Defense Energy Support Center (DESC)
With headquarters at Fort Belvoir, Virginia, DESC is one of five inventory control points in the Defense Logistics Agency (DLA). Although the Center’s work force handles over 30 percent of the Agency’s procurement budget, the 675 DESC employees worldwide account for a relatively small percentage of the DLA work force.
DESC exercises procurement and sales responsibility for crude oil for the Department of Energy’s Strategic Petroleum Reserve, a program used to store crude oil as a buffer against potential national energy emergencies.
The Defense Energy Support Center's mission is to provide the Department of Defense and other government agencies with comprehensive energy support in the most effective and economical manner possible. DESC directs the Department of Defense organization responsible for purchasing and managing all petroleum resources used by the U.S. Military. In addition, DESC guides the growing mission of total energy support by developing strategies to buy and sell deregulated electricity and natural gas to DoD and other federal agency customers. DESC also directly supports DoD’s initiative to privatize the military base infrastructure that distributes those utilities (in addition to lighting, heating, air conditioning and water/wastewater systems).
Recent contingency operations have shown that based upon controlled threat environments, the bulk fuel wholesale and retail support arrangements can be tailored. However, as DLA’s petroleum leadership cautioned, relying totally on their wholesale capabilities, which is/will be based on foreign nation support contractors, would not be an appropriate offset for Army force structure. They contend that the Army’s petroleum distribution mission for today, and the foreseeable future, will remain large and complex. Operational and threat realities will drive how far forward DLA’s civilian contractors are actually willing to deliver. DLA’s threats of contract terminations or directed demands have produced minimal performance resolution when their contractors have had political, religious or regional biases. They, therefore, considered it essential that the Army maintain a distribution capability that can meet the joint fuel needs anywhere on the future battlefield. This could prove to be an expensive proposition, especially if DLA routinely assumes the theater distribution responsibility (via contracting) and the Army builds a duplicative force structure.
The Defense Energy Support Center’s wholesale bulk fuel responsibilities relate to the Army’s assigned management role for providing overland petroleum distribution support. Based upon field experiences and doctrinal review, DLA’s position is that the term distribution in the Army’s assigned mission included the normal supply functions of directing, redirecting, tracking, storing, monitoring and distributing bulk fuel resources, and therefore would be appropriately categorized as a common item support function. In addition, the Theater Support Command’s (TSC) Petroleum Chief (dual hatted as the petroleum group commander) would be responsible to the theater commander for the requisitioning and ownership of all in theater fuel assets except those already delivered to an other Service’s storage location, e.g., air base. All elements needed for Class III bulk fuel -- procurement, requisitioning, storage and distribution and responsibility -- are in fact included in the Army’s petroleum distribution mission. However, it is not clear that DOD can afford for the Army to plan and resource for this mission, while in practice DLA assumes much of this role.
The Center purchases more light refined petroleum product than any other single organization or company in the world. With a $3.5 billion annual budget, DESC procures nearly 110 million barrels of petroleum products each year. That’s enough fuel for 1,000 cars to drive around the world 4,620 times—or 115.5 trillion miles. products. The Center manages jet fuels, aviation gasoline, automotive gasoline, heating oils, power generation, naval propulsion fuels, lubricants, natural gas and coal. The key military fuels procured are: JP-5, a kerosene-based jet fuel primarily used for Navy carrier-based aircraft; JP-8, a kerosene-based fuel similar to Jet A-1, a commercial jet fuel; and F-76, a U.S. naval diesel similar to marine gas oil.
DESC is divided into four commodity business units, each specializing in a specific product or process. By taking advantage of an integrated teaming concept, DESC’s customers enjoy “one-stop shopping” for all of their needs.
