&EPA
United States
Environmental Protection
Agency
Office of
Solid Waste and
Emergency Response
DIRECTIVE NUMBER:
9242.3-07
iLE: implenentation of the Decentralized Contractor
Performance Evaluation and Award Fee Process
for Selected Remedial Program Contracts
APPROVAL DATE:
EFFECTIVE DATE:
ORIGINATING OFFICE:
D FINAL
G DRAFT
STATUS:
REFERENCE (other documents):
March 9, 1987
March 9, 1987
OERR/HSCD
OS WER OS WER OS WER
VE DIRECTIVE DIRECTIVE D
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Wasnmgton. DC 20460
OSWER Directive Initiation Request
uirectrve Numoer
9242.3-07
Infermatlpn
Name o( Contact Ptrson
Stan KovelL
I Maii Coot
! OS-220
Office
HSCD
iTwepnore Coo*
I 382-7910
3. ii tie
Implementation of Decentralized Contractor Performance Evaluation and Award
Fee Process for Selected Remedial Program Contracts
4. Summary of Directive (mauoe one( statement of purpose)
Describes efforts and implementation of alternative cotnracting approaches to
support Remedial program; defines process.
Superfund.CERCLA.SARA
. UOM tms Directive Supersede rrevious oirecuveta) f
t. Does It Supplement Previous Oirective(s)'?
I No - I I Ye» What dirtctive (number. We)
o I I Ye» What direettve (number, tme)
Draft Level
A - Sgned by AACAA
B - Signed by Office Director
C - For Review 4 Comment
0 - In Development
8. Document to b« distributed to States by Headquarters?
VBI^^BI
Ye*
No
Thi* Reoueat Me«ta OSWER Olreetivea System Format Standarda.
9. Signature of leaa Office Directives Cooremator
RinVia-rrl WyH^
10. Name ana Title of Approving Official
Henry L. Longest II
Date
3/9/87
Date
3/9/87
EPA Form 1315-17 (Rev. 5-17) Previous coitions are oosoiete.
OSWER OSWER OSWER O
VE DIRECTIVE DIRECTIVE DIRECTIVE
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I JEtf \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
5 V^WV -
WASHINGTON. D.C. 20460
ri.'- - :C.Ol OPTICS OF
iCL.D -A/A5TE A\O EMEflGENC*
OSWER DIRECTIVE 9242.3-07
.MEMORANDUM
SUBJECT: Implementation of the Decentralired Contractor
Performance Evaluation and Award Fee Process for
Selected Remedial Program Contracts
FROM: Henry L. Longest, II, Director
Office of Emergency and Remedial RjQfSWsZ (WH-548)
TO: Addressees
The Office of Emergency and Remedial Response is progressing
to develop and implement alternative contracting approaches to
support the Remedial Program. The primary objective of these
ritcorts is to improve the pace, quality, and cost-effectiveness
of the Remedial Program by improving the contracting structure
and the management infrastructure that supports the Program. One
major element of OERR's effort to improve the contract management
infrastructure involves the decentralization of contractor per-
formance evaluation and award fee activities that are required
unJer cost-plus-award-fee (CPAF) contracts. Thi.s initiative is
Intended to: (1) further develop Regional infrastructures for
managing contracts in advance of implementation of the Alternative
Remedial Contracts Strategy (ARCS); (2) effect the Agency's policy
of decentralizing Superfund activities to the Regions, consistent
-vita other program delegations; (3) focus accountability for
contractor performance monitoring on the individuals who are
responsible for site specific Program operations; (4) allow
those most familiar with a contractor's performance to evaluate
that performance and determine the amount of fee to be awarded;
and (5) increase communication between Agency and contractor
personnel at all operational and management levels.
As we-are all aware, the recently reauthorized CERCLA legis-
lation places an enormous responsibility on EPA to accelerate the
pace of hazardous waste site investigations and remedial actions.
,The legislation also provides the Agency with additional resources
to get the job done. A major portion of these resources, however,
are to be allocated for extramural contracts. Consequently,
successful pursuit of the Agency's Superfund objectives will
depend in large part upon the Program's ability to direct and
;aanage contractor resources effectively. It is my intention to
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OSWER DIRECTIVE 9242.3-07
-2-
assist EPA managers at all levels to meet this responsibility,
as well as to promote decentralizing Superfund operations. As
a result, I have initiated actions that will decentralize contractor
performance evaluations and award fee decisions in order to give
the Regions important new management tools with which to meet
additional responsibilities for ensuring successful contractor
performance of Program assignments. Representatives from my
staff have briefed each of you on these procedures and we have
included your comments into the standard operating procedure
(SOP) which is attached.
A key initiative of the award fee process as it relates to
the ARCS concept is to not only reward contractors routinely for
superior performance, but to establish a performance record for
each contractor which will be the basis for increasing contract
ceilings from which the Agency can assign additional work. The
responsibilities of the Regional Fee Decisionmaker will be critical
to the ARCS concept and are detailed in the SOP. The SOP explicitly
designates the Regional Division Director as the accountable
Agency official for the award fee process and to function as the
Regional Fee Decisionmaker. This responsibility may be delegated
further to a Deputy Division Director; however, considering the
major implications of the fee decisions, I strongly recommend
that each of you serve as the Regional Fee Decisionmakar at
least until the point in time you are convinced the award fee
process within your respective Region is operating satisfactorily.
The SOP describes this initiative, and defines the roles and
responsibilities of key Regional, Headquarters, and Contractor
personnel. The SOP also defines the basic structure and operation
of the award fee process, and establishes minimum requirements
for Regional and Headquarters contractor performance evaluations
and award fee decisions. The decentralized award fee process
initially will apply only to remedial contracts (REMs II, III,
and IV), and the establishment of an appropriate infrastructure
vill enable the system to be expanded beyond the remedial program.
In accordance with Section 3.1 and other requirements of this
SOP, each Region and Headquarters will establish and have an
approved internal SOP for operating its award fee process. tt
is requested that your Regional procedures be forward to the
Hazardous Site Control Division (HSCD) for these contracts by
March 27, 1987. These procedures will be approved by the Division
Director, HSCD by April 10, 1987, in order to be used to evaluate
contractor performance for the evaluation period beginning
November 1, 1986, and ending February 28, 1987.
^
Any questions you may have on the general process or
procedures should be directed to William Kaschak at (FTS)
(382-2343), in HSCD. Any questions pertaining to the develop-
ment of the Regional infrastructure and expansion of these
procedures beyond the remedial program should be directed to
Stan Kovell of my immediate office at (FTS) (332-7910).
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OSWER DIRECTIVE 9242.3-07
The decentralized av;ard fee process will require fundamental
changes in the way Regions and Headquarters currently monitor and
evaluate contractor performance. I also anticipate that modifi-
cations to this SOP and/or to some Agency regulations may be
necessary as we gain actual experience in i iiiplement ing the process
We will be assessing the Regional implementation of the award
fee process and want to receive your comments and suggestions on
these process improvements. Nevertheless, it is important that
we begia to decentralize the award fee process now, and that
this effort receive your direct attention.
In closing, I would like to acknowledge the support provided
by the staff in Region V who assisted with the development of the
delegation procedures.
Attachment
Addressees:
Director,
VII and
Director,
Di rector,
Director,
Di rector,
Waste Management Division, Regions I, IV, V, VI,
VIII
Emergency and Remedial Response Division, Region II
Hazardous Waste Management Division, Region III
Toxics and Wast 2 Management Division (T-l), Region IX
Hazardous Waste Division, Region X
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OSWER DIRECTIVE 9242.3-07
DECENTRALIZED CONTRACTOR PERFORMANCE
EVALUATION AND AWARD FEE PROCESS
STANDARD OPERATING PROCEDURE
1. PURPOSE AND SCOPE
The purpose of this standard operating procedure (SOP) is to
define the process that the Office of Emergency and Remedial
Response uses to evaluate contractor performance and to determine
the appropriate fee to be awarded for that performance under
selected cost-plus-award-fee (CPAF) contracts. The contractor
evaluation and award fee process is a. form of "qualified"
acceptance of work and "prospective" technical direction of
contractor activities. The award fee process is an integral part
of monitoring contractor performance and provides an additional
communication link between contractor and Agency managers.
The primary program objective of Superfund's CPAF system is to
enhance the performance of program and contractor personnel by the
intense communication that results from the systematic program
evaluation that is required to award the contractor a fee
commensurate with its performance. Having fee decisions made at
the Regional level improves system effectiveness by placing
decision-making responsibility closer to the source of performance
information. Shortening communication loops will make the process
more efficient, more effective, and facilitate "personal"
accountability.
Exhibit 1 is a graphic depiction of the Superfund award fee
process. This exhibit shows the process by which Regions and
Headquarters evaluate contractor performance and determine
appropriate fees, and identifies key personnel who are accountable
for operating and managing the award fee process.
