Petroleum products contract awarded to ROSSETTI S.P.A. for over $21 million, spanning nearly six years

Contract Overview

Contract Amount: $21,051,924 ($21.1M)

Contractor: Rossetti S.P.A.

Awarding Agency: Department of Defense

Start Date: 2005-11-08

End Date: 2011-01-31

Contract Duration: 1,910 days

Daily Burn Rate: $11.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Plain-Language Summary

Department of Defense obligated $21.1 million to ROSSETTI S.P.A. for work described as: Key points: 1. The contract's duration and fixed-price structure with economic price adjustments suggest potential for cost fluctuations over its term. 2. Awarded under full and open competition, indicating a broad market search for the best value. 3. The contract's value of over $21 million places it as a significant procurement within its category. 4. Performance period of 1910 days (approx. 5.2 years) is substantial for a supply contract. 5. The specific NAICS code points to a specialized segment of petroleum product wholesaling. 6. The contract type (FP-EPA) aims to balance contractor risk with protection against market volatility.

Value Assessment

Rating: fair

Benchmarking the value of this contract requires detailed market analysis of petroleum product prices during the 2005-2011 period. The fixed-price with economic price adjustment (FP-EPA) contract type introduces complexity in assessing true value-for-money, as costs could escalate due to market forces. Without specific performance metrics or comparison to similar contracts awarded concurrently, a definitive value assessment is challenging. However, the duration suggests a need for a stable, long-term supplier.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION,' signifying that the solicitation was made available to all responsible sources. The presence of 3 bidders (no) indicates a moderate level of competition for this petroleum products supply contract. While not a highly contested bid, it suggests that multiple firms were interested and capable of fulfilling the requirement, which generally aids in price discovery and achieving a competitive price.

Taxpayer Impact: Taxpayers likely benefited from a competitive bidding process, which should have driven the price down compared to a sole-source award. The moderate number of bidders suggests a reasonable balance between competition and the potential for specialized supplier capabilities.

Public Impact

The Department of Defense, specifically the Defense Logistics Agency, is the primary beneficiary, ensuring a supply of petroleum products. This contract supports the logistical needs of military operations by providing essential fuel and related products. The geographic impact is likely widespread, supporting military installations and operations across various regions where the DLA operates. Workforce implications could include jobs in petroleum logistics, transportation, and supply chain management, both within the government and at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustments can lead to cost overruns if market prices increase significantly beyond projections.
The long duration of the contract (over 5 years) may limit flexibility to adopt newer, potentially more efficient or cost-effective fuel sources or technologies.
Reliance on a single contractor for a critical commodity like petroleum products can pose supply chain risks in case of disruptions.

Positive Signals

Awarded through full and open competition, suggesting a robust process to identify the best value.
The FP-EPA contract type provides some cost certainty while allowing for market fluctuations, potentially stabilizing supply.
The contract duration indicates a stable, long-term relationship, which can foster reliability in supply.

Sector Analysis

This contract falls within the Petroleum and Petroleum Products Merchant Wholesalers sector, a critical component of the energy industry. The market is characterized by global supply dynamics, price volatility, and significant logistical challenges. Federal spending in this area is essential for national security and operational readiness, particularly for defense agencies. Comparable spending benchmarks would involve analyzing other large-scale fuel supply contracts awarded by the DoD or other federal agencies over similar timeframes.

Small Business Impact

The data indicates that this contract did not involve small business set-asides (ss=false, sb=false). Therefore, there are no direct subcontracting implications specifically mandated for small businesses through this award. The primary contractor, ROSSETTI S.P.A., would have determined its own subcontracting strategy, potentially engaging small businesses if deemed beneficial for its operations, but without a specific requirement from this contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the Defense Contract Management Agency (DCMA) at the Defense Logistics Agency. Accountability measures are embedded in the contract terms, including delivery schedules and product specifications. Transparency is generally maintained through contract award databases like FPDS-NG. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Fuel Supply Center Contracts
Petroleum Product Procurement
Logistics and Transportation Services
Fixed-Price Economic Price Adjustment Contracts
Defense Logistics Agency Procurements

Risk Flags

Long contract duration may limit adaptability to market changes.
Economic price adjustment introduces potential for cost escalation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.1 million to ROSSETTI S.P.A.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is ROSSETTI S.P.A..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $21.1 million.

