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B-193005 1 (1978-10-02)

handle is hein.gao/gaobadgmm0001 and id is 1 raw text is: THn CCMFTROLLER CENEYRAL. 0ECI 10iN a OF THE UNtED STATEs. WAMINGTON. D.C,. 1054E OC T 2 1978 FILE: B-193005 DATE: MATTER OF: Obligation of Fun , for Purchase of Oil for Strategic Petroleum Reserve DIGEST: Department of Snergy (D01) has funds available for obligation thr6ugh December 31, 1978, to buy crude oil for Strategic Petroleum Reserve. Where DOE chooses to have Defense Fuel Supply Center (DFSC) contract for oil on its behalf, DOE may not obligate appropiutions until DFSC awards convracts. This is in respoise to a request froin the Department of Energy. The Department (DOE) has an appropriation of approximately $1. 1 billion to buy oil forits Strategic Petioleum Reserve (SPR) program. The funds are available for oblijgtion thrdgh Decemuer 31, 1978. Preferring not to. deqkl directly with commercial suppliers of oil, lOE has arrangdd t acquire the oil through the Defense Fuel Supply Center (DFSC), an agency' of the Departinent of Defense. DFSC does not stock sufficient oil iteself to meet DOE's needs. DFSC intends to procure additional oil on the open market. The problem is- ;Yhen the DOE funds may be considered to be obligated. -..If DOE's appropriation nay not be -;bligated until DFSC executes contracts ,'with commercial sellers for purchaEe of the oil, then to the extent si~ch dontracts are not executed by Decezinber 31, the appropriation 'il1 lipse. DFSC has issued as.sollcitation which will enable it to dt6r into contracts tith sellers obligating the full amount by Decembei- 31. However, both DOE and DFSC coisider that procedure to be' disadvantageous to the Government, priinarily because of the haste with Wihich the contracts must be awarded and the effect that could have on the market. If, 'on the other hand, the funds may be conside;Fed as having been obligated at the time DOE and DFSC agree that D9FSC will acquire the oil for DOE, then.DFSC can carry outfthe pur tase in a more delibe'iate fashion and'possibly upon terms more favcrable to the United States. (DOE is enjoined to acquire petroleum prodicts for the SPR consistent with mini- mization of cost, and minimization of the impact of the acquisition upon supply levels arid market forces. 42 U. S. C. S 6240(b),) The Federal Energy Administration (FEA) and DFSC entered into an interagency agreement in A ;ril 1977 which purports to be the au- thority for the purchase of petroleum for the SPR by DFSC. (FEA's -1- I

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