Doing Business in Iraq
Task Force Restore Iraqi Oil (RIO) mission
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Oct 16, 2003, 23:49

What is your mission?


Task Force Restore Iraqi Oil (RIO) mission is to restore the capability for oil production, oil refining and gas processing to pre-war conditions. The Corps is supporting the U. S. Government's goal of restoring the Iraqi people's oil production resources as quickly as possible. RIO's end state objective is to have fires suppressed, environmental cleanup accomplished, oil production levels restored and our personnel safely redeployed back home. Under the humanitarian assistance portion of the mission, we are providing emergency supplies of gasoline, LPG and other petroleum products to distribution points operated by the Iraqi Oil Company. We are also assisting the Iraqi Ministry of Oil to export oil to benefit Iraq.

What are the RIO targets and timeline?


We began work before hostilities concluded. The duration will depend on the extent of the damage. Damage assessments are ongoing as looting and sabotage continue. The Corps will continue to assist Iraq until pre-war production is maintained. A partnering meeting between the Corps and the Iraqi Ministry of Oil in July 2003 set goals of 2.5 million barrels per day by the end of March 2004 and 3.0 million barrels per day by the end of December 2004.

How do you plan to accomplish your mission?


All work is being performed through the use of Private Sector Contractors in conjunction with the Iraqi Ministry of Oil.

Are any Iraqi Ministry of Oil personnel helping you out? The Iraqi Ministry of Oil was re-established on May 3, 2003. The U.S. Army Corps of Engineers, under the direction of the Coalition Provisional Authority, is assisting the Ministry.


What are the current production levels? The Coalition Provisional Authority and the Iraqi Ministry of Oil have requested the Corps to allow the Ministry to release production volume figures. We agree with this strategy because information about production levels will have an effect upon world oil prices.

Iraqi Ministry of Oil: Dhia A-Bakka 914-360-3526 (pr DEE’-a a-BAKKA)


LOGCAP Contract
What contract did RIO use to start carrying out its mission mission?

An existing Army Field Support Command Logistics Civil Augmentation Program (LOGCAP) contract, competitively bid, was used to prepare contingency plans for the government. The contract was awarded to Brown & Root Services (later to be known as Kellogg, Brown and Root) of Houston on December 14, 2001.

When a potential requirement to develop contingency plans to extinguish oil well fires and to assess damage to oil facilities that might occur in Iraq in the event of hostilities was identified it became readily apparent that use of an existing contract (LOGCAP) would be the most efficient and expedient way to meet the very compressed time line for potential plan execution.

After DOD designated the U. S. Army Corps of Engineers as Executive Agent to implement plans to extinguish oil well fires and assess damages to oil facilities during Operation Iraqi Freedom, the Corps used the existing contract to pre-position firefighting equipment and personnel and to extinguish oil well fires in southern Iraq that were ignited during the war and to assess damages.

Kellogg, Brown & Root Contract (March 2003)
When did the Corps issue its first contract in support of the RIO mission and to whom?








On March 8, 2003 the Corps issued a contract to KBR to use for an interim period as a bridge to a competitive contract. It is an Indefinite Delivery/Indefinite Quantity (ID/IQ) contract. Task Orders are issued against this contract as needed to obtain services necessary to support the mission in the near term. This contract is specified to be for a maximum of $7 billion. It is for a maximum period of two years with three one-year renewal options. This is a cost plus award fee contract with a 2% fixed fee and a potential extra 5% for work achieved over and above what is normally achieved. This is determined by an award board that meets to go over all aspects of the work performed.


How was this contractor chosen?












Army Materiel Command utilized a competitively procured LOGCAP contract to perform the contingency planning for this mission. Through LOGCAP, Kellogg, Brown & Root (KBR) pre-positioned people and equipment to be able to provide emergency response related to the oil system, as well as other needs and services outlined under this contract. DOD selected KBR for a follow-on contract with the Corps of Engineers to perform the emergency response portion of this mission because they were the only contractor that could satisfy the requirement for immediate execution of the plan.
Who competed and, if sole course, what was justification?










The initial LOGCAP contract was extensively competed by the Army Materiel Command. The LOGCAP contract has the capability to be used for contingency planning. The USACE contract is sole source to KBR, as instructed by DOD, since KBR was the only company who could immediately satisfy the requirement of the plan, considering the urgency of potential hostilities.
What are the appropriate Federal Acquisition Regulation clauses allowing this action?





Justification was due to the urgent need to get the contract in place and KBR's extensive knowledge of the project. FAR 6.302-1 provides for sole source procurements when "only one responsible source and no other supplies or services will satisfy agency requirements."
What is the dollar value of the contract?









It is unknown, depending on the extent of the damage. It is an Indefinite Delivery/Indefinite Quantity, cost-plus type contract. The government reimburses the contractor for its actual cost, plus a fee that is based on the performance of the contractor. The work will be transitional to the competitive contracts. This is easily done since the work is performed through specific task orders to the basic contract. When the new contracts are awarded, new task orders will be placed to the new contracts. A summary of Task Orders issued is posted on this site.
What is the anticipated profit ratio?