What is the period of performance?

Start: 2005-11-08. End: 2011-01-31.

What was the historical spending pattern for petroleum products by the Defense Logistics Agency prior to this contract?

Analyzing historical spending patterns for petroleum products by the Defense Logistics Agency (DLA) prior to November 2005 would require accessing historical procurement data. Typically, the DLA manages a vast portfolio of fuel contracts to meet global military demands. Spending levels fluctuate based on geopolitical events, operational tempo, and global oil prices. Prior to this specific $21 million contract, the DLA likely awarded numerous contracts of varying sizes and durations to different suppliers, reflecting a continuous need for fuel. Understanding these patterns would involve looking at the total obligated amounts, number of contracts awarded, and average contract values within the 'Petroleum and Petroleum Products Merchant Wholesalers' NAICS code (424720) or similar categories managed by the DLA during preceding fiscal years. This context helps in evaluating whether the $21 million award was typical, an increase, or a decrease in spending for this category.

How did the economic price adjustment (EPA) clause impact the final cost of this contract compared to a firm fixed-price contract?

The economic price adjustment (EPA) clause in this contract, awarded as FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT, was designed to allow for modifications to the contract price based on fluctuations in specific economic factors, such as the cost of raw materials or labor. If market prices for petroleum products increased significantly between November 2005 and January 2011, the EPA clause would have permitted ROSSETTI S.P.A. to pass on some of those increased costs to the government, potentially leading to a higher final price than if it had been a Firm Fixed Price (FFP) contract. Conversely, if prices decreased, the EPA might have allowed for price reductions. Without the specific price adjustment data and the market conditions during the contract period, it's impossible to quantify the exact difference. However, the intent of EPA is to protect the contractor from unforeseen cost increases, which can sometimes result in a higher initial bid price compared to FFP, but aims to ensure supply stability by mitigating contractor risk.

What is the typical duration for similar petroleum supply contracts awarded by the Defense Logistics Agency?

The typical duration for petroleum supply contracts awarded by the Defense Logistics Agency (DLA) can vary significantly based on the specific product, quantity, delivery requirements, and market conditions. Contracts can range from short-term, immediate needs to longer-term agreements designed to ensure consistent supply and potentially achieve better pricing through volume commitments. A duration of 1910 days (approximately 5.2 years), as seen in this ROSSETTI S.P.A. contract, is substantial but not uncommon for strategic supply agreements where stability and predictable sourcing are prioritized. Shorter durations might be used for spot purchases or when market volatility is high and flexibility is desired. Longer durations, like this one, often involve more complex logistical planning and may include provisions for price adjustments to account for market fluctuations over the extended period.

Were there any performance issues or disputes reported for ROSSETTI S.P.A. on this contract?

Information regarding specific performance issues or disputes for ROSSETTI S.P.A. on this particular contract (NA 424720, awarded 2005-11-08, ending 2011-01-31) is not directly available in the provided summary data. Contract performance data, including any disputes, claims, or termination actions, is typically detailed in contract administration records and may be reflected in contractor performance assessment reports (CPARS). Publicly accessible databases like FPDS often summarize award information but may not contain granular details on performance issues unless they resulted in significant contractual actions like termination for default or litigation. To ascertain performance quality, one would need to consult CPARS reports or agency-specific contract management files, if available.

How does the $21 million award compare to the total annual spending on petroleum products by the DoD?

The $21 million award to ROSSETTI S.P.A. for petroleum products represents a specific procurement action over a period of approximately 5.2 years. To compare this to the total annual spending on petroleum products by the Department of Defense (DoD), one would need to examine the DoD's overall budget allocations and actual expenditures for fuel and related products across all its branches and agencies. The DoD is one of the largest consumers of petroleum products globally, with annual spending potentially reaching billions of dollars, depending on global oil prices and operational demands. Therefore, this $21 million contract, while significant for a single award, would likely constitute a fraction of the DoD's total annual fuel expenditure. A comprehensive analysis would involve aggregating all fuel-related contract awards and expenditures by the DoD over a given fiscal year.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

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

Evaluated Preference: NONE

Contractor Details

Address: VIA COLLATINA 400, ROMA

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,051,924

Exercised Options: $20,150,837

Current Obligation: $21,051,924

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060006D1002

IDV Type: IDC

Timeline