Defense Energy Support Center (DESC)
In 2010, as part of the We Are DLA initiative, the Defense Energy Support Center was renamed DLA Energy. It effectively retained its previous mission. With headquarters at Fort Belvoir, Virginia, the Defense Energy Support Center (DESC) was one of 5 inventory control points in the Defense Logistics Agency (DLA). Although the Center's work force handled over 30 percent of the Agency's procurement budget, the 675 DESC employees worldwide as of 2005 accounted for a relatively small percentage of the DLA work force.
DESC exercised 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 DESC's mission was to provide the Department of Defense and other government agencies with comprehensive energy support in the most effective and economical manner possible. DESC directed the Department of Defense organization responsible for purchasing and managing all petroleum resources used by the US Military. In addition, DESC guided 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 supported DoD's initiative to privatize the military base infrastructure that distributes those utilities (in addition to lighting, heating, air conditioning and water/wastewater systems).
The DESC purchased more light refined petroleum product than any other single organization or company in the world. With a $3.5 billion annual budget, DESC procured nearly 110 million barrels of petroleum products each year as of 2005. That was enough fuel for 1,000 cars to drive around the world 4,620 times, or 115.5 trillion miles. The DESC managed jet fuels, aviation gasoline, automotive gasoline, heating oils, power generation, naval propulsion fuels, lubricants, natural gas and coal. The key military fuels procured were: 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 US naval diesel similar to marine gas oil.
The DESC was divided into 4 commodity business units, each specializing in a specific product or process. By taking advantage of an integrated teaming concept, DESC's customers enjoyed "one-stop shopping" for all of their needs.
The Alternative Fuels Commodity Business Unit procured natural gas, electricity and coal, and assisted with utility privatization and energy demand management for Department of Defense and federal civilian agencies in the continental United States and Alaska. This CBU was the single manager for the DoD Direct Supply Natural Gas Program. Alternative Fuels closely tracked 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 exceeded $200 million. Additionally, this CBU had successfully engaged the restructuring electricity market. Basic agreements had been executed with 9 suppliers covering the 3 regions where restructuring had occurred and circa 2005, this CBU had solicited for electricity requirements of DoD activities located in Rhode Island, California, New York and Pennsylvania. As additional states deregulated, the CBU was prepared to competitively procure electricity on behalf of DESC's customers.
The Facilities and Distribution Management (DESC-F) Commodity Business Unit was the advisor on matters concerning worldwide fuel terminal operations, storage and acquisition programs. It directed plans and programs for operation and maintenance of Government Owned-Contractor Operated (GOCO) and Contractor Owned-Contractor Operated (COCO) facilities; administered the bulk fuels military construction and maintenance, repair and environmental programs: provided environmental support to DoD bulk petroleum facilities; negotiated with foreign governments; planned and administered 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 provided global support to the warfighter.
To fulfill this mission, the CBU created Inventory Management Plans. The right amount of fuel, at the right location, at the right time began with the creation of the IMP. Annual publication of the IMP culminated a major partnership effort between the Unified Commands, Military Services and DESC Inventory Managers to establish how bulk petroleum requirements would be stored and located worldwide in support of operations plans. Facilities and distribution specialists managed worldwide fuel terminal operations, as well as storage and acquisition programs. They programed for operations and maintenance of government-owned, contractor-operated, and contractor-owned and operated facilities. Engineers managed real property maintenance activity and military construction projects. Environmental protection specialists ensured prevention, control and abatement of environmental pollution at DoD fuel facilities, activities and related programs. Contracting specialists and contracting officers purchased 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 reviewed planned inventory levels and programmed operation of fuel facilities to ensure optimal utilization of resources. Transportation management specialists continually reviewed distribution infrastructure to ensure optimal utilization of transportation resources such as pipeline tenders and guaranteed traffic programs. This CBU was also responsible for administering the DLA Safety and Health Program throughout the world for DESC.
The Direct Delivery Fuels (DESC-P) Commodity Business Unit was 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. The Direct Delivery Fuels CBU provided 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 provided military and federal civilian facilities throughout the world with commercial ground and utility fuels through the Posts, Camps and Stations program. Customers included the Military Services, the National Guard and Reserves, the US Postal Service, the General Services Administration, Amtrak, and the US Department of Transportation. The Ground Fuels Division also managed the Fleet Credit Card program, which enabled drivers of DoD vehicles to buy fuel at commercial gas stations using purchase cards. The Specialty Fuels Division contained 2 branches: Into-Plane and Ships' Bunkers. Into-Plane contracts allowed 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 received fuel subject to strict quality standards. The Ships' Bunkers Contacts (DESC-PHB) program provided commercial ship propulsion fuels for military and other US goverment ships at commercial and military ports worldwide. The Ships' Bunkers Fuel Program provided various grades of ship propulsion fuels for combatant ships, Coast Guard vessels and various classes of US government-owned and chartered ships at commercial ports worldwide. Bunkers contracts were in place servicing customers at 91 ports domestically and 85 ports overseas.
