DoD spent over $25M on motor oil and related storage services from a single Greek refinery

Contract Overview

Contract Amount: $25,351,252 ($25.4M)

Contractor: Motor OIL (hellas) Corinth Refineries S.A.

Awarding Agency: Department of Defense

Start Date: 2004-01-01

End Date: 2009-12-31

Contract Duration: 2,191 days

Daily Burn Rate: $11.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Plain-Language Summary

Department of Defense obligated $25.4 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. for work described as: Key points: 1. The contract awarded to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. represents a significant investment in fuel logistics. 2. Competition dynamics for this contract were robust, indicating potential for favorable pricing. 3. Performance context suggests a long-term need for these specialized warehousing and storage services. 4. Sector positioning highlights the critical role of fuel supply chains in defense operations. 5. Risk indicators are minimal given the established nature of the services and contractor.

Value Assessment

Rating: good

The total award of over $25 million for motor oil and storage services over a six-year period suggests a substantial but potentially reasonable expenditure given the duration and scope. Benchmarking against similar international fuel supply contracts for military use is challenging due to the specific nature of the services and the geographic location of the supplier. However, the firm-fixed-price contract type generally provides cost certainty for the government. The per-unit cost of motor oil and storage would be the key metric for a precise value assessment, which is not detailed here.

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 were likely considered. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The presence of two bidders, as indicated by the 'no' field, suggests a reasonable level of interest, though more bidders would typically enhance competition further.

Taxpayer Impact: A full and open competition process helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Military operations in the European theater benefit from a reliable supply of motor oil. The contract supports essential logistics and maintenance functions for Department of Defense assets. Geographic impact is primarily focused on supporting DoD activities in and around Greece. Workforce implications include potential employment at the refinery and associated logistics operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price fluctuations in the global oil market impacting long-term costs.
Dependence on a single foreign supplier for a critical commodity could pose supply chain risks.
Ensuring consistent quality and timely delivery of motor oil over an extended period.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Firm-fixed-price contract provides cost predictability for the government.
Long contract duration indicates a stable and potentially efficient supply relationship.

Sector Analysis

The defense logistics sector relies heavily on the procurement of essential commodities like motor oil to maintain operational readiness. This contract falls within the broader energy and logistics market, where global supply and demand significantly influence pricing. Comparable spending benchmarks for military fuel procurement can vary widely based on volume, type of fuel, and geographic location. The $25 million expenditure over six years for specialized motor oil and storage services from a European refinery highlights the complexities of international defense supply chains.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting requirements. The primary contractor is a large international refining company, suggesting that the focus was on securing a large-scale supply of a specialized product rather than promoting small business participation.

Oversight & Accountability

The contract is subject to standard Department of Defense oversight mechanisms for procurement and contract management. Accountability is maintained through performance monitoring and adherence to the firm-fixed-price terms. Transparency is generally provided through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Fuel Support Center Contracts
Petroleum, Oils, and Lubricants (POL) Procurement
DoD Logistics and Supply Chain Management
Foreign Military Sales Fuel Support

Risk Flags

Single Source Dependency
Geopolitical Risk
Supply Chain Disruption

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.4 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is MOTOR OIL (HELLAS) CORINTH REFINERIES S.A..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $25.4 million.

What is the period of performance?

Start: 2004-01-01. End: 2009-12-31.

What was the specific type and grade of motor oil procured under this contract, and how did its specifications meet DoD requirements?

The provided data does not specify the exact type or grade of motor oil. However, given the contractor's name, 'MOTOR OIL (HELLAS) CORINTH REFINERIES S.A.', it is highly probable that the oil procured was a commercial-grade motor oil suitable for various vehicle and equipment applications within the Department of Defense. The '493190' NAICS code points to 'Other Warehousing and Storage,' which, when combined with the contractor's name, suggests the contract likely encompassed not only the supply of motor oil but also its storage and potentially distribution. DoD typically requires motor oils that meet stringent military specifications (e.g., MIL-SPEC) or equivalent commercial standards (like API or SAE) to ensure performance and compatibility with a wide range of equipment operating in diverse environmental conditions. Without further details, it's assumed the procured oil met the necessary performance criteria for its intended use.

How does the total contract value of approximately $25.35 million compare to other DoD fuel procurement contracts of similar duration and scope?

Comparing the total contract value of $25.35 million over six years (2004-2009) to other DoD fuel procurement contracts requires access to extensive historical spending data and careful consideration of numerous variables. Factors such as the specific type of fuel (e.g., jet fuel, diesel, motor oil), volume, delivery locations, contract duration, and prevailing market prices at the time of award significantly influence contract values. This contract, focused on motor oil and storage from a specific refinery in Greece, is likely specialized. General fuel contracts for large volumes of widely used fuels like jet fuel or diesel could easily exceed this amount, especially if covering global distribution. Conversely, smaller, localized contracts might be for lesser sums. The value here suggests a significant, but not necessarily outlier, expenditure for a specific logistical need within the European theater during that period.

What were the key performance indicators (KPIs) used to evaluate the contractor's performance, and were there any penalties or incentives tied to these KPIs?

The provided data does not contain specific details regarding the Key Performance Indicators (KPIs) or any associated penalties or incentives for this contract. Typically, for contracts involving the supply and storage of essential commodities like motor oil, KPIs would likely focus on aspects such as on-time delivery rates, quality assurance (ensuring the oil meets specifications), inventory management accuracy, and responsiveness to urgent requests. Performance evaluations would be conducted by the contracting officer's representative (COR) or a designated government representative. Penalties might be invoked for late deliveries or substandard product quality, while incentives, though less common in firm-fixed-price contracts, could theoretically be tied to exceeding performance expectations. Without the contract's statement of work or performance clauses, a definitive assessment is not possible.

What is the historical spending trend for motor oil and related storage services by the Department of Defense, and does this contract represent an increase or decrease?

The provided data offers a snapshot of a single contract from 2004-2009, making it difficult to establish a comprehensive historical spending trend for motor oil and related storage services by the DoD. To determine if this $25.35 million contract represents an increase or decrease, one would need to analyze DoD spending patterns over a much longer period, potentially decades, across various agencies and commands. This would involve aggregating data on all similar procurements, accounting for inflation, changes in operational tempo, and evolving equipment needs. The '493190' NAICS code (Other Warehousing and Storage) suggests a focus on the logistical aspect, which might be bundled with fuel procurement. Without broader data, it's impossible to definitively place this contract within a larger spending trend.

What risks are associated with relying on a single foreign supplier for a critical commodity like motor oil, and what mitigation strategies were likely in place?

Relying on a single foreign supplier for a critical commodity like motor oil introduces several risks. These include potential disruptions due to geopolitical instability in the supplier's region, international trade disputes or sanctions, currency exchange rate volatility, longer lead times for delivery, and challenges in ensuring consistent quality control and regulatory compliance across borders. For mitigation, the DoD likely employed strategies such as maintaining strategic reserves of motor oil, diversifying suppliers where feasible (though this contract was sole-source in nature for the supplier), establishing robust quality assurance protocols for incoming goods, and potentially requiring performance bonds or guarantees from the supplier. Furthermore, contingency planning for alternative sourcing or expedited shipping would be crucial.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage

Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12A, IRODOU ATTIKOU STR., MAROUSSI

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $25,351,252

Exercised Options: $25,351,252

Current Obligation: $25,351,252

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline