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--> Department of Energy's Construction Safety Program Patrick F. Finn Abstract This paper presents the program requirements of the recently developed policy for the management of safety and health on Department of Energy (DOE) construction projects. In a review of the program's elements, the paper discusses the shortcomings addressed and the options evaluated and chosen with supporting rationale. The paper provides insight to those responsible for developing or implementing policies for the management of construction safety and health within the contracting constraints of publicly funded construction projects. Introduction In early 1992, DOE's Office of Safety and Quality Assurance began revising the existing policy for the management of safety and health on the department' s construction projects, which is described within DOE Order 5480.9, ''Construction Safety and Health Program,'' which was originally published in December 1980. This policy was developed well before DOE's primary mission changed from defense production to environmental restoration and waste management. At that time, DOE weighted production goals over employee safety and health. This philosophy led to a management system in which there was minimal oversight of contractor compliance with applicable environmental, safety, and health requirements. With the change in DOE's primary mission came considerable public interest in and congressional scrutiny of the department's ability to effectively and safely manage the task of cleaning up the vast defense complex. Internal assessments and reviews by other government agencies, as well as several widely publicized events with significant safety and health ramifications, all pointed to a need to review and revise the policies that dealt with the safety and health of DOE-contractor employees.
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--> With its wide range of nuclear facilities, DOE expends considerable resources in managing the safety of its nuclear operations. Yet in terms of lost-time injuries, fatalities, and associated costs, the department's historical losses have been skewed heavily toward those attributable to exposure to conventional hazards, with construction a primary contributor. Beyond the moral imperative to improve safety in its operations, DOE has a significant economic interest beyond that of most public sector owners or contracting agencies, because, in most cases, it fully reimburses its contractors for worker's compensation costs and other casualty losses. With its environmental restoration and waste management mission and significant projects in program areas such as energy research and civilian radioactive waste management, DOE has become the largest construction owner in the nation. Thus, the obligation to review the construction safety management practices of the past and develop more effective policies for the future is created. The discussion that follows reviews the primary features of DOE's recently developed construction safety and health management policy, the issues and considerations involved in the development of this policy, and how the program deals with these issues. This discussion may help in the development or revision of agency or corporate policies dealing with the management of safety and health during construction activities. Department of Energy Policy The departmental directive in place since 1980, DOE Order 5480.9, prescribed little more than that "contractors bidding on or selected for DOE construction contracts" shall submit a "descriptive outline" of an appropriate program with ''adequate provisions for emergency aid, ... training, inspections, reporting, and certifying the safe operating condition of ... equipment'' acceptable to the contracting officer. It provided little detail on what constituted an acceptable program and it did not establish a management framework for DOE or its construction manager to ensure the effectiveness of the program at the project work site. Further, its objective was weighted strongly toward compliance with applicable standards and not toward the identification and control of project hazards, whether or not they were adequately addressed within the standards. This policy, along with DOE's legacy of limited oversight of its contractors, led to construction safety programs with widely ranging degrees of effectiveness across the DOE complex. DOE's greater emphasis on environment, safety, and health in recent years, however, has caused many of its contractors to develop construction safety programs that go far beyond the requirements of existing departmental policy and has led to outstanding safety records in many locations. Yet there are also a number of locations with less-than-
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--> exemplary performance records. Accordingly, a primary objective was to develop a policy that was flexible enough to allow (and encourage) those performing well to continue what they were doing, yet prescriptive enough to provide an effective framework for improvement for those that were not performing as well. It was necessary to recognize the elements present in nearly all successful programs and to establish a working group—the DOE Construction Safety Committee, composed of representatives from affected field and headquarters organizations—to present how these elements were addressed within their respective organizations. This process helped not only to achieve the acceptance of departmental organizations and their contractors, but also to ensure that the resulting program represented a minimum set of requirements for an effective program. Developing a minimum set of requirements was necessary for several reasons. Much existing DOE policy is a mix of requirements, philosophy, and opinion that does not lend itself well to the fixed-price, low-bid contracting method mandated for most federally funded construction work. In this firm fixed-price environment, there is ample legal precedent stating that the least reasonable interpretation of a contract requirement fully meets the contract terms. With the current emphasis on safety in DOE, it is DOE's obligation to clearly state its requirements to avoid the lengthy and often expensive disputes regarding minimum levels of acceptable safety and health performance. In addition, with efforts in the federal government to reduce internal departmental regulations, directives, and their derivative paperwork, there is a great deal of scrutiny of new or revised policy documents in terms of length, form, and content. Reviews of draft directives such as DOE Order 5480.9, therefore, result in comments such as: "What do we gain by imposing such requirements on our contractors?" "What's the added value of such a policy?" Or more to the point, ''What do you folks in Washington know about what's needed out here?'' These questions are as valid as they are predictable. Accordingly, the final product must be defensible to all affected parties, not only in terms of its technical content but also in terms of its cost-effectiveness. This constraint inherently limits how far one can go in prescribing program requirements beyond the accepted industry norm. The committee members' past experience in both the private and public sector, input from DOE contractors, and a review of several widely known construction safety program documents1 formed the basis of discussion for what should be required within the revised 1 These include American National Standards Institute (ANSI) Standard A10.33, "Construction and Demolition Operations Safety and Health Program Requirements," and the U.S. Army Corps of Engineers, "Safety and Health Requirements Manual," EM 385-1-1.
