Chevron seeks $354 million in US military fuel contract dispute

The Defense Energy Support Center Friday said it is "disappointed" with ChevronTexaco Corp. for filing a $354 million claim against the agency for 25 military fuel contracts awarded between 1984 and 1999. Chevron is one of more than a dozen fuel suppliers to seek refunds from DESC.

By the OGJ Online Staff

WASHINGTON, DC, Dec. 10 --The Defense Energy Support Center Friday said it is "disappointed" with ChevronTexaco Corp. for filing a $354 million claim against the agency for 25 military fuel contracts awarded between 1984 and 1999.

Chevron is one of more than a dozen fuel suppliers to seek refunds from DESC, a Department of Defense agency that buys jet fuel, gasoline, and diesel for military use. One company, Pride Cos. LP, took its allegations to court last year and won a $60 million judgment. The court ruled that the DESC should have paid up to 10% more for the fuel.

Following that ruling several companies have sought refunds, although ChevronTexaco's is the largest to date. It supplied the agency with 6.7 billion gal of fuel between 1981 and 2000. The company maintains the commercial price adjustments used in the fuel contracts were illegal because they were not specifically authorized under federal contracting regulations.

"We are disappointed that a supplier and business partner like Chevron has filed claims of this nature," said Jeff Jones, DESC director. "DESC's contracting officer has examined a number of similar claims and has found no merit in any of them."

Jones said contractors have not shown how the commercial type escalator provisions in the contracts hurt them. "The clauses did what they were supposed to and what the parties agreed to," he said.

DESC is "surprised Chevron would now claim that for year after year they have sold fuel below fair market value. DESC has contracted with Chevron for more than 18 years and they have never objected to our solicitations or contract escalator provisions," said Mark Iden, director of DESC's bulk fuels division. Escalator provisions used in contracts accepted by Chevron today are essentially the same as those used during the period Chevron is making a claim, DESC said.

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