Army Environmental Cleanup Program and Performance Based Contracts

1. Army Environmental Cleanup Program and Performance Based Contracts Charlie George ACSIM/ODEP 20 June 2007 Headquarters Department of the Army 600 Army Pentagon Washington, DC 20310-0600

2. Review the Army’s Cleanup Program Performance Based Acquisition Overview Agenda

3. Set the stage Army Environmental Cleanup Strategy & Strategic Plan Army cleanup philosophy Army direction for cleanup Resources Strategy, Strategic Plan, PMP & IAP Relationship Performance-based acquisition Conclusion Overview

4. Provides roadmap to guide the Army in attaining its environmental vision “The Army will be a national leader in cleaning up contaminated land to protect human health and the environment as an integral part of its mission” Identifies unified program objectives Ensure consistency and accountability Achieve standardization across programs Establishes program areas, drivers and mission statements for each program area Uses ISO 14001EMS framework Army Environmental Cleanup Strategy

5. Army Environmental Cleanup Program Defense Environmental Restoration Program (DERP) Compliance-Related Cleanup Active Installations Excess Installations Special Installations Military Munitions Response Program (MMRP) Formerly Used Defense Sites Remediation Overseas Base Realignment and Closure (BRAC) BRAC ’88 BRAC ’91 BRAC ’93 BRAC ’95 BRAC 2005

6. Objectives From Cleanup Strategy and tailored to each program area; not much change Conduct cleanup to sustain the Army mission Targets for FY2008 and FY2009 Identify specific actions with a time frame Some common to all programs Most are program specific Success Indicators How you know if you got there Strategic Plan Update

7. Centrally managed cleanup program Standardization across programs Completion of sites and installations Results oriented Performance driven management Recognize and reward achievements Army Cleanup Philosophy

8. Identify requirements Maintain supporting documentation Conduct semiannual management reviews Report financial liabilities Single database of record for each program area Use innovative technology and periodic reviews to safely and effectively accelerate site closeout Army Direction for Cleanup

9. Applies to all cleanup Defense Environmental Restoration Program Compliance-related Cleanup Link environmental liability with real property records Involve stakeholders early, agree on exit strategy Maintain administrative record Information repository too Maintain permanent document repository Protect future Army interests, especially for emerging contaminants and changing cleanup goals Requirements Identification

10. Semi-annual with each program manger Actual versus planned results as forecast in annual program management plan IRP RIP/RC MMRP SIs CC SIs Instill pride of ownership, finish cleanup, and recognize results Management Reviews

11. Qualified audit opinion in FY2010 Unqualified audit when Army’s revised financial system is in place Three databases of record AEDB-R AEDB-CC FUDSMIS Standardized cost estimates RACER or engineering estimate from Feasibility Study Supervisory review Quality Control / Quality Assurance Financial Liability Reporting

12. Cleanup Process Phases and Milestones Sites in Progress Investigation and Site Cleanup Characterization Closeout Assessment and Findings for Determination of New Eligibility (AFDE) Sites Preliminary Assessment Remedy in Place is an (PA) important milestone in the cleanup process. At this point, Site Inspection Decision the selected remedy is in place, (SI) Document Interim Remedial and remedial operations can begin Actions (IRAs) or Remedial Investigation Removal Actions (RI) may occur at any time during the Feasibility Study cleanup process Remedy in (FS) Place Remedial Design Response If the investigation process reveals that cleanup is not (RD) Complete required or when cleanup work is complete, a site moves into the Response Complete (RC) category, i.e. site does Remedial Action Construction not have to go through every phase to achieve RC Site (RA-C) Closeout Remedial Action Operation KEY : (RA-O) Start Milestone Complete Long-Term Management (LTM) * The Hazard Ranking System evaluation determines whether a site should be listed on the National Priorities List Accelerate Site Closeout

13. Endless? NO!!! ($M) FY07 FY08 Army DERP (IRP) $376 $389 Army DERP (MMRP) 27 46 FUDS (IRP) 177 170 FUDS (MMRP) 85 80 BRAC (IRP) 39 41 BRAC (MMRP) 11 14 Compliance Cleanup 99 110 Resources

