DOE's $5M Northeast Home Heating Oil Reserve contract awarded to Buckeye Terminals for 3 years
Contract Overview
Contract Amount: $5,022,000 ($5.0M)
Contractor: Buckeye Terminals, LLC
Awarding Agency: Department of Energy
Start Date: 2024-03-29
End Date: 2027-03-31
Contract Duration: 1,097 days
Daily Burn Rate: $4.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR)STORAGE OF 300,000 ULSD IN NEW HAVEN, CT AND/OR GROTON, CT.
Place of Performance
Location: GROTON, NEW LONDON County, CONNECTICUT, 06340
Plain-Language Summary
Department of Energy obligated $5.0 million to BUCKEYE TERMINALS, LLC for work described as: THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR)STORAGE OF 300,000 ULSD IN NEW HAVEN, CT AND/OR GROTON, CT. Key points: 1. Contract aims to ensure energy security for the Northeast region. 2. Focus on strategic petroleum reserves highlights critical infrastructure protection. 3. Fixed-price contract structure provides cost certainty for the government. 4. The duration of the contract suggests a long-term commitment to regional energy stability. 5. Geographic focus on Connecticut indicates a targeted approach to reserve management.
Value Assessment
Rating: good
The contract value of $5.02 million for a 3-year period for storing 300,000 barrels of ultra-low sulfur diesel (ULSD) appears reasonable. Benchmarking against similar storage contracts is challenging without specific details on storage capacity, location, and duration. However, the firm fixed-price nature of the contract helps mitigate cost overruns for the government. The price per barrel for storage is approximately $16.74 per year, which seems competitive for strategic reserve purposes.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of four bids suggests a healthy level of interest and competition for this type of service. This competitive process is expected to drive favorable pricing and service terms for the government.
Taxpayer Impact: Full and open competition ensures that taxpayer dollars are used efficiently by fostering a market that rewards the best value, potentially leading to lower storage costs and more robust service delivery.
Public Impact
Residents and businesses in the Northeast region, particularly Connecticut, benefit from enhanced energy security and reduced risk of heating oil shortages. The contract supports the critical service of maintaining a strategic reserve of heating oil. The geographic impact is concentrated in New Haven and/or Groton, Connecticut, where the storage facilities are located. The contract supports jobs within the logistics and warehousing sector at Buckeye Terminals.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price increases in future contract renewals if market conditions change.
- Dependence on a single contractor for a critical energy reserve could pose a risk if the contractor faces operational issues.
Positive Signals
- Awarded through full and open competition, suggesting competitive pricing.
- Firm fixed-price contract provides cost certainty.
- Strategic importance of the reserve for regional energy security.
- Contract duration of three years allows for stable planning and operations.
Sector Analysis
The energy storage and warehousing sector is critical for maintaining the stability of energy markets. This contract falls within the broader energy infrastructure and logistics industry, which is essential for national security and economic stability. Comparable spending benchmarks for strategic petroleum reserves vary widely based on the commodity, volume, and duration of storage. The market for specialized fuel storage is often characterized by high barriers to entry due to infrastructure requirements and regulatory compliance.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'ss': false. There is no explicit mention of subcontracting goals for small businesses. The primary contractor, Buckeye Terminals, LLC, is a significant player in the energy logistics sector, and its focus is likely on its own operational capabilities rather than extensive subcontracting to small businesses for this specific reserve function.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of Energy's relevant program offices responsible for energy security and infrastructure. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to meet specific storage and delivery obligations. Transparency is generally maintained through contract award databases and public reporting, although specific operational details of the reserve may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Northeast Home Heating Oil Reserve
- Strategic Petroleum Reserve
- Energy Infrastructure Security
- Fuel Storage and Logistics
Risk Flags
- Single point of failure risk
- Contractor operational reliability
- Future price escalation potential
Tags
energy-storage, department-of-energy, connecticut, definitive-contract, large-contract, full-and-open-competition, firm-fixed-price, warehousing, petroleum-reserve, northeast-region
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $5.0 million to BUCKEYE TERMINALS, LLC. THE NORTHEAST HOME HEATING OIL RESERVE (NEHHOR)STORAGE OF 300,000 ULSD IN NEW HAVEN, CT AND/OR GROTON, CT.
Who is the contractor on this award?
The obligated recipient is BUCKEYE TERMINALS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $5.0 million.
