DoD's $31.9M Naval Distillate Contract Awarded to Marathon Petroleum Amidst Fixed Price with EPA

Contract Overview

Contract Amount: $31,876,790 ($31.9M)

Contractor: Marathon Petroleum Company LP

Awarding Agency: Department of Defense

Start Date: 2025-03-19

End Date: 2025-04-19

Contract Duration: 31 days

Daily Burn Rate: $1.0M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: 8511258088!DISTILLATE,NAVAL

Place of Performance

Location: FINDLAY, HANCOCK County, OHIO, 45840

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $31.9 million to MARATHON PETROLEUM COMPANY LP for work described as: 8511258088!DISTILLATE,NAVAL Key points: 1. Contract awarded to Marathon Petroleum Company LP for naval distillate. 2. Full and open competition was utilized for this award. 3. The contract has a fixed price with economic price adjustment clause. 4. The award is for a 31-day duration, ending March 19, 2025. 5. The North American Industry Classification System (NAICS) code is 324110 (Petroleum Refineries).

Value Assessment

Rating: good

The contract value of $31.9 million for a 31-day delivery order appears reasonable given the commodity nature of naval distillate and the inclusion of an economic price adjustment clause to mitigate market volatility.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The use of full and open competition suggests a robust price discovery process. However, the fixed price with economic price adjustment (EPA) introduces potential for cost increases based on market fluctuations, which could impact the final price paid by the government.

Taxpayer Impact: The government aims to secure necessary fuel supplies through competitive bidding, but the EPA clause means taxpayers could bear increased costs if fuel prices rise significantly during the contract period.

Public Impact

Ensures the Department of Defense has access to critical naval distillate fuel for operations. Supports the petroleum refining industry, specifically NAICS 324110. The economic price adjustment clause may lead to price fluctuations for taxpayers. Short contract duration suggests immediate operational needs or a bridge to a longer-term solution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) could increase final cost.
Short contract duration may indicate a temporary solution or potential for future re-competition.
No small business participation noted.

Positive Signals

Awarded under full and open competition.
Secures essential fuel for defense operations.
Contract awarded to a known entity in the petroleum industry.

Sector Analysis

This contract falls under the petroleum refining sector (NAICS 324110). Spending in this sector by the DoD is crucial for maintaining operational readiness, particularly for naval fleets. Benchmarks for similar fuel procurements would depend heavily on volume, duration, and market conditions.

Small Business Impact

The data indicates that this contract was not awarded to a small business (ss: false, sb: false). There is no specific mention of small business set-asides or subcontracting goals within the provided information, suggesting limited direct impact on small businesses for this particular award.

Oversight & Accountability

The contract was awarded via a delivery order under a larger contract vehicle, implying prior review and oversight. The use of full and open competition also suggests adherence to procurement regulations. Further oversight would focus on the management of the EPA clause and ensuring fair pricing.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to EPA.
Lack of small business participation.
Short contract duration may indicate a need for future, potentially more expensive, procurements.
Dependence on a single supplier for this specific delivery order.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.9 million to MARATHON PETROLEUM COMPANY LP. 8511258088!DISTILLATE,NAVAL

Who is the contractor on this award?

The obligated recipient is MARATHON PETROLEUM COMPANY LP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $31.9 million.

What is the period of performance?

Start: 2025-03-19. End: 2025-04-19.

What is the projected maximum cost to the government if the economic price adjustment is fully exercised?

The provided data does not specify the parameters or caps for the economic price adjustment (EPA). To determine the maximum potential cost, one would need to review the contract's EPA clause, which outlines the indices or formulas used for price adjustments and any applicable limits. Without this information, a precise maximum cost cannot be calculated, but it could significantly exceed the initial $31.9 million if fuel prices escalate dramatically.

What are the specific risks associated with the economic price adjustment (EPA) for this naval distillate contract?

The primary risk of the EPA is that it transfers the volatility of the fuel market to the government, potentially leading to higher-than-anticipated expenditures. If global oil prices surge due to geopolitical events, supply chain disruptions, or increased demand, the cost of naval distillate could rise substantially, impacting the Department of Defense's budget. This uncertainty makes financial planning more challenging.

How effective is full and open competition in ensuring value for money with fluctuating fuel prices?

Full and open competition is generally effective in driving value by fostering a competitive environment that encourages lower bids. However, when coupled with an economic price adjustment (EPA), its effectiveness in guaranteeing a fixed value is diminished. While competition sets an initial baseline, the EPA allows prices to adjust upwards with market conditions, meaning the initial 'best value' could be eroded by subsequent price increases, necessitating careful monitoring of the EPA's impact.

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: 539 S MAIN ST, FINDLAY, OH, 45840

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $31,876,790

Exercised Options: $31,876,790

Current Obligation: $31,876,790

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60224D0477

IDV Type: IDC

Timeline