Department of Defense awards $6.7M for aviation turbine fuel, highlighting ongoing logistics needs

Contract Overview

Contract Amount: $6,769,252 ($6.8M)

Contractor: South National for Logistics LLC

Awarding Agency: Department of Defense

Start Date: 2025-12-01

End Date: 2026-01-05

Contract Duration: 35 days

Daily Burn Rate: $193.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 8511783760!TURBINE FUEL,AVIATION

Plain-Language Summary

Department of Defense obligated $6.8 million to SOUTH NATIONAL FOR LOGISTICS LLC for work described as: 8511783760!TURBINE FUEL,AVIATION Key points: 1. Contract value represents a significant investment in maintaining operational readiness for aviation assets. 2. Competition dynamics suggest a robust market for aviation fuel supply, potentially driving favorable pricing. 3. Fixed-price contract with economic price adjustment introduces some risk related to fuel market volatility. 4. Performance period of over one year indicates a sustained demand for these critical supplies. 5. Positioned within the broader energy and defense logistics sector, this contract supports essential military functions.

Value Assessment

Rating: good

The awarded amount of $6.7 million for aviation turbine fuel appears reasonable given the duration and nature of the requirement. Benchmarking against similar contracts for bulk fuel procurement by the Defense Logistics Agency (DLA) would provide a more precise value-for-money assessment. However, the fixed-price structure with economic price adjustment suggests an attempt to balance cost certainty with market fluctuations. The absence of specific performance metrics in the provided data makes a detailed assessment of efficiency challenging, but the contract's existence points to a recognized need.

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 were likely solicited. This approach is generally expected to foster competitive pricing and ensure the government receives the best value. The specific number of bidders is not provided, but the 'full and open' designation suggests a healthy level of market interest and participation. This competitive environment is crucial for price discovery and for ensuring that taxpayer funds are used efficiently.

Taxpayer Impact: Full and open competition typically leads to more competitive pricing, which directly benefits taxpayers by reducing the overall cost of acquired goods and services. It also ensures that a wide range of suppliers have the opportunity to compete, potentially leading to innovation and better service delivery.

Public Impact

Aviation units within the Department of Defense are the primary beneficiaries, ensuring they have the fuel necessary for flight operations. The contract delivers essential aviation turbine fuel, a critical component for maintaining military readiness and operational capability. Geographic impact is likely widespread, supporting air bases and operations across the areas served by the Defense Logistics Agency. Workforce implications are indirect, primarily supporting the logistics and supply chain personnel involved in fuel management and distribution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility due to the economic price adjustment clause, which could increase costs if fuel prices rise significantly.
Dependence on a single supplier for a critical commodity, although competition was open, the current award is to one entity.
Logistical challenges in ensuring timely and efficient delivery across potentially diverse operational locations.

Positive Signals

Awarded through full and open competition, suggesting a competitive market and potential for good value.
Fixed-price element provides some cost control, mitigating extreme price fluctuations.
Contract duration of over one year indicates a stable and predictable supply chain for a critical resource.

Sector Analysis

The procurement of aviation turbine fuel falls within the broader energy and defense logistics sectors. The market for aviation fuels is substantial, driven by both commercial and military demand. This contract represents a portion of the Department of Defense's significant spending on energy, which is a critical enabler of its global operations. Comparable spending benchmarks would involve analyzing DLA's historical fuel purchases and industry-wide fuel commodity prices.

Small Business Impact

The provided data does not indicate any specific small business set-asides or subcontracting requirements for this contract. As it was awarded under full and open competition, it is possible that small businesses could have participated as prime contractors or subcontractors. Further analysis would be needed to determine the extent of small business involvement and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the Defense Logistics Agency (DLA), which is responsible for managing and administering defense-wide logistics. Accountability measures are embedded in the contract terms, including delivery schedules and fuel quality specifications. Transparency is facilitated through contract award databases, though detailed performance monitoring data may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Aviation Fuel Supply Contracts
Department of Defense Energy Spending
Petroleum Refineries Sector Spending

Risk Flags

Short contract duration (35 days) may indicate a critical, immediate need or data anomaly.
Economic Price Adjustment clause introduces potential for cost overruns in volatile fuel markets.
Dependence on a single awardee for a critical supply, despite open competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.8 million to SOUTH NATIONAL FOR LOGISTICS LLC. 8511783760!TURBINE FUEL,AVIATION

Who is the contractor on this award?

The obligated recipient is SOUTH NATIONAL FOR LOGISTICS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $6.8 million.

What is the period of performance?

Start: 2025-12-01. End: 2026-01-05.

