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Accelerating Cleanups by Using Innovative Tools Implementing Pay for Performance Cleanups

Accelerating Cleanups by Using Innovative Tools Implementing Pay for Performance Cleanups. 14th Annual UST/LUST National Conference March 11, 2002 Ferda Yilmaz Florida Department of Environmental Protection Bureau of Petroleum Storage Systems. Brief Program History. Started in early 1987

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Accelerating Cleanups by Using Innovative Tools Implementing Pay for Performance Cleanups

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  1. Accelerating Cleanups by Using Innovative ToolsImplementing Pay for Performance Cleanups 14th Annual UST/LUST National Conference March 11, 2002 Ferda Yilmaz Florida Department of Environmental Protection Bureau of Petroleum Storage Systems

  2. Brief Program History • Started in early 1987 • Legislation created IPTF • Reimbursement Program • Early 1987-July 1996 • Approx. $980 million spent for cleanups • Preapproval Program (T&M Cleanups) • 1996-Present • Approx. $430 million spent for cleanups

  3. Preapproval Budget & Sites

  4. 18, 254 - 3,328 14,926 5,350 9,576 sites identified from 1986-2001 sites cleaned in 14 years sites still need closure currently being worked on sites waiting for cleanup Cleanup Program Progress • How many more years do we need to close these sites? • PFP can accelerate the rate of closures

  5. Pay for Performance Cleanups • T&M: Payments depend upon work orders • PFP: Payments depend upon milestones • No cleanup progress required • No progress, no payment

  6. Pay for Performance Cleanups • History of PFP in Florida • Voluntary participation since 1997 • Agreements individually negotiated • Quick Summary • Number of Agreements 224 • Total value $39.9 million • Avg. cleanup cost $178K • Site Closures 14 • Post Remedial Monitoring 34 • Time to closure 4-6 years

  7. Pay for Performance Cleanups • PFP Variations in Florida • Two Tier PFP • Bundling sites • Open competitive bid

  8. Two-Tier PFP • Offered in addition to “Standard” PFP • More flexible option • Encourage more participation in PFP • Cleanup divided into two parts • First Tier is to elevated target levels • Second Tier is Chapter 62-770CTLs

  9. Two-Tier PFP PROS • Reduced risk • More acceptable for more contractors • More opportunities for PFP cleanups • More achievable milestones • More information for second tier cleanup • Predictable cleanup time

  10. Two-Tier PFP CONS • Potential price increase • Double contingency and risk factors • May be difficult to negotiate • Short of goal • Two negotiations-two agreements • Less aggressive remedial action • Less standard PFP sites

  11. Two-Tier PFP • Implemented in September 2001 • Very little interest to date • Not Sure why not • Still no incentive to do PFP cleanup?

  12. Individual sites Labor intensive Time consuming Customized agreements More financial risk involved for contractors Usually more expensive to DEP “Bundle” of sites Not labor intensive Less time Similar agreements Financial risks spread over a number of sites More cost effective to DEP Bundling Sites in PFP

  13. PFP Bundling ProjectsEl Paso Energy Co. • Partnered with EPEC to develop PFP agreements for several sites • Total of 37 PFP agreements • RA through SC to State CTLs • Cost for cleanup shared between EPEC and FDEP • Avg. cleanup cost for FDEP: $87K

  14. PFP Bundling ProjectsState Lead Cleanup • 6 sites • Umbrella contract • RAP through SC State CTLs • Avg. cleanup cost: $265K

  15. PFP Bundling ProjectsRP Lead Competitive Bidding • 36 low cap sites ($150K-$300K) • Granted to 3 contractors by bidding • SA through SC to State CTLs • 4 different scenarios based on contamination levels • Cleanup cost $37.5K-$218.5K • Cleanup cost TBD after SA completed

  16. Open Competitive Bidding • Pilot Program • Most cost effective cleanup • No loss in cleanup effectiveness • Plenty of contractors offering bids • Bundled bids bring better prices

  17. Competitive Bidding for PFPOpen Competitive PFP Bid • 3 Site Bundle • Granted to lowest bidder • Signed in October-99 • RAP through SC to State CTLs • Site closures expected in September-04 • Avg. cleanup cost: $76K

  18. Competitive Bidding for PFPInnovative Technology Bid • Innovative Technology Pilot Program • Must use pre-determined innovative technology • Bioremediation, Chemical Injection, etc. • Max. price per site $300K • 5 sites • Contractor may win one or more sites • RAP through SC to State CTLs

  19. Competitive Bidding for PFPFuture Project • State Lead Competitive Bid • 92 sites currently in SA • Approx. 50 will require RA and go to PFP bid • Bundles of ~10 sites geographically

  20. Accelerating Cleanups • Pay for Performance provides incentives for results • Flexibility in approach can encourage participation • Bundling sites provides many advantages to regulator and contractor • Bidding yields best prices with no decrease in quality • Bundled bids are better still

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