However, where extreme risk is foreseen, there are some solutions in the development marketplace that can reduce or eliminate the unknown factors that can sink a project. One such available “product” is a guaranteed fixed-price remediation (GFPR) service.

GFPR is almost exclusively used on contaminated properties, also known as brownfields (or greyfields for “minor” or lesser affected sites). It has been used in both the public and private sector.

In the public sector, military officials have utilized the service to clean up properties for future military use or before turning the property over to new ownership.

In a 2002 article, Maj. Paul B. Olsen, of the office of the Assistant Chief of Staff for Installation Management (ACSIM) for the U.S. Army, defined GFPRs as a performance-based contracting vehicle obligating the contractor to guarantee the fulfillment of a specific Army environmental remediation requirement (including regulatory site closure). The Army and the contractor agree on a fixed price, up front, for the contract award, then stick to it, thus eliminating change clauses to the contract. The contractor buys insurance to cover additional costs in case the cleanup becomes more expensive than the contract award.

In addition, it is considered a form of performance-based contracting, since GFPR shifts financial responsibility to the contractor while the Army retains environmental liability and remediation oversight.

Olsen championed the GFPR initiative through the Army and Department of Defense staffs, gaining Secretary of Defense approval Nov. 12, 2002.

Less than two years later, Acting Secretary of the Army Les Brownlee commended Olsen and two Army staff members for their success in implementing the GFPR Business Initiative Council (BIC) initiative.

Brownlee recognized the accomplishments of Maj. Olsen, Janet Kim, of the U.S. Army Environmental Center Environmental Cleanup Division, and Shawn Holsinger, formerly of the ACSIM office and the U.S. Army Training and Doctrine Command (TRADOC), as he presented Olsen’s award at the Pentagon.

Kim received her certificate from BIC Executive Director Donald Tison. Holsinger will receive his award in front of Air Force staff. All received certificates of commendation signed by Tison, Army G8 (Deputy Chief of Staff for Programs).

Tison’s office reports a $32.9 million cost avoidance to date (through mid-2004), and projects a $280 million cost avoidance for fiscal 2004-2009.

With this approval, the Army established the GFPR BIC implementation team including Kim, who became the Base Realignment and Closure GFPR subject matter expert and the execution agent for the initiative, and Holsinger, whose extensive experience working active-installation TRADOC GFPRs was instrumental to the success of the initiative.

Today, GFPR serves as one method in the Assistant Chief of Staff for Installation Management’s performance-based contracting initiative for environmental remediation.

The Department of Defense BIC works to improve efficiency of DoD business operations by identifying and implementing business reforms and allocating savings to higher priority efforts.

KEMRON Environmental Services, Inc. was one of the firms to be awarded a GFPR Contract with the US Army Environmental Center (USAEC) for work at multiple US Army Reserve Command (USARC) installations located in Ohio, Wisconsin, California, Washington and the Northeast. KEMRON is responsible for the remedy selection, decision document preparation, agency negotiation and the cleanup of 30 sites at 16 facilities in eight states. Cleanup efforts include sediment dredging, groundwater remediation, OB/OD pit closure and capping and removal efforts.

The process has also enjoyed success in the private sector.

The Equitable Group, a respected real estate development firm based in Chicago, Ill., realized an opportunity to turn the land from a non-productive blight into a multi-family residential development complex.

While more than 900 drums containing a wide variety of chemical compounds in the form of liquids and sludge material had been removed from the property by contractors from the New York State Department of Environmental Conservation (NYSDEC) more than 10 years ago. The property was subsequently added to NYSDEC’s Registry of Inactive Hazardous Waste Sites. Since this time, until recently, the site had remained vacant.

TerraSure Development LLC was selected by the Equitable Group for the GFPR services for the property – to be known as the Ardenwood Estates – in Staten Island (NY). The site was a former privately owned, non-engineered, and unregulated drum and waste storage facility disposal site.

TerraSure was required to restore the property and guaranteed compliance with the regulatory requirements for residential use. TerraSure also assumed the risk for making certain that the cleanup cost would not exceed the Equitable Group’s projected costs. TerraSure’s guarantee, which is transferable to new owners, not only helped to give investors in this venture a high degree of comfort, but it also provided added value to the property.

TerraSure faced several challenges while completing remediation of the site. For example, the site is located in a densely populated residential community. Therefore, TerraSure made it a priority to work with members of the community to address their concerns and provide assurance that the work was being performed in a safe manner. Despite this challenge, the project ran smoothly and seamlessly to the owner.

TerraSure was able to complete the remediation on schedule within one year and deliver a property back to the community in which it can now take pride.

The NYSDEC issued a “No Further Action” letter stating that the project is complete and “no further remediation or groundwater monitoring is required.” Today, design and planning have begun on the Ardenwood Estates multi-family residential development complex, with construction to be completed in two years.

Some firms, such as Tetra Tech, Inc. have a number of GFPR products available for project owners. According to material on its website, the Tetra Tech Guaranteed Programs group offers leading expertise in environmental risk transfer solutions for attorneys and their clients. Its staff has implemented over 30 GFPR contracts, including many that have since achieved regulatory closure, and has facilitated the transaction of over $500 million in environmentally-impaired real estate. Gary Keyes, Vice President in charge of the group, originated Guaranteed Fixed Price Remediation in 1994. John Melnyk introduced GFPR to the DOD in 1998 and leads our Guaranteed Federal Programs. Buddy Bowles provides GFPR solutions to commercial clients, attorneys, and developers.  SLDT