DoD awards $11.1M for aviation turbine fuel, with Valero Marketing and Supply Co. securing the delivery order

Contract Overview

Contract Amount: $11,082,820 ($11.1M)

Contractor: Valero Marketing and Supply CO

Awarding Agency: Department of Defense

Start Date: 2025-12-23

End Date: 2026-01-17

Contract Duration: 25 days

Daily Burn Rate: $443.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 8511832447!TURBINE FUEL,AVIATION

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78249

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $11.1 million to VALERO MARKETING AND SUPPLY CO for work described as: 8511832447!TURBINE FUEL,AVIATION Key points: 1. The contract value represents a significant portion of the overall spending in the aviation fuel sector. 2. Competition dynamics for this contract are crucial for ensuring fair pricing and efficient resource allocation. 3. Risk indicators include potential price volatility in the fuel market and supply chain disruptions. 4. Performance context will be shaped by the timely delivery and quality of the fuel supplied. 5. This contract positions Valero Marketing and Supply Co. as a key supplier within the defense logistics chain. 6. The fixed-price structure with economic price adjustment aims to mitigate some market fluctuation risks.

Value Assessment

Rating: good

The awarded amount of $11.1 million for aviation turbine fuel appears reasonable given the market for such commodities. Benchmarking against similar contracts for bulk fuel purchases by the Department of Defense would provide a clearer picture of value for money. The fixed-price with economic price adjustment (FPEPA) contract type suggests an effort to balance cost certainty for the government with protection against significant market swings for the contractor. Without direct comparable contract data, a definitive value assessment is challenging, but the scale of the award is typical for large-volume fuel procurements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The specific number of bidders is not provided, but full and open competition generally fosters a competitive environment that can lead to better pricing and terms for the government. The Defense Logistics Agency's approach suggests a commitment to maximizing market participation to achieve the best value.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining competitive pricing and prevents potential price gouging associated with limited competition.

Public Impact

Military operations across various branches of the Department of Defense will benefit from a secure and reliable supply of aviation turbine fuel. The services delivered include the provision of essential fuel for aircraft, supporting readiness and operational capabilities. The geographic impact is primarily within Texas, where the contractor is based, but the fuel supports national defense operations. Workforce implications may include support roles in logistics, transportation, and fuel handling related to this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clauses if fuel market prices rise significantly.
Dependence on a single supplier for a critical commodity could pose a risk if supply chain issues arise.
Geopolitical events impacting global oil prices could indirectly affect the cost of this fuel.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
The fixed-price with economic price adjustment contract type offers some cost stability.
The Defense Logistics Agency's established procurement processes aim to ensure reliable supply chains.

Sector Analysis

The aviation turbine fuel market is a critical component of the broader energy and defense sectors. This contract falls under the petroleum refineries industry (NAICS 324110). The global market for jet fuel is substantial, driven by commercial aviation and military demand. Defense Logistics Agency (DLA) spending on fuel is a significant portion of the overall defense budget, with contracts often awarded through competitive bidding processes to major fuel suppliers. Valero Marketing and Supply Co. is a prominent player in the refining and marketing of petroleum products.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the nature of bulk fuel supply and the scale of the award, it is unlikely that small businesses would be the primary awardees for the prime contract. However, subcontracting opportunities for small businesses in logistics, transportation, or related support services may exist, though not explicitly detailed in the provided data.

Oversight & Accountability

The Department of Defense, through the Defense Logistics Agency, employs various oversight mechanisms for fuel procurement. These include contract performance monitoring, quality assurance checks, and financial audits. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to this contract. Transparency is generally maintained through contract award databases, though specific performance metrics are often internal.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Aviation Fuel Procurement
Petroleum Product Supply Contracts
Department of Defense Energy Procurement

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Economic Price Adjustment Clause Impact

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.1 million to VALERO MARKETING AND SUPPLY CO. 8511832447!TURBINE FUEL,AVIATION

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 $11.1 million.

