Petroleum Tank Release Compensation
Minimum Bid Policy

Effective Date:  November 4, 2002
Presiding Officer:  Tim Hornbacher

Purpose: To establish guidelines for a minimum bid level below which owners, operators or their representatives will not be required to initiate the bid process.

Background: May 9, 2000, the Board adopted a policy directing owners, operators, or their representatives to solicit bids for completion of discrete remedial activities. That Board policy applied to activities paid for through unit cost, task order, and pay for performance process.

Policy: The Board May 9, 2000, policy is now supplemented to establish a threshold bid minimum of $2,500 below which owners, operators, or their representatives are not required to solicit three bids from subcontractors for completion of one or more discrete remedial activities.

Rationale: This policy is adopted in order to reduce owner, operator, representative, and consequently fund overhead expenses on small projects. The Board does not believe it is cost effective to solicit bids for remedial activities costing less that $2,500. Minimum bid thresholds have been established by many states, including Montana, and have been adopted by many petroleum fund programs in other states. The amount, $2,500, is approximately 5% of the total cost of cleanup at many sites and this does not represent a significant expenditure of PTRC funds.

Guidelines for Implementation:

  • If three bids are not obtainable, documentation should be provided that at least three bids were solicited.
  • The consultants will be reimbursed a reasonable amount of time to prepare, solicit and evaluate bids.
  • If costs identified in the work plan appear unreasonable, the Board can require bids for subcontracted activities under $2,500.
  • Owners, operators or their representatives may obtain bids for activities under $2,500 at their discretion.

References:

75-11-309, MCA – Procedures for reimbursement of eligible costs

Approved: (Original signed by Tim Hornbacher on November 6, 2002)

Tim Hornbacher, Presiding Officer
Petroleum Tank Release Compensation Board

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Controlling Expenses Incurred in Preparing & Implementing Corrective Action Plans

Purpose: To establish guidelines for controlling expenses incurred in preparing and implementing a corrective action plan in accordance with §75-11-309(1)(f) & (g), MCA.

Owners or operators are directed to request bids for elements of corrective action plans from subcontractors interested in performing portions of remediation activities to resolve a release. The Board Staff shall recommend the type of bid process (unit cost, task completion or pay-for-performance. Board desires that the staff reimburse on a time and materials basis only when unable to obtain qualified bids. Emergency response work may be reimbursed on a time and materials basis. The owner/operator shall submit the results of the bidding process to the Department. All subsequent claims will be in the amount equivalent to the lowest bid. Bids shall be solicited from at least three sources, unless it appears to the board staff satisfaction that in the relevant locality there were not three sources capable of performing the work. Board staff will refer to the Board issues of reasonableness that can not be resolved. When there are not multiple qualified bidders, portions of the corrective action work may be awarded to a sole source as bid items or may be reimbursed on time and materials basis which is not unreasonable when compared to similar work completed elsewhere.

Unit Costs: Board staff may reimburse costs on a unit-cost basis. The Board staff should establish unit cost ranges for activities such as: removal of soil per cubic yard, backfill material per loose cubic yard, hauling per cubic yard, or removal and replacement of concrete or asphalt per cubic foot. The range of rates shall be determined from industry survey or historical review of claims. The unit costs may be negotiated with consultants and contractors. Documentation of at least three bids and the completed contract shall be filed with the department.

Task Completion: Board staff may reimburse costs based on the completion of specified tasks. Staff will review the bid cost submitted by the owner/operator or representative for the completion of specific tasks for a workplan and accept or reject the cost for each task. Documentation of bidding and completed contracts shall be filed with the department. If reasonable, the costs will be reimbursed when it is verified that the task has been completed. If the task cost appears to be unreasonable, the Board staff may negotiate for a more reasonable price. If unable to negotiate a reasonable price, staff shall require the costs be documented in a time and material basis.

Pay for Performance: This methodology will be utilized for the payment of contractors for the reduction of contamination for a fixed price. Pay-for-performance should be utilized for the cleanup phase of corrective action plan only after the full extent of the contamination has been defined and it is clear that the contamination can be efficiently remediated. As the department refines pay-for-performance procedures, the owner or operator may be requested to obtain bids from consultants to complete the cleanup to defined standards. The Department’s environmental cleanup goals will be provided to the owner/operator and consultant/contractor.

The Board staff shall negotiate the milestones, reimbursement goals, reporting requirements, costs and reimbursement schedule with the owner or operator and consultant or contractor before the work begins. Board staff must obtain prior approval from the Board if the expenditures for any milestones cost more than $25,000.00. Staff shall obtain a guarantee of reimbursement for the owner or operator at a regularly scheduled Board meeting. The attainment of each milestone will require verification by the Department release case manager. The Board staff shall reimburse according to the reimbursement schedule.

The Board staff shall assist owners, operators, consultants or contractors with the development of pay-for-performance contracts for the cleanup of the contamination. Board staff shall negotiate the cleanup and reimbursement milestones. Board staff shall not enter into the contract with the owner, operator, consultant or contractor. A copy of the completed contract shall be filed with the Department.

The Board will not authorize additional expenditure of funds at a site being remediated using this method unless a new release is documented or it can be demonstrated that the original site assessment had major errors or omissions.

Time and Materials: The least desired method of documentation from the Board perspective is to reimbursement corrective action on a time and materials basis. The substantiating documentation for time and material work should include:

  • Daily time sheets which identify the worker, hours worked, and duties performed.
  • The make, model and capacity of the equipment utilized, hours utilized, and tasks performed.
  • Copies of invoices for all materials and supplies utilized.

Payment: Board staff is authorized to reimburse claims for less than $25,000.00. For any claim submitted in excess of $25,000, regardless of which method(s) is utilized to control costs, reimbursement will not occur until the next regularly scheduled Board meeting, unless the activity and associated costs have been previously approved by the Board.

Documentation for bidding: Documentation of bidding shall include the name, address, and phone number of the party submitting either oral or written bids. A summary of the bidder qualifications should also be provided.

References:

§75-11-309, MCA – Procedures for reimbursement of eligible costs

Approved: (Original signed by Tim Hornbacher on May 9, 2000)

Tim Hornbacher, Presiding Officer
Petroleum Tank Release Compensation Board

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