DoD Awards $11.15M Naval Distillate Fuel Contract to Valero Marketing and Supply Co
Contract Overview
Contract Amount: $11,150,496 ($11.2M)
Contractor: Valero Marketing and Supply CO
Awarding Agency: Department of Defense
Start Date: 2025-12-17
End Date: 2026-01-16
Contract Duration: 30 days
Daily Burn Rate: $371.7K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: 8511819967!DISTILLATE,NAVAL
Place of Performance
Location: SAN ANTONIO, BEXAR County, TEXAS, 78249
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $11.2 million to VALERO MARKETING AND SUPPLY CO for work described as: 8511819967!DISTILLATE,NAVAL Key points: 1. Contract awarded to a single, large supplier for a critical fuel commodity. 2. Fixed price with economic price adjustment introduces potential for cost volatility. 3. Short 30-day duration suggests a tactical or immediate need. 4. No small business participation noted in this specific award.
Value Assessment
Rating: good
The contract value of $11.15 million for a 30-day delivery order appears reasonable for bulk fuel procurement. Benchmarking against historical Naval distillate fuel prices and similar large-volume contracts 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, indicating multiple bidders likely participated. The fixed-price with economic price adjustment (FPEPA) contract type aims to balance price stability for the government with protection against market fluctuations for the contractor.
Taxpayer Impact: The use of FPEPA aims to ensure a stable supply of fuel while mitigating extreme price swings, ultimately protecting taxpayer funds from excessive cost increases due to market volatility.
Public Impact
Ensures continued operational readiness for naval vessels requiring specific fuel types. Supports the Department of Defense's logistical supply chain for fuel. Potential for price fluctuations impacts budget predictability for fuel expenditures.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment could lead to higher-than-anticipated costs.
- Short contract duration may indicate a gap-filling or urgent need.
- Lack of small business participation in this specific award.
Positive Signals
- Awarded under full and open competition.
- Ensures supply of critical fuel for defense operations.
- Contractor is a major, established fuel supplier.
Sector Analysis
The petroleum refineries sector (NAICS 324110) is essential for national security, providing fuels for military operations. Defense Logistics Agency (DLA) is a major procurer of fuel, often using complex contract types to manage price volatility in this commodity-driven market.
Small Business Impact
This specific delivery order did not include small business participation. While the overall DLA fuel program may have small business set-asides, this particular award to a large supplier indicates no direct benefit to small businesses for this tranche of fuel.
Oversight & Accountability
The Defense Logistics Agency is responsible for procuring and managing the supply chain for fuel. Oversight would focus on ensuring fair pricing through the economic price adjustment mechanism and timely delivery to meet operational demands.
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 indicate supply chain instability or planning issues.
- Lack of small business participation in this specific award.
- Dependence on a single large supplier for a critical commodity.
Tags
petroleum-refineries, department-of-defense, tx, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $11.2 million to VALERO MARKETING AND SUPPLY CO. 8511819967!DISTILLATE,NAVAL
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 $11.2 million.
What is the period of performance?
Start: 2025-12-17. End: 2026-01-16.
What is the historical price trend for Naval distillate fuel, and how does the economic price adjustment clause compare to market benchmarks?
Analyzing historical price data for Naval distillate fuel is crucial to understanding the potential impact of the economic price adjustment. Comparing the adjustment formula against industry benchmarks and futures markets can reveal if the clause adequately protects the government from excessive price increases or if it exposes taxpayers to undue risk during periods of high market volatility.
What factors necessitated a short 30-day contract duration, and does this indicate a potential gap in longer-term fuel supply planning?
A 30-day duration for a fuel contract often suggests an urgent or immediate need, potentially to cover a gap in existing supply contracts or to respond to unforeseen operational requirements. Further investigation into the DLA's long-term fuel procurement strategy is warranted to determine if this short-term award is part of a broader, well-managed plan or if it signals potential deficiencies in forecasting and securing longer-term, stable fuel sources.
How does the awarded price, considering the economic price adjustment, compare to the average price paid for similar fuel types by other government agencies or commercial entities?
Benchmarking the awarded price, inclusive of the economic price adjustment's potential impact, against comparable contracts is vital for assessing value. Comparing this to prices paid by other government entities or large commercial buyers for similar fuel grades and volumes can highlight potential cost savings or overspending, informing future procurement strategies and ensuring taxpayer dollars are used efficiently.
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: $11,150,496
Exercised Options: $11,150,496
Current Obligation: $11,150,496
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60225D0475
IDV Type: IDC
Timeline
Start Date: 2025-12-17
Current End Date: 2026-01-16
Potential End Date: 2026-01-16 00:00:00
Last Modified: 2026-01-16
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