DLA awards $8.15M for aviation turbine fuel, highlighting fixed-price contracts with economic adjustments

Contract Overview

Contract Amount: $8,150,000 ($8.2M)

Contractor: South National for Logistics LLC

Awarding Agency: Department of Defense

Start Date: 2026-01-04

End Date: 2026-03-01

Contract Duration: 56 days

Daily Burn Rate: $145.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8511840510!TURBINE FUEL,AVIATION

Plain-Language Summary

Department of Defense obligated $8.2 million to SOUTH NATIONAL FOR LOGISTICS LLC for work described as: 8511840510!TURBINE FUEL,AVIATION Key points: 1. Contract utilizes fixed-price with economic price adjustment to mitigate fuel price volatility. 2. Competition was full and open, suggesting a competitive market for aviation fuel. 3. Contract duration is short (56 days), indicating a need for immediate supply. 4. Awarded by Defense Logistics Agency, a key entity for military supply chain management. 5. Focus on aviation turbine fuel points to critical defense operational needs. 6. No small business set-aside, suggesting the primary contractor is likely a larger entity.

Value Assessment

Rating: good

The contract value of $8.15 million for a 56-day delivery period for aviation turbine fuel appears reasonable given market fluctuations. Fixed-price contracts with economic price adjustments are standard for commodities like fuel, aiming to balance cost control for the government with risk mitigation for the contractor against price volatility. Benchmarking against similar fuel procurements by the Defense Logistics Agency would provide a more precise value assessment, but the structure suggests an attempt to secure supply at a competitive, albeit adjustable, price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. This approach typically fosters a competitive environment, driving down prices and encouraging innovation. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust bidding process was available, which is generally favorable for price discovery and achieving best value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by promoting a competitive marketplace that can lead to more favorable pricing and a wider selection of qualified suppliers, ensuring efficient use of public funds.

Public Impact

Aviation turbine fuel directly supports Department of Defense aviation operations, ensuring readiness and mission capability. Beneficiaries include military personnel and units relying on air transport and combat capabilities. Geographic impact is likely focused on locations where DoD aviation assets are stationed or operating. Workforce implications are minimal for this specific contract, as it procures a commodity rather than services requiring extensive labor.

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 contract duration may necessitate frequent re-competition, leading to administrative overhead.
Reliance on a single supplier for this delivery order, though competition was open for the award.

Positive Signals

Use of full and open competition promotes market efficiency and potentially better pricing.
Fixed-price with economic adjustment is a recognized method for managing commodity price risk.
Awarded by a specialized agency (DLA) experienced in logistics and fuel procurement.

Sector Analysis

The procurement falls within the Petroleum Refineries sector (NAICS 324110), specifically focusing on aviation turbine fuel. This is a critical component of the energy sector supporting transportation and defense. The market for aviation fuel is influenced by global oil prices, refining capacity, and geopolitical factors. Comparable spending benchmarks would involve analyzing other DLA or military fuel contracts, as well as commercial airline fuel purchasing agreements, to gauge price competitiveness.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary awardee is likely a large business capable of meeting the fuel supply demands. The absence of small business participation in this specific award does not preclude their involvement in other DLA contracts or supply chains.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a component of the Department of Defense, DLA operates under established procurement regulations and oversight mechanisms. Transparency is generally maintained through contract award databases. The Inspector General of the Department of Defense would have jurisdiction over any investigations into fraud, waste, or abuse related to this contract.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Department of Defense Aviation Operations Support
Petroleum Product Supply Contracts
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Economic Price Adjustment Clause Risk
Short Contract Duration
Commodity Price Volatility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.2 million to SOUTH NATIONAL FOR LOGISTICS LLC. 8511840510!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 $8.2 million.

What is the period of performance?

Start: 2026-01-04. End: 2026-03-01.

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

The Defense Logistics Agency (DLA) is a primary procurer of fuel for the U.S. military, including aviation turbine fuel. Historical spending data reveals significant and consistent investment in this category to support global operations. For instance, DLA's energy directorate manages billions of dollars in fuel contracts annually. Analyzing past awards for similar fuel types and quantities would show trends in pricing, supplier concentration, and the prevalence of different contract types (e.g., fixed-price vs. cost-plus, with or without economic price adjustments). This specific $8.15 million award for a short duration fits within the broader pattern of DLA's continuous need for aviation fuel, often procured through competitive bidding processes to ensure supply chain resilience and cost-effectiveness.

How does the fixed-price with economic price adjustment (FPEPA) clause impact the government's cost compared to a firm fixed-price contract?

A Fixed-Price with Economic Price Adjustment (FPEPA) contract offers a middle ground between a Firm Fixed-Price (FFP) contract and other more flexible pricing structures. With FFP, the price is set and does not change, regardless of market fluctuations. This shifts all price risk to the contractor. In an FPEPA contract, the price is fixed but includes a mechanism to adjust for fluctuations in specific costs, such as the price of crude oil or refined fuel products, often tied to an index. For the government, this means the initial price might be higher than a comparable FFP contract to account for potential upward adjustments. However, it mitigates the risk of contractors including large contingency premiums in their FFP bids to cover potential price spikes. It also prevents situations where a contractor might default or seek costly contract modifications if unforeseen market volatility makes the FFP price unsustainable. For this $8.15 million aviation turbine fuel contract, the FPEPA clause allows DLA to secure supply while sharing the risk of significant fuel price increases with the contractor, potentially leading to a more stable and reliable supply chain than a rigid FFP contract might offer in a volatile market.

What are the potential risks associated with a short contract duration (56 days) for fuel supply?

A short contract duration, such as the 56 days for this $8.15 million aviation turbine fuel award, presents several potential risks. Firstly, it necessitates frequent re-competition, which can increase administrative costs and workload for the contracting agency (Defense Logistics Agency in this case). Each re-procurement cycle involves market research, solicitation, evaluation, and award, consuming valuable resources. Secondly, short durations may discourage suppliers from making significant investments in infrastructure or specialized logistics tailored to the contract, potentially limiting the pool of highly capable bidders in the long run. Contractors might also be less inclined to offer their best pricing if they perceive the contract as temporary, potentially opting for higher unit prices to cover the overhead associated with short-term engagements. Finally, there's an increased risk of supply disruption if a follow-on contract is delayed or if the incumbent contractor is unable or unwilling to extend services, creating a gap in critical fuel availability for military aviation operations.

What does the absence of small business participation indicate about this specific contract?

The absence of small business (SB) participation, indicated by `ss: false` and `sb: false`, on this particular $8.15 million aviation turbine fuel contract suggests that the award was not specifically targeted towards small businesses through set-aside provisions. This is common for large-volume, commodity-based procurements where economies of scale often favor larger, established suppliers with extensive logistical capabilities and capital reserves. The primary contractor, SOUTH NATIONAL FOR LOGISTICS LLC, is likely a larger entity. While this specific award doesn't directly benefit small businesses, it doesn't preclude their involvement in the broader defense fuel supply chain, potentially as subcontractors to larger prime contractors or through other DLA contracts that may have SB set-asides. The focus here is on securing a critical fuel supply efficiently, and the contracting strategy prioritized full and open competition.

How does the 'Petroleum Refineries' NAICS code (324110) relate to the procurement of aviation turbine fuel?

The North American Industry Classification System (NAICS) code 324110, 'Petroleum Refineries,' is directly relevant to the procurement of aviation turbine fuel. This code encompasses establishments primarily engaged in refining crude petroleum into a wide array of products, including gasoline, kerosene, and distillate fuel oils. Aviation turbine fuel (often Jet A or JP-8) is a specialized type of kerosene-based fuel produced during the refining process. Therefore, companies classified under NAICS 324110 are the primary manufacturers and suppliers of this critical commodity. The Defense Logistics Agency (DLA), when procuring aviation turbine fuel, is essentially sourcing a refined petroleum product. While the contract might be awarded to a logistics company like SOUTH NATIONAL FOR LOGISTICS LLC, that company likely sources the fuel from refineries operating under this classification, either directly or through established distribution networks.

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: $8,150,000

Exercised Options: $8,150,000

Current Obligation: $8,150,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60525D9504

IDV Type: IDC

Timeline