DoD's $851M aviation turbine fuel contract awarded to Motor Oil (Hellas) Corinth Refineries S.A

Contract Overview

Contract Amount: $22,305,322 ($22.3M)

Contractor: Motor OIL (hellas) Corinth Refineries S.A.

Awarding Agency: Department of Defense

Start Date: 2025-06-30

End Date: 2025-07-25

Contract Duration: 25 days

Daily Burn Rate: $892.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511473800!TURBINE FUEL,AVIATION

Plain-Language Summary

Department of Defense obligated $22.3 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. for work described as: 8511473800!TURBINE FUEL,AVIATION Key points: 1. Contract value represents a significant investment in critical aviation fuel supply. 2. Full and open competition suggests a potentially competitive pricing environment. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces some price volatility risk. 4. Short performance period (25 days) indicates a specific, immediate need. 5. Contract awarded to a single entity, Motor Oil (Hellas) Corinth Refineries S.A., warrants scrutiny of market concentration. 6. The contract falls under the Petroleum Refineries industry classification.

Value Assessment

Rating: fair

The total contract value of $851,147,380.00 for aviation turbine fuel is substantial. Benchmarking this against similar large-scale fuel procurements is challenging without more specific data on fuel type, volume, and delivery locations. The fixed-price with economic price adjustment (FPEPA) clause introduces a degree of uncertainty in the final cost, as market fluctuations in oil prices can impact the total expenditure. While the contract value is high, the specific value-for-money proposition depends heavily on the prevailing market rates at the time of delivery and the efficiency of the supply chain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The specific number of bids received is not provided, but this procurement method generally promotes price discovery and allows the government to select from a wide range of potential suppliers. The presence of competition is a positive sign for achieving a reasonable price, although the ultimate competitiveness is influenced by market dynamics and the number of qualified bidders.

Taxpayer Impact: Full and open competition is intended to ensure that taxpayer dollars are used efficiently by fostering a competitive environment that drives down prices. This approach maximizes the opportunity to secure favorable terms and conditions for the government.

Public Impact

The primary beneficiaries are the Department of Defense (DoD) and its aviation units, ensuring operational readiness. The service delivered is the supply of critical aviation turbine fuel. Geographic impact is likely focused on locations where DoD aviation assets are deployed or require refueling. Workforce implications are minimal for the contracting agency but significant for the supplier's logistics and operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

FPEPA clause introduces potential for cost overruns due to market price volatility.
Reliance on a single supplier for a critical commodity could pose supply chain risks if not managed proactively.
Lack of specific volume and delivery location details makes a precise value assessment difficult.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
The contract ensures the availability of essential fuel for military operations.
The Defense Logistics Agency's involvement indicates established procurement processes for defense commodities.

Sector Analysis

This contract falls within the broader energy sector, specifically the downstream petroleum refining and distribution segment. The market for aviation turbine fuel is global and subject to significant price volatility influenced by crude oil prices, geopolitical events, and refining capacity. The Defense Logistics Agency (DLA) is a major procurer of fuels for the U.S. military, and contracts of this magnitude are typical for ensuring strategic supply chains. Comparable spending benchmarks would involve analyzing historical DLA fuel contracts and global market prices for jet fuel.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary consideration or requirement for this specific contract award. There is no indication of small business set-asides or subcontracting plans being mandated. This suggests the contract was awarded based on the capabilities and pricing of larger, established entities within the petroleum refining industry.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), which manages fuel procurement for the DoD. Accountability measures are embedded in the contract terms, including delivery schedules and fuel quality specifications. Transparency is facilitated through contract award databases, though detailed operational oversight is internal to the agency and the contractor. The DLA has an Inspector General's office that can investigate potential fraud, waste, or abuse.

Related Government Programs

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

Risk Flags

Price Volatility Risk (FPEPA)
Supply Chain Concentration Risk
Short-Term Supply Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.3 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A.. 8511473800!TURBINE FUEL,AVIATION

Who is the contractor on this award?

The obligated recipient is MOTOR OIL (HELLAS) CORINTH REFINERIES S.A..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.3 million.

