DoD awards $462.8M for 251M+ gallons of JP8 aviation fuel via full and open competition
Contract Overview
Contract Amount: $462,802,719 ($462.8M)
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: $1.2M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 27
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: 64,108,800 USG OF TURBINE FUEL, AVIATION JP8 FOB ORIGIN PIPELINE EX TOLEDO OH. 85,550,000 USG TURBINE FUEL, AVIATION JAA FOB ORIGIN EX CITGO TERMINAL. 101,050,000 USG OF TURBINE FUEL, AVIATION JAA OUT OF VARIOUS SHIP POINTS
Place of Performance
Location: NAPERVILLE, DUPAGE County, ILLINOIS, 60563
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $462.8 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 64,108,800 USG OF TURBINE FUEL, AVIATION JP8 FOB ORIGIN PIPELINE EX TOLEDO OH. 85,550,000 USG TURBINE FUEL, AVIATION JAA FOB ORIGIN EX CITGO TERMINAL. 101,050,000 USG OF TURBINE FUEL, AVIATION JAA OUT OF VARIOUS SHIP POINTS Key points: 1. Significant volume of critical aviation fuel procured. 2. BP Products North America Inc. is the sole awardee. 3. Contract type is Fixed Price with Economic Price Adjustment. 4. Spending is concentrated in the Defense sector, specifically fuel supply.
Value Assessment
Rating: good
The total award value of $462.8M for over 251 million gallons of fuel suggests a per-gallon cost of approximately $1.84. This appears competitive given market fluctuations for aviation fuel.
Cost Per Unit: $1.84
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating multiple bidders were likely considered. This method generally promotes competitive pricing and ensures the government receives fair market value.
Taxpayer Impact: The competitive award process aims to minimize taxpayer cost for essential fuel supplies, ensuring efficient use of public funds.
Public Impact
Ensures sustained operational readiness for military aviation assets. Supports global logistics and deployment capabilities. Impacts fuel prices for commercial aviation indirectly. Contributes to energy security for national defense.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause may lead to cost overruns if fuel prices spike unexpectedly.
- Sole awardee concentration could pose future supply chain risks.
- Contract duration of 375 days might not cover long-term price volatility.
Positive Signals
- Full and open competition drives initial price discovery.
- Large volume purchase likely secured favorable terms.
- Award to a major supplier ensures reliable delivery.
Sector Analysis
This contract falls within the Petroleum Refineries sector (NAICS 324110), a critical component of the energy industry supporting national defense. The award value is substantial for a single contract in this category.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as the awardee is BP Products North America Inc., a large corporation. There is no indication of small business subcontracting in the provided data.
Oversight & Accountability
The Defense Logistics Agency (DLA) is responsible for this procurement. Oversight would involve monitoring contract performance, delivery schedules, and price adjustments to ensure compliance and value for money.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Sole awardee concentration.
- Economic price adjustment clause.
- Potential for price volatility.
- Dependence on a single supplier for critical resource.
Tags
petroleum-refineries, department-of-defense, il, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $462.8 million to BP PRODUCTS NORTH AMERICA INC.. 64,108,800 USG OF TURBINE FUEL, AVIATION JP8 FOB ORIGIN PIPELINE EX TOLEDO OH. 85,550,000 USG TURBINE FUEL, AVIATION JAA FOB ORIGIN EX CITGO TERMINAL. 101,050,000 USG OF TURBINE FUEL, AVIATION JAA OUT OF VARIOUS SHIP POINTS
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 $462.8 million.
What is the period of performance?
Start: 2012-09-20. End: 2013-09-30.
What is the historical price trend for JP8 fuel during the contract period and how did the economic price adjustment clause affect the final cost?
Analyzing historical JP8 fuel prices from September 2012 to September 2013 would reveal market volatility. The economic price adjustment clause allowed for adjustments based on a pre-defined index, potentially mitigating risks for both parties. However, without specific index data and final cost breakdowns, it's difficult to quantify the exact impact on the final $462.8M expenditure.
What were the key performance metrics evaluated during the full and open competition to ensure the best value was obtained?
During full and open competition, key performance metrics likely included price competitiveness, proposed delivery capabilities, fuel quality assurance, and adherence to contract terms. The DLA would have evaluated technical proposals and price offers to determine the most advantageous contract for the government, balancing cost with reliability and operational needs.
Are there any identified risks associated with relying on a single supplier, BP Products North America Inc., for such a large volume of critical aviation fuel?
Relying on a single supplier for over 251 million gallons of JP8 fuel presents potential risks, including supply chain disruptions due to unforeseen events (e.g., natural disasters, geopolitical issues, or the supplier's operational problems). While competition was used for award, the long-term reliance on one entity warrants monitoring for potential future price leverage or availability issues.
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: 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: $462,802,719
Exercised Options: $462,802,719
Current Obligation: $462,802,719
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060012D0503
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: 2013-09-03
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