DoD's $6.3M aviation turbine fuel contract awarded to Marathon Petroleum, highlighting fixed-price with economic adjustment

Contract Overview

Contract Amount: $6,375,120 ($6.4M)

Contractor: Marathon Petroleum Company LP

Awarding Agency: Department of Defense

Start Date: 2025-12-18

End Date: 2026-01-28

Contract Duration: 41 days

Daily Burn Rate: $155.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511822870!TURBINE FUEL,AVIATION

Place of Performance

Location: FINDLAY, HANCOCK County, OHIO, 45840

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $6.4 million to MARATHON PETROLEUM COMPANY LP for work described as: 8511822870!TURBINE FUEL,AVIATION Key points: 1. Contract value of $6.3M for aviation turbine fuel. 2. Awarded to Marathon Petroleum Company LP. 3. Contract type is Fixed Price with Economic Price Adjustment. 4. Duration of 41 days for delivery. 5. Competition level is Full and Open. 6. Geographic focus on Ohio. 7. Part of Defense Logistics Agency's broader fuel procurement efforts.

Value Assessment

Rating: good

The contract value of $6.3M for aviation turbine fuel appears reasonable given the commodity nature of the product and the fixed-price with economic adjustment structure, which allows for market fluctuations. Benchmarking against similar fuel procurements by the Defense Logistics Agency would provide a more precise value-for-money assessment. The specific quantity and delivery terms will be critical in determining the true unit cost effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. The presence of full and open competition generally suggests a robust marketplace for aviation turbine fuel, which should lead to competitive pricing. The number of actual bids received would further clarify the intensity of the competition.

Taxpayer Impact: Full and open competition is favorable for taxpayers as it typically drives down costs through market forces, ensuring the government receives competitive pricing for essential fuel supplies.

Public Impact

Military operations relying on aviation turbine fuel will be supported. The Department of Defense is the primary beneficiary. Services are delivered within Ohio. Potential impact on the regional fuel supply chain and logistics workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment introduces potential for cost overruns if fuel prices spike unexpectedly.
Short delivery window (41 days) could strain supplier capacity or lead to premium pricing.

Positive Signals

Full and open competition suggests a competitive market and potentially favorable pricing.
Fixed-price element provides some cost certainty despite economic adjustments.
Award to a known entity like Marathon Petroleum may indicate reliability.

Sector Analysis

The aviation turbine fuel market is a critical component of the energy sector, supporting both commercial and military aviation. This contract falls under the broader category of petroleum product procurement, a significant area of federal spending. The Defense Logistics Agency is a major procurer of fuels for the U.S. military, and contracts like this are essential for maintaining operational readiness. Market size for aviation fuel is substantial, with prices influenced by global crude oil markets and refining capacity.

Small Business Impact

There is no indication that this contract includes a small business set-aside. Given the nature of large-scale fuel procurement, it is unlikely that small businesses would be primary contractors, though they may participate as subcontractors to larger entities like Marathon Petroleum. Further analysis of subcontracting plans would be needed to assess small business impact.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Logistics Agency, with specific contract officers and quality assurance personnel responsible for monitoring performance and compliance. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Aviation Fuel Contracts
Petroleum Product Procurement
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Economic Price Adjustment Clause
Short Contract Duration
Potential for Price Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.4 million to MARATHON PETROLEUM COMPANY LP. 8511822870!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 $6.4 million.

What is the period of performance?

Start: 2025-12-18. End: 2026-01-28.

What is Marathon Petroleum Company LP's track record with similar DoD fuel contracts?

Marathon Petroleum Company LP has a significant history of supplying fuel to the Department of Defense and other government agencies. As a major refiner and marketer of petroleum products, they are a common awardee for large-scale fuel contracts. Their track record typically involves fulfilling delivery orders under various contract types, including fixed-price and economic price adjustment agreements. Past performance data, often available through government contract databases, would detail their on-time delivery rates, quality compliance, and any disputes or claims. While specific details for this contract are not provided, their established presence in the market suggests a capacity to meet DoD requirements, though a thorough review of their historical performance metrics is advisable for a complete assessment.

How does the 'Fixed Price with Economic Price Adjustment' (FPEPA) structure compare to other fuel contract pricing mechanisms used by the DoD?

The FPEPA contract type is commonly used by the DoD for fuel procurements where significant price volatility is anticipated in the underlying commodity. Unlike a firm fixed-price contract, FPEPA allows for adjustments to the contract price based on an economic index or formula tied to market prices of crude oil or refined products. This protects both the government from excessively high prices during market upswings and the contractor from losses during price declines. Compared to cost-plus contracts, FPEPA offers more price certainty for the government. However, it introduces complexity in price calculation and requires robust monitoring of market indices. The DoD also utilizes firm fixed-price contracts for stable markets and cost-reimbursement contracts for research and development or services where costs are highly uncertain.

What are the primary risks associated with a short contract duration of 41 days for fuel delivery?

A short contract duration of 41 days for aviation turbine fuel delivery presents several potential risks. Firstly, it could indicate an urgent or emergency need, which might have led to less competitive bidding or a premium price. Secondly, it may strain the contractor's logistical capabilities, potentially increasing the risk of delivery delays or disruptions if unforeseen issues arise in the supply chain or transportation. Thirdly, the contractor might build a contingency into their pricing to account for the compressed timeline and potential for expedited handling, leading to a higher overall cost than a longer-term contract. Finally, if this is a recurring need, the short duration prevents the establishment of a stable, long-term supply relationship, requiring frequent re-procurement efforts.

What is the typical market size and annual spending for aviation turbine fuel by the Department of Defense?

The Department of Defense is one of the largest consumers of aviation turbine fuel globally, essential for its vast fleet of aircraft. While precise annual spending figures fluctuate based on operational tempo, global deployments, and fuel prices, the DoD's total fuel expenditure often runs into the billions of dollars annually. Aviation fuel constitutes a significant portion of this. Market research reports and government spending analyses indicate that the global market for aviation fuel is substantial, valued in the hundreds of billions of dollars. The DoD's share of this market is considerable, making it a key player influencing demand and pricing within the sector. Specific annual spending on aviation turbine fuel can vary significantly year-to-year.

How does the geographic location (Ohio) influence the logistics and cost of this aviation turbine fuel contract?

The geographic location of delivery, specified as Ohio, has a direct impact on the logistics and cost of this aviation turbine fuel contract. Proximity to refineries, major distribution hubs, and transportation infrastructure (pipelines, rail, trucking) will influence delivery costs. If Ohio is well-served by these facilities and Marathon Petroleum has strong logistical capabilities within the state, it could lead to more efficient and cost-effective delivery. Conversely, if the required delivery points are remote or lack robust infrastructure, transportation costs could increase. The presence of a major supplier like Marathon Petroleum, which has refining operations and distribution networks, likely mitigates some of these location-specific risks, but the specific delivery points within Ohio remain a key factor in final cost and logistical feasibility.

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: $6,375,120

Exercised Options: $6,375,120

Current Obligation: $6,375,120

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0480

IDV Type: IDC

Timeline