DoD's $39.2M Aviation Fuel Contract Awarded to Vitol Aviation Co. Amidst Fixed Price Adjustments
Contract Overview
Contract Amount: $39,221,549 ($39.2M)
Contractor: Vitol Aviation CO
Awarding Agency: Department of Defense
Start Date: 2022-06-22
End Date: 2022-07-01
Contract Duration: 9 days
Daily Burn Rate: $4.4M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8509187974!TURBINE FUEL,AVIATION
Place of Performance
Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245
Plain-Language Summary
Department of Defense obligated $39.2 million to VITOL AVIATION CO for work described as: 8509187974!TURBINE FUEL,AVIATION Key points: 1. The contract value is substantial at $39.2 million. 2. Vitol Aviation Co. secured the award under full and open competition. 3. The contract type, Fixed Price with Economic Price Adjustment, introduces potential cost volatility. 4. Spending is within the Petroleum Refineries sector, specifically for aviation fuel.
Value Assessment
Rating: fair
The contract's fixed price with economic price adjustment makes direct comparison difficult. However, the award amount of $39.2 million for aviation fuel over a short duration suggests a significant but potentially volatile expenditure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The award was made under full and open competition, indicating a competitive bidding process. However, the economic price adjustment clause may obscure the true final cost and limit price discovery effectiveness.
Taxpayer Impact: Taxpayers are exposed to potential price increases due to the economic price adjustment clause, which could lead to higher overall spending than initially anticipated.
Public Impact
Ensures supply of critical aviation fuel for Department of Defense operations. Potential for fluctuating fuel costs impacts budget predictability. Competition aims for best value, but price adjustment adds uncertainty. Contract supports aviation readiness and logistical capabilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause introduces cost uncertainty.
- Short contract duration may limit long-term price leverage.
- No small business participation noted.
Positive Signals
- Awarded under full and open competition.
- Secures essential aviation fuel supply.
Sector Analysis
This contract falls within the Petroleum Refineries sector, specifically for aviation fuel. Spending benchmarks for such contracts can vary widely based on global oil prices and geopolitical factors.
Small Business Impact
The data indicates no small business participation in this contract. This suggests that the prime contractor, Vitol Aviation Co., is a large business, and opportunities for small businesses were either not sought or not met.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for oversight. The fixed-price with economic price adjustment contract type requires careful monitoring of price fluctuations to ensure fair value.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Short contract duration may limit long-term price leverage.
- No small business participation.
- Potential for price volatility in the energy market.
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 $39.2 million to VITOL AVIATION CO. 8509187974!TURBINE FUEL,AVIATION
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 $39.2 million.
What is the period of performance?
Start: 2022-06-22. End: 2022-07-01.
What was the benchmark price for aviation fuel during the contract period, and how did the economic price adjustment impact the final cost compared to market rates?
The benchmark price for aviation fuel during the contract period (June-July 2022) was influenced by global supply chain disruptions and geopolitical events, leading to significant price volatility. The economic price adjustment clause allowed Vitol Aviation Co. to pass on these increased costs, meaning the final expenditure could be considerably higher than the initial fixed price. A detailed analysis of the price adjustment formula and actual market indices would be needed to determine the precise impact on taxpayer cost.
What are the specific risks associated with the economic price adjustment clause in this contract, and how are they being mitigated?
The primary risk is uncontrolled cost escalation, where fluctuating fuel prices could significantly exceed the initial budget, impacting the DoD's financial planning. Mitigation strategies typically involve clearly defined adjustment indices, caps on price increases, and robust monitoring by the contracting officer to ensure adjustments are justified and reasonable. Without specific details on these clauses, the risk remains elevated.
How effective was the full and open competition in achieving the best possible price for aviation fuel, considering the economic price adjustment?
Full and open competition is generally effective in driving down prices. However, the inclusion of an economic price adjustment clause complicates the assessment of 'best price.' While competition likely secured a competitive base price, the true cost-effectiveness is contingent on how the price adjustment mechanism performs against market fluctuations. It's possible a fixed-price contract without adjustments, if feasible, might have offered more cost certainty.
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $39,221,549
Exercised Options: $39,221,549
Current Obligation: $39,221,549
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60222D0488
IDV Type: IDC
Timeline
Start Date: 2022-06-22
Current End Date: 2022-07-01
Potential End Date: 2022-07-01 00:00:00
Last Modified: 2023-01-11
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