It is a cost-plus award fee contract. The contractor is guaranteed a fee of two percent and can make a maximum of seven percent, depending on performance. The five percent performance fee is based upon how well the contractor manages the work, the quality of the work, safety performance, and his ability to effectively control cost.
How are you doing quality control to avoid cost overruns and fraud, waste and abuse?







The Corps has a long history of specialized expertise in managing large contracts such as this one. We have established a Facility Engineering Support Team, which is essentially a district office with two construction resident offices. We have an organization that will provide contractor oversight insuring quality work is done in a timely manner, safely and at a reasonable cost.


Is the Restore Iraqi Oil mission being paid for with only United States taxpayer money?






No. The funding sources for Restore Iraqi Oil include the Natural Resource Risk Remediation Fund, the Iraq Seized Assets Fund, the Development Fund for Iraq, and the Operation and Maintenance, Army (O & M, A) Appropriation. The Natural Resource Risk Remediation Fund and O & M, A are US taxpayer sources allocated by Congress.
What are the environmental hazards that employees under this contract can expect to encounter?



We are providing a safe environment for our contractor and government employees, free from hostile activities, any unexploded ordnance or booby traps, or chemical, biological or nuclear hazards. All the normal health and safety procedures will be taken.




Has there been a contract awarded to any companies specializing in firefighting and damage assessment for oil facilities?



The LOGCAP contract was utilized to pre-position firefighting equipment and personnel to be ready to fight fires. A subsequent contract was awarded by USACE to KBR, who is responsible for subcontracting the fire fighting to qualified companies.






Follow on Contracts -- October 2003
Why are you awarding more contracts?












We have always planned for competitively procured contracts. The competitive contracts will replace the current sole source contract with KBR.

The Corps will issue two new competitively bid contracts in mid- to late October 2003 to replace the bridge contract with KBR. One will be for support to the Northern Oil Company area and the other for the Southern Oil Company area. The two areas will not overlap. Each will be for a minimum of $500,000 and a maximum of $500 million. They are for a period of two years with three one-year renewals.


When did RFP's go out?









Department of the Army and DOD approved our Acquisition Plan on 20 June 2003. The synopsis was posted to www.fedbizopps.gov (search word oil) on 23 June. The RFP was posted 10 July 2003 with a deadline for submission of 15 August. The RFP is now CLOSED.

We have set an aggressive schedule to review all proposals and award the two contracts by mid to late October.


What was the closing date for those RFPs?










August 14, 2003 was the closing date for those RFPs. The RFP was open to both domestic and international companies. In accordance with Federal Acquisition Regulation, we cannot discuss the number of proposals received, the names of the companies submitting proposals, their country of origin, or details within the proposals. The next steps in the process involve evaluation of the proposals and selection of the companies to be awarded the two indefinite delivery/indefinite quantity contracts. The Corps anticipates the contract awards will take place mid-to-late October. Both the synopsis of the solicitation and the transcript of the pre-proposal conference are available on this website.


Were the RFPs limited only to American companies?





No. Companies from countries qualifying under the Trade Agreements Act, Balance of Payments Act and Coalition members that are not qualified under the Acts are eligible to compete.
The Corps held a pre-proposal conference on 14 July. The Corps, KBR and the Iraqi Ministry of Oil had a separate meeting in July to develop a work plan. How were these related?










The two events were not related.

Task Force RIO, KBR, Southwestern Division, and the Iraqi Ministry of Oil had prepared a Rough Order of Magnitude to outline how to restore the oil infrastructure. The pre-proposal conference was to provide contractors information to help them decide whether to bid on the follow on contracts. The ROM was provided to prospective offerers as an indicator of the type of work that any selected contractor might encounter and needed to be prepared to implement under the new contract. The ROM has no connection to the follow on contracts.

The work planning meeting between the Corps, KBR and the Iraqi Ministry of Oil was to discuss the ROM and agree upon a list of projects that needed to be finished to complete the work under the current contract with KBR.

How many contracts do you anticipate awarding?


The solicitation is for two contracts. One will be for the Northern oil fields and one for the Southern oil fields. The two areas will not overlap.


Will part of the work under any follow-on contracts be set aside for small business?



This is a full and open competition that may involve foreign participation. However, the potential for establishing small business was carefully considered. There are no portions of the statement of work that could be broken out for this purpose.


What is "Source Selection" versus "Low Bid"





In source selection, factors other than price are considered more important to the government. For instance, past performance, experience, business and management approach and oil field capabilities are primary in this solicitation.
Is the Corps trying to accelerate the work in Iraq?








No. We are not "accelerating" work. We are trying to complete the mission originally assigned before hostilities began and that is to reduce damage to the oil infrastructure, repair damage as quickly as possible and restore Iraqi oil production levels to pre-war standards. The Iraqi Ministry of Oil is assuming a greater and greater responsibility for its own affairs, including repair and rehabilitation of the oil fields and related infrastructure.



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