Steuart Petroleum Co. cut off fuel deliveries to city schools and hundreds of other government buildings last Friday after the District of Columbia government had failed for more than a month to pay its mounting heating oil bills.
The crisis was resolved yesterday morning when the city paid $656,000 in back heating oil bills and deliveries were resumed. D.C. government officials said the city still owes $82,000 in back oil bills, and one official described the city's relationship with Steuart as "delicate."
Apparently no government building ran out of fuel during the four-day cutoff.But Spingarn High School in Northeast Washington was within two hours of running out yesterday when a fuel oil truck made a delivery at 1 p.m.
The payment was made yesterday on a special emergency order by City Administrator Elijah Rogers after it became clear that oil deliveries would not resume without the payment.
City officials had no explanation to offer yesterday of why there was a time lag between Friday's cutoff of fuel and yesterday's payment, just before some available supplies were to run out.
Officials said the city failed to pay its fuel bills because nine major agencies -- including the schools, the Department of Human Resources, the Department of Corrections and the University of the District of Columbia -- were tardy in submitting purchasing documents to the fuel oil contractor. The contractor needed the documents before he could send his bills to the city.
All the city agencies are under enormous pressure to cut costs as Mayor Marion Barry presses for sweeping cuts in services and in the number of city employes in an effort to make up for a budget shortage estimated to be as high as $172.4 million.
Adding to these pressures is the cost of heating oil, which has shot up nearly 100 percent during the last year. School Superintendent Vincent E. Reed said last month he expects a $3.1 million cost overrun for heating oil this year.
School officials have asked the mayor to ask Congress for extra money to pay this cost overrun and others, but so far the mayor has not done so.
Friday's cutoff affected the heavy No. 6 heating oil that makes up about half the city's heating oil supply. The rest is light No. 2 oil, and this was not affected.
The city's No. 6 oil is delivered under contract with Tricontinental Industries Inc., a new minority firm that received a special priority in obtaining the $6.2 million contract under a 1977 law requiring city agencies to spend 25 percent of their contracting dollars with minority firms.
Tricontinental obtains its No. 6 oil through a contract with Steuart Petroleum Co. -- a nonminority Washington firm that supplied the city before the 1977 law took effect.
Though Tricontinental has the contract with the city, Steuart trucks still make most of the actual deliveries to the city. The city's payments for the oil go into an escrow account instead of being paid directly to Tricontinental. Steuart then is paid from the escrow account.
"They were slow in their payment and we had to withhold delivery until they paid," said Steuart President Leonard Steuart II in explaining his company's action. "At 17 percent interest, we really can't afford to carry the District too long."
Steuart said that Tricontinental, the minority firm, does not have enough capital of its own to carry the city when it doesn't pay its bills, so the burden falls on Steuart -- a large local firm with multimillion gallon oil storage tanks in Anacostia and southern Maryland.
Tricontinental was awarded the 9.2 million gallon No. 6 oil contract on Jan. 23 -- midway in the heating season and four months later than normal for such contracts because of administrative delays in city offices.
To get oil under such a contract, city agencies normally have to submit "purchase orders." They failed to do so, but Tricontinental -- via Steuart -- began deliveries anyway and kept them up through the end of January and all of February.
While the contractor knew where to deliver the oil because the city agencies called and requested deliveries, it did not know which offices to bill for the oil without the purchase orders containing the addresses, according to city officials.
"They were delivering the oil and not getting paid. It was as simple as that," said one official in the city's Department of General Services, the agency that contracts for the oil.
Finally Steuart balked, sending Tricontinental Vice President Menkem Onyia scurrying to see City Administrator Rogers, officials said. Onyia could not be reached yesterday for comment.