DoD's $71.9M Fuel Contract Awarded to Brad Hall & Associates Faces Scrutiny Over Pricing and Competition

Contract Overview

Contract Amount: $71,862,779 ($71.9M)

Contractor: Brad Hall & Associates, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-08-01

End Date: 2017-08-31

Contract Duration: 1,491 days

Daily Burn Rate: $48.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 47

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: COG 3 DELIVERIES FOR RED-DYED ULSD #2, RFG REG UNLEADED&GASOHOL REG, UNLEADED FUEL.

Place of Performance

Location: IDAHO FALLS, BONNEVILLE County, IDAHO, 83401

State: Idaho Government Spending

Plain-Language Summary

Department of Defense obligated $71.9 million to BRAD HALL & ASSOCIATES, INC. for work described as: COG 3 DELIVERIES FOR RED-DYED ULSD #2, RFG REG UNLEADED&GASOHOL REG, UNLEADED FUEL. Key points: 1. The contract, valued at $71.9 million, covers various fuel types for the Department of Defense. 2. Awarded under full and open competition, the contract's pricing mechanism (Fixed Price with Economic Price Adjustment) warrants closer examination. 3. Potential risks include price volatility due to economic adjustments and the concentration of fuel supply. 4. The petroleum refineries sector is critical for military operations, making reliable sourcing paramount.

Value Assessment

Rating: questionable

The fixed price with economic price adjustment (FPEPA) contract type can lead to cost overruns if fuel prices increase significantly. Benchmarking against similar fuel contracts is crucial to assess if the economic price adjustment clause is overly generous or adequately protects taxpayer interests.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded through full and open competition, suggesting a competitive bidding process. However, the effectiveness of this competition in driving down costs is questionable given the FPEPA pricing structure, which can shield contractors from market fluctuations.

Taxpayer Impact: The use of FPEPA pricing introduces uncertainty in final costs, potentially leading to higher taxpayer expenditure than a fixed-price contract if market prices rise.

Public Impact

Ensures fuel availability for military operations, a critical national security function. Potential for increased costs to taxpayers due to economic price adjustments on fuel. Supports the petroleum refining industry, a key component of the energy sector. The contract's duration (over 4 years) means sustained exposure to fuel market volatility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Economic Price Adjustment (EPA) clause can inflate costs.
Long contract duration increases exposure to market volatility.
Lack of specific unit cost data makes direct comparison difficult.
Potential for price gouging if EPA is not closely monitored.

Positive Signals

Awarded under Full and Open Competition.
Ensures critical fuel supply for the Department of Defense.
Contract supports a vital industry sector.

Sector Analysis

This contract falls within the Petroleum Refineries sector (NAICS 324110), which is essential for supplying fuels to government agencies, particularly the Department of Defense. Spending benchmarks in this sector are highly dependent on global oil prices and geopolitical factors.

Small Business Impact

There is no indication that small businesses were involved in this contract, as the awardee is Brad Hall & Associates, Inc. Further analysis would be needed to determine if subcontracting opportunities were offered or utilized.

Oversight & Accountability

The use of an Economic Price Adjustment clause necessitates robust oversight from the Defense Logistics Agency to monitor fuel price fluctuations and ensure the adjustment mechanism is applied fairly and transparently, preventing undue cost increases.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Economic Price Adjustment (FPEPA) introduces cost uncertainty.
Long contract duration (over 4 years) increases exposure to market volatility.
Lack of specific unit cost data hinders direct benchmarking.
Potential for contractor to benefit disproportionately from price increases.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.9 million to BRAD HALL & ASSOCIATES, INC.. COG 3 DELIVERIES FOR RED-DYED ULSD #2, RFG REG UNLEADED&GASOHOL REG, UNLEADED FUEL.

Who is the contractor on this award?

The obligated recipient is BRAD HALL & ASSOCIATES, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $71.9 million.

What is the period of performance?

Start: 2013-08-01. End: 2017-08-31.

How does the economic price adjustment formula compare to industry standards for fuel contracts, and what safeguards are in place to prevent excessive price increases?

The specific formula for the economic price adjustment is not detailed in the provided data. However, standard practice involves tying adjustments to recognized indices for crude oil and refined products. Effective oversight requires regular audits of the index data used and comparison against market spot prices to ensure the adjustment reflects actual cost changes and doesn't unduly benefit the contractor.

What was the competitive landscape like for this fuel supply contract, and did the 'full and open competition' result in demonstrably better pricing compared to alternative procurement methods?

While 'full and open competition' suggests multiple bidders participated, the effectiveness in achieving optimal pricing is questionable due to the Fixed Price with Economic Price Adjustment (FPEPA) structure. This structure inherently introduces price volatility. A comparative analysis against contracts using firm-fixed-price or other less volatile mechanisms would be needed to definitively assess if this competition yielded the best possible value.

What is the potential taxpayer impact if fuel prices significantly increase over the contract's duration, given the economic price adjustment clause?

If fuel prices rise substantially during the contract period, the economic price adjustment clause will allow Brad Hall & Associates to increase their prices accordingly. This means taxpayers could face significantly higher costs than initially budgeted. The total potential increase is difficult to quantify without knowing the specific adjustment formula and future market price projections, but it represents a considerable financial 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: SP060013R0204

Offers Received: 47

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

Evaluated Preference: NONE

Contractor Details

Address: 280 S HOLMES AVE, IDAHO FALLS, ID, 83401

Business Categories: Category Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $71,862,779

Exercised Options: $71,862,779

Current Obligation: $71,862,779

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP060013D4009

IDV Type: IDC

Timeline