DoD spent $38.5M on jet fuel, with Signature Flight Support LLC awarded the contract

Contract Overview

Contract Amount: $38,516,279 ($38.5M)

Contractor: Signature Flight Support LLC

Awarding Agency: Department of Defense

Start Date: 2015-04-01

End Date: 2019-03-31

Contract Duration: 1,460 days

Daily Burn Rate: $26.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 131

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: JET A W/O FSII JET A W/FSII JET PETROLEUM 8

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77034, UNITED STATES OF AMERICA

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $38.5 million to SIGNATURE FLIGHT SUPPORT LLC for work described as: JET A W/O FSII JET A W/FSII JET PETROLEUM 8 Key points: 1. The contract value of $38.5 million over four years suggests a significant but potentially standard expenditure for aviation fuel. 2. Competition dynamics appear robust with 131 bids received, indicating a healthy market and potential for competitive pricing. 3. The fixed-price with economic price adjustment (EPA) structure introduces some risk related to fuel price volatility. 4. Performance context is tied to the Defense Logistics Agency's need for aviation fuel, a critical operational requirement. 5. This contract falls within the broader energy and logistics sector, specifically supporting military aviation operations.

Value Assessment

Rating: good

The total award of $38.5 million over approximately four years averages to about $9.6 million annually. Without specific per-gallon pricing or volume data, a direct value-for-money assessment is challenging. However, the presence of 131 bids suggests a competitive environment that likely drove pricing towards market rates. The economic price adjustment clause introduces some variability, but this is common in fuel contracts to account for market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, with a substantial 131 bids received. This high number of bidders indicates a broad market response and suggests that the solicitation was widely accessible. A large number of bids typically fosters price discovery and encourages competitive offers, potentially leading to more favorable terms for the government.

Taxpayer Impact: A high level of competition benefits taxpayers by driving down prices through market forces and ensuring that the government is not overpaying for essential goods like jet fuel.

Public Impact

Military aviation units within the Department of Defense are the primary beneficiaries, receiving essential fuel for operations. The services delivered include the supply of JET A fuel, with and without FSII, crucial for aircraft readiness. The contract's geographic impact is likely widespread, supporting operations across various locations where Signature Flight Support operates. Workforce implications are indirect, supporting jobs within the fuel supply chain and aviation support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to costs exceeding initial projections if fuel prices rise significantly.
Reliance on a single contractor for a critical supply chain component, even with competition, carries inherent risks.

Positive Signals

Full and open competition with a high number of bidders (131) suggests a robust and competitive market.
The contract duration of approximately four years provides supply stability for a critical resource.
Awarding to Signature Flight Support LLC, a known entity in aviation services, suggests a degree of reliability.

Sector Analysis

This contract falls within the energy sector, specifically the distribution and sale of aviation fuel. The market for aviation fuel is influenced by global oil prices, geopolitical events, and demand from commercial and military aviation. The Department of Defense is a significant consumer of aviation fuel, and contracts like this are essential for maintaining operational readiness. Comparable spending benchmarks would involve analyzing other large-scale aviation fuel procurements by government agencies or major airlines.

Small Business Impact

There is no indication that this contract included specific small business set-asides. The high number of bidders suggests that large fuel suppliers likely dominated the bidding process. Subcontracting opportunities for small businesses might exist within the broader logistics and fuel handling operations, but this is not explicitly detailed in the award data.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA), which manages fuel procurement for the DoD. Accountability measures would include performance metrics, delivery confirmations, and adherence to contract terms. Transparency is facilitated by the contract award data being publicly available, though detailed operational oversight specifics are usually internal.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Military Aviation Operations Support
Aviation Fuel Supply Contracts
Petroleum Product Procurement

Risk Flags

Price Volatility Risk (due to EPA)
Supply Chain Disruption Risk
Dependence on Specific Fuel Type Availability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.5 million to SIGNATURE FLIGHT SUPPORT LLC. JET A W/O FSII JET A W/FSII JET PETROLEUM 8

Who is the contractor on this award?

The obligated recipient is SIGNATURE FLIGHT SUPPORT LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $38.5 million.

What is the period of performance?

Start: 2015-04-01. End: 2019-03-31.

