DoD's $37.3M Naval Distillate Purchase from Vitol Aviation Co. Awarded via Full and Open Competition
Contract Overview
Contract Amount: $37,363,384 ($37.4M)
Contractor: Vitol Aviation CO
Awarding Agency: Department of Defense
Start Date: 2022-03-25
End Date: 2022-04-21
Contract Duration: 27 days
Daily Burn Rate: $1.4M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: 8508977422!DISTILLATE,NAVAL
Place of Performance
Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245
Plain-Language Summary
Department of Defense obligated $37.4 million to VITOL AVIATION CO for work described as: 8508977422!DISTILLATE,NAVAL Key points: 1. Significant expenditure for a critical fuel commodity. 2. Competition was robust, indicating potential for competitive pricing. 3. Fixed Price with Economic Price Adjustment introduces some price volatility risk. 4. Sector is Defense Logistics, essential for military operations.
Value Assessment
Rating: good
The contract value of $37.3M for a 27-day delivery period appears reasonable given the nature of fuel procurement. Benchmarking against similar large-volume fuel contracts would provide a more precise assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. This method generally leads to better price discovery and value for the government.
Taxpayer Impact: The use of full and open competition is taxpayer-favorable, as it aims to secure the best possible price through market forces.
Public Impact
Ensures fuel availability for naval operations. Supports the defense industrial base for petroleum products. Potential for price fluctuations due to economic price adjustment.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause could lead to higher costs if fuel prices surge.
- Short contract duration may necessitate frequent re-competition and associated administrative costs.
Positive Signals
- Awarded through full and open competition, maximizing potential for competitive pricing.
- Procurement supports critical Department of Defense operational needs.
Sector Analysis
This procurement falls within the Defense sector, specifically related to fuel supply chain management. Spending benchmarks for naval distillate fuel can vary significantly based on global market conditions and demand.
Small Business Impact
No specific indication of small business participation is provided in the data. Large fuel contracts often involve major suppliers, but subcontracting opportunities for smaller businesses may exist.
Oversight & Accountability
The award was a delivery order under a larger contract, suggesting existing oversight mechanisms. The Department of Defense and the Defense Logistics Agency are responsible for ensuring contract compliance and value.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost overruns due to Economic Price Adjustment.
- Short contract duration may lead to increased administrative burden for re-competition.
- Dependence on global fuel market fluctuations.
- Lack of specific small business participation data.
Tags
petroleum-refineries, department-of-defense, ca, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $37.4 million to VITOL AVIATION CO. 8508977422!DISTILLATE,NAVAL
Who is the contractor on this award?
The obligated recipient is VITOL AVIATION CO.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $37.4 million.
What is the period of performance?
Start: 2022-03-25. End: 2022-04-21.
What is the historical price trend for naval distillate fuel over the contract period and how did the economic price adjustment impact the final cost?
Analyzing historical price data for naval distillate fuel during the contract period (March-April 2022) is crucial. The economic price adjustment (EPA) clause allows for price changes based on market indices. Understanding the specific index used and the magnitude of price fluctuations would reveal how much the final cost deviated from the initial fixed price, directly impacting the government's expenditure and overall value.
What are the specific risks associated with the economic price adjustment (EPA) clause in this contract, and how are they mitigated?
The primary risk of an EPA clause is upward price volatility, potentially leading to costs exceeding initial budget estimates if market prices surge. Mitigation strategies could include caps on price increases within the EPA, frequent monitoring of market indices by the contracting officer, and ensuring the chosen index accurately reflects the cost of the commodity. The short duration of this contract may limit the long-term impact of EPA fluctuations.
How effectively does the full and open competition process ensure optimal value for this specific naval distillate procurement?
Full and open competition is designed to foster a competitive environment, driving down prices and encouraging innovation. For a commodity like naval distillate fuel, where market prices are relatively transparent, this method likely ensures a competitive price discovery. However, the effectiveness is also dependent on the number and capability of bidders, the clarity of specifications, and the government's negotiation leverage.
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
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Vitol Inc
Address: 300 CONTINENTAL BLVD STE 198, EL SEGUNDO, CA, 90245
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $37,363,384
Exercised Options: $37,363,384
Current Obligation: $37,363,384
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60222D0456
IDV Type: IDC
Timeline
Start Date: 2022-03-25
Current End Date: 2022-04-21
Potential End Date: 2022-04-21 00:00:00
Last Modified: 2024-01-17
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