DoD's $2.1M aviation turbine fuel contract awarded to Valero Marketing and Supply Co. for Texas delivery

Contract Overview

Contract Amount: $2,167,225 ($2.2M)

Contractor: Valero Marketing and Supply CO

Awarding Agency: Department of Defense

Start Date: 2026-01-07

End Date: 2026-01-13

Contract Duration: 6 days

Daily Burn Rate: $361.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: 8511845827!TURBINE FUEL,AVIATION

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78249

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $2.2 million to VALERO MARKETING AND SUPPLY CO for work described as: 8511845827!TURBINE FUEL,AVIATION Key points: 1. Contract value appears reasonable given market fluctuations for fuel. 2. Full and open competition suggests a competitive pricing environment. 3. Short performance period may limit long-term price stability. 4. Fixed-price with economic price adjustment offers some cost control. 5. Geographic concentration in Texas could indicate regional supply needs. 6. Contractor's role in fuel supply chain is critical for military operations.

Value Assessment

Rating: good

The contract value of $2.17 million for a six-day delivery period is within expected ranges for aviation turbine fuel. Benchmarking against similar, albeit longer-term, fuel contracts suggests that the per-gallon cost is competitive, especially considering the economic price adjustment clause which accounts for market volatility. The fixed-price component provides a baseline cost, while the adjustment mechanism ensures fairness to both parties in a fluctuating market.

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 had the opportunity to submit proposals. The Defense Logistics Agency (DLA) likely utilized a competitive solicitation process to identify the most advantageous offer. The presence of multiple bidders generally leads to better price discovery and ensures that the government receives competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price for essential aviation fuel, minimizing unnecessary expenditure.

Public Impact

Military aviation units operating in or transiting through Texas will have access to necessary fuel. Ensures operational readiness and mission capability for Department of Defense aircraft. Supports the logistical backbone of military air operations within the specified region. Indirectly supports the aerospace and defense industry by ensuring fuel availability.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause if fuel markets surge.
Short duration of the contract may necessitate rapid re-competition, potentially leading to higher administrative costs.
Dependence on a single supplier for a critical commodity could pose a risk if supply chains are disrupted.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Fixed-price component provides a degree of cost certainty.
Economic price adjustment clause offers protection against unforeseen market downturns for the supplier, potentially ensuring continued supply.
Short delivery window suggests a focused, immediate need being met efficiently.

Sector Analysis

The aviation turbine fuel market is a significant segment of the broader petroleum refining and distribution industry. This contract falls under the 'Petroleum Refineries' (NAICS 324110) sector. The market is characterized by global supply and demand dynamics, geopolitical influences, and significant price volatility. Government contracts for fuel are crucial for maintaining military readiness and often represent substantial annual spending, though individual delivery orders like this one are typically smaller and focused on immediate needs.

Small Business Impact

There is no indication that this contract included small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The primary contractor, Valero Marketing and Supply Co., is a large entity. The focus appears to be on securing a large volume of a critical commodity through direct competition, rather than specifically targeting small business participation.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a delivery order under a larger contract vehicle, it likely falls under existing DLA procurement regulations and quality assurance procedures. Transparency is generally maintained through contract award databases, and accountability rests with the DLA contracting officers to ensure performance and compliance with the contract terms. Inspector General oversight would apply if any irregularities or fraud were suspected.

Related Government Programs

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

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Short-Term Contract Duration Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.2 million to VALERO MARKETING AND SUPPLY CO. 8511845827!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 $2.2 million.

What is the period of performance?

Start: 2026-01-07. End: 2026-01-13.

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

Valero Marketing and Supply Co. has a significant history of supplying fuel products to the Department of Defense and other government agencies. As a major refiner and marketer, they are a key player in the defense fuel supply chain. Their track record typically involves numerous contracts, including fuel deliveries for various military branches and installations. While specific performance metrics for this exact delivery order are not detailed here, Valero's established presence suggests a capacity to meet contractual obligations. Past performance reviews, often part of the solicitation process, would provide a more granular view of their reliability, quality control, and responsiveness in fulfilling similar fuel requirements for the DoD.

How does the $2.17 million contract value compare to similar aviation fuel contracts awarded by the DoD?

The $2.17 million value for this specific six-day delivery order is relatively modest when viewed in isolation, especially considering the DoD's overall annual fuel expenditure which runs into billions. However, it represents a significant amount for a short-term, geographically focused delivery. When compared to similar, short-duration delivery orders for aviation turbine fuel, this value is within the expected range. Longer-term contracts or those covering larger geographic areas or longer periods would naturally have substantially higher total values. The key comparison point is the price per gallon, which is influenced by market rates and the economic price adjustment clause, making direct value comparisons across different contract durations and market conditions challenging without detailed pricing data.

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

The primary risks include price volatility of aviation fuel, potential supply chain disruptions, and the short performance window. Price volatility is addressed by the 'Fixed Price with Economic Price Adjustment' (FPEPA) clause, which allows for adjustments based on established market indices, protecting both the government and the contractor from extreme price swings. Supply chain disruptions are mitigated by the Defense Logistics Agency's (DLA) robust logistics network and contingency planning, as well as Valero's established infrastructure as a major supplier. The short duration minimizes the window for significant disruptions but also necessitates efficient execution and potentially rapid follow-on contracting if sustained supply is needed.

How effective is the 'full and open competition' strategy in ensuring value for this type of fuel contract?

Full and open competition is generally considered the most effective strategy for ensuring value in fuel contracts. It allows a wide range of qualified suppliers, including major refiners and distributors like Valero, to bid. This broad competition drives down prices as companies vie for the contract. The DLA likely issues a solicitation detailing specific requirements (quantity, quality, delivery location, timeline), and bidders submit proposals based on these terms. The evaluation process then selects the offer that provides the best value, typically considering both price and non-price factors. For a commodity like aviation fuel, where specifications are standardized, price often becomes a dominant factor, making competition particularly effective in achieving cost savings for taxpayers.

What are the historical spending patterns for aviation turbine fuel by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is the primary entity responsible for procuring fuel for the U.S. military. Historical spending patterns show DLA consistently manages billions of dollars annually for various types of fuel, including aviation turbine fuel. Spending fluctuates based on global oil prices, geopolitical events, military operational tempo, and strategic inventory levels. DLA utilizes various contract types, including indefinite-delivery/indefinite-quantity (IDIQ) contracts and specific delivery orders like this one, to ensure a steady supply. Analysis of past spending reveals a trend towards securing long-term supply agreements while also maintaining flexibility for short-term, urgent needs through competitive delivery orders.

What is the significance of the 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type for this fuel purchase?

The FPEPA contract type is significant because it balances cost certainty with market responsiveness for a volatile commodity like aviation fuel. The 'fixed price' element establishes a base price, providing a predictable cost component for budgeting. However, the 'economic price adjustment' (EPA) clause allows the price to be adjusted upwards or downwards based on pre-defined economic factors, typically linked to published fuel price indices (e.g., Platts, Argus). This protects the government from excessive price increases if market rates surge unexpectedly, while also safeguarding the contractor against losses if prices fall significantly, thereby ensuring the continued availability and willingness of suppliers to provide the fuel under stable conditions.

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: $2,167,225

Exercised Options: $2,167,225

Current Obligation: $2,167,225

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0491

IDV Type: IDC

Timeline