# Presentation: 782381

## Pay-For-Performance in Oklahoma

**The Oklahoma Experience**
**Presented by: Richard McKay**
**Petroleum Storage Tank Division**

## Do you have a stalled cleanup ?

- <date/time>

**Do you have a stalled cleanup ?**

## We realized we had many.... and here’s how!

## Conducted $100,000 Case Reviews

**The Football Field analogy.**
**Paying out money with little or no environmental results.**
**Reviewed our accountability.**
**We looked at Pay-For-Performance.**

## ACCOUNTABILITY

**As a Regulatory Agency we have a fiduciary responsibility:**
**To safeguard public health, safety & the environment.**
**To safeguard public money.**

## Why We Chose Pay-For-Performance

**Needed a way to guarantee environmental results and move away from time & materials projects. **
**Wanted a method to impose cost control so total costs would not exceed the $1.MM cap per site.**
**Wanted a way to reduce disallowances.**
**Wanted a way to focus on results...not paperwork.**
**Wanted a way to shorten time to pay claims.**
**Needed way to better relations between the tank owner, consultant and regulatory/fund.**

## We Began to Sign P-F-P Contracts

**We took a voluntary approach beginning in 1996 with Consultants willing to take a risk  and willing to guarantee environmental results.**
**Committed to 3 year contracts with a 2 warranty.**
**Payments are made based on attaining milestone contamination reductions. **
**Tank Owners supported P-F-P because:**
**Site restoration money was**** ****encumbered.**
**They wanted Consultants who were willing to take a risk and guarantee their work.**

## Results of P-F-P: Win-Win-Win

**Our difficult sites are being cleaned because:**
**Better designed RA systems are being installed.**
**Consultants are guaranteeing results.**
**Site costs are coming down because: **
**Emphasis is on closing the site to make money rather than keeping site open to make money.**
**Attained cost control by using Tank RACER 99 to negotiate a fixed price to remediate a site. **
**Site remediation costs are encumbered.**
**Funds are paid **_**only**_** when milestones are achieved.**

## P-F-P Program Results (cont’d)

**Consultant disallowances reduced to almost zero.**
**Tank owners do not have disallowances.**
**Paperwork has been substantially reduced.**
**Time to pay has reduced to a few days.**
**Achieved collaboration between all parties.**
**The Consultant can make a reasonable profit and take pride in a job well done.**
**The Tank Owner is happy - He knows the cost and when he can get back to work.**

## Other Results ... Not Counted On

**Other Results ... Not Counted On**

**Pre-approval process became mandatory.**
**UST Advisory Council composed of **** Consultants and Tank Owners adopted:**
**Unit Costs for all work through site delineation.**
**Tank RACER 99 to price site remediation.**
**Pre-approvals requested faster than money comes in.**
**Hold cooperative Consultant/State training sessions.**
**Technical staff has more time to visit sites and track site remediation progress.**

## How does the P-F-P process work?

**Set clean-up levels based on Tier I or Tier II report.**
**Submit Remediation Technology Report.**
**Submit final Remedial Action Plan.**
**Submit Pay- For-Performance proposal.**
**Look at clean-up cost  in $ / yd****3****.**
**Compare to similar sized systems & technology.**
**Run Tank RACER 99 to determine reasonable cost.**
**Negotiate the final set contract price and terms. **
**Sign the Pay-For-Performance contract.**

## P-F-P Process Cont’d.

**Next ... the Consultant installs the RA system.**
**Baseline groundwater samples are collected from pre-selected “Key Monitoring Wells” 2 weeks prior to system start-up.**
**Payments are made to the Consultant when decreases in groundwater contamination called “Milestones” are achieved. **
**Once all Milestones are achieved **_**and**_** contamination levels remains below “clean-up levels” for 6 months in all site wells the final payment is made. **

## Progress & Results

## AS / SVE System Progress

## Slide 15

## Slide 17

## Slide 18

## Potential Financial Savings

## Summary of Why We Chose Pay-For-Performance

**A****CCOUNTABILITY**** H****AS**** B****EEN**** E****STABLISHED****.**
**E****NVIRONMENTAL**** R****ESULTS**** A****RE**** G****UARANTEED**** A****ND ****A****RE**** B****EING**** A****CHIEVED****. **
**R****EMEDIATION ****C****OSTS**** A****RE**** R****EASONABLE****.**
**T****ANK**** O****WNERS**** A****RE**** W****ANTING ****I****T****. **
**    **
**T****HANK**** Y****OU**