14. Strategy includes vision and objectives Strategic Plan is ACSIM’s direction to program managers Program Management Plan The PM’s plan to tell leadership how they are managing their program Installation Action Plan (Management Action Plan) Presents a plan based on available funding Strategy, Strategic Plan, PMP & IAP Relationship

15. Another tool for accelerating cleanup and achieving site closeout Achieved 56% of ER,A $$ on PBA in FY06 Expecting ~50% of ER,A $$ in FY07, FY08 PBA Applies to BRAC and FUDS too Army Contracting Agency and USACE contracts available FFP, FP or Cost-plus w/incentives and/or insurance Through FY06, $290M in cost avoidance applied to additional cleanup projects Performance-Based Acquisition (PBA)

16. Bottom line Close sites, finish cleanup at installations & for the Army Management Philosophy Centrally managed cleanup program Completion of sites and installations Performance driven management Use Environmental Management System [“plan – do – check – act”] to gain continual improvement Conclusion

17. PERFORMANCE-BASED ACQUISITION OVERVIEW

18. Outline Performance-Based Acquisition Initiative for Army’s Installation Restoration Program (IRP) Discuss why Army is proceeding with PBA Discuss roles and responsibilities in PBA implementation Purpose

19. Performance-Based Acquisition (PBA) is a federal government-wide initiative Army began using PBA for environmental cleanup projects in 1999 Use of Guaranteed Fixed Price Remediation (GFPR) contracts Pilots at both BRAC and active installations PBA is an initiative of both DoD and ArmyBusiness Initiative Councils (BICs) US Army Environmental Command is implementingthe Army’s PBA initiative through use of performance-based contracts (PBCs) Background

20. Performance-Based Acquisition (PBA) is a mechanism that solicits bids on the basis of what RESULTS you want achieved rather than what ACTIVITIES you want conducted General characteristics of Performance-Based Acquisition Contract for “What,” not “How” Clearly define objectives, milestones, and standards Use incentives or environmental insurance to enhance performance Incentives are inherent in PBAs Promote flexibility in exchange for accountability Generally, use fixed price contracts What is PBA? PBCs are monitored to ensure performance is being achieved

21. PBA Contract Types • Acquisition “Tool Box” for Performance-Based Acquisitions includes: • Fixed Price Remediation with Performance Work Statement (PWS) or Statement of Objectives (SOO) • Fixed Price Remediation with or without Incentives • Guaranteed Fixed Price Remediation (GFPR) • With Cleanup Cost Cap Insurance, with or without Pollution Legal Liability Insurance • Large and small business awards • KEY - Be less prescriptive and contract for objectives and results

22. Metrics • Installation Restoration Program PBA goals: • FY03: 3-5% of total program – achieved 9% ($37M) • FY04: 30% of total program – achieved 36% ($141M) • FY05: 50% of total program –achieved 51% ($202M) • FY06: 60% of total program – achieved 54% ($240M) • FY07: 60% of total program - $242M Goal • FY08+: 50% of total program

23. Metrics • BRAC (either PBA or Environmental Services Cooperative Agreement): • FY06: 60% of remaining sites • FY07+: 70% of remaining sites • FUDS: • FY06: 15% of total program • FY07: 25% of total program • FY10+: 50 % of total program

24. Results of the PBA Initiative • Since 2000, Army has awarded 55 performance- based contracts (PBCs) at Active Army Installations • ~$597 million obligated on PBAs • Contract values range from $548 K to $52.4 M • Contracts in 39 states, Puerto Rico, and all 10 EPA Regions

25. Army PBA Awards as of 23 Apr 07 Alaska Hawaii BRAC Active BRAC & Active Puerto Rico * Installation locations are approximate

26. PBA Accomplishments (as of 23 Apr 07)

27. Goal is for Contractor is to achieve one or more of the following performance objectives for each site identified in the Performance Work Statement: Response Complete Remedy in Place Remedial Action (Operations)/Long-Term Management Successful 5-year Review (or equivalent) Environmental Insurance MAY BE used to protect against cost overruns above the estimated remediation cost PBA for Environmental Cleanup

28. Why Use PBA? • Performance-Based Acquisition is intended to improve cost and schedule performance without compromising cleanups that are protective of human health and the environment • Lower risk of cost growth • Accelerates cleanup / property transfer • Reduces contract reporting and oversight • Can be aligned to exit strategies or used to optimize systems • Cost effective / lower remediation costs

29. Significant variation in program performance Cost and schedule baselines not uniform Progress toward completion lacking Cost-to-Complete increasing or unstable Schedules slipping Completing only 60-70% of planned versus actual milestones Program not incentivized for completion IRP History CHANGE NEEDED TO GET DONE

30. PBA does not trade safety for speed Safety and quality can be incentivized Innovation can be incentivized Perception is that private cleanup goes faster Learn and apply the proven private sector practices Safety vs. Speed?

31. Increase use of PBA Use incentives for innovation and reaching program completion Streamline Army Cleanup infrastructure Get more dollars to the ground doing actual cleanup Decrease the number of contract overruns & change orders Reduce variability in program performance and optimize project baselines Strategy to “Get it Done”

32. Develop corporate acquisition tools (“Toolbox”) to accelerate cleanup/closure Increase competition Maintain contracting flexibility to improve cost effectiveness One size does not fit all circumstances Contractors must be accountable for their performance Approach

33. The PBA Process Initial Planning / On-Site Evaluation Draft and/or refine PWS/RFQ and IGE Is installation viable PBA candidate? Is there agreement on the PWS/RFQ and IGE? Y N* Seek input on PWS/RFQ and IGE N* Y Can additional activities help candidacy? Is there a technically acceptable low-cost proposal? Release RFQ Conduct additional activities to prepare for PBA in future Y Y Conduct technical evaluation Award PBA N N Proceed with current path forward Post-Award / Contract Implementation

34. The Army will continue to work with Regulators and Communities when considering options for Performance-Based Acquisition The Army, as the federal lead agency, still remains responsible for the cleanup with the same level of coordination with EPA and state regulators Collaboration

35. Role of the Installation Restoration Program Manager • Little change! Installation RPM still… • Oversees contract • Interfaces with Regulators, along with Contractor • Interfaces with Public • Manages and monitors long-term operations • Manages contract cost, schedule, and reporting • Army centrally manages installation restoration program and database at the US Army Environmental Command for improved data quality and ease of reporting/response to out of cycle data calls

36. Beginning with initial scoping meetings, may attend information sessions with installation personnel and contract team Participate in development of performance measures for the contract, and may comment on the Performance Work Statement Participate in Bidders’ conferences to present regulatory views to prospective contractors After project begins, continue to maintain active role by reviewing remedial activities before implementation Provides comments on site documents GOAL - Concurrence with remedy completion Role of the Regulator

37. Provides advice on environmental restoration issues Conducts regular meetings open to the Public Keeps meeting minutes that are available to the Public Reviews, advises, and comments on environmental restoration documents Recommends project requirements Recommends site cleanup priorities Provides advice and comments on restoration issues Represents and communicates Community interests andconcerns Role of the Restoration Advisory Board (RAB) No change! Public retains stakeholder involvement in decision-making process and still…

38. Army’s Responsibilities • Army fulfills its program responsibilities by: • Approving all performance / remedial action objectives • Maintaining the Administrative Record • Reviewing & signing agreements / Decision Documents • Maintaining primary interface with Regulators & Public • Certifying all deliverables / milestones • Army is the final decision authority for award, oversight, and payment • ARMY RETAINS ULTIMATE ENVIRONMENTAL LIABILITY

39. Performance-Based Contracts Responsibilities: Army remains responsible for cleanup Contractor is accountable to the Army for their performance Seeking EPA/State input on contract performance measures (objectives and standards) Army/EPA/State need to continue to partner to ensure performance measures are met – ensures satisfactory project completion and closeout Army will continue with success achieved in Fiscal Years 2003, 2004, 2005, 2006 and 2007. Summary

40. Resources http://aec.army.mil/usaec/cleanup/pbc00.html Performance-Based Acquisition web page