What is the period of performance?
Start: 2024-03-29. End: 2027-03-31.
What is the historical spending pattern for the Northeast Home Heating Oil Reserve?
Information on the historical spending for the Northeast Home Heating Oil Reserve (NEHHOR) specifically is not readily available in public databases. However, the Department of Energy (DOE) manages various energy security initiatives, including the Strategic Petroleum Reserve (SPR). The SPR's budget fluctuates based on market conditions, storage needs, and government directives. For instance, in fiscal year 2023, the SPR received significant funding for drawdown and sales, as well as for maintenance and modernization. The current contract for NEHHOR, valued at $5.02 million over three years, represents a specific allocation for maintaining a regional reserve, distinct from the larger SPR operations. Future spending on NEHHOR would depend on continued congressional appropriations and the DOE's strategic assessment of regional energy risks.
How does the cost of storing heating oil under this contract compare to market rates for similar services?
The contract value of $5.02 million over three years for storing 300,000 barrels of ULSD equates to approximately $5.58 per barrel per year, or about $0.015 per barrel per day. Benchmarking this against market rates for bulk fuel storage is complex, as prices vary significantly based on location, facility type, duration, volume, and specific services included (e.g., heating, blending, throughput). However, industry reports suggest that commercial storage rates for refined products can range from $0.05 to $0.20 per barrel per month, depending on these factors. Given this, the government's rate appears to be on the lower end, especially considering the strategic nature and potential regulatory requirements associated with a government reserve. The firm fixed-price nature also provides cost certainty, which is a significant benefit.
What are the key performance indicators (KPIs) for Buckeye Terminals under this contract?
While the specific Key Performance Indicators (KPIs) are not detailed in the publicly available award notice, typical KPIs for fuel storage contracts of this nature would likely include: 1. Maintaining the specified volume (300,000 barrels) and quality (ULSD) of fuel in storage throughout the contract period. 2. Ensuring timely availability of the stored fuel in the event of a drawdown or emergency release, adhering to specified response times. 3. Maintaining the integrity and safety of the storage facilities, meeting all environmental and safety regulations. 4. Accurate inventory management and reporting. 5. Compliance with all contractual terms and conditions, including operational readiness and emergency preparedness plans. Failure to meet these KPIs could result in contract remedies or termination.
What is the track record of Buckeye Terminals, LLC in managing government contracts, particularly for energy reserves?
Buckeye Terminals, LLC is a significant operator of energy storage and transportation infrastructure in North America. While specific details on their past government contracts, especially for energy reserves, are not extensively publicized, the company has a substantial history in the commercial sector managing large volumes of petroleum products. Their experience includes operating terminals that handle various refined products, crude oil, and biofuels. The award of this Department of Energy contract suggests they possess the necessary capabilities, infrastructure, and compliance record to manage government requirements. Government agencies typically conduct thorough due diligence on potential contractors, assessing their financial stability, operational capacity, safety record, and past performance before awarding significant contracts.
What are the potential risks associated with relying on a single contractor for this critical energy reserve?
Relying on a single contractor, Buckeye Terminals, LLC, for the Northeast Home Heating Oil Reserve presents several potential risks. Firstly, operational disruptions at the contractor's facilities due to unforeseen events (e.g., natural disasters, equipment failure, labor disputes, cyberattacks) could compromise the availability of the reserve. Secondly, if the contractor faces financial difficulties, it could impact their ability to maintain the required standards or even lead to contract termination, necessitating a rapid re-procurement process. Thirdly, there's a risk of vendor lock-in, where the government might have limited leverage in future contract negotiations if alternative storage providers are scarce or less competitive. Finally, any lapse in the contractor's compliance with safety or environmental regulations could lead to significant liabilities and operational interruptions.
Industry Classification
NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage
Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: 89243524RCR000014
Offers Received: 4
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Buckeye Terminals LLC
Address: 4200 WESTHEIMER RD, HOUSTON, TX, 77027
Business Categories: Category Business, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations
Financial Breakdown
Contract Ceiling: $6,804,000
Exercised Options: $5,022,000
Current Obligation: $5,022,000
Actual Outlays: $3,015,000
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Timeline
Start Date: 2024-03-29
Current End Date: 2027-03-31
Potential End Date: 2028-03-01 00:00:00
Last Modified: 2026-03-27
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