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Environmental Remediation Contracting: Summary of a Symposium (1994)

Chapter: ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT

« Previous: REVIEW OF APPLICABLE STATUTES, REGULATIONS, AND COURT DECISIONS REGARDING the RESPONSIBILITIES AND LIABILITIES OF FEDERAL AGENCIES AND FEDERAL EMPLOYEES
Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
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ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS —THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT

Dwight A. Beranek

U.S. Army Corps of Engineers

OUTLINE

  • Introduction—The challenge

  • Setting criteria—Knowing what we want

  • Measuring performance—Getting what we want

  • Summary—Meeting the challenge

THE CHALLENGE

Environmental Remediation is a Tough Ballgame:

  • Conditions are generated over time

  • Discovery is often spontaneous

  • Extent of damage/danger is unknown

  • Health/safety issues predominate

  • There are more laws/rules than you can shake a stick at—And they vary by state/locale

  • Personal and contractor liability is risky

  • Issues become visible and politicized

Technical Requirements are Hard to Define:

  • Site assessment takes time and money —uncertainties often remain

  • Subsurface conditions often predominate

  • Technical solutions vary widely in process, price, and time

  • Matching problem and solution has inherent risks

  • Defining acceptable final conditions is judgmental

Placing a Value on Contractor Performance is Difficult:

  • How much are we willing to pay for speed?

Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
  • How much are we willing to pay for level of remediation?

  • How much are we willing to pay for good management?

  • How much are we willing to pay for cost reduction?

  • How much are we willing to pay for good documentation?

Procurement Process Makes Life Interesting:

  • We can't relinquish sovereign responsibilities to contractors

  • We must comply with the norms of federal procurement—equity, fairness, integrity, consistency, accountability

  • Must be smart in the selection of the procurement vehicles to suit programmatic norms—risk management, performance, time, cost

Setting Criteria - Knowing What We Want:

  • Most important step in the process

  • Careful planning effort

  • Customer driven requirement

  • Risk management approach

    • learn all we can

    • within constraints

    • determine risk of uncertainties

    • assign risks between government and contractor

KNOWING WHAT WE WANT:

  • Acquisition planning

  • Conducted by a technical, procurement, and customer team—determines technical performance criteria, cost, and time targets

    • selects the appropriate contracting type

    • determines the scope of work

    • performs preaward evaluation

  • Determine desired end state

    • review applicable environmental regulations

    • consult closely with regulatory authority

  • Apply requirements carefully to site

  • Establish parameters necessary to achieve compliance

  • Determine constraints

    • time

    • health/safety

Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
  • funds

  • political

  • Assess present conditions

    • analyze site data

    • define conditions in regulated parameters

    • determine deficient areas—where possible

    • qualify potential deficiencies—assign probabilities

  • Determine certainty of technical performance, cost, and time criteria

  • Select contracting type based upon this analysis, for example:

    • low uncertainty/risk—firm fixed price

    • uncertain site conditions but known value of technical performance, cost, and time criteria—cost plus incentive fee

    • uncertain conditions and unknown or changing value of criteria—cost plus award fee

MEASURING RESULTS - GETTING WHAT WE WANT:

  • Must translate criteria/needs to clear/binding contractual requirements

  • Must rely on contractor profit motive

  • Must structure contract to incentivize contractor in high value (to government) areas

  • Must foster a businesslike climate between parties

  • Must establish an oversight process commensurate with government's responsibilities

GETTING WHAT WE WANT (WHEN THE VALUE OF CRITERIA IS KNOWN AND CONSTANT):

  • Determine the most important technical performance criteria

  • Describe minimum, target, and optimum performance levels

  • Determine the value to the government for achieving performance above the minimum criteria level

  • Determine the “sharing ration” between government and contractor

  • Build the formula into the contract in the fee determination process —in the OK or during negotiations

  • Perform the same analysis for cost and time criteria

  • Determine the relative values of trading off one criteria for another i.e., Increase technical performance at the expense of cost

  • Document the trade-offs in fee determination table, curves, or nomographs

  • Tie into contract

Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×

WHEN VALUE OF PERFORMANCE CRITERIA IS UNCERTAIN AND/OR CHANGES DURING CONTRACT:

  • Use award fee contracting approach

  • More subjective approach in fee determination

  • Contractor involved in approach

  • Government serves as final fee authority

  • Establishing a businesslike environment is crucial

  • Have an unambiguous contract

  • Enter a partnership to establish productive relationship (trust)

  • Understand respective motivations

  • Sign up to project related goals

  • Foster consistent and clear communications

  • Face and solve problems early

GOVERNMENT OVERSIGHT ROLES (STATED IN CONTRACT):

  • Fee Determination Official (FDO) — Provides equitable judgment on fee—high official

  • Performance Evaluation Boards (PEB)

    • Evaluates performance, cost, time reports

    • Recommends fee to FDO

  • Performance Monitors (PM) — Collect data—prepare reports for PEB

RULES OF THUMB:

  • Express requirement accurately = convey performance expectations

  • Emphasize reward-based incentives = reward successful performance

  • Motivate performance excellence = let the contractor manage and do the job

  • Cultivate communication and feedback = share agreements and differences

  • Keep it as simple as possible = be declarative and unambiguous

SUMMARY - MEETING THE CHALLENGE:

  • Government has a sovereign obligation to know what we want and get what we want for the taxpayer — government agents must perform the tasks that will ensure compliance with environmental regulations

  • We must do our homework

    • setting criteria

    • structuring the procurement action

    • determining risks and tradeoffs

  • We must be accountable and professional

Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
  • We must appreciate the contractor's world

  • We must not relent until the job is done.

Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
Page 12
Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
Page 13
Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
Page 14
Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
Page 15
Suggested Citation:"ESTABLISHING CONTRACTOR PERFORMANCE CRITERIA AND MEASURING RESULTS -- THE MOST CHALLENGING TASKS IN ANY ENVIRONMENTAL PROCUREMENT." National Research Council. 1994. Environmental Remediation Contracting: Summary of a Symposium. Washington, DC: The National Academies Press. doi: 10.17226/9266.
×
Page 16
Next: CONTRACTING FOR ENVIRONMENTAL STUDIES: PITFALLS AND CAUTIONS -- GOVERNMENT PERSPECTIVE »
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