DoD's $29.9M aviation turbine fuel contract awarded to BP Products North America Inc. for Illinois delivery

Contract Overview

Contract Amount: $29,880,241 ($29.9M)

Contractor: BP Products North America Inc.

Awarding Agency: Department of Defense

Start Date: 2022-12-30

End Date: 2023-01-22

Contract Duration: 23 days

Daily Burn Rate: $1.3M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8509616365!TURBINE FUEL,AVIATION

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60606

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 8509616365!TURBINE FUEL,AVIATION Key points: 1. Contract value represents a significant portion of annual fuel needs for specific military operations. 2. Competition dynamics suggest a potentially competitive bidding process for this fuel supply. 3. Risk indicators include price volatility in the global fuel market and logistical challenges. 4. Performance context is critical for ensuring uninterrupted aviation operations. 5. Sector positioning places this contract within the broader energy and defense logistics landscape.

Value Assessment

Rating: good

The awarded amount of $29.9 million for aviation turbine fuel appears reasonable given the scale and duration of the delivery order. Benchmarking against historical fuel contracts for similar defense logistics needs would provide a more precise value-for-money assessment. The fixed-price with economic price adjustment structure aims to mitigate some market fluctuation risks for both parties.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. This approach generally fosters competitive pricing and allows the government to select the most advantageous offer. The specific number of bids received would further clarify the intensity of the competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs through market forces, ensuring the government secures fuel at competitive rates.

Public Impact

Benefits military aviation units requiring reliable fuel supply for operational readiness. Delivers essential aviation turbine fuel to support flight operations. Geographic impact is concentrated in Illinois, serving as a key delivery point. Workforce implications include support for logistics personnel and fuel handling operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clause in volatile fuel markets.
Dependence on a single supplier for a critical aviation fuel component could pose a supply chain risk.
Logistical challenges in ensuring timely and secure delivery of fuel to operational sites.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Fixed-price contract with economic price adjustment provides some cost predictability.
Supplier has a significant presence in the fuel market, indicating capacity.

Sector Analysis

This contract falls within the energy sector, specifically the supply of refined petroleum products. The market for aviation fuels is large and complex, influenced by global crude oil prices, refining capacity, and geopolitical factors. This award represents a specific procurement within the Department of Defense's broader energy strategy, ensuring operational readiness through a stable fuel supply chain.

Small Business Impact

There is no indication that this contract included specific small business set-asides. As a large-scale fuel procurement, it is likely that prime contractors would have the capacity to fulfill the order directly. Subcontracting opportunities for small businesses might exist in areas such as transportation or logistics support, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Logistics Agency (DLA), which is responsible for procuring and distributing fuel for the Department of Defense. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is generally maintained through contract award databases, though specific performance metrics may not be publicly disclosed.

Related Government Programs

Defense Logistics Agency Fuel Procurement
Aviation Fuel Supply Contracts
Department of Defense Energy Purchases
Petroleum Product Procurement

Risk Flags

Potential for price volatility due to economic price adjustment clause.
Supply chain risk associated with reliance on a single supplier for critical fuel.
Logistical challenges in fuel delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to BP PRODUCTS NORTH AMERICA INC.. 8509616365!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 $29.9 million.

What is the period of performance?

Start: 2022-12-30. End: 2023-01-22.

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

The Defense Logistics Agency (DLA) is a major consumer of aviation turbine fuel, with annual spending often reaching billions of dollars. Historical data indicates consistent demand driven by global military operations and readiness requirements. Spending fluctuates based on geopolitical events, fuel market prices, and the specific needs of deployed forces. For instance, periods of increased conflict or expanded military presence in certain regions typically correlate with higher fuel procurement volumes and expenditures. The DLA utilizes various contracting mechanisms, including indefinite-delivery indefinite-quantity (IDIQ) contracts and individual delivery orders like this one, to manage its vast fuel requirements. Analyzing trends over the past 5-10 years would reveal patterns in average price per gallon, total obligated amounts, and the primary suppliers utilized, offering a benchmark for current contract values.

How does the price of this contract compare to market rates for aviation turbine fuel during the contract period?

Determining the precise price comparison requires access to real-time market data for aviation turbine fuel (Jet A or JP-8, depending on specification) during the contract period (December 2022 - January 2023). Factors influencing market rates include the Brent crude oil benchmark, refining margins, transportation costs, and regional supply/demand dynamics. Given the 'fixed price with economic price adjustment' clause, the base price would be compared to prevailing market rates, with adjustments made based on a pre-defined index. Without the specific unit price and the index used for adjustment, a direct comparison is challenging. However, the Defense Logistics Agency generally aims to secure fuel at or below market rates through competitive bidding processes. If the final adjusted price significantly deviates from established industry benchmarks for that period and region, it could indicate a potential issue with price discovery or contract terms.

What are the primary risks associated with relying on BP Products North America Inc. for this fuel supply?

The primary risks associated with relying on BP Products North America Inc. for this aviation turbine fuel supply include potential supply chain disruptions, price volatility, and geopolitical factors impacting global energy markets. As a major international energy company, BP's operations can be affected by events such as refinery issues, transportation bottlenecks, or international sanctions. While the contract includes an economic price adjustment clause to mitigate some price risk, significant market fluctuations could still impact the final cost. Furthermore, dependence on a single supplier for a critical resource like aviation fuel introduces a concentration risk. Should BP face unforeseen operational challenges, it could impact the military's ability to maintain flight readiness. The Defense Logistics Agency mitigates these risks through robust contract management, contingency planning, and maintaining relationships with multiple fuel suppliers across different regions.

What is the track record of BP Products North America Inc. in fulfilling government fuel contracts?

BP Products North America Inc. has a substantial track record of fulfilling government fuel contracts, particularly with the Department of Defense and other federal agencies. As a major player in the global energy market, the company possesses the infrastructure, refining capacity, and logistical capabilities necessary to meet large-scale government demands. Historical contract awards data often shows BP as a significant supplier of various petroleum products, including aviation fuels, to military installations. While specific performance metrics for individual contracts are not always publicly detailed, the continued awarding of contracts suggests a generally satisfactory performance history. Agencies typically conduct due diligence and performance evaluations before and during contract execution, which would inform decisions about awarding future contracts.

How does this contract's value compare to other recent aviation fuel procurements by the DoD?

The $29.9 million value of this specific delivery order for aviation turbine fuel is one component of the Department of Defense's overall massive fuel expenditure. The DoD procures billions of dollars worth of fuel annually through numerous contracts, including large indefinite-delivery/indefinite-quantity (IDIQ) vehicles and individual delivery orders. A single delivery order of this size is not unusual, especially when fulfilling specific regional needs or supplementing existing supply chains. To provide a comparative context, one would need to examine other recent delivery orders or task orders issued under larger fuel contracts during the same fiscal year or preceding periods. Comparing the unit price, quantity, and duration against similar procurements for the same type of fuel (e.g., JP-8 or Jet A) would offer a clearer picture of whether this contract represents a particularly high or low value procurement relative to its peers.

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: $29,880,241

Exercised Options: $29,880,241

Current Obligation: $29,880,241

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60222D0480

IDV Type: IDC

Timeline