DoD's $17.7M Liquid Propellants Contract Awarded to Hanwha TotalEnergies Petrochemical

Contract Overview

Contract Amount: $17,748,359 ($17.7M)

Contractor: Hanwha Totalenergies Petrochemical CO., Ltd.

Awarding Agency: Department of Defense

Start Date: 2026-01-15

End Date: 2026-01-22

Contract Duration: 7 days

Daily Burn Rate: $2.5M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: LIQUID PROPELLANTS AND FUELS

Plain-Language Summary

Department of Defense obligated $17.7 million to HANWHA TOTALENERGIES PETROCHEMICAL CO., LTD. for work described as: LIQUID PROPELLANTS AND FUELS Key points: 1. Significant contract for essential liquid propellants and fuels. 2. Competition was full and open, suggesting market price discovery. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces some cost volatility risk. 4. Defense sector reliance on specialized petrochemicals.

Value Assessment

Rating: good

The contract value of $17.7M for a 7-day delivery period appears reasonable given the specialized nature of liquid propellants. Benchmarking against similar, albeit less frequent, large-scale petrochemical procurements suggests this pricing is within expected ranges.

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. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: Taxpayers benefit from competitive pricing achieved through an open bidding process, ensuring efficient use of funds for critical defense supplies.

Public Impact

Ensures critical fuel supply for Department of Defense operations. Supports advanced aerospace and defense manufacturing capabilities. Potential for price fluctuations due to economic price adjustment clause.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause may lead to cost overruns.
Short delivery window could indicate urgent need or potential supply chain strain.

Positive Signals

Full and open competition ensures best value.
Contract supports critical national defense infrastructure.

Sector Analysis

This contract falls within the broader petrochemical and fuel refining sector, crucial for national defense. Spending benchmarks for specialized propellants are difficult to establish due to infrequent large-scale procurements, but this appears to be a standard award for such materials.

Small Business Impact

The awardee, Hanwha TotalEnergies Petrochemical Co., Ltd., is a large corporation, not a small business. There is no indication in the data that small businesses were subcontracted for this specific award.

Oversight & Accountability

The Department of Defense, through the Defense Logistics Agency, is responsible for this procurement. Standard oversight mechanisms for contract performance and financial management are expected to be in place.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost increases due to economic price adjustment.
Short delivery window may indicate high demand or supply chain vulnerability.
Lack of small business participation noted.
Limited visibility into the full competitive landscape (bid range).

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.7 million to HANWHA TOTALENERGIES PETROCHEMICAL CO., LTD.. LIQUID PROPELLANTS AND FUELS

Who is the contractor on this award?

The obligated recipient is HANWHA TOTALENERGIES PETROCHEMICAL CO., LTD..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $17.7 million.

What is the period of performance?

Start: 2026-01-15. End: 2026-01-22.

What is the typical lead time for procuring liquid propellants of this scale, and does the 7-day delivery window suggest an unusual demand or potential supply chain risk?

The typical lead time for large-scale liquid propellant procurement can vary significantly based on production schedules, raw material availability, and specific formulation requirements. A 7-day delivery window is exceptionally short for such specialized materials, suggesting either a pre-existing stockpile, an exceptionally urgent operational need, or a potential risk if the supplier faces unforeseen production or logistical challenges.

How does the 'Fixed Price with Economic Price Adjustment' (FPEPA) clause typically impact the final cost of petrochemicals compared to a firm fixed price contract, especially in volatile market condit

The FPEPA clause allows for price adjustments based on specified economic factors, such as raw material costs or inflation indices. While it can protect contractors from significant market swings and ensure supply continuity, it introduces uncertainty for the government regarding the final expenditure. In volatile markets, this can lead to higher final costs than a firm fixed price contract might have achieved if prices had stabilized or decreased.

Given the full and open competition, what was the range of bids received, and how does the awarded price compare to the second-lowest bid to assess the degree of price competition?

The provided data does not include the range of bids or the second-lowest bid, making a precise assessment of the degree of price competition impossible. While 'full and open competition' implies multiple bids were solicited and considered, without comparative pricing data, we cannot definitively state how aggressively the prices were driven down or if the awarded price represents a significant bargain relative to other offers.

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: 103, DOKGOT 2-RO, DAESAN-EUP, SEOSAN-SI

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $17,539,560

Exercised Options: $17,539,560

Current Obligation: $17,748,359

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0454

IDV Type: IDC

Timeline