What is the historical spending pattern for aviation fuel by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is the primary entity responsible for procuring fuel for the U.S. military. Historical spending on aviation fuel has been substantial, often running into billions of dollars annually, reflecting the vast operational needs of the Air Force, Navy, and other branches. DLA manages a complex global supply chain to ensure fuel availability. Analyzing DLA's historical spending data reveals consistent demand for JET A and other aviation fuels, with fluctuations often tied to operational tempo, geopolitical events, and global energy market prices. The $38.5 million awarded to Signature Flight Support LLC represents a portion of this larger, ongoing expenditure, and its significance can be better understood when viewed against the backdrop of DLA's total annual fuel budget, which can exceed $10 billion in some years.

How does the pricing of this contract compare to market rates for JET A fuel during the contract period?

Directly comparing the pricing of this contract to market rates for JET A fuel during the 2015-2019 period is challenging without access to the specific per-gallon prices negotiated and the economic price adjustment (EPA) formula used. However, the contract was awarded under full and open competition with 131 bids, suggesting that the pricing was likely competitive and aligned with prevailing market conditions. The EPA clause indicates that the price would fluctuate with market indices, aiming to keep it close to real-time costs. To perform a precise comparison, one would need to obtain the actual price paid per gallon, factoring in the EPA adjustments, and compare it against published spot prices or average contract prices for similar government or commercial aviation fuel purchases during the same timeframe.

What are the primary risks associated with a fixed-price contract with economic price adjustment for fuel?

The primary risks associated with a fixed-price contract with economic price adjustment (EPA) for fuel revolve around price volatility and cost predictability. While the fixed-price component offers some cost certainty, the EPA allows for adjustments based on fluctuations in underlying commodity prices (e.g., crude oil, refined product indices). If fuel prices increase significantly during the contract period, the government's costs will rise beyond the initially anticipated fixed price, potentially leading to budget overruns. Conversely, if prices fall, the government benefits from lower costs. The risk for the contractor is that the EPA might not fully compensate for extreme price increases, while the risk for the government is unexpected cost escalation. Effective management requires robust index tracking and clear contractual terms for the EPA.

What is Signature Flight Support LLC's track record with government contracts, particularly for fuel supply?

Signature Flight Support LLC is a major global provider of flight support services, including fueling, ground handling, and maintenance. They have a significant presence at numerous airports worldwide. Their track record with government contracts, particularly for fuel supply, is extensive. As a large commercial operator, they routinely engage in high-volume fuel transactions. While specific details of all government contracts are not always publicly aggregated, their role as a key fuel provider suggests a history of meeting the demands of various clients, including government entities. Awards like this one from the Defense Logistics Agency indicate their capability and competitiveness in securing large-scale fuel supply agreements with the U.S. military.

How does the competition level (131 bids) impact the government's ability to secure favorable pricing?

A high level of competition, such as the 131 bids received for this contract, significantly enhances the government's ability to secure favorable pricing. When numerous qualified vendors are vying for a contract, they are incentivized to offer their most competitive prices to win the award. This creates a buyer's market where the government has considerable leverage. The presence of many bidders reduces the risk of collusion and ensures that the government benefits from the collective market intelligence and cost structures of multiple suppliers. It allows for robust price discovery, meaning the final price is more likely to reflect the true market value of the goods or services, minimizing the potential for overpayment.

What are the potential performance risks if the contractor, Signature Flight Support LLC, fails to meet delivery obligations?

Performance risks associated with fuel supply contracts are critical due to the essential nature of aviation fuel for military operations. If Signature Flight Support LLC fails to meet delivery obligations, the primary risk is disruption to military flight schedules and readiness. This could range from minor delays to significant operational impacts, potentially affecting mission accomplishment. The Defense Logistics Agency (DLA) would likely have contingency plans in place, which might include sourcing fuel from alternative suppliers, potentially at a higher cost or with logistical challenges. Contractual remedies, such as penalties or termination for default, would also be available to the government. DLA's oversight and performance monitoring are crucial to mitigate these risks proactively.

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: SP060014R0221

Offers Received: 131

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Global FBO Holdings Inc (UEI: 112325753)

Address: 11811 N BRANTLY AVE, HOUSTON, TX, 77034

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

Financial Breakdown

Contract Ceiling: $38,516,279

Exercised Options: $38,516,279

Current Obligation: $38,516,279

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060015D0033

IDV Type: IDC

Timeline