DoD's $61M JP8 Turbine Fuel Contract Awarded to Hermes Consolidated LLC Under Full and Open Competition
Contract Overview
Contract Amount: $61,026,251 ($61.0M)
Contractor: Hermes Consolidated LLC
Awarding Agency: Department of Defense
Start Date: 2009-03-18
End Date: 2010-04-30
Contract Duration: 408 days
Daily Burn Rate: $149.6K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 26
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: TURBINE FUEL, JP8
Place of Performance
Location: DENVER, DENVER County, COLORADO, 80202
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $61.0 million to HERMES CONSOLIDATED LLC for work described as: TURBINE FUEL, JP8 Key points: 1. Significant spending on critical aviation fuel. 2. Competition method aimed for broad participation. 3. Potential for price volatility due to economic adjustment clause. 4. Sector focus on defense logistics and petroleum refining.
Value Assessment
Rating: good
The contract value of $61M for JP8 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,' indicating an initial restriction followed by broader competition. This method can sometimes lead to higher prices if the initial exclusion limits the competitive pool.
Taxpayer Impact: Taxpayer funds are utilized for essential defense fuel. The economic price adjustment clause introduces a risk of increased costs if market prices for petroleum rise.
Public Impact
Ensures availability of critical fuel for military operations. Supports the defense industrial base through procurement. Potential impact on aviation fuel prices for other consumers if demand is significantly influenced.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause may increase costs.
- Limited competition history due to exclusion of sources.
Positive Signals
- Full and open competition utilized.
- Ensures supply of essential defense material.
Sector Analysis
This contract falls within the Defense sector, specifically supporting aviation logistics with JP8 fuel. Spending benchmarks for petroleum products within the DoD can vary significantly based on geopolitical factors and market demand.
Small Business Impact
The data does not indicate whether small businesses were involved in this specific contract award. Further analysis would be needed to determine small business participation.
Oversight & Accountability
The contract was awarded by the Defense Logistics Agency, a key component of DoD oversight for supply chain management. The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' type suggests ongoing monitoring of market conditions.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic price adjustment clause.
- Potential for price volatility.
- Initial exclusion of sources in competition.
Tags
petroleum-refineries, department-of-defense, co, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $61.0 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 $61.0 million.
What is the period of performance?
Start: 2009-03-18. End: 2010-04-30.
What was the rationale for excluding sources initially before opening to full competition?
The rationale for excluding sources prior to opening to full competition is not explicitly stated in the provided data. This exclusion might have been due to specific technical requirements, existing relationships, or a desire to test the market with a limited set of qualified vendors before a broader solicitation. Understanding this initial exclusion is key to assessing the full competitive landscape and potential price impacts.
How has the economic price adjustment clause impacted the final cost compared to a fixed price contract?
The economic price adjustment clause allows for changes in contract price based on fluctuations in the cost of petroleum. Without historical data on the price adjustments applied to this contract, it's impossible to quantify the exact impact. However, this clause generally protects the contractor from unforeseen cost increases while potentially exposing the government to higher expenditures if fuel prices rise significantly during the contract period.
What is the typical per-unit cost for JP8 fuel procured by the DoD through similar contracts?
Determining a typical per-unit cost for JP8 fuel is challenging without access to a broader dataset of comparable DoD contracts. Factors such as contract volume, delivery location, duration, and prevailing market conditions at the time of award significantly influence pricing. The provided contract's total value and quantity (26 units, though unit type is unspecified) would need to be divided to estimate a per-unit cost, which should then be benchmarked against similar, contemporaneous procurements.
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: SP060009R0061
Offers Received: 26
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, Special Designations, Subchapter S Corporation, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $61,026,251
Exercised Options: $61,026,251
Current Obligation: $61,026,251
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060009D0472
IDV Type: IDC
Timeline
Start Date: 2009-03-18
Current End Date: 2010-04-30
Potential End Date: 2010-04-30 00:00:00
Last Modified: 2010-04-08
More Contracts from Hermes Consolidated LLC
- 18,000,000 USG of Turbine Fuel, Aviation, JAA, FOB Origin Pipeline EX NEW Castle, WY — $60.0M (Department of Defense)
- Turbine Fuel, Aviation (JP8) — $50.4M (Department of Defense)
- Turbine Fuel, Aviation, JP8, Set-Aside Quantity IS 14,040,000 USG, and the Set-Aside Dollar Value IS $26,676,000.00 — $29.1M (Department of Defense)
- Turbine Fuel, JP8 — $29.0M (Department of Defense)
- Turbine Fuel, Aviation (JP8) — $28.8M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)