DoD's $24.2M aviation turbine fuel contract awarded to Valero Marketing and Supply Co

Contract Overview

Contract Amount: $24,234,248 ($24.2M)

Contractor: Valero Marketing and Supply CO

Awarding Agency: Department of Defense

Start Date: 2025-06-10

End Date: 2025-07-05

Contract Duration: 25 days

Daily Burn Rate: $969.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511434245!TURBINE FUEL,AVIATION

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78249

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $24.2 million to VALERO MARKETING AND SUPPLY CO for work described as: 8511434245!TURBINE FUEL,AVIATION Key points: 1. Contract awarded via full and open competition, suggesting a competitive market for aviation fuel. 2. Fixed-price contract with economic price adjustment offers some protection against market volatility. 3. Short duration (25 days) indicates a tactical or immediate need for fuel supply. 4. The contract value is significant, highlighting the ongoing demand for aviation fuel within the Defense Logistics Agency. 5. Geographic focus on Texas (st: TX, sn: TEXAS) suggests regional supply chain considerations. 6. The award to a single vendor, Valero, warrants a review of market concentration and potential future competition.

Value Assessment

Rating: good

The contract value of $24.2 million for a 25-day delivery period appears reasonable given the nature of aviation fuel and market prices. Benchmarking against similar fuel contracts awarded by the Defense Logistics Agency would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure is common for commodities like fuel, aiming to balance cost certainty with market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but this method generally fosters price discovery and encourages competitive pricing. The Defense Logistics Agency's use of this procurement method suggests confidence in the availability of multiple qualified suppliers for aviation turbine fuel.

Taxpayer Impact: Taxpayers benefit from the competitive bidding process, which is expected to drive down costs and ensure fair market pricing for essential fuel supplies.

Public Impact

Military operations and readiness are supported through the reliable supply of aviation turbine fuel. The contract directly benefits the Department of Defense, specifically units relying on aviation assets. The geographic impact is concentrated in Texas, where the fuel is likely to be delivered or sourced. The contract supports the petroleum refining and distribution workforce within the supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to the economic price adjustment clause, though this is standard for fuel contracts.
Dependence on a single awardee for this specific delivery order, raising questions about broader market competition if this is a recurring pattern.

Positive Signals

Awarded through full and open competition, indicating a healthy competitive environment.
Fixed-price component provides a baseline cost control measure.
Short contract duration minimizes long-term price exposure risk.
Contract supports critical defense logistics operations.

Sector Analysis

The aviation turbine fuel market is a critical component of the energy sector, supporting both commercial and military aviation. This contract falls within the broader petroleum products and refining industry. Comparable spending benchmarks for aviation fuel by the DoD and other federal agencies would be necessary for a comprehensive sector analysis, but the scale of this award suggests significant demand.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not available for this specific award. Given the nature of aviation fuel supply and the large contract value, it is less likely to be a primary focus for small business set-asides, though subcontracting opportunities may exist within the broader Valero supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Logistics Agency's internal quality assurance and contract administration processes. Transparency is generally maintained through contract award databases, though specific delivery details and performance metrics may be internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Aviation Fuel Procurement
Petroleum Product Supply Contracts
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Potential for price volatility due to economic price adjustment.
Limited visibility into the number of bidders for this specific award.
Short contract duration may not reflect long-term strategic supply needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.2 million to VALERO MARKETING AND SUPPLY CO. 8511434245!TURBINE FUEL,AVIATION

Who is the contractor on this award?

The obligated recipient is VALERO MARKETING AND SUPPLY CO.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.2 million.

What is the period of performance?

Start: 2025-06-10. End: 2025-07-05.

What is Valero Marketing and Supply Co.'s track record with the Department of Defense for aviation fuel?

Valero Marketing and Supply Co. has a significant history of supplying petroleum products, including aviation fuel, to the Department of Defense and other federal agencies. Reviewing historical contract awards from the Federal Procurement Data System (FPDS) would reveal the volume and value of past contracts, performance ratings, and any instances of contract disputes or terminations. This specific award of $24.2 million for a short duration suggests an ongoing, established relationship for meeting immediate fuel needs. Understanding the frequency and scale of their awards provides insight into their capacity and reliability as a supplier to the DoD.

How does the $24.2 million contract value compare to similar aviation fuel contracts awarded by the Defense Logistics Agency?

The $24.2 million value for a 25-day delivery period for aviation turbine fuel is substantial, indicating a significant volume requirement. To benchmark this value, one would compare it against other recent Delivery Orders or contracts for similar fuel types (e.g., JP-8, Jet A-1) issued by the Defense Logistics Agency (DLA) or other military branches. Factors such as the specific fuel grade, delivery location, and prevailing market conditions at the time of award influence pricing. A higher value for a similar duration might suggest market price increases or a larger quantity, while a lower value could indicate better negotiation or a more competitive bidding environment for that specific award.

What are the primary risks associated with this fixed-price contract with economic price adjustment for aviation fuel?

The primary risk in a fixed-price contract with economic price adjustment (FP-EPA) for aviation fuel lies in the potential for significant price increases due to fluctuations in the global oil market. While the fixed-price component offers some cost certainty, the economic price adjustment clause allows the price to rise (or fall) based on an established index, typically tied to crude oil or refined product prices. For the government, the risk is paying a higher price than anticipated if fuel markets surge. For the contractor, the risk is lower, as they are largely protected from market volatility, but they still bear the risk of operational inefficiencies or unexpected cost increases not covered by the index.

How effective is the 'full and open competition' method in ensuring value for taxpayers in the aviation fuel market?

The 'full and open competition' method is generally considered the most effective way to ensure value for taxpayers in markets like aviation fuel, provided there are sufficient qualified bidders. It allows any responsible source to submit an offer, fostering a competitive environment that drives down prices and encourages innovation. For taxpayers, this means the government is likely to receive the best possible price and quality for the fuel purchased. However, the effectiveness is contingent on the actual level of competition; if only a few companies can realistically bid due to market structure or specialized requirements, the competitive pressure might be less intense, potentially impacting the value realized.

What are the historical spending patterns for aviation turbine fuel by the Defense Logistics Agency?

Historical spending patterns for aviation turbine fuel by the Defense Logistics Agency (DLA) show consistent and substantial investment, reflecting the critical role of aviation in military operations. DLA is the primary agency responsible for procuring and distributing fuel to the DoD. Annual spending can fluctuate based on global geopolitical events, operational tempo, and fuel price volatility. Examining multi-year spending data reveals trends in contract values, the number of awarded contracts, and the primary suppliers. This data is crucial for forecasting future needs, budgeting, and identifying potential efficiencies or areas of concern in the supply chain.

What are the implications of the short contract duration (25 days) on overall program effectiveness?

The short contract duration of 25 days for this aviation turbine fuel award suggests it is intended to meet immediate, short-term operational needs rather than long-term strategic supply. This approach allows the agency to adapt quickly to changing fuel prices and operational requirements, potentially securing favorable pricing for the specific period. However, relying on numerous short-duration contracts can increase administrative burden and may not always yield the best long-term value compared to longer-term agreements that might offer volume discounts or price stability. It indicates a focus on tactical responsiveness over strategic supply chain management for this particular requirement.

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: Valero Energy Corporation

Address: 1 VALERO WAY, SAN ANTONIO, TX, 78249

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,234,248

Exercised Options: $24,234,248

Current Obligation: $24,234,248

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0475

IDV Type: IDC

Timeline