DoD's $18.6M Aviation Turbine Fuel Contract with S-OIL Corporation Faces Scrutiny Over Pricing and Competition
Contract Overview
Contract Amount: $18,623,633 ($18.6M)
Contractor: S-Oil Corporation
Awarding Agency: Department of Defense
Start Date: 2025-06-11
End Date: 2025-07-02
Contract Duration: 21 days
Daily Burn Rate: $886.8K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: 8511436198!TURBINE FUEL,AVIATION
Plain-Language Summary
Department of Defense obligated $18.6 million to S-OIL CORPORATION for work described as: 8511436198!TURBINE FUEL,AVIATION Key points: 1. The contract value of $18.6M for aviation turbine fuel is significant, potentially impacting fuel availability and cost for military operations. 2. Competition appears to be full and open, but the specific pricing mechanisms and benchmarks need further examination to ensure value. 3. Potential risks include price volatility due to economic price adjustment and reliance on a single supplier for a critical commodity. 4. The Petroleum Refineries sector is essential for defense logistics, making this contract's efficiency crucial for national security.
Value Assessment
Rating: fair
The fixed price with economic price adjustment structure introduces uncertainty. Benchmarking against similar aviation fuel contracts for government and commercial entities is needed to assess if the $18.6M value is competitive, especially considering the short 21-day duration.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the effectiveness of this competition in driving down prices for aviation turbine fuel requires further analysis, particularly regarding the economic price adjustment clause.
Taxpayer Impact: Taxpayer funds are used for this procurement. Ensuring competitive pricing and efficient use of funds is paramount to minimize the financial burden on taxpayers.
Public Impact
Ensures supply of critical aviation fuel for Department of Defense operations. Supports the Petroleum Refineries sector, a key industrial base component. Potential for price fluctuations impacts budget predictability for the agency. Short delivery window may limit supplier options and increase urgency pricing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause could lead to cost overruns.
- Short contract duration might not reflect true market pricing.
- Lack of specific unit cost data makes detailed value assessment difficult.
Positive Signals
- Awarded under full and open competition.
- Addresses a critical operational need for aviation fuel.
- Contract provides a clear delivery schedule.
Sector Analysis
The Petroleum Refineries sector is vital for supplying fuel to military aircraft. Spending benchmarks in this sector are highly dependent on global oil prices and geopolitical factors. This contract's value appears moderate within the context of large-scale military fuel procurements.
Small Business Impact
The data does not indicate whether small businesses were involved in this procurement. Further analysis is needed to determine the extent of small business participation and opportunities.
Oversight & Accountability
Oversight is crucial to monitor the execution of the economic price adjustment clause and ensure the Defense Logistics Agency is receiving fair market value throughout the contract period.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost overruns due to economic price adjustment.
- Limited duration may not reflect optimal market pricing.
- Lack of transparency on specific pricing benchmarks.
- Dependence on a single supplier for a critical commodity within the delivery window.
Tags
petroleum-refineries, department-of-defense, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $18.6 million to S-OIL CORPORATION. 8511436198!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 $18.6 million.
What is the period of performance?
Start: 2025-06-11. End: 2025-07-02.
What is the specific benchmark used to calculate the economic price adjustment for aviation turbine fuel in this contract, and how does it compare to industry standards?
The contract specifies 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' but lacks details on the benchmark index or formula. Typically, such adjustments are tied to published fuel indices (e.g., Platts, EIA data) for specific fuel types. Without the exact benchmark, it's difficult to assess if the adjustment mechanism is fair and aligns with market realities, potentially leading to unexpected cost increases for the DoD.
How does the awarded price per gallon compare to recent full-and-open competition contracts for similar aviation turbine fuel from the Defense Logistics Agency or other federal agencies?
A direct comparison requires access to historical contract data and current market prices. Given the $18.6M value and the 21-day duration, a rough estimate of the per-gallon cost can be made if the total volume is known. However, without that volume or specific unit pricing, assessing value against benchmarks is challenging. The fixed price with economic adjustment adds complexity to a simple per-gallon comparison.
What is the potential impact of the short 21-day delivery period on the overall cost-effectiveness and logistical efficiency of this aviation turbine fuel procurement?
A short delivery window can sometimes lead to premium pricing as suppliers may need to expedite logistics or allocate specific inventory. While it ensures timely supply for immediate needs, it might preclude leveraging longer-term contracts or bulk purchasing discounts. The efficiency depends on whether this short period aligns with the DoD's operational tempo and inventory management strategy.
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: $18,623,633
Exercised Options: $18,623,633
Current Obligation: $18,623,633
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60225D0459
IDV Type: IDC
Timeline
Start Date: 2025-06-11
Current End Date: 2025-07-02
Potential End Date: 2025-07-02 00:00:00
Last Modified: 2025-06-26
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