Safety-Kleen Systems Inc., the continents biggest used oil rerefiner, has received a $14.2 million contract from the Defense Supply Center in Richmond, Va. to support the continuous U.S. closed loop motor oil program.
We sell them rerefined motor oil, and under the contract terms, we will pick up their used oil, Bill Shiels, director of lubricant sales for Safety-Kleen, told Lube Report. Thats where closed loop comes from – we pick up the used oil, rerefine it and sell it back to them. Its very helpful to the federal government to promote recycling. He said both the Bush and Clinton administrations had promoted such oil recycling among federal government agencies and departments.
According to the U.S. Department of Defense Public Affairs Office, services using the program will include the U.S. Army, Air Force, and federal civilian agencies such as the National Park Service and the United States Postal Service. The agency solicited proposals via an Internet-based bidding system, and Safety-Kleen placed the only bid. It is a base contract with a one-year option period. Date of performance completion is March 2008.
Shiels said the contract, which went into effect in early April, is technically a renewal of a previous one. The $14.2 million figure represents the maximum amount of money the government has allocated to the contract on an annual basis, he added. So basically, when they say its for $14.2 million, we wont get $15 million or $18 million of orders, Shiels explained. If that happens, they have to pull forward from the next year or ask for more money. It could also be less than that. They like to put the maximum in there.
Plano, Texas-based Safety-Kleen collects and rerefines more than 200 million gallons of used oil annually. It has two rerefineries – one in the United Statesand one in Canada.