South CarolinaPay For Performance

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South CarolinaPay For Performance

• Arthur A. Shrader
• UST Program
• South Carolina DHEC

2
South CarolinaPay For Performance

• Bid All Active Cleanups from the State Petroleum
  Cleanup Fund Since 1997
  
• Total of 223 Sites
• Individual or Multiple Sites
  
  
• Scope Includes all Required Actions
• Remediation of Soil and/or Ground Water
• Replacement of Impacted Receptors (e.g., New
  Water Supply Well, Bottled Water, Municipal Tap)

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What We Had Time and Materials
People Worked. . . Constant Cost Changes - Mor
e Soda - Sharpen Shears - Leaf Pick-up Extra T
he Fund Owned - Broken Chair - Dull
Shears Invoices were a Novel Fights over 0.2
7
4
What We Had

• Time Materials had Serious Flaws
• Contractors Worked.. The Fund Paid
• No Incentive for Completion of the Project
• No Way to Cap or Reduce Cleanup Costs
• Paperwork (Invoices, Timesheets, Manifests,
  Utility Bills, Rental Receipts ad nauseam)
  
• Opportunity for Fraud and Abuse
• Audits Were Time Consuming and Costly

5
What We Wanted Pay For Performance
The Job Completed or Substantial Progress
No Cost Increases or Change Orders The Fu
nd did Not Own Broken Equipment Warehouse Equ
ipment Simplified Invoices


Contractors Using Their


Initiative
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Pay For PerformanceExpectations

• Rehabilitation of Chemicals of Concern
  
  - Best or Appropriate Technology is Used
  - Work is Successfully Completed
• Timely Rehabilitation (Sooner is Better!)
• Solve Problem Areas
• - What to Do With Used Systems
• - Simplify Invoicing Procedures
• Lowest Possible Cost to the Fund

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RehabilitationBest Technology

• Contractor Selects Technology
• Must Be Permitable
  - Method or System Previously Used
  
  - Pilot Study that Demonstrates Success
• Proposed Method or Technology Must Protect All
  Actual and Potential Receptors
  

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South Carolina Best Technology

• Free Product Technologies Being Used
• Percent Method
• 83 Enhanced Fluid Recovery
• 15 Skimmer or Other Mechanical Pumps
• 3 PetroTrap or Other Passive Skimmer
• 3 Hand Bailing
  
  104

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South CarolinaBest Technology

• Rehabilitation of Soil and Ground Water
• Percent Method
• 57 Air Sparge and/or Vapor Extraction
• 35 Biological
• 10 Oxygen Releasing Compound (ORC)
• 9 Soil Excavation
• 3 Pump and Treat
  
  114

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Work Is Successfully Completed

• Certified Contractors
• Guarantee of the Bid Amount Required
• - Performance Bond
• - Irrevocable Letter of Credit
• QA/QC
• - Oversight of System Installation
• - Split Samples to a Separate Lab Verify
  Results
  
• - Verification Monitoring Wells

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Work Is Successfully Completed

• Of 223 Awarded Feb.1997 through August 2001
• 5 Are Completed
  25 Have
  Met Goals, In Verification
  
• 26 Are In Cleanup and Ahead of Goals
• 25 Are In Startup and Ahead of Goals
  19 Are At or Behind Schedule
  
• No Contractors Have Walked Off the Job

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Rehabilitation Progress by Month
56 Of The Cases Have Achieved 3/4 Of Their
Cleanup Goal
13
Reduce Problem AreasInvoice Procedures

• Payment Based on Performance
• Single Page Invoice
• No Separate Financial Backup Required
• Based on Quarterly Report/ Split Samples
• 40 of the Bid Amount for System in Operation
• 10 of the Bid Amount for1/4 Reduction in Mass
  
  
• 10 of the Bid Amount for 1/2 Reduction in Mass
• 15 of the Bid Amount for 3/4 Reduction in Mass
• 25 of the Bid Amount for Goal Met for 6 Months
  and Site Recovery (System and Wells Removed)

