DoD awards $119M contract for refined petroleum products to BP Products North America Inc
Contract Overview
Contract Amount: $384,182,822 ($384.2M)
Contractor: BP Products North America Inc.
Awarding Agency: Department of Defense
Start Date: 2012-09-20
End Date: 2013-09-30
Contract Duration: 375 days
Daily Burn Rate: $1.0M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 27
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Other
Official Description: AWARD F76: 119,040,000 USG FOB ORIGIN PASADENA, TX BY PIPELINE 56,024,000 USG FOB ORIGIN KINDER MORGAN TERMINAL-GALENA PARK, TX BY TANKER
Place of Performance
Location: CHICAGO, COOK County, ILLINOIS, 60606
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $384.2 million to BP PRODUCTS NORTH AMERICA INC. for work described as: AWARD F76: 119,040,000 USG FOB ORIGIN PASADENA, TX BY PIPELINE 56,024,000 USG FOB ORIGIN KINDER MORGAN TERMINAL-GALENA PARK, TX BY TANKER Key points: 1. Contract awarded to a single, large business entity. 2. Fixed-price contract with economic price adjustment may expose taxpayers to fuel price volatility. 3. Spending falls within the Petroleum Refineries sector. 4. No small business participation noted.
Value Assessment
Rating: fair
The total award value is $119,040,000. Without specific per-unit pricing or historical data for similar refined petroleum products, a direct comparison is difficult. However, the scale suggests a significant volume purchase.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple bidders were likely considered. However, the award went to a single entity, BP Products North America Inc.
Taxpayer Impact: The use of fixed-price with economic price adjustment introduces potential for increased costs to taxpayers if fuel prices rise significantly during the contract period.
Public Impact
Ensures supply of critical refined petroleum products for Department of Defense operations. Potential for price fluctuations impacts budget predictability for fuel expenses. Supports a major energy corporation, contributing to the broader energy market.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause may increase costs.
- No small business participation.
Positive Signals
- Awarded under full and open competition.
- Ensures supply of essential fuel.
Sector Analysis
This contract falls within the Petroleum Refineries sector, specifically NAICS code 324110. Spending in this sector is crucial for national security and economic stability, with prices often influenced by global commodity markets.
Small Business Impact
The contract was not awarded to a small business, and there is no indication of subcontracting with small businesses. This represents a missed opportunity for small business participation in federal contracting.
Oversight & Accountability
The Defense Logistics Agency is responsible for this award. Oversight would focus on contract performance, delivery, and adherence to the economic price adjustment terms to manage taxpayer risk.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic price adjustment clause
- No small business participation
- Potential for price volatility
- Award to a single large entity
Tags
petroleum-refineries, department-of-defense, il, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $384.2 million to BP PRODUCTS NORTH AMERICA INC.. AWARD F76: 119,040,000 USG FOB ORIGIN PASADENA, TX BY PIPELINE 56,024,000 USG FOB ORIGIN KINDER MORGAN TERMINAL-GALENA PARK, TX BY TANKER
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 $384.2 million.
What is the period of performance?
Start: 2012-09-20. End: 2013-09-30.
What was the average per-unit cost of the refined petroleum products under this contract, and how does it compare to market rates at the time of award?
The provided data does not include the average per-unit cost. To assess value, this information would be necessary. Comparing it to prevailing market rates for refined fuels (e.g., West Texas Intermediate or Brent crude benchmarks, plus refining margins) would reveal if the government secured a competitive price, considering the economic price adjustment clause's potential impact.
What is the potential downside risk to taxpayers associated with the 'economic price adjustment' clause in this fixed-price contract?
The primary risk is that the government could end up paying significantly more than initially anticipated if the price of crude oil or other relevant commodities increases substantially during the contract period. This clause transfers some of the price volatility risk from the contractor to the government, potentially leading to budget overruns and reduced purchasing power for other essential goods and services.
How effectively did the 'full and open competition' process ensure the best value for the government, given the award to a single large entity?
While 'full and open competition' suggests a robust bidding process, the ultimate award to a single entity warrants scrutiny. It implies that either only one bidder met all requirements, or BP Products North America Inc. offered the most advantageous proposal. Further analysis would be needed to confirm if the pricing secured truly represented the best value achievable through the competitive process, especially considering the economic price adjustment.
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: SP060012R0061
Offers Received: 27
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: BP P.L.C. (UEI: 210042669)
Address: 30 S WACKER DR STE 900, CHICAGO, IL, 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: $384,182,822
Exercised Options: $384,182,822
Current Obligation: $384,182,822
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060012D0480
IDV Type: IDC
Timeline
Start Date: 2012-09-20
Current End Date: 2013-09-30
Potential End Date: 2013-09-30 00:00:00
Last Modified: 2013-09-04
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