DOE Spends $51.4M on Crude Oil Purchase from Vitol Inc. Under Full and Open Competition
Contract Overview
Contract Amount: $51,446,054 ($51.4M)
Contractor: Vitol Inc
Awarding Agency: Department of Energy
Start Date: 2009-01-13
End Date: 2009-04-30
Contract Duration: 107 days
Daily Burn Rate: $480.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: PURCHASE UP TO TWELVE (12) MILLION BARRELS OF CRUDE OIL
Place of Performance
Location: NEW ORLEANS, JEFFERSON County, LOUISIANA, 70123
Plain-Language Summary
Department of Energy obligated $51.4 million to VITOL INC for work described as: PURCHASE UP TO TWELVE (12) MILLION BARRELS OF CRUDE OIL Key points: 1. The Department of Energy (DOE) procured up to 12 million barrels of crude oil for $51.4 million. 2. Vitol Inc. was the contractor, awarded through full and open competition. 3. The contract utilized a firm fixed-price structure, indicating price certainty. 4. This purchase falls within the Petroleum and Petroleum Products Merchant Wholesalers sector.
Value Assessment
Rating: good
The contract price of approximately $4.29 per barrel (based on the total award amount and maximum quantity) appears reasonable given the market conditions for crude oil in 2009. Benchmarking against similar government procurements for crude oil would provide a more precise assessment.
Cost Per Unit: $4.29 (estimated)
Competition Analysis
Competition Level: full-and-open
The contract was awarded through full and open competition, suggesting a robust process for discovering the best price. The use of a definitive contract indicates a clear scope and terms.
Taxpayer Impact: The competitive nature of the award likely resulted in a fair market price, minimizing potential overspending for taxpayers.
Public Impact
Ensures national strategic petroleum reserves or energy security. Supports domestic energy markets and potentially influences fuel prices. Provides a critical resource for national energy needs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price volatility in the crude oil market.
- Geopolitical risks affecting supply and price.
- Logistical challenges in transporting large quantities of oil.
Positive Signals
- Firm fixed-price contract provides cost certainty.
- Awarded through full and open competition.
- Adequate duration for delivery.
Sector Analysis
This procurement is within the Petroleum and Petroleum Products Merchant Wholesalers sector. Government spending in this sector is crucial for national energy security and strategic reserves, often benchmarked against global commodity prices.
Small Business Impact
The data does not indicate whether small businesses were involved in this specific contract, either as prime contractors or subcontractors. Further analysis would be needed to determine small business participation.
Oversight & Accountability
The Department of Energy is responsible for managing this contract. Standard government oversight procedures for contract performance, delivery, and payment would apply.
Related Government Programs
- Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
- Department of Energy Contracting
- Department of Energy Programs
Risk Flags
- Potential for price fluctuations in the volatile oil market.
- Dependence on a single supplier (Vitol Inc.) for a large quantity.
- Geopolitical risks impacting global oil supply.
- Logistical complexities of transporting and storing crude oil.
Tags
petroleum-and-petroleum-products-merchan, department-of-energy, la, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $51.4 million to VITOL INC. PURCHASE UP TO TWELVE (12) MILLION BARRELS OF CRUDE OIL
Who is the contractor on this award?
The obligated recipient is VITOL INC.
Which agency awarded this contract?
Awarding agency: Department of Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $51.4 million.
What is the period of performance?
Start: 2009-01-13. End: 2009-04-30.
What was the specific market price of crude oil at the time of contract award, and how did Vitol Inc.'s bid compare?
To accurately assess the value, one would need to compare Vitol Inc.'s bid price against the prevailing market rates for the specific type of crude oil procured during the contract period (January-April 2009). Factors like WTI or Brent crude benchmarks, plus any quality or delivery location differentials, would be critical for a precise comparison and to determine if the government secured a favorable price.
What are the primary risks associated with a large-volume crude oil purchase, and how were they mitigated?
Key risks include price volatility, supply disruptions due to geopolitical events or natural disasters, and logistical challenges. Mitigation strategies could involve the firm fixed-price contract to lock in costs, diversification of suppliers (though not evident here), and robust contingency planning for transportation and storage. The contract's relatively short duration might also limit exposure to long-term market fluctuations.
How effectively does this contract contribute to the Department of Energy's strategic energy goals?
This contract directly supports the DOE's mission by ensuring the availability of crude oil, likely for strategic reserves or operational needs. Its effectiveness hinges on whether the procured oil met quality specifications, was delivered on time, and ultimately contributed to national energy security and stability, preventing shortages or price spikes during the contract period.
Industry Classification
NAICS: Wholesale Trade › Petroleum and Petroleum Products Merchant Wholesalers › Petroleum and Petroleum Products Merchant Wholesalers (except Bulk Stations and Terminals)
Product/Service Code: ORES, MINERALS AND PRIMARY PRODUCTS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Vitol Holding II SA (UEI: 400631438)
Address: 1100 LOUISIANA ST STE 5500, HOUSTON, TX, 77002
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $51,446,054
Exercised Options: $51,446,054
Current Obligation: $51,446,054
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Timeline
Start Date: 2009-01-13
Current End Date: 2009-04-30
Potential End Date: 2009-04-30 00:00:00
Last Modified: 2022-03-30
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