DOD's $64M JP-8 Aviation Fuel Contract Awarded to PAR Hawaii Refining LLC

Contract Overview

Contract Amount: $64,118,544 ($64.1M)

Contractor: PAR Hawaii Refining LLC

Awarding Agency: Department of Defense

Start Date: 2011-09-30

End Date: 2012-06-29

Contract Duration: 273 days

Daily Burn Rate: $234.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 14

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: AVIATION FUEL, TURBINE, GRADE JP-8

Place of Performance

Location: KAPOLEI, HONOLULU County, HAWAII, 96707

State: Hawaii Government Spending

Plain-Language Summary

Department of Defense obligated $64.1 million to PAR HAWAII REFINING LLC for work described as: AVIATION FUEL, TURBINE, GRADE JP-8 Key points: 1. Significant award for turbine fuel, highlighting critical defense logistics. 2. Single awardee suggests potential market concentration or specific capability requirements. 3. Fixed Price with Economic Price Adjustment (EPA) introduces cost fluctuation risk. 4. Geographic concentration in Hawaii may limit broader competition.

Value Assessment

Rating: fair

The contract value of $64.1M for 273 days of fuel supply is substantial. Without specific per-unit pricing or volume details, direct comparison is difficult, but the EPA clause introduces uncertainty in the final cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Despite being awarded to a single entity, the contract was under full and open competition. This suggests that while PAR Hawaii Refining LLC was the chosen vendor, other qualified bidders likely participated, but PAR offered the best value.

Taxpayer Impact: The use of EPA clauses means taxpayers are exposed to market fluctuations in fuel prices, potentially increasing the final cost beyond initial projections.

Public Impact

Ensures critical fuel supply for military aviation operations in the Pacific region. Potential for price volatility impacts budget predictability for the Department of Defense. Supports a key industrial base facility in Hawaii.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause can lead to cost overruns.
Single awardee may indicate limited supplier base or specific logistical needs.
Geographic concentration of supplier could pose supply chain risks.

Positive Signals

Secures essential fuel for military readiness.
Awarded under full and open competition, suggesting competitive pricing was sought.
Supports domestic refining capacity.

Sector Analysis

This contract falls within the Petroleum Refineries sector (NAICS 324110). Spending in this sector is crucial for national security and energy independence, with prices often influenced by global commodity markets and geopolitical factors.

Small Business Impact

The data indicates this contract was not awarded to small businesses (sb: false). The nature of petroleum refining and large-scale fuel supply typically favors larger, established corporations with significant infrastructure.

Oversight & Accountability

The contract was awarded by the Defense Logistics Agency (DLA), a primary agency for procuring and supplying goods for the military. Oversight would focus on delivery, quality, and adherence to EPA terms.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Price volatility due to EPA clause.
Potential supply chain disruption if PAR Hawaii Refining faces operational issues.
Limited competition indicated by single awardee, despite 'full and open' status.
Geographic concentration of supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $64.1 million to PAR HAWAII REFINING LLC. AVIATION FUEL, TURBINE, GRADE JP-8

Who is the contractor on this award?

The obligated recipient is PAR HAWAII REFINING LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $64.1 million.

What is the period of performance?

Start: 2011-09-30. End: 2012-06-29.

What was the average per-gallon price paid under this contract, considering the EPA adjustments?

Determining the exact average per-gallon price requires access to the specific price adjustment data tied to the EPA clause. Without this granular data, it's impossible to calculate the final cost per unit. The initial award value and duration provide a baseline, but the actual expenditure could vary significantly based on market fluctuations during the contract period.

What specific factors led to PAR Hawaii Refining LLC being the sole awardee despite full and open competition?

Several factors could contribute to a single awardee under full and open competition. These might include unique logistical capabilities required for delivery to Hawaii, specific product quality certifications, the most competitive overall price proposal including risk assessment, or the ability to meet stringent delivery schedules. The DLA likely evaluated proposals based on a combination of technical, logistical, and cost factors.

How effectively did the EPA clause manage price risk for the government compared to a fixed-price contract?

The effectiveness of the EPA clause in managing price risk is debatable and depends on market conditions. While it protects the contractor from unforeseen cost increases (e.g., crude oil price spikes), it transfers that price volatility risk to the government. In a period of rapidly rising fuel prices, an EPA clause can lead to higher-than-anticipated costs for the taxpayer compared to a fixed-price contract negotiated at a lower market point.

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: SP060011R0708

Offers Received: 14

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

Evaluated Preference: NONE

Contractor Details

Parent Company: Tesoro Corporation (UEI: 008133480)

Address: 91-325 KOMOHANA STREET, KAPOLEI, HI, 90

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

Financial Breakdown

Contract Ceiling: $64,118,544

Exercised Options: $64,118,544

Current Obligation: $64,118,544

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060011D0528

IDV Type: IDC

Timeline