DLA Acquisition Regulation; Fuel Allocation Procedures

DEPARTMENT OF DEFENSE

48 CFR Part 5452

DLA Acquisition Regulation; Fuel Allocation Procedures

AGENCY: Defense Logistics Agency, DoD.

ACTION: Proposed rule and request for comments.

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SUMMARY: The Defense Logistics Agency (DLA) proposes to add coverage to

a proposed to 48 CFR Chapter 54, which is published elsewhere in this

issue of the Federal Register. The proposed changes affect regulations

on Solicitation Provisions and Contract Clauses. Comments are hereby

requested on the proposed changes which implement and supplement the

Federal Acquisition Regulation 49.504(a)(1) which requires the use of

FAR Default clause 52.249-8. The changes are required in order to

incorporate three nonstandard clauses in bulk, bunkers, intoplane, and

posts, camps, and stations petroleum solicitations and contracts

concerning fuel allocation procedures. These allocation clauses permit

DFSC contractors to supply less than the full amount of fuel contracted

by the government, without being terminated for default, during periods

of exceptional fuel shortages. The proposed coverage is being published

in the Federal Register because it is expected to have an effect beyond

the internal operating procedures of DLA and, in some cases, a

significant cost or administrative impact on contractors.

DATES: Comments on the proposed DLAR rules must be submitted in writing

to the address shown below on or before June 27, 1994, to be considered

in the formulation of the final rules.

ADDRESSES: Interested parties should submit written comments to Defense

Logistics Agency, Directorate of Procurement, Contract Policy Team

(AQPLL), Ms. Melody Reardon, Cameron Station, Alexandria, Virginia

22304-6100 FAX: (703) 274-0130.

FOR FURTHER INFORMATION CONTACT:

Ms. Melody Reardon, Defense Logistics Agency, AQPLL (703) 274-6431.

SUPPLEMENTARY INFORMATION:

A. Background

Defense Fuel Supply Center has historically utilized deviations to

FAR termination for default clauses in order to provide for

contingencies in the case of fuel allocations by contractors. These

deviations have been approved on an annual basis since 1974. Defense

Fuel Supply Center proposed incorporating these three nonstandard

clauses in DLAR to eliminate the need for annual review and approval.

The clauses are necessary to protect potential contractors from default

proceedings and ensure the continuance of a competitive procurement

environment for government petroleum requirements. Allocation of fuel

to customers on a pro rata basis during periods of extreme shortage is

a standard practice in the petroleum industry.

B. Regulatory Flexibility Act

The proposed clauses are not expected to have significant economic

impacts on a substantial number of small entities within the meaning of

the Regulatory Flexibility Act, 5 U.S.C1 601 et seq. since the clauses

have been utilized for many years by Defense Fuel Supply Center as

deviations to FAR. An initial regulatory flexibility analysis has,

therefore, not been performed. Comments are invited from small

businesses and other interested parties. Comments from small entities

concerning the affected FAR sections will also be considered in

accordance with section 610 of the Act. Such comments must be submitted

separately and cite this case in correspondence.

C. Paperwork Reduction Act

The proposed rules do not impose any reporting or record keeping

requirements which require the approval of OMB under 44 U.S.C. 3501, et

seq.

List of Subjects in 48 CFR 5452

Government procurement.

Therefore, it is proposed that 48 CFR chapter 54 part 5452, which

is proposed to be added elsewhere in this issue of the Federal

Register, be amended to add the following coverage:

PART 5452--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

1. The authority citation for part 5452 continues to read as

follows:

Authority: 5 U.S.C. 301, 10 U.S.C. 2202, 48 CFR part 1, subpart

1.3 and 48 CFR part 201, subpart 201.3.

2. Part 5452 is amended by adding sections 5452.249-9 F01,

5452.249-9F02 and 5452.249-9F04 reading as follows:

5452.249-9F01 Allocation.

The Defense Fuel Supply Center will use the following clause in

overseas petroleum solicitations/contracts including those for Canal

Zone and Puerto Rico when a fixed-price contract is contemplated and

the contract amount is expected to exceed the small purchase

limitation.

5452.249-9F01 Allocation (DFSC) (May 1992) (Deviation)

(a) Reduced supplies.

If, for any cause beyond the control and without the fault or

negligence of the Contractor, the total supply of crude oil and/or

refined petroleum product is reduced below the level that would have

otherwise been available to the Contractor, the Contractor allocates

to its regular customers its remaining available supplies of crude

oil or product, then the Contractor may also allocate to the U.S.

Government supplies to be delivered under this contract, provided--

(1) Prompt notice of and evidence substantiating the necessity

to allocate and describing the allocation rate for all the

Contractor's customers are submitted to the Contracting Officer;

(2) Allocation among the Contractor's regular customers is made

on a fair and reasonable basis (except where allocation on a

different basis is required by a governmental authority, agency or

instrumentality); and

(3) Reduction of the quantity of product due the Government

under this contract shall not exceed the pro rata amount by which

the Contractor reduces delivery to its other customers similarly

situated.

(b) Additional supplies.

