JA COCO Sedong Final Redacted.pdf

DEFENSE LOGISTICS AGENCY

ENERGY

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6222

<21-0021>

Justification for Other than Full and Open Competition

1. Summary/Introduction:

The Defense Logistics Agency (DLA) Energy is the contracting activity for bulk petroleum products and services for the Department of Defense (DoD). This Justification and Approval (J&A) is for the award of an extension not to exceed twelve-months (July 1, 2021 – June 30, 2022) via modification SPE603-20-C-5003 P00005 to Sedong Enertank (Sedong) for Contractor- Owned, Contractor-Operated (COCO) storage services for receiving, storing, and issuing commercial jet turbine fuel (Jet-A) at Defense Fuel Support Point (DFSP) West Pyeongtaek.

Modification SPE603-20-C-5003 P00005 was executed on June 28, 2021 in the amount of $4,704,000.00 and increased the total contract value from $4,200,724.08 to $8,904,724.08. The purpose of this modification extension is to allow the Government sufficient time to evacuate all remaining product at the request of . The customer determined the fuel to be a malpositioned strategic storage location and requested DLA Energy take action to drawdown the fuel and associated services. As such, the modification formalizes the required reduction in services during the extension period by reducing storage and returning tanks to Sedong for commercial service, when such tank(s) are confirmed empty by DLA Energy. This reduction in service will also reduce the total price of this action, as tanks are confirmed empty, removed from service, and returned to Sedong.

, had insufficient time to procure vessels and evacuate remaining inventories of fuel during the originally contracted term once the strategic

In Fiscal Year 20, DLA Energy had proceeded with the planning and execution to solicit a follow-on procurement for this DFSP. On April 12, 2021, confirmed the storage of Government-owned fuel at DFSP West Pyeongtaek was malpositioned and therefore rendering the requirement no longer valid. The urgency of this action is a direct result of the sequence of events in April 2021 where DLA Energy had to cancel the ongoing solicitation SPE603-21-R-0501 and enter into negotiations with Sedong to establish the course of action to drawdown the remaining fuel at this site.

A twelve-month extension drawdown plan is being implemented to evacuate the approximately

U.S. Government-owned fuel remaining at DFSP West Pyeongtaek identified under contract SPE603-20-C-5003. This J&A supports the drawdown plan by awarding an extension of services under contract SPE603-20-C-5003 to evacuate fuel within the desired extension period.

Due to the unusual and compelling nature of this requirement, the preparation and approval of this J&A prior to award would have unreasonably delayed the acquisition in accordance with Federal Acquisition Regulation (FAR) 6.303-1(e).

Justification for Other Than Full and Open Competition (Cont’d)

(SPE603-20-C-5003– SEDONG ENERTANK)

2. Nature and/or description of the action being approved (FAR 6.303-2(b)(2):

There is approximately $23,988,980.00 of fuel stored in the contractor’s tanks at DFSP West Pyeongtaek, and as it stands today, it will take approximately 12-months to move all of this Government owned fuel to another location. This plan simply allows the Government the time it will take to evacuate it.

