DoD Awards $10.99M for Aviation Turbine Fuel to Marathon Petroleum, Highlighting Fixed Price with EPA

Contract Overview

Contract Amount: $10,988,880 ($11.0M)

Contractor: Marathon Petroleum Company LP

Awarding Agency: Department of Defense

Start Date: 2025-09-24

End Date: 2025-10-24

Contract Duration: 30 days

Daily Burn Rate: $366.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: 8511665225!TURBINE FUEL,AVIATION

Place of Performance

Location: FINDLAY, HANCOCK County, OHIO, 45840

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $11.0 million to MARATHON PETROLEUM COMPANY LP for work described as: 8511665225!TURBINE FUEL,AVIATION Key points: 1. Marathon Petroleum secures a significant contract for aviation fuel, indicating strong market presence. 2. The fixed-price contract with economic price adjustment aims to mitigate fuel cost volatility. 3. Competition method is 'Full and Open', suggesting a competitive bidding process. 4. The contract is for a 30-day delivery period, indicating short-term supply needs.

Value Assessment

Rating: good

The contract value of $10.99M for a 30-day period appears reasonable given market prices for aviation fuel. Benchmarking against similar fuel procurements by the Defense Logistics Agency would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically drives competitive pricing. The fixed-price with economic price adjustment structure allows for market fluctuations, potentially impacting the final cost to the government.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers, ensuring fair pricing. However, the economic price adjustment clause introduces some uncertainty in the final expenditure.

Public Impact

Ensures critical aviation fuel supply for Department of Defense operations. Supports the energy sector through a substantial government contract. Potential impact on aviation fuel prices due to large-scale procurement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment could lead to higher costs if fuel prices surge.
Short 30-day duration may necessitate frequent re-competition and associated administrative costs.

Positive Signals

Awarded through full and open competition, promoting market fairness.
Fixed price component provides a baseline cost control.

Sector Analysis

This contract falls under the Petroleum Refineries sector (NAICS 324110). Spending in this sector is crucial for national security and operational readiness, particularly for fuel-dependent agencies like the DoD. Benchmarks for fuel procurement vary significantly based on type, volume, and duration.

Small Business Impact

The data indicates the awardee is Marathon Petroleum Company LP, a large corporation. There is no indication of small business participation in this specific award, suggesting limited opportunities for small businesses in this particular procurement.

Oversight & Accountability

The award was made by the Defense Logistics Agency, a key agency for managing supply chains. Oversight would involve monitoring contract performance, adherence to delivery schedules, and managing the economic price adjustment clause effectively.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to economic price adjustment.
Short contract duration may lead to supply chain disruptions.
High administrative costs associated with frequent re-competition.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.0 million to MARATHON PETROLEUM COMPANY LP. 8511665225!TURBINE FUEL,AVIATION

Who is the contractor on this award?

The obligated recipient is MARATHON PETROLEUM COMPANY LP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $11.0 million.

What is the period of performance?

Start: 2025-09-24. End: 2025-10-24.

What is the historical price trend for aviation turbine fuel over the contract period and how does the economic price adjustment mechanism compare to market volatility?

Analyzing historical price trends for aviation turbine fuel is crucial. The economic price adjustment (EPA) clause is designed to protect both the contractor and the government from extreme price fluctuations. If market prices rise significantly above the fixed component, the EPA will increase the cost. Conversely, if prices fall, the EPA could potentially lower the cost. A thorough analysis would compare the EPA's trigger points and adjustment formula against actual market volatility to assess if it truly benefits the government or exposes it to undue risk.

What is the potential risk associated with the short 30-day duration of this contract in terms of sustained operational support and administrative overhead?

A 30-day contract duration presents a risk of interrupted supply if follow-on contracts are not secured promptly. This could impact sustained operational readiness for the Department of Defense. Furthermore, frequent re-competition for short-term fuel needs incurs significant administrative overhead for the Defense Logistics Agency, including the costs associated with solicitation, evaluation, and award processes. This could be less efficient than longer-term agreements, potentially leading to higher overall program costs.

How effectively does the 'Fixed Price with Economic Price Adjustment' structure balance cost control with the need to secure a stable supply of a volatile commodity like aviation fuel?

The 'Fixed Price with Economic Price Adjustment' (FPEPA) structure attempts to balance cost control and supply stability by setting a base fixed price while allowing adjustments based on a pre-defined economic index. This protects the government from excessive price hikes due to market volatility, while ensuring the contractor remains willing to supply the fuel. However, the effectiveness hinges on the chosen index and adjustment formula; a poorly designed EPA could still lead to unpredictable costs or disincentivize the contractor if the adjustment mechanism is too restrictive.

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: 539 S MAIN ST, FINDLAY, OH, 45840

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $10,988,880

Exercised Options: $10,988,880

Current Obligation: $10,988,880

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60224D0477

IDV Type: IDC

Timeline