Detailed Information on the
Strategic Petroleum Reserve Assessment

Program Code 10001048
Program Title Strategic Petroleum Reserve
Department Name Department of Energy
Agency/Bureau Name Department of Energy
Program Type(s) Direct Federal Program
Assessment Year 2003
Assessment Rating Effective
Assessment Section Scores
Section Score
Program Purpose & Design 100%
Strategic Planning 88%
Program Management 100%
Program Results/Accountability 87%
Program Funding Level
(in millions)
FY2007 $164
FY2008 $187
FY2009 $344

Ongoing Program Improvement Plans

Year Began Improvement Plan Status Comments

Completed Program Improvement Plans

Year Began Improvement Plan Status Comments

The Administration will maintain funding for the program in the 2008 Budget at a level that allows the program to continue to achieve its relatively high level of performance.

Completed The FY07 President's request contains sufficient SPR funding to meet all performance requirements.

Program Performance Measures

Term Type  
Long-term Outcome

Measure: Enable ready distribution of SPR oil by achieving maximum sustained (90 day) drawdown rate of 4.4 million barrels.

Explanation:Maximum achievable rate is 4.4 million barrels for 90 days.

Year Target Actual
2002 4.1 4.2
2003 4.3 4.39
2004 4.4 4.4
2005 4.4 4.4
2006 4.4 4.4
2010 4.4
2015 4.4
Annual Outcome

Measure: Ensure drawdown readiness by achieving > 95% of monthly maintenance and accessibility goals.

Explanation:Equipment inspections (pumps, motors, etc.)

Year Target Actual
2002 95% 98%
2003 95% 98%
2004 95% 98%
2005 95% 98%
2006 95% 98%
Annual Efficiency

Measure: Operating Cost per barrel of oil capacity ($ per barrel).


Year Target Actual
2002 .2058 0.1981
2003 .213 0.2004
2004 .207 0.194
2005 .198 0.180
2006 .201 0.186
2008 .204
2008 .213

Questions/Answers (Detailed Assessment)

Section 1 - Program Purpose & Design
Number Question Answer Score

Is the program purpose clear?

Explanation: The purpose of the program is to acquire and maintain a petroleum stockpile for emergency distribution to "diminish the vulnerability of the United States to the effects of a severe energy supply interruption, and provide limited protection from the short-term consequences of interruptions in supplies of petroleum products."

Evidence: Energy Policy and Conservation Act (P.L. 94-163, as amended), Part B, Section 151); National Energy Policy.

YES 20%

Does the program address a specific and existing problem, interest, or need?

Explanation: U.S. (and trading partner) reliance on oil and U.S. net oil import levels (forecast to increase) combined with location of significant global oil reserves in regions of the world subject to political unrest, have made the US vulnerable to supply disruptions. The Strategic Petroleum Reserve (SPR) provides protection from supply disruptions.

Evidence: When the 1991 SPR drawdown was announced in conjunction with Operation Desert Storm, the price of oil immediately dropped $8/bbl.

YES 20%

Is the program designed so that it is not redundant or duplicative of any Federal, state, local or private effort?

Explanation: The industry generally relies on just-in-time inventories to maintain their minimum operating level. Industry has no incentive to incur costs for holding adequate additional supplies in the chance that a supply disruption might occur, since potential public benefits would not solely accrue to the industry.

Evidence: The 1999 National Petroleum Council Refining Study.

YES 20%

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The program seeks to minimize acquisition costs and impacts on supply levels and market forces and encourage competition, consistent with meeting program goals (e.g., in the event of a drawdown, SPR oil is distributed by competitive sale). Also, the Department of Energy (DOE) has committed to conducting a study to determine the optimal amount of oil to maintain in the SPR. Some analyses suggest that the program might be more cost effective if allowed to acquire oil when prices are low rather than through the current royalty-in-kind program (although current policy considers deferral of RIK acquisitions under certain circumstances).

Evidence: Standard Sales Provisions (www.fe.doe.gov/spr); Energy Deputy Secretary McSlarrow's March 5, 2003 testimony before the House Committee on Energy and Commerce, Subcommittee on Energy and Air Quality; Senate Committee on Governmental Affairs; S Prt. 108-18: U.S. Strategic Petroleum Reserve: Recent Policy has Increased Costs to Consumers but not Overall U.S. Energy Security (March 5, 2003).

YES 20%

Is the program effectively targeted, so program resources reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: In a drawdown, competitive sales would place the oil with U. S. consumers (the statute prevents the oil from being exported). All potential drawdown decisions are discussed with international organizations established to coordinate response in the event of severe supply disruptions. The system has been tested by one emergency sale and one competitive exchange.

Evidence: SPR Plan

YES 20%
Section 1 - Program Purpose & Design Score 100%
Section 2 - Strategic Planning
Number Question Answer Score

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: Readiness to drawdown when directed by the President is the program's long-term goal. The associated outcome is energy and economic security against supply disruptions.

