DoD spent $178.8M on turbine fuel, with Husky Marketing and Supply Company awarded the contract

Contract Overview

Contract Amount: $178,794,000 ($178.8M)

Contractor: Husky Marketing and Supply Company

Awarding Agency: Department of Defense

Start Date: 2009-03-24

End Date: 2010-05-30

Contract Duration: 432 days

Daily Burn Rate: $413.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 26

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: TURBINE FUEL, JP8

Place of Performance

Location: LIMA, ALLEN County, OHIO, 45804

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $178.8 million to HUSKY MARKETING AND SUPPLY COMPANY for work described as: TURBINE FUEL, JP8 Key points: 1. The contract value represents a significant investment in fuel supply for defense operations. 2. Competition dynamics for this fuel contract are crucial for ensuring cost-effectiveness. 3. Potential risks include price volatility and supply chain disruptions for critical fuel. 4. Performance context is tied to the reliable delivery of JP8 turbine fuel. 5. This contract falls within the broader energy and logistics sector supporting defense. 6. The fixed-price with economic price adjustment structure aims to balance cost certainty with market fluctuations.

Value Assessment

Rating: good

The contract value of $178.8 million for turbine fuel over approximately 14 months suggests a substantial but potentially competitive procurement. Benchmarking against similar large-scale fuel contracts would be necessary for a precise value-for-money assessment. The economic price adjustment clause indicates an effort to mitigate risks associated with fuel price volatility, which is common in this market.

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 considered. This level of competition is generally favorable for achieving competitive pricing and ensuring that the government receives the best value. The presence of 26 bids suggests a robust bidding process.

Taxpayer Impact: Full and open competition typically leads to better price discovery and can result in cost savings for taxpayers by fostering a competitive environment among suppliers.

Public Impact

Military operations across various branches of the Department of Defense benefit from the reliable supply of JP8 turbine fuel. The contract ensures the availability of essential fuel for aircraft and other turbine-powered equipment. The primary geographic impact is likely within the operational theaters and bases served by the Defense Logistics Agency. Workforce implications include roles in fuel procurement, logistics, transportation, and quality assurance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause.
Dependence on a single contractor for a critical resource.
Geopolitical events impacting global fuel prices and availability.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Contract includes provisions for economic price adjustments to manage market volatility.
Defense Logistics Agency's established processes for fuel procurement.

Sector Analysis

This contract operates within the energy sector, specifically focusing on the procurement and distribution of petroleum-based fuels critical for defense operations. The market for military fuels is substantial, often characterized by long-term contracts and specialized logistics requirements. Comparable spending benchmarks would involve analyzing other large fuel supply contracts awarded by the DoD or other government agencies to similar entities.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. The primary contractor, Husky Marketing and Supply Company, is a significant player in the fuel market. Further analysis would be needed to determine if small businesses were involved in the supply chain or as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA), which is responsible for procuring and distributing fuel for the DoD. Accountability measures would include performance metrics, delivery schedules, and quality control. Transparency is generally maintained through contract award databases and reporting requirements, though specific operational details may be sensitive.

Related Government Programs

Defense Logistics Agency Fuel Procurement
JP8 Turbine Fuel Supply Contracts
Department of Defense Energy Procurement
Petroleum Product Supply Contracts

Risk Flags

Price Volatility Risk
Supply Chain Disruption Risk
Contractor Performance Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $178.8 million to HUSKY MARKETING AND SUPPLY COMPANY. TURBINE FUEL, JP8

Who is the contractor on this award?

The obligated recipient is HUSKY MARKETING AND SUPPLY COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $178.8 million.

What is the period of performance?

Start: 2009-03-24. End: 2010-05-30.

What is the historical spending pattern for JP8 turbine fuel by the Defense Logistics Agency?

Historical spending on JP8 turbine fuel by the Defense Logistics Agency (DLA) has been substantial and consistent, reflecting its critical role in supporting military aviation and other turbine-powered assets. DLA manages a complex global supply chain to ensure fuel availability. Annual expenditures can fluctuate based on operational tempo, global market prices, and the specific mix of fuel types procured. For instance, in fiscal years with higher operational demands or significant price spikes in crude oil, DLA's spending on fuels like JP8 would naturally increase. Analyzing multi-year spending data reveals trends in volume, average price per gallon, and the number of contracts awarded, providing context for the $178.8 million awarded to Husky Marketing and Supply Company in 2009-2010.

How does the pricing of this contract compare to market rates for JP8 turbine fuel during the contract period?

Assessing the pricing of this $178.8 million contract against market rates requires access to historical JP8 fuel price indices and data from comparable government or commercial fuel procurements during the 2009-2010 period. The contract's 'fixed price with economic price adjustment' (FPEPA) clause is designed to allow for price changes based on a specified index, typically tied to fluctuations in crude oil or refined product prices. To benchmark value, one would compare the adjusted prices paid under this contract against prevailing market prices for similar volumes and delivery terms. If the adjusted prices consistently tracked or remained below market benchmarks, it would indicate good value. Conversely, if the adjustments led to prices significantly above market rates, it might suggest less favorable terms or market conditions.

What are the key performance indicators (KPIs) used to evaluate Husky Marketing and Supply Company's performance on this contract?

Key performance indicators (KPIs) for a contract of this nature, involving the supply of critical turbine fuel like JP8, would likely focus on reliability, timeliness, and quality. Specific KPIs could include on-time delivery rates to designated locations, adherence to fuel quality specifications (e.g., meeting ASTM standards for JP8), accuracy of invoicing and documentation, and responsiveness to DLA's logistical requirements. Performance would also be assessed based on the contractor's ability to manage the supply chain effectively and mitigate disruptions. DLA would monitor these KPIs throughout the contract duration, potentially using a contractor performance assessment reporting system (CPARS) to document adherence and identify any areas needing improvement or corrective action.

What is the track record of Husky Marketing and Supply Company in fulfilling large government fuel contracts?

Husky Marketing and Supply Company has a history of engaging in large-scale fuel supply contracts, including those with government entities. Their track record would be evaluated based on past performance on similar contracts, assessing factors such as on-time delivery, quality compliance, contract management, and responsiveness. Government agencies typically maintain performance records for contractors, which are used in source selection for future procurements. A review of DLA's past performance databases or CPARS reports for Husky Marketing and Supply Company would provide specific insights into their reliability and effectiveness in fulfilling complex fuel logistics requirements for the government.

What are the potential risks associated with relying on a single contractor for such a large volume of critical fuel?

Relying on a single contractor, even one selected through full and open competition, for a large volume of critical fuel like JP8 introduces several potential risks. These include supply chain disruptions due to unforeseen events (e.g., natural disasters, geopolitical instability, transportation issues), the contractor's financial stability, or potential quality control failures. If the primary contractor faces issues, the government may have limited immediate alternatives, potentially impacting military readiness. The economic price adjustment clause, while intended to manage price volatility, also carries a risk of escalating costs if market prices rise sharply. Mitigation strategies often involve robust contract monitoring, contingency planning, and maintaining relationships with alternative suppliers where feasible.

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: SP060009R0061

Offers Received: 26

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

Evaluated Preference: NONE

Contractor Details

Address: 1209 ORANGE ST, WILMINGTON, DE, 00

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $178,794,000

Exercised Options: $178,794,000

Current Obligation: $178,794,000

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060009D0464

IDV Type: IDC

Timeline