DOE's $21.4M contract for refined product reserve storage awarded to BP Products North America Inc
Contract Overview
Contract Amount: $21,456,000 ($21.5M)
Contractor: BP Products North America Inc.
Awarding Agency: Department of Energy
Start Date: 2014-06-30
End Date: 2018-12-31
Contract Duration: 1,645 days
Daily Burn Rate: $13.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: FIRM FIXED PRICE
Sector: Other
Official Description: CONTRACTOR-OWNED, CONTRACTOR-OPERATED (COCO), STORAGE SERVICES IN ACCORDANCE WITH DOE'S REFINED PRODUCT RESERVE
Place of Performance
Location: CARTERET, MIDDLESEX County, NEW JERSEY, 07008
Plain-Language Summary
Department of Energy obligated $21.5 million to BP PRODUCTS NORTH AMERICA INC. for work described as: CONTRACTOR-OWNED, CONTRACTOR-OPERATED (COCO), STORAGE SERVICES IN ACCORDANCE WITH DOE'S REFINED PRODUCT RESERVE Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of over 4 years indicates a significant, long-term need for storage services. 3. The firm-fixed-price structure aims to provide cost certainty for the government. 4. The contract value of $21.4 million over its term warrants scrutiny for value for money. 5. The service is categorized under 'Other Warehousing and Storage,' a broad classification. 6. The contract was awarded to a single entity, BP Products North America Inc.
Value Assessment
Rating: fair
The contract value of $21.4 million over approximately 4.5 years averages to about $4.77 million per year. Benchmarking this against similar government contracts for large-scale storage solutions is challenging without more specific details on the volume and type of refined products stored. However, the firm-fixed-price nature suggests an attempt to control costs. The absence of detailed performance metrics or cost breakdowns makes a definitive value assessment difficult, but the price appears within a reasonable range for substantial logistical services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. The presence of 4 bids suggests a moderate level of competition. While not a large number of bidders, it implies that multiple companies were interested and capable of providing the required services, which generally aids in price discovery and can lead to more competitive pricing compared to sole-source or limited competition scenarios.
Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down costs through market forces. The fact that multiple companies vied for this contract suggests the government likely received a fair price.
Public Impact
The primary beneficiary is the Department of Energy, ensuring the availability of refined petroleum products for strategic reserves. The service delivered is essential for national energy security and stability. The geographic impact is primarily within New Jersey, where the storage facilities are located. While not directly creating new jobs, it supports existing jobs within the warehousing and logistics sector for BP Products North America Inc.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for price increases in future contract renewals if competition diminishes.
- Dependence on a single contractor for critical energy reserve storage.
- Limited transparency on the specific operational costs and profit margins for the contractor.
Positive Signals
- Awarded through full and open competition, indicating a fair process.
- Firm-fixed-price contract provides cost certainty for the government.
- Long-term contract suggests a stable and reliable service provider.
Sector Analysis
The energy sector, particularly the storage and logistics of refined petroleum products, is critical for national energy security. This contract falls under the broader warehousing and storage industry, which is a vital component of the supply chain for many goods, including energy commodities. The market for specialized storage of strategic reserves is likely limited to a few large players with the necessary infrastructure and security protocols. Comparable spending benchmarks are difficult to ascertain without knowing the exact volume and type of products stored, but large-scale energy storage contracts can run into tens or hundreds of millions of dollars.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by `ss: false` and `sb: false`. The prime contractor, BP Products North America Inc., is a large corporation. There is no explicit information provided regarding subcontracting plans with small businesses. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal, unless BP Products North America Inc. voluntarily engages small businesses for support services.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Energy's contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price contract terms, requiring the contractor to deliver specified services. Transparency is limited to the contract award details; specific operational performance data and cost breakdowns are typically not publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Strategic Petroleum Reserve
- Energy Infrastructure Security
- Petroleum Product Storage
- Government Logistics Contracts
Risk Flags
- Contract duration exceeds 4 years, requiring sustained oversight.
- Single awardee for a critical national security-related service.
- Limited public detail on specific performance metrics and cost breakdowns.
Tags
energy, department-of-energy, warehousing-and-storage, definitive-contract, firm-fixed-price, full-and-open-competition, new-jersey, large-business, national-security, petroleum-storage
Frequently Asked Questions
What is this federal contract paying for?
Department of Energy awarded $21.5 million to BP PRODUCTS NORTH AMERICA INC.. CONTRACTOR-OWNED, CONTRACTOR-OPERATED (COCO), STORAGE SERVICES IN ACCORDANCE WITH DOE'S REFINED PRODUCT RESERVE
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 $21.5 million.
What is the period of performance?
Start: 2014-06-30. End: 2018-12-31.
What is the historical spending pattern for refined product reserve storage by the Department of Energy?
