Attachment 5A - Cargo Fuels Measurement and Accountability SMS 6_8-002-ALL.pdf

Military Sealift Command, Government Operations

Safety Management System

Endorsed by:

ISM Steering Committee

6.8-002-ALL

Revision 0.1

Cargo Fuel Measurement and Accountability

1 PURPOSE: To provide clear guidance, direction and procedures in order to maintain consistency and accuracy with regard to the inventory management and accounting objectives for Defense Working Capital Fund (DWCF) fuel carried by Military Sealift Command (MSC) government owned/government operated (GO/GO) Civil Service Mariner (CIVMAR) operated/manned vessels. While this document provides concise guidance tailored to a MSC audience, the NAVSUPINST 4026.1 is to be reviewed, comprehended, and adhered to in its entirety.

2 APPLICABILITY: Current release date: January 2018

3 BACKGROUND & PROCEDURES:

3.1 Background: The Defense Logistics Agency (DLA) has worldwide responsibility for the procurement, storing and distribution of bulk petroleum products in an efficient and economical manner until they are sold to an End-Use customer. NAVSUP-Energy is co-located with DLA- Energy and is the US Navy/MSC interface for all Cargo Fuel actions pertaining to quality and accountability of product onboard US Navy/MSC platforms. MSC Combat Logistics Force (CLF) vessels are identified as Defense Fuel Support Points (DFSP(A)s) for purposes of receiving, stowing, issuing and accounting for DLA bulk petroleum products.

3.2 NOTE: The term Cargo Fuel will be used interchangeably with DWCF fuel, both referring to DLA-owned product. This SMS Procedure will focus on proper Cargo Fuel inventory management, accountability and reporting requirements to include tank gauging, volume corrections, documentation, and reportage.

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3.3 Objectives: Promulgate procedures and standards needed to maintain proper accountability of DWCF bulk petroleum.

3.4 Applicability: MSC shipboard Civil Service Mariners (CIVMARs) onboard any/all DFSP(A)s.

3.4.1 Due to the unique requirements of managing cargo fuel in the

Prepositioning Fleet, COMSC and DLA have established a Cargo Fuel MOA specifically for the Prepositioning Ships. Should a conflict arise on a Prepositioning ship between this SMS Procedure and the COMSC-DLA PM3 Cargo Fuel MOA, the MOA will take precedence.

3.5 Responsibilities: The ship’s master will determine who shall be assigned as the Responsible Officer (RO) and Accountable Officer (AO); in general, the Cargo Officer will be assigned as the RO while the Supply Officer will be assigned as the AO. The RO will remain primarily responsible for the Cargo Fuel QS program. The AO will be responsible for fuel accounting duties. The RO and AO will be designated in writing IAW NAVSUPINST

4026.1. It is expected that the RO will work hand-in-hand with the AO to ensure that QS actions that might impact inventory levels, such as re-grades and stripping, are communicated effectively to the AO.

3.6 Gross Volume: Measuring fuel begins by accurately obtaining the uncorrected “gross volume” of product in a tank, or tanks, which does not take temperature or density into account. This is done through calibrated TLIs or by manually gauging tanks either by the “innage” method or “ullage” method. Efforts should be made to maintain consistency in the chosen method of fuel measurement. Whether TLIs or manual gauging is ultimately used to determine the invoice quantity, both methods should be used in concert for the purposes of comparison and therefore anomaly detection.

3.6.1 The use of automatic Tank Level Indicators (TLI’s), if installed onboard, to obtain uncorrected gross volumes of DWCF fuel is authorized per the NAVSUPINST 4026.1 (series), provided that TLI’s are consistently calibrated, functional, and altogether trustworthy. Otherwise, manual gauging is also authorized and the choice of using either manual procedures or TLI technology is left to the CIVMAR Master and his or her supporting CIVMAR professionals. TLIs must be calibrated within required periodicities

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(SAMM).

3.6.2 Manual Cargo Tank gauging procedures, when combined with tank strapping charts, will provide only a gross measure of volume, which may require trim/list adjustments, and which shall always need to be corrected for density and temperature on a tank-by-tank basis in accordance with NSTM 541. If a ship opts for manual gauging, installed TLI’s should still be consulted in order to identify any potential manual gauging errors.

3.7 Corrected Volume: To properly account for fuel, gross volumes must be adjusted to “corrected volumes” for any/all transactions; Corrected volumes are determined by applying correction factors based on density and product temperature(s) in accordance with NSTM 541.

3.7.1 For each Cargo Tank to be measured, obtain the American

Petroleum Institute (API) gravity reading must be obtained. The primary means of doing this is via Anton Parr DMA 35 Digital Density Meter. The secondary means of obtaining API is in accordance with para 541-10.9.2.7 of NSTM 541. NOTE: API can vary between batches of fuel, and thus from tank to tank, so it is unacceptable to take only one API reading and apply this reading to multiple tanks indiscriminately.

3.7.2 After obtaining the API reading from table 541-10-6 of NSTM 541, use the temperature of the fuel for a given tank to arrive at the volume correction factor listed in Table 541-10-8 and then multiply the gross volume times this correction value to arrive at the corrected volume for a given tank. Repeat this process for and/all relevant tanks to achieve a net corrected value. This is the actual amount of fuel that was received, issued, transferred, offloaded, etc. NOTE: Temperature can often vary from tank to tank, so it is unacceptable to take only one temperature reading and apply this reading to multiple tanks indiscriminately.

3.7.3 Records for each gauging and conversion process shall be maintained indefinitely, until clearly codified by DLA, and such records, at a minimum, shall include:

a. Date and purpose of gauging (e.g. issue, receipt, credit from ashore, Weekly/EOM Inventory, etc.)

b. Customer/receiving activity

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c. Trim

d. List

e. Density/API

f. Temperature of fuel in each tank involved in an evolution.

g. Correction factor.

h. Corresponding TLI readings, whenever available.

3.7.4 Over time, various platforms have utilized a range of local Excel forms as well as software such as Qikgauge to arrive at corrected volumes. While such tools may be helpful as a QA tool, nothing alleviates the requirement to comply with this SMS, which, in turn, requires adherence to shipboard tables and amplifying guidance as set forth in NSTM 541. Qikgauge is not a program of record and will not be recognized as valid by MSC, NAVSUP Energy, or DLA Energy.

3.7.5 Unit conversions (e.g. metric tons to U.S. gallons), when necessary, will be executed IAW NAVSUPINST 4026.1.

3.8 Inventory Actions: Gauging, volume corrections, and associated ShipCLIP CLF actions based on “corrected volumes” will be conducted under the following circumstances:

3.8.1 Receipts and Offloads: Prior to Cargo Fuel offloads and receipts, all tanks, regardless of whether they will be used or not, will be gauged, individual temperatures and API readings taken and calculated for all tanks. Differences between ShipCLIP book inventories and physical inventories will be noted but will not be posted in ShipCLIP prior to loading Cargo Fuel. After a Cargo Fuel on-load or off-load, all tanks will be gauged, individual temperatures and API readings taken for each tank, and the Supply Department will post the difference between the “Quantity Invoiced” by the DFSP and “Quantity Received,” as ascertained by gauging’s and proper conversions; for receipts, the loss or gain will be recorded in ShipCLIP CLF Module as a loss or gain by receipt, as appropriate.

a. It is unacceptable to accept API and temperature readings provided by the ashore DFSP, as both may vary relative to the API and temperature readings for individual tanks onboard.

b. The Supply Department should make every effort to send ashore an experienced individual to witness shore-side DFSP issue tank volumes before and after receipt.

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3.8.2 End Use Issues and Transfers to Other Capitalized Assets: Prior to issuing fuel to an end-use customer, to bunkers, or transferring fuel to another DFSP(A), issue tanks will be gauged, temperatures obtained, and API readings taken. There is no requirement to gauge tanks not involved in the issue/transfer. After issuing fuel, issue tanks used will be re-gauged, though API/temperature will not need to be retaken, and pre-issue API/temperature values may be used. This is the process to be followed in order to determine the net amount of fuel passed to a receiving ship.

