Karen Frantz
GHG Monitor
2/21/2014
DM Petroleum Operations Company is suing the Department of Energy over its failed bid for the Strategic Petroleum Reserve management contract, alleging that the Department’s evaluation of its proposal was flawed, causing DM Petroleum, the incumbent contractor and lowest-priced bidder, to lose the award to a team led by Fluor Federal Petroleum Operations. “But for DOE’s unlawful, arbitrary and capricious conduct, DM Petroleum, as the 20-year incumbent and the lowest-priced offeror, would have been awarded the contract, given that its proposal represents the best-value to DOE,” the lawsuit, filed earlier this month, said. The suit asks the court to enjoin the DOE from awarding the contract to Fluor and instead award the contract to DM Petroleum, and it also asks that DM Petroleum be awarded the costs for preparing the proposal and its attorney’s fees.
The lawsuit highlighted DM Petroleum’s evaluated price for the contract—at $95.5 million—which is less than Fluor’s evaluated price, at $98 million. The lawsuit further alleges that the DOE was “unreasonable” in giving DM Petroleum a “satisfactory” rating under the management approach factor—the most important technical factor under the terms of the solicitation—and that the assignment is inconsistent with DOE’s own evaluation scheme. The suit also alleges that the DOE’s evaluation of DM Petroleum under other factors, such as organizational structure and past performance, were flawed. The lawsuit said that if it weren’t for these evaluations, DM would likely have been found to be the best-value given that the solicitation stated that “the closer or more similar in merit that the offeror’s technical proposals are evaluated to be, the more likely the evaluated price may be the determining factor in selection for the award.”
The Department of Energy awarded the Strategic Petroleum Reserve management contract—worth approximately $1.46 billion over 10 years—to Fluor last September. The SPR consists of four sites—two located in Louisiana and two in Texas—and currently holds approximately 696 million barrels of oil, according to DOE. DM Petroleum, made up of Jacobs and International Matex Tank and Terminal, and one of four unsuccessful bidders for the contract, filed a protest with the Government Accountability Office over the contract soon after losing the bid, and the GAO rejected the challenge in January. The DOE had suspended transition activities after DM Petroleum submitted the protest to the GAO, but once the GAO denied DM Petroleum’s challenge and a second challenge from another unsuccessful bidder, Fluor confirmed that it was set to begin transition to take over management of the SPR by April 1. A DOE spokesperson, Allison Lantero, said the Department does not comment on pending litigation, but that it had requested a decision on the lawsuit by March 28, which would be before the end of the transition process. Fluor declined to comment on the lawsuit and Jacobs did not return calls for comment.