Evidence: See "Measures" section in this PART. The program uses a strategic management system to set its course (SPR Strategic Plan), establish expectations (SPR Annual Performance Plan), and review organizational performance (Program Reviews). The SPR Strategic Plan outlines seven core values and nine supporting success factors at which the program must excel to ensure success of the long-term readiness goal.

YES 12%

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The targets are to achieve the maximum designed draw down rate given the SPR inventory level of 700 MB.

Evidence: See Measures section of this PART.

YES 12%

Does the program have a limited number of specific annual performance measures that demonstrate progress toward achieving the program's long-term measures?

Explanation: The SPR is maintained in a high state of readiness. Annual assurance is measured by how quickly the program can respond to a Presidential direction to draw down; how much of the oil inventory in SPR storage is available; and the cost efficiency of operations.

Evidence: See Measures section of this PART.

YES 12%

Does the program have baselines and ambitious targets and timeframes for its annual measures?

Explanation: All targets are baselined and consider various strategies to improve performance and effectiveness. Fill-to-capacity efforts are influencing the increased drawdown rate and the vapor mitigation program was implemented to ensure the maximum availability of oil while meeting all safety and environmental standards.

Evidence: See Measures section of this PART.

YES 12%

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, etc.) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Operational measures are established annually to support higher-level programmatic measures. Currently, there are 76 operational measures for the Management & Operating (M&O) contractor and 49 measures for the Management & Technical Support Services (M&TSS) Contractor. Performance against targets is used to monitor and track ongoing achievement and is considered when determining contractor performance fee. This approach has been successful in ensuring that all levels of the Government and contractor organizations are aware of SPR goals and objectives and that their achievement is incorporated into daily operations.

Evidence: Work Authorization Directives for the M&O contractor and Performance Evaluation Plan for the M&TSS contractor. The measures are maintained in the program's automated performance tracking tool (PB-Views).

YES 12%

Are independent and quality evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Although product is not regularly delivered to customers, there are periodic requests for public input, and two test sales have been conducted. When the SPR has been drawn down under presidential direction (1991, 2000), the SPR met performance expectations. The last independent evaluation was conducted as part of an application for a 2001 Energy Performance Excellence Award. A site examination team performed the assessment using Malcom Baldridge criteria.

Evidence: Measurement of customer satisfaction has been made using post-surveys of participants in SPR drawdown tests, responses to questionnaires used for refiners/traders customer visits, participant surveys at industry trade conferences, and Employee Climate Surveys. In 2001, the SPR applied for the Energy Performance Excellence Award and received input from the field examiners as part of their assessment of the program.

YES 12%

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: DOE has not provided Budget documents that link performance goals to budget levels.

Evidence: Budget documents (e.g., FY 2004 Budget Congressional Justification).

NO 0%

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: Program reviews, project reviews, staff meetings and Strategic Plan working sessions are used to discuss, review, and revise objectives, plans, and measures. These meetings are designed to keep planning and performance measurement current, to communicate performance status throughout the organization (so all parts of the organization will act in concert), and to encourage widespread input into improving performance. A Strategic Plan Working Group updates the SPR Strategic Plan annually in a six-month participative process. This group takes the lead in review and assessment of the SPR Strategic Plan to validate its currency, relevance, and completeness in light of: program mission, vision, federal mandates, & major public policy issues.


YES 12%
Section 2 - Strategic Planning Score 88%
Section 3 - Program Management
Number Question Answer Score

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: SPR has a hierarchy of performance information. The Department collects & tracks the "critical few" measures. The SPR Program Office monitors the limited, specific, short- and long-term measures. The SPR Project Management Office manages the detailed, operational measures that are implemented by the contractors. Organizational and action plans are reviewed and analyzed at quarterly Program Reviews. Monthly Project Assessments and Project Reviews are conducted to analyze performance against all milestones and contracts. Data from the PBViews system is used during these sessions to ensure all operational areas are covered. These reviews provide an opportunity to discuss performance and provide direction to contractors. These same measures are reviewed daily during the site managers' site status meetings.

Evidence: PBViews System and Joule system.

YES 14%

Are Federal managers and program partners (grantees, subgrantees, contractors, cost-sharing partners, etc.) held accountable for cost, schedule and performance results?

Explanation: The program considers performance against targets when determining contractor performance fee. The current M&O contract contains changes to the fee structure that increased the amount of fee incentive for cost control from 5% to 25%.

Evidence: The program's automated performance tracking tool (PB Views) reflects the individual responsible for each of the 76 operational performance measures.

YES 14%

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: After receipt of the annual appropriation, a time-phased Annual Operating Plan is developed that outlines obligation requirements on a monthly basis. To ensure a seamless transition from budget formulation to execution, the Annual Operating Plan is developed using the functional cost detail from the budget formulation process. Variance analysis is performed on a monthly basis to ensure all funding is spent for its intended purpose.

