DOD uses  naval distillate fuel, known as F-76, to power nonnuclear ships. DOD Guidance on Alternative Fuels

DOD Directive 4180.01, DOD Energy Policy, among other things,  establishes that DOD will diversify and expand its energy supplies and  sources, including alternative fuels.responsibilities for various matters, including the following:
The Assistant Secretary of Defense for Operational Energy Plans and  Programs for development, certification, qualification, field demonstration, and  ongoing purchases of alternative fuels for operational platforms in  accordance with the U.S. Code;   is to develop policy and guidelines and provide oversight
The Director, Defense Logistics Agency is to (1) manage energy  commodities and related services to support the qualification of alternative fuels and support field  demonstration activities; and  ; and (2) provide energy expertise
The Secretaries of the military departments are to develop and  implement doctrine, guidance, and strategies consistent with the  directive and implementing instructions. Promoting the development of  alternative fuels—in the form of testing and approving them for use by  existing military platforms, and helping to catalyze a competitive biofuels  industry—constitutes one means for achieving this goal. The DPA fund manager is the Secretary of Defense. DOD Purchases Alternative Fuels to Test and Validate that the Fuel Can Meet Safety, Performance, and Reliability Standards

		DOD Has Purchased Small Quantities of Alternative Fuels

DOD has purchased small quantities of alternative fuels for research,  development, and demonstration purposes but not large quantities for  military operations yet. The military departments purchased about 2.0 million gallons of  alternative jet and naval distillate fuels from fiscal years 2007 through  2014 to conduct the department’s testing, approving, and demonstration  activities, at a total cost of about $58.6 million (adjusted for inflation to  fiscal year 2015 dollars using the gross domestic product price index). According to DOD officials, the  By contrast, over the same period of time, the military departments  purchased approximately 32.0 billion gallons of jet and naval distillate  conventional petroleum fuel at a total cost of about $107.2 billion  (adjusted for inflation to fiscal year 2015 dollars using the gross domestic  product price index). DOD Has a Standard Process to Purchase All Fuels for Military Operations and is Currently Required to Ensure Alternative Fuel Purchases for Operational Purposes Are Cost-Competitive with Conventional Fuels

		DOD Uses a Standard Process to Purchase Large-Scale Volumes of Fuel for Military Operations

DOD has a standard process in place for purchasing large-scale volumes  of fuel, including alternative fuels, for military operations. DLA-E considers  two primary factors—technical acceptability and price—when evaluating  fuel vendors’ submitted proposals. The Department of Agriculture plans, under the authority of  the Commodity Credit Corporation Charter Act, to contribute up to       $161 million to alternative fuel purchases to help defray some of the extra  costs—which may include the costs of feedstocks—that would have  caused the final alternative fuel to be more expensive than the price of  conventional fuels for DOD. DOD Has Used DPA Title III Authority for Two Biofuel Production Projects

			Bio-Synthetic Paraffinic Kerosene Project

DOD first used Title III authority in relation to alternative fuels in 2010, for  the purpose of producing Bio-Synthetic Paraffinic Kerosene, an  alternative jet and naval distillate fuel made from the Hydroprocessed  Esters and Fatty Acids production process. Alternative fuels made from  this process can meet DOD’s technical fuel specifications when blended  with conventional fuels. The Departments of Energy and the Navy plan to apply  their funds through the DPA. Agency Comments

We are not making any recommendations in this report. DOD provided technical  comments on our findings, which we have incorporated where  appropriate.
Why GAO Did This Study

DOD is the single largest consumer of energy in the federal government, spending billions of dollars annually on petroleum fuels to support military operations. One of DOD's strategic operational energy goals is to expand its energy supply options. Investing in alternative fuels—liquid fuels, derived from non-petroleum feedstocks, whose use does not necessitate any modifications to platforms and equipment—represents one means of potentially achieving this goal.
GAO was asked to examine aspects of DOD's investment in alternative fuels. GAO reviewed the extent to which DOD (1) has purchased alternative fuels, and has demonstrated these fuels can meet its safety, performance, and reliability standards; (2) has a process for purchasing alternative fuels for military operations that takes into consideration any cost differences between alternative and conventional fuels; and (3) has used the DPA authorities to promote the development of a domestic biofuel industry.
GAO reviewed past alternative and conventional petroleum fuel procurements, as well as statutes, regulations, and DOD guidance related to fuel purchases. Also, GAO reviewed various documents on biofuel projects initiated under the DPA authority and interviewed cognizant DOD officials involved with purchasing and using fuel and administering the biofuel projects.
GAO is not making recommendations in this report. DOD provided technical comments on the findings, which GAO has incorporated where appropriate.

What GAO Found

The Department of Defense (DOD) has purchased small quantities of alternative fuels—jet and naval distillate (known as F-76, to power ships)—for testing and demonstration purposes, but has not done so yet for military operations. DOD's testing process validates the ability of alternative fuels to meet safety, performance, and reliability standards for military equipment and platforms. From fiscal years 2007 through 2014, DOD purchased about 2.0 million gallons of alternative fuel for testing purposes, at a cost of about $58.6 million. Over the same period, it purchased about 32.0 billion gallons of petroleum fuel at a cost of about $107.2 billion. DOD has approved alternative fuels made from two production processes for use in certain items and is continuing to test others.
DOD is currently required by law to ensure alternative fuel purchases for operational purposes are cost-competitive with conventional fuels and has a standard process to purchase large-scale volumes of all fuels. Proposals are evaluated according to technical acceptability and price. To help the Navy purchase alternative jet and naval distillate fuels blended with conventional fuels, the Department of Agriculture plans to provide funding directly to alternative fuel vendors that meet certain requirements and receive awards from DOD. These funds are intended to defray some of the alternative fuel producer's extra costs—such as costs of domestic feedstocks. Per DOD, no alternative fuel vendors have received awards so none of these funds have been paid out yet.
DOD has used financial incentives provided for by Title III of the Defense Production Act (DPA) to help facilitate the development of commercially viable plants for producing biofuels for the military and commercial sectors. To date, DOD has used this authority for two ongoing projects: Bio-Synthetic Paraffinic Kerosene and Advanced Drop-In Biofuels Production Project and the federal government's cost share for these projects was about $234.1 million.