JPTS_JA_Redacted .pdf

Page 1 of 5 ̀ Justification for Other Than Full and Open Competition

(SPE60222D0458 P00008 – SK Energy)

DEFENSE LOGISTICS AGENCY

HEADQUARTERS

8725 JOHN J. KINGMAN ROAD

FORT BELVOIR, VIRGINIA 22060-6221

J&A Tracking Number: 25-0009

Justification for Other than Full and Open Competition

JPTS SPE60222D0458 – Quantity Increase Modification

1. Summary/Introduction:

Defense Logistics Agency (DLA) Energy is the integrated material manager for energy commodities and the contracting activity for petroleum products and services for the Department of Defense (DoD). DLA

Energy is responsible for the procurement of Jet Petroleum Thermally Stable (JPTS) to support Osan Air

Base, South Korea. JPTS is the sole grade of aviation fuel authorized for the USAF U-2 aircraft. The U-2 is a High Demand, Low Density platform with a critical Intelligence, Surveillance, Reconnaissance (ISR) mission supporting the INDOPACOM Area of Responsibility. Operations include 24-hour year-round

ISR capability fueling Osan’s “Fight Tonight” mission for stability and security of the Korean peninsula and greater Indo-Pacific Region. The sole responsible source of JPTS in Korea, SK Energy, will be unavoidably shutdown from April – August 2025 due to South Korean environmental inspection. The shutdown period will leave the requirement location with depleted supply unless additional quantity is ordered and stored prior to shutdown to support JPTS delivery to Osan AB and DFSP through May 2025.

This Justification and Approval (J&A) is to increase the quantity awarded on the existing contract

SPE60222D0458 for JPTS delivered via tank truck on an other than full and open competition basis to

Osan, Korea. This J&A covers the procurement of 150,000 U.S. gallons (USG) of JPTS with an estimated value of $673,420.95 based on the current market value.

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

150,000 USGs of additional quantity to the existing contract (SPE60222D0458) for JPTS to Osan, Korea FOB Destination via tank truck delivery with SK Energy. SK Energy is the sole responsible source for JPTS fuel in Osan, Korea. The existing contract was awarded with a 65% minimum lift guarantee and has been lifted 100% due to an increase in demand at Osan. A quantity increase modification to the existing contract is required to prevent mission failure in the upcoming months as

SK Energy is preparing for shutdown from April – August 2025. The additional quantity will be awarded firm fixed price with economic price adjustment (EPA), at the same price as awarded for the current performance year of the existing contract. 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)):

The estimated quantity the Government shall award as a sole source modification is expressed in the table below:

Page 2 of 5 ̀

Quantity Product Program Location

FOB &

Mode

Supplier Estimated Unit Price

Estimated Value

150,000 JPTS

JPTS

(Supply) Osan, KR

Destination

Truck SK Energy $4.489473 $673,420.95

The anticipated cost to the Government for this requirement is $673,420.95 which represents the modification increase quantity multiplied by the awarded price per gallon for the current performance year of the contract.

4. Identification of the statutory authority permitting: other than fun and open competition

(FAR 6.303-2(b)(4)):

This J&A is based upon the authority of l0 U.S.C. §3204(a)(l), as implemented by Federal

Acquisition Regulation 6.302-1. The supplies required by the agency are available from only one responsible source and no other type of supplies will satisfy the needs of the agency.

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)):

JPTS is a unique, niche product with a limited supplier base worldwide, that requires its own refinery process, testing, storage, and additives. The supplier base is extremely limited in Korea, resulting in a sole responsible offeror for the supply requirement in Osan for over a decade.

Eligibility to supply JPTS to the DoD requires offerors to satisfy Thermal Stability Testing and First

Article Testing inspection requirements, in accordance with QAP C16.08-13 TURBINE FUEL, AVIATION, THERMALLY STABLE (JPTS) (DLA ENERGY JUL 2022). First Article Testing requires three months minimum to complete. A portion of the First Article testing requires offered

JPTS to be subjected to storage stability analysis, where a drum of fuel is tested for six weeks to ensure product conformance. If the offered fuel fails stability testing during the six weeks period or failure of any of the Table 1 test requirements per MIL-DTL-25524G, it constitutes failure of the

First Article Testing. Offerors who fail to meet the First Article Testing requirements prior to or at the time of technical evaluation of an offer, they will be rated technically “unacceptable”.

