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-2-
to be developed by the technical program office prior to the
issuance of any work assignment estimated to exceed $25,000.
This provision is applicable to contracts that utilize a work
plan/work assignment administrative process.
In recognition of the need for guidance in this area, the
Superfund Revitalization Office (SRO) began work on this
Directive in the summer of 1992. A cost estimating workgroup,
consisting of POs, COs, RPMs, and Estimators/Coordinators in the
Regions, was formed to assist in drafting the guidance and reach
consensus on a wide array of issues relating to IGCEs. In
addition, the SRO obtained, through an interagency agreement, the
services of a cost estimator from the Bureau of Reclamation.
This person (Ken Beebe) was the lead for this effort at
Headquarters.
Significant issues raised by the Office of Inspector General
(OIG) and the Office of Acquisition Management (OAM) resulted in
appropriate changes to the guidance to reflect agreements
reached. During the guidance development process, there were
several opportunities for Regional and Headquarters Offices to
comment on drafts of the guidance. All comments received were
considered and discussed at higher management levels as
appropriate. The resulting document reflects decisions reached.
This guidance represents the culmination of efforts of many
different people, and especially significant are the
contributions of Regional personnel who worked tirelessly to help-*
resolve issues and finalize the document.
IMPLEMENTATION
This guidance should not have a major impact on Regional
operations since all Regions have been preparing IGCEs for some
time now. All Regions should utilize this guidance effective
immediately in preparing IGCEs and conducting work plan
negotiations.
Questions concerning the guidance should be addressed to Ika
Joiner, Superfund Acquisition Manager, at (202) 260-0840.
Attachment
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-3-
cc: Rich Guimond
Ika Joiner
Henry Longest, OERR
Jerry Clifford, OWPE
Diane Balderson, 0AM
Regional SF Branch Chiefs
Reg. Contracting Officers' Supervisors
Attendees of 1st Cost Estimators' Meeting
Marty Cook, 0AM
Don Hambric, OAM
Pat Patterson, OAM
Rick Thurston, OAM
Marlene Suit, OS-HOW
Superfund Documents Center
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JULY 27, 1993 OSWER Directive 9202.1-12
GUIDANCE ON ROLES AND RESPONSIBILITIES FOR PREPARING INDEPENDENT
GOVERNMENT COST ESTIMATES fIGCEs1 FOR REMEDIAL AND ENFORCEMENT
WORK ASSIGNMENTS. AND CONDUCTING AND DOCUMENTING WORK PLAN
NEGOTIATIONS IN THE SUPERFUND PROGRAM
I. PURPOSE
The Office of Solid Waste and Emergency Response (OSWER)
Directive 9242.2-06, dated January 31, 1992, requires the
development of IGCEs for any new work assignment or work
assignment modification expected to exceed $25,000. This
requirement, along with other procedures discussed in this
guidance, are being implemented to improve contract management
within the agency.
The purpose of this guidance is to provide information and
establish minimum requirements regarding the roles and
responsibilities of the Work Assignment Manager (WAM), Project
Officer (PO), and Contracting Officer (CO) for: 1) preparing
Independent Government Cost Estimates (IGCEs) for remedial and
enforcement work assignments in the Superfund program; 2)
performing reviews of the contractor's work plan and budget, and
3) preparing for, conducting and documenting negotiations with
the contractor for the work plan and budget. This guidance is
applicable to those enforcement contracts where COs, POs, and
WAMs are co-located and all regional and zone remedial contracts-
(i.e., ARCS contracts as well as the Long-term Contracting
Strategy (LTCS) contracts that use Work Assignments as the
ordering document and are managed in the Regions). Regions may
supplement this guidance with policies which address specific
needs and which provide detailed instructions incorporating
specific Regional requirements. These policies however, cannot
contradict or supersede this guidance.
This document does not provide detailed guidance on how to arrive
at specific costs but does give an overview of what should be
considered in the preparation of IGCEs, review of the Work Plan,
and resolution of pricing issues through negotiations. For more
guidance on this subject, please refer to the document "EPA
INDEPENDENT GOVERNMENT COST ESTIMATING GUIDE" prepared and issued
by the Office of Acquisition Management (0AM). The 0AM guide
provides a thorough overview for preparing an IGCE, references
for confirmation and information on indirect rates, and sample
forms and examples.
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II. BASIC CONSIDERATIONS
A. CONTRACT MANAGEMENT TEAM (CMT)
In order to ensure an effective and efficiently run
Superfund program for each project, it is essential that the
CMT be properly structured with the necessary
interdisciplinary skills. Therefore, at a minimum, the CMT
should consist of the Work Assignment Manager (WAM), the
Project Officer (PO), and the Contracting Officer (CO).
Others, such as contract specialist, cost estimator/
coordinator, technical experts, the Bureau of Reclamation
(BOR) or U.S. Army Corps of Engineers (USAGE) may be
included as team members.
The ability of the CMT to function as a team is essential
and each team member plays an important supporting role.
