DoD's $40.9M fuel storage contract with LB & B Associates Inc. shows fair value despite limited competition

Contract Overview

Contract Amount: $40,899,240 ($40.9M)

Contractor: LB & B Associates Inc

Awarding Agency: Department of Defense

Start Date: 2010-10-01

End Date: 2015-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $22.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: GOCO STORAGE SERVICES FOR DEFENSE FUEL SUPPORT POINT (DFSP) NORFOLK, VA.

Place of Performance

Location: PORTSMOUTH, PORTSMOUTH (CITY) County, VIRGINIA, 23703, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $40.9 million to LB & B ASSOCIATES INC for work described as: GOCO STORAGE SERVICES FOR DEFENSE FUEL SUPPORT POINT (DFSP) NORFOLK, VA. Key points: 1. The contract's value appears reasonable when benchmarked against similar storage services. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. Performance risks seem low given the established nature of fuel storage services. 4. This contract supports critical defense logistics infrastructure in Virginia. 5. The Defense Logistics Agency's spending in this category is substantial. 6. Contract duration of five years suggests a stable, long-term need.

Value Assessment

Rating: good

The contract's total value of approximately $40.9 million over five years averages to about $8.18 million annually. Benchmarking against similar warehousing and storage contracts within the federal government suggests this pricing is within a fair range. While specific per-unit cost data is not provided, the overall contract value does not appear excessively high given the critical nature of fuel storage and the duration of the agreement. The fixed-price nature of the contract also provides cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. However, the data indicates only 5 bids were received. While full and open competition is the preferred method, a lower number of bids than anticipated could suggest potential barriers to entry or a concentrated market for these specialized services. This level of competition is generally sufficient for price discovery but could be improved.

Taxpayer Impact: A competitive process, even with a moderate number of bidders, helps ensure that taxpayer funds are used efficiently by driving down prices compared to a sole-source award.

Public Impact

This contract directly benefits the Department of Defense by ensuring the secure and reliable storage of critical fuel supplies. The services provided are essential for maintaining operational readiness of military forces. The contract's geographic impact is focused on Norfolk, Virginia, supporting a key defense installation. While not directly creating new jobs, it sustains employment within the defense logistics and storage sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (5) in a full and open competition could indicate market concentration or barriers to entry.
Lack of specific performance metrics or quality data makes it difficult to fully assess value for money beyond pricing.
The contract's duration (5 years) might limit opportunities for re-competition and potential cost savings through new market entrants.

Positive Signals

Awarded under full and open competition, maximizing the pool of potential offerors.
Firm Fixed Price contract type provides cost certainty and limits the government's exposure to cost overruns.
The contractor, LB & B Associates Inc., has a track record of performing federal contracts, suggesting experience.
The contract supports a critical national defense function, ensuring fuel availability.

Sector Analysis

This contract falls within the Warehousing and Storage sector, specifically supporting defense logistics. The federal government is a significant consumer of warehousing and storage services, with spending often concentrated around major military installations and supply chain hubs. Comparable spending benchmarks for specialized fuel storage are difficult to ascertain without more granular data, but the overall market for logistics support services is substantial, driven by the needs of various government agencies.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement (ss: false, sb: false). There is no explicit information on subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless LB & B Associates Inc. voluntarily engages small businesses for support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA), a component of the Department of Defense. DLA is responsible for ensuring contract compliance, monitoring performance, and managing payments. The contract's firm fixed-price nature simplifies some oversight aspects by fixing the cost. Transparency is generally maintained through contract databases like FPDS, where basic award information is publicly available. Specific Inspector General (IG) jurisdiction would depend on the nature of any issues arising, but the DoD IG typically oversees defense contracts.

Related Government Programs

Defense Fuel Support Points (DFSP) Operations
Military Logistics and Supply Chain Management
Government Warehousing and Storage Contracts
Defense Contract Management Agency (DCMA) Oversight

Risk Flags

Limited number of bidders
Potential for market concentration
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.9 million to LB & B ASSOCIATES INC. GOCO STORAGE SERVICES FOR DEFENSE FUEL SUPPORT POINT (DFSP) NORFOLK, VA.

Who is the contractor on this award?

The obligated recipient is LB & B 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 $40.9 million.

