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Procurement

There are a number of ways to make contracting and procurement "Triad-friendly."

The Triad can be implemented using a number of different contractual mechanisms, but some contractual vehicles lend themselves to a Triad approach. As an opening disclaimer, agency-specific procurement guidance and/or regulations take precedent over options discussed in this section. In addition, this section is not a primer on contracting or procurement activities. This section discusses contracting and procurement dimensions pertinent to implementing a Triad approach.

Procurement is the process of obtaining a contractor who will provide consulting services, personnel, or equipment (or any combination) to complete the work required. Procurement may cover an entire project or some specified portion. The ultimate goal of procurement is the same for federal, state, local agencies and private firms responsible for hazardous waste site cleanup: to get the work done as cost-efficiently as possible while meeting project performance requirements. Under the Triad approach there is an additional objective: to retain flexibility in proposed work so that dynamic work strategies and associated field activities can be implemented effectively. Procurement and associated contracting mechanisms are critical to consider because they can determine what dynamic work strategies are viable options under a Triad approach and the way real-time decision-making is approached.

There are two fundamental contract types commonly used, fixed-price contracts and cost-reimbursable contracts. Fixed-price contracts, as their name implies, require that contractors estimate up front what project activities will cost. For firm fixed-price contracts, once a contract is in place the contractor is responsible for any cost-overruns. Other forms of fixed-price contracts allow variances or change orders if conditions are significantly different from what the original statement of work described. Fixed-price contracts are effective when the scope of work is well-defined. Fixed-price contracts shift at least some of the uncertainty associated with a project to the contractor. Fixed-price contracts encourage efficiency in contractor work since the level of profit realized depends on a contractor's ability to control costs. Fixed-price contracts are among the easiest to administer if change orders are not required. Fixed-price contracts, however, can result in relatively inflexible project activities, with significant institutional disincentives to modifying activities once work is underway.

With cost-reimbursable contracts, contractors are paid for the work accomplished. Cost-reimbursable contracts are effective when the scope of work is ill-defined. Under cost-reimbursable contracts, uncertainty in project scope is born by the agency administering the contract. Cost-reimbursable contracts are generally the most expensive to administer and offer relatively less incentive for contractors to be cost-efficient. On the other hand, cost-reimbursable contracts offer significant flexibility for responding to conditions that are unexpected. There are different variations of basic cost-reimbursable contracts, including cost-reimbursable plus fixed fee, or cost plus award fee (performance-based), or cost plus percentage of costs, etc.

There are a couple of options for retaining the project flexibility required by the Triad while at the same time providing efficiency incentives to contractors. These include:

• Hybrid Contracts. An example of a hybrid contract is a fixed unit cost and requirements contract. For this type of contract, unitized costs are treated as fixed-cost items, while the number of activity units is kept open. This type of contract resembles a cost reimbursable contract for sites where significant uncertainty exists regarding project outcomes, but looks more like a fixed price contract as the CSM matures and uncertainty is removed from both decision-making and project scope. The key to this type of contract is a unitized costing structure. Performance awards can be included in this type of contracting mechanism to further encourage contractor efficiency.



• Mixed Contracts. Under a mixed contracts paradigm, project activities are divided into two basic sets: those whose scope is well-defined and known with a high level of certainty (e.g., the costs associated with work plan development), and those whose scope is more uncertain (e.g., waste disposition). The former are procured through fixed-price contracting mechanisms while the latter are addressed through a cost-reimbursable or hybrid contract. The point is to select the contracting mechanism for subsets of project activities that is the most appropriate for the expected level of flexibility required for a successful project outcome.



• Contract Options. In cases where contingencies are well-defined for a Triad-based activity, a contract option added to the main contracting vehicle may make sense for handling scope uncertainty. Well-defined contingencies occur when a particular possible (though unlikely) project outcome has been clearly identified. For those contingencies whose scope is less certain, a cost reimbursable option may be appropriate. For those contingencies whose scope would be fixed, a fixed-price contract option would make sense.