The Alternative Fuels Commodity Business Unit procures natural gas, electricity and coal, and assists with utility privatization and energy demand management for Department of Defense and federal civilian agencies in the continental United States and Alaska. This CBU is the single manager for the DoD Direct Supply Natural Gas Program. Alternative Fuels closely tracks the natural gas industry to take advantage of deregulation, thus providing more than 200 customers with substantial cost savings by purchasing gas from a source other than the local utility company. Cost savings since the inception of the program exceed $200 million. Additionally, this CBU has successfully engaged the restructuring electricity market. Basic agreements have been executed with nine suppliers covering the three regions where restructuring has occurred and, to date, this CBU has solicited for electricity requirements of DoD activities located in Rhode Island, California, New York and Pennsylvania. As additional states deregulate, the CBU is prepared to competitively procure electricity on behalf of DESC’s customers.
The Facilities and Distribution Management (DESC-F) Commodity Business Unit is the advisor on matters concerning worldwide fuel terminal operations, storage and acquisition programs. Directs plans and programs for operation and maintenance of Government Owned-Contractor Operated (GOCO) and Contractor Owned-Contractor Operated (COCO) facilities. Administers the bulk fuels military construction and maintenance, repair and environmental programs: provides environmental support to DoD bulk petroleum facilities; negotiates with foreign governments; plan and administers DESC laboratory testing, alongside fueling, and large purchase base contracts. From inventory accounting at worldwide storage locations to writing international agreements and providing support to Foreign Military Sales agreements, this CBU provides global support to the warfighter. The right amount of fuel, at the right location, at the right time begins with the creation of the Inventory Management Plan (IMP). Annual publication of the IMP culminates a major partnership effort between the Unified Commands, Military Services and DESC Inventory Managers to establish how bulk petroleum requirements will be stored and located worldwide in support of operations plans. Facilities and distribution specialists manage worldwide fuel terminal operations as well as storage and acquisition programs. They program for operations and maintenance of government-owned, contractor-operated and contractor-owned and operated facilities. Engineers manage real property maintenance activity and military construction projects. Environmental protection specialists ensure prevention, control and abatement of environmental pollution at DoD fuel facilities, activities and related programs. Contracting specialists and contracting officers purchase services required for storing bulk petroleum products as well as services required for other areas of fuel operations, including environmental protection and aircraft refueling. Supply system analysts continually review planned inventory levels and programmed operation of fuel facilities to ensure optimal utilization of resources. Transportation management specialists continually review distribution infrastructure to ensure optimal utilization of transportation resources such as pipeline tenders and guaranteed traffic programs. This CBU is also responsible for administering the DLA Safety and Health Program throughout the world for DESC.
The Direct Delivery Fuels (DESC-P) Commodity Business Unit is responsible for the worldwide acquisition and integrated materiel management of fuels delivered directly to using activities by contracted vendors as required to support the Military Services, DoD Activities and designated Federal agencies. Services Administration, Amtrak and the US Department of Transportation. The Direct Delivery Fuels CBU provides the Military Services, DoD activities and designated federal agencies worldwide with acquisition and management for ground, aviation and ship propulsion fuels delivered directly to the customer from commercial vendors. Ground Fuels provides military and federal civilian facilities throughout the world with commercial ground and utility fuels through the Posts, Camps and Stations program. Customers include the Military Services, the National Guard and Reserves, the U.S. Postal Service, the General The Ground Fuels Division also manages the Fleet Credit Card program, which enables drivers of DoD vehicles to buy fuel at commercial gas stations using purchase cards. The Specialty Fuels Division contains two branches: Into-Plane and Ships’ Bunkers. Into-Plane contracts allow government aircraft from military and federal civilian agencies to purchase fuel and refueling services at commercial airports at substantial discounts from the posted airport price. Customers receive fuel subject to strict quality standards. The Ships' Bunkers Contacts (DESC-PHB) program provides commercial ship propulsion fuels for military and other U.S. goverment ships at commercial and military ports worldwide. The Ships’ Bunkers Fuel Program provides various grades of ship propulsion fuels for combatant ships, Coast Guard vessels and various classes of U.S. government-owned and chartered ships at commercial ports worldwide. Bunkers contracts are in place servicing customers at 91 ports domestically and 85 ports overseas.
