DoD Awards $33.5M for Naval Distillate Fuel to BP Products North America Inc
Contract Overview
Contract Amount: $33,472,873 ($33.5M)
Contractor: BP Products North America Inc.
Awarding Agency: Department of Defense
Start Date: 2022-06-07
End Date: 2022-06-26
Contract Duration: 19 days
Daily Burn Rate: $1.8M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8509152189!DISTILLATE,NAVAL
Place of Performance
Location: CHICAGO, COOK County, ILLINOIS, 60606
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $33.5 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 8509152189!DISTILLATE,NAVAL Key points: 1. Significant award to a single large business for a critical fuel commodity. 2. Competition was full and open, suggesting potential for price discovery. 3. Fixed price with economic price adjustment introduces potential cost volatility. 4. Sector is energy/defense logistics, vital for military operations.
Value Assessment
Rating: good
The award amount of $33.5M for a 19-day delivery period appears reasonable given the commodity. Benchmarking against similar fuel contracts would provide further validation.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically allows for the best possible pricing through multiple bids. The fixed-price with economic price adjustment structure may mitigate some risk for the contractor.
Taxpayer Impact: Taxpayer funds are used for essential fuel procurement. The competitive nature of the award aims to ensure fair pricing, but economic adjustments could lead to higher costs if market prices rise significantly.
Public Impact
Ensures availability of critical fuel for naval operations. Supports energy sector jobs and infrastructure. Potential for price fluctuations impacts budget predictability.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause could increase final cost.
- Short delivery window may limit competitive offers in future.
Positive Signals
- Awarded under full and open competition.
- Procurement of essential defense commodity.
Sector Analysis
This award falls within the energy sector, specifically petroleum refining and distribution, which is crucial for national defense. Spending benchmarks for fuel procurement vary widely based on volume, type, and market conditions.
Small Business Impact
This contract was awarded to a large business (BP Products North America Inc.) and does not indicate any specific benefit or set-aside for small businesses.
Oversight & Accountability
The Department of Defense, through the Defense Logistics Agency, is responsible for this procurement. Standard oversight mechanisms for fuel contracts would apply, including monitoring delivery and price adjustments.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost escalation due to economic price adjustment.
- Limited competition due to short delivery window.
- Reliance on a single large supplier for a critical commodity.
- Lack of small business participation.
Tags
petroleum-refineries, department-of-defense, il, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.5 million to BP PRODUCTS NORTH AMERICA INC.. 8509152189!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 $33.5 million.
What is the period of performance?
Start: 2022-06-07. End: 2022-06-26.
What is the historical price trend for naval distillate fuel, and how does the economic price adjustment clause compare to market volatility?
Naval distillate fuel prices can be volatile, influenced by global oil markets, geopolitical events, and refining capacity. The economic price adjustment clause aims to protect the contractor from significant price increases while allowing the government to benefit from decreases. Analyzing historical price data against the specific adjustment formula used in this contract is crucial to assess the true taxpayer impact and potential for cost overruns.
What are the risks associated with a short delivery window (19 days) for a large fuel award?
A short delivery window can limit the number of potential bidders, potentially reducing competition and leading to higher prices. It also increases the risk of supply chain disruptions or logistical challenges for the awarded contractor, which could impact timely delivery and potentially lead to contract disputes or increased costs passed on to the government.
How effectively does the fixed-price with economic price adjustment structure balance cost control for the government against contractor risk?
This contract structure attempts to balance cost control by setting a base price while acknowledging market fluctuations through economic adjustments. It shifts some price risk to the government if fuel prices rise significantly but protects the contractor from losses, potentially encouraging participation. The effectiveness hinges on the fairness of the adjustment formula and the government's ability to monitor market trends.
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.
Address: 30 S WACKER DR STE 900, CHICAGO, IL, 60606
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations
Financial Breakdown
Contract Ceiling: $33,472,873
Exercised Options: $33,472,873
Current Obligation: $33,472,873
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60221D0488
IDV Type: IDC
Timeline
Start Date: 2022-06-07
Current End Date: 2022-06-26
Potential End Date: 2022-06-26 00:00:00
Last Modified: 2025-04-24
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