Whatever contracting mechanism is selected, services are usually procured through a formal RFP. The RFP typically has a detailed statement of work (SOW) attached that specifies what work will be conducted and that provides the information responders require to prepare appropriate responses. There are a number of Triad-related RFP facets that should be kept in mind by managers as RFPs are being prepared. These include:

• Level of Technical Sophistication. The level of technical sophistication of the requestor of services is an important consideration for Triad-based projects. If high, the RFP SOW may be very specific about what type of technologies and approaches are required. If relatively lower, it may be more appropriate to establish general project performance requirements in the RFP SOW and request that responders identify appropriate technologies and approaches. This is all tied directly to the systematic planning process. The Triad assumes that a systematic planning process is available for project planning purposes with appropriate supporting technical expertise. The supporting technical expertise (e.g., analytical, regulatory, engineering, risk assessment, statistical, and/or fate and transport expertise) required for a systematic planning process and associated CSM development may itself be contracted to some degree or accessed "in-house", but its availability needs to precede any RFP for field activities.



• Unitized Project Costs for Logically Grouped Activities. Unitization breaks environmental projects into discrete activities consisting of related services and equipment. A key element is the development of unit costs for these related services and equipment that are site-specific. The systematic planning and cost estimation process should have produced initial unitized cost estimates for the proposed work and the structure needed to organize and aggregate unitized costs. Triad RFPs should ask for unitized cost information in the RFP response. This information will facilitate the comparison of multiple responses, and eventual contract negotiations and amendments or change orders in response to evolving site conditions once a contractor has been selected and work is underway.



• Cost Breakpoints. Triad RFPs should solicit information about cost breakpoints that might affect unitized cost estimates (e.g., if there will be X number of samples, then a fixed laboratory is more cost effective, but if Y, then a mobile laboratory will be cheaper). This type of information may be the deciding factor for selecting the ultimate mix of technologies and the roles they will play. In many cases, the mobilization/demobilization costs of field deployable measurement technologies (particularly mobile laboratories) are only justifiable if a certain total number of samples and/or sample throughput are required to support field activities.



• Identifying Key Capabilities. The RFP needs to be framed in such a way that key capabilities important to successful implementation of a Triad approach can be assessed for respondents. These include capabilities such as:



• Prior experience with the types of technologies proposed for use.
• How the project will be staffed, and by whom.
• Prior experience with dynamic work strategies (development and implementation).
• Prior experience with real-time measurement technologies and their deployment.
• Whether responder has in-house capacity or will be subcontracting important technical components of work, and if the latter, example subcontractors that might be used with statements of their qualifications.

For Triad RFPs, the requirements for details in the statement of work are greater than in a traditional RFP because the request will be for site-specific technology implementations that may not fit generic commercially available capabilities. Detailed statements of work allow RFP responders to accurately appraise requirements and their costs, and respond with proposals that fit site needs. There is a strong connection between the RFP and the systematic planning process, dynamic work strategy definitions, and articulation of contingency plan requirements. Examples of details that may be important include the following:

• Systematic Planning Requirements. Systematic planning is a critical yet often neglected Triad requirement. If the expectation is that RFP responders will have specific systematic planning responsibilities (e.g., work plan development, participation on the core team, conceptual site model formulation and maintenance, etc.), then those responsibilities should be spelled out in detail.



• QA/QC Specifications. Non-standard measurement or analytical techniques will have non-standard QA/QC requirements. These requirements have an impact on cost estimation, RFP response preparation, and response comparisons, and so should be stated as explicitly as possible.



• Deliverable Expectations. Triad-based activities depend on the timely delivery of information. Consequently the statement of work should be as explicit as possible about deliverable requirements (time-frames and formats). For example, for particular types of data collection the expected deliverables and time-frames for turn-around may need to be specified. As another example, the level, quality, and timing of locational control for data collection will be important.



