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US Navy Issues Solicitation for “Drop-In” Biofuel Blends




by:
J. Paul Forrester
Mayer Brown LLP - Chicago Office

Cameron S. Hamrick
Marcia G. Madsen
Mayer Brown LLP - Washington Office

 
June 17, 2014

Previously published on June 12, 2014

The Defense Logistics Agency (DLA), in conjunction with the US Navy, has issued a solicitation for bulk fuels for DLA Energy’s customers located in the Inland/East/Gulf Coast regions of the United States. The Inland/East/Gulf Coast is the single largest bulk fuels acquisition program, and it is valued in excess of $3.5 billion.

Significantly, as part of the regular bulk fuel procurement for Inland/East/Gulf, the solicitation is designed to assist the Department of the Navy in meeting its goals to increase the use of biofuels. Under the joint “Farm to Fleet” program of the US Department of Agriculture and Navy, the Navy has a goal that 10 percent of its total military specification of JP-5 aviation turbine fuel and F-76 naval distillate fuel requirements consist of biofuels.

In a statement issued on June 10, 2014, the Navy indicated that at least 37 million gallons of “drop-in” biofuels are being sought in the solicitation. These biofuels can be blended in a range of 10 to 50 percent with conventional petroleum products and must meet all military fuel specification properties that make handling requirements and performance indiscernible to the end user. The Navy stated that DLA will purchase the biofuel blends only if they are cost competitive with their conventionally derived counterparts. The Navy also added that “[e]xpanding military energy sources improves the reliability of our overall fuel supply, adds resilience against supply disruptions, and gives the military more fuel options to maintain its readiness and defend the national security interests of the United States.”

According to the Navy, $27.2 million in Commodity Credit Corp. (CCC) funds are available to defray any additional costs that may exist for fuels derived from domestic feedstocks on a US Department of Agriculture-approved list. The CCC funding is capped at 71 cents per neat gallon of biofuel.

Fuel offered under the solicitation must also comply with Section 526 of the Energy Security and Independence Act, which requires that the lifecycle gas emissions of the alternative fuel must be equal to or less than petroleum-based fuel based on either the renewable fuel standard (RFS) or GREET Model.

The solicitation anticipates award of an Indefinite Delivery/Indefinite Quantity Type, Fixed-Price with Economic Price Adjustment contract. The total estimated quantities are for JP-8 (376,000 USG), JP-5 (254,612,000 USG), JAA (925,544,000 USG), and F-76 (137,886,000 USG). The procurement is 44.94 percent set-aside for small business. Offers are due July 9, 2014, 3:00 pm EST.



 

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Author
 
J. Paul Forrester
Cameron S. Hamrick
Marcia G. Madsen
Practice Area
 
Energy
 
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