If, after the event causing the shortage of crude oil and/or

refined petroleum product as described in (a) above, additional

supply becomes available to the Contractor, the Contracting Officer

may choose any one of the following three possible courses of

action:

(1) accept an updated pro rata reduction as outlined in

paragraph (a); or

(2) Determine that continuance of the contract with the

quantities as originally stated in the Schedule is in the best

interests of the Government, in which case negotiations for an

equitable adjustment in price will be properly undertaken; or

(3) Terminate the contract as permitted in paragraph (d) below.

(c) Reduced deliveries.

If the Contractor believes that a law, regulation, or order of a

foreign government requires the Contractor to deliver less than the

quantity set forth in the Schedule for any location within that

country, the Contractor may request allocation in accordance with

paragraph (a) of this clause. In addition, to the criteria in

paragraph (a) above, the Contractor's request shall cite--

(1) The law, regulation or order, furnishing copies of the same;

(2) The authority under which it is imposed; and

(3) The nature of the Government's waiver, exception, and

enforcement procedure. The Contracting Officer will promptly review

the matter and advise the Contractor whether or not the need to

allocate has been substantiated. If the law, regulation, or order

requiring the Contractor to reduce deliveries ceases to be

effective, the Contractor shall resume deliveries in accordance with

the original Schedule.

(d) If, as a result of reduced deliveries permitted by (a), (b)

or (c) above, the Contracting Officer decides that continuation of

this contract is no longer in the best interests of the Government,

the Government may terminate this contract or any quantity

thereunder, by written notice, at no cost to the Government.

However, the Government shall not be relieved of its obligation to

pay for supplies actually delivered to and accepted by it.

(d) Except as otherwise stated in paragraph (b), any volumes

omitted pursuant to paragraphs (a) or (b) of this clause shall be

deleted from this contract, and the Contractor shall have no

continuing obligation, so far as this contract is concerned, to make

up such omitted supplies.

[End of Clause]

5452.249-9F02 Domestic Allocation.

The Defense Fuel Supply Center will use the following clause in

domestic bulk, bunkers, and posts, camps, and stations solicitations/

contracts when a fixed-price contract is contemplated and the contract

amount is expected to exceed the small purchase limitation.

5452.249-9F02 Domestic Allocation (DFSC) (Jun 1989) (Deviation)

(a) If the Contractor's total available supply of refined

petroleum products is reduced due to factors beyond its control and

without its fault or negligence, and if as a result of this reduced

supply, the Contractor is forced to allocate remaining supplies

among its regular customers and does so on a fair and equatable

basis, then the Contractor may reduce the quantity of product due

the Government under this contact on a pro rata basis with the

Contractor's other regular customers.

(b) The contractor shall provide prompt written notice to the

Contracting Officer of its intention to allocate, provide evidence

substantiating the necessity for allocation, and describe the

allocation rates applicable to all regular customers.

(c) If, as a result of reduced deliveries permitted by paragraph

(a) above, the Contracting Officer decides that continuation of this

contract is no longer in the best interests of the Government, the

Government may terminate this contract or any quantity thereunder,

by written notice and at no cost to the Government. However, the

Government shall pay for supplies actually delivered to and accepted

by it.

(d) Department of Energy priority orders and allocation

regulations will take precedence over any provisions of this clause.

(e) For domestic bulk and bunkers solicitations/contracts, the

provisions contained in (a) above shall be inoperative where the

Secretary of Defense makes a written determination that it is

essential to the National Defense that the Defense Fuel Supply

Center be provided contract volumes exceeding the amount of product

to which it would otherwise be entitled. However, in no case will

the Contractor be required, under this contract, to supply more than

100 percent of the quantity specified in the Schedule.

[End of Clause]

5452.249-9F04 Product Availability.

The Defense Fuel Supply Center will use the following clause in all

domestic into-plane solicitations/contracts when a firm fixed-price

contract is contemplated and the contract amount is expected to exceed

the small purchase limitation.

5452.249-9F04 Product Availability (DFSC) (Jun 1979) (Deviation)

(a)(1) If, a result of the actions of the supplier(s) listed by

reference in the Economic Price Adjustment clause which are beyond

the control and without the fault or negligence of the Contractor,

reduced supply of a referenced product is made available to the

Contractor, and

(2) If, as a result of this reduced supply the contractor

allocates its remaining supply among it regular customers on a fair

and reasonable basis, the contractor may reduce the quantity of

product due the Government under this contract on a pro rata basis

with the Contractor's other regular customers.

(b) The Contractor will provide prompt written notice to the

Contracting Office of its intention to allocate, provide evidence

substantiating the necessity for allocation, and describe the

allocation rates applicable to all regular customers.

(c) If, as a result of reduced deliveries permitted by (a)(2)

above, the Contracting Officer decides that continuation of this

contract is no longer in the best interest of the Government, the

Government may terminate this contract, or any quantities

thereunder, by written notice at no cost to the Government.

[End of Clause]

Marilyn S. Barnett,

Executive Director (Procurement).

[FR Doc. 94-9961 Filed 4-26-94; 8:45 am]

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