DoD Awards $26.4M for Jet Fuel Amidst Fixed Price Adjustments
Contract Overview
Contract Amount: $26,437,515 ($26.4M)
Contractor: Freeman Holdings of Louisiana LLC
Awarding Agency: Department of Defense
Start Date: 2015-04-01
End Date: 2019-03-31
Contract Duration: 1,460 days
Daily Burn Rate: $18.1K/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/FSII
Place of Performance
Location: LAKE CHARLES, CALCASIEU County, LOUISIANA, 70615, UNITED STATES OF AMERICA
Plain-Language Summary
Department of Defense obligated $26.4 million to FREEMAN HOLDINGS OF LOUISIANA LLC for work described as: JET A W/FSII Key points: 1. Contract awarded to Freeman Holdings of Louisiana LLC for Jet A fuel. 2. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces price volatility. 3. Competition was full and open, suggesting potential for competitive pricing. 4. The contract spans nearly four years, indicating a significant long-term commitment.
Value Assessment
Rating: fair
The contract's fixed price with economic price adjustment introduces uncertainty in final costs. Benchmarking against similar fuel contracts is difficult without knowing the specific adjustment clauses and market fluctuations during the contract period.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically fosters competitive pricing. However, the FPEPA clause may obscure the true price discovery, as the final price is subject to economic adjustments.
Taxpayer Impact: Taxpayer exposure is managed through competition, but the economic price adjustment introduces potential for increased costs beyond initial projections.
Public Impact
Ensures supply of critical jet fuel for Department of Defense operations. Potential for fluctuating fuel costs impacts budget predictability for the agency. Supports a specific Louisiana-based company, contributing to regional economic activity.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause introduces cost uncertainty.
- Lack of specific unit cost data makes direct comparison difficult.
Positive Signals
- Awarded under full and open competition.
- Contract supports essential defense logistics.
Sector Analysis
This contract falls within the petroleum refining sector, specifically for aviation fuel. Spending benchmarks for such contracts can vary widely based on global oil prices, geopolitical factors, and specific fuel additives like FSII (Fuel System Icing Inhibitor).
Small Business Impact
The contract was awarded to Freeman Holdings of Louisiana LLC, which is not indicated as a small business. There is no specific set-aside for small businesses in this award, suggesting larger prime contractors were involved.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key component of DoD procurement. Oversight would involve monitoring contract performance, adherence to pricing adjustments, and ensuring timely delivery of fuel.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause.
- Long contract duration (1460 days).
- Lack of specific unit cost data.
- No small business participation noted.
Tags
petroleum-refineries, department-of-defense, la, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.4 million to FREEMAN HOLDINGS OF LOUISIANA LLC. JET A W/FSII
Who is the contractor on this award?
The obligated recipient is FREEMAN HOLDINGS OF LOUISIANA LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $26.4 million.
What is the period of performance?
Start: 2015-04-01. End: 2019-03-31.
What was the average price per gallon of Jet A fuel under this contract, considering the economic price adjustments?
Determining the average price per gallon requires access to the specific economic price adjustment indices and the frequency of adjustments applied throughout the contract's duration. Without this granular data, it's impossible to calculate an accurate average, making it difficult to assess value for money.
What is the risk associated with the economic price adjustment clause in this contract?
The primary risk of the economic price adjustment clause is cost escalation. Unforeseen spikes in crude oil prices or other market factors could significantly increase the final cost of the jet fuel beyond initial budgetary expectations, potentially straining the DoD's financial resources.
How effective was the full and open competition in achieving optimal pricing for this fuel contract?
While full and open competition is generally effective in driving competitive pricing, the presence of an economic price adjustment clause complicates the assessment. It suggests that while initial bids may have been competitive, the final realized price could deviate significantly based on market volatility, potentially diminishing the long-term cost-saving effectiveness.
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
Address: 4500 CHENNAULT PKWY, LAKE CHARLES, LA, 70615
Business Categories: Category Business, Limited Liability Corporation, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business
Financial Breakdown
Contract Ceiling: $26,437,515
Exercised Options: $26,437,515
Current Obligation: $26,437,515
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060015D0076
IDV Type: IDC
Timeline
Start Date: 2015-04-01
Current End Date: 2019-03-31
Potential End Date: 2019-03-31 00:00:00
Last Modified: 2016-09-23
More Contracts from Freeman Holdings of Louisiana LLC
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