DoD awards $15.7M for aviation turbine fuel, with fixed-price adjustments to manage market volatility

Contract Overview

Contract Amount: $15,741,023 ($15.7M)

Contractor: PAR Hawaii Refining LLC

Awarding Agency: Department of Defense

Start Date: 2025-12-15

End Date: 2026-01-29

Contract Duration: 45 days

Daily Burn Rate: $349.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: 8511815491!TURBINE FUEL,AVIATION

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77024

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $15.7 million to PAR HAWAII REFINING LLC for work described as: 8511815491!TURBINE FUEL,AVIATION Key points: 1. Contract utilizes economic price adjustments to mitigate fluctuating fuel costs. 2. Competition was full and open, suggesting a competitive bidding process. 3. Performance period is relatively short, indicating a need for immediate supply. 4. The contract is a delivery order, suggesting it's part of a larger program. 5. Focus on aviation fuel highlights critical logistical support for military operations. 6. The fixed-price nature with adjustments aims to balance cost certainty and market responsiveness.

Value Assessment

Rating: good

The awarded amount of $15.7 million for aviation turbine fuel appears reasonable given the nature of the commodity and the fixed-price with economic price adjustment structure. This structure is common for volatile commodities like fuel, allowing for adjustments based on market indices, which can prevent cost overruns for the government if prices rise significantly. Benchmarking against similar fuel contracts would provide a more precise value assessment, but the contract type suggests an effort to secure a predictable cost base while accounting for market fluctuations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach typically fosters a competitive environment, encouraging multiple bidders to offer their best pricing and terms. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition that should lead to favorable pricing for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces, ensuring that the government is not overpaying for essential goods like aviation fuel.

Public Impact

Aviation turbine fuel directly supports Department of Defense aviation operations, ensuring readiness and mission capability. The fuel will be supplied to Texas, indicating a focus on domestic logistical support. This contract ensures the availability of critical fuel for military aircraft, underpinning national defense capabilities. The delivery order structure suggests it fulfills an immediate or ongoing need within the Defense Logistics Agency's supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases due to economic price adjustment clauses if market prices surge.
Dependence on a single supplier for a critical commodity could pose supply chain risks if not managed proactively.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Fixed-price with economic price adjustment structure helps manage cost volatility.
Delivery order format allows for agile procurement of essential supplies.

Sector Analysis

The petroleum refineries sector (NAICS 324110) is crucial for supplying refined products, including aviation fuel, to various industries. The market for aviation fuel is influenced by global oil prices, geopolitical events, and refining capacity. This contract represents a specific procurement within the broader defense logistics and energy supply chain, ensuring a critical component for military aviation. Comparable spending benchmarks for aviation fuel procurement by the DoD would typically be in the millions to billions annually, depending on operational tempo and fleet size.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale procurement of a commodity likely requiring significant refining and distribution infrastructure, it is probable that larger, established companies are the primary participants. There is no explicit information on subcontracting opportunities for small businesses within this specific award, though the prime contractor may engage them.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. The Defense Logistics Agency (DLA) is responsible for the overall management and execution of fuel procurements. Transparency is facilitated through contract award databases like FPDS. Inspector General (IG) investigations could be initiated if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Logistics Agency Fuel Programs
Military Aviation Fuel Procurement
Petroleum Product Supply Contracts
Fixed Price Contracts with Economic Price Adjustment

Risk Flags

Potential for price volatility managed by economic price adjustment.
Short performance period requires timely execution.
Dependence on a single delivery order for critical fuel supply.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.7 million to PAR HAWAII REFINING LLC. 8511815491!TURBINE FUEL,AVIATION

Who is the contractor on this award?

The obligated recipient is PAR HAWAII REFINING LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $15.7 million.

What is the period of performance?

Start: 2025-12-15. End: 2026-01-29.

What is the historical spending pattern for aviation turbine fuel by the Department of Defense, and how does this award compare?