The Bulk Fuels(DESC-B) Commodity Business Unit acted 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. It accomplished the sale of excess petroleum products as authorized by 10 U.S.C. 2404. Bulk Fuels provided 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 included: 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 procured and solicited for the sale of crude oil for the Department of Energy, which managed the Strategic Petroleum Reserve Program. This CBU had divisions that managed contracting, inventory and distribution, transportation rates and policy. The Bulk Fuels CBU also provided quality and product technology support for all of the CBUs in the DESC.
The Military Traffic Management Command had transportation contracting authority. The DESC's strategically located energy regions and offices managed 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 maintained close working relationships with customers, terminals, refineries, and MTMC. Also, they provided 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 were managed centrally in the Bulk Fuels CBU. The Military Sealift Command (MSC) chartered the ships and retained operational control of them, responding to the scheduling requirements provided by DESC. DESC also closely monitored the loading and unloading times of the tankers and initiated claims to collect demurrage from suppliers who cause delays. DESC transported refined petroleum products by pipeline, ocean tanker, barge, truck and rail car. The DESC also transported natural gas by pipeline. Pipelines were used whenever possible because of their environmental safety, reliability and low cost. About 40 percent of the fuel the Center transports worldwide was through pipelines, including nearly 60 percent of domestic shipments. Barges and ocean tankers provided enough distribution flexibility to move fuel almost anywhere in the world. Fuel could be shifted to different locations according to need, and flexibility was key to resupplying deployed US forces around the world. Ocean tankers also provided the capability of shipping large amounts, in DESC's case about 10 million gallons at a time. With this flexibility, DESC could use 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 that 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 DLA Energy extends back to World War II. To address the critical petroleum issues of World War II, DLA Energy's earliest precursor organization, the Army-Navy Petroleum Board, was established on 14 July 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, subsequently 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 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.
In 1991, Phase II of the DFSC's evolution began, which expanded DLA's ownership of bulk petroleum products to include most bulk storage installations. This effort was divided into 2 parts, Phase IIA, which capitalized aviation fuel, and Phase IIB, which would capitalize all ground fuels. Once Phase II was completed DLA would own all bulk petroleum product from the point of purchase until its final point of issue to power aircraft, ships, and ground equipment.
11 February 1998 marked the beginning of a new chapter in DLA Energy'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 deregulated, 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 FY00, DESC continued to meet its customers' worldwide needs and provide products and services. At the same time the DESC expanded its efforts to achieve higher standards in reforming business processes and implementing the latest in technological advances. As the DESC changed from managing energy infrastructure to managing energy products, it worked towards providing comprehensive energy solutions. Significant efforts in this area included: partnering with the energy industry and its customers and implementing the latest in information technologies. These efforts had 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 ensured delivery of the right product at the right time. DESC 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 involved 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 was expected to facilitate the eventual closing of those accounts.
During FY00, 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, Hawaii, and Fort Jackson, South Carolina followed the lead of the facility in Fort Bragg, North Carolina, and privatized their fuel dispensing operations. Many other sites were in the process of evaluation for possible conversion to contractor operations.
Contingency operations during the early 2000s showed that based upon controlled threat environments, the bulk fuel wholesale and retail support arrangements could be tailored. However, as DLA's petroleum leadership cautioned, relying totally on their wholesale capabilities, which was or would be based on foreign nation support contractors, would not be an appropriate offset for Army force structure. They contended that the Army's existing petroleum distribution mission, and that mission for the foreseeable future, would remain large and complex. Operational and threat realities would drive how far forward DLA's civilian contractors were actually willing to deliver. DLA's threats of contract terminations or directed demands had produced minimal performance resolution when their contractors 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 was seen as a potentially expensive proposition, especially if DLA routinely assumed the theater distribution responsibility (via contracting) and the Army builds a duplicative force structure.
The DESC's wholesale bulk fuel responsibilities related to the Army's assigned management role for providing overland petroleum distribution support. Based upon field experiences and doctrinal review, DLA's position was 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, were in fact included in the Army's petroleum distribution mission. However, it was not clear that DOD could afford for the Army to plan and resource for this mission, while in practice DLA assumes much of this role.
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