Alan Boos
Bechtel National, Inc.

This paper discusses changes in the role of Bechtel National, Inc., the Project Management Contractor for the Formerly Utilized Sites Remedial Action Program (FUSRAP), as the primary focus of the program has shifted from characterization and other front-end work to remedial action at the larger sites. Highlighted topics include project management initiatives to reduce costs and improve efficiency in response to the challenges of our changing role. First, we restructured the procurement approach from cost-reimbursable to fixed price/fixed quantity unit rate contracts, using performance-based approaches wherever possible. Next, we developed and implemented a standards/requirements identification document that significantly reduced the number of governing regulatory requirements, largely by eliminating redundancy. This allowed us to pass more contracting risk on to our subcontractors, who would otherwise have been reluctant to assume the risk associated with the more extensive list of regulatory drivers previously in effect. As we shifted responsibility to our subcontractors, we were able to substantially reduce our staffing levels. This staffing reduction was most visible in areas such as design engineering, where we began preparing performance-based subcontracts, letting the subcontractor perform the detailed engineering. In addition, our relocation of project teams to the sites facilitates better contact with stakeholders and enables the teams to work more closely with subcontractors. This provides full-service capability and promotes interaction with local communities. In determining the appropriateness of our path forward (particularly the organizational aspects), we requested benchmarking by Logistics Management Institute (LMI), a non-profit organization. LMI's review validated our approach as representing a "best in class" effort.

During 16 years as the Project Management Contractor (PMC) for the Formerly Utilized Sites Remedial Action Program (FUSRAP), Bechtel National, Inc. has experienced many changes. Perhaps the most significant change is the recent transfer of the program from the U.S. Department of Energy (DOE) to the U.S. Army Corps of Engineers (USACE). As of November 1997, USACE is finalizing its approach to program management and execution. As a first step, the program is being decentralized, and the 21 sites that remain to be remediated are being assigned to 6 USACE district offices. This distribution of responsibility is consistent with the USACE Civil Works approach to project execution, and it aligns FUSRAP more closely with the USACE Formerly Used Defense Sites (FUDS) program. As a result, Bechtel's role as PMC will change substantially during the months ahead, in ways that may be very different from the changes implemented in the past.

The focus of this paper is on the changes Bechtel made while managing FUSRAP for DOE. In retrospect, it is clear that while these changes were made to improve the performance of a centralized program executed to meet DOE standards, requirements, management philosophies, and work procedures, the changes now provide valuable lessons learned that will be relevant to other DOE projects and may also apply to USACE and other federal agency environmental cleanup projects.

As PMC, Bechtel's responsibilities have generally included

• Project management: overall detailed planning and implementation of project activities, including maintenance of a cost and schedule control system that reflects and integrates the costs of all project participants for supporting the fiscal year budget and life-cycle planning efforts.
• Site characterization: radiological and chemical characterization of remedial action and waste disposal sites, in accordance with sampling plans prepared by the Environmental Studies Contractor (ESC), Science Applications International Corporation. Working under a separate government contract, the ESC produces environmental documentation as required by federal regulations, including characterization studies, engineering evaluation/cost analyses, independent evaluations of the environmental impact of alternative response actions, and feasibility studies and other decision documents.
• Engineering: technical support for all project activities, including preparation of design packages and review of packages prepared by subcontractors.
• Procurement: performance of all project procurement services, especially remedial action and waste disposal contracts.
• Remedial action: management of construction services for remedial action and all other construction subcontracts at FUSRAP sites.
• Environmental, safety, and health: oversight of all FUSRAP activities to ensure safe performance and compliance with all applicable federal, state, and local regulations.
• Facility operation, maintenance, and surveillance: provision of these services for all government-owned and government-leased FUSRAP facilities.
• Quality assurance: implementation of a quality assurance program that complies with ISO-9001 and emphasizes audit and self-assessment activities.
• Public liaison/communication: implementation of a community relations program that maintains continuous and open dialogue with stakeholders at all levels.

Bechtel's initial role as PMC emphasized site characterization, as is typical of environmental restoration projects. Because of the variety of sites in this nationwide program, the complexity and duration of characterization efforts varied widely. Figure 1 identifies the site characterizations conducted each year since the inception of Bechtel's first PMC contract in 1981 (a second contract became effective in 1991 after a recompetition was held).

Major remedial action at FUSRAP sites has been ongoing since 1981. The initial focus was on small sites and residential vicinity properties in an effort to remove contamination from areas with significant public contact, to prevent the spread of contamination, and to minimize the impact of remedial action on operating businesses. At most of these sites, the quantity of waste generated was small; some significant exceptions include management of 3,040 cubic meters of concentrated K-65 residues and other wastes from site and vicinity property remediation and demolition of the buildings at a site in Lewiston, New York, and cleanup of contaminated soil from an expanse of 14,544 square meters on contiguous residential and public properties in Wayne, New Jersey. Also, cleanup of a landfill in Middlesex, New Jersey, involved construction of a storage pile to contain 23,712 cubic meters of waste.