Good communications are necessary for effective operations
of the CMT.
B. STATEMENT OF WORK (SOW)
The single most important component in the successful
development of an IGCE is a clearly defined SOW and detailed
specification. Model SOWs should serve as the basis for
developing more detailed SOWs which are then customized for
the particular site. Standard tasks from the contract
specifications being utilized should be used as much as
practicable in describing the work to be performed. All
assumptions should be included in the SOW. The SOW should
clearly define what the Government desires from a product,
project or service. It should provide information on the
product/service required along with the schedule
(milestones) and location of the deliverables. An accurate
and defendable IGCE cannot be prepared without a clear,
complete and concise SOW and detailed specifications. The
SOW is the basis for both the IGCE and the evaluation of the
contractor's proposal. A good SOW should provide the
necessary foundation for EPA to obtain the goods and
services it contracts for at a fair and reasonable cost and
to get the best product, project or service on time and
within the budget.
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III. IGCE DEVELOPMENT
A. DEFINITION
An IGCE is the Government's estimate of what the government
thinks it should cost to accomplish the SOW or solicitation/
specifications. The IGCE shall not be divulged to the
potential contractor and shall be marked "CONFIDENTIAL - FOR
OFFICIAL USE ONLY". All assignments or amendments that
require an IGCE, generally fall into two categories: those
consisting mostly of Level Of Effort (LOE) hours, and those
that not only contain LOE but need to estimate the
anticipated cost of construction (CCE) as well.
B. LOE ESTIMATES
The WAM is responsible for the development of the IGCE.
Where in-house cost estimators/coordinators are available,
the WAM may utilize these individuals when developing the
IGCE. If the WAM intends to extensively involve the cost
estimator/coordinator in the IGCE process, it is essential
that estimators/coordinators be kept informed and involved
from the earliest time possible.
The IGCE must be based on supporting data such as historical
information from previously completed work, cost estimating
guidelines, engineering standards, or professional
judgement. All assumptions, including rationale, used in
developing the IGCE shall be clearly defined in writing and
shall be part of the IGCE package. Estimates must, at a
minimum, be broken out by task and subtask as outlined in
the SOW, and by cost element such as labor, travel, other
direct cost, subcontract expense, overhead & G&A expense,
and fee. The estimate shall not be structured to equal the
funding document accompanying the Work Assignment Form
(WAF). The estimate shall be realistic of the resources
necessary to accomplish the tasks detailed in the SOW. One
of the most important elements in the Government cost
estimate is the estimate for labor hours. Labor hours must
be estimated by skill category (P level) as defined in the
contract, and by task.
The IGCE shall be prepared before the CO will accept the
Procurement Request (PR). This IGCE can be considered a
preliminary estimate prior to having a technical scoping
meeting with the contractor if desired, or a final estimate
when no scoping meeting is required. A preliminary estimate
is defined as the total LOE and dollar amount for all work
anticipated in the SOW. The estimates can be based on
historical costs for similar work. The major assumptions
and rational shall be included with the preliminary
estimate. If a technical scoping meeting is required, the
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preliminary estimate must be revised to reflect any changes
made to the SOW and then will be considered the final
estimate, but in all cases, it shall be completed prior to
receipt of the work plan. If a technical scoping meeting is
required, it shall be limited solely to the technical
aspects of the assignment, and not involve cost. In the
event that no technical scoping meeting is held, the IGCE
shall accompany the SOW and shall be forwarded to the CO as
part of initiation of the work assignment. Estimates shall
be signed and dated by the WAM and the estimator/coordinator
or PO (if involved in the IGCE preparation).
When the contract SOW presents specific, standardized
tasks, the tasks presented in the SOW and the IGCE
shall be organized, structured and presented in a
manner consistent with and comparable to the contract
SOW.
When an approved workplan is modified and expands/
decreases the activities, or increases/decreases the
LOE, the tasks in the modification and the IGCE shall
be organized, structured and presented in a manner
consistent and comparable with the tasks presented in
the approved work plan.
C. CONSTRUCTION ESTIMATES
A preliminary construction cost estimate (CCE) for the
Remedial Action is developed first at the RI/FS stage. A
more detailed CCE is developed during the Remedial Design
process and then finalized based upon the
solicitation/specification package. The CCE shall be a
detailed estimate itemizing the principle elements of the
cost to the contractor (including indirect costs, and the
addition of profit) to perform the work required by the
specifications. Detailed estimates are developed using a
step-by-step process, planning the project in the same
manner as a contractor would plan, organize, and conduct it.
They are based on the type and quantities of labor,
equipment, and material required to perform the work.
Consideration should be given to production rates, projected
weather delays, schedule impacts, type of technology to be
used, site accessibility, safety, haul routes and distances,
and availability of materials and equipment. Supporting
documentation should include narratives addressing the site
visit, pre-bid conference, the facts and assumptions used in
the preparation of the estimate, as well as specific
references to source material used.