What is the historical spending pattern for aviation turbine fuel by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is the primary agency responsible for procuring fuel for the Department of Defense. Historical spending on aviation turbine fuel has been substantial, often running into billions of dollars annually, reflecting the extensive operational needs of the U.S. military's aviation assets. DLA manages a complex global supply chain to ensure fuel availability. Analyzing DLA's past contract awards for similar fuel types, such as JP-8 or JP-5, would reveal trends in volume, pricing, and supplier concentration. For instance, fluctuations in global oil prices, geopolitical events, and changes in military operational tempo can significantly impact DLA's annual fuel expenditures. Understanding these patterns is crucial for budgeting and forecasting future requirements.

How does the pricing of this contract compare to market rates for aviation turbine fuel?

Assessing the precise pricing competitiveness of this $6.7 million contract requires access to detailed market data for aviation turbine fuel (likely a specific grade like JP-8 or JP-5) during the contract period. The contract includes an 'economic price adjustment' clause, meaning the final price will fluctuate based on an index or formula tied to market prices. To benchmark, one would compare the base fixed price and the adjustment mechanism against prevailing spot market prices, futures contracts, and prices paid by other large consumers (e.g., commercial airlines) in the relevant geographic regions. The 'full and open competition' award suggests that the initial pricing was deemed competitive, but the economic adjustment introduces variability. Without specific benchmark data, it's difficult to definitively state if it's above or below market, but the competitive award process is a positive indicator.

What are the potential risks associated with the 'Fixed Price with Economic Price Adjustment' contract type for aviation fuel?

The 'Fixed Price with Economic Price Adjustment' (FPEPA) contract type for aviation fuel presents a dual risk profile. For the government, the primary risk is cost escalation. While the fixed-price component offers some predictability, the economic price adjustment allows the contractor to pass on increases in fuel commodity prices, potentially leading to higher-than-anticipated expenditures. This is particularly relevant in volatile energy markets. Conversely, if fuel prices decrease significantly, the government might not fully benefit from the price reduction depending on the specific adjustment formula. For the contractor, the risk lies in potential price decreases that might erode profit margins if the adjustment formula doesn't fully capture market declines or if their internal costs are higher than anticipated. Effective oversight requires monitoring the economic indicators used for adjustment.

What is the track record of SOUTH NATIONAL FOR LOGISTICS LLC in supplying aviation turbine fuel to the government?

Information regarding the specific track record of SOUTH NATIONAL FOR LOGISTICS LLC in supplying aviation turbine fuel to the government is not detailed in the provided data snippet. To assess their track record, one would need to examine their past performance on similar government contracts, including delivery timeliness, fuel quality compliance, and overall customer satisfaction ratings. Databases like the Federal Procurement Data System (FPDS) or CPARS (Contractor Performance Assessment Reporting System) would be essential resources. A history of successful, on-time deliveries and adherence to specifications would indicate reliability, while past issues could signal potential performance risks for this new award. Without this specific data, the assessment remains incomplete.

How does the duration of this contract (35 days) impact its overall value and risk?

The provided data indicates a duration of 35 days ('dur': 35), which seems exceptionally short for a contract valued at $6.7 million for aviation turbine fuel. This duration might represent a specific delivery order period within a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, or it could be an error in the data. If it is indeed a 35-day period, it implies a very high intensity of fuel delivery required within that short timeframe, potentially increasing logistical risks and the urgency of supply. The value-per-day would be extremely high, suggesting a critical, immediate need. If this is a standalone contract, the short duration makes it difficult to achieve economies of scale in procurement and distribution, potentially leading to a higher per-unit cost compared to longer-term contracts. Clarification on the contract structure and the meaning of 'dur' is essential for a proper risk and value assessment.

What is the significance of the NAICS code 324110 (Petroleum Refineries) in relation to this contract?

The North American Industry Classification System (NAICS) code 324110, 'Petroleum Refineries,' is relevant because aviation turbine fuel is a refined petroleum product. While the contract is for the *supply* of fuel, the NAICS code indicates that the primary business activity of the contractor or the nature of the product procured is directly linked to the refining process. This suggests that the fuel supplied likely originates from or is closely associated with refinery operations. It helps categorize the economic activity and understand the supply chain. However, the actual supplier might be a distributor or reseller rather than the refinery itself. The code helps government agencies classify spending and understand the industrial sector involved in fulfilling the contract.

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: ELLIA ABU MADI ST SHEMESANI, AMMAN

Business Categories: Category Business, Foreign Owned, Limited Liability Corporation, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations

Financial Breakdown

Contract Ceiling: $6,769,252

Exercised Options: $6,769,252

Current Obligation: $6,769,252

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60525D9504

IDV Type: IDC

Timeline