DoD Awards $29.5M for Naval Distillate Fuel, Fixed Price with Economic Adjustment

Contract Overview

Contract Amount: $29,148,460 ($29.1M)

Contractor: Vitol Aviation CO

Awarding Agency: Department of Defense

Start Date: 2024-09-03

End Date: 2024-09-23

Contract Duration: 20 days

Daily Burn Rate: $1.5M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8510864897!DISTILLATE,NAVAL

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77098

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $29.1 million to VITOL AVIATION CO for work described as: 8510864897!DISTILLATE,NAVAL Key points: 1. Significant award for essential fuel supply to the Department of Defense. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Fixed price with economic adjustment introduces potential for cost fluctuations. 4. The sector is critical for military readiness and energy security.

Value Assessment

Rating: good

The award amount of $29.5 million is substantial for fuel procurement. Benchmarking against similar contracts for naval distillate fuel would be necessary to fully assess pricing, but the fixed-price with economic adjustment structure suggests an attempt to balance cost certainty with market volatility.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which generally promotes competitive pricing and allows a broad range of capable vendors to participate. The use of a delivery order under a larger contract structure indicates a specific need was met through this competitive process.

Taxpayer Impact: The use of full and open competition is generally favorable for taxpayers as it aims to secure the best value. However, the economic price adjustment clause introduces a risk of increased costs if fuel prices rise significantly.

Public Impact

Ensures continued supply of critical fuel for naval operations. Supports the energy sector and related industries through government procurement. Potential for price increases due to economic adjustment clause impacts consumers indirectly.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment may lead to higher than anticipated costs.
Short contract duration (20 days) may limit long-term price stability.
No indication of small business participation.

Positive Signals

Full and open competition utilized.
Awarded by the Defense Logistics Agency, a key procurement entity.
Addresses a critical operational need for the DoD.

Sector Analysis

The Department of Defense is a major consumer of petroleum products, including naval distillate fuel. Spending in this sector is directly tied to operational readiness and national security. Benchmarks for fuel procurement vary widely based on market conditions and contract specifics.

Small Business Impact

The provided data does not indicate whether small businesses were involved in this specific delivery order. Further investigation would be needed to determine the extent of small business participation in the underlying contract or this specific award.

Oversight & Accountability

The Defense Logistics Agency is responsible for significant portions of the DoD's supply chain, including fuel. Oversight would focus on ensuring fair competition, adherence to contract terms, and appropriate management of the economic price adjustment clause.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Economic Price Adjustment Clause
Short Contract Duration
No Small Business Indication
Potential for Price Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.1 million to VITOL AVIATION CO. 8510864897!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 $29.1 million.

What is the period of performance?

Start: 2024-09-03. End: 2024-09-23.

What is the historical price trend for naval distillate fuel, and how might the economic price adjustment clause affect the final cost compared to a fixed-price contract?

Historical price trends for naval distillate fuel are subject to global oil market fluctuations, geopolitical events, and refining capacity. An economic price adjustment clause allows the contract price to be modified based on an agreed-upon index, typically reflecting changes in the cost of raw materials or labor. This can protect the contractor from unexpected cost increases but may result in higher final costs for the government if prices rise significantly, compared to a fixed-price contract where the price remains constant regardless of market shifts.

Given the full and open competition, what was the range of bids received, and how does the awarded price compare to the lowest bid?

The provided data does not include the range of bids received or the lowest bid. Full and open competition suggests multiple bids were likely submitted, and the contracting officer selected the best value offer. To assess the competitiveness of the awarded price, one would need access to the bid tabulation and the source selection documentation to understand the evaluation criteria and the rationale for choosing this specific offer.

What is the strategic importance of this specific fuel award, and are there alternative fuel sources or suppliers being considered to mitigate supply chain risks?

Naval distillate fuel is critical for the operational readiness of naval vessels, powering propulsion and auxiliary systems. This award ensures a continuous supply for a defined period. The Department of Defense likely has strategies for diversifying fuel sources and suppliers to mitigate risks associated with geopolitical instability, natural disasters, or single-point failures. However, the specific details of these broader supply chain risk mitigation efforts are not detailed in this contract award notice.

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: 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: $29,148,460

Exercised Options: $29,148,460

Current Obligation: $29,148,460

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60224D0458

IDV Type: IDC

Timeline