What is the period of performance?

Start: 2025-12-23. End: 2026-01-17.

What is Valero Marketing and Supply Co.'s track record with the Department of Defense for similar fuel contracts?

Valero Marketing and Supply Co. has a history of supplying petroleum products, including aviation fuel, to various government agencies, including the Department of Defense. Their track record typically involves large-scale fuel distribution and refining capabilities. Analyzing past contract awards and performance reviews would reveal their reliability, pricing competitiveness, and adherence to delivery schedules. While specific details for this exact contract are not provided, their established presence in the market suggests a capacity to meet the demands of such a significant award. Past performance data, often available through government contract databases, would offer a more granular view of their suitability and past successes or challenges in fulfilling similar defense contracts.

How does the awarded price compare to market rates for aviation turbine fuel during the contract period?

The awarded price for this contract is $11.1 million for aviation turbine fuel. To assess its competitiveness, it needs to be benchmarked against prevailing market rates for similar fuel types (e.g., JP-8, Jet A-1) during the contract's performance period (late 2025 to early 2026). Factors such as the economic price adjustment clause will influence the final cost. Market rates are influenced by global crude oil prices, refining margins, transportation costs, and regional supply/demand dynamics. A comparison would involve analyzing industry price indices (e.g., Platts, Argus) and potentially other government contract awards for comparable fuel quantities and delivery locations. Without specific per-gallon pricing or detailed market data for the period, a precise comparison is difficult, but the contract's full and open competition suggests an effort to secure market-competitive pricing.

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

The primary risks associated with this contract include price volatility in the aviation fuel market, potential supply chain disruptions, and logistical challenges in delivery. The economic price adjustment (EPA) clause in the fixed-price contract is a key mitigation strategy for price volatility, allowing for adjustments based on established indices, thus protecting both the government from excessive price hikes and the contractor from unsustainable losses. Supply chain risks are managed through the Defense Logistics Agency's (DLA) robust procurement and distribution network, which aims to ensure redundancy and reliability. Logistical risks are addressed by specifying delivery requirements and performance standards within the contract, with penalties for non-compliance. Furthermore, the full and open competition process itself helps mitigate risks by fostering a competitive environment that encourages reliable performance from multiple potential bidders.

How effective is the Defense Logistics Agency in managing fuel contracts to ensure readiness?

The Defense Logistics Agency (DLA) is generally considered highly effective in managing fuel contracts to ensure military readiness. DLA manages the global supply chain for fuel, providing a critical service that supports all branches of the U.S. military. Their effectiveness stems from extensive experience, sophisticated logistics planning, and established relationships with major fuel suppliers. They utilize a variety of contract types, including competitive solicitations and strategic sourcing, to ensure a reliable and cost-efficient supply. DLA's ability to forecast demand, manage inventory, and respond to emergent needs is crucial for maintaining operational readiness. While specific contract performance can vary, DLA's overall mission success in fuel provision is a testament to its robust management capabilities and its critical role in national security.

What is the historical spending trend for aviation turbine fuel by the Department of Defense?

Historical spending by the Department of Defense (DoD) on aviation turbine fuel has been substantial and relatively consistent, reflecting the continuous operational needs of the U.S. military. Annual expenditures can fluctuate based on global fuel prices, geopolitical events, and changes in operational tempo. The DoD is one of the largest consumers of fuel globally. The Defense Logistics Agency (DLA) manages the majority of these procurements, often awarding multi-year contracts through competitive processes. Spending trends are generally influenced by factors such as the price of crude oil, refining capacity, and strategic reserve management. While precise year-over-year figures require detailed analysis of budget documents and contract awards, the overall trend indicates a significant and ongoing investment in aviation fuel to maintain global reach and readiness.

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: $11,082,820

Exercised Options: $11,082,820

Current Obligation: $11,082,820

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0475

IDV Type: IDC

Timeline