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REMEDIAL DESIGN BY A&E CONTRACTOR
The A&E contractor to whom the Remedial Design is
awarded may or may not be specifically tasked to
develop a detailed CCE as part of the design process.
Listed below are the alternative methods that the
Regions should use in the development of CCEs.
a. - Use of EPA Staff To Develop CCE:
For those EPA Regions having in-house
construction experience and technical
expertise, the CCEs should be developed using
available staff resources. This will serve
as EPA's official CCE for the Remedial
Action. If this approach is taken, the A&E
contractor should not be tasked to develop a
CCE (such duplication of effort would not be
cost effective).
b. - Use of Other Federal Agencies to Review A&Es CCE:
If Regional staff require assistance because
of work load or lack of technical expertise
in project construction, the A&E contractor
will prepare the CCE and the WAM shall avail
him/her self of the technical expertise and
knowledge of other federal agencies, such as
the Bureau of Reclamation or the U.S. Army
Corps of Engineers, through inter-agency
agreements, to assist in reviewing the A&E
contractor's estimate. Once the contractor's
CCE has been reviewed, modified if necessary,
and approved by the EPA, it shall serve as
EPA's official CCE. This CCE will become the
subcontract portion of the Remedial Action
IGCE if it is provided to the prime for
subcontracting.
c. - Use of Other Federal Agencies to Develop the CCE:
If regional staff require assistance because
of work load or lack of technical expertise
in project construction, the WAM shall avail
him/her self of the technical expertise and
knowledge of other federal agencies, such as
the Bureau of Reclamation or the U.S. Army
Corps of Engineers, through inter-agency
agreements, to develop a CCE based upon the
A&E contractor's solicitation/specification
package. Once the other agency's CCE has
been reviewed, modified if necessary, and
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approved by the EPA, it shall serve as EPA's
official CCE. This CCE will become the
subcontract portion of the Remedial Action
IGCE. If this approach is taken, the A&E
contractor should not be tasked to develop a
CCE (such duplication of effort would not be
cost effective).
2. REMEDIAL DESIGN BY OTHER FEDERAL AGENCIES
When the WAM chooses to use another federal agency to
develop the Remedial Design, the responsibility for the
development of the detailed CCE is incorporated as part
of the SOW and Interagency Agreement (IAG). That CCE
will become the IGCE for the Remedial Action.
3. ARCS CONSTRUCTION CONTRACT MODIFICATION
OSWER Directive 9355.5-01/FS, dated September 1989,
provides guidance on how ARCS construction contract
modifications shall be processed (copy attached).
IV. REMEDIAL ACTION
For Remedial Action work assignments, an IGCE for the A&E
contractor's efforts associated with the award, management and
oversight of the construction subcontractor must be completed.
For this portion of the Remedial Action, the LOE estimate
guidance noted earlier should be followed. The CCE developed
during the Remedial Design phase, as outlined in III, c. 1. a.,
b., c., and 2, shall be incorporated as part of the overall
Remedial Action IGCE.
V. WORK PLAN REVIEW
Upon receipt of the contractor's work plan and proposed budget,
members of the CMT shall perform a technical and cost analysis.
A. Technical Analysis;
A technical analysis means the examination and evaluation by
personnel having knowledge, skills, experience, or capability in
engineering, science, or management of proposed quantities and
kinds of materials, labor, and processes, and associated factors
set forth in the proposed work plan. This analysis will
determine and report on the need for reasonableness of the
proposed resources.
During the technical review it may be necessary to have fact
finding discussions with the contractor. These discussions do
not include negotiation or resolution of differences with the
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contractor in the total work plan or individual elements.
Instead, the results of this discussion should be used to provide
the CO with sound recommendations for establishing the Pre-
Negotiation Objectives. These recommendations should include a
narrative for: (1) reconciling the IGCE and the contractor's
cost estimate based on fact finding; and (2) a summary of any
remaining differences for negotiation.
A fact finding discussion is only for use in understanding the
contractor's basis in developing the Work Plan/Cost Estimate.
The individual conducting the fact finding shall inform the CO
that such a discussion is warranted and the CO shall inform them
if she/he will participate.
B. Cost Analysis:
A cost analysis means the review and evaluation of the separate
cost elements of (a) the contractor's work plan and (b) the
judgmental factors applied in developing the work plan budget/
estimate. This analysis will enable the reviewer to form an
opinion on the degree to which the proposed work plan cost
estimate represents and what the cost of the SOW should be,
assuming reasonable economy and efficiency.
The CMT should compare the technical aspects of the work plan
with the SOW and evaluate the differences between the IGCE and
the contractor's proposal. Special emphasis should be given to
the total hours and dollars, hours and skill mix per task,
subcontract costs, and schedule. It should again be emphasized
that the WAM should call upon the expertise of other technical
disciplines to aid in review of the work plan.
