DoD's $5.7M Bulk Propane Contract with Amerigas Faces Scrutiny Over Potential Overpricing
Contract Overview
Contract Amount: $5,743,016 ($5.7M)
Contractor: Amerigas Propane, L.P.
Awarding Agency: Department of Defense
Start Date: 2021-07-01
End Date: 2026-06-30
Contract Duration: 1,825 days
Daily Burn Rate: $3.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: BULK PROPANE DELIVERY
Place of Performance
Location: DUGWAY, TOOELE County, UTAH, 84022
State: Utah Government Spending
Plain-Language Summary
Department of Defense obligated $5.7 million to AMERIGAS PROPANE, L.P. for work described as: BULK PROPANE DELIVERY Key points: 1. The contract awarded to Amerigas Propane, L.P. for bulk propane delivery is for $5.7 million over five years. 2. Competition was full and open, but the pricing needs further analysis against benchmarks. 3. Potential risks include price volatility for propane and ensuring consistent delivery in Utah. 4. The IT sector is not directly involved; this falls under general services/energy.
Value Assessment
Rating: questionable
The contract's firm fixed price structure for a volatile commodity like propane raises concerns about potential overpayment if market prices decrease. Benchmarking against similar contracts for bulk propane delivery in the region is crucial to assess value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which generally promotes competitive pricing. However, the firm fixed price for a commodity subject to market fluctuations may not have fully captured potential cost savings for the government.
Taxpayer Impact: Taxpayers may be exposed to higher costs if propane prices fall significantly during the contract term due to the firm fixed price.
Public Impact
Ensures a critical energy supply for Department of Defense operations in Utah. Potential for higher costs for taxpayers if propane prices decline. Amerigas Propane, L.P. is a major supplier, indicating market concentration. The contract duration of five years locks in a price structure for an extended period.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Firm Fixed Price for volatile commodity
- Long contract duration (5 years)
- Lack of specific unit cost data for analysis
Positive Signals
- Full and open competition was utilized
- Established supplier with proven delivery capability
Sector Analysis
This contract falls under the energy sector, specifically the procurement of bulk propane. Spending benchmarks for similar energy contracts vary widely based on volume, location, and market conditions. The $5.7 million over five years represents a moderate expenditure for this type of service.
Small Business Impact
There is no indication that small businesses were involved in this specific contract award. The prime contractor, Amerigas Propane, L.P., is a large corporation, suggesting limited opportunities for small business participation as subcontractors in this instance.
Oversight & Accountability
Standard contract oversight by the Department of the Army would apply. Accountability for delivery and pricing rests with the contracting officer and Amerigas Propane, L.P. Further review of performance metrics and price adjustments would be necessary.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Potential for overpayment due to firm fixed price on volatile commodity
- Lack of transparency in per-unit cost breakdown
- Long contract duration may not adapt to market changes
- Limited visibility into small business participation
Tags
petroleum-refineries, department-of-defense, ut, definitive-contract, 1m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $5.7 million to AMERIGAS PROPANE, L.P.. BULK PROPANE DELIVERY
Who is the contractor on this award?
The obligated recipient is AMERIGAS PROPANE, L.P..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $5.7 million.
What is the period of performance?
Start: 2021-07-01. End: 2026-06-30.
What is the average per-unit cost of propane under this contract compared to market rates at the time of award and throughout the contract period?
Determining the average per-unit cost requires access to detailed delivery records and market price data for propane in Utah during the contract's lifespan. Without this granular data, a precise comparison is difficult. However, the firm fixed price suggests a potential disconnect if market prices have fallen substantially since the contract's inception.
What mechanisms, if any, are in place to adjust the firm fixed price if propane market prices experience significant downward fluctuations?
The firm fixed price contract structure typically implies that the price remains constant regardless of market fluctuations, protecting the government from price increases but also preventing them from benefiting from price decreases. Unless specific clauses for price redetermination or economic price adjustments were included, there are likely no built-in mechanisms for downward price adjustments.
How does the total contract value of $5.7 million compare to the estimated annual propane needs for the specified DoD facilities in Utah?
To assess this, one would need to know the annual consumption volume of propane at the DoD facilities. The $5.7 million over five years averages to $1.14 million annually. Comparing this to the estimated annual need requires understanding the facilities' energy demands and typical propane usage patterns.
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
Solicitation ID: W911S621R0005
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: UGI Corporation
Address: 460 N GULPH RD, KING OF PRUSSIA, PA, 19406
Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $7,425,047
Exercised Options: $6,853,944
Current Obligation: $5,743,016
Actual Outlays: $183,607
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2021-07-01
Current End Date: 2026-06-30
Potential End Date: 2026-06-30 00:00:00
Last Modified: 2026-01-14
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