DOE Spends $121M on Crude Oil from BP, Raising Questions on Value and Competition
Contract Overview
Contract Amount: $120,977,849 ($121.0M)
Contractor: BP Products North America Inc.
Awarding Agency: Department of Energy
Start Date: 2015-04-02
End Date: 2015-07-31
Contract Duration: 120 days
Daily Burn Rate: $1.0M/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 9
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: CRUDE OIL PURCHASE
Place of Performance
Location: FREEPORT, BRAZORIA County, TEXAS, 77542, UNITED STATES OF AMERICA
State: Texas Government Spending
Plain-Language Summary
Department of Energy obligated $121.0 million to BP PRODUCTS NORTH AMERICA INC. for work described as: CRUDE OIL PURCHASE Key points: 1. Significant expenditure of $121M on crude oil. 2. Sole supplier identified as BP Products North America Inc. 3. Contract awarded by Department of Energy. 4. Petroleum wholesale sector, with potential for price volatility. 5. Contract duration of 120 days.
Value Assessment
Rating: questionable
The total award amount is substantial, but without a clear benchmark or comparison to market rates at the time of award, assessing the value for money is difficult. The firm fixed price contract offers some cost certainty.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the data does not specify the number of bids received or the details of the price discovery mechanism.
Taxpayer Impact: The taxpayer impact is directly tied to the $121M expenditure. Ensuring competitive pricing is crucial to minimize unnecessary costs to taxpayers.
Public Impact
Consumers may be indirectly affected by fluctuations in fuel prices influenced by government purchasing. Energy market stability could be marginally impacted by large government contracts. The Department of Energy's procurement practices are under scrutiny for efficiency and cost-effectiveness. Transparency in government energy procurement is vital for public trust.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of detailed competition metrics.
- Limited visibility into price justification.
- Short contract duration may indicate ad-hoc needs.
Positive Signals
- Awarded under full and open competition.
- Firm fixed price contract provides cost predictability.
Sector Analysis
The Department of Energy's procurement in the petroleum wholesale sector involves significant sums. Benchmarking against similar crude oil purchases during the contract period is essential to evaluate cost-effectiveness.
Small Business Impact
This contract does not appear to involve small businesses directly, as the supplier is a large corporation. Analysis of subcontracting opportunities for small businesses is not provided.
Oversight & Accountability
Oversight of this contract would involve reviewing the procurement process, bid evaluation, and final pricing to ensure adherence to regulations and optimal use of taxpayer funds. The short duration might suggest less intensive oversight compared to longer-term agreements.
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 uncompetitive pricing due to limited supplier information.
- Lack of detailed justification for the awarded price.
- Short contract duration may indicate reactive rather than strategic procurement.
- No clear indication of small business participation.
Tags
petroleum-and-petroleum-products-merchan, department-of-energy, tx, dca, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $121.0 million to BP PRODUCTS NORTH AMERICA INC.. CRUDE OIL PURCHASE
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 Energy (Department of Energy).
What is the total obligated amount?
The obligated amount is $121.0 million.
What is the period of performance?
Start: 2015-04-02. End: 2015-07-31.
What was the market price for crude oil during the contract period, and how did the awarded price compare?
Determining the precise market price for crude oil during April-July 2015 requires accessing historical commodity data. Comparing the awarded price against benchmarks like West Texas Intermediate (WTI) or Brent crude, adjusted for specific grades and delivery terms, would reveal if the government secured a favorable rate. Without this comparison, the value proposition of the $121M expenditure remains unclear.
Were there any specific factors that limited competition despite the 'full and open' designation?
While designated as 'full and open,' specific market conditions, supplier qualifications, or contract requirements might have inadvertently limited the number of viable bidders. Investigating the solicitation details and the number of proposals received could clarify if only a few entities could realistically compete for this specific crude oil purchase, potentially impacting price discovery.
How effective was this procurement in meeting the Department of Energy's energy supply needs during the contract period?
Assessing effectiveness requires understanding the specific crude oil requirements (e.g., type, volume, delivery points) and whether the purchased product met those needs without disruption. Evaluating the contract's role in maintaining strategic reserves or supporting operational functions would provide insight into its overall success beyond just the financial transaction.
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: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: DE-SOL-0008003
Offers Received: 9
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: BP P.L.C. (UEI: 210042669)
Address: 30 S WACKER DR STE 900, CHICAGO, IL, 60606
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: $120,977,849
Exercised Options: $120,977,849
Current Obligation: $120,977,849
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2015-04-02
Current End Date: 2015-07-31
Potential End Date: 2015-07-31 00:00:00
Last Modified: 2015-08-20
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