DoD awards $18.8M for Aviation Turbine Fuel to S-OIL Corporation under full and open competition
Contract Overview
Contract Amount: $18,818,479 ($18.8M)
Contractor: S-Oil Corporation
Awarding Agency: Department of Defense
Start Date: 2025-03-21
End Date: 2025-04-20
Contract Duration: 30 days
Daily Burn Rate: $627.3K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: 8511263761!TURBINE FUEL,AVIATION
Plain-Language Summary
Department of Defense obligated $18.8 million to S-OIL CORPORATION for work described as: 8511263761!TURBINE FUEL,AVIATION Key points: 1. Significant award for aviation fuel, a critical defense commodity. 2. Competition was full and open, suggesting market-driven pricing. 3. Fixed Price with Economic Price Adjustment (FPEPA) introduces some cost volatility risk. 4. Petroleum Refineries sector is subject to global commodity price fluctuations.
Value Assessment
Rating: good
The award price of $18.8M for a 30-day delivery period appears reasonable given the FPEPA clause. Benchmarking against similar aviation fuel contracts would provide a more precise assessment of value.
Cost Per Unit: $627,283 per delivery order
Competition Analysis
Competition Level: full-and-open
Full and open competition was utilized, indicating multiple bidders likely participated. This method generally promotes competitive pricing and ensures the government receives fair market value.
Taxpayer Impact: The competitive nature of this award is expected to yield a fair price, minimizing unnecessary taxpayer expenditure for this essential fuel.
Public Impact
Ensures continued supply of critical aviation fuel for military operations. Potential for price fluctuations due to economic price adjustment clause. Supports the defense industrial base through procurement of refined petroleum products.
Waste & Efficiency Indicators
Waste Risk Score: 60 / 10
Warning Flags
- Economic price adjustment may lead to higher-than-expected costs.
- Geopolitical events can impact global fuel prices.
Positive Signals
- Full and open competition ensures market-based pricing.
- Awarded to a known supplier in the petroleum industry.
Sector Analysis
The defense sector relies heavily on petroleum products, including aviation turbine fuel. Spending in this area is subject to global market dynamics and geopolitical stability, with benchmarks often tied to crude oil prices.
Small Business Impact
This contract was awarded to S-OIL CORPORATION, a large business. There is no indication of small business participation in this specific award, which is common for large-scale fuel procurements.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, manages these fuel procurements. Oversight typically involves contract performance monitoring and adherence to terms, including price adjustment mechanisms.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause introduces cost uncertainty.
- Dependence on a single supplier for a critical commodity.
- Potential for supply chain disruptions impacting delivery.
- Vulnerability to global oil market price volatility.
Tags
petroleum-refineries, department-of-defense, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.8 million to S-OIL CORPORATION. 8511263761!TURBINE FUEL,AVIATION
Who is the contractor on this award?
The obligated recipient is S-OIL CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $18.8 million.
What is the period of performance?
Start: 2025-03-21. End: 2025-04-20.
What is the historical price trend for aviation turbine fuel over the contract period, and how might the economic price adjustment impact the final cost?
Historical price trends for aviation turbine fuel are influenced by crude oil prices, refinery capacity, and demand. The economic price adjustment (EPA) clause allows for modifications to the fixed price based on specified indices, typically related to fuel costs. This means the final cost could be higher or lower than the initial estimate, depending on market fluctuations during the contract period. Analyzing the specific EPA formula and relevant indices is crucial for forecasting potential cost impacts.
What are the primary risks associated with relying on a single supplier for a critical commodity like aviation turbine fuel, even with full and open competition?
Even with full and open competition, relying on a single supplier for a critical commodity like aviation turbine fuel carries inherent risks. These include potential supply chain disruptions due to unforeseen events affecting the supplier (e.g., natural disasters, labor strikes, geopolitical issues impacting their operations). Furthermore, a lack of ongoing competition after the initial award could lead to complacency or less aggressive pricing in future solicitations if the supplier becomes entrenched.
How effectively does the 'Fixed Price with Economic Price Adjustment' contract type balance cost control for the government against ensuring supplier viability for essential goods?
The FPEPA contract type aims to balance cost control and supplier viability by allowing price adjustments tied to objective economic indicators, mitigating risks for both parties. For the government, it provides a baseline price while acknowledging market volatility, preventing excessive supplier demands or contract failures due to uncontrollable cost increases. For the supplier, it ensures profitability is not eroded by external market forces, encouraging participation and reliable supply of essential goods.
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: 192, BAEKBEOM-RO, SEOUL
Business Categories: Category Business, Foreign Owned, International Organization, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $18,818,479
Exercised Options: $18,818,479
Current Obligation: $18,818,479
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60225D0459
IDV Type: IDC
Timeline
Start Date: 2025-03-21
Current End Date: 2025-04-20
Potential End Date: 2025-04-20 00:00:00
Last Modified: 2026-01-15
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