Analyzing historical spending for refined product reserve storage by the Department of Energy (DOE) requires examining contracts related to the Strategic Petroleum Reserve (SPR) and potentially other energy security initiatives. The SPR, managed by the DOE, has various contracts for storage, transportation, and maintenance of crude oil and refined products. Spending can fluctuate based on market conditions, geopolitical events, and government policy decisions regarding reserve levels. For instance, periods of high oil prices or supply disruptions might lead to increased activity and spending on storage. The contract in question, valued at $21.4 million over approximately 4.5 years for refined product storage, represents a portion of the DOE's overall expenditure in maintaining energy security infrastructure. Without access to comprehensive historical contract databases or specific DOE budget allocations for this particular service, a precise historical spending trend is difficult to establish. However, it is reasonable to assume that consistent funding is allocated annually to ensure the readiness and capacity of these strategic reserves.
How does the price per unit for this storage contract compare to market rates or similar government contracts?
Determining a precise 'price per unit' for this contract is challenging because the unit of service (e.g., per barrel, per gallon, per cubic foot) and the specific type of refined product are not detailed in the provided data. The contract value is $21.4 million over roughly 1645 days (approx. 4.5 years). If we assume a hypothetical storage volume, we could derive a cost. For example, if the contract covered storage for 1 million barrels of refined product, the annual cost would be approximately $4.77 million / 1 million barrels = $4.77 per barrel per year. Market rates for petroleum product storage vary significantly based on location, product type, storage duration, and market demand. Major storage hubs can see rates ranging from $0.50 to $5.00+ per barrel per year. Given the 'firm fixed price' nature and the strategic importance, this rate might be within the expected range, especially if it includes specialized handling, security, or specific location requirements. However, without more granular data on the service volume and specifics, a definitive comparison to market rates or similar government contracts remains difficult.
What is BP Products North America Inc.'s track record with government contracts, particularly with the Department of Energy?
BP Products North America Inc. has a significant history of engaging with government contracts, including those with the Department of Energy (DOE). As a major player in the energy sector, BP has been involved in various capacities, potentially including supply, transportation, and storage of energy products. Examining their broader federal contract history reveals numerous awards across different agencies. For contracts specifically with the DOE related to energy reserves or infrastructure, BP's involvement would likely be scrutinized for reliability, safety, and compliance. While the provided data focuses on this single contract, a comprehensive assessment of BP's track record would involve reviewing past performance evaluations, any instances of contract disputes or penalties, and their overall history of fulfilling government obligations. Their long-standing presence in the industry suggests a capacity to manage large-scale operations, but specific performance metrics on prior DOE contracts would be needed for a thorough evaluation.
What are the key performance indicators (KPIs) used to measure the success of this storage contract?
The provided data does not explicitly list the Key Performance Indicators (KPIs) for this specific contract. However, for a contract involving the storage of refined petroleum products for a strategic reserve, typical KPIs would likely focus on several critical areas. These would include: 1) Availability and Uptime: Ensuring the storage facilities are consistently operational and accessible when needed. 2) Product Integrity: Maintaining the quality and specifications of the stored products, preventing degradation or contamination. 3) Security: Adherence to stringent security protocols to prevent unauthorized access or tampering. 4) Reporting Accuracy: Timely and accurate reporting of inventory levels, product status, and any operational incidents. 5) Environmental Compliance: Meeting all environmental regulations related to storage and handling. The firm-fixed-price nature suggests that the contractor is responsible for meeting these performance standards to receive full payment, but the specific metrics and thresholds would be detailed in the contract's Statement of Work (SOW).
Are there any identified risks associated with this contract, such as contractor performance or operational issues?
While the contract was awarded through full and open competition and has a firm-fixed-price structure, potential risks can still exist. One primary risk is contractor performance: BP Products North America Inc. might face operational challenges, such as equipment failures, labor disputes, or logistical issues, that could impact their ability to fulfill the storage obligations. Another risk relates to the security of the stored products; any breach or compromise could have significant national security implications. Furthermore, unforeseen market changes or regulatory shifts in the energy sector could affect the contractor's operational costs or feasibility, potentially leading to performance issues if not managed effectively. The long duration of the contract also introduces a risk of obsolescence if storage technologies evolve rapidly, though this is less likely for basic refined product storage. The government's oversight mechanisms are crucial for mitigating these risks through regular monitoring and enforcement of contract terms.
Industry Classification
NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage
Product/Service Code: LEASE/RENT FACILITIES › LEASE/RENTAL OF BUILDINGS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060014R0517
Offers Received: 4
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: $21,465,000
Exercised Options: $21,465,000
Current Obligation: $21,456,000
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Timeline
Start Date: 2014-06-30
Current End Date: 2018-12-31
Potential End Date: 2018-12-31 00:00:00
Last Modified: 2019-05-24
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