Department of the Army awards $16.6M contract for liquid propane gas, with 9083 units delivered

Contract Overview

Contract Amount: $16,595,397 ($16.6M)

Contractor: SAN Luis Butane Distributors

Awarding Agency: Department of Defense

Start Date: 2020-04-30

End Date: 2025-05-01

Contract Duration: 1,827 days

Daily Burn Rate: $9.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: LIQUID PROPANE GAS

Place of Performance

Location: FORT IRWIN, SAN BERNARDINO County, CALIFORNIA, 92310

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $16.6 million to SAN LUIS BUTANE DISTRIBUTORS for work described as: LIQUID PROPANE GAS Key points: 1. Contract value appears reasonable given the duration and scope of fuel delivery. 2. Full and open competition suggests a healthy market for propane supply. 3. Fixed-price contract type mitigates cost overrun risks for the government. 4. Contract duration of 1827 days indicates a long-term need for this fuel. 5. The contract supports essential energy generation for military operations. 6. Geographic focus on California suggests regional demand for this resource.

Value Assessment

Rating: good

The contract's firm fixed-price structure provides cost certainty for the Department of the Army. While specific per-unit pricing is not detailed here, the total award of $16.6 million over approximately five years suggests a stable, predictable cost for a critical fuel. Benchmarking against similar large-scale propane supply contracts would be necessary for a definitive value assessment, but the competitive nature of the award implies market-driven pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely solicited and allowed to bid. The presence of a single award suggests that San Luis Butane Distributors offered the best value proposition to the government among the competing entities. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment among suppliers, driving down costs.

Public Impact

The Department of the Army is the primary beneficiary, securing a consistent supply of liquid propane gas. This contract ensures the availability of fuel for power generation and other operational needs. The services are geographically focused within California, supporting military installations in the state. The contract supports the energy sector workforce involved in propane production, distribution, and delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in the propane market impacting long-term costs.
Dependence on a single supplier for a critical fuel source over an extended period.

Positive Signals

Firm fixed-price contract limits the government's exposure to price fluctuations.
Full and open competition suggests a robust market and competitive pricing.
Long contract duration indicates a stable, ongoing requirement met efficiently.

Sector Analysis

The energy sector, specifically the distribution of fossil fuels like liquid propane gas, is a critical component of national infrastructure. This contract falls within the broader category of energy supply for government operations. The market for propane is influenced by global supply and demand, weather patterns, and regulatory environments. Comparable spending benchmarks would involve analyzing other large-scale government fuel contracts or regional industrial propane procurement.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the scale of liquid propane gas distribution, it is likely that larger, established energy companies or distributors were the primary bidders. Subcontracting opportunities for small businesses might exist in logistics, transportation, or related support services, but this is not explicitly detailed in the award information.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The firm fixed-price nature simplifies financial oversight compared to cost-plus contracts. Accountability is maintained through performance metrics and delivery schedules outlined in the contract. Transparency is generally provided through federal contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency (DLA) Energy contracts
Federal Energy Regulatory Commission (FERC) regulated energy markets
Department of Energy (DOE) fuel supply programs

Risk Flags

Potential for price escalation beyond fixed contract terms due to market volatility.
Dependence on a single supplier for a critical resource over an extended period.
Logistical challenges in fuel delivery within the specified geographic region.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.6 million to SAN LUIS BUTANE DISTRIBUTORS. LIQUID PROPANE GAS

Who is the contractor on this award?

The obligated recipient is SAN LUIS BUTANE DISTRIBUTORS.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $16.6 million.

What is the period of performance?

Start: 2020-04-30. End: 2025-05-01.

What is the historical spending pattern for liquid propane gas by the Department of the Army in California?

Analyzing historical spending for liquid propane gas by the Department of the Army specifically within California requires access to detailed procurement data over multiple fiscal years. While this specific contract award is for $16.6 million over approximately five years, understanding the broader trend involves looking at previous contracts for similar fuel types and quantities. Factors such as base closures, operational tempo changes, and shifts in energy sources can influence historical spending. Without access to a comprehensive historical database filtered by agency, location, and commodity, a precise historical spending pattern cannot be determined from this single award notice. However, the existence of this significant contract suggests a consistent and substantial requirement for propane in the region.

How does the per-unit cost of this contract compare to market rates for liquid propane gas in California?

Determining the exact per-unit cost requires dividing the total contract value by the number of units (9083). This calculation yields approximately $1,827 per unit. However, the definition of a 'unit' (e.g., gallon, metric ton) is crucial for accurate comparison. Assuming 'unit' refers to a standard measure like a gallon, this price would need to be benchmarked against prevailing wholesale and retail prices for propane in California during the contract period. Market rates fluctuate based on supply, demand, seasonality, and transportation costs. Given the large volume and delivery logistics involved in a federal contract, the per-unit cost might differ from standard retail prices. A comprehensive analysis would involve comparing this calculated rate against industry price indices and regional fuel market reports.

What are the key performance indicators (KPIs) for this contract, and how is performance monitored?

Key performance indicators for a liquid propane gas supply contract typically revolve around timely delivery, fuel quality, and adherence to quantity specifications. The contract likely includes clauses detailing delivery schedules, acceptable temperature and pressure ranges for the gas, and purity standards. Performance monitoring would involve the contracting officer's representative (COR) or a designated government official verifying deliveries against orders, inspecting documentation, and potentially conducting quality assurance checks. Failure to meet these KPIs could result in contract remedies, such as penalties or termination. The firm fixed-price nature incentivizes the contractor to meet these requirements efficiently to maximize profit.

What is the track record of San Luis Butane Distributors in fulfilling federal contracts, particularly for fuel supply?

Assessing the track record of San Luis Butane Distributors requires examining their past performance on federal contracts, specifically those involving fuel supply. Information on contract history, including awards, performance ratings, and any instances of disputes or terminations, can often be found in federal procurement databases like the Federal Procurement Data System (FPDS) or through agency-specific performance management systems. A positive history of on-time deliveries, quality compliance, and competitive pricing on previous contracts would indicate reliability. Conversely, a history of performance issues could raise concerns about the contractor's ability to meet the demands of this current $16.6 million award.

What are the potential risks associated with a long-term (1827 days) firm fixed-price contract for liquid propane gas?

A primary risk for the government in a long-term firm fixed-price contract is the potential for the contractor to lock in a price that becomes significantly below market value over time, leading to potential underperformance or contractor default if costs escalate unexpectedly. Conversely, the contractor bears the risk of market prices rising substantially above the fixed price, potentially impacting their profitability or ability to fulfill the contract. For this specific contract, risks include supply chain disruptions (e.g., pipeline issues, production shortfalls), transportation challenges in California, and unforeseen regulatory changes affecting propane availability or cost. The government's mitigation strategy relies on the contractor's robust risk management and the competitive nature of the initial award.

Industry Classification

NAICS: Utilities › Electric Power Generation, Transmission and Distribution › Fossil Fuel Electric Power Generation

Product/Service Code: CHEMICALS AND CHEMICAL PRODUCTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1960 RAMADA DR, PASO ROBLES, CA, 93446

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $16,595,397

Exercised Options: $16,595,397

Current Obligation: $16,595,397

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline