Army MMRP Site Inspections Performance-Based Contract Lessons Learned

1. Army MMRPSite InspectionsPerformance-Based Contract Lessons Learned Gaby A. Atik, P.E. g.atik@fpm-group.com FPMgroup August 2007

2. PBC Background • MMRP Overview • FPM’s Active Army MMRP SIs PBC • Lessons Learned Outline

3. President’s Management Agenda (2001/2002) • “Government likes to begin things – to declare grand new programs and causes and national objectives. But good beginnings are not the measure of success. What matters in the end is completion. Performance. Results. “ President George W. Bush • Federal Acquisition Regulation (FAR) 2.1.0 defines PBC • “…structuring all aspects of an acquisition around the purpose of the work to be performed with the contract requirements set forth in clear, specific, and objective terms with measurable outcomes as opposed to either the manner by which the work is to be performed or broad and imprecise statements of work.” • Similar discussions in FAR 36 and 37 • PBC = Paying for results • Based on clear definition of scope • Approach affords flexibility to Contractor in developing solutions • Minimizes likelihood of cost growth – CTC fidelity • Typically considered for post-RI phases • Transfers risk from government to contractor • PBC ≠ Business as Usual PBC Background

4. FLEXIBILITY UNCERTAINTY SITE GROUPING KNOWN END-STATE PBC Screening

5. MMRP Established by FY02 Defense Authorization Act as a DERP Program • MMRP Policy • Follows CERCLA Process • Applies to releases prior to 30 Sep 2002 • Does not apply to: • Operational Areas • Operating Storage/Manufacturing Facilities • Permitted Treatment or Disposal Facilities • Munitions Response Site Prioritization Protocol (MRSPP) (32 CFR Part 179) - Promulgated in October 2005 MMRP Overview

6. Active Army MMRP • Centrally Managed by USAEC • Executed by USACE Military Munitions Design Centers • Baltimore • Omaha • Sacramento • Supported by Huntsville USACE Military Munitions Center of Expertise • Over 800 MRSs at approximately 165 Installations representing ± 3 Million Acres • MMRP PAs completed in 2003 ahead of 2007 goal • MMRP SIs on-track for completion prior to 2010 goal MMRP Overview

7. Competitively Awarded FFP PBC • 2-Step Process • Qualify • Low-bid • PBC Awarded to Complete MMRP SIs in Central & Western Regions • Teaming Partner – URS • 19 Installations • ± 100 MRSs • Average Cost per Installation ≈$150K • 8 Installations awarded in FY06 • 11 Installations awarded in FY07 • Performance Period = 2 years FPM MMRP SIs PBC – Overview

8. FPM MMRP SIs PBC - Location

9. NGB USAEC Installations Regulators USACE FPM/URS Team Others FPM MMRP SIs PBC - Stakeholders

10. Key Objectives/Milestones • Historical Records Review < 12 months • SI Report < 24 months • Other Milestones • Project Management Plan • Technical Project Planning (TPP) Meetings • Quarterly Quality in Progress Reviews (QIPRs) SI PBC Objectives

11. TECHNICAL PROJECT PLANNING (TPP) PROCESS QUARTERLY QUALITY IN PROGRESS REVIEWS (QIPRs) SI PBC PROCESS

12. Acceptable Performance Unacceptable Performance Superior Performance SI PBC Performance Standards

13. Challenge: Scheduling Meetings • 19 Installations X 3 TPP meetings + 4 QIPRs/year • Average 2 meetings /month • Minimum 5-6 stakeholders / meeting • 6 Other Active Army Contractors with similar requirements also trying to schedule with USAEC and USACE PMs • Communication protocol varies NGB USAEC Installations USACE Regulators Lessons Learned – Coordination FPM/URS Others

14. Lessons • Leverage USAEC, USACE & NGB resources to identify Installation POCs • Contact Installation POC and establish stakeholder communication protocol early-on • Initiate meeting scheduling efforts as early as possible • NLT 30 days but preferably 45 days prior to meeting • Stakeholders participation at TPP meetings ensures project success • Communicate with the stakeholders to ensure attendance • Communicate with the stakeholders to ensure attendance Lessons Learned – Coordination

15. Challenge: Deliverables Consistency • Key Deliverables: HRR, WP, SI Report • Iterations: Army Draft, Stakeholder Draft & Final • 19 Installations • 57 Key deliverables / year • Lessons: • Leverage USAEC’s central management of Active Army MMRP to streamline deliverables • Ensure that pilot deliverable is approved prior submitting simultaneous deliverables • Optimize # of personnel involved to ensure consistency and timeliness Lessons Learned – Deliverables

16. Challenge: Uncertainty in SI Scope • CTT/Phase 3 Site Inventory (PA) findings current validity • Operational areas variation • Regulatory acceptance • Lessons: • HRR is Errors & Omissions Policy for CTT • Operational area variations require flexibility by all parties to ensure that SI MRSs are valid • USAEC’s consistent management of Active MMRP facilitates regulatory acceptance Lessons Learned – Uncertainty

17. Challenge: How to manage SIs PBC risk? • Lessons: • Regional contract provides inherent diversification • Further risk diversification is achieved through teaming • Continuously evaluate need for improvements • Staggering of awards provides opportunities for implementing lessons learned • Keep in mind that while you get paid for getting to the Finish line, you get rated for how you get there Lessons Learned – Risk

18. Challenge: Key deliverables/milestones are not achieved till ≈1 and 2 years following award • Lessons: • Include as many measurable Interim Milestones as reasonably possible • Finish early • Diversify contracts portfolio • Best-value PBC • Low-bid PBC • Traditional Contracts Lessons Learned – Cash Flow

19. TO PBC OR NOT TO PBC?