Department of Defense awards $24.3M contract for JP-8 fuel, with competition details undisclosed for foreign awardees

Contract Overview

Contract Amount: $24,322,967 ($24.3M)

Contractor: Foreign Awardees (undisclosed)

Awarding Agency: Department of Defense

Start Date: 2009-06-18

End Date: 2011-06-23

Contract Duration: 735 days

Daily Burn Rate: $33.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: CONSTRUCT TWO (2) 25K BL, JP-8

Plain-Language Summary

Department of Defense obligated $24.3 million to FOREIGN AWARDEES (UNDISCLOSED) for work described as: CONSTRUCT TWO (2) 25K BL, JP-8 Key points: 1. Contract awarded via full and open competition, suggesting a broad market solicitation. 2. The definitive contract type indicates a commitment to a specific supplier for a defined period. 3. The firm fixed price structure aims to control costs and provide predictability. 4. The contract duration of 735 days suggests a significant, ongoing need for the fuel. 5. The North American Industry Classification System (NAICS) code 424710 points to wholesale distribution of petroleum products. 6. The absence of specific small business set-aside information warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: fair

The contract value of approximately $24.3 million over two years for bulk fuel delivery appears within a reasonable range for large-scale military logistics. However, without specific details on the quantity of JP-8 fuel (measured in 25,000-barrel increments), a precise per-unit cost comparison is difficult. Benchmarking against similar fuel contracts would require more granular data on fuel type, delivery locations, and market fluctuations at the time of award.

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 bids. While the number of bidders is listed as two, the specific details regarding the competition, especially concerning the 'FOREIGN AWARDEES (UNDISCLOSED)' aspect, are not fully transparent. This lack of clarity could obscure the true extent of market engagement and potentially impact price discovery if key domestic competitors were excluded or if foreign awardee information is intentionally withheld.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices. However, the undisclosed nature of foreign awardees raises questions about whether the most cost-effective bids were truly considered and secured.

Public Impact

This contract directly supports Department of Defense operations by ensuring a supply of JP-8 jet fuel. The primary beneficiaries are military units requiring aviation fuel for training and operational readiness. The geographic impact is likely concentrated around military installations where the fuel is stored and distributed. The contract supports the petroleum distribution and logistics sector, potentially involving transportation and storage workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency regarding foreign awardees could mask competitive disadvantages or preferential treatment.
The specific quantity of fuel (25K BL) is mentioned, but the total volume and unit price are not easily discernible for value assessment.
Limited information on the performance of the awardee(s) is available within the provided data.

Positive Signals

Awarded under full and open competition, suggesting a broad solicitation process.
The use of a firm fixed price contract provides cost certainty for the government.
The contract duration indicates a stable, long-term requirement being met.

Sector Analysis

This contract falls within the Energy sector, specifically focusing on the wholesale distribution and supply of petroleum products, including aviation fuel like JP-8. The market for military fuel procurement is often characterized by large, specialized suppliers capable of meeting stringent logistical and quality requirements. Comparable spending benchmarks would involve analyzing other large-volume fuel supply contracts awarded by the Department of Defense or other federal agencies to similar types of distributors.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct implications for small business set-asides. However, the prime contractor may engage small businesses for subcontracting opportunities related to transportation, storage, or ancillary services, though this information is not detailed in the summary data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver the specified fuel at the agreed-upon price. Transparency is limited by the undisclosed nature of some awardee details. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to contract performance or execution.

Related Government Programs

Defense Fuel Supply Center Contracts
Aviation Fuel Procurement
Petroleum Product Wholesale Distribution
Military Logistics and Supply Chain Management

Risk Flags

Undisclosed Foreign Awardee Information
Limited Bidder Transparency
Potential for Price Volatility Not Fully Mitigated by FFP if Market Spikes Dramatically

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.3 million to FOREIGN AWARDEES (UNDISCLOSED). CONSTRUCT TWO (2) 25K BL, JP-8

Who is the contractor on this award?

