DOD's $47M Gasoline Contract with OKINAWA IDEMITSU K.K. Awarded via Full and Open Competition

Contract Overview

Contract Amount: $47,032,837 ($47.0M)

Contractor: Okinawa Idemitsu K.K.

Awarding Agency: Department of Defense

Start Date: 2024-03-25

End Date: 2024-05-31

Contract Duration: 67 days

Daily Burn Rate: $702.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8510528655!GASOLINE, AUTOMOTIVE

Plain-Language Summary

Department of Defense obligated $47.0 million to OKINAWA IDEMITSU K.K. for work described as: 8510528655!GASOLINE, AUTOMOTIVE Key points: 1. Significant spending on automotive gasoline for defense operations. 2. Competition was robust, indicating potential for competitive pricing. 3. Fixed Price with Economic Price Adjustment contract type introduces some cost volatility. 4. The sector is critical for military readiness and logistics.

Value Assessment

Rating: good

The contract value of $47M for a 2-month period is substantial. Benchmarking against similar fuel contracts would be necessary to fully assess pricing, but the full and open competition suggests a reasonable price discovery process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded using full and open competition, which typically leads to competitive pricing and ensures the government receives the best value. The use of a delivery order under a larger contract structure is standard.

Taxpayer Impact: Taxpayer funds are being used for essential fuel supplies for military operations. Competitive bidding helps ensure these funds are used efficiently.

Public Impact

Ensures fuel availability for Department of Defense vehicles and equipment. Supports military readiness and operational capabilities in the Okinawa region. Impacts the regional fuel market and suppliers.

Waste & Efficiency Indicators

Waste Risk Score: 70 / 10

Warning Flags

Economic price adjustment clause can lead to cost overruns if fuel prices spike unexpectedly.

Positive Signals

Full and open competition utilized.
Contract awarded to a known entity in the region.
Essential service for defense operations.

Sector Analysis

This contract falls within the energy sector, specifically fuel procurement for government operations. Defense spending on fuel is a significant component of the overall energy market, often influenced by geopolitical factors and global supply chains.

Small Business Impact

The data does not indicate any specific involvement or benefit to small businesses in this particular contract award. The primary contractor, OKINAWA IDEMITSU K.K., is a large entity.

Oversight & Accountability

The contract is managed by the Defense Logistics Agency, a key component of the DOD responsible for supply chain management. Oversight would focus on delivery, quality, and adherence to contract terms, especially the economic price adjustment.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to economic price adjustment.
Dependence on a single supplier for a critical commodity.
Geopolitical risks affecting fuel supply chains.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to OKINAWA IDEMITSU K.K.. 8510528655!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 $47.0 million.

What is the period of performance?

Start: 2024-03-25. End: 2024-05-31.

What is the historical price trend for automotive gasoline in the Okinawa region over the contract period?

Analyzing historical price trends for automotive gasoline in Okinawa is crucial for understanding the potential impact of the economic price adjustment clause. Significant price volatility could lead to higher-than-anticipated costs for the Department of Defense, impacting budget predictability. Conversely, stable or declining prices would benefit the government.

What are the specific risks associated with relying on a single supplier for a critical commodity like gasoline in a potentially remote or strategic location?

Relying on a single supplier, even with competitive initial bidding, carries risks such as supply chain disruptions due to unforeseen events (natural disasters, geopolitical issues), potential for price gouging if competition weakens over time, and limited flexibility in sourcing alternatives. Ensuring robust contingency plans and monitoring supplier performance are key mitigation strategies.

How effectively does the 'Fixed Price with Economic Price Adjustment' clause protect the government from excessive cost increases while ensuring supplier viability?

This contract type aims to balance cost certainty for the government with the need for suppliers to manage fluctuating input costs. The effectiveness hinges on the specific indexation formula used for price adjustments. If the formula accurately reflects market changes without excessive upward bias, it can be effective. However, poorly defined or overly generous adjustment mechanisms can lead to significant cost overruns for the government.

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: 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: $47,032,837

Exercised Options: $47,032,837

Current Obligation: $47,032,837

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60521D1004

IDV Type: IDC

Timeline