What is the period of performance?

Start: 2025-06-30. End: 2025-07-25.

What is the historical spending pattern for aviation turbine fuel by the Department of Defense?

Historical spending on aviation turbine fuel by the Department of Defense is substantial and fluctuates based on operational tempo, global events, and fuel prices. The Defense Logistics Agency (DLA) is the primary entity responsible for procuring fuel for the military. Annual spending can range in the billions of dollars, with significant variations year-over-year. Factors influencing this spending include the number of flight hours, the types of aircraft in operation, and the prevailing market prices for jet fuel. Analyzing past DLA contracts reveals trends in pricing, supplier diversification, and the impact of economic adjustments on contract values. For instance, periods of high oil prices have historically led to increased total contract values, even if the volume of fuel procured remained constant.

How does the FPEPA clause in this contract typically affect final costs compared to fixed-price contracts?

The Fixed Price with Economic Price Adjustment (FPEPA) clause allows for adjustments to the contract price based on fluctuations in specified economic factors, most commonly commodity prices like fuel. Unlike a firm fixed-price contract where the price is set regardless of market changes, FPEPA introduces a mechanism to account for external economic shifts. This can benefit the government if prices decrease, but it also exposes the contract to potential cost increases if fuel prices rise significantly. The specific formula or index used for the economic price adjustment is critical in determining the extent of these fluctuations. While FPEPA can help ensure supply by mitigating the risk for contractors in volatile markets, it transfers some of that price risk to the government, potentially leading to higher final costs than a fixed-price agreement if market conditions are unfavorable.

What is the typical market share of Motor Oil (Hellas) Corinth Refineries S.A. in supplying aviation fuel to government entities?

Determining the precise market share of Motor Oil (Hellas) Corinth Refineries S.A. in supplying aviation fuel specifically to government entities requires detailed analysis of numerous contracts and market data, which is not readily available in the public domain. However, as a significant refinery in Greece, it is plausible that they participate in various fuel supply tenders, including those issued by defense organizations. Government fuel procurement often involves large, established suppliers capable of meeting stringent logistical and quality requirements. While this specific award indicates their capability to secure a large DoD contract, it does not necessarily reflect a dominant market share across all government fuel procurements. Further investigation into historical awards and competitor analysis would be needed to ascertain their broader market position.

What are the risks associated with a short contract duration (25 days) for fuel supply?

A short contract duration of 25 days for fuel supply, like the one awarded to Motor Oil (Hellas) Corinth Refineries S.A., typically indicates a need for immediate or short-term replenishment rather than a long-term strategic supply agreement. The primary risks associated with such short durations include potential price premiums due to the urgency, limited opportunity for competitive bidding if the need arises unexpectedly, and the possibility of supply disruptions if the contractor faces unforeseen logistical challenges within that tight timeframe. For the government, it necessitates a rapid procurement process and may require more frequent contract actions to ensure continuous supply. From a contractor's perspective, it requires agile logistics and inventory management to meet the demand within the specified period.

How does the Defense Logistics Agency (DLA) ensure the quality and reliability of aviation turbine fuel procured?

The Defense Logistics Agency (DLA) employs rigorous quality assurance and control measures to ensure the reliability of aviation turbine fuel. Fuel must meet strict military specifications (e.g., MIL-DTL-83133 for JP-8) and industry standards (e.g., ASTM D1655). DLA utilizes a network of fuel laboratories and inspection points, both domestically and internationally, to test fuel quality at various stages, from refinery to point of delivery. Contractors are required to provide certificates of analysis for each fuel lot. DLA personnel conduct surveillance and audits of contractor facilities and operations. Furthermore, the agency maintains relationships with qualified suppliers who have a proven track record of meeting these demanding standards, and performance is continuously monitored throughout the contract lifecycle.

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: 12A IRODOU ATTIKOU, MAROUSSI

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $22,305,322

Exercised Options: $22,305,322

Current Obligation: $22,305,322

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60224D0475

IDV Type: IDC

Timeline