DoD awards Husky $78.3M for aviation turbine fuel, highlighting fixed-price with economic adjustment

Contract Overview

Contract Amount: $78,334,047 ($78.3M)

Contractor: Husky Marketing and Supply Company

Awarding Agency: Department of Defense

Start Date: 2011-05-19

End Date: 2012-03-01

Contract Duration: 287 days

Daily Burn Rate: $272.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 25

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: IEG SUPPLMENTAL (SP060010R00610001) AWARDED CONTRACT SP0600-11-D-0498 TO HUSKY FOR THE PURCHASE OF TURBINE FUEL, AVIATION (JP8).

Place of Performance

Location: WILMINGTON, NEW CASTLE County, DELAWARE, 19801

State: Delaware Government Spending

Plain-Language Summary

Department of Defense obligated $78.3 million to HUSKY MARKETING AND SUPPLY COMPANY for work described as: IEG SUPPLMENTAL (SP060010R00610001) AWARDED CONTRACT SP0600-11-D-0498 TO HUSKY FOR THE PURCHASE OF TURBINE FUEL, AVIATION (JP8). Key points: 1. The contract for JP8 aviation fuel was awarded to Husky Marketing and Supply Company. 2. This represents a significant expenditure within the Defense Logistics Agency's fuel procurement. 3. The fixed-price with economic adjustment structure aims to manage fluctuating fuel costs. 4. Competition was full and open, suggesting a competitive bidding process for this fuel purchase.

Value Assessment

Rating: good

The contract value of $78.3M for aviation fuel is substantial. Benchmarking against similar fuel procurements would be necessary for a precise value assessment, but the full and open competition suggests a reasonable price was likely achieved.

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 method generally promotes price discovery and competitive pricing.

Taxpayer Impact: Taxpayers benefit from competitive bidding processes that aim to secure goods and services at the best possible prices.

Public Impact

Ensures a critical fuel supply for military aviation operations. Supports the operational readiness of Department of Defense aircraft. Impacts the broader aviation fuel market due to the large volume purchased.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic price adjustment clauses can lead to cost overruns if not carefully monitored.
Reliance on a single supplier for a critical commodity carries inherent supply chain risk.

Positive Signals

Full and open competition suggests a robust procurement process.
Award to an established supplier like Husky indicates a degree of reliability.

Sector Analysis

This contract falls under the Petroleum Refineries sector, specifically for aviation turbine fuel (JP8). Defense Logistics Agency spending in this area is crucial for maintaining military operational capabilities and is subject to global commodity price fluctuations.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. The primary contractor, Husky Marketing and Supply Company, is a large entity, suggesting limited direct opportunities for small businesses in this specific prime contract.

Oversight & Accountability

The contract was awarded by the Defense Logistics Agency, a component of the Department of Defense, which has established oversight mechanisms for procurement. The fixed-price with economic adjustment structure requires ongoing monitoring to ensure fair pricing.

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 fuel type.
Fluctuations in global oil prices could impact contract costs.
Need for robust quality assurance to ensure fuel integrity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.3 million to HUSKY MARKETING AND SUPPLY COMPANY. IEG SUPPLMENTAL (SP060010R00610001) AWARDED CONTRACT SP0600-11-D-0498 TO HUSKY FOR THE PURCHASE OF TURBINE FUEL, AVIATION (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 $78.3 million.

What is the period of performance?

Start: 2011-05-19. End: 2012-03-01.

What is the historical price trend for JP8 fuel during the contract period, and how did the economic price adjustment impact the final cost compared to a fixed price?

Analyzing historical JP8 fuel prices during the contract's duration (May 2011 - March 2012) is crucial. The economic price adjustment (EPA) clause allows for price changes based on market indices. Understanding the specific EPA formula used and comparing the final awarded price against what a purely fixed-price contract might have yielded would reveal the true cost-effectiveness and the extent to which the government was protected from or exposed to price volatility.

How does the per-unit cost of this JP8 fuel purchase compare to other similar DoD fuel contracts awarded around the same period?

Benchmarking the per-unit cost against other Department of Defense contracts for JP8 fuel awarded in 2011-2012 is essential for assessing value. Factors like delivery location, volume, and specific contract terms (like the EPA) influence pricing. A detailed comparison would highlight whether Husky's pricing was competitive and if the full and open competition effectively drove down costs relative to industry standards for military-grade fuel.

What mechanisms are in place to ensure the quality and timely delivery of the aviation turbine fuel to meet operational demands?

The contract likely includes specific quality assurance provisions and delivery schedules managed by the Defense Logistics Agency. Mechanisms would typically involve inspection and acceptance testing of the fuel, adherence to strict delivery timelines at designated locations, and performance metrics for the contractor. Ensuring these quality and delivery standards are met is paramount for maintaining aviation safety and operational readiness.

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: SP060010R0061

Offers Received: 25

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: $78,334,047

Exercised Options: $78,334,047

Current Obligation: $78,334,047

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0498

IDV Type: IDC

Timeline