The action being approved is a twelve-month extension under current contract SPE603-20-C- 5003 citing unusual and compelling urgency, whereas the U.S. Government would be seriously injured unless DLA Energy is permitted to limit the number of sources from which it solicits bids or proposals and full and open competition need not be provided for. As contract SPE603-20-C- 5003 was set to expire on June 30, 2021, it was scheduled to be replaced by the aforementioned canceled follow-on solicitation SPE603-21-R-0501. The acquisition was paused prior to opening negotiations with offerors in the competitive range after confirmed that the storage services for 350,000 BBLS of bulk petroleum stocks at DFSP West Pyeongtaek were malpositioned and the requirement was no longer required. DLA Energy canceled the solicitation on April 21, 2021, which was on track for award prior to June 30, 2021. After cancellation, DLA Energy was left without sufficient time to draw down or transfer the remaining inventory of fuel by June 30, 2021. The efforts to evacuate product required a longer lead time than that available (April 21 – June 30, 2021) to orchestrate another DFSP location to have available storage capacity for Jet-A, taking into consideration available storage for fuel procurements with current contracts and upcoming procurements under DLA Energy Bulk Product actions in the same geographical region, and multiple vessels to accomplish this transfer. An extension was required because there is no other option to move the fuel out any faster, either by stock transfer by MSC vessel or by issuing the remaining approximate of Government-owned petroleum product from DFSP West Pyeongtaek. If an extension was not executed before June 30, 2021, the Government would have forfeited the fuel and potentially had to pay the contractor for its removal. Therefore, DLA Energy has a need for Sedong to continue to provide COCO storage services for the approximate of U.S. Government-owned inventory remaining. Failure to extend the current contract by sole source modification for a period not to exceed 12 months would have led to an abandonment of property and resulted in an approximate $23,988,980.00 of financial loss to the Government, as further described in paragraph 9(iii) below. The price for the twelve-month extension has been negotiated and incorporated via a bilateral Modification.

3. Description of supplies or services required to meet the agency’s need (including estimated value) (FAR 6.303-2(b)(3)):

SPE603-20-C-5003 was awarded to Sedong on April 17, 2020, as a procurement action to ensure continuality of the COCO storage services of Government-owned

(SPE603-20-C-5003– SEDONG ENERTANK)

Jet-A fuel with no available options. The total dollar value of the current contract is $4,357,515.00.

The agency’s requirement at DFSP West Pyeongtaek now is to maintain continuity of operations and draw down and evacuate the remaining of Government-owned Jet-A fuel within the twelve-month extension period. If the contract was not extended by June 30, 2021, it would have resulted in the inability of DLA Energy to recover the fuel from the COCO facility, resulting in the inability to issue, transfer or use the fuel for its intended purposes, which in turn would result in a loss of Government-owned product with an approximate value of $23,988,980.00.

4. Identification of the statutory authority permitting other than full and open competition (FAR 6.303-2(b)(4)):

This J&A is based upon the authority of 10 U.S.C. §2304(c)(2), as implemented by Federal Acquisition Regulation (FAR) 6.302-2. An unusual and compelling urgency precludes full and open competition, and delay in award of a contract would result in serious injury to the Government.

5. Demonstration that the proposed contractor’s unique qualifications or the nature of the acquisition requires use of the authority cited (FAR 6.303-2(b)(5)):

Sedong is the contractor under current contract SPE603-20-C-5013, and has the ability to meet the agency’s requirement for evacuation of such Government-owned fuel product within a twelve-month period without substantial duplication of cost or financial loss to the government at an approximate value of $23,988,980.00. Also, the fuel is located at the Sedong’s facility and there was not sufficient time to transfer it to another contractor’s facility or a Government installation for storage before contract expiration. If the contract was not extended by June 30, 2021, DLA Energy would have been unable to recover the remaining of Jet-A fuel from Sedong’s facility without resulting in significant loss of Government-owned product.

Under contract SPE603-20-C-5003, Sedong is responsible for management, operation maintenance, product quality surveillance, inventory control and accounting, security, safety, and the protection of Jet-A fuel stored at DFSP West Pyeongtaek. Also, Sedong is the sole source contractor capable of performing acceptable services at DFSP West Pyeongtaek without delays, additional costs, or other adverse impacts to the U.S. Government.

6. Description of the efforts made to ensure that offers are/were solicited from as many potential sources as is/was practicable, including whether a notice was or will be publicized as required by Subpart 5.2 and, if not, which exception under 5.202 applies (FAR 6.303- 2(b)(6)):

The proposed contract action was not synopsized due to the unusual and compelling urgency in accordance with FAR 5.202(a)(2). This J&A will be posted within 30 days of the executed bilateral modification in accordance with FAR 6.305(b).

