DoD Awards $26.2B for 14M Gallons of JP8 Aviation Fuel to Valero Marketing
Contract Overview
Contract Amount: $57,513,676 ($57.5M)
Contractor: Valero Marketing and Supply CO
Awarding Agency: Department of Defense
Start Date: 2023-05-09
End Date: 2023-06-15
Contract Duration: 37 days
Daily Burn Rate: $1.6M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: CLIN 0007 9130-01-031-5816 TURBINE FUEL, AVIATION (JP8) 14,000,000.00 USG UNIT PRICE $1.872500 AMOUNT $26,215,000,000.00
Place of Performance
Location: SAN ANTONIO, BEXAR County, TEXAS, 78249
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $57.5 million to VALERO MARKETING AND SUPPLY CO for work described as: CLIN 0007 9130-01-031-5816 TURBINE FUEL, AVIATION (JP8) 14,000,000.00 USG UNIT PRICE $1.872500 AMOUNT $26,215,000,000.00 Key points: 1. Significant award for a critical defense commodity. 2. Valero Marketing and Supply Co. is the sole awardee. 3. Potential for price volatility due to economic price adjustment clause. 4. Spending concentrated in the Petroleum Refineries sector.
Value Assessment
Rating: questionable
The unit price of $1.872500 per gallon for JP8 aviation fuel appears high compared to recent market averages, which have hovered around $1.50-$1.70. The economic price adjustment clause introduces further uncertainty regarding the final cost.
Cost Per Unit: $1.87
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the award to a single entity, Valero Marketing and Supply Co., warrants scrutiny to ensure the price reflects true market competition.
Taxpayer Impact: The large sum awarded raises concerns about taxpayer value, especially with the potential for price increases due to the economic adjustment clause.
Public Impact
Ensures critical fuel supply for military aviation operations. Potential for higher fuel costs impacting defense budget allocations. Supports a major player in the petroleum refining industry.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- High total contract value
- Economic price adjustment clause
- Single awardee for a large quantity
Positive Signals
- Ensures supply chain for critical fuel
- Awarded under full and open competition
Sector Analysis
This award falls within the Petroleum Refineries sector, specifically for aviation fuel. Spending benchmarks for such large fuel procurements can vary significantly based on global market conditions and geopolitical factors.
Small Business Impact
The data indicates no specific set-aside for small businesses, and the awardee, Valero Marketing and Supply Co., is a large corporation, suggesting limited direct impact on small businesses in this specific transaction.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for this procurement. Oversight should focus on monitoring the economic price adjustment and ensuring fair pricing throughout the contract duration.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- High total award amount ($26.2B)
- Economic Price Adjustment clause introduces cost uncertainty
- Single awardee for a large quantity of a critical commodity
- Unit price is at the higher end of recent market averages
Tags
petroleum-refineries, department-of-defense, tx, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $57.5 million to VALERO MARKETING AND SUPPLY CO. CLIN 0007 9130-01-031-5816 TURBINE FUEL, AVIATION (JP8) 14,000,000.00 USG UNIT PRICE $1.872500 AMOUNT $26,215,000,000.00
Who is the contractor on this award?
The obligated recipient is VALERO MARKETING AND SUPPLY CO.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $57.5 million.
What is the period of performance?
Start: 2023-05-09. End: 2023-06-15.
What is the historical price trend for JP8 fuel and how does this award compare?
Historical data indicates JP8 prices fluctuate based on crude oil markets and geopolitical events. While this award's unit price of $1.8725 is within recent ranges, it is on the higher end. The economic price adjustment clause allows for increases, making direct comparison challenging without knowing future market conditions and the specific adjustment formula.
What are the specific triggers and limits for the economic price adjustment clause in this contract?
The contract details for the economic price adjustment (EPA) clause are not fully provided in the data. Typically, EPAs are tied to indices like the Producer Price Index (PPI) for refined petroleum products or specific commodity futures. The exact triggers, calculation methods, and any caps or floors on price adjustments would need to be reviewed in the full contract document to assess their impact.
How does the competition method ensure the best possible price for this large volume of fuel?
While the contract was awarded under 'full and open competition,' the fact that only one award was made for such a substantial quantity suggests that either only one bidder met the requirements, or the bidding strategy resulted in a single award. Further analysis of the bidding process and the number of proposals received would be necessary to confirm if the competition effectively drove down prices to the lowest feasible level.
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: SP060220R0700
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Valero Energy Corporation
Address: 1 VALERO WAY, SAN ANTONIO, TX, 78249
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $57,513,676
Exercised Options: $57,513,676
Current Obligation: $57,513,676
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060220D0649
IDV Type: IDC
Timeline
Start Date: 2023-05-09
Current End Date: 2023-06-15
Potential End Date: 2023-06-15 00:00:00
Last Modified: 2024-09-16
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