DEFENSE LOGISTICS AGENCY AMERICA S COMBAT SUPPORT LOGISTICS AGENCY

Transcription

1 WARFIGHTER FOCUSED, GLOBALLY RESPONSIVE SUPPLY CHAIN LEADERSHIP DEFENSE LOGISTICS AGENCY AMERICA S COMBAT SUPPORT LOGISTICS AGENCY Defense Logistics Agency Energy: Bulk Petroleum/Biofuel Kevin Ahern August 27, 2015 WARFIGHTER SUPPORT ENHANCEMENT STEWARDSHIP EXCELLENCE WORKFORCE DEVELOPMENT 1

2 Global Organization/Support JCS DoD Petroleum Structure Office of Secretary of Defense Unified Commands DLA Energy LNOS JPO SAPO Army Navy/Marine Corps Air Force Defense Logistics Agency Service Control Points Army Petrol Center NAVSUP Energy AFPA Defense Logistics Agency Energy Fuel Terminals Fuel Terminals Fuel Terminals Regions / Field Offices Customers Fuel Terminals 2

3 Scope and Impact - A Day in the Life of DLA Energy - 14M gallons of fuel worth $53M 2,023 posts, camps, and stations in 38 countries 230 bunker contract locations in 51 countries 506 Into-Plane contract locations in 97 countries 26 along side aircraft refueling locations 22 optimization effort locations Natural gas for over 200 customers 6.2M megawatt hours of renewable power 179 terminal operations USAF and five commercial launch and space programs 95,000 standard cubic feet of gaseous helium to the Middle East AOR $1.1M in foreign military sales 3

4 DLA Energy Enterprise Military Fuel FY14 Inventory 56.1M barrels* Storage Locations (9/30/14) 594 Transactions 7.1M Barrels Sold 99.2M Fuel Card Aerospace Energy Sales Petroleum Sales: All Customers FY10 Net Sales 130.5M barrels $15.2B FY11 Net Sales 129.7M barrels $19.1B FY12 Net Sales 120.1M barrels $18.7B FY13 Net Sales 103.1M barrels $16.5B FY14 Net Sales 99.2M barrels $15.8B FY15 Estimate 94.0M barrels $12.9B Foreign Military Sales FY14 $1,112.6M $56.1M Net Sales 0.6 Mbbls $98.2M Bulk Contract Awards 3.0 Mbbls $367.9M Expanding Energy Solutions FY14 Natural Gas Business $436M Electricity Business $902M Coal Contract Business $108M Renewables* $287M Energy Savings Performance** $297M U.P. Awards^ *Total Est. Contract Value ^Contract Administration Forward Presence FY14 Co- located: 3 Service Control Points 4 Geographic Regions: approx. 303 personnel Personnel On Board FY14 Civilians 1278 Military 67 $45.2M * 42 Gallons = 1 Barrel 4

5 DoD Energy Products and Services Supported by DLA Energy Class III Bulk Petroleum Natural Gas Electricity Coal Aerospace Energy Alternative Fuels Renewable Energy Energy Savings Performance Contracts Utilities Privatization 5

6 Bulk Fuels Program Program Overview JP8/F-24/JAA/JA1 Primary Ground and Air fuel Procure Petroleum Products in Very Large Volumes Award Indefinite Quantity Contracts Estimated Quantity with a 75% to 90% minimum lift guarantee Fixed Price with Economic Price Adjustment Weekly/Daily Price Change Based on Commercial Market for petroleum prices FSII Freeze point F76 Navy Distillate fuel Pour point Stability JP5 Marine Aviation fuel Flashpoint (140 degree F) Fuel System Icing Inhibitor (FSII) Move towards commercial jet fuel with additives Focus on Inventory and Distribution Alternatives Utilize Bid Evaluation Model (BEM) for award and distribution patterns Set and Maintain Peacetime Operating Stocks and War Reserve Materiel Management Levels Inland/East/Gulf Coast (IEG) Rocky Mountain/West (RMW) Western Pacific (West Pac) Atlantic Europe Mediterranean (AEM) Lube Oils Jet Propulsion Thermally Stable (JPTS) Fuel System Icing Inhibitor (FSII) Aviation Synthetic Fuels (Synfuels) 6

7 Issue Solicitation WARFIGHTER FOCUSED, GLOBALLY RESPONSIVE SUPPLY CHAIN LEADERSHIP Bulk Fuels Purchase Programs Always in the Market Close Solicitation->Evaluate Offers->Conduct Negotiations->Evaluate Final Offers Award Contract Sep 15 INLAND/E. & GULF COAST Apr 16 Mar 17 F76, JAA, JP4, JP5, JP8 Feb 16 Nov 15 ATLANTIC EUROPE Med. Multi- year award Jul 16-Jun 17 F76, JP8, JP5, JA-1 May 16 Jan 16 ROCKY MOUNT & W. COAST Oct 16-Sep 17 F76, JAA, JP4, JP5, JP8 Aug 16 Mar 16 WESTERN PACIFIC Jan-Dec 17 F76, JA1, JP5, JP8, RME Nov 16 7

