DoD's $25.7M Naval Distillate Purchase from BP Products America Inc. Amidst Fixed Price with EPA

Contract Overview

Contract Amount: $25,725,866 ($25.7M)

Contractor: BP Products North America Inc.

Awarding Agency: Department of Defense

Start Date: 2017-12-19

End Date: 2018-01-27

Contract Duration: 39 days

Daily Burn Rate: $659.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8505039666!DISTILLATE,NAVAL

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60606

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $25.7 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 8505039666!DISTILLATE,NAVAL Key points: 1. Significant expenditure on a critical fuel commodity. 2. Sole awardee BP Products North America Inc. suggests potential market concentration. 3. Fixed Price with Economic Price Adjustment (EPA) introduces cost volatility risk. 4. Defense Logistics Agency's procurement supports naval operations.

Value Assessment

Rating: fair

The $25.7 million award for naval distillate appears to be a standard market price for this commodity, especially considering the fixed-price with economic price adjustment structure. However, without specific unit cost data or historical benchmarks for this exact product, a precise valuation is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple bidders were considered. The fixed-price with EPA contract type aims to balance price stability for the government with adjustments for market fluctuations, potentially impacting the final cost discovery.

Taxpayer Impact: Taxpayers are exposed to potential price increases due to the economic price adjustment clause, which is tied to market conditions for petroleum products.

Public Impact

Ensures fuel availability for naval vessels, critical for national security. Price fluctuations can impact the defense budget and require careful monitoring. Supports the energy sector through large-scale procurement of refined products.

Waste & Efficiency Indicators

Waste Risk Score: 65 / 10

Warning Flags

Economic price adjustment clause introduces cost uncertainty.
Sole awardee for this specific order may indicate limited supplier options.
Dependence on a single supplier for critical fuel.

Positive Signals

Procurement supports essential military operations.
Full and open competition was utilized.
Awarded to a major, established supplier.

Sector Analysis

This procurement falls within the energy sector, specifically refined petroleum products. Defense spending on fuel is a significant component of the overall energy market, with benchmarks often tied to global oil prices and refining margins.

Small Business Impact

This contract was awarded to BP Products North America Inc., a large corporation, and there is no indication of small business participation in this specific award. Large-scale fuel procurements often favor major energy companies.

Oversight & Accountability

The Defense Logistics Agency is responsible for managing the supply chain for the U.S. military. Oversight would focus on ensuring timely delivery, adherence to specifications, and proper management of the economic price adjustment clause to mitigate excessive cost increases.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for cost overruns due to EPA clause.
Limited competition indicated by sole awardee for this order.
Dependence on a single supplier for a critical resource.
Lack of detailed quantity data hinders unit cost analysis.
Price volatility inherent in petroleum markets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.7 million to BP PRODUCTS NORTH AMERICA INC.. 8505039666!DISTILLATE,NAVAL

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 Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $25.7 million.

What is the period of performance?

Start: 2017-12-19. End: 2018-01-27.

What was the average price per gallon or barrel for the naval distillate, and how does it compare to market benchmarks at the time of award?

The provided data does not include the quantity of naval distillate purchased, making it impossible to calculate a per-unit cost. Therefore, a direct comparison to market benchmarks for price per gallon or barrel cannot be made. This lack of quantity information hinders a thorough value assessment.

What specific economic factors are tied to the 'economic price adjustment' clause, and what is the potential range of price increases allowed?

The specific economic factors tied to the EPA clause are not detailed in the provided data. Typically, these adjustments are linked to indices for crude oil prices, refining costs, or other relevant commodity markets. The potential range of price increases would be defined in the contract's full terms and conditions, which are not available here.

How frequently does the Defense Logistics Agency procure naval distillate, and what is the typical volume to assess if this $25.7M award represents a standard or unusually large expenditure?

The provided data does not offer historical procurement frequency or volume for naval distillate by the Defense Logistics Agency. Without this context, it's difficult to determine if the $25.7 million award is a typical expenditure or an outlier. Understanding historical patterns would aid in assessing spending trends and potential budget impacts.

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

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

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, Foreign Owned, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $25,725,866

Exercised Options: $25,725,866

Current Obligation: $25,725,866

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60017D0467

IDV Type: IDC

Timeline