SK Energy has historically been the sole offeror for the JPTS requirement at Osan, Korea. SK

Energy is also the only fuel refiner in Korea that has satisfied the Thermal Stability Testing and

First Article Testing inspections required for JPTS and are authorized to provide JPTS to the DoD by the USAF.

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):

Prior to the contract award, a sources sought notice was publicized on SAM.gov on June 16, 2021, and vendors on FEB’s Mass Bidders List were notified of the requirement. FEB’s Mass Bidders List includes historical offerors, incumbent contractors, and companies that express written interest in the solicitation. There are only four known certified suppliers that meet the requirements in

MILDTL-25524G (USAF). No suppliers expressed interest in the requirement at Osan except for the incumbent, SK Energy.

Page 3 of 5 ̀

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 contract to be modified was awarded in fiscal year 2022 with one base year and two one-year option periods. Prior to the contract award, the offered price per unit for the base and option periods was offered by SK Energy and underwent price analysis. The Contracting Officer determined that the cost to the Government was fair and reasonable based on a comparison of the proposed prices to historical prices paid, for the same or similar items, in accordance with FAR 15.404-1(b)(2)(ii) and analysis of data other than certified cost or pricing data provided by the offeror in accordance with

FAR 15.404-1(b)(2)(vii).

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 issued a Sources Sought Notice on August 8, 2024 for market research to support the solicitation for the follow-on requirement. Ten (10) companies responded to the Sources Sought

Notice (SSN) issued under solicitation SPE602-25-R-0700. All respondents expressed general interest in the solicitation, however, none of the respondents expressed specific interest in the line items at Osan.

DLA Energy's Inventory Management Division (FEN), the Agency's experts on the JPTS supply chain, concluded that Osan resides in a marketplace where there are no other available suppliers of JPTS in Korea based on their market research and analysis of historical data.

9. Any other facts supporting the use of other than full and open competition, such as (FAR

6.303-2(b)(9)):

a. 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.

b. 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.

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

10. A listing of the sources, if any, that expressed, in writing, an interest in the acquisition

(FAR 6.303-2(b)(11)):

There were no vendors that expressed interest in writing.

Page 4 of 5 ̀

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 regarding the JPTS fuel requirement in Osan, Korea. The primary barrier to competition is the lack of refineries worldwide that manufacture JPTS, particularly in Korea, as well as the product testing that must be accomplished to obtain authorization from the USAF. JPTS required first article testing to be deemed technical acceptable and obtain authorization is required by the USAF. This testing takes a minimum of three months to complete, which would not allow a new vendor to obtain authorization prior to the required delivery date. To attempt to overcome these obstacles in the future, the

Government will continue to synopsize the requirement via SAM.gov for potential new vendors months in advance of contract award, despite there being a sole offeror for the requirement in Korea for over a decade.

Page 5 of 5 ̀

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.

ACEY.MADISO

N.1091628380

Digitally signed by

GRINSTEAD.TRACEY.MA

DISON.1091628380

Date: 2025.02.28 10:14:40

-05'00'

Tracey Grinstead

Contracting Specialist

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.

Digitally signed by

SCHULE.BRIAN.W.1016691271

W.1016691271

Brian Schule

Date: 2025.02.28 10:44:44

-05'00'

Chief of Requirements Division

Approved:

Digitally signed by

COLEMAN.SHANNON.LANETTE

ON.LANETTE.1455 .1455554833

554833

Shannon Coleman

Date: 2025.02.28 10:17:08

-05'00'

Contracting Officer

GRINSTEAD.TR

SCHULE.BRIAN.

COLEMAN.SHANN