DoD's $50.4M Turbine Fuel Contract with Hermes Consolidated LLC: Full and Open Competition
Contract Overview
Contract Amount: $50,434,352 ($50.4M)
Contractor: Hermes Consolidated LLC
Awarding Agency: Department of Defense
Start Date: 2007-03-23
End Date: 2008-04-30
Contract Duration: 404 days
Daily Burn Rate: $124.8K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 21
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: TURBINE FUEL, AVIATION (JP8)
Place of Performance
Location: NEWCASTLE, WESTON County, WYOMING, 82701
State: Wyoming Government Spending
Plain-Language Summary
Department of Defense obligated $50.4 million to HERMES CONSOLIDATED LLC for work described as: TURBINE FUEL, AVIATION (JP8) Key points: 1. Significant spending on aviation fuel (JP8) highlights critical defense logistics needs. 2. Hermes Consolidated LLC secured the contract, indicating a competitive market for fuel supply. 3. The contract's fixed-price with economic price adjustment structure carries potential cost escalation risks. 4. Spending falls within the Defense sector, specifically supporting aviation operations.
Value Assessment
Rating: good
The contract value of $50.4M for aviation turbine fuel appears reasonable given the quantity and duration. Benchmarking against similar fuel contracts would provide a more precise assessment of value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' suggesting a competitive process that aimed to maximize price discovery. This method typically leads to better pricing outcomes.
Taxpayer Impact: The competitive award process likely ensured taxpayers received fair value for the aviation fuel procured.
Public Impact
Ensures operational readiness for military aircraft requiring JP8 fuel. Supports critical supply chain for defense aviation assets. Potential for price fluctuations due to economic price adjustment clause.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause could lead to cost overruns.
- Dependence on a single supplier for a critical fuel type.
Positive Signals
- Full and open competition ensures market-driven pricing.
- Contract awarded to a known entity in the sector.
Sector Analysis
This contract falls within the Defense sector, specifically related to the procurement of aviation fuel. Spending on such commodities is essential for maintaining military operational capabilities and readiness.
Small Business Impact
The data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further investigation would be needed to assess small business participation.
Oversight & Accountability
The contract was awarded under full and open competition, suggesting a degree of oversight in the procurement process. However, monitoring the economic price adjustment clause is crucial for accountability.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost increases due to economic price adjustment.
- Dependence on a single supplier for a critical commodity.
- Lack of transparency regarding small business participation.
- Contract duration and volume may not align with fluctuating fuel market needs.
Tags
petroleum-refineries, department-of-defense, wy, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $50.4 million to HERMES CONSOLIDATED LLC. TURBINE FUEL, AVIATION (JP8)
Who is the contractor on this award?
The obligated recipient is HERMES CONSOLIDATED LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $50.4 million.
What is the period of performance?
Start: 2007-03-23. End: 2008-04-30.
What is the typical price range for JP8 fuel procured by the DoD, and how does this contract's pricing compare?
Determining the exact price range for JP8 fuel is complex due to market volatility, location, and contract specifics. However, comparing the per-unit cost against historical DoD contracts for similar volumes and durations, adjusted for economic factors, would reveal if this contract achieved competitive pricing. The 'Full and Open Competition' suggests an effort to secure favorable rates.
What are the specific risks associated with the 'Economic Price Adjustment' clause in this contract?
The primary risk of an Economic Price Adjustment (EPA) clause is potential cost escalation for the government if fuel prices rise significantly beyond initial projections. This can lead to budget overruns and reduced purchasing power for other defense needs. The extent of the risk depends on the specific indexation and caps defined within the contract's EPA terms.
How effectively does this contract support the DoD's overall aviation readiness and operational goals?
This contract is crucial for ensuring the availability of JP8 fuel, a vital component for military aircraft operations. By securing a substantial supply, it directly supports the DoD's aviation readiness and operational goals. The competitive nature of the award suggests a commitment to efficient procurement, further bolstering the effectiveness of this spending.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060007R0061
Offers Received: 21
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: 1600 BROADWAY STE 2300, DENVER, CO, 90
Business Categories: Category Business, Small Business
Financial Breakdown
Contract Ceiling: $50,434,352
Exercised Options: $50,434,352
Current Obligation: $50,434,352
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060007D0475
IDV Type: IDC
Timeline
Start Date: 2007-03-23
Current End Date: 2008-04-30
Potential End Date: 2008-04-30 00:00:00
Last Modified: 2009-10-30
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