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--> DOE Order. The following were universally accepted as elements that needed to be addressed within the policy: contractor qualifications; a written plan that clearly delineates respective responsibilities and ensures proper coordination of safety and health programs of project subcontractors; a formal, written analysis of project hazards; employee training that is related to the anticipated hazards; and a minimum acceptable level of on-site verification by the construction manager and the DOE project manager. Nonetheless, some comments received during the review process maintained that the Occupational Safety and Health Administration (OSHA) Safety and Health Regulations for Construction, Title 29, Section 1926, Subpart C, of the Code of Federal Regulations (CFR) provided sufficient means to ensure an adequate level of safety in DOE construction operations. But Subpart C lacks requirements for written safety and health programs or a formal analysis of project hazards. The fundamental basis for these comments was twofold—it included cost and liability. There was a belief that anything beyond the requirements of Subpart C would cause project costs to increase far beyond any direct benefits received and that prescribing (and enforcing compliance with) essential elements of a contractor's safety and health plan would increase DOE liability in the event of a job-related injury or illness. There are, however, compelling arguments against these positions. The tremendous costs associated with injury and illness in the construction industry, or more specifically, the cost of insuring against these losses, has recently been the subject of considerable discussion. The escalation of worker's compensation costs has resulted in premiums that are now nearly 100 percent of direct-labor costs for particular trades in certain states. Yet this remains a fraction of the total costs of a disabling injury, in that indirect costs are generally estimated to be approximately four times direct, or insured, costs. This is particularly pertinent to DOE, because, by and large, the agency reimburses contractors directly for such costs. According to a report entitled "Improving Construction Safety Performance" (The Business Roundtable, 1982), which used extremely conservative data, the ratio of benefits to costs for administering effective safety and health programs was 3.2 to 1. With regard to liability, there are two prevailing bodies of opinion as to the advantages and disadvantages of prescribing and overseeing contractor safety and health programs. The first is that such involvement increases owner and construction manager liability exposure and should therefore be avoided. The second is that, by virtue of having
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--> the responsibility (and the financial ability) to exert control over a contractor's safety and health performance, the owner's, construction manager' s, and general contractor's liability is inherent, and positive steps need to be taken to limit this liability exposure. There is a considerable body of case law supporting the latter argument, as was emphatically underscored in a recent Washington State Supreme Court ruling (State v. PBMC, 1990) and subsequent Washington State Appeals Court rulings (Husfloen v. MTA Construction, 1990; Weinert v. Bronco National Co., 1990; and Doss v. ITT Rayonier, 1991). Interestingly, one of the more contentious issues during the development of this policy was the definition of construction. There were two primary reasons for this seemingly mundane point being discussed so thoroughly. First, unlike some other government agencies or private sector companies whose primary mission is construction management, DOE's mission involves a wide range of activities, from building, maintaining, and operating complex industrial facilities to scientific research and electrical power distribution. Accordingly, a definition that clearly distinguished between construction and maintenance was needed, because many questioned the benefit and cost effectiveness of applying the policy to daily maintenance activities. Second, the diverse organized labor representation on DOE facilities had an interest in whether future DOE environmental restoration and waste management work would be considered construction or the continued operation of a facility, albeit with a different product. This distinction could play a major role in determining which unions perform the bulk of future environmental restoration work. There was accordingly an expressed desire of the affected parties to use the revised policy as the arbiter of this issue. A policy document for the management of construction safety, however, is not the proper vehicle with which to resolve such an issue. Any effort to do so not only would have been inappropriate but also would have politicized and overburdened the process unnecessarily, resulting in many unneeded fights and delays as well as the risk of continued dissension by those adversely affected. It was, therefore, decided to defer to the definition of construction provided within the Davis-Bacon Act (used for wage-rate determination on federally funded construction projects). This definition is consistent with that provided within both the OSHA standards for construction safety, 29CFR1926, and the Federal Acquisition Regulation (FAR). Moreover, there exists at each DOE site a committee whose responsibility it is to review proposed construction-like activities above a threshold of $2,000 to determine the applicability of wage rates prescribed by the Davis-Bacon Act. The requirement for the construction contractor to perform a written analysis of projected hazards for each project phase elicited a significant number of comments. Many expressed concern that the level of effort demanded by this requirement would parallel that required by another DOE directive, which requires safety analysis reports to evaluate,