The Bulk Fuels (DESC-B) Commodity Business Unit acts as principal advisor and assistant to the Director DESC/Deputy Director Operation in directing the accomplishment of mission responsibilities to provide worldwide support of authorized activities in the areas of contracting, distribution, transportation, and inventory control of: bulk fuels including jet fuels, distillate fuels, residual fuels, automotive gasoline's (for overseas locations only), specified bulk lubricating oils, aircraft engine oils, and fuel additives such as fuel system icing inhibitor, and crude oil in support of the Department of Energy Strategic Petroleum Reserve Program. Accomplishes the sale of excess petroleum products as authorized by 10 U.S.C. 2404. Bulk Fuels provides contracting, distribution, transportation, inventory control and quality support for bulk fuels worldwide, accounting for about three-fourths of all fuel supplied by the Center. Commodities managed by this CBU include: JP-5 and JP-8 jet fuels, F-76 diesel fuel, motor gasoline, jet fuel additives and lubricants for domestic and overseas uses. Bulk Fuels also procures and solicits for the sale of crude oil for the Department of Energy, which manages the Strategic Petroleum Reserve Program. This CBU has divisions that manage contracting, inventory and distribution, transportation rates and policy. The Bulk Fuels CBU also provides quality and product technology support for all of the CBUs in the Center.
The Military Traffic Management Command (MTMC) has transportation contracting authority. The Center’s strategically located energy regions and offices manage most of its transportation requirements, serving as focal points for arranging and coordinating fuel deliveries by pipeline, barge, tank truck and rail car. These offices maintain close working relationships with customers, terminals, refineries and MTMC. Also, they provide information and advice on transportation requirements, delivery patterns and efficient, economical movement of fuel within their assigned geographical areas of responsibility. Shipments by ocean tanker are managed centrally in the Bulk Fuels CBU. The Military Sealift Command (MSC) charters the ships and retains operational control of them, responding to the scheduling requirements provided by DESC. DESC also closely monitors the loading and unloading times of the tankers and initiates claims to collect demurrage from suppliers who cause delays. DESC transports refined petroleum products by pipeline, ocean tanker, barge, truck and rail car. The Center also transports natural gas by pipeline. Pipelines are used whenever possible because of their environmental safety, reliability and low cost. About 40 percent of the fuel the Center transports worldwide is through pipelines, including nearly 60 percent of domestic shipments. Barges and ocean tankers provide enough distribution flexibility to move fuel almost anywhere in the world. Fuel can be shifted to different locations according to need, and flexibility is key to resupplying deployed U.S. forces around the world. Ocean tankers also provide the capability of shipping large amounts—in DESC’s case about 10 million gallons at a time. Because of this flexibility, DESC uses tankers and barges for delivery of nearly half of its total transportation requirements and for the majority of its overseas requirements.
During World War I, a Unit Commander was responsible for all logistics support. His primary concern in equipping his troops for battle consisted of a short list—beans, bullets and oil. Back then, oil was packaged in 55-gallon drums and delivered to the front lines by any means of transportation available. World War II brought some improvement in acquiring and distributing fuel; however, thousands of 55-gallon drums were still hauled to the front lines to refuel vehicles and quipment. The introduction of the fuel truck signaled a technological advance which enhanced logistics support to the troops. However, this process was still very slow. Pumping fuel was difficult and unsafe. Distribution remained a major problem.
The origin of the Defense Energy Support Center extends back to World War II. To address the critical petroleum issues of World War II, the Defense Energy Support Center’s earliest precursor organization, the Army-Navy Petroleum Board, was established on July 14, 1942. Originally it was an entity of the Department of Interior. Its mission was to administer the critical petroleum requirements during World War II. The Army-Navy Petroleum Board was a product of World War II. It naturally came into being and grew in strength as the high military authorities saw their dominance in the war being developed by the internal combustion engine. As they measured the fuel needed for war areas whose land was to be covered by mobile equipment of all kinds, and whose air was to be crowded with tens of thousands of planes, and as they saw the seas with great flotillas of fighting vessels, also driven by petroleum, and great convoys of supply ships moved by oil, and carrying munitions and more petroleum to the fighting units, the need for procuring and handling petroleum products on the most gigantic scale in history was driven home and the Army-Navy Petroleum Board was born.