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South CarolinaPay For Performance

• Payment Schedule Example for 100,000 Award
• Current Concentration 11,000 ppb
• Clean-up Goal - 1,000 ppb
• Clean-up Mass 10,000 ppb
• 40 Initial Money 40,000 for System Startup
• 10 for 1/4 Reduction 10,000 for reaching 8,500
  ppb
  
• 10 for 1/2 Reduction 10,000 for reaching 6,000
  ppb
  
• 15 for 3/4 Reduction 15,000 for reaching 3,500
  ppb
  
• 25 for Completion 25,000 for reaching 1,000
  ppb for 6 months
  
• 
  and removal of the cleanup system
  

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Reduce Problem AreasRehabilitation System

• System Belongs to the Contractor
• Removed by Contractor (Fixed or Mobile)
• No Additional Cost for Repairs
• Acts of Nature (Lightning, Hurricane, Drought)
• Theft or Vandalism
• Routine Wear and Tear
• Fund Does Not Salvage Used Equipment
• Inventory and Warehouse
• Reuse, Scrap, or Auction

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South CarolinaPay for Performance

• Bid Costs Are Increased By
• Cost For Surety Letter or Bond (2-11)
• Cost to Install Verification Wells
• Timeliness of Payment (Less than 30 days)
• Contractor Confidence Level.Assumes All Risks
  (e.g., Theft or Damage to System, Weather Delays,
  Wrong Technology)

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Lowest Possible Cost
Bids Fluctuate As New Contractors Participate
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South CarolinaBidding

• Must have More Than 5 Quotes
• Must Define The Scope of Work
• Complete Assessment of the Problem
• Defined Cleanup Target or Goal
• Professional Services Concerns Not Justified
• Can Quantify The Work Scope
• Substantial Economic Benefits for Taxpayers
• Staff Must Prepare Bid Specifications
• Staff Are Not Required to Negotiate Initial Price
  
  

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South CarolinaFindings

• Bid/Fixed Cleanup Cost
• Best Use of Each Dollar
• Allow Budget Projections
• Avoid Change Orders (Unfair to Second Lowest
  Bidder)
  
• Change Orders/Revisions
• New Release (4 to date)
• Initial Increase in Contaminants (2 to date)
• Assessment Problem (1 to date)

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What Affects Cost

• Plume Size Is The Key Cost Factor
  - 54,000 for 100 ft. x 240 ft.
  - 118,000 for
  275 ft. x 495 ft.
  - 750,000 for 1,800 ft. x 4,000 ft.
• Cost Increases to Remediate Metals
• No Significant Increase For MCL Goal vs. 800 ppb
  Goal
  
• 85 Include Cleanup of MtBE

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South CarolinaConclusions

• Active Corrective Action Cost
• Based on Bids Awarded Summer 2001
• Dissolved Free 0.08 per yd3
  Product Recovery
  or 4.66 per part per million
  
• Free Product Recovery 0.05 per gallon
• Average Pay for Performance 146,800.06
• Average Time and Material 215,109.23
• 32 Savings

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Lowest Possible Cost
Costs Have Typically Decreased With Time
For Similar Sites
(200 ft. X 500 ft.)
57 and 82 Price Savings Since 1997
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Pay For PerformanceConclusions

• Rehabilitates Environmentally Impacted Properties
  at the Lowest Cost to the Taxpayer
  
• Simplifies and Streamlines the Cleanup Process
• Reduces Paperwork
• Reduces Potential for Fraud, Abuse, and Waste
• Allows for Cost Management
• Contractor Must Accept Responsibility for
  Rehabilitation, but Can Increase Their Profit
  
• Focuses Everyone on Environmental Results

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CATCH THE WAVE!
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South CarolinaPay For Performance

• Arthur A. Shrader
• shradeaa_at_dhec.state.sc.us
• [phone]