DOD's $37.1M Gasoline Contract Awarded to OKINAWA IDEMITSU K.K. Amidst Full and Open Competition

Contract Overview

Contract Amount: $37,100,594 ($37.1M)

Contractor: Okinawa Idemitsu K.K.

Awarding Agency: Department of Defense

Start Date: 2022-12-18

End Date: 2023-01-31

Contract Duration: 44 days

Daily Burn Rate: $843.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: 8509596770!GASOLINE, AUTOMOTIVE

Plain-Language Summary

Department of Defense obligated $37.1 million to OKINAWA IDEMITSU K.K. for work described as: 8509596770!GASOLINE, AUTOMOTIVE Key points: 1. The contract value is $37.1 million for automotive gasoline. 2. Competition was full and open, suggesting a competitive bidding process. 3. The contract is for a short duration of 44 days. 4. The award was made by the Defense Logistics Agency. 5. The North American Industry Classification System (NAICS) code is 324110 (Petroleum Refineries).

Value Assessment

Rating: good

The contract value of $37.1 million for automotive gasoline appears reasonable given the market for petroleum products. Benchmarking against similar contracts would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This method generally promotes competitive pricing and ensures the government receives fair market value.

Taxpayer Impact: The competitive nature of the award suggests that taxpayer funds are being used efficiently, as the price was likely driven down by market forces.

Public Impact

Ensures fuel availability for Department of Defense operations. Supports military readiness and logistical capabilities. Impacts the regional fuel market in Okinawa. Potential for price fluctuations due to economic price adjustment clause.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clause could lead to cost overruns.
Short contract duration may limit long-term price stability.
Dependence on a single supplier for a critical commodity.

Positive Signals

Awarded through full and open competition.
Supports essential defense logistics.
Clear contract award with defined delivery period.

Sector Analysis

The petroleum refining sector is critical for national security and economic stability. Spending in this sector is subject to global commodity prices and geopolitical factors. This contract falls within the typical range for fuel procurement for military operations.

Small Business Impact

The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis would be needed to determine small business participation.

Oversight & Accountability

The Defense Logistics Agency is responsible for overseeing this contract. Standard oversight procedures for delivery orders under full and open competition would apply, focusing on timely delivery and adherence to contract terms.

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 contract duration limits long-term price predictability.
Dependence on a single supplier for a critical commodity.
Lack of information on small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.1 million to OKINAWA IDEMITSU K.K.. 8509596770!GASOLINE, AUTOMOTIVE

Who is the contractor on this award?

The obligated recipient is OKINAWA IDEMITSU K.K..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.1 million.

What is the period of performance?

Start: 2022-12-18. End: 2023-01-31.

What is the specific impact of the economic price adjustment clause on the final cost?

The economic price adjustment clause allows for modifications to the contract price based on fluctuations in specific economic indicators, such as the price of crude oil or refining costs. Without knowing the exact index and adjustment formula used, it's difficult to quantify the precise impact. However, it introduces a risk of increased costs for the government if market prices rise significantly during the contract period.

How does the short contract duration affect the government's ability to secure favorable pricing?

A short contract duration, like the 44 days for this gasoline supply, typically limits the government's ability to negotiate long-term price stability. While it allows for flexibility to re-compete or adjust to changing market conditions quickly, it may not capture the benefits of longer-term fixed-price agreements. The fixed-price with economic price adjustment structure attempts to balance this by allowing for some market-driven adjustments.

What are the potential risks associated with relying on a single supplier for automotive gasoline in Okinawa?

Relying on a single supplier, even one selected through full and open competition, carries inherent risks. These include potential supply chain disruptions due to unforeseen events (e.g., natural disasters, geopolitical issues), supplier performance issues, or a lack of leverage if market conditions shift unfavorably. The short duration and competitive award mitigate some of this risk by allowing for quicker reassessment of suppliers.

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: Idemitsu Kosan CO.,Ltd.

Address: 843-2, WAUKE, NAKAGUSUKUSON, NAKAGAMI-GUN

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

Financial Breakdown

Contract Ceiling: $37,100,594

Exercised Options: $37,100,594

Current Obligation: $37,100,594

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60521D1004

IDV Type: IDC

Timeline