• Data Management Requirements. Triad-based field activities involve the generation and management of real-time data sets. In order to be successful, capabilities must be in place to manage these real-time data sets, a requirement that is unique to the Triad. If the expectation is that contractors will perform this task, then the RFP should be specific about the expectations.



• Required Technical Expertise. The RFP should specify the expected level of technical expertise that will accompany the delivery of a particular technology. As an example of what can happen if expectations are not explicitly stated, a project may believe it is procuring membrane interface probe (MIP) services with associated technical data interpretation expertise, but in response to a vague statement of work the service provider may simply field a MIP system with an operator and deliver the raw data sets produced.



• Redundancy and Replaceability. For Triad work where timely data are critical, statements of work should specify expectations for system redundancy and replaceability as protection against equipment malfunction or failure. These can be prescriptive (e.g., two GC/MS systems are required, one for daily analytical work and the second as a stand-by) or performance-based (e.g., in the event of instrument failure, the contractor shall provide an equivalent replacement within 24 hours).

A pre-qualification process such as a basic ordering agreement (BOA) is a useful tool to weed out potential responders who do not have suitable technical expertise or experience and/or for managing program contracting when there are a significant number of repetitive projects that will require site-specific RFPs. A pre-qualification process can be used to establish unitized costs, simplify site-specific RFP development, and still guarantee a sufficient level of competition in the RFP process.

The Florida Department of Environmental Protection's (FDEP) dry cleaning program (http://www.dep.state.fl.us/waste/categories/drycleaning) is an excellent example of the use of basic ordering agreements, unitized cost estimation, and fixed-price contracting mechanisms for implementing Triad-based cleanup activities. Dry cleaner owners and operators apply for state assistance under this program. The program provides characterization and remediation services along with limited liability protection. The program relies on direct-push sampling technologies and field-based measurement systems to support dynamic work strategies. The FDEP procures program services through a basic ordering agreement that pre-qualifies consulting and contracting firms. For each site, multiple firms respond under a fixed-price contracting mechanism to a site-specific RFP. Unitized rates are a required part of the RFP response in the event that the project scope changes. FDEP developed a detailed unit-cost structure based on program experience that is used for programmatic cost-estimation purposes.

Finally, there are several important points to remember when evaluating proposal responses for Triad-related work:

• In some cases, an RFP may specify performance characteristics desired and not specific technologies. Care must be taken when comparing costs for different analytical techniques in this setting since technical performance characteristics (e.g., turn-around time, analytical quality, etc.) will not be identical either.



• Particular attention must be paid to the level of QA/QC proposed, and its relationship to analytical performance and cost estimates. This is especially true if QA/QC requirements were not spelled out in detail in the RFP statement of work but were left open for the respondent to propose.



• Successful Triad activities require appropriate expertise. The question for RFP responses is whether identified personnel will be dedicated to the lifecycle of a project, and how they will be deployed as part of the Triad work effort. Proposal evaluators should also look carefully for evidence of prior experience and staff expertise with the proposed technologies. In particular there should be evidence that responders are cognizant of potential problems and/or limitations of proposed technologies. Many alternative analytical technologies are not commodity products and require proper expertise for successful implementation.

Because of the potential effect procurement and contracting have on the design and implementation of Triad-based activities, it is important to have access to a procurement or contracting specialist early in the systematic planning process. Doing this will familiarize them with the project intent and work strategies under consideration. A procurement specialist will be able to identify organization or agency-specific procurement policies/standards that may affect the way contracts can be structured, and consequently how Triad-based work might be approached.

• Understanding Procurement for Sampling and Analytical Services Under a Triad Approach (975K)
  The purpose of this document is to provide project managers, technology service providers, regulators, and other interested parties with information and examples that may be useful in developing and implementing Triad-specific procurement approaches.

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