DoD Awards $37M for Naval Distillate Fuel to Vitol Aviation Co. Amidst Fixed Price with EPA
Contract Overview
Contract Amount: $37,006,285 ($37.0M)
Contractor: Vitol Aviation CO
Awarding Agency: Department of Defense
Start Date: 2022-09-20
End Date: 2022-10-07
Contract Duration: 17 days
Daily Burn Rate: $2.2M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: 8509413040!DISTILLATE,NAVAL
Place of Performance
Location: EL SEGUNDO, LOS ANGELES County, CALIFORNIA, 90245
Plain-Language Summary
Department of Defense obligated $37.0 million to VITOL AVIATION CO for work described as: 8509413040!DISTILLATE,NAVAL Key points: 1. Significant award for a critical fuel commodity. 2. Competition method is 'Full and Open', suggesting broad market access. 3. Fixed Price with Economic Price Adjustment (EPA) introduces potential cost volatility. 4. Sector is Defense Logistics, vital for military operations.
Value Assessment
Rating: good
The award value of $37M for a short duration (17 days) is substantial. Benchmarking against similar fuel contracts would be necessary to fully assess pricing, but the EPA clause warrants close monitoring for potential overruns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition', indicating multiple bidders were likely considered. This method generally promotes competitive pricing, but the EPA clause can obscure the true final cost.
Taxpayer Impact: Taxpayer funds are used for this essential fuel. The EPA clause means the final cost could fluctuate, potentially exceeding initial projections if fuel prices rise significantly.
Public Impact
Ensures supply of critical naval fuel for operations. Potential for price increases due to economic price adjustment. Supports a major aviation fuel supplier in the defense sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic Price Adjustment (EPA) clause can lead to cost overruns.
- Short contract duration may indicate urgent need or limited availability.
- Lack of specific unit cost data makes precise value assessment difficult.
Positive Signals
- Awarded under Full and Open Competition.
- Secures a vital commodity for the Department of Defense.
- Contract awarded to a known supplier in the aviation fuel market.
Sector Analysis
This award falls within the Petroleum Refineries sector, specifically for naval distillate fuel. Defense Logistics Agency (DLA) frequently procures large volumes of fuel, with contract values often in the tens to hundreds of millions, depending on quantity and duration.
Small Business Impact
The data does not indicate any specific set-aside for small businesses. The prime contractor, Vitol Aviation Co., is a large entity, suggesting limited direct opportunities for small businesses in this specific award.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for this procurement. Oversight would involve monitoring contract performance, adherence to the EPA clause, and ensuring timely delivery of fuel.
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 might indicate a lack of long-term planning or market instability.
- No specific unit cost provided, hindering granular price analysis.
- Prime contractor is a large entity, potentially limiting small business participation.
- Contract type is Fixed Price with EPA, which can be complex to manage.
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 $37.0 million to VITOL AVIATION CO. 8509413040!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 $37.0 million.
What is the period of performance?
Start: 2022-09-20. End: 2022-10-07.
What is the historical pricing trend for naval distillate fuel under similar EPA clauses awarded by the DLA?
Analyzing historical data for naval distillate fuel contracts with Economic Price Adjustment (EPA) clauses awarded by the Defense Logistics Agency (DLA) is crucial. This would reveal patterns of price volatility and the extent to which the EPA has impacted final costs in the past. Understanding these trends helps assess the current contract's risk profile and whether the fixed price component adequately buffers against potential escalations.
How does the awarded price per gallon compare to market benchmarks for jet fuel or similar distillates during the contract period?
Comparing the implied price per gallon for this naval distillate fuel against established market benchmarks (e.g., Platts, EIA data) for similar petroleum products during September-October 2022 is essential. This comparison helps determine if Vitol Aviation Co.'s pricing was competitive. A significant deviation from market rates, even with an EPA, could signal potential overpayment or an unfavorable contract structure.
What specific economic factors are covered by the EPA, and what is the mechanism for price adjustment?
Understanding the precise economic factors stipulated in the contract's Economic Price Adjustment (EPA) clause is vital. This includes identifying the specific indices or market indicators (e.g., crude oil prices, refining costs) that trigger price changes. The mechanism for adjustment—whether it's a formula-based calculation or a negotiation process—determines the predictability and potential impact on the final cost to the government.
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: $37,006,285
Exercised Options: $37,006,285
Current Obligation: $37,006,285
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60222D0456
IDV Type: IDC
Timeline
Start Date: 2022-09-20
Current End Date: 2022-10-07
Potential End Date: 2022-10-07 00:00:00
Last Modified: 2022-12-06
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