DoD Awards $269M for Aviation Fuel (JP8) to Husky Marketing and Supply Company
Contract Overview
Contract Amount: $269,282,981 ($269.3M)
Contractor: Husky Marketing and Supply Company
Awarding Agency: Department of Defense
Start Date: 2012-11-19
End Date: 2014-01-30
Contract Duration: 437 days
Daily Burn Rate: $616.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 27
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: INLAND EAST GULF CONTRACT FOR TURBINE FUEL, AVIATION JP8.
Place of Performance
Location: DUBLIN, FRANKLIN County, OHIO, 43017
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $269.3 million to HUSKY MARKETING AND SUPPLY COMPANY for work described as: INLAND EAST GULF CONTRACT FOR TURBINE FUEL, AVIATION JP8. Key points: 1. Significant contract value for aviation fuel, indicating substantial demand. 2. Husky Marketing and Supply Company is the sole awardee, raising questions about competition. 3. Fixed Price with Economic Price Adjustment contract type introduces price volatility risk. 4. The sector is critical for military aviation operations.
Value Assessment
Rating: fair
The contract value of $269M over approximately 1.5 years suggests a substantial volume. Benchmarking against similar JP8 fuel contracts would be necessary to assess if the pricing is competitive, especially given the economic price adjustment clause.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Despite being awarded to a single entity, the contract was advertised as full and open competition. The price discovery mechanism relies on the economic price adjustment, which can lead to fluctuations based on market conditions.
Taxpayer Impact: Taxpayer funds are used for essential aviation fuel. The economic price adjustment clause means taxpayers bear the risk of fuel price increases.
Public Impact
Ensures the availability of critical aviation fuel for military operations. Potential for price increases due to economic adjustments impacts budget predictability. Supports the logistics and readiness of the Defense Logistics Agency. The contract duration and value suggest a significant, ongoing need for this fuel type.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment introduces cost uncertainty.
- Sole awardee may limit competitive pressure on pricing.
- Contract duration could lock in potentially unfavorable pricing.
Positive Signals
- Secures a vital resource for national defense.
- Full and open competition was advertised.
- Awardee is an established supplier.
Sector Analysis
This contract falls within the petroleum refining and distribution sector, crucial for supporting transportation and logistics. Spending benchmarks for aviation fuel vary widely based on volume, geopolitical factors, and contract terms.
Small Business Impact
The data does not indicate any specific set-asides for small businesses. The nature of large-scale fuel supply contracts often favors larger, established companies with significant logistical capabilities.
Oversight & Accountability
The Defense Logistics Agency is responsible for this procurement. Oversight would focus on contract performance, adherence to terms, and management of the economic price adjustment clause to ensure fair pricing.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Price volatility due to economic price adjustment.
- Potential for limited competition despite 'full and open' status.
- Dependence on a single supplier for a critical resource.
- Contract duration may not reflect current market conditions.
- Lack of transparency on specific EPA index and its impact.
Tags
petroleum-refineries, department-of-defense, oh, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $269.3 million to HUSKY MARKETING AND SUPPLY COMPANY. INLAND EAST GULF CONTRACT FOR 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 $269.3 million.
What is the period of performance?
Start: 2012-11-19. End: 2014-01-30.
What was the basis for the economic price adjustment, and how has it impacted the final cost compared to initial projections?
The economic price adjustment (EPA) clause typically ties fuel price changes to a specific market index or commodity price. Understanding the index used and historical fluctuations is key. If the index rose significantly during the contract period, the final cost could be substantially higher than the initial fixed price component, impacting the overall value and taxpayer burden.
How effectively did the 'full and open competition' process ensure competitive pricing, given the single awardee?
While advertised as full and open, a single awardee suggests either limited bidders or one bidder significantly outperforming others. Further analysis of the bidding process, including the number of proposals received and the evaluation criteria, is needed. If only a few bids were submitted, the competition might not have been robust enough to drive the lowest possible price.
What is the long-term strategy for aviation fuel procurement to mitigate risks associated with economic price adjustments and ensure sustained competitive pricing?
The DoD should explore strategies like longer-term fixed-price contracts (where feasible), diversifying suppliers, hedging against fuel price volatility, or investing in alternative fuel sources. Analyzing the performance and pricing trends of this contract can inform future procurement strategies to better balance cost, availability, and risk.
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
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: $269,282,981
Exercised Options: $269,282,981
Current Obligation: $269,282,981
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060013D0650
IDV Type: IDC
Timeline
Start Date: 2012-11-19
Current End Date: 2014-01-30
Potential End Date: 2014-01-30 00:00:00
Last Modified: 2014-02-03
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