§ 626.5 - Acquisition procedures - general.

§ 626.5 Acquisition procedures - general.

(a) Notice of acquisition.

(1) Except when DOE has determined there is good cause to do otherwise, DOE shall provide advance public notice of its intent to acquire petroleum products for the SPR. The notice of acquisition is usually in the form of a solicitation. DOE shall state in the notice of acquisition the will, to the extent feasible, include the general terms and details of DOE's crude oil petroleum products acquisition and , to the extent feasible, shall inform the public of its DOE's overall fill goals, so that they may be factored into market participants' plans and activities.

(2) The notice of acquisition will generally statesinclude the:

(i) The method Manner of acquisition to be employed;

(ii) The time that the solicitations will be open Time period for solicitations;

(iii) The quantity of oil that is Quantity of petroleum products sought;

(iv) The minimum crude oil Minimum petroleum product quality requirements;

(v) The acceptable delivery Time period for delivery;

(vi) Acceptable delivery locations; and

(

vi

vii)

The necessary instructions

Instructions for the offer process.

(b) Method Manner of acquisition.

(1) DOE shall define specify the method manner of crude oil petroleum product acquisition, direct either purchase or royalty-in-kind transfer and exchange, in the notice of acquisition.

(2) DOE shall, to the greatest extent practicable, determine the method manner of crude oil petroleum product acquisition after taking into account the considering:

(i) The availability of appropriated funds

, current market conditions, the availability of oil from the Department of the Interior, and other

;

(ii) Minimization of costs;

(iii) Minimization of the Nation's vulnerability to a severe energy supply interruption;

(iv) Minimization of the impact to supply levels and market forces;

(v) Whether the manner of acquisition would encourage competition in the petroleum industry; and

(vi) Other considerations DOE deems to be relevant.

(c) Solicitation.

(1) To secure the economic benefit and security of a diversified base of potential suppliers of petroleum products to the SPR, DOE shall maintain a listing, developed through on-line registration and personal contact, of interested suppliersonline registration, direct requests to DOE, and outreach to potential suppliers by DOE. Upon the issuance of a solicitation, DOE shall notify potential suppliers via their registered e-mail email addresses.

(2) DOE shall make the solicitation publicly available on the Web sites of the DOE Office of Fossil Energy http://www.fe.doe.gov/programs/reserves and the OPR http://website of the OPR: www.spr.doe.gov.

(d) Timing and duration of solicitation.

(1) DOE shall determine crude oil petroleum products requirements on nominal six-month cycles, and shall review and update these requirements prior to each solicitation cycle.

(2) Unless termination rights are explicitly waived by DOE, DOE may terminate all any solicitations and contracts pertaining to the acquisition or exchange of crude oil petroleum products at the convenience of the Government, and in such event shall not be responsible for any costs incurred by suppliers, other than costs for oil petroleum products delivered to the SPR and for reasonable, customary, and applicable costs incurred by the supplier in the performance of a valid contract for delivery before the effective date of termination of such contract. In no event shall the Government be liable for consequential damages or the contractorentity's lost profits as a result of such termination.

(e) Quality.

(1) DOE shall define minimum crude oil petroleum product quality specifications for the SPR. DOE shall include such specifications in acquisition solicitations, and shall make them available on the Web sites of the DOE Office of Fossil Energy http://www.fe.doe.gov/programs/reserves and the OPR http://website of the OPR: www.spr.doe.gov.

(2) DOE shall periodically review the quality specifications to ensure, to the greatest extent practicable, the crude oil petroleum product mix in storage matches the demand of the United States refining system.

(f) Quantity. In determining the quantities of oil petroleum products to be delivered to the SPR, DOE shall:

(1) Take into consideration market conditions and the availability of transportation systems; and

(2) Seek to avoid adversely affecting other market participants or crude oil petroleum product market fundamentals.

(g) Offer and evaluation procedures.

(1) Each solicitation shall provide necessary instructions on offer format and submission procedures. The details of the offer, evaluation, and award procedures may vary depending on the method of acquisition.

(2) DOE shall may use relative crude values and time differentials to the maximum extent practicable to manage acquisition and delivery schedules to reduce acquisition costs.

(3) DOE shall may evaluate offers based on prevailing market prices of specific crude oilspetroleum products, and shall award contracts on a competitive basis.

(4) Whether acquisition is by direct purchase or royalty transfer and exchange on a term contract basis, DOE shall may use a price index to account for fluctuations in absolute and relative market prices at the time of delivery to reduce market risk to all parties throughout the contract term.

(h) Scheduling and delivery.

(1) Except as provided in paragraph (h)(4) of this section, DOE shall accept offers for crude oil petroleum products delivered to specified SPR storage sites via pipeline or as waterborne cargos delivered to the terminals serving those sites.

(2) Except as provided in paragraph (h)(4) of this section, DOE shall generally establish schedules that allow for evenly spaced deliveries of economically - sized marine and pipeline shipments within the constraints of SPR site and commercial facilities receipt capabilities.

(3) DOE shall strive to maximize U.S. flag carrier utilization through the terms of its supply contracts.

(4) DOE reserves the right to accept offers for other methods of delivery if, in DOE's sole judgment, market conditions and logistical constraints require such other methods.