Jan. 15, 2019 —
The No. 1 priority for Defense Logistics Agency Energy
is meeting the warfighters’ competing demands on the battlefield, especially when it comes to providing reliable and high-quality fuel, supported by a network of global relationships.
A vital way DLA Energy meets this priority is through its International Agreements Program. DLA Energy’s International Fuel Agreements team is responsible for establishing and maintaining long-term Department of Defense fuel agreements with foreign militaries. Synchronized with DLA Energy regional offices, the IFA team focuses on providing a global capability to meet future fuel requirements.
“It takes a very special set of professionals to make the international agreements successful,” said Frank Pane, director of DLA Energy Bulk Petroleum Supply Chain Services, which the IFA team is part of. “They need to not only have a firm grasp of the operational needs and workings of the Class III [petroleum, oil and lubricants] supply chain but also fully understand the myriad of governing policies, integrate successfully with the regions, and have the tact and diplomacy to conduct successful face-to-face negotiations with senior military members of partner nations.”
With no less than 25 years of fuel experience for each member, the IFA team provides global expertise using complex strategies.
“We foster strategic international partnerships that provide the capability and availability of fuel before it’s even needed,” said Michael Maclean, a logistics management specialist on the team. “We have Fuel Exchange Agreements all around the world that provide reciprocal fuel support between the U.S. and partner nations.”
The agreements give DLA Energy the authority to obtain services such as pipeline access or fuel in foreign countries. DLA Energy has 41 fuel agreements across the world with countries including Honduras, India, Japan, Korea, Spain, Italy, Greece, Argentina, Chile, Indonesia and New Zealand. The IFA team is continually working to expand the area of the world with these partnerships in place.
“If an agreement authority was not in place and the warfighter needed support, DLA Energy would have to consider other solutions that may take additional time,” Maclean said. “Our agreements provide DLA Energy with options to ensure immediate warfighter support, and that’s why we focus on expanding agreement coverage.”
In a global operating environment, the partnerships are also key to the non-combat missions DLA supports.
“The agreements play a vital role in any coalition operation, exercise or humanitarian mission,” said David Alexander, chief of the IFA team. “They’re used by our forces anywhere we operate and significantly enhance interoperability.”
Capitalizing on Efficiency
International partnerships are mutually beneficial to optimizing the supply chain. Alexander said the agreements provide economical, operational and logistical efficiencies between both countries. It’s not just about selling a gallon of fuel, he added.
“We have a variety of different types of agreements, and we create a synergy … where they complement each other,” he said. “For example, we have an agreement with the Turkish Ministry of Defense for U.S. use of a strategic Turkish pipeline essential to U.S. operations in the area. To expand beyond this capability, we also developed a Fuel Exchange Agreement with the Turkish Navy and Turkish Air Force.”
When it’s time to reconcile financial accounts, the countries can use any combination of agreements to settle debts, Alexander said. This includes offsetting debt balances through replacement-in-kind, in which one country repays the other in fuel. In the case of the U.S.-Turkey partnership, it means using the Turkish-NATO Pipeline System to settle balances in fuel.
“It’s about interoperability,” Alexander said. “It creates a single supply chain with partnering countries feeding off it.”
Maclean says there isn’t one agreement that is more important than another; they’re all valued equally.
“We do business with some countries more than we do with other countries,” he said. “Germany is one of our biggest agreements in terms of dollar value or volume exchanged.”
Scott Stafford, lead international agreements negotiator for DLA Energy Europe & Africa, highlighted one way DLA Energy uses partnerships to save money: DLA Energy gives the foreign partner the standard price it charges U.S. military forces and, in turn, the foreign partner charges DLA Energy the rate it charges its own military.
Alexander added that offsetting fuel balances gallon-for-gallon during settlement is a great economic efficiency. For example, the price Australia usually charges for fuel is consistently higher what the U.S. pays, he said.
“If they sold us 1 million gallons and we sold them 2 million gallons, the first million is offset gallon for gallon,” he said. “For that first million, we won’t pay more than what we would through the standard price.”
Operationally, fuel agreements allow U.S. forces to strategically plan flight routes and ground movements.
Alexander cited President Barack Obama’s trip to South Africa for Nelson Mandela’s funeral in 2013 as an example. Air Force One was able to take the most direct route because DLA Energy’s partnerships with the United Kingdom allowed the plane to refuel at the U.K.’s Ascension Island in the middle of the South Atlantic.
“If we didn’t have fuel support under a fuel exchange agreement there, the president would’ve had to go a whole different route,” Alexander said.
For DLA Energy, it isn’t only about the exchange of fuel; it’s also about developing relationships with partnering countries.
Since 2007, DLA Energy Europe & Africa has hosted an annual Fuel Exchange Agreement Forum for current and potential fuel-agreement partners in Europe and Africa. Last September, 64 participants from 13 countries gathered for the 14th Annual Fuel Exchange Forum in Garmisch-Partenkirchen, Germany.
“The meeting serves as an annual opportunity to bring together the international fuel-agreement community,” said DLA Energy Europe & Africa Commander Army Lt. Col. Dennis Williams. “It’s a terrific opportunity to learn more about fuel infrastructure, future operations and share information, which leads to increased partnership opportunities and the use of agreements.”
The event helps build relationships while providing an opportunity to begin, continue or finalize agreement negotiations; reconcile financial account balances; and open or close Acquisition Cross-Servicing Agreement orders to ensure compliance with ACSA guidance from the combatant command for that region.
The DLA Energy Europe & Africa International Agreements Office has been working to expand negotiations with several Eastern Europe countries.
“We’re close to finalizing agreements with Estonia and Latvia and are continuing to work through negotiations with Romania and Lithuania,” said DLA Energy Europe & Africa International Agreements Chief Steven Helton. “One of our goals is to expand DLA Energy military fuel agreements throughout Europe with the support of U.S. European Command.”
Whether U.S. forces are conducting coalition exercises, providing humanitarian support or executing a strategic mission, they need to trust that they have fuel available worldwide to perform their duties. DLA Energy prides itself on understanding customer requirements and anticipating future needs to ensure warfighters have reliable and efficient fuel sources across an increasingly complex global environment.
Know Your Agreements
The legal framework for reciprocal support with a partner nation is called an Acquisition and Cross-Servicing Agreement. With that in place, Fuel Support Agreements, Fuel Exchange Agreements or Direct Bill Agreements are possible.
Fuel Support Agreements
FSAs are precise, technical arrangements that give access to pipeline and large storage systems. They stipulate payment provisions, quality control and logistical requirements pertinent to transportation or delivery.
Fuel Exchange Agreements
FEAs are more widely used and in essence allow DLA Energy and partner nations to exchange fuel worldwide. They optimize supply chain capabilities and can be used in conjunction with an FSA. For instance, a U.S. Air Force C-17 could receive fuel on Ascension Island after which DLA Energy could “repay” the United Kingdom in its pipeline system via a book transfer. Likewise, if an Italian naval vessel received fuel in Greece and then again in Djibouti, Italy could repay DLA Energy with aviation fuel via an equal-value exchange settlement option in the Northern Italian Pipeline System.
Direct Bill Agreements
DBAs authorize worldwide fuel exchanges with monetary payment as the primary means of settlement between the partnering countries.