DoD awards $12.6M for naval distillate fuel, highlighting reliance on established refineries

Contract Overview

Contract Amount: $12,671,929 ($12.7M)

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

Awarding Agency: Department of Defense

Start Date: 2025-12-16

End Date: 2026-01-08

Contract Duration: 23 days

Daily Burn Rate: $551.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511816591!DISTILLATE,NAVAL

Plain-Language Summary

Department of Defense obligated $12.7 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. for work described as: 8511816591!DISTILLATE,NAVAL Key points: 1. Contract value represents a significant portion of annual spending for this specific fuel type. 2. Competition was robust, suggesting potential for competitive pricing. 3. Contract duration is relatively short, indicating potential for frequent re-competition and price adjustments. 4. Economic price adjustment clause introduces potential for cost escalation. 5. Contractor is a major regional refinery, suggesting established supply chain and market position. 6. Focus on a single commodity points to specialized logistical needs within the Defense Logistics Agency.

Value Assessment

Rating: good

The contract value of $12.6 million for naval distillate fuel appears reasonable given the commodity's market volatility and the specialized nature of military-grade fuel. Benchmarking against similar fuel procurements by the DLA or other military branches would provide a more precise value assessment. The fixed-price with economic price adjustment (FP-EPA) structure aims to balance cost certainty for the government with protection for the contractor against market fluctuations, which is a common practice for fuel contracts.

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. This level of competition is generally favorable for price discovery and achieving competitive pricing. The Defense Logistics Agency's standard procurement processes for bulk fuels typically involve broad solicitations to ensure a wide range of potential suppliers can participate.

Taxpayer Impact: Full and open competition for this fuel contract is beneficial for taxpayers as it increases the likelihood of securing the best possible price through market forces, preventing potential overpayment.

Public Impact

Naval forces will receive a critical fuel supply for operational readiness. The contract supports the logistical backbone of the Department of Defense's maritime operations. Geographic impact is likely concentrated around naval bases and operational areas requiring this specific fuel. The contract supports jobs within the petroleum refining and fuel distribution sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to higher-than-anticipated costs if market prices surge.
Reliance on a single, albeit large, supplier could pose a risk if supply chain disruptions occur.
Short contract duration may necessitate frequent re-procurement efforts, consuming administrative resources.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Contractor is a well-established refinery, implying a reliable supply chain.
Fixed-price element provides some cost control for the government.

Sector Analysis

This contract falls within the energy sector, specifically the refining and distribution of petroleum products. The market for naval distillate fuel is influenced by global crude oil prices, geopolitical stability, and demand from maritime industries, including the military. The size of this specific award ($12.6M) is moderate within the broader context of DoD fuel procurement, which can run into billions annually.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the scale and specialized nature of refining and supplying military-grade fuels, large, established companies are typically the primary participants. Subcontracting opportunities for small businesses might exist in areas like transportation or logistics support, but are not explicitly detailed in the provided data.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. Standard DLA procurement policies and contract administration procedures would apply. Transparency is generally maintained through contract award databases like FPDS. Inspector General oversight would be applicable in cases of suspected fraud, waste, or abuse.

Related Government Programs

DoD Fuel Procurement
Defense Logistics Agency Contracts
Petroleum Product Supply
Naval Operations Support

Risk Flags

Price Volatility Risk (due to EPA clause)
Supply Chain Disruption Risk
Contractor Performance Risk (requires further review)
Geopolitical Risk impacting fuel prices

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.7 million to MOTOR OIL (HELLAS) CORINTH REFINERIES S.A.. 8511816591!DISTILLATE,NAVAL

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 $12.7 million.

What is the period of performance?

Start: 2025-12-16. End: 2026-01-08.

What is the historical spending pattern for naval distillate fuel by the Defense Logistics Agency?

