DLA Awards $15.1M for Aviation Turbine Fuel to Valero, Highlighting Fixed Price with EPA

Contract Overview

Contract Amount: $15,131,506 ($15.1M)

Contractor: Valero Marketing and Supply CO

Awarding Agency: Department of Defense

Start Date: 2025-09-16

End Date: 2025-10-04

Contract Duration: 18 days

Daily Burn Rate: $840.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511644316!TURBINE FUEL,AVIATION

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78249

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $15.1 million to VALERO MARKETING AND SUPPLY CO for work described as: 8511644316!TURBINE FUEL,AVIATION Key points: 1. Valero Marketing and Supply Co. secured a significant contract for aviation turbine fuel. 2. The contract utilizes a fixed-price structure with economic price adjustment, potentially impacting final costs. 3. Competition was full and open, suggesting a competitive bidding process. 4. The award is for delivery orders within a short timeframe, indicating immediate operational needs.

Value Assessment

Rating: good

The fixed-price with economic price adjustment (EPA) structure allows for cost fluctuations based on market conditions. While this protects the contractor from significant losses, it introduces price volatility for the government. Benchmarking against similar fuel contracts would be necessary for a precise value assessment.

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 had the opportunity to submit proposals. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: The competitive nature of the award is expected to yield a reasonable price for the aviation turbine fuel, benefiting taxpayers by avoiding inflated costs.

Public Impact

Ensures supply of critical aviation fuel for Department of Defense operations. Supports national defense readiness through reliable fuel procurement. Economic price adjustment may lead to cost savings or increases depending on market fluctuations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to economic price adjustment.
Short delivery window may limit future competitive opportunities.

Positive Signals

Full and open competition ensures a competitive bidding environment.
Contract supports critical national defense needs.

Sector Analysis

The petroleum refineries sector is vital for supplying energy products to government agencies. This contract falls within the broader energy and defense logistics sectors, where fuel prices are subject to global market volatility and geopolitical factors.

Small Business Impact

The contract was awarded to Valero Marketing and Supply Co., a large corporation. There is no indication of specific provisions or set-asides for small businesses in this particular award, suggesting limited direct impact on the small business sector for this specific contract.

Oversight & Accountability

The Defense Logistics Agency is responsible for overseeing this contract. Standard procurement regulations and oversight mechanisms are expected to be in place to ensure compliance and accountability throughout the contract's duration.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Price volatility due to EPA.
Short contract duration limits flexibility.
Potential for increased costs if market prices surge.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.1 million to VALERO MARKETING AND SUPPLY CO. 8511644316!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 $15.1 million.

What is the period of performance?

Start: 2025-09-16. End: 2025-10-04.

What is the projected cost impact of the economic price adjustment clause over the contract duration?

The economic price adjustment (EPA) clause allows for modifications to the contract price based on fluctuations in specified economic factors, typically related to fuel market indices. Without specific indices and historical data, it's difficult to project the exact cost impact. However, it introduces a risk of increased costs if fuel prices rise significantly, potentially exceeding the initial fixed price estimate and impacting the overall value for taxpayers.

How does the short delivery period affect the government's ability to secure better pricing in the future?

The short delivery period (18 days) suggests an immediate need for the fuel, which can limit the time available for extensive market research and competitive bidding for subsequent orders. While this award was under full and open competition, future needs with similar short lead times might necessitate expedited processes, potentially reducing the leverage for negotiating lower prices or exploring alternative suppliers.

What are the key performance indicators (KPIs) used to measure the effectiveness of this fuel supply contract?

Effectiveness is likely measured by on-time delivery of the specified aviation turbine fuel, adherence to quality standards (e.g., jet fuel specifications), and accurate invoicing. The Defense Logistics Agency would track metrics such as delivery success rates, fuel quality test results, and any discrepancies in billing. Meeting these KPIs ensures operational readiness and efficient use of government funds.

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: $15,131,506

Exercised Options: $15,131,506

Current Obligation: $15,131,506

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0475

IDV Type: IDC

Timeline