DoD awards $20.9M for naval distillate fuel, with S-OIL CORPORATION securing the contract

Contract Overview

Contract Amount: $20,889,144 ($20.9M)

Contractor: S-Oil Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-19

End Date: 2025-10-16

Contract Duration: 27 days

Daily Burn Rate: $773.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511654656!DISTILLATE,NAVAL

Plain-Language Summary

Department of Defense obligated $20.9 million to S-OIL CORPORATION for work described as: 8511654656!DISTILLATE,NAVAL Key points: 1. Contract value represents a significant investment in fuel supply for naval operations. 2. The fixed-price structure with economic price adjustment aims to mitigate fuel price volatility. 3. Competition dynamics suggest a potentially competitive bidding process for this fuel supply. 4. The short duration of the delivery order indicates a specific, immediate need for fuel. 5. This contract falls within the broader energy sector's role in supporting defense logistics. 6. Performance will be closely monitored to ensure timely delivery and fuel quality.

Value Assessment

Rating: good

The contract value of $20.9 million for naval distillate fuel appears reasonable given the market for specialized fuels. Benchmarking against similar fuel supply contracts for the Department of Defense would provide a more precise assessment of value. The fixed-price with economic price adjustment (FPEPA) contract type is common for commodities like fuel, aiming to balance cost certainty for the government with protection against market fluctuations for the contractor. The relatively short performance period suggests a focused procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach generally fosters a competitive environment, encouraging multiple bidders to offer their best pricing and terms. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition was intended and likely achieved, which is beneficial for price discovery.

Taxpayer Impact: Full and open competition typically leads to more favorable pricing for taxpayers by leveraging the widest possible range of suppliers and encouraging them to offer competitive bids.

Public Impact

Naval forces will benefit from a secure and timely supply of essential fuel for operations. The contract supports the logistical readiness of the U.S. Navy. Geographic impact is likely concentrated around naval bases or operational areas where the fuel is delivered. The contract supports jobs within the petroleum refining and distribution industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if market prices for crude oil or refined products rise significantly.
Dependence on a single contractor for a critical fuel supply during the performance period.
Geopolitical events impacting global oil markets could affect the cost and availability of the fuel.

Positive Signals

Award to a known entity (S-OIL CORPORATION) suggests a degree of confidence in their capability.
The fixed-price element provides some cost control for the government.
The contract is for a defined, short period, limiting long-term exposure.

Sector Analysis

This contract falls within the energy sector, specifically the refining and distribution of petroleum products. The market for naval distillate fuel is specialized, often involving large-scale suppliers capable of meeting stringent military specifications and delivery requirements. Comparable spending benchmarks would involve other fuel procurements by the Department of Defense and other government agencies, which can vary widely based on volume, duration, and specific fuel types.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. Given the nature of large-scale fuel procurement and the likely size of the awarded contractor (S-OIL CORPORATION), it is improbable that small businesses would be directly involved as the prime contractor. However, opportunities for subcontracting may exist within the fuel distribution or logistics network, though this is not explicitly detailed in the provided information.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Logistics Agency (DLA), which is responsible for procuring and distributing fuel for the Department of Defense. Accountability measures would include performance monitoring, adherence to delivery schedules, and quality control of the fuel supplied. Transparency is generally maintained through contract award databases and reporting mechanisms, though specific operational details may be sensitive. The DLA has established procedures and personnel dedicated to contract oversight and quality assurance.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Naval Fuel Supply Contracts
Petroleum Product Procurement
Energy Sector Support for Defense

Risk Flags

Potential for price escalation due to economic price adjustment.
Supply chain vulnerability if contractor faces disruptions.
Ensuring consistent fuel quality meeting military specifications.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.9 million to S-OIL CORPORATION. 8511654656!DISTILLATE,NAVAL

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 $20.9 million.

What is the period of performance?

Start: 2025-09-19. End: 2025-10-16.

What is the historical spending pattern for naval distillate fuel by the Department of Defense?

Historical spending on naval distillate fuel by the Department of Defense (DoD) has been substantial and consistent, reflecting the continuous operational needs of the U.S. Navy. While specific figures for naval distillate fuel alone are not readily available in public databases without detailed searches, the DoD is one of the largest consumers of petroleum products globally. Annual spending on fuel across all branches can run into billions of dollars. Contracts for fuels like naval distillate are typically awarded through competitive processes, with prices fluctuating based on global oil markets, geopolitical events, and contract duration. The Defense Logistics Agency (DLA) manages the majority of these procurements. Analyzing past awards for similar quantities and durations would reveal trends in pricing, competition levels, and the primary contractors involved, providing context for the current $20.9 million award.

How does the price of this contract compare to market rates for naval distillate fuel?

Determining the precise market rate for naval distillate fuel is complex due to its specialized nature and the proprietary data often associated with bulk fuel contracts. Naval distillate fuel (like NATO F-76) must meet stringent military specifications, which can command a premium over commercial fuels. The provided data does not include a per-unit cost, making direct comparison difficult. However, the contract's fixed-price component with economic price adjustment suggests an attempt to anchor costs while allowing for market fluctuations. To benchmark effectively, one would need to compare the awarded price (once unit costs are calculable or historical data is available) against recent awards for similar fuel types and volumes by the DLA or other government entities, considering factors like delivery location and contract duration. Without this granular data, a definitive value-for-money assessment against market rates is challenging.

What is S-OIL CORPORATION's track record with the Department of Defense?

S-OIL CORPORATION is a South Korean oil refining and marketing company. While specific details of their contract history with the U.S. Department of Defense (DoD) are not immediately available in this dataset, major international oil companies and refiners frequently engage in supplying fuel to military organizations worldwide. Their ability to win a 'full and open competition' contract for naval distillate fuel suggests they possess the necessary certifications, production capacity, and logistical capabilities to meet DoD requirements. A deeper analysis would involve reviewing DoD contract databases (like FPDS or SAM.gov) for past awards to S-OIL CORPORATION, examining their performance history, any past issues or commendations, and the types and values of previous contracts awarded to them by the DoD or other government agencies.

What are the potential risks associated with this contract?

Several potential risks are associated with this contract for naval distillate fuel. Firstly, the economic price adjustment (EPA) clause introduces price volatility risk; if global crude oil prices surge, the cost to the government could increase beyond initial projections. Secondly, reliance on a single supplier, S-OIL CORPORATION, for a critical resource like fuel during the contract period poses a supply chain risk. Disruptions due to geopolitical events, natural disasters affecting the supplier's operations, or shipping issues could impact delivery. Thirdly, ensuring the fuel consistently meets the stringent military specifications requires robust quality assurance processes, and any deviation could lead to operational issues for the Navy. Finally, the short duration means the DoD will need to re-compete this requirement relatively soon, introducing potential risks related to future market conditions and contractor availability.

How does the competition level impact the value for taxpayers?

The 'full and open competition' designation for this contract is a positive indicator for taxpayers. It signifies that the Department of Defense actively sought bids from all eligible sources, maximizing the potential pool of suppliers. This broad competition generally drives down prices as companies vie for the contract by offering their most competitive terms and rates. A higher number of bidders typically correlates with better price discovery and a greater likelihood of securing the fuel at a cost closer to the actual market value, minimizing potential overpayment. Conversely, if competition were limited or sole-source, taxpayers might face higher prices due to reduced market pressure on the contractor.

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: $20,889,144

Exercised Options: $20,889,144

Current Obligation: $20,889,144

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0459

IDV Type: IDC

Timeline