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Pay-For-Performance in Oklahoma

Richard McKay presents how Pay-For-Performance (P-F-P) contracts have improved cleanup efforts in Oklahoma. The program guarantees environmental results, reduces costs, and fosters collaboration between all parties involved. Learn about the benefits and successes of P-F-P in this informative presentation.

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Pay-For-Performance in Oklahoma

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  1. Pay-For-Performance in Oklahoma The Oklahoma Experience Presented by: Richard McKay Petroleum Storage Tank Division

  2. Do you have a stalled cleanup ?

  3. We realized we had many…. and here’s how!

  4. Conducted $100,000 Case Reviews • The Football Field analogy. • Paying out money with little or no environmental results. • Reviewed our accountability. • We looked at Pay-For-Performance.

  5. ACCOUNTABILITY As a Regulatory Agency we have a fiduciary responsibility: • To safeguard public health, safety & the environment. • To safeguard public money.

  6. Why We Chose Pay-For-Performance • Needed a way to guarantee environmental results and move away from time & materials projects. • Wanted a method to impose cost control so total costs would not exceed the $1.MM cap per site. • Wanted a way to reduce disallowances. • Wanted a way to focus on results...not paperwork. • Wanted a way to shorten time to pay claims. • Needed way to better relations between the tank owner, consultant and regulatory/fund.

  7. We Began to Sign P-F-P Contracts • We took a voluntary approach beginning in 1996 with Consultants willing to take a risk and willing to guarantee environmental results. • Committed to 3 year contracts with a 2 warranty. • Payments are made based on attaining milestone contamination reductions. • Tank Owners supported P-F-P because: • Site restoration money wasencumbered. • They wanted Consultants who were willing to take a risk and guarantee their work.

  8. Resultsof P-F-P: Win-Win-Win • Our difficult sites are being cleaned because: • Better designed RA systems are being installed. • Consultants are guaranteeing results. • Site costs are coming down because: • Emphasis is on closing the site to make money rather than keeping site open to make money. • Attained cost control by using Tank RACER 99 to negotiate a fixed price to remediate a site. • Site remediation costs are encumbered. • Funds are paid only when milestones are achieved.

  9. P-F-P Program Results (cont’d) • Consultant disallowances reduced to almost zero. • Tank owners do not have disallowances. • Paperwork has been substantially reduced. • Time to pay has reduced to a few days. • Achieved collaboration between all parties. • The Consultant can make a reasonable profit and take pride in a job well done. • The Tank Owner is happy - He knows the cost and when he can get back to work.

  10. Other Results … Not Counted On • Pre-approval process became mandatory. • UST Advisory Council composed of Consultants and Tank Owners adopted: • Unit Costs for all work through site delineation. • Tank RACER 99 to price site remediation. • Pre-approvals requested faster than money comes in. • Hold cooperative Consultant/State training sessions. • Technical staff has more time to visit sites and track site remediation progress.

  11. How does the P-F-P process work? • Set clean-up levels based on Tier I or Tier II report. • Submit Remediation Technology Report. • Submit final Remedial Action Plan. • Submit Pay- For-Performance proposal. • Look at clean-up cost in $ / yd3. • Compare to similar sized systems & technology. • Run Tank RACER 99 to determine reasonable cost. • Negotiate the final set contract price and terms. • Sign the Pay-For-Performance contract.

  12. P-F-P Process Cont’d. • Next ... the Consultant installs the RA system. • Baseline groundwater samples are collected from pre-selected “Key Monitoring Wells” 2 weeks prior to system start-up. • Payments are made to the Consultant when decreases in groundwater contamination called “Milestones” are achieved. • Once all Milestones are achieved and contamination levels remains below “clean-up levels” for 6 months in all site wells the final payment is made.

  13. Progress & Results

  14. AS / SVE System Progress

  15. Potential Financial Savings

  16. Summary of Why We Chose Pay-For-Performance • ACCOUNTABILITY HAS BEEN ESTABLISHED. • ENVIRONMENTAL RESULTS ARE GUARANTEED AND ARE BEING ACHIEVED. • REMEDIATION COSTS ARE REASONABLE. • TANK OWNERS ARE WANTING IT. THANK YOU

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