1. Environmental Acquisition Strategy Performance-Based Contracting

2. AGENDA PERFORMANCE-BASED CONTRACTING (PBC) NAVFAC PBC EXPERIENCE
ACQUISITION BUILDING BLOCKS AND WORKLOAD PLAN
ENVIRONMENTAL ACQUISITION TRANSFORMATION
ACQUISTION STRATEGY EXECUTION
CONCERNS
SUMMARY
WAY AHEAD

3. Performance-Based Contracting (PBC)
What is PBC?
Structuring all aspects of an acquisition around the purpose of the work to be performed. PBC actions (task order) describe “what” is required (expected outcome) and places the responsibility on the contractor for determining “how” to deliver or meet the desired outcome on the contractor.

4. Performance-Based Contracting (PBC)
Each PBC action need to include:
Performance Objectives (task): Define the work in measurable outcome, mission related terms.
Performance Standards: Define what is acceptable (quality, quantity and timeliness) tied to performance objectives
Performance Assessment Plan or Quality Assurance Plan: Identifies acceptable quality levels for the objectives. Describes how performance will be measured.
Incentives: Addresses how to manage performance that does or does not meet objectives.
Performance Requirements Matrix: Documents in a summary table all the performance objectives, standards, assessments and incentives developed for a proposed contract action.

5. Performance-Based Contracting (PBC)
NAVFAC issued specific PBC guidelines on 26 Oct 04 :
PBC eligibility (applies to non-Brooks Bill work only)
Responsibilities and level of approval
Directs increased use of PBC
Training the workforce
Explains the elements of PBC
Established reporting requirements
PBC is incorporated in our Acquisition Strategy. It is a tool in our approach to execute the program. It is to be used where it makes sense.
The majority of our contract tools can have PBC components.
DoD IG Research Project identifies PBC as an area of future audit interest.

6. Performance Base Contracting (PBC)
PBC Concerns
Perception that PBC equates to Guaranteed Fixed Price (GFP) and GFP not necessarily in line with Management Guidance (worst first)
At IR sites that are not well characterized you will pay for the uncertainties related to unforeseen conditions.
Arbitrary PBC goals may have unintended consequences for the program.

7. Performance Base Contracting (PBC)
Indications are PBC strategies may lead to more cost effective acquisitions, better value and greater competition.
NAVFAC has been using PBC techniques since 1999; however, not all the elements were present in our contract actions, some PBC examples include:
Charleston Naval Base. Combination of real estate transfer and environmental cleanup.
Kings Bay. Chemical Oxidation in landfill hot spots, we established targets for reduction of contaminant levels.
Whiting Field. Milestones established for achieving certain contaminants reductions with a one year funding hold back to insure desired outcome.
Stockton and Mare Island, CA: Environmental Service Cooperative Agreement which is a combination of Guaranteed Fixed Price with Performance Base Contracting. The contractor assumes all responsibility for the action
Cost Plus Remediation Contracts Navy wide. We move select remediation efforts from a completed EECA which sometimes is less than 35% drawings and specs and move forward with a remedial action.

8. Execution Plan Building Blocks
Annual Plan Controlling Factors:
Funding controls (ER,N)
Amount of Reimbursable work (Compliance and BRAC)
Ability to contract work
Cleanup goals (ER,N)
% Cleanup vs Study
% High risk
Use small amount to fund MED/LOW priority if it will close an installation (ER,N)
Reuse Priority and completing installation (BRAC)
Economy of Scale
1. There is an optional slide on relative risk site evaluations at the end of the brief that can be used if the RAB has not been briefed or needs a quick refresher on relative risk evaluations.
2. ER,N clean up Goal is 70% of project targets.
3. Percentage of high relative risk ER,N project site cost is 80% project target for FY97 and 70% FY98 and out.

9. ENVIRONMENTAL ACQUISITION STRATEGY EXECUTION
2005 Environmental Acquisition Strategy Objectives
Continue emphasizing Small Business participation
Establishes Command base-line for Small Business 40%
Increase use of fixed priced contracts
Encourages Environmental Multiple Award Remedial Action Contracts
Considered suitable for work such as UST/AST, Asbestos and LBP Removal, Site Restoration, Monitoring Well Abandonment, Well-defined excavation and soils disposal, Remedial Action Operations/Long-Term Maintenance Work, Transportation and Disposal.
Increase use of performance-based contracting strategies
Promotes innovative technologies in contract work
Expedite close-out of contract task orders
Reduces high levels of unexpended funds
Meet Legislative and DoD requirements
Limits on large business IDIQs (>$130M)

10. Summary
We have changed our acquisition strategy to adapt to new polices and the evolving nature of the program.
We have a variety of tools available to address environmental requirements and flexibility to surge if needed.
PBC initiatives have been incorporated in our strategy.
Concern that a push for a mandatory PBC goal may have an unintended negative impact on program execution

11. Way Ahead
Looking at innovative contract mechanisms that provide quality service at a lower cost and close sites quickly.
Performance Environmental Restoration Multiple Award Contract (PERMAC): combine design and construction under a fixed price contract.
Looking at emphasizing incentives within the performance base framework with our fixed price and cost plus contracts.