DoD's $63.6M petroleum refueling contract with Primus Solutions, LLC awarded under full and open competition

Contract Overview

Contract Amount: $63,623,261 ($63.6M)

Contractor: Primus Solutions, LLC

Awarding Agency: Department of Defense

Start Date: 2012-05-16

End Date: 2018-06-16

Contract Duration: 2,222 days

Daily Burn Rate: $28.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CLASS III PETROLEUM, OILS, AND LUBRICANT (POL) REFUELING/DEFUELING SERVICES

Place of Performance

Location: FORT RUCKER, DALE County, ALABAMA, 36362

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $63.6 million to PRIMUS SOLUTIONS, LLC for work described as: CLASS III PETROLEUM, OILS, AND LUBRICANT (POL) REFUELING/DEFUELING SERVICES Key points: 1. Contract value of $63.6M over 6 years suggests significant operational support needs. 2. Awarded via full and open competition, indicating a potentially competitive bidding process. 3. Firm Fixed Price contract type aims to control costs and provide budget certainty. 4. The contract duration of over 6 years may present risks related to price escalation and evolving needs. 5. Primus Solutions, LLC is the sole awardee, raising questions about sustained competition. 6. The contract supports air transportation logistics, a critical but potentially volatile sector. 7. Small business participation is not explicitly indicated, warranting further investigation.

Value Assessment

Rating: fair

The total contract value of $63.6 million over approximately six years averages to about $10.6 million annually. Benchmarking this against similar petroleum, oils, and lubricants (POL) refueling/defueling services contracts is challenging without more specific details on the scope of services, geographic coverage, and volume of fuel handled. However, the firm fixed-price structure suggests an attempt to lock in costs. The number of bids received (3) is on the lower side for a full and open competition, which could indicate that the pricing might not be as aggressively competitive as in a more robustly bid scenario.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Three bids were received, which is a moderate level of competition. While full and open competition is generally preferred for maximizing price discovery and value, a lower number of bidders can sometimes suggest barriers to entry or a niche market. The fixed-price nature of the contract, combined with the competition level, suggests an effort to achieve a stable price point, though the limited number of bidders might mean less downward pressure on that price.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing inherent in full and open competition. However, with only three bids, the savings realized may be less substantial than if more companies had participated, potentially leading to a higher-than-optimal price.

Public Impact

The Department of the Army benefits from essential refueling and defueling services for its aircraft and potentially other vehicles. This contract ensures the operational readiness and logistical support for military aviation activities. Services are likely concentrated in Alabama, given the contract's place of performance. The contract supports jobs within the logistics and fuel services sector, potentially benefiting the local economy in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) in a full and open competition could indicate potential market concentration or barriers to entry.
Long contract duration (over 6 years) increases the risk of price escalation and potential misalignment with evolving technological or operational needs.
Lack of explicit small business set-aside or subcontracting information raises concerns about opportunities for smaller businesses in this significant contract.
The specific nature of 'CLASS III PETROLEUM, OILS, AND LUBRICANT (POL) REFUELING/DEFUELING SERVICES' can be sensitive and require specialized handling, potentially limiting the pool of qualified bidders.

Positive Signals

Awarded under full and open competition, which theoretically allows for the widest possible range of qualified contractors to bid.
Firm Fixed Price contract type provides cost certainty and protects the government from cost overruns.
The contract supports critical Department of Defense operational requirements, ensuring mission readiness.
The contract has a defined period of performance, allowing for periodic reassessment of needs and contractor performance.

Sector Analysis

The petroleum, oils, and lubricants (POL) market is a critical component of the broader logistics and transportation sector, supporting a wide range of industries, including defense. The defense sector's reliance on POL is substantial, encompassing fuel for aircraft, vehicles, and equipment. Contracts for refueling and defueling services are essential for maintaining operational readiness. While specific market size data for POL refueling services is not readily available, the overall defense logistics market is vast, with significant annual spending. This contract fits within the niche of specialized fuel handling and logistics support for aviation assets.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). With only three bidders in the competition, it is important to understand if there were opportunities for small businesses to participate, either as prime contractors or subcontractors. The absence of specific subcontracting plans or goals in the provided data suggests that the impact on the small business ecosystem may be limited unless Primus Solutions, LLC proactively engages small businesses. Further investigation into subcontracting reports would be necessary to fully assess the impact.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards, delivery schedules, and payment clauses. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise. The firm fixed-price nature of the contract provides a degree of financial oversight by establishing a ceiling cost.

Related Government Programs

Defense Logistics Agency (DLA) Fuel Contracts
Air Force Petroleum, Oil, and Lubricant Services
Navy Fueling Facilities Support
General Services Administration (GSA) Schedule for Fuel and Lubricants

Risk Flags

Limited competition
Long contract duration
Potential for price volatility in POL market
Lack of explicit small business subcontracting data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.6 million to PRIMUS SOLUTIONS, LLC. CLASS III PETROLEUM, OILS, AND LUBRICANT (POL) REFUELING/DEFUELING SERVICES

Who is the contractor on this award?