2. DEFINITIONS AND RESPONSIBILITIES
The following sections define the roles and responsibilities
of key personnel. Contractor performance evaluations and fee
determinations are made through two distinct but interconnected
processes: (1) the Regions evaluate and make site-specific fee
determinations based on the contractor's Regional performance, and
(2) Headquarters evaluates and makes a fee determination based on
the contractor's overall program management performance. The
Headquarters Program Office also is responsible for establishing
operational standards and procedural guidance, and integrating and
evaluating the operation "of these two processes to ensure that
both contractor and Regional performance meet overall program
objectives.
Section 2.1 below provides the definitions and
responsibilities of key personnel (Regional, Headquarters, and
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-2- OSWER DIRECTIVE 9242.3-07
Exhibit 1
CONTRACTOR PERFORMANCE EVALUATION AND
AWARD FEE PROCESS
REGIONS
HEADQUARTERS
! RPM
RPO
I Contractor
Technical Performance
Evaluation. Fee
Determination, and
Oversight of Regional
CPAF Process
Fee Decisionmaker
Regional Division Director
Contractor
Feedback
Dialogue
Fee Determination
Process Integration
Project Officer
Program Management
Evaluation. Fee
Determination, and
Oversight of Headquarters
CPAF Process
fee Decisionmaker
Program Division Director
Determine Supportability
of Fee Decision
Fee Determination
Officer/PCMD
Exercise Fee Mod
CO
Contractor
RPO
PO
CO
Contractor
Contractor
Feedback
Dialogue
PROGRAM MANAGEMENT OVERSIGHT PROCESS
Program and
Management
Information
SCAP
Information
Program Evaluation
Corrective Action
Determinations
Program Decisions
Program Division Director
Fee
Determination
Officer
Contractor
Program Decisions
OERR Director
vv, .- -. l;::'Ss,-/.',.,/s/s.//sV/s'':--/-
Implementation of
Contractor Actions
Contractor
' '.
Implementation of
Program Decisions
EPA
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-3- OSWER DIRECTIVE 9242.3-07
contractor) who play major roles in monitoring, evaluating, and
awarding fees for contractor performance. Definitions and
responsibilities of Program Office and OERR management officials
are provided in Section 2.2
2.1 Regional and Headquarters Contractor Performance Evaluation
ana Fee Determination
2.1.1 Performance Monitors
Contractor performance is evaluated and reported by EPA
performance monitors. Performance monitors are defined as being
any Government employee in a position to observe, assess, and
report the performance of a contractor. This SOP designates
certain individuals as routine performance monitors because their
usual duties put them in a position to closely monitor contractor
performance on a continuous basis.
2.1.2 Remedial Project Manager
The Remedial Project Manager (RPM) has site-specific
responsibility for directing and monitoring the contractor's
technical performance of Regional work assignments. The RPM is
also a designated Regional performance monitor in the award fee
process. At the close of each performance evaluation period, and
in conformance with the Award Fee Plan and the Regional award fee
process SOP, the RPM is responsible for reporting'his/her
evaluation of contractor performance in accordance with the Award
Fee Plan and applicable procedures. The RPM submits site-specific
evaluation documentation to the Regional Project Officer who
integrates all performance evaluation submissions into a single
package for Fee Decisionmaker consideration.
2.1.3 Regional Project Officer
The Regional rrojecr Officer (RPO) is another designared
Regional performance monitor in the award fee process because of
his/her general responsibility for ensuring that contractor work
assignment performance meets program and contract requirements.
The RPO also performs delegated contract administration tasks such
as accepting work and providing technical direction. The RPO is
responsible for evaluating a contractor's performance of work
assignments across sites that may have different RPMs. At the
close of each performance evaluation period, the RPO assesses the
contractor's Region-wide performance during that evaluation period
and documents those assessments in evaluation reports in
conformance with the Award Fee Plan and the Region's award fee
"procedures. The RPO also is responsible for integrating all
contractor performance reports and supporting documentation into a
single package for the consideration of the designated Fee
Decisionmakers.
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2.1.4 Contracting Officer
The Contracting Officer (CO) has three distinct functions in
the Award Fee'Process. These are as follows:
1) The CO is generally responsible for maintaining the
inregrity of the Contract Administration Process. The CO
is, therefore, responsible for assuring that both the
contractor and the EPA project personnel who operate the
contract perform in accordance with its terms and
conditions;
2) The CO also serves as a designated performance monitor
because of his/her unique perspective in observing
contractor performance. In this role, the CO functions
exactly as any other performance monitor; and
3) The CO implements the fee decisions made by the Fee
Decisionmakers by implementing the appropriate contract,
modifications. The CO is also responsible for receiving,
evaluating, and acting upon requests from authorized
program officials for appropriate contract action.
