June 13, 2002

Michigan’s first pay-for-performance contract for cleaning up a leaking underground storage tank site is proceeding ahead of schedule by several months, Department of Environmental Quality Director Russell Harding said today.

A pay-for-performance contract is one in which the contractor is paid based on the amount of reduction in contamination that is achieved rather than on a time and materials basis.

The cleanup of soil and groundwater is being conducted at the former Woody’s Grocery site northwest of Alpena along the Thunder Bay River. Global Environmental Engineering Inc. of Elk Rapids is performing the work. The DEQ’s Storage Tank Division is overseeing the project

Global has removed more than 600 tons of contaminated soil and is treating the groundwater with a proven technology that injects oxygen into the water, stimulating natural bacteria to effectively “eat” the contamination. To date, these actions have reduced the amount of contamination in the groundwater by 90 percent of the established goal, which is at least nine months ahead of schedule.

“This has been a very successful project using an innovative approach to environmental cleanups,” Harding said. “We believe that pay-for-performance contracting is an effective way of keeping these types of projects cost-effective and timely, while allowing the contractor flexibility to meet the project objectives.”

Said Chris Griffin of Global Environmental Engineering: “We have had to put our money where our mouths are by completing the project on time and within budget, and we are.”

Woody’s Grocery site was used as a gasoline service station beginning in 1971 and had three underground storage tanks. At least one of the tanks released product to the soil and groundwater prior to 1988, when they were removed.

The amount released is unknown, though product was entering the Thunder Bay River. The DEQ began investigating in the spring of 1999 to determine the extent of the contamination.

Upon completing the study, the DEQ and the Michigan Department of Management and Budget’s Office of Infrastructure Services drafted the pay-for-performance contract and developed bid specifications for the cleanup portion of the project. The contract was advertised for bidding in May 2001 and Global was the lowest responsive bidder.

The DEQ’s Storage Tank Division currently has three pay-for-performance contracts under way and plans to develop more of these types of contracts for future cleanups.

For more information about this site or other pay-for-performance contracting questions, contact Robert Reisner, State Funded Cleanup Unit chief, at (517) 373-2748.

Editor’s note: DEQ news releases are available on the department’s Internet home page at www.michigan.gov/deq.

Revised June 13, 2002 by Pat Watson