The obligated recipient is PRIMUS SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $63.6 million.

What is the period of performance?

Start: 2012-05-16. End: 2018-06-16.

What is the track record of Primus Solutions, LLC in performing similar petroleum, oils, and lubricants (POL) refueling/defueling services for the Department of Defense or other government agencies?

Assessing Primus Solutions, LLC's track record requires a review of their past performance on similar contracts. This would involve examining contract histories, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any documented issues or commendations. Without access to these specific performance records, it's difficult to definitively gauge their reliability and capability in executing complex POL services. However, being awarded a definitive contract of this magnitude suggests they have met certain baseline requirements. Further due diligence would involve searching for any past disputes, claims, or negative performance reviews that might indicate potential risks associated with this contractor.

How does the average annual value of this contract ($10.6M) compare to other DoD contracts for similar POL refueling/defueling services, considering scope and location?

Direct comparison of the average annual value ($10.6M) is challenging without detailed scope information for comparable contracts. However, POL services are critical and often involve significant infrastructure and logistical coordination, especially for aviation. Contracts can range widely based on the volume of fuel, types of aircraft/vehicles supported, geographic spread of operations, and specific services (e.g., bulk storage, mobile refueling, specialized handling). A $10.6M annual spend suggests a substantial operational requirement, potentially supporting a large base or multiple facilities. Benchmarking against contracts with similar service descriptions, duration, and performance locations (if available) would provide a clearer picture of whether this represents a competitive or premium price point for the services rendered.

What are the primary risks associated with a firm fixed-price contract of this duration (over 6 years) for POL services?

The primary risks associated with a firm fixed-price (FFP) contract of over six years for POL services revolve around price volatility and potential obsolescence of services or equipment. POL prices are subject to market fluctuations (e.g., crude oil prices), which could lead to the contractor absorbing significant losses if prices rise sharply, or the government potentially overpaying if prices fall substantially below the fixed rate. Furthermore, over a long duration, technological advancements in fuel efficiency, alternative fuels, or refueling equipment could emerge, making the contracted services or specified products less relevant or efficient. The contractor also bears the risk of unforeseen operational challenges or increased costs related to environmental regulations or safety compliance, which could strain their ability to maintain profitability under the FFP terms.

Given the 'Other Support Activities for Air Transportation' NAICS code, how effective is this contract in ensuring the operational readiness of air assets?

The effectiveness of this contract in ensuring air asset operational readiness hinges on the reliability and quality of the POL refueling/defueling services provided by Primus Solutions, LLC. If the services are consistently delivered on time, meet stringent fuel quality standards, and adhere to safety protocols, then the contract is highly effective. This ensures that aircraft have the necessary fuel to conduct missions without delay. Conversely, any disruptions, quality issues, or safety incidents related to fuel supply could directly impede flight schedules and mission capability. The contract's performance metrics and oversight mechanisms are crucial for monitoring and ensuring its effectiveness in supporting the DoD's air transportation mission.

How has historical spending on POL refueling/defueling services by the Department of the Army trended over the past 5-10 years, and does this contract align with those trends?

Analyzing historical spending trends for POL refueling/defueling services by the Department of the Army requires access to comprehensive procurement data over the specified period. Without this data, it's difficult to ascertain specific trends in spending, contract types, or average values. However, it's reasonable to assume that spending in this area remains relatively consistent, driven by the ongoing need for aviation fuel to support military operations. This $63.6 million contract, awarded in 2012 and ending in 2018, represents a significant investment. Its alignment with historical trends would depend on whether overall Army spending on similar services has increased, decreased, or remained stable during that timeframe. Fluctuations could be influenced by changes in operational tempo, fleet size, or strategic shifts in fuel sourcing and logistics.

What are the potential implications of having only three bidders for this contract, particularly concerning long-term price stability and innovation?

Having only three bidders in a full and open competition for this POL refueling contract carries several implications. Firstly, it suggests a potentially concentrated market where only a few firms possess the necessary capabilities, certifications, and infrastructure. This limited competition could lead to less aggressive pricing than if more bidders were present, potentially resulting in higher costs for the government over the contract's duration. Secondly, reduced competition might lessen the incentive for contractors to innovate in service delivery, efficiency, or technology adoption, as the pressure to outperform rivals is diminished. While the firm fixed-price structure provides some cost certainty, the lack of robust competition could mean that taxpayers are not benefiting from the most cost-effective solutions available in the market or from advancements that could improve service.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W9124711R0017

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Arctic Slope Regional Corporation

Address: 6303 IVY LANE STE 130, GREENBELT, MD, 20770

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Other Minority Owned Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $64,746,395

Exercised Options: $64,746,395

Current Obligation: $63,623,261

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline