DOE awards $24.9M for crude oil distribution and terminaling services to Sunoco Partners
Contract Overview
Contract Amount: $24,886,278 ($24.9M)
Contractor: Sunoco Partners Marketing & Terminals L.P.
Awarding Agency: Department of Energy
Start Date: 2018-10-01
End Date: 2026-09-30
Contract Duration: 2,921 days
Daily Burn Rate: $8.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: SPR WEST HACKBERRY AND BIG HILL CRUDE OIL/CRUDE PETROLEUM DISTRIBUTION&TERMINALLING SERVICES
Place of Performance
Location: NEDERLAND, JEFFERSON County, TEXAS, 77627
State: Texas Government Spending
Plain-Language Summary
Department of Energy obligated $24.9 million to SUNOCO PARTNERS MARKETING & TERMINALS L.P. for work described as: SPR WEST HACKBERRY AND BIG HILL CRUDE OIL/CRUDE PETROLEUM DISTRIBUTION&TERMINALLING SERVICES Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value for money. 2. Long contract duration of nearly 8 years suggests a need for stable, ongoing services. 3. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces risk of cost escalation. 4. Services are critical for energy infrastructure, indicating a high degree of necessity. 5. Geographic concentration in Texas for distribution and terminaling. 6. No small business set-aside, indicating potential missed opportunities for smaller firms.
Value Assessment
Rating: fair
The contract value of $24.9 million over nearly 8 years averages approximately $3.2 million annually. Without comparable sole-source contracts for similar services in the same region, a precise value-for-money assessment is challenging. The FPEPA clause introduces uncertainty in the final cost. However, the critical nature of crude oil distribution suggests a baseline necessity that may justify the expenditure, provided the pricing reflects fair market value for the services rendered.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services. The lack of competition means there was no opportunity for price negotiation through a bidding process, which could potentially lead to higher costs for the government compared to a competitively awarded contract.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price.
Public Impact
The Department of Energy benefits from reliable crude oil distribution and terminaling services. Ensures the continued operation and supply chain management of critical energy resources. Services are geographically focused in Texas, supporting regional energy infrastructure. Potential indirect workforce implications for personnel involved in oil transportation and terminal operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
- Economic price adjustment clause introduces risk of cost increases over the contract term.
- Long contract duration may reduce flexibility to adapt to changing market conditions or technology.
Positive Signals
- Contract addresses a critical need for energy infrastructure support.
- Fixed-price component provides some cost certainty, despite the economic adjustment.
- Established contractor likely possesses the necessary expertise for complex terminaling services.
Sector Analysis
The energy sector, particularly crude oil distribution and terminaling, is a vital component of national infrastructure. This contract falls within the broader energy logistics and services market. The market for specialized crude oil terminaling services can be concentrated due to the significant capital investment and regulatory hurdles required. Benchmarking this contract's value is difficult without specific data on comparable terminaling service contracts, but the annual value suggests a significant operational scale.
Small Business Impact
This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are limited. The large scale and specialized nature of crude oil terminaling services often favor larger, established companies with significant infrastructure and capital.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting and program management offices. As a sole-source award, scrutiny may focus on the justification for non-competition and the reasonableness of the pricing. Transparency regarding the specific services rendered and the application of the economic price adjustment clause would be key areas for oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Petroleum Product Pipeline Transportation
- Crude Petroleum Distribution
- Marine Cargo Handling Services
- Energy Infrastructure Support Services
Risk Flags
- Sole-source award
- Economic Price Adjustment clause
- Long contract duration
Tags
energy, department-of-energy, crude-oil, distribution, terminaling, sole-source, fixed-price-economic-price-adjustment, definitive-contract, texas, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $24.9 million to SUNOCO PARTNERS MARKETING & TERMINALS L.P.. SPR WEST HACKBERRY AND BIG HILL CRUDE OIL/CRUDE PETROLEUM DISTRIBUTION&TERMINALLING SERVICES
Who is the contractor on this award?
The obligated recipient is SUNOCO PARTNERS MARKETING & TERMINALS L.P..
