DoD awards $32.7M for 14M gallons of automotive gasoline via full and open competition

Contract Overview

Contract Amount: $26,846,155 ($26.8M)

Contractor: BP Products North America Inc.

Awarding Agency: Department of Defense

Start Date: 2015-10-28

End Date: 2015-11-23

Contract Duration: 26 days

Daily Burn Rate: $1.0M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: ORDER 0001 IS FOR 14,000,000 USG OF GASOLINE, AUTOMOTIVE (EN228). THE ESTIMATED VALUE OF THIS ORDER IS $32,670,960.00. PRODUCT IS FOB ORIGIN FROM GALENA PARK, TX.

Place of Performance

Location: GALENA PARK, HARRIS County, TEXAS, 77547

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $26.8 million to BP PRODUCTS NORTH AMERICA INC. for work described as: ORDER 0001 IS FOR 14,000,000 USG OF GASOLINE, AUTOMOTIVE (EN228). THE ESTIMATED VALUE OF THIS ORDER IS $32,670,960.00. PRODUCT IS FOB ORIGIN FROM GALENA PARK, TX. Key points: 1. The Department of Defense (DoD) is procuring a significant volume of automotive gasoline. 2. BP Products North America Inc. is the awardee, indicating a competitive market for fuel supply. 3. The contract type, Fixed Price with Economic Price Adjustment, introduces some price volatility risk. 4. The sector is Defense, with specific product classification related to petroleum refining.

Value Assessment

Rating: good

The estimated value of $32,670,960.00 for 14,000,000 USG of gasoline appears reasonable given market prices for automotive fuel. Benchmarking against similar large-volume fuel procurements would provide a more precise assessment.

Cost Per Unit: $2.33

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. This method typically leads to more competitive pricing compared to limited or sole-source approaches.

Taxpayer Impact: The use of full and open competition is generally favorable for taxpayers, as it encourages multiple bidders to offer their best prices, potentially lowering the overall cost to the government.

Public Impact

Ensures a critical fuel supply for military operations. Supports the energy sector and related industries. Potential for price fluctuations due to economic price adjustment clause. Geographic concentration of delivery from Texas could impact regional supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment may lead to costs exceeding initial estimates.
Dependence on a single supplier for a large volume.
Geographic concentration of origin point.

Positive Signals

Awarded through full and open competition.
Significant volume procured, potentially achieving economies of scale.
Established supplier with likely experience in government contracts.

Sector Analysis

This procurement falls within the Defense sector, specifically related to fuel supply chain management. Benchmarks for fuel contracts vary widely based on type, volume, and duration, but this appears to be a standard, large-volume acquisition for operational needs.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The awardee, BP Products North America Inc., is a large corporation, suggesting that small businesses were likely not primary participants in this specific contract, though they may be subcontractors.

Oversight & Accountability

The award was made by the Defense Logistics Agency, a key component of the DoD responsible for logistics support. Oversight would involve monitoring delivery, quality, and adherence to contract terms, including the economic price adjustment.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to economic price adjustment.
Supply chain vulnerability with a single source for a large volume.
Geographic concentration of origin point (Galena Park, TX).
FOB Origin places transportation risk on the government.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.8 million to BP PRODUCTS NORTH AMERICA INC.. ORDER 0001 IS FOR 14,000,000 USG OF GASOLINE, AUTOMOTIVE (EN228). THE ESTIMATED VALUE OF THIS ORDER IS $32,670,960.00. PRODUCT IS FOB ORIGIN FROM GALENA PARK, TX.

Who is the contractor on this award?

The obligated recipient is BP PRODUCTS NORTH AMERICA INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $26.8 million.

What is the period of performance?

Start: 2015-10-28. End: 2015-11-23.

What is the historical price trend for automotive gasoline in the region of origin (Texas) during the contract period, and how did the economic price adjustment clause impact the final cost compared t

Analyzing historical gasoline price data from sources like the EIA for the period between October 28, 2015, and November 23, 2015, would reveal market fluctuations. The economic price adjustment (EPA) clause allows for price changes based on an index, typically tied to market fuel prices. If prices rose significantly during this period, the EPA would increase the final cost above the initial estimated price. Conversely, if prices fell, the EPA would reduce it. Understanding the specific index used in the contract is crucial for a precise assessment.

What are the potential risks associated with relying on a single supplier (BP Products North America Inc.) for such a large volume of a critical commodity like gasoline, especially considering the FOB

Reliance on a single supplier for 14 million gallons of gasoline presents risks including supply chain disruptions due to unforeseen events (e.g., natural disasters affecting the refinery or transport, labor strikes, geopolitical issues). The FOB Origin clause places the responsibility for transportation and associated risks on the government once the product leaves the supplier's facility in Galena Park, TX. This could lead to unexpected logistical challenges and costs if the government manages the transportation.

How effectively does the 'Fixed Price with Economic Price Adjustment' contract type balance cost control for the government against ensuring a stable supply of gasoline during potentially volatile mar

This contract type attempts to balance cost control and supply stability by allowing prices to adjust with market conditions, mitigating the risk of supply shortages if market prices rise sharply. However, it shifts some price risk to the government, as the final cost can exceed initial estimates. For a commodity like gasoline with inherent price volatility, this structure can be effective in ensuring supply, but requires careful monitoring of the price adjustment index to prevent excessive costs.

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

Offers Received: 6

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: BP P.L.C. (UEI: 210042669)

Address: 30 S WACKER DR STE 900, CHICAGO, IL, 60606

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $26,846,155

Exercised Options: $26,846,155

Current Obligation: $26,846,155

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060015D0498

IDV Type: IDC

Timeline