J and A signed Redacted.pdf

DEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

J&A Tracking Number: 23-00

Justification for Other than Full and Open Competition Rocky Mountain West Coast Solicitation SPE602-23-R-0702

1. Summary/Introduction:

Defense Logistics Agency (DLA) Energy is the integrated materiel manager for energy commodities and the contracting activity for petroleum products and services for the Department of Defense (DoD). This Justification and Approval (J&A), which covers a portion of the requirement in the Rocky Mountain West Coast (RMW) request for proposals (RFP) SPE602- 23-R-0702, is for the acquisition of Turbine Fuel, Aviation Grade Jet A (JAA) delivered via pipeline on an “other than full and open competition” basis from US Oil & Refining Co. (US Oil) to McChord Air Force Base, WA (McChord). This J&A covers a total procurement of approximately 26,538,000 U.S. gallons (USG) of JAA delivered via pipeline with an estimated value of $66,172,503.00 based on the market value as of November 1, 2022.

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

The action being approved is a J&A authorizing other than full and open competition for the award of an annual JAA contract for FOB Destination delivery to McChord using US Oil’s pipeline. The contract will be a one-year, fixed-price with economic price adjustment (EPA), Indefinite Delivery Indefinite Quantity (IDIQ) contract with a 30-day carryover delivery period for fuel ordered during the contractual ordering period. The contract covering McChord will have a contract period of October 1, 2023 – September 30, 2024. Defense Working Capital Funds will be used for this effort.

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

Requirements are subject to change based on mission needs to support operations throughout the region.

The estimated quantity the Government shall award under this J&A is set forth in the table below:

Justification for Other Than Full and Open Competition (Cont’d) (SPE602-23-R-0702 – US Oil)

Quantity Product Program Location FOB & Mode Supplier Unit Price Estimated Value 26,538,000 JAA RMW McChord AFB Destination Pipeline US Oil $2.493500 $66,172,503.00

The anticipated cost to the Government for this contract is $66,172,503.00, which represents the quantity multiplied by the anticipated price per gallon. The anticipated price per gallon for the RMW requirement in the table above is determined by using the lowest laid down unit price at this RMW location for JAA under solicitation SPE602-22-R-0702, escalated to the base reference date of November 1, 2022.

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. § 3204(a)(1), as implemented by Federal Acquisition Regulation 6.302-1. The supplies required by the agency are only available from one responsible source for this location, and no other type of supplies will satisfy agency requirements.

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)):

If fuel deliveries to McChord were 100% via truck, the monthly fuel requirements would not be met. Additionally, McChord’s truck rack is not capable of receiving the amount of fuel required by 100% truck. US Oil owns a proprietary pipeline that connects directly to McChord.

Up to 10% of the requirement, however, is subject to competition between the pipeline operator and proposals for delivery by truck.

Due to limited transport supply, and lack of available commercial pipelines to support delivery without use of the US Oil-owned pipeline, this supplier-owned pipeline is required to meet quantities above 10% of McChord’s JAA requirements. The remaining 10% of the total quantity to be awarded for this location will be determined by competition under the applicable solicitation based on the best interests of the government in evaluating a pipeline proposal from US Oil and truck proposals from companies offering truck delivery (see section 6 below for details of the solicitation).

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

(SPE602-23-R-0702 – US Oil) as required by Subpart 5.2 and, if not, which exception under 5.202 applies (FAR 6.303- 2(b)(6)):

On November 3, 2022, DLA Energy posted a combined Sources Sought Notice/Synopsis (SSN) on SAM.gov under notice SPE602-23-RFI-1001, stating that the Government intended to procure 605,006,000 USG of JAA to support the annual RMW purchase program (including McChord).

Six companies responded to the SSN, expressing a general interest in the procurement, and providing their general capabilities. None of the respondents expressed interest in supply at McChord.

DLA Energy issued solicitation SPE602-23-R-0702 on January 9, 2023. McChord is solicited as at least 90% (and up to 100%) FOB Destination pipeline delivery and up to 10% FOB Origin or Destination truck.

Additionally, the requirements for the pipeline deliveries to McChord are solicited under full and open competition, meaning that any potential offeror/supplier may supply the required quantity via pipeline if the offeror/supplier makes the necessary arrangements with US Oil to use their proprietary pipeline. Nevertheless, since this supplier-owned proprietary pipeline must be used to supply a portion of the requirement to McChord, this J&A has been issued to cover this restriction.

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 anticipated cost to the Government for these contracts is $66,172,503.00, which represents the sole source quantities multiplied by the anticipated price per gallon. The anticipated price per gallon for the RMW requirements is determined by using the unit price at this RMW location for JAA under prior RMW solicitation SPE602-22-R-0702, escalated to the base reference date of November 1, 2022. Additionally, it is expected that the anticipated cost to the Government will be fair and reasonable based on a comparison of the proposed price to historical prices paid in accordance with FAR 15.404-1(b)(2)(ii) and market research in accordance with FAR 15.404-1(b)(2)(vi).

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)):

DLA Energy’s Inventory Management Division (IMD), the Agency’s experts on the RMW supply chains, conduct ongoing market research concerning fuel supply, transportation, and logistics. Based on their research, IMD concluded that McChord resides in a marketplace where no commercial pipeline other than the one owned by US Oil can service McChord.

The only other mode of delivery to McChord is truck, but this mode of delivery is limited. As

(SPE602-23-R-0702 – US Oil) discussed in Sections 5 and 11, this is primarily due to base manpower and infrastructure limitations, as well as weather restrictions. However, research also included a review of market availability of truck delivery. Currently, the United States is experiencing a nationwide shortage of qualified HAZMAT certified truck drivers. The American Trucking Association (ATA), the nation’s largest group representing the industry, explained in an April 14, 2021, letter to members of Congress that the pandemic has, “exacerbated the truck driver shortage, and the temporary closures of state motor vehicle departments and truck driver training schools dried up the already fragile pipeline of new drivers entering the trucking industry.” Further per the ATA, there is a shortfall of 78,000 truck drivers as of 2022. The COVID-19 pandemic brought on a surge of early retirements for many of these drivers, and the trucking industry is struggling to make up for the shortfall.

Finally, market research was conducted via an SSN, discussed in Section 6 above.

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.

Not applicable.

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

See Section 6.

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)):

DLA Energy is presently unable to overcome the barriers to competition at McChord. The primary barrier to competition is the lack of resources at the location to handle large scale trucking

(SPE602-23-R-0702 – US Oil) operations for delivery of fuel by truck. To overcome this obstacle, the Government has to consider significant investment into labor through service contracts/Full Time Equivalents and/or spend Sustainment, Restoration and Modernization funds for facilities, plants, and equipment.

Another barrier is the nationwide driver shortage discussed in Section 8.

Unless the transportation market rebounds, and the government makes strategic long-term investments, it is unlikely that level of competition will change for the requirements at McChord.

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(SPE602-23-R-0702 – US Oil)

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.

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.

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(SPE602-23-R-0702 – US Oil)

I have reviewed this justification.

I have reviewed and hereby recommend that this Justification be approved:

(SPE602-23-R-0702 – US Oil)

I have reviewed and concur with this Justification:

I have reviewed and hereby recommend that this Justification be approved:

Approved: