Ft. Leavenworth performance-based Contracting

[Lenny Siegel <lsiegel@cpeo.org>]

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Performance-based Contracting Speeds Leavenworth Cleanup 

By Jean Skillman 
Environmental Update (U.S. Army Environmental Center) 
Spring 2004
http://aec.army.mil/usaec/publicaffairs/update/spr04/spr0416.html

The environmental restoration program at Fort Leavenworth, Kan., is on
the fast track to beating the 2014 Defense Environmental Restoration
Program goal for the cleanup of contaminated sites through the use of
performance-based contracting (PBC). 

Nineteen sites on Fort Leavenworth became the subject of a PBC pilot
study for the Army in 2001. Of the nine sites identified in the first
contracting phase, four are near completion, three have a remedy in
place and two are in an interim remedial action period. 

"This is tremendous progress," said Richard Wilms, Fort Leavenworth's
restoration program manager. "We weren't even close at the rate we had
been moving." 

The Leavenworth cleanup program had been stuck in the investigation
phase and had been unable to move forward to the remediation phase,
Wilms explained. "We knew what needed to be done, but couldn't move
forward because of the way the money was budgeted under the old
contracting method," said Wilms. "Now that we are using PBC, the
contractor is paid when milestones are reached, which enables us to have
the flexibility to work several sites at once and keep things moving." 

The Army's commitment to using PBC is part of the president's management
agenda and is part of a larger governmentwide initiative. 

"Performance-based contracting is not new, but the governmentwide push
[toward] using PBC is," said Michael Hoffman, director of the Center for
Contracting at The Performance Institute, a think tank based in
Arlington, Va. 

According to a July 2003 Office of Federal Procurement Policy (OFPP)
report, performance-based contracting is now the preferred method for
acquiring services for the government. The House Committee on Government
reported $135 billion is spent annually on government services ? the
largest single category of federal spending. 

The Army's cleanup program reported a $32.9 million in cost savings to
date through the use of PBCs, with a potential $280 million in
additional cost avoidance through fiscal 2009. 

Under a PBC, the Army states the desired end result, and it's up to the
contractor to take the necessary steps to get there. Contractors must
still seek approval from the Army and regulators before implementing
final cleanup remedies, and the Army still has the ultimate
responsibility for the cleanup of its installations. 

"PBC focuses on achieving results while continuing to emphasize safety
and protection of the environment," said Janet Kim, an environmental
engineer at the U.S. Army Environmental Center and the Army's technical
coordinator for PBC implementation. "Using this type of contracting
mechanism significantly increases schedule and budget certainty.
Contractors are really incentivized to develop and implement an
effective and efficient approach to achieving regulatory closure." 

The joint cleanup effort partners the Environmental Protection Agency,
Kansas Department of Health and Environment, Army Corps of Engineers and
the installation management team with the cleanup contractor, Arcadis
Geraghty & Miller. Arcadis has agreed to complete the work at Fort
Leavenworth for a fixed price and on a set schedule. 

The PBC approach chosen for Fort Leavenworth is called Guaranteed Fixed
Price Remediation (GFPR). Unlike some other kinds of fixed-price
agreements, GFPR contracts shift more responsibility for the financial
risks and meeting deadlines from the Army to the contractor. 

"We've been using the GFPR method for over a decade in the private
sector and know its value and worth when implemented correctly," said
Lee Ann Smith, program manager for Arcadis. "It gives us the freedom to
think of a better, cheaper and faster way to complete the cleanup." 

The structural changes in the GFPR contract also give the contractor the
ability to respond immediately to regulatory requests for additional
fieldwork or modifications. There is no longer a need to stop and wait
for the terms of the contract to catch up. 

"Now when we encounter the unexpected, we can just take care of it,"
said Wilms, who coordinates the efforts with the installation, Corps of
Engineers and regulators. "Under the old contracting method we would
have to stop what we were doing and request a modification that could
trigger a month's worth of paperwork. Now if the EPA says, ?Add another
well,' Arcadis adds another well." 

As the work is moving more quickly, so is the paperwork. 

"While it is good that cleanup is happening at a much faster rate ...
the Army and their contractors need to realize that we [the regulators]
are working on other sites as well," said David Garrett, EPA Region 7
project manager. "In the beginning, we had to work through some issues
as we learned to work as a team and respect each other's workloads." 

Kim said the Army is committed to working with the installations,
regulators and communities when considering options for
performance-based contracting. 

"We're very sensitive to the fact that regulatory agencies may have
resource limitations on how quickly they can review our documents," said
Kim. "We try hard to work closely with our regulators to develop
workable review schedules. However, because the contractors are
incentivized to get the work done, they're going to push, and push hard,
to keep things moving at a good clip." 

According to Wilms, manager of Fort Leavenworth's restoration program
for more than 14 years, good communication is key to working as a team
and respecting the needs of all parties involved. 

"GFPR requires a tremendous effort from everyone involved in the
process," said Wilms. "The reward is the ability to watch the progress
of sites moving towards final remedy." 

Kim, who recently received an Army Business Initiative Council award for
her work on GFPR, agreed. "While performance-based contracting isn't a
new tool, its use in the Army's cleanup program is a dramatic change.
One of the the biggest challenges in implementation of the PBC concept
is educating all the stakeholders on what PBC really is and the
significant benefits that this contracting tool brings to the table." 

In 2002, 25 percent of Department of Defense contracts were
performance-based, compared to 9.6 percent of the Army Installation
Restoration Program contracts in 2003. 

The Army plans to use performance-based approaches to write at least
half of its cleanup contracts by the end of fiscal 2005 and 80 percent
by the end of fiscal 2007. 

-- 


Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org

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