costs, and delivery logistics.

Small Business Impact

This contract did not involve small businesses, as indicated by the 'sb': false field. The large volume and nature of the procurement may favor larger, established fuel suppliers.

Oversight & Accountability

The contract was awarded by the Defense Logistics Agency, a key component of DoD oversight for supply chain management. The fixed-price with economic price adjustment structure requires careful monitoring of market prices to ensure fair value.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Economic Price Adjustment (EPA) clause introduces cost uncertainty.
No Small Business participation.
Potential for price volatility in a critical commodity.
Large contract value requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $75.0 million to U.S. OIL TRADING LLC. TURBINE FUEL, AVIATION JAA - 22,500,000 USG FOR DESTINATION PIPELINE DELIVERY TO MCCHORD AFB EX TACOMA, WA. TURBINE FUEL, AVIATION - 3,408,750 USG FOR FOB ORIGIN TRUCK DELIVERY EX TACOMA, WA. TURBINE FUEL, AVIATION, JAA - 5,000,000 USG FOR FOB ORIGIN TRUCT DELIVERY EX TACOMA, WA.

Who is the contractor on this award?

The obligated recipient is U.S. OIL TRADING LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $75.0 million.

What is the period of performance?

Start: 2013-06-25. End: 2014-06-30.

What was the average per-gallon price paid under this contract, considering the economic price adjustments?

Calculating the exact average per-gallon price is not possible with the provided data due to the economic price adjustment clause. This clause means the price fluctuates based on market conditions. To determine the average, one would need access to the actual price paid at various points throughout the contract period and the corresponding market indices used for adjustment.

What is the historical trend of aviation fuel prices in the region relevant to this contract?

Historical aviation fuel prices in the Tacoma, WA region, and globally, have shown significant volatility. Factors such as geopolitical events, supply and demand dynamics, and crude oil prices heavily influence these trends. Understanding these historical fluctuations is crucial for assessing the risk associated with the economic price adjustment clause in this contract.

How does the total contract value compare to similar aviation fuel procurements by the DoD?

The total award of $75 million for aviation turbine fuel is substantial, reflecting the large quantities procured (over 30 million gallons). Comparing this to similar procurements requires access to a database of historical DoD fuel contracts, considering factors like fuel type, delivery location, contract duration, and prevailing market prices at the time of award.

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: SP060012R0161

Offers Received: 14

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

Evaluated Preference: NONE

Contractor Details

Address: 3001 MARSHALL AVE, TACOMA, WA, 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: $75,031,308

Exercised Options: $75,031,308

Current Obligation: $75,031,308

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060013D0472

IDV Type: IDC

Timeline