DoD's $40M Gasoline Contract with Idemitsu K.K. for Refined Petroleum Products
Contract Overview
Contract Amount: $40,036,495 ($40.0M)
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: $909.9K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8509596766!GASOLINE, AUTOMOTIVE
Plain-Language Summary
Department of Defense obligated $40.0 million to OKINAWA IDEMITSU K.K. for work described as: 8509596766!GASOLINE, AUTOMOTIVE Key points: 1. Significant spending on automotive gasoline for military operations. 2. Competition was full and open, suggesting potential for competitive pricing. 3. Fixed price with economic price adjustment introduces some cost volatility. 4. Sector is critical for defense logistics and operational readiness.
Value Assessment
Rating: good
The contract value of $40M for gasoline is substantial. Benchmarking against similar large-volume fuel contracts is necessary, but the fixed price with EPA suggests a need to monitor market fluctuations closely.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Full and open competition was utilized, which is positive for price discovery. The use of fixed price with economic price adjustment allows for market fluctuations but requires careful monitoring to ensure fair pricing.
Taxpayer Impact: Taxpayer funds are used for essential fuel procurement. Competitive bidding aims to secure the best value, but economic adjustments could impact final costs.
Public Impact
Ensures fuel availability for military vehicles and equipment. Supports operational readiness of forces stationed in Okinawa. Potential impact on local fuel markets due to large contract volume.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment may lead to cost overruns if fuel prices spike.
- Dependence on a single supplier for a critical commodity.
- Geopolitical risks affecting fuel supply chains.
Positive Signals
- Full and open competition promotes market efficiency.
- Contract supports critical defense logistics.
- Fixed price component provides some cost certainty.
Sector Analysis
The defense sector relies heavily on petroleum products for mobility and operations. This contract falls within the energy and logistics sub-sectors, with spending benchmarks varying based on global oil prices and strategic needs.
Small Business Impact
This contract does not appear to involve small business participation directly, as the awardee is a large corporation. Opportunities for small businesses may exist further down the supply chain.
Oversight & Accountability
The Defense Logistics Agency is responsible for this procurement. Oversight should focus on the administration of the economic price adjustment clause and ensuring compliance with contract terms.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Price volatility due to economic price adjustment.
- Potential supply chain disruptions in the Pacific region.
- Dependence on a single supplier for a critical commodity.
- Geopolitical instability impacting fuel prices.
Tags
petroleum-refineries, department-of-defense, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $40.0 million to OKINAWA IDEMITSU K.K.. 8509596766!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 $40.0 million.
What is the period of performance?
Start: 2022-12-18. End: 2023-01-31.
What is the historical price trend for automotive gasoline in the Okinawa region during the contract period?
Analyzing historical price trends for automotive gasoline in Okinawa during the contract period (late 2022 to early 2023) is crucial. This data would help assess the fairness of the economic price adjustment and whether the government paid a reasonable price relative to market conditions. Understanding these trends informs future contract negotiations and risk assessments.
What are the specific criteria and triggers for the economic price adjustment in this contract?
The specific criteria and triggers for the economic price adjustment (EPA) are vital for understanding potential cost fluctuations. This includes identifying the benchmark indices or formulas used to calculate adjustments, the frequency of adjustments, and any caps or floors. Clarity here is essential for managing budget predictability and ensuring the government is not unduly exposed to price volatility.
How does the unit price of this gasoline contract compare to other similar government or commercial contracts for fuel in the Pacific region?
Comparing the unit price of this gasoline contract to similar government or commercial contracts in the Pacific region provides a key benchmark for value. This analysis should account for volume, delivery terms, and contract type. A favorable comparison suggests effective price negotiation and competitive sourcing, while a higher price may indicate market inefficiencies or unique logistical challenges.
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: $40,036,495
Exercised Options: $40,036,495
Current Obligation: $40,036,495
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60521D1004
IDV Type: IDC
Timeline
Start Date: 2022-12-18
Current End Date: 2023-01-31
Potential End Date: 2023-01-31 00:00:00
Last Modified: 2024-06-13
More Contracts from Okinawa Idemitsu K.K.
- 8509170425!gasoline, Automotive — $76.2M (Department of Defense)
- 8508939626!gasoline, Automotive — $73.9M (Department of Defense)
- 8508913784!gasoline, Automotive — $60.5M (Department of Defense)
- 8507772750!gasoline, Automotive — $57.6M (Department of Defense)
- 8508540843!gasoline, Automotive — $55.2M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)