2.1.5 Fee Determination Officer
The Fee Determination Officer (FDO) is responsible for the
ultimate fee decision developed by the Fee Decisionmakers. The
FDO will determine the supportability of the initial fee decisions
by review of the Fee Decision and Rationale Reports. The FDO may
overrule decisions for reasons such as: bias, arbitrariness,
inconsistencies, procedural irregularities, false data, incomplete
data, or which are contrary to the terms and conditions of the
contract.
2.1.6 Project Officer
The Project Officer (PO) is a designated performance monitor
because of his/her responsibility for monitoring and evaluating
contractor performance of Program Office work assignments and
management activities. As a performance monitor, he/she is
responsible for evaluating and reporting contractor Program Office
performance in accordance with the Award Fee Plan and the
Headquarters award fee procedures. The PO also is responsible for
providing Regional contractor performance documentation and
evaluation reports to assist the Headquarters Fee Decisionmaker
evaluate the contractor's overall program performance.
Following fee determinations by Fee Decisionmakers, the PO is
responsible for coordinating, receiving, and integrating all of a
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contractor's Fee Decision and Rationale Reports into a single
package for transmittal to the Fee Determination Officer.
2.1.7 'Contractor
The contractor participates in the award fee process by
providing assessments of its performance. These self-evaluations
may include descriptions of superior performance as well as
explanations in mitigation of any performance problems,
deficiencies, or delays. Contractor self-evaluations are
submitted to the appropriate Regional RPO/RPM or Headquarters CO
and PO at the close of each performance evaluation period, in
accordance with the contract specific Award Fee Plan and the
appropriate Regional or Headquarters SOP. The contractor also may
be asked to meet with the Regional or Headquarters Fee
Decisionmaker, RPM, RPO, PO, CO, and other Agency officials to
review the results of the evaluation process, and to discuss,
develop, and implement improvements to program procedures and
performance.
2.1.8 Performance Evaluation Boards
Each Fee Decisionmaker is assisted by a Performance Evaluation
Board (PEB) consisting of managers (who are not involved in the
day-to-day direction of contractor performance) appointed by the
appropriate Regional or Headquarters Division Director. Fee
Decisionmakers are personally accountable for determining the
appropriate amount of fee to be awarded. The purpose of the PEB
is to advise and assist the Fee Decisionmaker in evaluating
contractor performance. The PE3s provide the necessary discussion
and interaction among Agency managers to ensure that all matters
relevant to a contractor's performance evaluation are brought to
the Fee Decisionmaker's attention for his decision.
2.1.9 Fee Decisionmakers
Division Directors are responsible and accountable for
functioning as Fee Decisionmakers in accordance with the contract
specific Award Fee Plan. Division Directors may delegate their
Fee Decisionmaker role to a Deputy Division Director; however," the
Division Director will retain full responsibility and
accountability for both the fee determination process and all fee
decisions.
Fee Decisionmakers are accountable for the following major fee
determination activities:
Evaluating Contractor Performance --
Assisted by the PO, CO, RPM, RPO, PEB, and
contractor, Fee Decisionmakers evaluate
contractor performance in accordance with
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-5- CSWER DIRECTIVE 9242.3-07
procedures contained in the contract
specific Award Fee Plan.
/Determining Appropriate Award Fee -- Fee
decisions must be made as the direct and
clear result of the contractor evaluation
process, and in conformance with the
procedures and requirements of the
contract specific Award' Fee Plan.
Documenting the Fee Decision and
Producing the Fee Decision and Rationale
Report -- This report provides a concise
rationale supporting the fee decision, and
is submitted to the FDO via the PO. The
Headquarters Program Division Director
receives a copy of the report for his
program management and overview
responsibility. In addition, Fee
Decisionmakers maintain an "audit trail"
of all contractor performance
documentation, evaluation reports, and
other materials that support the Award Fee
decision. The Fee Decision and Rationale
Report is produced in accordance with all
procedures and content requirements of
this SOP, the contract specific Award Fee
Plan, the appropriate Regional or
Headquarters SOP, and the minimum criteria
provided by the FDO.
