Argus Sole Source Justification and Approval (Redacted).pdf

FAR SUBPART 13.5 SIMPLIFIED PROCEDURES FOR CERTAIN COMMERCIAL

ITEMS

SOLE SOURCE JUSTIFICATION AND APPROVAL

1. Identification of the Agency and the Contracting Activity

The requiring activity is by the U.S. Department of Energy (DOE) Office of Petroleum Reserves (FE-40) within DOE’s Office of Fossil Energy, and the Acquisition and Sales Division of the Project Management Office (PMO) of FE-40 based outside of New Orleans, Louisiana, is the procuring activity for this requirement.

2. Nature and/or Description of the Action Being Approved

This is a sole source acquisition under FAR Part 13, “Simplified Acquisition Procedures,” to renew an existing contract with Argus Media, Inc., for a twelve (12) month subscription for the following suite of products: Argus Crude, Argus Freight, Argus US Products, Argus Petroleum Transportation North America, Argus Crude and Refined Products Outlook, Argus Possibility Curve – Crude, and Argus European Products. The contract is Firm-Fixed Price, and the period of performance is March 3, 2021 through March 2, 2022.

3. Description of the Supplies or Services Required to Meet the Agency’s Needs (Including the Estimated Value) The requirement is to provide real time crude oil and refined product pricing, crude oil deals/trading (bids and offers) data, and daily alerts and commentaries pertaining to significant oil and refined product market events to the following three sites: FE-40; the PMO of FE-40 based outside of New Orleans, Louisiana; and the Oak Ridge National Lab (ORNL) at the cost of $332,973.00. This will allow FE-40 to accomplish its mission to “reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program.” More specifically, the service provided will enable FE-40 to perform Congressionally mandated crude oil sales, monitor crude oil and refined product market dynamics for potential release of Strategic Petroleum Reserve (SPR) oil, and for conducting internal and/or Congressionally mandated studies pertaining to the purpose, design, and utilization of the SPR. The PMO administers the actual drawdown, distribution and acquisition of SPR oil as well as manages the SPR sites. ORNL maintains and runs an oil valuation model based on Argus pricing and other data to value SPR crude oil streams.

4. Statutory Authority

Simplified Procedures for Certain Commercial Items, 41 U.S.C. 1901 as implemented by FAR Subpart 13.5

5. A statement demonstrating the unique qualifications of proposed contractor or nature of the action requiring use of this authority

Argus is uniquely qualified to provide these services to FE-40 and ORNL because they are the industry trusted source of pricing info for U.S. crude streams in terms of breadth, depth, and transparency in methodology used to calculate price or price differentials. As an example, Argus generated a new crude oil ‘marker’ for Houston, Texas when the volume of oil trades in Houston reached a sufficiently high volume. The new marker not only provides valuable information about the market dynamics in Houston but also enhances price discovery/formation in competing sites. Argus covers more than 80 different internationally traded crude streams and the widest set of markets/regions with respect to crude oil and refined products. Argus also provides a high degree of transparency in their formulas for calculating the price differentials which appeals to traders, buyers, and sellers. Their pricing and trading data are critical for FE-40 to implement Congressionally mandated crude oil sales and potential oil exchanges and releases in an emergency situation.

6. A description of efforts to ensure that offers were solicited from as many potential sources as is practicable Argus Media was contacted directly. They confirmed that these products are sold direct from them and are not offered through resellers; however, a notice of intent to sole source this acquisition was posted on FedConnect for interested parties to identify their capabilities. No inquiries or responses were received.

7. A determination by the Contracting Officer that the anticipated cost to the Government will be fair and reasonable.

The Contracting Officer determines that the anticipated price(s) will be fair and reasonable in accordance with FAR 13.106-3(a)(2)(ii). Sufficient historical pricing data exist to make the fair and reasonable determination.

8. A description of the market research conducted and the results.

Market research of other potential service providers in oil and refined product real time pricing data provision, trading data provision, and timely market analysis and commentaries was conducted. FE-40 has been unable to locate other sources that provide compatible oil pricing data and analyses critical to accomplishment of its mission but will evaluate options again in a year’s time. For example, I H S Markit provides short and long-term oil supply and demand outlook, and monthly pricing data (including forecasts); however, it does not provide daily pricing nor trading data. Bloomberg terminal provides real time crude oil and refined product pricing and trading info; however, they cover a narrower set of crude streams and do not provide the level of transparency that traders, refiners, and analysts seek. S&P Global also provides real time crude oil and refined product pricing and trading info;

however, their gulf coast markers reflects purely the lowest cargo price each day whereas the Argus includes both waterborne and pipeline transactions to reflect a true USGC weighted average benchmark.

9. Any other facts supporting the use of other than full and open competition.