While petroleum is the primary commodity supplied to Defense Logistics Agency Energy’s whole of government partners, it also provides electricity, natural gas and renewable energy to support the operations of several federal agencies.
“Working with 12 different government partners on facility energy operations, DLA Energy continues to strengthen its ability to serve national interests,” said DLA Energy Installation Energy Director Pam Griffith. “DLA Energy’s network and expertise in the natural gas and electricity supply chains improves efficiency and provides value to the whole of government.”
Thirty percent of DLA Energy’s natural gas and electricity portfolio is comprised of federal customers with the Departments of Health and Human Services, Commerce, Energy and Veterans Affairs representing the largest partnerships.
“The facility energy we provide is critical to government operations,” Griffith said. “We frequently work with industry to identify innovative and reliable solutions to position ourselves to be a provider of choice and to meet our customer’s energy needs in the best possible way.”
Provider of Choice
DLA Energy is uniquely positioned to be a reliable partner to the whole of government, said DLA Energy Installation Energy Branch Chief Larry Fratis.
“Our customers know us and trust us,” he said. “Our core expertise in energy acquisition increases the effectiveness of our customers by allowing them to focus on their mission priorities, capitalize on economies of scale and avoid duplication.”
Pooling customer needs is one way DLA Energy maximizes efficiency.
Contracting officers combine Department of Defense and federal civilian requirements under regional solicitations while adhering as closely as possible to generally accepted commercial practices to maximize supplier participation and competition, Fratis said. The typical contract performance period is two to three years. Prior to the end of the performance period, follow-on requirements are re-solicited and new contracts are awarded prior to the existing contract expiration period to ensure continuous and seamless third-party supplier service, he added.
“Each customer has unique requirements, different levels of expertise and varying local utility tariffs and transportation agreements in place,” said DLA Energy Installation Energy Branch Chief Joe Knudson. “It is critical that we capture these nuances and express them accurately in our requirements to receive competitive offers and ensure smooth contract performance.”
“If we execute our mission effectively, then our partners can successfully focus on executing their core mission,” Griffith explained. “We know we are contributing to something much larger than just supplying energy.”
Department of Energy Argonne, the largest national laboratory in the Midwest, is Installation Energy’s second largest federal natural gas customer and fourth largest federal electricity customer. The energy supplied through DLA Energy supports DOE’s research and development efforts, to include research in renewable energy and its integration into the electric power grid, energy storage and smart grid technologies.
“Our whole of government partners also look to Installation Energy as a provider of expanded energy solutions,” Griffith said. “For instance, the Environmental Protection Agency has participated in our renewable energy credit program for years, purchasing enough credits to claim that 100 percent of their power was generated from renewable energy resources.”
In partnership with Installation Energy, the EPA unveiled a new solar farm at its Edison, New Jersey, facility late last year. The solar array system at EPA Edison includes 4,788 photovoltaic panels that generates enough electricity to power 45 percent of the campus’ electrical demand annually.
Offer Value
When it comes to value, DLA Energy provides competitive and cost-effective solutions, Fratis said.
“We bring value by leveraging the government’s buying power,” he said. “Rather than each customer soliciting their own requirements, we are able to combine multiple federal civilian customers with our DoD customer requirements in the same market area under one regional solicitation to get greater market attention and more competition.”
Numbers tell the story, Fratis added.
DLA Energy competitively procures over 4.7 million megawatt hours of electricity valued at $250 million on behalf of its whole of government partners. DLA Energy has provided customers with a competitive choice, netting them an average of 13 percent in direct savings.
“In fiscal year 2017, our whole of government partners also received an additional $365,000 in utility bill cost reductions through participation in the DLA Energy electricity demand response program,” Fratis said.
In natural gas, DLA Energy assesses the program’s effectiveness using cost avoidance – the difference between the DLA Energy delivered price and the associated regulated rate of supply by the local utility. During fiscal year 2017, the contracts Installation Energy awarded netted its federal customers a natural gas cost avoidance of $11.8 million. This equates to a 22 percent savings versus the local utility provider rates.
“Over the life of the program, DLA Energy has saved federal customers more than $289 million,” Griffith said.
Crisis Response
While humanitarian aid or disaster-response efforts do not typically involve Installation Energy, the team is aware of the importance of providing agile and rapid responses to emergent events.
When extreme cold temperatures curtailed scheduled deliveries during the 2017/2018 winter heating season, the team completed over 250 spot purchases totaling more than 600,000 dekatherms of natural gas in support of both DoD and federal customers throughout the Northeast, Mid-Atlantic and Southern regions of the U.S. These spot purchases allowed customers to continue operations without interruption, to avoid using more expensive alternate fuel, and to minimize costly utility imbalance penalties.
When the January 2018 ‘cyclone’ weather event threatened the operability of the National Institutes of Health central utility plant operations, the natural gas team worked numerous daily spot purchases to keep the organization up and running.
“NIH is our single largest federal customer in both electricity and natural gas programs,” said DLA Energy Installation Energy Branch Chief Mark Warno. “Their central utility plant is one of the largest of its kind in the U.S.”
The team’s hard work didn’t go unnoticed, he said. The Director of the NIH Division of Technical Resources Farhad Memarzadeh praised the team for providing a quality product in a timely manner and often on short notice.
“We feel lucky to have your staff on board,” Memarzadeh told Warno. “They are responsive and dependable at all times, but particularly in emergency situations … we could not ask for more.”
“By working with our suppliers to purchase natural gas on the daily market, Installation Energy successfully saved customers an estimated $4.5 million in alternative fuel costs and penalties during the 2017/2018 winter heating season,” Warno said.
“While we understand that our whole of government partners have a choice when it comes to providing natural gas, electricity and renewable energy solutions, we believe the combination of our acquisition and market expertise, our DoD, interagency and industry partnerships, and the cost-effectiveness of our programs deliver the best value to these customers,” Griffith said.
DLA Energy will continue to expand its network and expertise in facility energy operations in order to strengthen our ability to support our warfighters and serve broader U.S. government strategic and policy objectives, Griffith added.