3.8.3 End of Month (EOM) Inventories: End of month (EOM) physical inventories will be conducted and posted by all ships on the last calendar day of the month. The permissible inventory threshold by which inventory adjustments shall be evaluated, known as “the 1% threshold,” is equal to .01 x (Beginning inventory + Receipts + Credits + Positive Adjustments). “Positive adjustments” are also known as determinable gains (i.e. from receipts and re-grades). For EOM inventories, all tanks will be gauged, temperatures and API readings taken, and physical inventory matched to ShipCLIP CLF inventory. An operational loss or gain, by inventory will be posted in ShipCLIP CLF Module to reflect the difference between physical and book inventory to align EOM accountability. The only exceptions to this requirement are as follows:

a. Tanks are physically inaccessible. (Must be reported to

MSCHQ Cargo Fuels Manager)

b. A ship is de-fueled, although a DD 1348-8 is still required.

3.8.4 Determinable Losses and Gains: If a determinable loss or gain is identified during the month (i.e. due to receipt differences, re-grades, flushing, stripping, coalescing) then such losses or gains should be documented on a DD 1348-8 and posted on the day that the gain or loss occurs.

3.8.5 Supply Officer Turnover: as part of the turnover process, all Cargo Tanks will be inventoried using temperature corrected volumes IAW with current ISM/SMS turnover procedures. When an Accountable Officer (AO) is relieved, per the NAVSUPINST 4026.1, DLA/NAVSUP/MSC requires an updated AO letter of designation, signed by the Master.

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3.9 Receiving/Issuing Quantity Differences/Reconciliation: Although the issuing activity (Ashore or Afloat) shall ultimately determine the invoice quantity for a transfer or end-use issue of fuel at sea, IAW NAVSUPINST 4026.1, nevertheless the issuing ship should always review their figures against the receiving activity's figures prior to making a determination of the final billing/invoice quantity, to ensure that the issuing ship has not misread strapping charts, miscalculated volume corrections, or committed other errors, such as a clerical 'fat finger' or tank gauging errors.

3.10 Required documentation:

3.10.1 A standard ShipCLIP-generated DD 1149 will be signed by the

MSC Supply Department Head and used to document all issues/receipts and credits.

a. After a Cargo Fuel transfer or end-use issue or receipt, the issuing MSC vessel will provide the DD 1149 to the receiving activity (ship or shore) and request that the receiving activity review, validate, counter-sign, and maintain a copy of this document. Likewise, upon receipt, the MSC vessel will provide receipt documentation to the issuing activity and validate documentation against the issuing activity’s documentation.

b. In reviewing shore-side DFSP paperwork, ensure that the fuel grade, Julian date, and invoice quantity are all correct.

Also verify that the DFSP has not posted an end-use bunker transaction as a Cargo shipment or vice versa. For quality-related re-grades prior to off-loads, validate with the receiving DFSP as to whether the re-grade is to be posted afloat, by the ship, or by the shore-side DFSP after receiving the product as on-grade.

c. Paper and electronic copies of Cargo DD 1149’s will be maintained onboard indefinitely.

3.10.2 A DD 1348-8 is a multi-use form and will be generated to document

EOM inventories, receipt adjustments that exceeded 0.5% (one half of one percent) of the invoice quantity, and all other determinable losses and gains (flushing, stripping, re-grades) as occurring during the month.

a. DD 1348-8’s shall be emailed to the COMSC N46 Cargo

Fuels Manager as well as DLA and NAVSUP Afloat/MALS Logistics Liaison Office (aka “CRT”) POC’s identified by N46, 6.8-002-ALL

Cargo Fuel Measurement and Accountability Page 7 of 9 as they occur, and all DD 1348-8’s for a given month shall be appended to the DD 1348-8 End of Month (EOM) inventory record.

b. The Supply Department Head or Lead Supply Department Representative shall sign the DD-1348-8 documenting inventory adjustments. However, the DD-1348-8 will be signed by the ship’s Master when a loss or gain by receipt exceeds 1% of the invoice quantity or an EOM operational loss/gain or other determinable loss exceeds the 1% threshold per the NAVSUPINST 4026.1.

