LNG_NSGB_Q&A.pdf

Responses to Industry Questions from SPE60418R0406 LNG NSGB RFP

1. Is delivery to GTMO from the United States a Jones Act requirement?

DLA Energy Response: Solicitation SPE60418R0406 includes DFARS Clause 252.247- 7023 Transportation of Supplies by Sea (APR 2014), starting on page 26. Therefore, a request to the Contracting Officer must be made to authorize shipment via foreign-flag vessels.

2. Will preference be given to a US Flag Vessel under the Cargo Preference Act?

DLA Energy Response: No. Please see Amendment 0001. Solicitation SPE60418R0406 includes DFARS Clause 252.247-7023 Transportation of Supplies by Sea (APR 2014).

3. Is contractor to supply anything other than the LNG fuel? E.g. storage tanks, etc?

DLA Energy Response: The contractor shall supply and transport LNG fuel that meets the specifications and requirements of solicitation SPE60418R0406.

4. Section A.1.6 indicates that the LNG requirement is contingent upon investment decision in a new combined cycle power plant. What is the timeline contemplated for this investment decision and how would this decision articulate with the contracting strategy of LNG supply volumes?

DLA Energy Response: The investment decision will be made prior to award of any resulting LNG contract. A decision to move forward with the combined cycle power plant will not change the contracting strategy for LNG supply.

5. Does DLA require the selected LNG supplier to enter into a pre-established contractual framework aligned on its procurement policy or will a specific LNG sales and purchase agreement, aligned on international standards and practices applicable for LNG contracts, be negotiated and signed with the preferred selected supplier?

DLA Energy Response: Any contract resulting from the solicitation will be a DLA Energy document aligned with the Solicitation and any Amendments.

6. How will DLA rank the supply offers received? Would any preference be given to suppliers based on their track record in the region, and security of supply/diversification of supply?

DLA Energy Response: Offers will be evaluated in accordance with FAR 52.212-2 Evaluation – Commercial Items. Past Performance is part of the evaluation process.

7. Could you clarify the monthly volume required from the start of supply over the Term? Based on monthly information provided in the RFP documents, the total volume between May 2020 and August 2023 would amount to 2,143,460 MMBtu. Will the power station be running on turbines or reciprocating engines? What will the load factor and capacity of the power station?

DLA Energy Response: Please see Amendment 0001. The delivery timeframe has been updated to May 2020 through Nov. 2023. DLA Energy is not privy to the specifications of the power station.

8. Could you clarify the rationale behind the commissioning period over May 2020 – February 2021 and the underlying requested volumes? From our experience, commissioning of the combined cycle plant is generally done on a much shorter period.

DLA Energy Response: The commissioning period provided in Section B.3.2 is the scheduled plan provided by NSGB.

9. Section A.1.5 indicates that there would be no guaranteed minimum volume. We drive your attention to the fact that interested LNG suppliers will have to reserve and commit sufficient shipping capacity to deliver LNG to NSGB and that this cost will have to be reflected in the price structure of the LNG.

DLA Energy Response: Your concern is noted.

10. Does DLA anticipate additional LNG needs over the period?

DLA Energy Response: At this time DLA Energy has no additional LNG requirements.

11. Term: would you consider a longer term for this LNG sale and purchase transaction? The limited term is likely to drastically reduce participation of possible LNG suppliers and would not allow DLA to benefit from increased competition which could be achieved with a longer term

DLA Energy Response: DLA Energy cannot consider a longer contract term.

12. LNG is generally sold on fixed price only for spot volumes (i.e. individual cargoes sold and purchased in a very short timeframe) – and term volumes are traded internationally with a price indexed either to crude oil or natural gas indexes. Would DLA Energy be open to purchasing LNG on an oil or natural gas indexation as an alternative to fixed price? (assuming the alternative fuel for the power plant is diesel, purchasing LNG with a price indexed to oil would allow to guarantee savings versus the alternative fuel)

DLA Energy Response: Your concern is noted. The requirement is being solicited as a Firm Fixed Price (FFP). In accordance with A.1.16, should an offeror take exception to elements of the solicitation, the exceptions must be clearly stated in writing. These exceptions shall be included in Volume IV of the offeror’s proposal.

13. We drive your attention on the fact that fixing a price today over may 2020 – august 2023 with validity until January 2019 as required by the RFP is i) not possible without commitment on volume and ii) would require a high premium to justify the commodity risk taken by the supplier which will result in a price beyond the ceiling fixed by DLA in the RFP

DLA Energy Response: Your concerns are noted.

14. Please note that the level of minimum LNG purchase obligation has an impact on the LNG price formula and that such price formula can be improved with a higher annual contractual quantity

DLA Energy Response: Your concern is noted. In accordance with FAR 52.216-21, this is a requirements type contract.

15. What decisions/actions have been taken with regards to LNG storage solution? Is DLA open to consider different onshore storage solutions?

DLA Energy Response: The solicitation is issued to procure LNG on a FOB Destination basis. DLA Energy is not procuring LNG storage solutions.

16. Could DLA require a Jones Act Waiver for the duration of the Term or would the LNG supplier be requested to apply on a delivery by delivery basis? There are very little Jones Act compliant LNG vessels in the market and none have sufficient available capacity to serve NSGB in addition to the client these vessels have been built to serve.

DLA Energy Response: Solicitation SPE60418R0406 includes DFARS Clause 252.247- 7023 Transportation of Supplies by Sea (APR 2014) and requires a contractor to submit any request for use of foreign-flag vessels in writing to the Contracting Officer at least 45 days prior to the sailing date.

17. Would DLA consider alternative modes of LNG delivery (e.g. ISO LNG containers)?

DLA Energy Response: DLA Energy is not considering alternate modes of delivery;

however, in accordance with A.1.16, should an offeror take exception to elements of the solicitation, the exceptions must be clearly stated in writing. These exceptions shall be included in Volume IV of the offeror’s proposal.