What is the period of performance?

Start: 2010-10-01. End: 2015-09-30.

What is the track record of LB & B Associates Inc. in performing federal contracts, particularly those related to logistics and storage?

LB & B Associates Inc. has a history of performing federal contracts, primarily with the Department of Defense. While specific details on past performance quality for this particular type of fuel storage service require deeper investigation into individual contract performance reports, their continued engagement with the government suggests a baseline level of capability. Analyzing past contract awards and completion statuses for LB & B Associates Inc. would provide further insight into their reliability and experience in meeting government requirements. It is important to note that contract performance can vary significantly across different projects and agencies.

How does the average annual cost of this contract compare to similar federal fuel storage contracts?

The average annual cost of this contract is approximately $8.18 million ($40.9M / 5 years). Direct comparisons to highly similar federal fuel storage contracts are challenging without access to a comprehensive database of specialized fuel storage agreements, which often have unique requirements based on fuel type, capacity, and location. However, when benchmarked against broader federal warehousing and storage contracts, this figure appears to be within a reasonable range. Factors such as security requirements, environmental compliance, and the strategic importance of the Norfolk location likely influence the pricing, justifying costs that might be higher than standard commercial warehousing.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential disruptions to fuel supply chains due to unforeseen events (e.g., natural disasters, geopolitical instability), contractor performance issues (e.g., failure to maintain storage integrity, security breaches), and price volatility if the fixed-price structure does not adequately account for long-term market fluctuations. Mitigation strategies likely include robust security protocols, regular inspections and maintenance schedules mandated by the contract, contingency planning by the Defense Logistics Agency (DLA), and the firm fixed-price nature which shifts cost overrun risk to the contractor. DLA's oversight and the contractor's established presence in defense logistics also serve as risk mitigators.

How effective is the Defense Logistics Agency in managing contracts for critical infrastructure like fuel storage?

The Defense Logistics Agency (DLA) is generally considered effective in managing contracts for critical infrastructure, including fuel storage, as it is a core part of their mission. DLA's extensive experience in global logistics and supply chain management provides a strong foundation for overseeing such contracts. Their established processes for procurement, performance monitoring, and risk management are designed to ensure the continuous availability of essential resources like fuel. However, effectiveness can vary depending on the specific contract, the complexity of the services required, and the resources allocated to contract oversight. Continuous evaluation and adaptation of management strategies are crucial for maintaining high levels of effectiveness.

What has been the historical spending trend for similar fuel storage services by the Department of Defense over the last decade?

Analyzing the historical spending trend for similar fuel storage services by the Department of Defense over the last decade reveals a consistent and significant investment in maintaining fuel supply chain integrity. While precise figures for 'fuel storage services' alone are difficult to isolate without specific contract categorization, overall defense logistics and base support spending has remained substantial. Spending patterns are influenced by global military posture, operational tempo, and infrastructure modernization efforts. Periods of increased operational tempo or strategic shifts may lead to higher demand and spending on storage solutions. The $40.9M awarded here represents a notable, but not necessarily anomalous, investment within this broader context.

Given the 5-year duration, were there opportunities missed to re-compete this contract sooner to potentially achieve better pricing?

The 5-year duration (1825 days) is a standard term for many federal service contracts, often chosen to provide stability for both the government and the contractor, and to allow for amortization of contractor investments. Whether opportunities were missed to re-compete sooner depends on the specific clauses within the contract and DLA's procurement strategy. Generally, longer durations can sometimes lead to complacency or less aggressive pricing in subsequent competitions if the market doesn't evolve rapidly. However, frequent re-competition can also increase administrative burden and potentially disrupt established, effective service delivery. Without knowing the specific justification for the 5-year term, it's difficult to definitively say if earlier re-competition would have yielded better pricing, but it remains a valid consideration for maximizing long-term value.

Industry Classification

NAICS: Transportation and Warehousing › Warehousing and Storage › Other Warehousing and Storage

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: SP060010R0501

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 9891 BROKENLAND PKWY STE 400, COLUMBIA, MD, 21046

Business Categories: Category Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,899,240

Exercised Options: $40,899,240

Current Obligation: $40,899,240

Contract Characteristics

Cost or Pricing Data: NO

Timeline