FORT BELVOIR, Virginia –
Defense Logistics Agency Energy Installation Energy’s newest customers, Altus Air Force Base, Oklahoma, and DLA Susquehanna, Pennsylvania, have Direct Supply Natural Gas Program contracts beginning Oct. 1.
“The program allows installations to contract with third-party suppliers, rather than local utility companies to purchase natural gas supply,” said Carol Bartenhagen, Natural Gas South region contracting officer section chief.
The Direct Supply Natural Gas Program was established by the Defense Energy Program Policy Memorandum 93-1 dated Jan. 12, 1993. This policy, governed by the Office of the Assistant Secretary of Defense, revised responsibilities and guidelines for the centralized, competitive acquisition of direct supply natural gas to ensure an increase in the program’s efficiency and cost savings to military installations.
Bartenhagen said there are 215 installations in the program and to date in fiscal year 2015 DLA Energy achieved cost avoidance of more than $61.5 million, which represents a savings of 27 percent, compared to local utility rates. Since program inception, DLA Energy achieved cost avoidance currently in excess of $1.09 billion.
“In addition to the cost avoidance, DLA Energy
Installation Energy manages relations with suppliers and consolidates requirements when possible to take advantage of economies of scale, which is an added benefit,” Bartenhagen said. “The more facilities that enter the program, the more opportunities DLA Energy has to achieve cost avoidance for the military and ultimately for the taxpayer.”
The typical contract performance period is two to three years. Prior to the end of the performance period, the requirements are re-solicited and new contracts are awarded to allow for continuous third-party supplier service.
“During the length of the contract, DLA Energy monitors each installation’s natural gas usage, transportation agreements, local utility invoices and other items to ensure contractor performance,” said Joseph Knudson, Natural Gas II branch chief. “In addition, DLA Energy also monitors industry publications such as Inside FERC’s Gas Market Report and Platt’s Gas Daily to verify pricing and keep on top of industry developments.”
Knudson added that while DLA Energy interfaces with service commands such as the Air Force Civil Engineer Center, Army Corps of Engineers and Navy Facility and Engineering Command to help identify possible candidates for the program, ultimately DLA Energy must engage installations directly. Contracts are only awarded when it is cost effective.
“Each installation has unique requirements, levels of experience, transportation agreements, and they are governed by varying local utility tariffs,” Knudson said. “It is critical that we capture these nuances and express them accurately in our requirements to receive the best quotes and ensure smooth contract performance.”
Scott Taetsch, DLA Energy Installation Energy deputy director, said the team strives to provide cost effective solutions to Department of Defense installations.
“The natural gas team continuously works with potential customers to identify opportunities for economical and reliable supply,” he said. “The team has especially been focused on targeting customers with high consumption levels as well as those in historically constrained or non-competitive market areas to identify ways of supporting their requirements.”
In addition to Altus Air Force Base and DLA Susquehanna, the Installation Energy team has added the U. S. Army Reserve Center in Statham, Georgia, U.S. Department of Education Richland Research Campus in Washington and Westover Air Force Base, Massachusetts, to the program this fiscal year.