DoD's $38.9M Aviation Turbine Fuel Contract Awarded to BP Products North America Inc

Contract Overview

Contract Amount: $38,883,272 ($38.9M)

Contractor: BP Products North America Inc.

Awarding Agency: Department of Defense

Start Date: 2024-03-29

End Date: 2024-04-16

Contract Duration: 18 days

Daily Burn Rate: $2.2M/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Energy

Official Description: 8510540711!TURBINE FUEL,AVIATION

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60606

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $38.9 million to BP PRODUCTS NORTH AMERICA INC. for work described as: 8510540711!TURBINE FUEL,AVIATION Key points: 1. Significant contract value for aviation fuel. 2. BP Products North America Inc. is a major player in the energy sector. 3. Potential for price volatility in fuel markets presents a risk. 4. Spending falls within the broad 'Energy' sector, specifically petroleum refining.

Value Assessment

Rating: good

The contract value of $38.9M appears reasonable for aviation fuel, especially considering the fixed-price with economic price adjustment structure which allows for market fluctuations. Benchmarking against similar large-scale fuel procurements 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, suggesting a robust price discovery process. This method typically leads to more competitive pricing as multiple vendors have the opportunity to bid.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces, ensuring the government receives competitive pricing for essential goods like aviation fuel.

Public Impact

Ensures a critical supply of aviation fuel for Department of Defense operations. Supports national security by maintaining readiness of air assets. Impacts the broader energy market and fuel prices for other consumers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Fuel price volatility
Geopolitical risks affecting supply chains
Dependence on a single supplier for this specific delivery order

Positive Signals

Awarded under full and open competition
Fixed-price contract with economic price adjustment offers some cost control
Supports critical defense logistics

Sector Analysis

This contract falls within the energy sector, specifically related to the refining and distribution of petroleum products. The $38.9M award is substantial for aviation fuel, a critical commodity for military operations. Benchmarks for similar fuel procurements would indicate if this price point is competitive.

Small Business Impact

The data does not indicate any specific involvement or benefit to small businesses in this particular contract award. Large fuel suppliers typically dominate this market.

Oversight & Accountability

The award was made by the Defense Logistics Agency, a key component of the DoD responsible for logistics. Oversight would involve monitoring contract performance, adherence to terms, and managing the economic price adjustment clause effectively.

Related Government Programs

Petroleum Refineries
Department of Defense Contracting
Defense Logistics Agency Programs

Risk Flags

Potential for significant price increases due to fuel market volatility.
Dependence on a single supplier for this delivery order.
Geopolitical risks impacting global fuel supply chains.
Contract duration is relatively short (18 days), requiring frequent re-procurement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.9 million to BP PRODUCTS NORTH AMERICA INC.. 8510540711!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 $38.9 million.

What is the period of performance?

Start: 2024-03-29. End: 2024-04-16.

What is the historical price trend for aviation turbine fuel, and how does the economic price adjustment clause protect the government from significant cost overruns?

Historical price trends for aviation turbine fuel are influenced by crude oil prices, geopolitical events, and seasonal demand. The economic price adjustment clause in this contract allows for modifications to the price based on a pre-defined index, typically tied to market fuel prices. This protects the government by ensuring the price reflects current market conditions, preventing excessive overpayment if prices rise significantly, but also means the government may pay more if fuel prices increase.

What are the primary risks associated with relying on BP Products North America Inc. for this significant volume of aviation fuel, and what mitigation strategies are in place?

Primary risks include potential supply disruptions due to geopolitical instability, refinery issues, or transportation problems affecting BP. Additionally, market volatility could lead to higher costs if the economic price adjustment clause is triggered unfavorably. Mitigation strategies likely involve robust contract monitoring by the Defense Logistics Agency, maintaining strategic fuel reserves, and potentially diversifying suppliers for future contracts to reduce single-source dependency.

How effectively does the 'full and open competition' process ensure value for money in the procurement of specialized aviation fuels, compared to other contracting methods?

Full and open competition is generally considered the most effective method for ensuring value for money as it allows multiple qualified vendors to bid, fostering a competitive environment that drives down prices. For specialized aviation fuels, this process ensures that the government benefits from the best available pricing and terms from across the market. While other methods like limited competition might be faster, they often result in higher prices due to reduced vendor participation.

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: $38,883,272

Exercised Options: $38,883,272

Current Obligation: $38,883,272

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60223D0483

IDV Type: IDC

Timeline