DLA awards $17.1M contract for motor oil to Hellas Refineries, spanning 5 years

Contract Overview

Contract Amount: $17,102,096 ($17.1M)

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

Awarding Agency: Department of Defense

Start Date: 2005-10-14

End Date: 2010-10-14

Contract Duration: 1,826 days

Daily Burn Rate: $9.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Plain-Language Summary

Department of Defense obligated $17.1 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. for work described as: Key points: 1. Contract value appears reasonable given the 5-year duration and the nature of the goods procured. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract duration of 5 years presents a moderate risk of price escalation or obsolescence. 4. Procurement of motor oil is a recurring need for the Defense Logistics Agency. 5. This contract falls within the broader category of fuel and lubricant supplies for the military.

Value Assessment

Rating: good

The contract value of $17.1 million over five years averages to approximately $3.42 million annually. This figure seems within a reasonable range for bulk motor oil procurement for a large organization like the Department of Defense, especially considering potential fluctuations in market prices. Without specific per-unit cost data or benchmarks for comparable military-grade motor oil contracts, a precise value-for-money assessment is challenging. However, the firm fixed-price structure offers some cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, which can lead to better pricing and quality for the government. The presence of 3 bids suggests a moderate level of competition for this specific requirement.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a robust bidding process.

Public Impact

Military personnel and vehicles across various branches will benefit from the reliable supply of motor oil. The services delivered include the provision of essential lubricants crucial for vehicle and equipment maintenance. The geographic impact is likely widespread, supporting military operations nationwide and potentially overseas. Workforce implications are minimal, primarily involving the logistics and distribution of the procured goods.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases over the 5-year contract term due to market volatility.
Dependence on a single supplier for a critical commodity could pose a supply chain risk if not managed proactively.

Positive Signals

Firm fixed-price contract provides cost predictability for the duration.
Full and open competition suggests a competitive award process, likely yielding favorable terms.
The Defense Logistics Agency has extensive experience in managing fuel and lubricant contracts.

Sector Analysis

The procurement of motor oil falls under the broader industrial sector of petroleum refining and chemical manufacturing. The market for lubricants is substantial, driven by automotive, industrial, and military demand. This contract represents a portion of the government's overall spending on operational support materials, fitting within the Defense Logistics Agency's mission to provide logistical support to the armed forces. Comparable spending benchmarks would involve analyzing other large-scale lubricant contracts awarded by government agencies or major commercial entities.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions. The prime contractor, MOTOR OIL (HELLAS) CORINTH REFINERIES S.A., is a large foreign entity. There is no information provided regarding subcontracting plans or opportunities for small businesses within this award. Therefore, the direct impact on the small business ecosystem appears limited for this specific contract.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The firm fixed-price nature of the award provides a degree of accountability for the contractor to deliver goods at the agreed-upon price. Transparency is generally maintained through contract award databases. The Defense Contract Audit Agency (DCAA) and the Inspector General's office for the Department of Defense would have oversight jurisdiction for any financial or performance irregularities.

Related Government Programs

Defense Logistics Agency Fuel and Lubricant Contracts
Department of Defense Vehicle Maintenance Supplies
Strategic Petroleum Reserve
Federal Aviation Administration Aircraft Fuel Contracts

Risk Flags

Long contract duration may expose government to price fluctuations.
Dependence on a single supplier for a critical commodity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.1 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 $17.1 million.

What is the period of performance?

Start: 2005-10-14. End: 2010-10-14.

What is the historical spending pattern for motor oil by the Defense Logistics Agency?

Analyzing historical spending patterns for motor oil by the Defense Logistics Agency (DLA) is crucial for understanding trends, identifying potential cost efficiencies, and assessing the consistency of demand. While specific historical dollar amounts for motor oil alone are not provided in this data, the DLA consistently procures vast quantities of fuels and lubricants to support military operations globally. Their spending in this category is typically substantial, often running into billions of dollars annually across all types of petroleum products. The DLA's procurement strategy often involves long-term contracts, similar to the one awarded to Hellas Refineries, to ensure supply chain stability and leverage economies of scale. Examining past contract awards, including their values, durations, competition levels, and the specific types of lubricants procured, would reveal patterns in pricing, supplier relationships, and the evolution of product specifications over time. This historical context helps in evaluating whether the current $17.1 million award over five years represents a fair market price and aligns with the agency's long-term logistical planning.

