DoD spent $28.4M on aviation turbine fuel from BP, with 11 bids received

Contract Overview

Contract Amount: $28,482,141 ($28.5M)

Contractor: BP Products North America Inc.

Awarding Agency: Department of Defense

Start Date: 2018-06-05

End Date: 2018-06-30

Contract Duration: 25 days

Daily Burn Rate: $1.1M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Energy

Official Description: 8505564677!TURBINE FUEL,AVIATION

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60606

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $28.5 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 8505564677!TURBINE FUEL,AVIATION Key points: 1. Value for money appears reasonable given the competitive nature of the award. 2. Strong competition dynamics with 11 bidders suggest fair market pricing. 3. No immediate risk indicators are apparent from the contract data. 4. Performance context is a short-term delivery order for fuel. 5. Sector positioning is within the energy and defense logistics supply chain.

Value Assessment

Rating: good

The contract value of $28.4 million for aviation turbine fuel is within a typical range for such a commodity. The presence of 11 bids indicates a healthy level of competition, which generally drives prices towards market rates. Benchmarking against similar fuel contracts would provide a more precise value assessment, but the competitive landscape suggests a fair price was likely achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 11 distinct bidders submitting proposals. This high level of participation is a positive signal, suggesting that the solicitation was accessible and attractive to a broad range of suppliers. The robust competition likely contributed to price discovery and ensured that the government received competitive offers.

Taxpayer Impact: The extensive competition means taxpayers benefited from a market-driven price, avoiding potential overpayment that could occur with less competitive solicitations.

Public Impact

Military operations and readiness are supported through the provision of essential aviation fuel. The Department of Defense is the primary beneficiary, ensuring aircraft can be fueled. Geographic impact is likely concentrated around military airfields where the fuel is delivered. Workforce implications are minimal for this specific contract, primarily involving logistics and delivery personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded under full and open competition.
Multiple bidders participated, indicating a competitive market.
Contract type is firm fixed price, providing cost certainty.
Short duration (25 days) limits long-term exposure.

Sector Analysis

The energy sector, specifically petroleum refining and distribution, is crucial for national security and economic stability. This contract falls within the downstream segment of the oil and gas industry, focusing on the supply of specialized fuels. Comparable spending benchmarks for aviation fuel can vary significantly based on global market prices, geopolitical events, and demand.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor are there explicit subcontracting requirements mentioned in the provided data. The nature of aviation fuel supply often involves large-scale operations, which may favor larger prime contractors. Further analysis would be needed to determine if small businesses were involved in the supply chain or as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Logistics Agency (DLA), which is responsible for managing the supply chain for the Department of Defense. Accountability measures are inherent in the firm fixed-price contract type, requiring delivery of specified fuel. Transparency is generally maintained through contract award databases, though detailed performance metrics are not provided here.

Related Government Programs

Defense Logistics Agency Fuel Contracts
Aviation Fuel Procurement
Department of Defense Energy Spending

Risk Flags

Potential for price volatility in the energy market.
Dependence on global supply chains for petroleum products.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.5 million to BP PRODUCTS NORTH AMERICA INC.. 8505564677!TURBINE FUEL,AVIATION

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 $28.5 million.

What is the period of performance?

Start: 2018-06-05. End: 2018-06-30.

What is the historical spending trend for aviation turbine fuel by the Defense Logistics Agency?

Historical spending data for aviation turbine fuel by the Defense Logistics Agency (DLA) reveals a consistent and significant demand driven by military aviation operations. While specific annual figures fluctuate based on global fuel prices, operational tempo, and strategic needs, the DLA consistently procures billions of dollars worth of fuel annually. For instance, in fiscal years preceding and following this 2018 contract, DLA's fuel spending has remained substantial, often exceeding $10 billion per year across all fuel types. This particular contract for $28.4 million represents a small fraction of the overall annual fuel expenditure, highlighting the scale of DLA's procurement activities. Analyzing trends over multiple years would show the impact of market volatility and geopolitical events on DLA's fuel budget and procurement strategies.

How does the price per gallon for this contract compare to market benchmarks at the time of award?

Determining the exact price per gallon for this contract requires dividing the total award amount ($28,421,413.40) by the quantity of fuel procured. However, the provided data does not include the quantity. To benchmark, we would need to compare this implied price per gallon to prevailing market rates for aviation turbine fuel (like Jet A or JP-8) in the relevant geographic region (Illinois, based on 'IL' and 'ILLINOIS') around June 2018. Market data from sources like the Energy Information Administration (EIA) or industry publications would be consulted. Given the competitive bidding process with 11 offers, it is reasonable to infer that the price achieved was competitive. However, without the quantity, a precise per-gallon comparison and value-for-money assessment against market benchmarks remains incomplete.

What is BP Products North America Inc.'s track record with the Defense Logistics Agency for fuel supply?

BP Products North America Inc. has a significant track record as a supplier of petroleum products, including aviation fuels, to the U.S. military and government agencies, including the Defense Logistics Agency (DLA). Their history includes numerous contracts for various fuel types, often awarded through competitive processes. DLA relies on major energy companies like BP to ensure a stable and reliable supply of fuel critical for military operations. While this specific contract was a delivery order valued at $28.4 million, BP has likely been involved in larger, multi-year fuel supply agreements with DLA over the years. Their ability to consistently win competitive bids suggests a strong performance history and competitive pricing in the fuel market.

What are the potential risks associated with relying on a single supplier like BP for a significant fuel purchase?

While this specific contract involved competition, relying heavily on any single supplier for critical resources like aviation fuel can introduce risks. Potential risks include supply chain disruptions due to unforeseen events affecting the supplier (e.g., refinery issues, labor strikes, geopolitical instability in regions where BP operates). Price volatility could also be a concern if future contracts become less competitive or if market conditions shift unfavorably. Furthermore, over-reliance might reduce the government's leverage in future negotiations. However, the DLA typically manages these risks by diversifying its supplier base across multiple contracts and regions, and by closely monitoring market conditions and supplier performance.

How does this contract fit into the broader context of the Department of Defense's energy procurement strategy?

This contract for aviation turbine fuel is a component of the Department of Defense's (DoD) vast and complex energy procurement strategy. The DoD is one of the largest consumers of energy globally, and ensuring a reliable supply of fuel, including aviation fuel, is paramount for maintaining operational readiness and national security. Procurement strategies aim to balance cost-effectiveness, supply chain resilience, and energy security. Contracts like this, awarded through competition, contribute to cost management. The DoD also increasingly focuses on diversifying energy sources, improving energy efficiency, and exploring alternative fuels, although traditional fossil fuels remain critical. This specific award reflects the ongoing need for conventional fuels to support existing aviation assets.

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

Financial Breakdown

Contract Ceiling: $28,482,141

Exercised Options: $28,482,141

Current Obligation: $28,482,141

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60218D0451

IDV Type: IDC

Timeline