7. Determination by the contracting officer that the anticipated cost to the Government will be fair and reasonable (FAR 6.303-2(b)(7)):

The estimated value of the extension of services, not to exceed twelve-months, is $4,704,000.00.

Fiscal Year 2021 Defense Wide Working Capital Funds were used to fund this requirement under The Contracting Officer has determined that an estimated cost of $4,704,000.00 ($392,000/month) for a twelve-month extension of services under the current contract is fair and reasonable in accordance with

. Sedong’s firm-fixed-price of $392,000.00/month offered for the extension period equates to a total price of $4,704,000.00 for the extension period.

8. Description of the market research conducted and the results or a statement of the reason market research was not conducted (FAR 6.303-2(b)(8)):

Market research was conducted using the proposals received in response to the canceled solicitation, SPE603-21-R-0501. One such proposal was from Sedong which confirms that Sedong has the capabilities to store and hold the Jet-A fuel until the product can be evacuated from the facility without any delays or financial loss to the government at an approximate value

(SPE603-20-C-5003– SEDONG ENERTANK)

of $23,988,980.00. DLA Energy would not have the time to execute a new contract with a new contractor or time to transfer fuel to another contractor’s COCO facility by June 30, 2021.

Therefore, it is in the Government’s best interest to utilize the twelve-month extension to implement the draw down plan for evacuation of fuel from DFSP West Pyeongtaek.

9. Any other facts supporting the use of other than full and open competition, such as (FAR 6.303-2(b)(9):

(i) Explanation of why technical data packages, specifications, engineering descriptions, statements of work, or purchase descriptions suitable for full and open competition have not been developed or are not available.

Not applicable.

(ii) When 6.302-1 is cited for follow-on acquisitions as described in 6.302-1(a)(2)(ii), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

Not applicable.

(iii) When 6.302-2 is cited, estimated cost, or other rationale as to the extent and nature of the harm to the Government.

If the contract was not extended by June 30, 2021, the government would incur a significant financial loss. For instance, this contract will result in the inability of DLA Energy to recover approximately of Jet-A fuel and a financial loss to the U.S. Government at approximately $23,988,980.00 = $23,988,980.00) based on the S&P Global Platts pricing for South Korea as of June 23, 2021.

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition (FAR 6.303-2(b)(10):

Not Applicable

11. Actions that may be taken to remove or overcome barriers to competition before any subsequent acquisition for the supplies or services are required (FAR 6.303-2(b)(11)):

There are no inherent barriers to competition for DFSP West Pyeongtaek. The Government received timely offers in response to the follow-on solicitation SPE603-21-R-0501, which was cancelled due to the requirement for storage services at DFSP West Pyeongtaek no longer being needed. Currently, a draw down plan is being implemented to evacuate the U.S. Government-owned fuel from DFSP West Pyeongtaek, .

(SPE603-20-C-5003– SEDONG ENERTANK)

I hereby certify that the data which forms the basis for this justification is accurate and complete to the best of my knowledge and belief.

Contract Specialist Contracting Officer DLA Energy, FESBB DLA Energy FESBB Bulk Petroleum Supply Chain Services Bulk Petroleum Supply Chain Services OCONUS COCO Storage Branch OCONUS COCO Storage Branch

Division Chief DLA Energy, FESB Bulk Petroleum Supply Chain Services CONUS/OCONUS Storage/Services Contract Division

I hereby certify that the data which forms the basis for this justification is accurate and complete and that the purchase request covers only the minimum requirements to satisfy the needs of the Government.

Terminal Operations DLA Energy – FENCA Chief, Programs & Studies Branch

I have reviewed and concur with this Justification.

Director DLA Energy, FES Bulk Petroleum Supply Chain Services

I have reviewed this Justification.

Assistant Counsel DLA Counsel-Energy

Approved:

Alternate Advocate for Competition