Waste materials were placed in temporary storage piles at the Wayne (27,740 cubic meters), Maywood (13,984 cubic meters), and Middlesex (50,388 cubic meters) sites in New Jersey and at the St. Louis site (24,320 cubic meters). A long-term storage cell was constructed in Lewiston, New York (193,800 cubic meters) and was sealed with an interim cap. Temporary storage piles were commonly used at that time because cost-effective commercial disposal of low-level and 11e(2) waste did not become available to FUSRAP until 1993 and 1995, respectively. The sites and vicinity properties remediated since 1980 are shown in Figure 1.

The execution strategy applied during this period featured the use of Bechtel-directed subcontractors working on a fixed-unit labor rate/equipment rate basis. This approach was necessary for characterization activities and provided maximum flexibility for remediating small sites and vicinity properties.

Because many communities rejected the use of onsite disposal cells, when commercial disposal of low-level and 11e(2) waste became available, FUSRAP efforts focused on remediation of large-volume sites and removal of the interim storage piles. With this progression to the later phase of the cleanup process, Bechtel and DOE agreed that a more aggressive procurement strategy was needed to shift more of the financial risk from the government to the contractors. To make this strategy effective, FUSRAP moved away from the practice of providing detailed design and construction directions to subcontractors and adopted a performance-based approach that specified the required end result but left the design and methodology to the subcontractor.

The success of the performance-based approach required a limitation of the number of regulatory requirementsCprimarily in DOE ordersCpassed along to subcontractors. To achieve this reduction, a Standards/Requirements Identification Document (S/RID) was developed over a 6-month period and implemented in April 1996.

These measures were adopted to move contracting strategies closer to common commercial practices. Fixed lump-sum price subcontracts became the preferred practice, and fixed-quantity unit rate subcontracts were an acceptable alternative. Some subcontracts combined these strategies: for example, a fixed lump sum price would apply where characterization had accurately defined the extent of contamination, while a fixed quantity unit rate would apply where the characterization results were less complete. Figure 2 shows the increase in the use of these subcontracting approaches, expressed as a percentage of total subcontract dollars expended each fiscal year. The recent success in FUSRAP subcontracting strategy is also evident in the low FY 1997 dollar value for change orders, which, expressed as a percentage of total subcontract dollars, is less than 1 percent. Another measure of success is the small business subcontract component of 76 percent and the small disadvantaged business component of 18 percent.

Fig. 2. Procurement strategy.

Much of the success of the revised FUSRAP procurement strategy results from the implementation of the S/RID. The S/RID was developed to implement a DOE initiative toward streamlining requirements for environmental restoration projects to reflect a customized approach that assigned field elements more responsibility for determining appropriate or "necessary and sufficient" standards for a facility, site, or project. In the past, many generic DOE standards (e.g., DOE orders) were intended for DOE weapons facilities rather than environmental restoration or waste management operations. For many environmental restoration projects, the generic standards were outdated and unnecessary; project-specific requirements would ensure more efficient and cost-effective operations. FUSRAP was determined to be an ideal candidate for this initiative, and DOE Headquarters requested that FUSRAP "develop a project management system that [would meet] the applicable statutory requirements of Federal and State laws, while eliminating duplicative and/or non-applicable Department directives."

To develop the S/RID, a group of Bechtel and DOE subject matter experts conducted a comprehensive review of FUSRAP. Significant work processes were defined, listed, and organized into six groups based on similarity of process. The 15 work processes were compared against the ES&H Guide functional categories and evaluated to determine which categories were appropriate for development as S/RID areas. Thirteen functional categories were initially identified; the number was reduced to 11 after it was determined that construction would be addressed in the S/RID area of engineering and construction, and operations would be addressed under the areas of engineering and construction, quality assurance, and occupational safety and health. Other functional categories were addressed under the 11 S/RID areas as applicable to FUSRAP. Requirements identified for inclusion in the FUSRAP S/RID were categorized as Law, DOE Order/Directive, Industry Standard, or Best Management Practice. Completion of the S/RID resulted in identification of only 356 applicable requirements that met these criteria.

A process has also been developed for determining whether revised and new regulatory drivers should be added to the S/RID. As a result, 7 requirements have been added and 9 deleted as of November 1997; the total is now 354. Implementation of the S/RID has achieved the goal of aligning FUSRAP more closely with commercial practices and allowing procurement reforms to be implemented.

