Wildlife & Land

Solving the Procurement Puzzle for Flood Infrastructure

  September 4, 2018      Katie Riley  

Photo by the California Department of Water Resources

How can we maximize the effectiveness of funding for flood and multi-benefit infrastructure projects, in the face of rising construction and O&M costs, multiple agency mandates, and competing pressures for every acre of land?

Leading floodplain managers from several western states will be convening in Reno this week for the 2018 Floodplain Management Association (FMA) Annual Conference to discuss this question, along with other issues of sustainability in the face of change. FMA is the premier voice for advancing flood safety and environmentally, economically, and socially sustainable floodplains for the public benefit.

Environmental Incentives is excited to have our President Jeremy Sokulsky join colleagues from ESA, Larsen Wurzel & Associates, Willis Towers Watson, Bartle-Wells, and the Truckee River Authority to discuss existing and emerging funding tools that can support the installation and maintenance of critical flood infrastructure while also providing multiple benefits from healthy floodplains.

The Challenge

For any given flood infrastructure project, flood managers must piece together several contracting steps involving different procurement offices and funding sources. This process frequently requires leveraging several “buckets” of funding to navigate the lengthy project delivery process—from project planning to ongoing maintenance and everything in-between. Each funding source comes with new sets of red tape and “color of money” restrictions (i.e., single-purpose funding sources).

Standard procurement processes are defined by project implementation steps and “color of money” restrictions.

As a result, many landowners simply refuse to work with agency project leads, project costs escalate, and project complexities increase with every year, every new staff person, and every new contract. Opportunities to create multiple flood, environmental, and community benefits may be rejected out of the need to simply get projects done.

Dollars and Benefits

Pay for performance contracts, on the other hand, tie funding directly to project benefits. This reduces the publics’ risk of spending money on projects that do not deliver on their intended purpose and enables third parties to efficiently negotiate private land deals and other contracting terms without the restrictions of the State. Structuring and valuing benefits as tangible contract deliverables also opens the market up to private investors who can finance projects, so that one round of funding can create all project needs. It is even possible to define benefits as “goods”, which creates more flexibility to focus on outcomes rather than cost-reimbursable service contracts.

Pay for performance contracts simplify procurement and funding and focus all parties on delivering the intended project benefits.

Broad-Scale Applications

Flood managers can apply outcomes-based procurement mechanisms in a number of different ways. For instance, California’s Department of Water Resources (DWR) used a partial pay for performance competitive RFP to solicit projects to create habitat for the endangered Delta Smelt. Through this process, DWR was able to leverage third parties to bring additional resources and ingenuity to the problem, overcome land acquisition barriers, and speed up project delivery.

Pay for performance procurement strategies can also integrate into a Habitat Portfolio Management approach. By understanding current and future habitat assets and needs, flood managers can develop strategies to ensure habitat mitigation requirements do not cause project delays and conservation commitments are achieved. This approach can also allow agencies to flexibly align multiple funding sources and maximize the habitat value of every project. Focusing on the benefits achieved from projects not only puts funding to its best and highest use, it can also build public trust and create solid rationale for future funding requests.

Navigating the complex state and federal funding landscape is essential to ensure critical flood infrastructure continues to protect our communities over decades, and outcome-based procurement is a key piece of the puzzle. Jeremy’s FMA conference panel – We all like the music, but can we pay the piper? Long-term funding for flood management – will take place this Thursday, September 6th at the Atlantis Casino Resort in Reno from 9:00-10:30 am. We hope to see you there!

About the Author

Katie Riley is a Senior Associate with Environmental Incentives and leads our habitat and infrastructure work in California’s Central Valley.

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