Spring 2004
This is an archived article. Facts and links are current as of publication date.

Photo by Jean Skillman

Geologist Aaron Rosenboom checks the pressure of a molasses solution to be injected into a monitoring well as environmental scientist Scott Rose operates the pump. Both work for Arcadis.

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.

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