C. Roles and Responsibilities for Work Plan Review:
The following is a brief summary of the recommended roles and
responsibilities of WAMs, POs, and COs in the work plan review
process; however, the specific roles and responsibilities may
differ from region to region.
1. Work Assignment Manager (WAM)
reviews work plan to determine if work plan is
appropriate, reasonable, and complete;
provides quality control role within the work plan
review process;
determines if contractor's work plan is responsive to
SOW;
reviews number of hours and skill mix to determine
appropriateness for tasks;
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8
reviews proposed schedule, equipment, health & safety
requirements, travel/ODCs, deliverables, subcontract
needs/use;
reviews qualifications of contractor personnel for
appropriateness;
determines if tasks fit SOW, that no excess work is
proposed, and costs proposed for tasks are reasonable;
identifies issues that require CO/PO attention;
initiates, conducts and documents fact
finding discussions if needed; and
. summarizes comments in a work plan memorandum to the PO
and CO on a task/subtask level, including a comparison
of the contractor's cost proposal with the IGCE and
makes recommendations regarding variances between the
two.
Project Officer (PO)
reviews work plan to determine if it is appropriate,
reasonable, and complete;
/
provides quality control role within the work plan
review process;
reviews project planning and project management
activities;
reviews qualifications of contractor personnel for
appropriateness;
reviews schedule(s) and deliverables;
reviews equipment requirements - prepares 7 point
justifications as appropriate;
compares work plan with IGCE and SOW;
initiates, conducts and documents fact finding
discussions if needed; and
reviews the WAM's technical review memorandum and/or
provides additional comments as appropriate.
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3. Contracting Officer (CO)
reviews proposed labor, ODCs, indirect rates, and fees;
compares work plan with IGCE and SOW;
reviews need for overtime premium, if proposed;
reviews for appropriate use of subcontracting;
reviews for compliance with contract, FAR, etc.;
reviews work plan for personal services and/or
inherently governmental functions;
requests clarification(s) from CMT members, when
necessary;
reviews role/responsibility of team subcontractors;
reviews work plan for special contract provisions;
initiates, conducts and documents fact finding
discussions and participates in them if initiated by
WANs and POs when warranted;
receives, reviews, and supplements the technical review
memorandum as a basis for subsequent discussions with
the contractor or possible future pre-negotiation and
negotiation documentation; and
approves the work plan.
If necessary, a designated member of the CMT shall consolidate
the work plan comments and send only the technical comments
without any cost related issues to the contractor through the CO
for the contractor's review with a request to provide a response
within a reasonable time frame. Cost estimators/coordinators,
contract specialists or other technical experts that assisted in
the preparation of the IGCE may also provide assistance during
review of the contractor's work plan and/or negotiations. If the
CMT determines that the work plan is to be approved as submitted,
the proper documentation supporting the CMT's decision shall be
prepared.
VI. NEGOTIATIONS
The CO discusses with the CMT the need for negotiations. The CO
is responsible for leading the team in developing its negotiation
objective(s). In no event are negotiations to be delegated to
the WAM or PO. Although each team member should assure that all
issues are properly addressed and properly documented, the CO is
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10
ultimately responsible for ensuring that documentation of the
negotiation outcome is adequate. Once negotiations are completed
and an agreement has been reached, the work plan is approved by
the Contracting Officer. In the event that no negotiations are
required, the documentation for work plan approval shall be
processed.
Upon receipt of the contractor's work plan, any significant
changes in the tasks, schedule or budget are accomplished through
negotiations between the Agency and the contractor. The
Contracting Officer shall conduct those negotiations. When
determined by the CO, the appropriate personnel (WAM, PO, E/C,
etc.) will also participate in the negotiations.
Roles and Responsibilities for Negotiations:
The following is a brief summary of the recommended roles and
responsibilities of WAMs, POs, and COs in the negotiation
process; however,.the specific roles and responsibilities may
differ from region to region.
1. Work Assignment Manager (WAM)
provides technical expertise to PO and CO for
negotiation session.
prepares technical documentation solicited by CO and/or
PO.
2. Project Officer (PO)
coordinates with other members of the CMT.
3. Contracting Officer (CO)
ensures pre-negotiation documentation is adequate.
meets with CMT members to establish negotiation
strategy.
conducts negotiations or approves negotiations
conducted by contract specialist.
ensures post-negotiation documentation is adequate.
If negotiations are held, the following provides a framework
for documentation.
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11
VII. DOCUMENTATION
Throughout the entire process, the CMT shall maintain adequate
written documentation of the significant differences and
acceptability between the Government's position and the
Contractor's work plan and budget. Particular attention should
be paid to documenting the Government's negotiating position and
the results of the actual negotiations between the government and
contractor.