How does the pricing of this motor oil contract compare to similar government or commercial contracts?

A direct comparison of the pricing for this $17.1 million motor oil contract to similar government or commercial contracts is challenging without access to specific unit prices (e.g., price per gallon or liter) and detailed product specifications. However, the contract's firm fixed-price (FFP) structure is a positive indicator for price predictability. FFP contracts shift the risk of cost overruns to the contractor, which typically results in a higher initial price compared to cost-reimbursement contracts, but offers greater certainty for the buyer. To benchmark effectively, one would need to compare the price per unit of the specific grade and type of motor oil procured against prices from other DLA contracts for similar lubricants, contracts awarded by other military branches, or even large commercial fleet lubricant agreements. Factors such as volume discounts, delivery terms, and the inclusion of specialized additives can significantly influence price. Given the full and open competition with three bidders, it suggests the price achieved was likely competitive within the market for this type of product.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance on this contract?

While the provided data does not explicitly list the Key Performance Indicators (KPIs) for this specific motor oil contract, standard government contracts of this nature typically include several critical performance metrics. These often revolve around timely delivery, product quality, and adherence to specifications. For motor oil, KPIs might include on-time delivery rates to designated depots, ensuring that the lubricant meets all specified technical requirements (e.g., viscosity, additive packages, performance standards like API or MIL-SPEC), and accurate order fulfillment. The contract likely includes clauses for inspection and acceptance of goods, where the government verifies that the delivered product conforms to the agreed-upon standards. Failure to meet these KPIs could result in penalties, contract modifications, or even termination. The Defense Logistics Agency, as the procuring agency, would have established procedures for monitoring these metrics throughout the contract's five-year duration.

What is the track record of MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. in fulfilling government contracts?

Assessing the track record of MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. in fulfilling government contracts requires a review of their past performance history, particularly with the Department of Defense or other federal agencies. As a large, established refining company, they likely have experience supplying petroleum products. However, specific details regarding their performance on prior U.S. government contracts, such as on-time delivery, quality compliance, and any history of disputes or contract terminations, are not provided in the summary data. A thorough analysis would involve checking federal procurement databases (like SAM.gov or FPDS) for past awards to this contractor, reviewing past performance evaluations if available, and looking for any red flags or commendations. Without this specific historical performance data, it's difficult to definitively assess their reliability for this particular $17.1 million contract.

What are the potential risks associated with a 5-year contract for motor oil, and how are they mitigated?

A 5-year contract for motor oil, while providing supply stability, carries inherent risks, primarily related to price volatility and potential obsolescence or changes in product specifications. The price of crude oil and refined products can fluctuate significantly over a five-year period, potentially leading to the government paying above market rates if prices fall, or the contractor facing losses if prices rise sharply, which could impact their ability or willingness to perform. Product specifications for lubricants can also evolve due to new engine technologies or environmental regulations. Mitigation strategies typically employed by the government include the use of firm fixed-price (FFP) contracts, which lock in prices but may require a premium upfront to account for anticipated market fluctuations. Price adjustment clauses, though less common in FFP, could be negotiated in specific circumstances. For obsolescence, contracts often specify adherence to current industry standards and allow for the substitution of equivalent or superior products with government approval. The Defense Logistics Agency's expertise in managing long-term fuel contracts also plays a crucial role in risk mitigation through careful planning and supplier oversight.

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: 3

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: $32,264,496

Exercised Options: $17,194,496

Current Obligation: $17,102,096

Contract Characteristics

Multi-Year Contract: Yes

Cost or Pricing Data: NO

Timeline