The obligated recipient is FOREIGN AWARDEES (UNDISCLOSED).

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.3 million.

What is the period of performance?

Start: 2009-06-18. End: 2011-06-23.

What is the specific unit cost of the JP-8 fuel delivered under this contract, and how does it compare to market rates at the time of award?

The provided data specifies a total contract value of $24,322,966.65 for 'TWO (2) 25K BL, JP-8'. This translates to a total of 50,000 barrels (2 x 25,000 barrels). Therefore, the average cost per barrel is approximately $486.46 ($24,322,966.65 / 50,000 barrels). Benchmarking this against market rates for JP-8 during the contract period (mid-2009 to mid-2011) would require accessing historical fuel price indices (e.g., EIA data, Platts) and considering factors like delivery location, volume discounts, and specific contract terms. Without more precise market data for that specific period and region, a definitive comparison is challenging, but this figure provides a basis for further analysis.

What does the 'FOREIGN AWARDEES (UNDISCLOSED)' notation signify, and what are the potential implications for competition and cost savings?

The 'FOREIGN AWARDEES (UNDISCLOSED)' notation indicates that one or more of the entities awarded a portion of this contract are foreign companies, but their specific identities are not publicly revealed in this data summary. This lack of transparency can have several implications. It might be due to national security concerns, proprietary business information, or specific government reporting protocols. For taxpayers, it raises questions about whether the full competitive landscape was truly leveraged. If key domestic suppliers were excluded or if foreign awardees received preferential treatment (though unlikely under 'full and open competition'), it could potentially impact the final price. Conversely, foreign competition can sometimes drive innovation and lower costs if they possess unique efficiencies or market access.

How does the firm fixed price (FFP) contract type mitigate risks for the government in fuel procurement?

A Firm Fixed Price (FFP) contract is designed to provide the government with cost certainty. Under an FFP agreement, the contractor assumes the risk of cost overruns. This means the price is set and generally not subject to adjustment, regardless of the contractor's actual costs incurred. For fuel procurement, where market prices can fluctuate, an FFP contract locks in the price at the time of award. This protects the government from unexpected price increases in the fuel market during the contract period. The primary risk shifts to the contractor, who must manage their procurement and delivery costs efficiently to maintain profitability.

What is the significance of the NAICS code 424710 (Petroleum Bulk Stations and Terminals) in the context of this contract?

The North American Industry Classification System (NAICS) code 424710 identifies the primary business activity of the contractor(s) as wholesale distribution of petroleum products, operating bulk storage facilities and terminals. In the context of this Department of Defense contract, it signifies that the awardee(s) are established entities equipped for the large-scale storage, handling, and distribution of fuels like JP-8. This code helps categorize the contract within the broader economy and indicates the type of industry expertise required, focusing on logistics, supply chain management, and potentially transportation services for bulk petroleum.

Given the contract duration of 735 days, what are the potential implications for long-term fuel supply chain stability for the Department of Defense?

A contract duration of 735 days (approximately two years) suggests a stable, predictable supply of JP-8 fuel for the Department of Defense over that period. This duration helps ensure operational readiness by mitigating the risks associated with frequent contract re-competitions and potential supply disruptions during transition phases. It allows the DoD to plan logistics and operations with a higher degree of certainty regarding fuel availability. For the contractor, it provides a significant revenue stream and encourages investment in infrastructure and inventory management to meet the sustained demand. However, it also means the government is committed to a specific supplier for an extended term, potentially limiting flexibility if market conditions or requirements change drastically.

Industry Classification

NAICS: Wholesale Trade › Petroleum and Petroleum Products Merchant Wholesalers › Petroleum Bulk Stations and Terminals

Product/Service Code: CONSTRUCT OF STRUCTURES/FACILITIES › CONSTRUCTION OF BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W912ER09R0008

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1800 F ST NW, WASHINGTON, DC, 20405

Business Categories: Category Business, Foreign Owned, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $24,322,967

Exercised Options: $24,322,967

Current Obligation: $24,322,967

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline