We evaluated the effectiveness and oversight of the Defense Logistics Agency (DLA) Energy 2016 aviation fuel (JA1) contract, valued at $754.8 million.1 Specifically, we evaluated the effectiveness of the Al Udeid Air Base (AUAB) fuel requirements process and oversight of the JA1 fuel contract payment process.
Air Force and DLA Energy officials effectively managed the AUAB fuel requirements process. Specifically, Air Force and DLA Energy officials followed the DoD and Air Force guidance to properly develop fuel requirements and contracted for up to 390.6 million gallons of fuel for January through December 2016. In addition, Air Force fuel service center officials properly collected and stored daily AUAB fuel consumption data in the Fuels Manager Defense and the Joint Chiefs of Staff Bulk Petroleum Contingency and Capabilities Report systems. As a result, fuel delivered from January through December 2016 was sufficient to sustain AUAB mission operations. In addition, Air Force and DLA Energy officials maintained realistic fuel consumption data to continue developing future fuel requirements for AUAB.
However, DLA Energy officials did not provide effective oversight of the contract payment process. Specifically, for 6 of the 22 contractor invoices submitted from January through December 2016:
- DLA Energy quality assurance representatives (QARs) improperly certified three of the invoices because the QARs did not verify that JA1 fuel quantities listed on the DD Forms 250 matched the invoiced fuel quantities.
- DLA Energy officials did not ensure valid and timely payments were made for three of the invoices because the contracting officer did not ensure the payment period was restarted once the contractor submitted corrected invoices and accurate banking information.
As a result, DLA Energy improperly paid $58,816 in interest charges. Without effective oversight of the contract payment process for the JA1 fuel contract, DLA Energy will continue to make incorrect payments.
As a result of discussions with the DLA, we redirected the recommendations to the Director, DLA, who has the authority to implement the recommendations. We recommend that the Director, DLA, direct the contracting officer to:
- direct the QARs to verify that the JA1 fuel delivery quantities stated on the contractor invoices match the amounts stated on the DD Forms 250 before invoices are submitted for payment, and
- recoup the $58,816 in interest paid to the contractor for delivery orders 0002, 0009, and 0013, and adjust the payment period when a payment is delayed because of contractor error.
Management Comments and Our Response
The Director, DLA Acquisition, responding for the Director, DLA, agreed with the recommendation to ensure the QARs verify the JA1 fuel delivery quantities before invoices are submitted for payment. The Director, DLA Acquisition, stated that the QARs will receive training on all elements that must be inspected and accepted by QARs in the Invoice, Receipt, Acceptance, and Property Transfer web‑based application, which the contractors use to create and submit electronic invoices and DD Forms 250. Therefore, the recommendation is resolved and will be closed once we receive training completion certificates for the QARs.
The Director, DLA Acquisition, also agreed with the recommendations to recoup the $58,816 in interest paid to the contractor and to adjust the payment period when a payment is delayed because of contractor error. Therefore, the recommendations are resolved and will be closed once DLA officials provide documentation to verify the $58,816 was recouped and documentation detailing the process for working with DLA Finance to ensure that the corrected invoice receipt date is recorded in the DLA Finance Enterprise Business System
1 JA1 is a kerosene grade cut fuel that is suitable for most turbine aircraft.
This report is a result of Project No. D2016-D000RE-0091.000.