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DynMcDermott Business Case Teaching Notes -- Robert W. Campbell Award

DynMcDermott Business Case Teaching Notes -- Robert W. Campbell Award

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Environment, Safety & Health Business Case of DynMcDermott Petroleum Operations, 2006 winner of the international Robert W. Campbell Award.
Environment, Safety & Health Business Case of DynMcDermott Petroleum Operations, 2006 winner of the international Robert W. Campbell Award.

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Published by: NSCFacultyPortal on Nov 02, 2010
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09/09/2013

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Teaching Note For:A Strategic Focus on Workers, the Public and the Environment: DynMcDermottPetroleum Operations Company
William R. Nance, Jr.The McAfee School of Business AdministrationUnion UniversityWilliam BozzoSuzanne BroussardRon SchulingkampDynMcDermott Petroleum Operations CompanyMei-Li LinThe National Safety Council
 
DynMcDermott Teaching Note 1
Case Overview
This case offers students the opportunity to analyze the Malcolm BaldrigeNational Quality Award- and Robert W. Campbell Award-winning Company thatmanages the US Strategic Petroleum Reserve, an important component of US energy,economic and strategic policies. Students also have the opportunity to explore strategyand strategic implementation in a government-contracting environment where there is
only one “customer” (mono
psony) and where competition among potential suppliers isoften intense. The case emphasizes the strategic use of corporate social responsibility tocreate sustainable competitive advantage.
Case Synopsis
In the early 1990’s, DynMcDermott Petroleum Oper 
ations Company (DM) wascreated to compete for the contract to operate
the US Department of Energy’s Strategic
Petroleum Reserve (SPR). The SPR is comprised of four underground oil storagefacilities constructed in naturally occurring salt domes
1
in Texas and Louisiana, withheadquarters in the city of New Orleans, Louisiana. Congress authorized the SPR in the
 Energy Policy and Conservation Act 
 
of 1975
(EPCA, P.L. 94-163). The SPR iscontrolled by the Department of Energy (DOE) which employs private-sector contractorsto operate government-owned facilities. The SPR consists of over 700 million barrels of crude oil storage capacity, representing approximately 60 days of crude oil supply atcurrent rates of demand in the US. DM has successfully managed the SPR since 1992,with a second contract awarded in 2003. The current (2003) contract runs through 2013.
2
 
 
DynMcDermott Teaching Note 2The US Congress and the DOE have identified three key mission-relatedoutcomes for the SPR, which are:1.
 
Maintaining operational readiness, defined a
s storing and providing petroleum “to
reduce the adverse economic impact of a major petroleum supply interruption tothe United States and (carrying) out obligations under the International Energy
Program.”
3
 2.
 
Meeting the contractual requirements of the SPR Management and Operationscontract.3.
 
Providing a safe, environmentally sound, and effective management and operatinginfrastructure.
4
 
The case illustrates how DM’s
strategy integrates focus on three strategic
“pillars”
togenerate success in meeting the DOE
’s
requirements for the SPR while simultaneouslyfending off potential competitors for the SPR contract. The first pillar is the worker, thesecond is the public, and the third is the environment. Evidence is provided to show thateach of these pillars contributes to operational, contractual, safety and environmentalexcellence, while enabling DM to manage the SPR efficiently. The case seeks to showthat these three elements not only contribute to excellence separately, but that they alsoprovide a combi
ned synergy that amplifies DM’s business performance in ways that no
single point of focus could.
The case also illustrates the company’s effective implementation of strategy through
its Baldrige-based business management approach integrating safety, health andenvironmental (SH&E) management systems built around ISO 14001 and ANSI Z10.The case shows students that firms may create sustainable competitive advantage using a

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