Emergency Response Contracting for Quality & Cost Control

Author(s):

Drew McCarty
Drew McCarty, Vice President of Quality & Emergency Response Petroclean, Inc. (www.petroclean.com) Carnegie, PA 15106, (800) 247-3592

84th Annual International Conference Proceedings - 1999 

Abstract. If your company manufactures, ships, or receives any type of regulated substance, it is possible that your company could be the responsible party in a future spill emergency and remedial response. In fact, even unsuspecting companies have had small spills from company-owned vehicles, larger spills from on-site transformer units, and spills from small tanks holding back-up generator fuel. In fact, almost no industry is immune from being involved in an emergency response clean-up incident. This presentation offers an approach to ensure your contractual readiness for such an emergency while enhancing cost control and quality assurance for your company's response.

The Implications of an Environmental Emergency. An environmental emergency imposes many implications to the responsible party. For an in-plant emergency, your issues may include employee safety, an OSHA reportable incident, a plant or department shutdown, damage repair, plume migration, and local public perception of your company and its operations, future inspections and in-depth inspections, etc. For off-site emergencies, your issues may be expanded ten-fold. Public safety, the safety of responders, making property owners whole for their damages and losses, and a number of other liability scenarios can influence the outcome of an incident. With these things in mind, it is important to carry out an effective response in the event of an emergency.

Readiness is Required by Several Agencies, and It Does Pay to Be Ready. Various legislation requires readiness through training, contingency planning, exercises, and resource commitments. Specifically, OSHA has training requirements for personnel and several operating standards that are applicable for various tasks involved in a response action. Likewise, the US Coast Guard and US EPA each have pre-planning requirements that outline regulated facilities, readiness planning, and resource identification and commitments. The DOT also requires contingency planning for emergencies during transportation. Post-incident penalties may also be imposed by any of these regulatory agencies, and penalties are often influenced by how well-prepared the responsible party was for the response, and how well the responsible party performed during the response. The more prepared your company is, and how well it responds to the emergency, can save thousands of dollars in penalties.

A Quality Performance From Your Contractor Controls Costs. How does your company ensure quality from its vendors? Does that approach apply to emergency response contracting vendors? The fact is, many buyers have every-day fires to put out, and choosing an emergency response contractor for an emergency they hope never happens often slips down their list of priorities. There are several things a buyer can do to evaluate the quality of an emergency response contractor. The first step is to identify your company's risk. Is it product-specific, geographically isolated, multi-product and broad-based, multi-modal in terms of transportation accidents, etc.? Once you have identified your potential exposure for an environmental emergency, you can relate your contractor evaluation to your risks and your products. A contractor evaluation worksheet can assist you in evaluating a candidate vendor, and the worksheet also lends itself to readiness documentation mentioned earlier with respect to regulatory issues. An example of an evaluation worksheet for emergency response contractors is attached.

Ensuring quality takes an on-going commitment to evaluate your contractor in his/her performance. This does not need to be a burdensome task. In fact, by telling the contractor up front that he/she will be "graded" on how well he/she performs, the contractor will most likely pay very close attention to your project because the contractor is striving to earn an "A+" on your grading scale. By evaluating the contractors performance in each response, you will build teamwork with your vendor, build confidence in each other, and continuously improve the quality of performance to emergencies involving your products and/or facility operations. An example of a contractor performance evaluation worksheet is attached.

An experienced, qualified contractor can also influence how the job gets done, and this can control costs associated with the project. A pro-active approach to the clean-up most often results in the responsible party maintaining control of the project. A pro-active approach does not always necessitate an excessive staffing or equipment assignment to the emergency. In fact, in most cases, the real emergency can be controlled early in the incident (as it should be). A good contractor can often recommend courses of action that can satisfy all agencies involved while minimizing the costs to the responsible party. This type of ability must be inherent in the contractor. If the responsible party does not have control of the clean-up, cost control becomes extremely difficult (if not impossible).

Negotiating The Best Deal. Once you have selected a contractor that satisfies your needs and can handle your risks, negotiate an agreement. This agreement should be simple, but it needs to protect your company from unreasonable terms, conditions, and pricing. It is no secret that a "quickie" negotiation is usually not the best deal for either party involved. A "quickie" is precisely what happens when many buyers of emergency response contracting services call a contractor at the time of the incident. At the time of the emergency, neither party wants to negotiate pricing or debate terms and conditions. In fact, this is precious response time being wasted by the negotiation process, and regulatory agencies perceive that as a delay in the response. When a buyer calls at the time of the emergency and no agreement is already in place, the buyer will likely pay more for the response service than if an agreement had been previously negotiated.

A negotiated contract prior to an emergency response can secure written agreement to your company's terms and conditions, rates that are fair and reasonable, and a better deal for both parties.


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