The Department of Defense is a massive consumer of aviation turbine fuel, with annual spending often reaching billions of dollars across various contracts and agencies. This specific award of $15.7 million represents a single delivery order, likely part of a larger, ongoing procurement strategy. Historical data from sources like the Federal Procurement Data System (FPDS) would show significant fluctuations in total spending based on operational tempo, global fuel prices, and strategic initiatives. Comparing this award to the average value of similar delivery orders or the total annual spend provides context; it's a substantial amount for a single order but a fraction of the DoD's overall fuel budget. The use of fixed-price with economic price adjustment suggests a strategy to manage the inherent volatility in fuel prices, which has been a significant factor in past DoD spending.

How does the 'fixed price with economic price adjustment' clause typically function for fuel contracts, and what are its implications for cost certainty?

The 'fixed price with economic price adjustment' (FPEPA) clause is designed to provide a baseline fixed price while allowing for adjustments based on a pre-defined economic indicator, such as a published fuel price index. For aviation turbine fuel, this typically means the base price is fixed, but it can be increased or decreased if the relevant market price index moves beyond a specified threshold. This mechanism offers a degree of cost certainty by establishing a floor and ceiling, preventing extreme price swings from drastically impacting the contract value. However, it also means the final cost is not entirely fixed, introducing some variability. For the government, it aims to balance the risk of price increases against the benefit of securing supply, especially for volatile commodities like fuel, potentially leading to better overall value than a purely fixed-price contract in a rising market.

What is the typical track record of PAR Hawaii Refining LLC in supplying fuel to the Department of Defense or other government agencies?

Information regarding PAR Hawaii Refining LLC's specific track record with the Department of Defense or other government agencies is not detailed in the provided data. However, as a refiner, their ability to secure such contracts suggests they possess the necessary infrastructure, certifications, and capacity to meet stringent military specifications and delivery requirements. Government contracting databases would typically contain award histories, performance ratings, and any past performance issues for contractors. A thorough assessment would involve reviewing these databases to understand their history of on-time delivery, product quality, and compliance with contract terms on previous government awards. Without this specific data, it's assumed they met the pre-qualification criteria for this competitive bid.

What are the potential risks associated with relying on a single delivery order for a critical commodity like aviation turbine fuel?

Relying on a single delivery order, even if awarded through full and open competition, carries inherent risks for critical commodities like aviation turbine fuel. The primary risk is supply chain disruption; unforeseen events such as natural disasters affecting the refinery or transportation network, geopolitical instability impacting crude oil supply, or unexpected surges in demand could lead to shortages or significant price spikes beyond the economic price adjustment limits. While the contract is for a defined period, the dependence on one order for a specific need means any interruption could directly impact military aviation readiness. Mitigation strategies often involve maintaining strategic reserves, diversifying suppliers where possible, and robust contract management to monitor market conditions and supplier performance closely.

How does the geographic location of the award (Texas) influence the logistics and cost of delivering aviation turbine fuel to the Department of Defense?

The award being associated with Texas (st: TX, sn: TEXAS) is significant for aviation turbine fuel logistics. Texas is a major hub for oil refining and petrochemical industries, with extensive pipeline infrastructure and port access. This proximity to refining capacity and potentially major military installations could streamline delivery, reduce transportation costs, and enhance supply chain reliability. For the Department of Defense, sourcing fuel from a region with strong domestic refining capabilities can offer advantages in terms of lead times and reduced exposure to international shipping disruptions. The specific delivery points within or near Texas would further dictate the logistical efficiency and final cost, but the location itself suggests a potentially advantageous sourcing position.

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: PAR Pacific Holdings, Inc.

Address: 825 TOWN AND COUNTRY LN STE 1500, HOUSTON, TX, 77024

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $15,741,023

Exercised Options: $15,741,023

Current Obligation: $15,741,023

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE60225D0486

IDV Type: IDC

Timeline