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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended September 29, 1996.
[_] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to
__________.
Commission file number 0-19655
TETRA TECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
Delaware 95-4148514
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
670 N. Rosemead Blvd.
Pasadena, California 91107
(Address of registrant's principal executive offices) (Zip Code)
(Registrant's telephone number, including area code:) (818) 351-4664
Securities registered pursuant to Section 12(b) of the Act: (Name of each exchange on which registered)
(Title of each class)
None None
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Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
Common Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant on December 2, 1996 was $237,721,388.
The number of shares of Common Stock, $.01 par value, outstanding (the only
class of common stock of the registrant outstanding) was 14,141,365 on December
2, 1996.
Portions of registrant's Annual Report to Stockholders for the fiscal year ended
September 29, 1996 are incorporated by reference in Part II of this report.
Portions of registrant's Proxy Statement for its 1997 Annual Meeting of
Stockholders are incorporated by reference in Part III of this report.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
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PART I
ITEM 1. BUSINESS.
This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of The Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are in the fourth paragraph
under "Overview," in the first paragraph under "Marketing," in the sole
paragraph under "Backlog," in the last paragraph under "Environmental
Legislation," in the last paragraph under "Potential Liability and Insurance,"
in the last paragraph under "Properties," and in the sole paragraph under "Legal
Proceedings." Actual results could differ materially from those projected in the
forward-looking statements as a result of the risk factors set forth below under
"Risk Factors."
INTRODUCTION
Tetra Tech, Inc. ("Tetra Tech" or the "Company") provides nationally
recognized comprehensive environmental engineering and consulting services
addressing complex water contamination and other environmental problems. These
services are directed to a broad base of public and private sector clients and
include substantially all types of engineering and consulting services in the
environmental area, such as water chemistry, geohydrology, soil science, water
and wastewater treatment, hydrodynamics, geology, air quality and civil
engineering.
The Company was incorporated in Delaware in February 1988 to acquire the
assets of the Water Management Group of Tetra Tech, Inc. (the "Predecessor"), a
subsidiary of Honeywell Inc. ("Honeywell"), in a management buy-out in March
1988. The Predecessor was founded in 1966 as a coastal and marine engineering
business. Honeywell acquired the Predecessor in 1982, by which time the
Predecessor had developed an integrated water and environmental science and
engineering business. In November 1988, the Company acquired GeoTrans, Inc., a
groundwater service firm, and in March 1990, the Company acquired M.H. Loe
Company ("Loe"), an underground storage tank removal and remediation company. In
October 1991, Loe was merged into the Company. As of October 1993, the Company
acquired Simons, Li & Associates, Inc., a firm engaged primarily in advanced
water resources and environmental engineering, and in June 1994, the Company
acquired Hydro-Search, Inc., a groundwater hydrology and remediation firm. In
September 1995, the Company acquired PRC Environmental Management, Inc., an
environmental engineering and consulting firm which provides services ranging
from policy analysis to innovative remedial technology evaluation, including
feasibility studies, remedial investigations and design, economic and financial
analyses, environmental audits, risk management services, and regulatory
compliance assistance. In November 1995, Tetra Tech acquired KCM, Inc., an
engineering firm specializing in the areas of water quality, water and
wastewater systems, surface water management, fisheries and facilities. Since
1966, the Company's business has expanded through the establishment of an
international network of over 70 offices, allowing the development of technical
and marketing expertise in a variety of geographic areas.
OVERVIEW
Tetra Tech works in partnership with government and industry to balance the
need for economic growth with sustainable development of natural resources. The
Company responds to its partnerships by recognizing the uniqueness of each
client; by recognizing the requirements and needs of the client; setting
priorities and ensuring proper allocation and control of resources applied to a
problem; as well as monitoring results. The Company's goal is to help the client
build environmental performance into each aspect of their organizational
activities to enhance both environmental and fiscal performance. Tetra Tech
achieves this goal by assisting clients to be more effective in pollution
prevention, better manage the spectrum of environmental compliance, and apply
innovative and cost-effective solutions to remediation or corrective action to
problems impacting our environment.
Tetra Tech has a commitment to people and results, technical excellence and
teamwork and cost-effective solutions for its clients' technical problems. The
challenges of today's environmental issues requires an integrated multi-
disciplinary approach to assist clients in making informed decisions and to
implement them in the most cost-effective way. These challenges are driven by:
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. Complex and continuously evolving environmental regulations and the
need for a more strategic approach to meet national and international
environmental challenges in a way that allows the government and
industry to be cost-effective and competitive in the markets they
serve.
. Increased emphasis on pollution prevention and waste minimization as
a necessary part of a long-term solution to sound natural resource
management.
. Competition for limited resources and the need for new and more
effective technology to achieve pollution prevention, resource
management and remediation goals more cost-effectively.
Public concern with water resources and other environmental issues has been
a driving force behind the promulgation of numerous laws and regulations which
seek to control or prevent environmental degradation and mandate restorative
measures. According to the United States Environmental Protection Agency
("EPA"), contamination of groundwater and surface water resulting from
industrial, agricultural and residential development is one of the most serious
environmental problems facing the United States. Because of the interrelated
nature of groundwater, surface water and rainwater in the water cycle,
contamination of one source of water affects the quality of other sources.