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--> in a rigorous and exhaustive fashion, the safe operating parameters of DOE nuclear facilities. It is important to note that the job safety analysis or activity hazard analysis that is common to most successful construction safety programs is considerably less rigorous and resource-intensive. A shortcoming of some construction safety programs that require a hazard analysis for each project phase is that a definition for the term project phase is not provided in the program, nor is there a requirement for a determination in advance of the construction activities that comprise a project phase and require such an analysis. In these cases, it is often difficult to assess a contractor's implementation of the contract's safety program requirements. Proactive, pre-job safety and health planning, the objective of such hazard analyses, is not always achievable when it is unclear which elements of the project require it and no clear tie can be made back to the project schedule. The DOE Order 5480.9 deals with this issue through the requirement for a preliminary hazard analysis in which the anticipated project phases are identified, typical associated hazards and control measures are listed, and specific contract requirements for the design or inspection of control measures by a professional engineer or other competent person are emphasized. (OSHA standards define a competent person as "one who is capable of identifying existing and predictable hazards... and has the authorization to take prompt, corrective measures to eliminate them.") This prescribed level of planning allows for a timely completion of a second step, the activity hazard analysis, in which the specific hazards and their control measures are identified. All engineering requirements are then completed prior to commencement of work on the affected project phase. For the sake of flexibility and economy, the Order allows for the preliminary hazard analysis to be completed in advance and provided within the bid documents or to be completed concurrently with the activity hazard analysis by the construction contractor, provided that all requirements are fulfilled. In addition to containing customary employee safety orientation and weekly toolbox training, the DOE Order uses the completed activity hazard analysis to ensure that employees are trained specifically regarding identified project hazards and the appropriate control measures. This method was chosen to address what all too frequently occurs in the construction industry: employees are given an 8- or 10-hour block of construction safety and health training by vendor or videocassette that may not reflect the hazards found on the job site and may not be consistent with the company's safety and health policy or practices. Another fundamental element of a program that effectively manages construction 'safety and health is a means to evaluate prospective bidders' safety and health records to ascertain whether they meet a minimum level of performance. In this element, the methods used in the private sector may not fit the constraints of the federal procurement
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--> process. For example, in the private sector, prospective bidders are frequently prequalified on the basis of several indicators of past safety and health performance. These may include a review of each contractor's safety and health plan, the worker's compensation experience modifier rate, the OSHA 200 Log (a required listing of recordable injuries and illnesses), or the incidence rate derived from the OSHA Log. As meaningful as these indicators might be, for several reasons their use is problematic in the federal sector. First, the use of a prequalification process for prospective bidders on federal work is restricted to specific and compelling technical competencies essential to perform the work; a written justification for the resulting limited competition is mandatory. It would be difficult to argue that safety and health performance indicators that are less than absolute constitute a compelling reason for restricted competition on federally funded construction projects. Furthermore, the fundamental tenet of federal procurement policy, fair and open competition, would be compromised by the indiscriminate use of indicators such as the experience modifier rate or incidence rate. The experience modifier rate is deliberately and inherently biased against companies with small payrolls (i.e., small businesses) in that a single catastrophic loss constitutes a larger percentage of annual payroll (upon which premiums are based) than it would for a large corporation. Moreover, it is based on performance from two to four years ago as opposed to current performance and therefore may not reflect significant safety and health program improvements. With respect to the use of incidence rates as a prequalification criterion, history has shown clearly that the mere use of these rates for such purposes has led, in and of itself, to their marked improvement, without necessarily a corresponding improvement in true safety performance. The fairness of either of these indicators can easily be questioned. What is allowed—and in fact required—under applicable federal procurement policies is that the responsibility of a bidder, based on past performance, be determined prior to contract award. On fixed-price construction contracts, this performance record is to be based, in part, on past evaluations of performance in five elements: (1) quality of work, (2) timely performance, (3) effectiveness of management, (4) compliance with labor standards, and (5) compliance with safety standards. Therefore, in the interest of fair and open competition, any contractor with appropriate bonding can bid on and be awarded a federally funded, fixed-price construction contract. The contractor's ability to continue doing so, however, is based largely on satisfactory performance. Although this system is more fair than a prequalification process based on sometimes faulty safety performance indicators, it is by no means foolproof. It is essential to maintain accurate and thorough records to support the issuance or use of such ratings. To do otherwise is to invite contract disputes and bid protests with their accompanying impact on project cost and schedule.