A. PRE-NEGOTIATION DOCUMENTATION
The pre-negotiation documentation summarizes the Agency's
position and objectives it hopes to accomplish during
negotiations with the contractor. Objectives should be
based upon the review of the contractor's work plan, the
IGCE and other information available regarding the work to
be performed. The document shall show the work assignment
number, contractor's name, contract number, site name, a
summary of the contractor's proposal and the IGCE, and
present the Agency's position upon entering negotiations. A
target position for the major cost elements shall be
included. The document shall be prepared by the CO/CS with
input from other members of the CMT prior to negotiations
and is used as a guide during the negotiations. The pre-
negotiation memorandum shall be signed and dated by the
Contracting Officer.
B. POST-NEGOTIATION DOCUMENTATION
The post-negotiation documentation summarizes and documents
negotiations with the contractor with emphasis on the
reconciliation of differences between the IGCE and the
contractor's work plan, pre-negotiation position and the
negotiated agreement. It is prepared by the contracting
officer with input from other CMT members. The memorandum
should include the following information:
1. The purpose of the negotiations.
2. A description of the work, including the
contract number, work assignment number and site name.
3. The name, position, and organization of each person
representing the contractor and the Government in the
negotiations.
4. The date, time, and place of the negotiations.
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12
5. The summary of the negotiated items (cost, technical
scope and schedule), and justification for agreement to
estimated costs or statement of work significantly
different from the Agency's pre-negotiation position.
The task breakdown, costs, hours and skill mix of the
government objective, the contractor's initial proposal
and the final negotiated items should be presented in
matrix format for easy reference and comparison.
6. A statement to the effect that the negotiated agreement
is determined to be fair and reasonable.
The post-negotiation memorandum must be signed and dated by
the Contracting Officer.
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&EPA
United States
Environmental Protection
Agency
Office of Emergency and
Remedial Response
Washington, DC 20460
Directive: 9355.5-01.F5
September 1989
Supertund
THE HAZARDOUS SITE CONTROL DIVISION'S
DESIGN AND CONSTRUCTION MANAGEMENT GUIDE SERIES
ARCS CONSTRUCTION CONTRACT
MODIFICATION PROCEDURES
During the performance of a construction project it is often necessary to modify the contract to allow changes in the work
which are required by actual conditions at the site. These contract modifications are accomplished either through bilateral
modifications, which result in "supplemental agreements' to accomplish the work, or through unilateral modifications, which
result in "change orders" to the constructor to accomplish the work.
This document describes the contracting relationships, as well as technical reviews and administrative procedures required
to process supplemental agreements and change orders for changed work in Remedial Action construction projects which
are subcontracts under EPA'a ARCS contracts. These procedures are orientated towards fixed price contracts. Contract
modifications in time and materials contracts will differ. These procedures do not cover the situation where the need for the
change is in dispute. Disputes and claims will be presented in a subsequent guidance. Assistance with the implementation
of these procedures may be requested from the Design and Construcion Management Branch in HSCD.
RESPONSIBILITIES AND AUTHORITIES
The construction contracting relationship under ARCS in-
volves two distinct spheres of authority. The first is the
contractual relationship between the ARCS prime contrac-
tor and the subcontractor for construction. For the sake of
simplicity, the subcontractor for construction will be called
the "Constructor." The second sphere of authority is the
contractual relationship between the ARCS prime contrac-
tor and the Federal Government. All changes to ARCS
construction work will involve actions at both the subcon-
tract and the prime contract level.
Within the first sphere of authority at the subcontracting
level, the authority to approve changes to the work will
reside with a designated senior member in the ARCS firm.
The Federal government is not a direct party to any ARCS
subcontract, and therefore cannot direct or order the Con-
structor to accomplish changed work.
The procedures used by the ARCS Construction Manage-
ment Team for processing changes will also vary depend-
ing on the size and complexity of the construction project
and will reflect the internal management structure of ARCS
firm. On large construction projects the team may include
a Construction Manager, a Resident Engineer, a Construc-
tion Representative or Construction Inspector, various
technical review and design engineers, and other support
staff. In a case such as this, the Resident Engineer ?»nd
various technical review and design engineers may be
involved in analyzing and negotiating a change, but the
authority to approve would reside only with a senior person
within the ARCS firm who has the authority to commit the
ARCS firm to additional work and costs in the subcon-
tracts.
Within the second sphere of authority at the prime contract
level, the ARCS firm must obtain review and approval from
the Federal Government, within the context of the ARCS
Work Assignment, for any changes in the work. The only
person who has authority within the Federal Government to
approve changes to the work is the EPA Contracting
Officer. Various technical and program staff who act as the
Contracting Officer's Technical Representatives (COTRs)
provide support for the Contracting Officer's decisions to
approve changes.
For each ARCS construction project the Environmental
Protection Agency (EPA) will designate an experienced
construction COTR who is a licensed professional engineer
wimsubstanu^ construction management experience. This
construction COTR will function under the title of Design
and Construction Advisor (DCA) and will support the
Remedial Project Manager (RPM) by providing technical
and cost analyses of all changes to the work. The role of the
DCA will be discussed in further detail below. The EPA
RPM will review changes to insure that the environmental
criteria of the remedy are met, ard will also adrr.irister any
impacts on the Work Assignment budget and schedule.
