DoD Awards $11.8M for Naval Distillate Fuel to Marathon Petroleum, Ensuring Supply Through 2026

Contract Overview

Contract Amount: $11,838,053 ($11.8M)

Contractor: Marathon Petroleum Company LP

Awarding Agency: Department of Defense

Start Date: 2025-12-19

End Date: 2026-01-11

Contract Duration: 23 days

Daily Burn Rate: $514.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511827077!DISTILLATE,NAVAL

Place of Performance

Location: FINDLAY, HANCOCK County, OHIO, 45840

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $11.8 million to MARATHON PETROLEUM COMPANY LP for work described as: 8511827077!DISTILLATE,NAVAL Key points: 1. Significant award for a critical fuel commodity supporting naval operations. 2. Marathon Petroleum, a major refiner, is the sole awardee. 3. Fixed-price contract with economic price adjustment introduces potential cost volatility. 4. Spending falls within the broad Petroleum Refineries sector.

Value Assessment

Rating: good

The award amount of $11.8 million for a 23-day delivery period appears reasonable for bulk fuel procurement. Benchmarking against similar large-volume fuel contracts would provide further context on pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the specific award type (Delivery Order) implies it might be against a larger indefinite-delivery contract, and the price discovery mechanism is influenced by the fixed-price with economic price adjustment structure.

Taxpayer Impact: Taxpayers benefit from competitive bidding, but the economic price adjustment clause requires monitoring to mitigate potential cost overruns due to market fluctuations.

Public Impact

Ensures continued operational readiness for naval vessels requiring specialized fuel. Supports a key segment of the energy infrastructure and refining industry. Potential for price fluctuations impacts budget predictability for the Department of Defense. Geographic concentration of awardee in Ohio may have localized economic impacts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to higher costs.
Sole awardee for this specific delivery order, though competition was initially full and open.
Short duration of the delivery period may indicate a need for frequent re-solicitation.

Positive Signals

Award supports critical national defense needs.
Leverages established infrastructure of a major petroleum company.
Contract structure aims to balance price stability with market realities.

Sector Analysis

This award falls within the Petroleum Refineries sector (NAICS 324110), which is vital for national security and energy independence. Spending benchmarks for fuel procurement vary widely based on volume, type, and duration, but this award represents a significant, albeit short-term, commitment.

Small Business Impact

The awardee, Marathon Petroleum Company LP, is a large corporation, not a small business. There is no indication in the provided data that small businesses were subcontracted for this specific delivery order.

Oversight & Accountability

The Department of Defense, through the Defense Logistics Agency, is responsible for this procurement. Standard oversight mechanisms for fuel contracts, including quality control and delivery verification, would apply. The fixed-price with economic price adjustment requires careful monitoring of market indices.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to economic price adjustment.
Dependence on a single supplier for this delivery order.
Short contract duration may necessitate frequent and potentially costly re-procurement.
Geographic concentration of the supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.8 million to MARATHON PETROLEUM COMPANY LP. 8511827077!DISTILLATE,NAVAL

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 $11.8 million.

What is the period of performance?

Start: 2025-12-19. End: 2026-01-11.

What is the historical price trend for naval distillate fuel, and how does the economic price adjustment clause mitigate or exacerbate potential cost increases?

Naval distillate fuel prices are subject to global crude oil market dynamics and refining costs. The economic price adjustment clause is designed to pass through documented changes in these input costs, protecting the contractor from losses due to market volatility. However, this also means the government bears the risk of price increases, potentially exceeding initial budget projections if fuel prices rise significantly during the contract period.

Given the full and open competition, why was Marathon Petroleum the sole awardee for this specific delivery order, and what are the implications for future competition?

While the initial contract vehicle may have been awarded through full and open competition, this specific delivery order could have been awarded based on factors like best value, specific technical capabilities, or existing contract terms that favored Marathon. If this is part of a larger IDIQ contract, future orders could potentially go to other awardees. However, if Marathon holds a dominant position in supplying this specific fuel type, future competition might be limited.

What is the strategic importance of securing this specific fuel supply through 2026, and are there alternative fuel sources or suppliers being considered to ensure long-term energy security?

Securing naval distillate fuel through 2026 is crucial for maintaining the operational readiness and deployment capabilities of naval assets. This ensures a consistent supply chain for a critical energy resource. The Department of Defense likely engages in ongoing market analysis and strategic sourcing to identify alternative suppliers and fuel types, fostering resilience and mitigating risks associated with over-reliance on a single source or fuel.

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: $11,838,053

Exercised Options: $11,838,053

Current Obligation: $11,838,053

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0480

IDV Type: IDC

Timeline