Implementation of the S/RID and the revised subcontracting strategies allowed for a substantial downsizing of the PMC staff. Figure 3 shows the change in staffing levels expressed in full-time equivalents (FTEs). The change in staffing helped to direct project spending toward remedial action. Figure 4 illustrates the acceleration of remedial action since the inception of the second PMC contract in 1991.

These steps prepared the project for the last big step: movement of the primary project resources to the jobsites. FUSRAP had first implemented the project team concept in 1985. Until then, the project had been organized along functional lines, so that functional managers assigned personnel to the FUSRAP jobsites and oversaw their daily activities. The sites were grouped under project managers to provide a single point of contact for DOE, but the technical resources were controlled by the functional managers; as a result, the project managers were really coordinators. When increased remedial action brought about a shift to project teams in 1985, project managers assumed control of personnel resources, while functional managers retained technical control of the work. Under this classic matrixed organization, the project manager directed the "what" and "when" dimensions of the work, and the functional manager determined the "how."

The three project teams (St. Louis/Ohio, New York, and New Jersey) were located in an office in Oak Ridge, Tennessee, and had a small cadre of construction and safety personnel permanently assigned to the three primary field offices. During the construction season, additional technical resources were directed to the field to provide onsite supervision, and they returned to the office at the end of each season. Late in 1996, a decision was made to move the project teams to the field and retain project support and integration staff in the Oak Ridge office. The support team provides technical assistance to the deployed teams and conducts many of the functions required of DOE projects (e.g., preparation of the Accelerated Cleanup Plan and integration of budget and funding information for submittal to DOE). The decision was made in response to the following circumstances:

• Progression of FUSRAP activities to the remedial action phase required the presence of the teams in the field, where the work was being conducted.
• The proposed FY 1998 budget of $182 million would further accelerate the pace of remedial action (the final budget of $140 million has had this effect).
• The use of fixed price lump sum and fixed quantity unit rate contracts required the location of technical resources in the field, where the work was being conducted.
• Community relations efforts would be strengthened by an increased presence at the jobsites, which demonstrated a firm commitment to complete the work.
• Combining construction and engineering resources at a single location allowed a reduction in manpower so that personnel would fulfill dual roles on an ongoing basis.
• Relocation of the workforce was cost effective for DOE because the reduction in the field office billing rate offset the temporary assignment and field office setup costs (permanent assignments would not have been cost effective because of the imminent recompetition of Bechtel's contract).

With DOE approval, the New York team (now the Buffalo District team) and the New Jersey team (now the New York District team) relocated to the field in May 1997. Unfortunately, contention among St. Louis stakeholders precluded relocation of the entire team to that district, but some technical personnel have been positioned in the field. As of November 1997, Bechtel personnel are distributed as follows:

These staffing levels are expected to decline as USACE further defines Bechtel's role on FUSRAP.

As these measures were being implemented, the Logistics Management Institute (LMI), a non-profit organization, was contracted at Bechtel's expense to benchmark Bechtel's services as PMC. The benchmarking evaluated Bechtel's current performance for

FY 1996, relative to the environmental industry, and its expected performance for FY 1997 and FY 1998 after the planned changes were implemented. The benchmarking process compares the cost of execution for standard functional areas (as established by DOE) against a database containing information on the same areas from a cross section of environmental projects, including those managed by DOE, the Department of Defense, other federal agencies, and private industry. The evaluated functions include administrative support; construction management; engineering related to construction; engineering unrelated to construction; environment, safety, and health; information services; inventory control; laboratory services; procurement; project management; project controls; public affairs; quality assurance; senior management; and waste transportation. The final LMI report issued in June 1997 concluded that

• Bechtel's performance on FUSRAP for FY 1996 was outstanding and was the best noted to date for any DOE project benchmarked by LMI.
• During FY 1997, Bechtel significantly downsized its project forces. This measure should yield approximately a 23 percent reduction in benchmarked function costs for FY 1997 as compared to FY 1996, resulting in a project with one of the lowest support cost operations in government.
• FY 1998 plans forecast even greater efficiency gains, and most evaluated areas will achieve best in class levels of cost performance for both government and private environmental projects.
• Bechtel's support costs as a percentage of total project costs for FY 1996 were 35 percent plus fee. In comparison, the mean value for DOE projects as reported through the Functional Cost Reporting System is 49.6 percent. LMI believes that the floor for support costs based on current DOE operating procedures is 32.5 percent (1).

While the project changes described here have improved Bechtel's performance as the PMC for FUSRAP under DOE, at least two factors also benefit USACE. First, the assignment of Bechtel project teams to the field in Buffalo, New York, and Maywood, New Jersey, has greatly eased the transition process for USACE office personnel in the Buffalo and New York Districts. And second, the use of fixed quantity unit rate contracts introduced on FUSRAP is consistent with USACE practice.

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