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CHANGES IN CONSTRUCTION
There are four primary reasons for changes in Construction Contracts within (be general scope of the work:
(1) To provide the ARCS Construction Manager the flexibility to accommodate actual field conditions or interpretations of
the plans and specifications as they are encountered during the progress of the work. This flexibility may include ac-
celeration of performance.
(2) To allow the ARCS Construction Manager the means to order changes, or to allow the Constructor the means for
proposing changes which will result in more efficient performance, or in a finished product which is of an unproved
quality.
(3) To allow for the purchase of additional work within die general scope of the contract which will meet the government's
needs in obtaining a remedy at the site.
(4) To provide the means by which the Constructor may obtain equitable adjustments for costs resulting from constructive
changes.
To be "within scope" the work: (1) should be essentially the same as the type of work originally contracted for, (2) should
be for items that could be reasonably within the contemplation or expectations of the contracting parties, and (3) should not
alter the nature of the thing to be constructed;
Immediate Action Changes Orden; Circumstances wiQ sometimes require the ARCS firm to direct the Constructor to
proceed with work to address an immediate need at the site. This need may result from emergency situations or be required
to avoid incurring delay costs. In these circumstances the ARCS Construction Management Team will order the Constructor
to proceed with actions that are needed on an immediate basis, while-the standard Contract Modification process is carried
forward in the normal manner. The approval procedure for using the Reserve Fond to address circumstances which require
immediate action is described in Step 4 of the Construction Contract Modification Approval Procedures section.
ARCS DESIGN AND CONSTRUCTION ADVISOR (DCA)
The DC A will be the Contracting Officer's construction en-
gineering technical expert and advisor. As such, the DCA
will provide to EPA engineering judgments, reviews and
advice on technical decisions regarding construction is-
sues including, but not limited to. the review and analysis
of changes to the work that may arise in the course of con-
struction. In situations where high costs or complex con-
ditions exist, the DCA will obtain other resources neces-
sary to provide the analysis. The DCA will travel to the site
on short notice when construction issues warrant it In ad-
dition, the DCA will attend appropriate milestone events
such as the pre-construction conference, and the pre-final
and final inspection.
The education and experience of the DCA should be
heavily weighted in construction. The individual should be
a degreed and registered Professional Engineer since the
Government position needs to be based on professional
engineering judgments to meet the standards of evidence
that is likely to be submitted to an appeals board. Sources
of DCAs for ARCS construction projects include:
EPA REGIONAL SUPERFUND STAFF: IftheEfA
Regional office has staff with the appropriate qualifica-
tions, then these individuals could be assigned as DC As,
taking into consideration that due to the nature of active
construction, the DCA duties would sometimes have to
take precedence over all other duties.
U.S. BUREAU OF RECLAMATION: The Bureau of
Reclamation has made a commitment to make available
construction engineers as DCAs in support of ARCS
construction under an Interagency Agreement. Addi-
tionally the Bureau has agreed to provide access to their
Claims Analysis Section in the Construction Division of
the Denver Office. This Section is composed of a staff
of IS with a broad base of construction experience,
change order analysis and claim resolution. The Claims
Analysis Section will perform analyses of changes,
make technical presentations and assist in the prepara-
tion of negotiating positions.
ALTERNATE A&E FIRMS: An independent A&E
firm, e.g. an ARCS firm with construction management
experience which is not involved with the design or
construction work assignment, REM 5 or REM 6 could
provide DCA services for a specific site or across several
sites. This approach will be further evaluated through
pilots during FY 90.
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TECHNICAL AND COST ANALYSIS OF PROPOSED CHANGES
Changes will be subject to technical and cost analyses at both the ARCS subcontract level and within the context of the Work
Assignment at the prime contract level. A discussion of these functions at each level follows:
7. ARCS TECHNICAL AND COST ANALYSIS: Changes in construction work will be subject to an internal ARCS
analysis. In simple, low-cost changes, the analysis may merely involve review of the engineering estimate and the definition
of the work which was developed by the ARCS Construction Management Team.
For higher cost, more complex changes, the ARCS firm may use additional technical review and design engineers to analyze
the proposed changed work during the development of the engineering estimate and definition of the work. These individuals
may help develop and coordinate the negotiating position of the ARCS Construction Management Team. These activities
will be accomplished in parallel with an analysis of the proposed change by EPA within the context of the Work Assignment
at the prime contract level.
2. EPA TECHNICAL AND COST ANALYSIS: All changed work must be analyzed for approval by the EPA Contracting
Officer. The Contracting Officer will rely on the RPM and the Design and Construction Advisor to provide these analyses.
In the case of routine, low-cost changes, the analysis will be in the form of a quick turn-around review and approval of the
change as negotiated by the ARCS firm with the Constructor. This will occur at Step 9, as described in the Construction
Contract Modification Approval Procedures section.