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--> These principles were considered in several areas in the development of the Order. When DOE contracts directly for fixed-price construction (which it seldom does), the policy defers paragraph 36.201 of the FAR provision. Similarly, when the department procures construction services through fixed-price subcontracts to its maintenance and operation contractors, environmental restoration management contractors, or construction management contractors, the policy requires that these contractors develop and implement a system to measure contractor safety and health performance on their projects and use the results during bid evaluations for future work. Their systems should be similar to that prescribed in the FAR in that they are obligated to subcontract consistent with the federal acquisition policy. The FAR prescribes application of such an evaluation system to fixed-price contracts exceeding $500,000, or less in exceptional cases. This amount was used in the Order to establish the threshold above which an enhanced level of DOE project manager involvement was required in subcontracted projects. This threshold was needed for two reasons. First, DOE does not have the personnel at its sites to allow the active participation of its project managers on construction projects down to the threshold of $2,000 provided within the Davis-Bacon Act. Second, enhanced participation above this $500,000 threshold helps ensure that the department is involved in decisions on those projects for which such an evaluation is required. This involvement will include reviewing project documentation that may form the basis of future unsatisfactory evaluations and even become the subject of future contract disputes or bid protests. There were a number of comments concerning the perceived inability of small or minority-owned businesses to comply with the construction safety and health program requirements of the order. Of primary concern was that these requirements would work against programs meant to encourage small and minority-owned business participation on DOE sites. Interestingly, there were at least as many comments (some from the same sources) stating that a rigid prequalification process based on experience modifier rates and incidence rates was superior to the contractor evaluation system prescribed by the FAR and referred to in the Order, despite the fact that the experience modifier rate is inherently biased against small businesses. In reviewing these contradictory positions, it was believed that it was more desirable to allow contractors the opportunity to demonstrate their ability to comply with DOE's construction safety program requirements than it was to preclude contractors on the basis of safety performance indicators that were neither fair nor completely reliable. Not only does this win the "fairness" argument, but also it will probably result in a larger pool of prospective bidders capable of performing in accordance with DOE's program requirements. In addition to the desired positive effect on safety and health, this larger
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--> bidder pool should exert downward pressure on bid prices, thereby enabling DOE to perform its construction more safely and more economically. Summary Within a short paper, it is impossible to review all the elements of DOE's recently developed policy for the management of safety and health on its construction projects, or the issues confronted in its development. However, it is hoped that some of the approaches taken and the supporting rationale provided will prove helpful to those who may have a hand in implementing it or developing similar policies.
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--> References The Business Roundtable. 1982. Improving construction safety performance: A construction industry cost effectiveness project report. Report A-3. January. Reprinted August 1991. New York: The Business Roundtable. Doss v. ITT Rayonier, 60 Wn. App. 125. 803 P.2d 4 (1991). Husfloen v. MTA Construction, 58 Wn. App. 686. 794 P.2d 859 (1990). State v. PBMC, 114 Wn.2d 454. 788 P.2d 545 (1990). Weinert v. Bronco National Co., 58 Wn. App. 692. 795 P.2d 1167 (1990).
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