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089123 1 (1975-08-13)

handle is hein.gao/gaobacvdq0001 and id is 1 raw text is: o UNITED STATES GENERAL ACCOUNTING OFFICE - WASHINGTON REGIONAL OFFICE 1Cu FIFTH FLOOR 803 WEST BROAD STREET FALLS CHURCH, VIRGINIA 22046 AUG 13 1975 Rear Admiral W. M. Oler Commander, Defense Fuel Supply Center Cameron Station Alexandria, Virginia 22314 Dear Admiral Oler: In the course of a review by the General Accounting Office of the activities of the Defense Fuel Supply Center (DFSC), Cameron Station, Virginia, we found a possible overcharge to the Government by Texaco Export, Inc., under a fuel contract with DFSC. We have referred this matter to the Federal Energy Administration (FEA), for possible recoupment action. This matter was discussed with Mr. Martin J. Harty by representatives of our Office of the General Counsel. The contract (DSA 600-74-D-0519), for various amounts of jet fuel, diesel fuel, Navy distillate, and Navy special fuel was entered into in December 1973, pursuant to a mandatory allocation placed upon Texaco, Inc., under the Defense Production Act of 1950. This mandatory allocation was accepted by Texaco Export, Inc., a wholly-owned subsidiary of Texaco, Inc. The contract provided that delivery of the fuel to the Government was to be FOB Texaco's Refinery, Pointe-A-Pointe, Trinidad, but allowed the contractor the option of delivering the fuel to the Government FOB Port Arthur, Texas, at the same price. While most of the fuel was delivered FOB Trinidad, we noted that the contractor exercised the option of delivering a portion of the Navy distillate fuel (235,137 barrels or approximately 9,875,745 gallons), to Port Arthur, Texas, in late December 1973, for ship- ment to U.S. military installations overseas at the contract price of $.37 per gallon. We were advised by an FEA official that this price was signif- icantly higher than Texaco Inc., (the parent company), could have charged for the fuel for use domestically at that time under the Cost of Living Council (COLC) guidelines. DFSC officials were apparently under the impression that the fuel price was exempt from COLC control because it was to be used for export. At the time in question, Phase IV of the Economic Stabilization Program was in effect, and prices were being controlled by the COLC Phase IV Price Regulations, Part 150 of Title 6, C.F.R. Exports were exempt from Phase IV as provided in 150.54 which reads in part: (1) The prices charged for export sales including the sales or products to a domestic purchaser who certifies that the product is for export are exempt. 6~ ~OV?2 3

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