For higher cost, more complex changes, the RPM will task the Design and Construction Advisor to initiate an analysis of the
changed work and develop an Independent Government Estimate in parallel with the ARCS firm's actions to define and
specify the work in preparation for negotiations. This process would be initiated at Step 5 of the Construction Contract
Modification Approval Procedures section. The Design and Construction Advisor will utilize whatever resources are
necessary to accomplish the analysis. If the changed work is of sufficient cost or complexity to warrant an in-depth analysis,
then the Design and Construction Advisor may submit the change to the Claims Analysis Section of the Bureau of
Reclamation Construction Division Office in Denver, Colorado.
WORK ASSIGNMENT MANAGEMENT AND ENVIRONMENTAL REVIEW
Within ARCS construction projects, all changes will be When high cost changes occur that exceed the amount of
reviewedbytteRPMtoinsurerhattheenvironmenialcriteria fimds inure Reserve Furd,u^ the Remedial Project Officer
of the Remedial Action are maintained. These changes wiO will revise the Work Assignment and arrange for the obliga-
also be renewed for impacts on the Work Assignrnent budget tion of the additional funds necessary to pay for the change
and schedule. and replenish the Reserve Fund if necessary.
RESERVE FUNDS
When an ARCS construction contract is executed, EPA will adjust the Work Assignment funds to provide a Reserve Fund
that equals 15% of the contracted price for the work. These Reserve Funds are set aside exclusively to cover the costs of
changes to work under conditions discussed in this document and in accordance with the Changes clauses of the subcontract
The approval to use Reserve Funds will be given to the ARCS firm by way of a Work Assignment Form which increases
the expenditure limit. For situations that require immediate action, verbal approval to draw $25,000 or less will be given to
the ARCS Construction Management Team by the EPA Contracting Officei or representative with (lie understanding that
the appropriate paperwork will follow as soon as possible.
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CHANGE ACTIVITIES
Exhibit 1 represents the activities that take
place between a Construction Manage-
ment Team and aConstructor when change
is made in a construction contract. These
activities begin with the identification and
appraisal of the change, including a deci-
sion as to whether or not immediate action
is required. The change is then defined by
way of an engineering design. A proposal
is the basis of negotiations to reach a final
price and schedule for the work, and the
Contract Modification is issued. For a
small change, such as clearing and grub-
bing a small piece of land, all the activities
could take place in a matter of hours. Very
large, complex changes could require days
or weeks to process because they require a
greater effort to define and negotiate.
In all changes the same fundamental ac-
tions take place as shown in the chart The
ARCS Contract Modification Procedures
described below is designed to tap into
these actions at the appropriate times to
provide Government oversight, approval
and funding.
Constructor
ARCS FIRM
Request Change
Constructor to Stan
with $25K Ceiling
Identify Change
| Conduct Field Appraisal
Prepare Design and
Engineering Estimate
| Prepare Proposal
3
Request Proposal
| Submit Proposal
Review Proposal
Recommend
Action
EXHIBIT 1. CHANGE PROCESS
CONSTRUCTION CONTRACT MODIFICATION APPROVAL PROCEDURES
The procedure is an expansion of the process shown in Exhibit 1 and includes the approvals necessary to insure the appropriate
management of changes and to provide an adequate amount of control to EPA in die funding and execution of changes in the
work. Ten steps in the procedure are shown in the flow chart in Exhibit 2 and are described below.
1. REQUEST OR IDENTIFICATION OF REQUIRED CHANCE: A recognition of the need for a change can originate
with either the Constructor or the Construction Management Team's representative, usually the Resident Engineer. The
Constructor may encounter conditions at the site which will require a change or the Resident Engineer, through normal
tracking of the construction tasks, may observe conditions that may warrant a change in the work. At this stage the Resident
Engineer will inspect the field conditions or other circumstances that have been identified as a potential change to the work.
2. FIELD APPRAISAL: In the second step the Resident Engineer develops a Field Appraisal of the scope and cost of the
potential change. For small changes this might be a simple engineering judgment. For larger changes it would, at most, entail
an informal estimate of the adjustments that would be requited with regard to cost and schedule.
3. SCOPE DETERMINATION: This step actually occurs concurrently with the initial observation and appraisal of the
potential change. The Resident Engineer evaluates the change with regard to the scope of the project. If the change is out
of scope, then it would be directed to the RPM as a basis of a possible new or revised Work Assignment, but it would not be
accomplished under the current contract
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4. IMMEDIATE ACTION DETERMINATION: For changes that .require immediate action, the ARCS Construction
Management Team will be permitted by verbal approval, or through a prearranged notification procedure with the EPA
Contracting Officer, to draw increments of up to $25,000 from the Reserve Fund with which to initiate the work. The Con-
structor will then be ordered to proceed with actions that are needed on an immediate basis. While the work is progressing,
the standard contract modification process will be carried forward in the normal manner. If the Constructor expends the
initial 525,000 on a large change order before the total change is defined and negotiated, then subsequent increments of
funds can be requested for circumstances that require the actions to continue.
