DoD's $29.4M Aviation Turbine Fuel Contract Awarded to BP Products North America Inc
Contract Overview
Contract Amount: $29,396,489 ($29.4M)
Contractor: BP Products North America Inc.
Awarding Agency: Department of Defense
Start Date: 2022-09-19
End Date: 2022-10-17
Contract Duration: 28 days
Daily Burn Rate: $1.0M/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: 8509411410!TURBINE FUEL,AVIATION
Place of Performance
Location: CHICAGO, COOK County, ILLINOIS, 60606
State: Illinois Government Spending
Plain-Language Summary
Department of Defense obligated $29.4 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 8509411410!TURBINE FUEL,AVIATION Key points: 1. The contract is for aviation turbine fuel, a critical component for military aviation operations. 2. BP Products North America Inc. secured this award, indicating significant market presence. 3. The fixed-price with economic price adjustment contract type introduces potential cost volatility. 4. The sector is dominated by a few large suppliers, potentially limiting future competition.
Value Assessment
Rating: good
The award amount of $29.4 million for a one-month delivery order appears reasonable given the fluctuating nature of fuel prices and the specialized market for aviation fuel.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, suggesting a competitive bidding process. However, the nature of fuel supply chains can still lead to limited effective competition among major suppliers.
Taxpayer Impact: The use of economic price adjustment clauses means taxpayers are exposed to market fluctuations in fuel prices, potentially increasing the final cost beyond initial projections.
Public Impact
Ensures continued operational readiness for military aircraft reliant on specialized fuel. Impacts the global aviation fuel market and pricing for other consumers. Highlights the dependence on a few major suppliers for critical defense logistics.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause could lead to cost overruns.
- Limited number of qualified suppliers for aviation turbine fuel.
- Short contract duration may not reflect long-term market stability.
Positive Signals
- Awarded under full and open competition.
- BP Products North America Inc. is a major fuel supplier.
- Contract supports critical defense logistics.
Sector Analysis
The petroleum refineries sector (NAICS 324110) is capital-intensive and subject to global commodity prices. Defense contracts for fuel are essential but can be volatile due to market dynamics and geopolitical factors.
Small Business Impact
This contract was awarded to a large corporation, BP Products North America Inc. There is no indication of small business participation in this specific award, which is common for large-scale fuel procurement.
Oversight & Accountability
The Defense Logistics Agency is responsible for managing this contract. Oversight would focus on ensuring timely delivery, fuel quality, and adherence to the economic price adjustment formula.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for cost overruns due to economic price adjustment.
- Limited number of qualified suppliers.
- Dependence on global commodity markets.
- Short contract duration may not reflect long-term price stability.
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 $29.4 million to BP PRODUCTS NORTH AMERICA INC.. 8509411410!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 $29.4 million.
What is the period of performance?
Start: 2022-09-19. End: 2022-10-17.
What is the historical price trend for aviation turbine fuel over the contract period and how did it compare to the economic price adjustment?
Analyzing the historical price trend for aviation turbine fuel during the contract period (September 19 to October 17, 2022) is crucial. Comparing this trend against the economic price adjustment formula used in the contract will reveal whether the government paid a fair price or was exposed to excessive cost increases due to market volatility. This comparison helps assess the effectiveness of the pricing mechanism.
What is the risk of supply disruption given the concentration of major aviation fuel suppliers?
The risk of supply disruption is moderate to high due to the concentrated nature of the aviation fuel market. A limited number of major suppliers, like BP, means that geopolitical events, refinery issues, or logistical challenges affecting one supplier could have a significant impact on the Defense Department's ability to procure this critical fuel, potentially affecting operational readiness.
How effectively does the economic price adjustment clause protect the government from price spikes while ensuring supplier viability?
The effectiveness of the economic price adjustment clause is a key concern. While intended to balance price fluctuations, it can expose taxpayers to significant cost increases if fuel prices surge unexpectedly. The government must have robust mechanisms to monitor market prices and ensure the adjustment formula accurately reflects true cost changes without unduly burdening the budget or creating excessive profit for the contractor.
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: $29,396,489
Exercised Options: $29,396,489
Current Obligation: $29,396,489
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE60221D0488
IDV Type: IDC
Timeline
Start Date: 2022-09-19
Current End Date: 2022-10-17
Potential End Date: 2022-10-17 00:00:00
Last Modified: 2022-10-04
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