DoD awards $4.26M for Aviation Turbine Fuel to Placid Refining, highlighting fixed-price with economic adjustment
Contract Overview
Contract Amount: $4,263,882 ($4.3M)
Contractor: Placid Refining Company LLC
Awarding Agency: Department of Defense
Start Date: 2026-01-05
End Date: 2026-01-10
Contract Duration: 5 days
Daily Burn Rate: $852.8K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8511840998!TURBINE FUEL,AVIATION
Place of Performance
Location: PORT ALLEN, WEST BATON ROUGE County, LOUISIANA, 70767
Plain-Language Summary
Department of Defense obligated $4.3 million to PLACID REFINING COMPANY LLC for work described as: 8511840998!TURBINE FUEL,AVIATION Key points: 1. Significant award for aviation fuel, a critical defense commodity. 2. Competition method is 'Full and Open', suggesting market availability. 3. Fixed Price with Economic Price Adjustment (FPEPA) introduces price volatility risk. 4. Sector is Petroleum Refineries, with a NAICS code of 324110.
Value Assessment
Rating: fair
The award value of $4.26M for a 5-day delivery period appears reasonable given the commodity. However, the FPEPA contract type introduces uncertainty in the final cost.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple potential bidders. This method generally promotes competitive pricing, but the FPEPA clause may temper aggressive price reductions.
Taxpayer Impact: Taxpayer exposure is managed through competition, but the economic price adjustment clause could lead to higher-than-anticipated costs if fuel prices surge.
Public Impact
Ensures supply of critical aviation fuel for military operations. Potential for fluctuating fuel costs impacts budget predictability. Supports the refining industry, contributing to domestic energy production.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause introduces cost uncertainty.
- Short delivery window may limit competitive offers.
- No small business participation noted.
Positive Signals
- Awarded through full and open competition.
- Ensures critical fuel supply.
- Contract supports domestic refining capacity.
Sector Analysis
The petroleum refining sector is essential for national security, providing fuels for military and civilian use. Spending benchmarks for aviation fuel can vary significantly based on global market conditions and demand.
Small Business Impact
The award was not set aside for small businesses, and no small business participation was explicitly noted. This suggests larger refining companies were the primary competitors.
Oversight & Accountability
The use of full and open competition is a positive oversight measure. However, the FPEPA clause warrants close monitoring by the Defense Logistics Agency to manage price escalations.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (FPEPA) clause introduces cost uncertainty.
- Short delivery window may limit competition.
- No small business set-aside.
- Potential for significant price fluctuations based on market conditions.
Tags
petroleum-refineries, department-of-defense, la, delivery-order, 1m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $4.3 million to PLACID REFINING COMPANY LLC. 8511840998!TURBINE FUEL,AVIATION
Who is the contractor on this award?
The obligated recipient is PLACID REFINING COMPANY LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $4.3 million.
What is the period of performance?
Start: 2026-01-05. End: 2026-01-10.
What is the historical price trend for aviation turbine fuel, and how might this impact the FPEPA clause?
Historical data shows significant volatility in aviation turbine fuel prices, influenced by crude oil markets, geopolitical events, and seasonal demand. The FPEPA clause is designed to account for these fluctuations, protecting both the contractor from losses and the government from excessive initial pricing. However, without a clear cap or floor, the ultimate cost to the taxpayer remains uncertain and could exceed initial projections if market prices rise sharply during the contract period.
What are the specific economic indicators used in the price adjustment formula, and what is the potential range of price increases?
The specific economic indicators used in the price adjustment formula are not detailed in the provided data. Typically, these might include indices related to crude oil prices, refining costs, and transportation. The potential range of price increases is also not specified, which is a critical factor for assessing risk. A broad or uncapped adjustment mechanism significantly increases the financial risk for the government compared to a formula with defined limits.
How does the short 5-day delivery window affect the potential for competition and price discovery in this contract?
A very short delivery window, such as 5 days, can significantly constrain the pool of potential bidders. Companies need to have immediate production capacity and logistical readiness. This limitation might reduce the number of competitive offers received, potentially leading to less aggressive pricing than if a longer lead time were provided. It also suggests an urgent need, which can sometimes reduce the government's leverage in price negotiations.
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: 1940 LA HWY 1 N, PORT ALLEN, LA, 70767
Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $4,263,882
Exercised Options: $4,263,882
Current Obligation: $4,263,882
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60225D0472
IDV Type: IDC
Timeline
Start Date: 2026-01-05
Current End Date: 2026-01-10
Potential End Date: 2026-01-10 00:00:00
Last Modified: 2026-01-05
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