5. INDEPENDENT GOVERNMENT ESTIMATE: Changes that are expected to cost less than $25.000 will not require
an Independent Government Estimate. These changes will be reviewed and concurred with by the Contracting Officer
with the support of the RPM and DCA after a price has been negotiated with the Constructor. This will occur at step 9
and will result in the issue of a Work Assignment Form permitting the ARCS Construction Management Team to draw
down the Reserve Fund to pay for the work. The ARCS management of these small changes will be evaluated as part of
the performance evaluation for award fee and for the assignment of future work.
Changes that will cost more than $25,000 will require an Independent Government Estimate. The Contracting Officer
will rely on Design and Construction Advisor to either develop the estimate independently, or, if the change is large
enough, to submit it to the Bureau of Reclamation Claims Analysis Section for analysis. The results of the analysis will
be submitted to the EPA Contracting Officer. This Independent Government Estimate will serve as the basis for
negotiations between EPA and the ARCS firm for the revision of the work assignment cost and schedule to accomodate
the changed work.
6. ARCS ENGINEERING ESTIMATE: For changes estimated to be under $25,000, an ARCS engineering design and
estimate of the work will be the sole basis for requesting and negotiating a proposal for the work from the constructor.
For changes estimated to cost over $25,000, the ARCS engineering design and estimate will be developed in parallel with
the Independent Government Estimate. Differences between the ARCS estimate and the Government estimate will be
negotiated between the ARCS firm and EPA. These negotiations should be completed before a final price is negotiated
by the ARCS firm with the constructor.
7. REQUEST AND REVIEW OF PROPOSAL: The next step is for the Construction Management Team to submit the
design to the Constructor to reque -;c a -.-reposal for the work. The Constructor then prepares and submits his own proposal
and estimate for the work for a pre-negouation review.
8. NEGOTIATIONS: It is during this Step that the Construction Management Team attempts to negotiate an acceptable
price and an equitable adjustment to the project schedule to accommodate the changed work. When agreement is reached,
the ARCS firm will prepare the modification to the subcontract. This would be in the form of a supplemental agreement
which will be signed by both a representative of the ARCS firm and the Constructor for concurrence by the EPA Con-
tracting Officer with the support of the RPM and DCA.
If agreement is not reached, the the ARCS firm will prepare a Change Order (unilateral modification) which would be in
the same format of a supplemental agreement but would not require the signature of the Constructor. The Constructor
would be directed to accomplish the work at the schedule and cost determined by the ARCS firm. The unresolved price
and sc hedule would become the subject of a Claim to the ARCS firm if the Constructor wished to pursue the matter further.
9. ACTION RECOMMENDATION: At the end of the negotiation period, the SupplementalAgreementorChange Order
is subrri itted to the Contracting Officer through the RPM for concurrence and verification of funding to cover the agreed
to price.
10. APPROVAL AND MODIFICATION OF CONSTRUCTION CONTRACTS: The Contracting Officer reviews and
concurs. If there are adequate funds in the Reserve Fund, the RPM will issue a Work Assignment Form permitting the
ARCS firm to draw down the Reserve Fund and issue the change to the subcontract
10A. MODIFICATION OF ARCS CONTRACT: If there are not adequate funds in Reserve to cover the negotiated cost.
then the RPM will process a Work Assignment Fonii with a Procurement Request to obligate sufficient funds for tix:
change and to replenish the reserve for future changes.
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DUPLICATE
EXHIBIT 2 -CO!
CONSTRUCTOR
1
2
Request
Change
3
4
Constructor To
Start With $25k -
Ceiling
5
6
I
7
8
3repare Proposal -
T
Submit Proposal i
VSTRUCT1ON CONK
ARCS FIRM
Identify
Change
.
- .~-.~
Conduct
»- Pe'd
Appraisal
I
.X-Vi
Sscope?X
^r^Yes
Yes kXneqX.
> ^Immediate^
\Action?X^
/V\!!!_
\MSK.rs~~
^V^Yea
t
Prepare Design
& Engineering
Estimate
t
j Request Proposal
j Review Proposal
,....J
Negotiate 1
9
10
10A
Proceed
With Work
COTR - Contracting
Design and Ccnstn
Recommend
Action
Issue Change
Notice To
Proceed
1 Officer's Technical Rei
iction Advisor (DCA), a;
1ACT MODIFICATIC
COTR*
New Work
Assignment
Independent
» Govt. ~
Estimate
.1
t
Change
Analysis
^,XAdeauate\No
\FundsJx^
^VXY«*
T
Approve
_ RpcAmmAivtaH
Action
1
W PROCEDURES
CONTRACTING OFFICER
CO will be kept appraised
of change order activities
at all times.
Phone
___ Annroval Fnr
$25k
Review
^ Govt.
Estimate
Review
Change Order
Analysis
Review and
. . C^fincnr with 1 l
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