DoD's $42.3M Jet Fuel Contract Awarded to BP Products North America Inc. Amidst Full and Open Competition

Contract Overview

Contract Amount: $42,321,697 ($42.3M)

Contractor: BP Products North America Inc.

Awarding Agency: Department of Defense

Start Date: 2011-04-14

End Date: 2011-07-29

Contract Duration: 106 days

Daily Burn Rate: $399.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: UNUASUAL&COMPELLING SOLICITATION SP0600-10-R-0061-0003, JAA AVIATION JET FUEL

Place of Performance

Location: BAYTOWN, HARRIS County, TEXAS, 77520

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $42.3 million to BP PRODUCTS NORTH AMERICA INC. for work described as: UNUASUAL&COMPELLING SOLICITATION SP0600-10-R-0061-0003, JAA AVIATION JET FUEL Key points: 1. The contract represents a significant expenditure for jet fuel procurement by the Defense Logistics Agency. 2. BP Products North America Inc. secured this award through a competitive process. 3. The contract type, Fixed Price with Economic Price Adjustment, suggests potential for price fluctuations based on market conditions. 4. The duration of the contract was relatively short, indicating a specific, time-bound need for fuel. 5. The geographic location of performance was Texas, a key hub for energy and logistics. 6. The award value of over $42 million underscores the substantial demand for aviation fuel within the defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without more granular data on fuel prices during the contract period and comparable contract volumes. The fixed-price with economic adjustment structure introduces variability. However, the award amount of over $42 million for a roughly three-month period suggests a substantial volume of fuel was procured, and the price per unit would need to be assessed against market rates at that specific time to determine true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be open, certain sources were excluded, potentially limiting the pool of bidders. The number of bids received (2) is on the lower side for a contract of this value, which could suggest that the exclusion of sources or other factors narrowed the competitive landscape.

Taxpayer Impact: A limited number of bidders, even in an 'open' competition, can sometimes lead to less aggressive pricing for taxpayers. However, the specific reasons for source exclusion would need further investigation to fully understand the impact on price discovery.

Public Impact

Military aviation operations are supported through the provision of essential jet fuel. The contract directly benefits the Department of Defense's logistical capabilities. The geographic impact is primarily within Texas, where the fuel was delivered. The contract supports the broader defense industrial base, including fuel suppliers and distributors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (2 bidders) could indicate potential for higher prices than a more robustly competed contract.
The 'Economic Price Adjustment' clause introduces uncertainty regarding the final cost to the government.
Exclusion of sources, if not well-justified, could limit competitive options and potentially increase costs.

Positive Signals

Awarded through a form of open competition, suggesting an effort to solicit offers.
The contract was awarded to a major energy company, likely ensuring reliable supply.
The fixed-price component provides some cost certainty, albeit with adjustments.

Sector Analysis

The petroleum refining and distribution sector is critical for supplying fuel to various industries, including the military. This contract falls within the broader energy sector, specifically focusing on the distribution and sale of refined petroleum products. The North American Industry Classification System (NAICS) code 324110 (Petroleum Refineries) is associated with the production of refined products, though the contract likely pertains more to the distribution and sale aspect. Comparable spending benchmarks for jet fuel procurement by the DoD would be necessary for a more precise sector analysis.

Small Business Impact

The contract details indicate that small business participation was not a primary focus, as the 'small business' flag is false. There is no explicit mention of small business set-asides or subcontracting requirements in the provided data. Therefore, the direct impact on the small business ecosystem for this specific contract appears minimal, with the award going to a large corporation.

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 ensuring compliance with contract terms and financial accountability. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Fuel Supply Center Contracts
Aviation Fuel Procurement
Department of Defense Energy Contracts
Fixed Price with Economic Price Adjustment Contracts

Risk Flags

Limited Competition
Economic Price Adjustment Clause
Exclusion of Sources

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.3 million to BP PRODUCTS NORTH AMERICA INC.. UNUASUAL&COMPELLING SOLICITATION SP0600-10-R-0061-0003, JAA AVIATION JET FUEL

Who is the contractor on this award?

The obligated recipient is BP PRODUCTS NORTH AMERICA INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $42.3 million.

What is the period of performance?

Start: 2011-04-14. End: 2011-07-29.

What was the specific justification for excluding certain sources in this 'Full and Open Competition After Exclusion of Sources' award?

The provided data does not specify the exact reasons for excluding certain sources under solicitation SP0600-10-R-0061-0003. Typically, such exclusions might be based on factors like prior performance issues, inability to meet technical requirements, or specific national security considerations. Without the detailed solicitation documents or award justification, it's impossible to ascertain the precise rationale. However, the fact that it was designated as 'Full and Open Competition After Exclusion of Sources' implies that the contracting activity believed the remaining pool of potential offerors was sufficient to ensure adequate competition while still adhering to the exclusion criteria.

How did the economic price adjustment clause impact the final cost of the jet fuel compared to a fixed-price contract?

The 'Economic Price Adjustment' (EPA) clause in this contract allowed for modifications to the price based on fluctuations in specified economic factors, likely related to the cost of crude oil or refined jet fuel market indices. If market prices for jet fuel increased significantly during the contract period (April 14, 2011, to July 29, 2011), the EPA clause would have resulted in a higher final cost to the government than a purely fixed-price contract. Conversely, if prices decreased, the government might have benefited. Without access to the specific EPA formula and the market indices used, and the final price paid, it's impossible to quantify the exact impact. However, EPA clauses are generally used to mitigate risks for contractors in volatile markets, potentially leading to slightly higher initial bids but ensuring supply continuity.

What was the average price per gallon of jet fuel procured under this contract?

To determine the average price per gallon, we would need to divide the total award amount ($42,321,696.74) by the total volume of jet fuel procured. The provided data does not include the quantity of fuel purchased. Therefore, calculating the price per gallon is not possible with the current information. This metric is crucial for benchmarking against market rates and assessing value for money. If the quantity were known, it could be compared to prevailing market prices for JP-8 or similar jet fuels during the contract's performance period in Texas.

What is the typical volume and duration for similar DoD jet fuel contracts?

Typical volumes and durations for DoD jet fuel contracts can vary significantly based on the specific needs of the supported units, geographic location, and strategic fuel reserve requirements. Contracts can range from short-term, high-volume emergency procurements to longer-term agreements supporting sustained operations. A contract duration of approximately 3.5 months (106 days) as seen here is relatively short, suggesting a specific operational need or a bridge contract. Volumes can range from thousands to millions of gallons. Without more context on the specific DLA or military base requirements driving this particular award, it's difficult to definitively state if this contract's volume and duration are typical, but it represents a substantial, albeit short-term, fuel supply.

What is BP Products North America Inc.'s track record with federal fuel contracts?

BP Products North America Inc. is a major player in the energy market and has a history of securing federal contracts, including those for fuel. While this specific data point highlights one award, BP has likely been involved in numerous fuel supply agreements with various government agencies over the years. Assessing their overall track record would require a comprehensive review of their past performance on similar contracts, including adherence to delivery schedules, quality standards, pricing competitiveness, and any past disputes or contract terminations. Their ability to win this DoD contract suggests they met the necessary qualifications and competitive requirements at the time of award.

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: SP060010R0061

Offers Received: 2

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

Evaluated Preference: NONE

Contractor Details

Parent Company: BP P.L.C. (UEI: 210042669)

Address: 150 W WARRENVILLE RD BLDG 200 FL 2, NAPERVILLE, IL, 11

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

Financial Breakdown

Contract Ceiling: $42,321,697

Exercised Options: $42,321,697

Current Obligation: $42,321,697

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0483

IDV Type: IDC

Timeline