d. Delivery Schedule. The date(s), location(s), and amount(s) of each delivery are set.
e. Default. This refers to a failure of delivery and its penalties. The penalty can range from a fine to
cancellation of the contract and removal of the contractor from the DESC list of approved suppliers.
f. Market Condition. Sometimes external factors affecting the price of crude oil shift dramatically for
unforeseeable reasons. If a contract had been in place with a reasonable price set and the OPEC cartel cut world
production levels of crude petroleum, the price of crude oil would soar. This happened in the 1970's and caused
long lines at the gas pumps all across the country. The contractor supplying DESC, through no fault of his own,
may not have been able to fulfill the contract due to the dramatic price increase of crude oil. The market
conditions clause allows the price to be renegotiated under extreme circumstances to allow a reasonable profit for
the contractor. The overall effect is that the flow of product to DESC coffers would continue uninterrupted.
Also, if the price was set and then the market price significantly lowered for the duration of the contract then
DESC may get a reduction in the price of the product for that contract.
g. Special. Sometimes there are circumstances particular to one contract and an effort will be made to
cover these areas to ensure contract completion.
6.
Contract Bids.
DESC uses the EDI system to receive contract bids from suppliers. EDI is the computer-to-computer exchange of
standardized documents between customers and suppliers. Fuel requirements, solicitations, offers, notifications,
awards, funding, billing, payments, orders, shipping, and receipts are also done through using EDI. There are two
types of bids on contracts:
a. Sealed bids are used when relatively small amounts of bulk petroleum are bought. The amount of
product can be delivered over a few days or weeks rather than months or years. In this form of bid, the specifics
of the contract are published in trade publications. Suppliers either accept the terms of the contract or bid or they
do not bid on the contract.
b. Negotiated bids are the most widely used by the DESC. The amount of product required and the
general time frame needed is published in trade publications. Interested suppliers notify DESC and negotiations
are started. During negotiations, the specifics of the contract are determined. DESC determines which supplier
best meets the needs of DESC. The contract is finalized and signed. The bulk purchases of petroleum by DESC
are frequently so large that the contract may be divided among several suppliers.
QM5200
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