Historical spending data for naval distillate fuel by the DLA reveals a consistent requirement driven by the operational needs of the U.S. Navy and other maritime forces. Annual spending can fluctuate based on global fuel prices, geopolitical events impacting supply chains, and changes in operational tempo. For instance, in fiscal years where crude oil prices were significantly higher, the total expenditure for distillate fuels, including naval distillate, would likely have increased, even if the volume procured remained relatively stable. Conversely, periods of lower oil prices would see reduced dollar amounts. The DLA manages a complex portfolio of fuel contracts, and specific line items for naval distillate fuel are part of a larger strategic sourcing effort to ensure energy security and operational readiness across the armed forces. Analyzing trends over the past 5-10 years would show the impact of market volatility and strategic shifts in energy procurement.

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

Directly comparing the price of this specific contract to real-time market benchmarks for naval distillate fuel is challenging without access to the exact unit price and the specific date of award relative to market fluctuations. Naval distillate fuel (NDF) is a specialized product, and its price is influenced by crude oil costs, refining margins, transportation, and specific military grade requirements which can command a premium over commercial diesel. The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FP-EPA) clause further complicates a simple benchmark comparison, as the final price paid will vary. However, the fact that the contract was awarded under 'FULL AND OPEN COMPETITION' suggests that the DLA aimed to secure a competitive market price. The DLA often publishes average prices paid for various fuel types, which can serve as a benchmark. If the negotiated price, considering the economic price adjustment, falls within or below these historical DLA averages for similar contract types and delivery locations, it would indicate good value for money.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include price volatility due to the 'ECONOMIC PRICE ADJUSTMENT' (EPA) clause, potential supply chain disruptions affecting the contractor's ability to deliver, and the risk of cost overruns if market prices escalate significantly. Mitigation strategies are embedded within the contract structure and procurement process. The EPA clause itself is a risk mitigation tool, protecting the contractor from losses due to price increases and thereby ensuring supply continuity. The 'FULL AND OPEN COMPETITION' requirement helps mitigate the risk of non-competitive pricing. Furthermore, the Defense Logistics Agency (DLA) likely vets potential suppliers for financial stability and operational capacity. The short contract duration (23 days for the delivery order period) also limits the government's exposure to prolonged market volatility or supply issues with a single award. The DLA's robust contract management framework and contingency planning for fuel supply are additional layers of risk mitigation.

What is the track record of MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. as a government contractor?

MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. is a significant player in the European energy market, primarily operating refineries in Greece. While specific details on their historical performance as a direct U.S. government contractor are not provided in the abbreviated data, their scale suggests they are a capable supplier. Government contracts, particularly for fuel, often involve rigorous performance standards and delivery schedules. A company of this size typically has experience meeting such requirements, potentially including prior contracts with allied nations or international organizations. To fully assess their track record, one would need to examine past performance evaluations, any history of contract disputes or terminations, and the volume and types of previous government contracts they have fulfilled. Their established presence in the refining industry implies a baseline capability, but specific government contract performance history is crucial for a complete risk assessment.

How does this contract fit into the broader strategy of the Defense Logistics Agency for energy procurement?

This contract for naval distillate fuel is a component of the Defense Logistics Agency's (DLA) broader strategy to ensure reliable and cost-effective energy supply for military operations. The DLA's strategy emphasizes maintaining a diverse supplier base, leveraging competitive sourcing, and managing price volatility through various contract types, including fixed-price with economic price adjustment. Procuring fuels like naval distillate through full and open competition aligns with the goal of achieving best value. The DLA also focuses on geographic diversification of supply sources and robust inventory management to mitigate risks associated with geopolitical instability or natural disasters. This specific award, while for a relatively short delivery period, contributes to the ongoing operational readiness of naval forces by securing a critical fuel commodity. The DLA continuously analyzes market trends and operational requirements to adapt its procurement strategies, ensuring the warfighter has the necessary energy resources.

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: $12,671,929

Exercised Options: $12,671,929

Current Obligation: $12,671,929

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0488

IDV Type: IDC

Timeline