2.1.10 Regional Division Director/Headquarters Program
Division Director
The primary CPA'F "activities" common to both Regional and
Headquarters Program Division Directors is to ensure the validity
of fee decisions by maintaining process integrity. These
officials accomplish this (1) by establishing and enforcing the
contractor performance evaluation and award fee process
procedures, (2) by appointing the PEB and other key personnel, and
monitoring each appointee's performance of assigned
responsibilities, (3) by taking corrective action when accountable
personnel or the written procedures fail to perform as expected,
and (4) by making recommendations to a higher authority to improve
contractor or program performance.
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2.2 Headquarters Program Management
2.2.1 Headquarters Program Division Director
The Headquarters Program Division Director is responsible for
assuring that the performance of contractors and Regional
personnel interacting with these contractors meets program
objectives. The Program Division Director also reviews the
performance of accountable Agency managers in operating the award
fee process and takes necessary and appropriate contractor or
program actions to improve program operations.
The Headquarters Program Division Director is responsible for
the following specific activities:
Coordinating the development of Award
Fee Plans in accordance with contract
terms and conditions;
Providing necessary award fee process
standardization and guidance, including
required report formats and reporting
schedules to be used in preparing Regional
or Headquarters award fee process SOPs;
Reviewing and approving Regional and
Headquarters contractor performance
evaluation and award fee process SOPs to
ensure conformance with this SOP;
Analyzing performance reports,
rationales, and issues to validate
information and identify contractor or
program deficiencies requiring corrective
action;
Reviewing Regional and Headquarters
contractor evaluation and award fee
process operations to ensure process
integrity; and
Allocating Regional and Headquarter's
award fee funds, in accordance with
Program needs. The allocation of the
available fee pool is one way by which the
Program articulates its program
performance needs to the contractor and,
hence is a form of technical direction.
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2.2.2 'Director OERR
The Director OERR, or his designee, is responsible for policy
level program -assessment and action, and for resolving broad
program issues beyond the authority of the Program Division
Director. The Director OERR reviews and evaluates corrective
contract or program actions recommended by the Program Division
Director, and makes OERR-wide decisions on necessary corrective
actions. Contractor actions and program decisions made by the
Director OERR are implemented by the contractor and EPA,
respectively.
In addition, the Director OERR, or his designee, is
responsible for reviewing Fee Decision and Rationale Reports. The
Director has the authority to overrule fee decisions if there are
clear indications of bias, arbitrariness, inconsistency,
procedural irregularities, false data, or incomplete information.
Whenever a fee decision is overruled the Director OERR must
provide a written rationale supporting his decision, and must take
appropriate action in conjunction with the cognizant Fee
Decisionmaker.
3. AWARD FES PROCESS
The purpose of this section is to establish standards for
Regional/Headquarters Standard Operating Procedures and for the
determination of the award fee pool. The establishment of these
standards is discussed below.
3.I Regional/Headquarters Standard Operating Procedures
Regional and Headquarters Program Division Directors are
responsible for developing internal procedures for operating the
award fee process. SOPs will be submitted for review and approval
by the Headquarters Program Division Director. Once approved,
these SOPs must be followed in evaluating contractor performance
and awarding fee.
Major elements to be addressed in the SOPs include:
- Identification of Fee Decisionmakers;
Definition of the role and responsibili-
ties of the F.ee Decisionmakers, consistent
with Section 2 of this SOP;
Definition of the role and
responsibilities of (as appropriate) the
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RPM, RPO, contractor, PO, CO, and other
Agency personnel and performance monitors
who will have a substantive role in the
award fee process, consistent with Section
2 of this SOP;
Definition, reporting schedule, and
information requirements of all contractor
performance documentation and evaluation
reports, consistent with requirements
contained in the Award Fee Plan, including
requirements for the timely Agency review
and feedback on milestone deliverables
(suggested Regional schedules will be
provided prior to Regional development of
SOPs);
Definition of the process that Fee
Decisionmakers will employ to evaluate
contractor performance and determine the
award fee, consistent with the contract
specific Award Fee Plan;
Definition of the role of the PEB and
identification of its members; and
Definition of the role and
responsibilities of Division Directors in
managing the award fee process, consistent
with Section 2 of this SOP.
3.2 Determination of the Award Fee Pool
In accordance with the contract specific Award Fee Plan, the
Headquarters Program Division Director will determine the amount
of the award fee pool available to the Regions and to Headquarters
based upon project-specific funding and levels of activity. The
award fee pool is that portion of the contract set forth in the
contract as the amount of fee available to be awarded for
contractor performance in accordance with the criteria contained
in the Award Fee Plan. Fee Decisionmakers will base the dollar
amount of fee decisions on the amount of fee available for each
project and for program management.
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