Management of Storage and Distribution of DOD Bulk Fuels Can Be Improved

LCD-79-218: Published: Jun 14, 1979. Publicly Released: Jun 14, 1979.

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A study was made of the storage and distribution of bulk petroleum products by the Defense Logistics Agency. The Defense Fuel Supply Center has a responsibility to procure and distribute fuel used by the armed forces and certain other federal activities.

There are four areas in which the Defense Logistics Agency (DLA) can improve its management of bulk petroleum products. The use of inaccurate or inappropriate transportation cost data in the computer model used by the Defense Fuel Supply Center to evaluate bids from suppliers has in some instances distorted the results. The overall cost of petroleum products could be reduced if maximum use were made of existing pipelines for distribution. Inventories at some fuel storage points have been maintained at higher levels than can be justified by usage or war reserve requirements. The loading of fleet oilers at supply points away from the source of supply has resulted in unnecessary double handling of fuels, thus increasing costs.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director, DLA, should adopt quality control measures to make sure that the proper transportation data are included in the bid evaluation model. Regional personnel who have knowledge of specific installations and distribution facilities should review the transportation data used in the bid evaluation process. Distribution patterns should be changed to make the best use of less costly pipeline services. The Director should: (1) work with the individual services to encourage them to share distribution facilities; (2) recompute peacetime stockage objectives on the basis of documented requirements, and storage needs should be evaluated on the basis of the revised stockage requirements and release facilities no longer needed; (3) ask the Navy to require that fleet oilers be loaded as near to the supply source as is feasible; and (4) direct the Secretaries of the military services to cooperate in bringing about the above improvements, particularly in the areas involving the sharing of distribution facilities and the loading of fleet oilers.

    Agency Affected:

 

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