DoD's $29M JP8 Turbine Fuel Contract Awarded to Hermes Consolidated LLC Amidst Full and Open Competition

Contract Overview

Contract Amount: $28,983,940 ($29.0M)

Contractor: Hermes Consolidated LLC

Awarding Agency: Department of Defense

Start Date: 2008-04-02

End Date: 2009-04-30

Contract Duration: 393 days

Daily Burn Rate: $73.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 23

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: TURBINE FUEL, JP8

Place of Performance

Location: NEWCASTLE, WESTON County, WYOMING, 82701

State: Wyoming Government Spending

Plain-Language Summary

Department of Defense obligated $29.0 million to HERMES CONSOLIDATED LLC for work described as: TURBINE FUEL, JP8 Key points: 1. The contract for turbine fuel (JP8) was awarded by the Defense Logistics Agency (DLA) to Hermes Consolidated LLC. 2. A total of $28,983,940 was obligated for this contract. 3. The procurement method was 'Full and Open Competition', indicating a competitive bidding process. 4. The contract duration was 393 days, ending April 30, 2009. 5. The NAICS code 324110 points to Petroleum Refineries as the relevant industry.

Value Assessment

Rating: fair

The contract value of $28.98 million for turbine fuel appears reasonable given the duration and the nature of fuel procurement for defense purposes. Benchmarking against similar fuel contracts would provide a clearer picture of its competitiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition', suggesting multiple bidders likely participated. This method generally promotes price discovery and competitive pricing, although specific bid details are not provided.

Taxpayer Impact: The competitive nature of the award suggests taxpayers likely received a fair price for the fuel, minimizing potential overspending.

Public Impact

Ensures the availability of critical fuel for military aircraft and operations. Supports the Department of Defense's logistical capabilities. The contract's value contributes to the economic activity within the petroleum refining sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific per-unit cost data makes detailed value assessment difficult.
Contract duration is relatively short, potentially leading to frequent re-procurement cycles.
Economic price adjustment clause could introduce cost volatility.

Positive Signals

Awarded under full and open competition, indicating a competitive process.
Contract supports essential defense operations.
The contracting agency is the Defense Logistics Agency, a specialized procurement entity.

Sector Analysis

The petroleum refining sector is characterized by significant capital investment and global supply chains. Defense fuel procurement represents a stable, albeit specialized, segment of this market, often subject to stringent quality and delivery requirements.

Small Business Impact

There is no indication that small businesses were involved in this specific contract award, as it was awarded to Hermes Consolidated LLC. Further analysis would be needed to determine if small businesses participated as subcontractors.

Oversight & Accountability

The award was managed by the Defense Logistics Agency, which is responsible for providing logistical support to the U.S. Armed Forces. Standard procurement oversight processes would have been applied.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Economic Price Adjustment (EPA) clause introduces cost uncertainty.
Limited contract duration may not reflect long-term strategic needs.
Lack of detailed quantity and unit price data hinders thorough analysis.
No explicit mention of small business participation or subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.0 million to HERMES CONSOLIDATED LLC. TURBINE FUEL, 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 $29.0 million.

What is the period of performance?

Start: 2008-04-02. End: 2009-04-30.

What was the average price per gallon of JP8 fuel under this contract, and how did it compare to market rates at the time?

The provided data does not include the quantity of fuel procured, making it impossible to calculate the average price per gallon. Without this information, a direct comparison to market rates at the time of the contract (April 2008 - April 2009) cannot be made. This lack of detail hinders a precise assessment of cost-effectiveness.

What were the specific risks associated with the economic price adjustment clause in this contract?

The primary risk associated with an economic price adjustment (EPA) clause is cost volatility for the government. Fluctuations in the market price of crude oil or refining costs could lead to higher-than-anticipated expenditures for JP8 fuel. The extent of this risk depends on the specific indexation and caps defined within the EPA clause, which are not detailed here.

How effectively did the 'Full and Open Competition' process ensure competitive pricing for this turbine fuel procurement?

While 'Full and Open Competition' is designed to foster competitive pricing, its effectiveness in this specific case cannot be fully determined without knowing the number of bids received and the price spread among them. The presence of competition generally drives prices down, but the ultimate success depends on the level of actual market participation and the specific terms negotiated.

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

Solicitation ID: SP060008R0061

Offers Received: 23

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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Subchapter S Corporation

Financial Breakdown

Contract Ceiling: $28,983,940

Exercised Options: $28,983,940

Current Obligation: $28,983,940

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060008D0478

IDV Type: IDC

Timeline