Contracting Frequently Asked Questions

Performance-Based Acquisition (PBA), formerly known as Performance-Based Contracting (PBC), is a contracting approach in which contractor performance is assessed against the desired outcome rather than the level of effort performed. The Army PBA initiative is designed to ensure that: Contractors are provided flexibility to determine and implement the best approach to meet the Government's performance objectives; Contractors can achieve appropriate performance quality levels; and Contractors receive payments only for services that meet the agreed upon levels of quality and performance and that are delivered on the agreed upon schedule. In addition, the contractor has the option of buying environmental insurance to cover additional costs that may occur if the cleanup expenditures exceed the contract award. Not all PBAs require environmental insurance.

A Performance-Based Contract (PBC) is the contract or task order tool that is implemented as an integral part of PBA. The hallmark of a PBC is that it contracts for an endpoint rather than mandating how work will be completed. The general characteristics of a PBC include the following:

• Contract for "What," not "How"
• Clearly define objectives, milestones, and standards
• May use incentives to enhance performance
• Promote flexibility in exchange for accountability
• Use fixed-price contractsUse environmental insurance where required to mitigate uncertainties

In short, a PBC is a mechanism that solicits bids on the basis of what RESULTS you want achieved rather than what ACTIVITIES you want conducted.

PBC projects associated with the Army Cleanup Program include any activities generally associated with remediation projects, including investigative studies, removal action, remedial design, remedial action, long term monitoring, establishment of institutional controls, or any combination thereof.

The decision to move forward with a PBC depends on the specific site and installation. The determination as to when a site (or installation) should be considered for this approach depends on the ability for the Army to bound the uncertainties associated with remaining decisions. Sites that have completed (or are close to completing) the investigation and assessment phase where the contaminants of concern, media, and extent of contamination are understood, and where the path forward toward a remedy is clear (i.e., a presumptive remedy) may pose ideal candidates. The balance that has to be struck by the Army during candidate evaluation is determining at what point the uncertainties can be managed such that costs associated with a fixed price bid are not prohibitive. In some cases, this is only achieved once a Record of Decision or other Decision Document is signed. However, if the decision document is too prescriptive, the offerors do not have the flexibility desired for the PBC approach. In some cases, when the level of uncertainty regarding the path forward is too high, the Army may select the performance objective to be "achievement of a Decision Document" rather than achievement of remedy in place or response complete. This allows the implementing contractor to propose on a fixed price basis while reducing the potentially significant cost impact of the unknowns.

PBCs may encompass all remaining work at an installation or portions of an installation, depending on the nature of the remedial work required at each site within the installation, and the status of execution of that work. An advantage of adding sites is having a greater work scope over which risk is spread. A disadvantage of adding all sites at an installation can be the inclusion of sites that are not far enough along to have risks sufficiently reduced. To make this determination, the status of each open site at the installation is evaluated to determine if the activities and schedule necessary for remediation of that site are amenable to a PBC contracting approach. Depending on the outcome of this evaluation, the recommendation will be made to either include the entire scope of the remaining effort or to focus on a group of selected sites.

The Army has successfully implemented four approaches to reduce uncertainty resulting from inadequate characterization as a way of managing its impact on bids:Remove the site from the PWS and allow it to be closed under another contracting strategy;

• Defer putting the site in a PWS until sufficient characterization has been performed to reduce the uncertainty;
• Modify the objectives in the PWS so the output is a decision document rather than site closure; or
• Conduct a targeted data gathering exercise to provide additional information to bidders prior to the procurement.

The determination of a site boundary is site-specific. In limited cases the boundary is defined by a discrete physical landmark (e.g., east/west of water body), or a physical boundary (e.g., all soils inside the boundary of the fenced area). In most cases the site boundary is defined by the footprint of the known contamination. However, if future investigation shows that the contamination is more wide-spread than originally thought, the defined site boundary will expand to equal the size of the plume resulting from contamination by the source(s) at the site.

There are two primary elements associated with performance objectives: the final outcome of the work, and the date by which the work needs to be accomplished. The final outcome, or end state for each site is established by working with the installation and regulators to determine the most likely future use of the site property and what is considered a realistic expectation within the contract period of performance. The performance date is developed through evaluation of the current status of the site, the Defense Program Goal (DPG) target date for the site, and the funding available for the installation.

In order to expedite contract award and reduce costs associated with solicitations, the Army has in general opted to use one of the many pre-placed contract vehicles available for PBCs. For such opportunities, firms are encouraged to contact the existing ID/IQ contract holders to investigate possible teaming arrangements. In limited cases the Army will make a decision to go outside of the pre-placed contracts and conduct a full and open competition. Contractors should monitor Federal Business Opportunities.

In general, incumbent contractors can participate in the bid process if, to the extent practicable, their work products (e.g., sampling results, reports) are made available to the interested bidders, to the extent that this work affects the bidders' ability to prepare their proposals. This determination is made on a case-by-case basis with the contracting office. All efforts are made to mitigate conflicts so as to allow incumbents to participate in the bid process if they are available through the contract vehicle being applied.

Federal and state regulators may participate in the initial candidate evaluation meetings, help prepare performance measures, and provide comments on the draft PBA Performance Work Statement. After contract award, contractors, in coordination with the installation, are are required to keep regulators involved in the execution of the PBC, consistent with federal, state, or local regulations, legal agreements, or as requested by the Army or regulators. This involvement may include:

• Providing copies of progress reports to regulators
• Providing draft copies of documents to regulators for comments
• Providing final copies of documents to regulators
• Obtaining regulatory concurrence of remedial goals (e.g., cleanup levels)
• Obtaining appropriate regulatory concurrence of all remedial activities prior to implementation
• Obtaining regulatory concurrence that remedies have reached RIP/RC

While the terms of the PBC may allow the contractor to discuss remediation approaches with the regulators, the Army representative needs to remain aware of ongoing discussions and is responsible for representing the Army's official position to the regulator and is the Army decision-maker.

The Army retains responsibility for coordination and final negotiations with the regulators. The Army retains final approval authority on all cleanup actions and activities for all installations and relies on the PBC contractor to support decision-making meetings between the Army and regulators. PBC contractor should be proactive and obtain regulatory input for planned remedial actions.