In 1945, it was transferred to the War Department and became the Joint Army-Navy Purchasing Agency. The organization’s name changed in 1948 to the Armed Services Petroleum Purchasing Agency, and in 1957, it functioned as the Military Petroleum Supply Agency. The Agency underwent several name changes, but its mission remained essentially the same until 1962.
In 1962, the agency became the Defense Petroleum Supply Center, a charter element of the of the consolidated military supply organization, the Defense Supply Agency, now known as the Defense Logistics Agency (DLA). The Center was designated the Defense Fuel Supply Center (DFSC) in 1964 as a single entity to purchase and manage the Department of Defense's petroleum products and coal.
In 1973, DFSC progressed from a wholesale fuel central procurement activity to a more comprehensive mission as the Integrated Materiel Manager (IMM) for the Department of Defense petroleum requirements. Under Phase I, DFSC added management of the acquisition, storage, distribution and sale of fuel with responsibility ending at the Service installation boundary. In 1991 Phase II began, which expanded DLA's ownership of bulk petroleum products to include most bulk storage installations. This effort was divided into two parts, Phase IIA which capitalized aviation fuel and Phase IIB which will capitalize all ground fuels. Once Phase II is completed DLA will own all bulk petroleum product from the point of purchase until its final point of issue to power aircraft, ships, and ground equipment.
In 1990, the DFSC mission was expanded to include the supply and management of natural gas as well as the basic petroleum and coal products. Under this program, natural gas requirements were consolidated and centrally procured with a mission to provide direct supply natural gas to customers when determined more economical than using gas from a local distribution company.
February 11, 1998 marked the beginning of a new chapter in the Center's history with a name change to Defense Energy Support Center. With it came a new mission to build an energy program aimed at moving the Department of Defense out of the management of energy infrastructure and into the management of energy products. The initiative to deregulate electricity in CONUS added still another mission to DESC. As states deregulate, DESC pursues and awards contracts for electricity services to CONUS DoD and Federal Civilian Agency installations in the same manner as procurements for natural gas.
In Fiscal Year 2000, DESC continued to meet its customers’ worldwide needs and provide products and services. At the same time the Center expanded its efforts to achieve higher standards in reforming business processes and implementing the latest in technological advances. As the Center changed from managing energy infrastructure to managing energy products, it worked towards providing comprehensive energy solutions. Significant efforts in this area include: partnering with the energy industry and its customers and implementing the latest in information technologies. These efforts have resulted in DESC accomplishing its mission in the most efficient and economical manner. As part of its continuing efforts to expand electricity support, DESC awarded several new Energy Savings Performance Contracts (ESPC) to Department of Defense (DoD) customers.
The Center continued providing energy support to all customers. From the support of DoD contingency operations in such locations as Kosovo to support an ever increasing customer base in the electricity and natural gas markets, DESC has ensured delivery of the right product at the right time. The Center carried out its critical support of the warfighter overseas by providing the necessary fuel to U.S. Forces, NATO, and other allies.
During the second half of FY00, DESC expanded the fuel capitalization program originally started in 1992 under Phase IIA of Integrated Material Management. Phase IIB involves the capitalization of all ground fuels, non-capitalized jet fuels and DESC retail billing to the end-use customers. DESC capitalized over 100 sites from March to August 2000 and processed retail billings to numerous customers previously billed by the Military Services. DESC sponsored 4 capitalization conferences and numerous training sessions that trained over 150 people in preparation for capitalization. The elimination of retail billings previously performed via the Military Services’ Fuel Working Capital Funds will facilitate the eventual closing of those accounts.
During Fiscal Year 2000, DESC expanded on its development of contractor-owned, contractor-operated automated fuel dispensing facilities to replace the antiquated motor pool fuel facilities and underground storage tanks on military installations. This initiative solved Service environmental compliance requirements while providing a significant cost savings to the government. Schofield Barracks, HI, and Fort Jackson, SC, have followed the lead of the facility in Fort Bragg, NC, and privatized their fuel dispensing operations. Many other sites are in the process of evaluation for possible conversion to contractor operations.
