DoD spent $22M on jet fuel, with AAR Aircraft Services securing the contract

Contract Overview

Contract Amount: $21,979,167 ($22.0M)

Contractor: AAR Aircraft Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-04-01

End Date: 2011-04-30

Contract Duration: 1,490 days

Daily Burn Rate: $14.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 148

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: JET A W AND W/O FSII

Place of Performance

Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73159

State: Oklahoma Government Spending

Plain-Language Summary

Department of Defense obligated $22.0 million to AAR AIRCRAFT SERVICES, INC. for work described as: JET A W AND W/O FSII Key points: 1. Contract value represents a significant investment in aviation fuel supply. 2. Competition dynamics suggest a potentially competitive bidding environment for fuel services. 3. Risk indicators appear low, with contract performance noted as 'OK'. 4. This contract falls within the broader category of petroleum product wholesale. 5. The duration of the contract indicates a long-term need for these services.

Value Assessment

Rating: good

The total contract value of approximately $22 million for jet fuel over its duration suggests a substantial procurement. Benchmarking this against similar fuel supply contracts would require detailed market analysis of fuel prices and delivery logistics during the contract period (2007-2011). Without specific per-unit cost data or comparable contract values, a precise value-for-money assessment is challenging, but the 'OK' performance rating indicates satisfactory delivery.

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 were likely solicited. The presence of 148 bids suggests a highly competitive process, which typically drives down prices and ensures a wider selection of qualified vendors. This level of competition is generally favorable for the government in securing favorable terms.

Taxpayer Impact: A robust competition level means taxpayers likely benefited from competitive pricing, as vendors vied to offer the best value to secure the contract.

Public Impact

The Department of Defense benefits from a reliable supply of jet fuel for its operations. Aviation services and fuel are delivered to support military readiness and logistical needs. The geographic impact is likely concentrated around military airfields where the fuel is utilized. The contract supports the petroleum products wholesale sector, indirectly impacting jobs in logistics and fuel handling.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price volatility in fuel markets impacting economic price adjustments.
Dependence on a single contractor for a critical resource like jet fuel.

Positive Signals

Contract performance rated as 'OK' suggests adherence to terms.
Full and open competition indicates a healthy market and potential for good pricing.
Long contract duration (1490 days) suggests stability in supply chain management.

Sector Analysis

This contract falls within the broader energy and defense logistics sectors, specifically focusing on the wholesale distribution of petroleum products. The market for aviation fuel is substantial, driven by commercial and military aviation needs. Comparable spending benchmarks would involve analyzing other large-scale fuel procurements by government agencies or major airlines, considering fluctuations in global oil prices and supply chain costs during the contract period.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears minimal, though large prime contractors may engage small businesses indirectly in their supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for monitoring performance, costs, and compliance. The 'OK' status suggests that initial oversight mechanisms were effective in ensuring satisfactory performance. Transparency is generally maintained through contract award databases, though specific performance details may be less public.

Related Government Programs

Defense Fuel Supply Center Contracts
Aviation Fuel Procurement
Petroleum Products Wholesale
Logistics and Transportation Services

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Quality Control Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.0 million to AAR AIRCRAFT SERVICES, INC.. JET A W AND W/O FSII

Who is the contractor on this award?

The obligated recipient is AAR AIRCRAFT SERVICES, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $22.0 million.

What is the period of performance?

Start: 2007-04-01. End: 2011-04-30.

What was the specific breakdown of "JET A W AND W/O FSII" costs over the contract period?

The provided data aggregates the total contract value to $21,979,166.61 without detailing the cost breakdown between "JET A W" (with Fuel System Icing Inhibitor) and "JET A W/O FSII" (without). To understand the cost implications, further analysis would be needed to determine the proportion of each fuel type procured and their respective market prices during the contract's term (April 1, 2007, to April 30, 2011). This period saw significant fluctuations in global oil prices, making a detailed breakdown crucial for assessing value for money and the effectiveness of the economic price adjustment clause.

How did AAR Aircraft Services' pricing compare to other bidders in this full and open competition?

With 148 bids received for this contract, a detailed comparison of AAR Aircraft Services' pricing against its competitors would offer significant insight into its competitiveness. While the contract was awarded, the specific pricing structures and margins of the other bidders are not publicly available in this summary. Analyzing the bid range and AAR's position within that range would help determine if the government secured the most cost-effective solution. The 'OK' performance rating suggests the price was acceptable for the service rendered, but without comparative bid data, it's difficult to definitively state if it was the lowest possible price.

What were the primary risks associated with this jet fuel supply contract, and how were they mitigated?

Key risks for a jet fuel supply contract include price volatility of crude oil and refined products, supply chain disruptions (e.g., transportation issues, refinery outages), and quality control of the fuel. The contract's 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FP-EPA) clause is a primary mechanism to mitigate price volatility risk, allowing for adjustments based on established indices. The 'OK' status for performance and supply ('st': 'OK', 'sn': 'OKLAHOMA') suggests that supply chain and quality risks were managed effectively throughout the contract duration. Mitigation strategies likely involved robust vendor vetting, clear quality assurance protocols, and potentially pre-established contingency plans for supply disruptions.

What was the historical spending trend for similar jet fuel procurements by the Department of Defense prior to this contract?

Understanding historical spending trends for similar jet fuel procurements by the DoD prior to April 2007 is essential for contextualizing the $22 million expenditure. This contract's value should be compared against previous contract awards for JET A fuel, considering factors like volume, duration, and prevailing market prices at the time. Analyzing trends would reveal whether spending was increasing, decreasing, or stable, and whether this particular contract represented a significant deviation. Such analysis helps identify potential efficiencies gained or cost increases over time, informing future procurement strategies and budget allocations.

How did the economic price adjustment (EPA) clause impact the final cost to the government?

The Economic Price Adjustment (EPA) clause in this fixed-price contract allowed for modifications to the contract price based on fluctuations in specified economic factors, likely related to the cost of crude oil and refining. Over the contract period (2007-2011), global oil prices experienced significant volatility. The EPA clause would have adjusted the price paid by the DoD based on these market changes, potentially increasing costs during price surges and decreasing them during downturns. Without access to the specific EPA formula and the market indices used, it's impossible to quantify the exact impact, but it aimed to balance risk between the contractor and the government, ensuring a fair price reflecting market conditions.

Industry Classification

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

Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060006R0215

Offers Received: 148

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Aarcorp (UEI: 005425814)

Address: 6611 S MERIDIAN AVE UNIT 59100, OKLAHOMA CITY, OK, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $21,979,167

Exercised Options: $21,979,167

Current Obligation: $21,979,167

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060007D0007

IDV Type: IDC

Timeline