DoD's $33.3M Aviation Turbine Fuel Purchase: Full & Open Competition Amidst Volatile Energy Markets
Contract Overview
Contract Amount: $33,341,876 ($33.3M)
Contractor: Qatarenergy
Awarding Agency: Department of Defense
Start Date: 2022-12-08
End Date: 2022-12-28
Contract Duration: 20 days
Daily Burn Rate: $1.7M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8509575947!TURBINE FUEL,AVIATION
Plain-Language Summary
Department of Defense obligated $33.3 million to QATARENERGY for work described as: 8509575947!TURBINE FUEL,AVIATION Key points: 1. Significant expenditure on critical aviation fuel highlights defense supply chain importance. 2. Full and open competition suggests potential for competitive pricing, but market volatility is a risk. 3. The contract's short duration may indicate responsiveness to immediate needs or market fluctuations. 4. Petroleum refineries sector is essential but subject to global supply and demand pressures.
Value Assessment
Rating: good
The awarded price of $33.3 million for aviation turbine fuel appears reasonable given the market conditions and the fixed-price with economic price adjustment structure. Benchmarking against similar contracts is challenging due to the dynamic nature of fuel prices.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The use of full and open competition is a positive indicator for price discovery. This method allows multiple qualified vendors to bid, theoretically driving down costs. However, the economic price adjustment clause introduces uncertainty regarding the final cost.
Taxpayer Impact: Taxpayers benefit from competitive bidding, but the economic price adjustment introduces a variable cost component that could increase the final expenditure beyond initial projections.
Public Impact
Ensures availability of critical fuel for military aviation operations. Supports the petroleum refining industry and associated supply chains. Price fluctuations directly impact the defense budget and taxpayer burden.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment could lead to cost overruns.
- Geopolitical events impacting global oil prices.
- Supply chain disruptions affecting fuel delivery.
Positive Signals
- Full and open competition utilized.
- Awarded by a major defense agency.
- Short duration may reflect agile procurement.
Sector Analysis
The Department of Defense is a major consumer of petroleum products, including aviation turbine fuel. Spending in this sector is heavily influenced by global energy markets, geopolitical stability, and refining capacity. Benchmarks are highly variable.
Small Business Impact
This contract does not appear to directly involve small businesses as prime contractors, as the awardee is QATAR ENERGY. Further analysis would be needed to determine if small businesses are involved as subcontractors.
Oversight & Accountability
The contract falls under the purview of the Defense Logistics Agency, which has established oversight mechanisms for fuel procurement. The use of fixed-price with economic price adjustment requires careful monitoring of price indices.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) Clause
- Geopolitical Instability in Energy Markets
- Dependence on Foreign Supplier
- Volatility of Fuel Prices
- Supply Chain Vulnerabilities
Tags
petroleum-refineries, department-of-defense, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.3 million to QATARENERGY. 8509575947!TURBINE FUEL,AVIATION
Who is the contractor on this award?
The obligated recipient is QATARENERGY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $33.3 million.
What is the period of performance?
Start: 2022-12-08. End: 2022-12-28.
What is the projected maximum cost of this contract considering the economic price adjustment clause and current market forecasts?
Determining the exact maximum cost is complex due to the fluctuating nature of the economic price adjustment. This clause typically ties the final price to a specific index (e.g., a fuel price index). To project the maximum, one would need to analyze historical volatility of the relevant index and consider worst-case scenarios for oil price increases over the contract period.
How does the price of this aviation turbine fuel compare to the benchmark price for similar DoD contracts awarded in the same period?
Direct comparison is difficult without access to specific benchmark data for aviation turbine fuel from the same period. However, the contract's price is subject to market fluctuations. The 'good' rating suggests it's within an acceptable range, but a detailed analysis of the specific fuel type, grade, and delivery location would be needed for a precise benchmark.
What are the specific risks associated with relying on a foreign entity like QATAR ENERGY for a critical defense fuel supply?
Risks include potential geopolitical tensions impacting supply, currency exchange rate fluctuations affecting cost, and adherence to U.S. security and quality standards. While competition mitigates some risks, long-term reliance on foreign suppliers for critical resources warrants strategic consideration and potential diversification.
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
Address: WORLD TRADE CENTER, AL DAFNA AREA, DOHA
Business Categories: Category Business, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $33,341,876
Exercised Options: $33,341,876
Current Obligation: $33,341,876
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60222D0454
IDV Type: IDC
Timeline
Start Date: 2022-12-08
Current End Date: 2022-12-28
Potential End Date: 2022-12-28 00:00:00
Last Modified: 2023-01-27
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