3.10.3 The survey form DD 200 shall be signed by the ship’s Master and shall only be used when the loss of product is the result of:

a. Personal culpability, whether suspected or confirmed.

b. Major disasters (e.g., collision)

c. Enemy actions

3.11 Documentation and Audit Readiness: In support of audit readiness, to include Financial Improvement Audit Readiness (FIAR) assertions, or to adjudicate other losses or gains, all associated documentation to include gauging logs and conversion worksheets shall be provided to COMSC N46 within two business days of having received the request for documentation.

3.12 Shipboard Relationships: It is imperative that the Cargo Officer and Supply Department Head work closely together to validate and reconcile all cargo fuel transactions; moreover, the Supply Department Head must be made aware of the movement of all Cargo fuel internal to the ship, whether by stacking, stripping, flushing, or any other fuel movement evolution. All internal transfer evolutions to the End-Use Bunker Tanks will be treated as a sale from Cargo inventory and the Engineering Department will accept the Supply Department’s documented invoice quantity.

3.13 Process Management:

3.13.1 Office of Primary Responsibility (OPR): N46.

3.13.2 Interfaces: All MSC Combat Logistics Force (CLF) Ships, ESB

Platforms.

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3.13.3 Performance Indicators: EOM inventories consistently below the 1% threshold, documentation for determinable gains and losses, clear audit trail and compliance with procedures set forth in the NAVSUPINST 4026.1 (series) , NSTM 541, amplifying GSC External Memo’s, and this SMS procedure.

4 RECORDS & REPORTS:

4.1 Manual gauging logs.

4.2 DD 1149 Requisition and Invoice/Shipping Document.

4.3 DD 1348-8 Inventory Accounting and End of Month Report.

4.4 DD 200 Report of Survey Document.

5 REFERENCES:

5.1 CIVMAR Competency Matrix

5.2 NAVSUPINST 4026.1(series) – Fuel Management and Accounting Afloat

5.3 NSTM 541- Navy Ships Technical Manual 541

6 DEFINITIONS:

6.1 CIVMAR – Civil Service Mariner

6.2 CLF – Combat Logistics Force

6.3 CLF Module – Combat Logistics Force Module

6.4 CMLS – Corrective Maintenance and Logistics System

6.5 Determinable Gain/Loss - A loss or gain for which there is a known legitimate cause, such as the stripping of tanks or the flushing of hoses.

6.6 DFSP – Defense Fuel Supply Point Ashore

6.7 DFSP(A) – Defense Fuel Supply Point Afloat

https://msc.navy.deps.mil/QMS/SMS/SMS/EX_DOCS/Navy%20Docs/Navy%20Documents/MSUP40261.pdf https://msc.navy.deps.mil/QMS/SMS/SMS/EX_DOCS/Navy%20Docs/NSTMs/S9086-SN-STM-010.pdf

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6.8 DLA-Energy – Defense Logistics Agency Energy

6.9 DWCF – Defense Working Capital Fund

6.10 EOM – End of Month

6.11 FIAR – Financial Improvement Audit Readiness

6.12 GSC – Global Stock Control

6.13 NAVSUP-Energy – Naval Supply Systems Command – Energy

6.14 NSN – National Stock Number

6.15 OSO – Other Supply Officer

6.16 Operational Gain/Loss – Variance between the book and physical inventory of DWCF/Cargo fuel that cannot be readily attributable to a determinable cause.

6.17 ShipCLIP – Shipboard Consolidated Logistics Information Program

6.18 Strapping Charts – individual tank volume charts

6.19 TLI – Tank Level Indicator

7 REVISIONS:

Original 26 May 2017 Rev 0.1 08 Jan 2018 – Removed AFSB class vessel throughout Procedure.