Evidence: FY 2004 Budget; Annual Operating Plan.

YES 14%

Does the program have procedures (e.g., competitive sourcing/cost comparisons, IT improvements, approporaite incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Program efficiencies and cost effectiveness are assessed by operating cost per barrel of oil capacity. Incentives (25% of the total award fee) are built into the contract's award fee structure to encourage efficiencies that improve performance. An example is the Service Enterprise Resource Planning project, which is a 4-year reengineering of material management, acquisition, property management, maintenance, cost management, and many other administrative processes utilizing enterprise resource planning software. The M&O contractor streamlined processes using modern information technology and extensive benchmarking in the commercial sector.

Evidence: PB Views system and Joule system.

YES 14%

Does the program collaborate and coordinate effectively with related programs?

Explanation: SPR participates in International Energy Agency activities including the presentation and exchange of management, technical and operational information on the U.S. government experience with emergency oil stocks so as to lead by example in encouraging member states to fulfill and maintain their stockholding responsibilities, including the effective use of stocks in crises.

Evidence: SPR has made presentations and participated in the Asian Pacific Economic Cooperation (APEC) Energy Working Group conference in Taiwan (April 2002), the Beijing Oil Forum in China (October 2001) and the APEC Energy Security Workshop in Korea (March 2001).

YES 14%

Does the program use strong financial management practices?

Explanation: Budget formulation/execution sessions are routinely conducted to assess progress in development of budgets and in executing approved budgets that provide the financial resources to accomplish goals. There is an annual validation of the assumptions used to develop budget estimates and how these assumptions are reflected in cost and schedule baselines. During budget execution, variance analyses are performed on a monthly basis to monitor and track expenditures. Finally, the program prepares audited financial statements as part of the Department's Accountability Report.

Evidence: DOE annual Performance and Accountability report

YES 14%

Has the program taken meaningful steps to address its management deficiencies?

Explanation: SPR's leaders use a structured program management system to set the SPR's course (Strategic Plan and subsidiary plans), establish expectations (annual Performance Plan), and review organizational performance (Program Reviews). Drawdown Readiness Exercises are conducted to test all levels of program involvement and ensure that any management deficiencies are addressed.

Evidence: Quarterly Program Reviews with the Project Management Office; Project Management Office monthly Project Reviews with the management and operations contractor and other key suppliers. SPR Strategic Plan; Annual Performance Plan; Program Reviews.

YES 14%
Section 3 - Program Management Score 100%
Section 4 - Program Results/Accountability
Number Question Answer Score

Has the program demonstrated adequate progress in achieving its long-term outcome performance goals?

Explanation: The SPR is maintained in a high state of readiness and continues to make strides in assuring full mission capability. Drawdown and distribution can begin within 15 days of notification. Readiness is assured through periodic assessments, training, tests, and exercises. Various program intiatives have addressed how quicklythe prgram can respond to Presidential direction to draw down; availability of oil; and the cost efficiency of operations.


YES 20%

Does the program (including program partners) achieve its annual performance goals?

Explanation: The program has met or exceeded all programmatic measures in each year since establishing the SPR Annual Performance Plan in 1998.

Evidence: Annual Performance Report.

YES 20%

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program performance goals each year?

Explanation: Cost per barrel of storage capacity. The 1994 budget request for the SPR reflected requirements over $200 million. The current request for facilities and management has leveled to $ 172 million reflecting implementation of cost saving efficiencies (I.e., Life Extension Program, Enterprise Resource Planning System, etc). M&O contract contains a Cost Savings Plan to achieve further savings in the next six years.

Evidence: M&O Contract.


Does the performance of this program compare favorably to other programs, including government, private, etc., that have similar purpose and goals?

Explanation: SPR compares well with industry in areas such as environmental protection, safety, and employee satisfaction. Storage costs are roughly 10 percent of private industry and 4 percent of Japan. Germany also stores strategic reserves in salt caverns, and their annual operating costs are believed to be on the same order of magnitude as the SPR's.

Evidence: DOE Analysis

YES 20%

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: Last independent evaluation was for the 2001 Energy Performance Excellence Award. A site examination team used the Malcolm Baldrige Criteria to evaluate the program's Leadership, Strategic Planning, Customer Focus, Information and Analysis, Human Resource Focus, Process Management and Business Results. Overall score was 647 out of a possible 1,000 demonstrating efficient and effective performance. When the SPR was used in conjunction with military operations during the Persian Gulf War, it operated as expected and the price of oil fell (although it is difficult to attribute price effect solely to SPR use.)

Evidence: 2001 Energy Performance Excellence Award application and evaluation (Executive Summary).

Section 4 - Program Results/Accountability Score 87%

Last updated: 09062008.2003SPR