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $24.9 million.
What is the period of performance?
Start: 2018-10-01. End: 2026-09-30.
What is the justification for awarding this contract on a sole-source basis?
The provided data indicates the contract was awarded as 'NOT COMPETED,' which signifies a sole-source or limited competition award. The specific justification for this sole-source determination is not detailed in the provided data. Typically, sole-source awards are justified when only one responsible source is available or capable of providing the required services, or in cases of urgent and compelling need where competition is not feasible. For a contract of this nature (crude oil distribution and terminaling services), potential justifications could include unique infrastructure ownership, specialized technical expertise, or existing government-owned facilities that only one contractor can operate. A thorough review of the contract file and justification documentation would be necessary to understand the precise reasons.
How does the Fixed Price with Economic Price Adjustment (FPEPA) clause impact the total cost to the government?
The FPEPA clause allows for adjustments to the contract price based on fluctuations in specific economic factors, such as the cost of fuel, labor, or materials. For this contract, it means the initial fixed price is not the final price. As the costs incurred by Sunoco Partners Marketing & Terminals L.P. for providing crude oil distribution and terminaling services change due to market conditions, the contract price can be adjusted upwards or downwards. This introduces uncertainty for the government regarding the total expenditure over the contract's nearly 8-year duration. While it can protect the contractor from unforeseen cost increases, it also shifts some of the price risk to the government, potentially leading to higher overall costs than a firm fixed-price contract if market conditions trend unfavorably.
What are the risks associated with the long duration of this contract (nearly 8 years)?
A contract duration of nearly 8 years (2921 days) for crude oil distribution and terminaling services presents several risks. Firstly, it reduces the government's flexibility to adapt to changing market dynamics, technological advancements, or evolving energy policies. If new, more efficient, or cost-effective methods of distribution or terminaling emerge, the government is locked into the current contract. Secondly, long-term contracts can sometimes lead to complacency from the contractor, potentially impacting service quality or innovation over time. Lastly, the longer the contract, the greater the potential exposure to economic fluctuations, especially with the FPEPA clause, increasing the risk of cost overruns if market conditions become volatile.
Are there any comparable contracts that can be used to benchmark the value of this award?
The provided data does not include information on comparable contracts, making a direct benchmarking of this award's value difficult. The contract is for crude oil distribution and terminaling services, awarded on a sole-source basis to Sunoco Partners Marketing & Terminals L.P. in Texas. To benchmark effectively, one would need to identify other contracts for similar services (e.g., bulk fuel terminaling, crude oil logistics) awarded to different entities, preferably through a competitive process, within the same geographic region or with similar contract terms (e.g., FPEPA). Without such comparative data, assessing whether the $24.9 million award represents good value for money is challenging and relies heavily on the contractor's demonstrated performance and the justification for the sole-source award.
What is the historical spending pattern for crude oil distribution and terminaling services by the Department of Energy?
The provided data snippet focuses on a single contract award and does not offer historical spending patterns for crude oil distribution and terminaling services by the Department of Energy (DOE). To analyze historical spending, one would need access to broader contract databases or DOE's procurement records covering multiple fiscal years. This analysis would involve identifying all contracts related to crude oil distribution, terminaling, and related logistics services, summing their values annually, and observing trends. Such a review could reveal whether spending on these services has increased, decreased, or remained stable, and whether this specific contract represents a significant deviation from past expenditures or is part of a consistent procurement strategy.
Industry Classification
NAICS: Transportation and Warehousing › Support Activities for Water Transportation › Marine Cargo Handling
Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: DE-SOL-0011618
Offers Received: 1
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Aloha Petroleum LLC
Address: 3807 WEST CHESTER PIKE, NEWTOWN SQUARE, PA, 19073
Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $31,513,818
Exercised Options: $27,701,262
Current Obligation: $24,886,278
Actual Outlays: $16,197,214
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-10-01
Current End Date: 2026-09-30
Potential End Date: 2028-09-30 00:00:00
Last Modified: 2025-12-05
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