At the Tar Creek cleanup site, the Tulsa District was the EPA's contracting agent and, as such, performed duties which were governmental functions. All of the physical work was performed by private sector subcontractors through the primary contractor Morrison-Knudsen. Performance-based contracts are being used extensively throughout the U.S. Government. In this contract, the contractor's fee comes from a fixed pool. The Award Fee evaluates the contractor's performance against the standards for work performance and technical management, business management, quality control, and safety.
Cost is part of the criteria.
Morrison-Knudsen could not earn more than this fixed pool, regardless of how much the agreed upon work eventually costs. However, they could earn less than the fixed pool based on evaluations against performance and management criteria. This contract was awarded through a rigorous, open competition, solicitation process. Such a contract is prohibited in government contracting. In order to control government costs, the District varied the size of its Quality Assurance staff commensurate with the production rate of Morrison-Knudsen and the number of work crews they were using.