8 Bulk Fuels Business Model Procure Petroleum Products in Very Large Volumes Award Annual Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts Annual contracts industry norm for larger purchasers (airlines) Socio-economic considerations Small Business Set-Asides Estimated Quantity with a high minimum lift guarantee Price tied to market price indicator with fixed margin Contracts typically with manufacturer (refinery) with product purchased at origin Moved through commercial distribution system to intermediary storage locations for redistribution or directly to end use customer 8

9 Steps in Acquisition Process Receiving and verifying a purchase requirement Planning the acquisition Soliciting offers Solicitation posted on FedBizOpps website ( Reviewing offers/evaluating Negotiating and finalizing offers Conducting final offer evaluations (BEM) Award Contracts Post-Contract Administration 9

10 PATH TO AWARD ISSUE RFP CLOSE RFP/ INIITIAL OFFERS SUBMISSION INITIAL EVALS & TECH REVIEW OPEN NEGOTIATIONS REQUEST INTERIM PRICES PROCUREX REVERSE AUCTION FINAL TECH EVALS ISSUE BEM REPORTS FINAL PROPOSAL REVISIONS ISSUE BEM REPORTS COMPLETED BEM SMALL BUSINESS NEGOTIATIONS FINAL BEM RUN AWARDS 10

11 Bid Evaluation Model Awards made based on lowest overall cost to DoD taking into account offer pricing, transportason to point of sale and other cost factors Model calculates costs of all possible ways to connect an offer to a requirement All offer lines considered individually All possible transportason modes considered Applicable node/arc combinasons up to four iterasons to connect offerors and requirements All offer opsons (such as either/or opsons for JP5 or JP8) and considerasons (offer maximums/minimums) and addisve possibilises Each leg of a route is moneszed and added to the offer (up to 6) Includes intermediate throughput costs and evaluason factors Lowest overall cost across all requirements is awarded 11

12 Farm-to-Fleet Procurements of operational quantities of alternative fuel blends to support Navy 2016 Great Green Fleet and 2020 Alternative Fuels Goals Navy requirement for 10% min to 50% max biofuel content for JP-5 jet fuel and F-76 marine diesel Programs included to date: 2014 Inland/East/Gulf Coast region 2015 Rocky Mountain/West Coast region These two solicitations cover all 50 states Compliance with section 526 of Energy Independence and Security Act of 2007 lifecycle greenhouse gas requirements Commodity Credit Corporation (CCC) funding incentive will be available for biofuels produced from USDA-approved domestic feedstocks 12

13 Farm to Fleet CCC & Evaluation Commodity Credit Corporation Financing institution created in 1933 to stabilize, support, and protect farm income and prices Biofuel blend must contain 10% to 50% biofuel Biofuel must be refined from domestic feedstocks approved by the USDA Not intended to be a perpetual incentive CCC funding eligibility Bid Evaluation Model (BEM) Evaluation factor applied for eligible biofuel blends The amount of the biofuel production incentive provided to an individual offeror will be only the amount needed to be competitive with petroleum DLA Energy will not pay more than it normally would for conventional fuels 13

14 IEGC Farm to Fleet Results No awards made to biofuel offerors No offers received for alternative jet fuel (JP-5) Offers for alternative marine diesel (F-76) Examples of HRD feedstocks: Distillers/non-food grade corn oil, animal fats/byproducts, yellow grease, UCO, camelina oil, algal oil HRD offers found technically unacceptable / quality assurance & specification compliance concerns Potential reasons for lack of alt jet fuel offers 1. No existing synthetic jet fuel producers 2. Not enough CCC incentive (ie fuel cost too high) 3. Suppliers unaware of requirement (not enough press) 14

15 F-76 HRD Quality Concerns Familiarity with specification Lack of experience with F-76 in general Specification appendix requirements for testing on neat alternative fuels Unlike aviation fuels, not analogous to commercial diesel requirements (ISO 8217 & D975) Quality assurance: Blending capability Storage limitations Specification compliance: Carbon + Hydrogen content Metals DSEP Flash Point Particulates Additive requirements 15

16 Future Procurements - Way Forward Post- IEGC Award: Modified awarded contracts to encourage biofuel supply during the performance period Pre- RMW Solicitation: Conducted a lessons learned review with the unsuccessful biofuels offerors and the Navy for future solicitations Continued to work with the unsuccessful biofuel offerors in overcoming proposal deficiencies Assisted the Navy with identifying any modifications necessary to the CCC funding for the RMW solicitation Post- RMW Solicitation: Hosted an industry conference prior to the close of the RMW solicitation to encourage partnering opportunities between biofuel companies and other petroleum companies offering on the solicitation 16

17 Current and Future Solicitations Rocky Mountain/West Coast Solicitation already closed, contracts to be awarded in early September, deliveries to start 1 Oct 15 Includes Hawaii and Alaska Production incentive set at $0.25/gal. Interest shown in previous WESTPAC and AEM solicitations Additional Opportunities Jet A in CONUS Jet A-1 in OCONUS Regions JP-5, JP-8, F-76 all Regions 17

18 DEFENSE LOGISTICS AGENCY AMERICA S COMBAT LOGISTICS SUPPORT AGENCY WARFIGHTER FOCUSED, GLOBALLY RESPONSIVE SUPPLY CHAIN LEADERSHIP WARFIGHTER SUPPORT ENHANCEMENT STEWARDSHIP EXCELLENCE WORKFORCE DEVELOPMENT 18 18