Surface water can be affected by direct contamination or runoff from cities or
agricultural areas. In addition, soil contamination from hazardous materials
often leads to water contamination through surface runoff and infiltration.
Similarly, air pollution and the resulting acid rain and other forms of
deposition can contribute to the contamination of water resources over a wide
geographic area. This contamination can threaten the quality of the water
supplies that serve as drinking water sources and detrimentally affect aquatic
life and the quality of lakes, rivers, estuaries, harbors and oceans.
The economic and environmental consequences from continuously evolving
regulations present new opportunities for the Company to assist public and
private sector clients in achieving compliance. Past enforcement efforts under
the Clean Water Act ("CWA") have focused on regulating sources of pollution
which originate from a discrete point, such as industrial facilities and
municipal treatment plants. Much of the Company's water-related environmental
business has been derived from this market. However, the EPA estimates that
nonpoint sources, such as stormwater runoff from urban streets, runoff from
farmland and construction sites, atmospheric deposition, drainage and combined
sewer overflow, currently account for more than 50% of the pollution entering
the nation's waters. As a result, the EPA is currently developing programs and
allocating funding to address the complex problem of nonpoint source pollution
within the context of holistic watershed management. Under National Pollutant
Discharge Elimination System ("NPDES") regulations promulgated in November 1990,
for example, the EPA will require municipalities and industries to apply for
nonpoint discharge permits. The Company's ongoing technical support of the
EPA's water programs has led to early involvement in the development and
implementation of this emerging nonpoint source program. However, no assurance
can be given that the Company will continue to participate in this program.
In addition to the CWA, other laws, such as the Resource Conservation and
Recovery Act of 1976 ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and the Safe Drinking Water Act
("SDWA"), require companies and government agencies to make considerable
environmental expenditures. Major environmental expenditures are also planned
by the United States government, including expenditures by the United States
Department of Defense ("DOD") and the United States Department of Energy ("DOE")
to clean up defense and nuclear weapons production and test facilities that have
become contaminated over the past four decades.
COMPANY SERVICES
The Company's services generally fall within six business areas: surface
water, groundwater, waste management, nuclear environmental, resource management
and facilities management. The Company provides its clients with a wide range of
services including research and development, environmental assessment and
engineering, design and construction management, and facility operation and
maintenance. These services are offered individually or together as part of the
Company's full service approach to environmental problems. The Company is
currently performing services under more than 800 active contracts, which range
from small site investigations to large, comprehensive assessment and
remediation projects.
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SURFACE WATER
Public concern with the quality of surface water resources, defined as
rivers, lakes and streams as well as coastal and marine waters, and the ensuing
legislative and regulatory response, have led to a demand for the Company's
services. Over the past 30 years, the Company and the Predecessor have developed
a specialized set of technical skills which position the Company to compete
effectively for surface water and watershed management projects. The Company
provides water resource services to public clients such as the EPA, DOD and DOE
and to a broad base of private clients including those in the chemical,
pharmaceutical, utility, aerospace and petroleum industries. The Company also
provides surface water services to state and local agencies, particularly in the
areas of watershed management, flood control and drainage designs. The Company's
services in the management of surface water quantity and quality include
research and development for new generations of computer models that can predict
and compare the response of water quality parameters under various watershed
management practices; design of monitoring programs; consulting services,
particularly in regulatory compliance, permitting and nonpoint source
management; and engineering design of integrated best management practices
(e.g., stormwater detention ponds and artificial wetlands), stream, lake and
wetland restoration and enhancement measures, and flood conveyance and control
structures.
Traditional "command and control" solutions used since the 1970s by the
federal government to bring industrial and municipal wastewater treatment plant
discharges into compliance have been successful in reducing impacts to U.S.
surface waters. However, a significant percentage of waters remain polluted due
primarily to diffuse "nonpoint source" pollution generated by man's activities
on the rural and urban landscape. Under a reauthorized Clean Water Act expected
within the next one to two years, EPA has set as a high priority working with
states and local governments to implement more effective nonpoint source and
watershed management programs to address this problem.
The Company has also worked closely with the U.S. Army Corps of Engineers
(ACE) to develop and implement nationwide non-traditional approaches to flood
control policy, planning, and design. As a consultant to ACE, the Company has
implemented flood control practices using natural, non-structural features. In
addition to ensuring human health, safety, and welfare protection, this new
approach results in a decreased federal investment, higher benefit-to-cost
ratios, the creation of recreational opportunities, and the enhancement and
effective long-term management of endangered urban watersheds.
The Company has worked closely with the EPA since the passage of the CWA in
1977 in researching and evaluating surface water environmental systems. Under
contracts with the EPA, the Company has assisted in the development of national
guidelines on surface water monitoring strategies, nonpoint source pollution
control practices, pollution trading and other economic incentive-based control
strategies, and public education methods for use by states and local agencies in
their ongoing surface water and watershed management programs. Through its work
for the EPA, the Company has developed expertise in complex modeling, Geographic
Information Systems (GIS), remote sensing, surface water monitoring, data
analyses, publication of national guidance documents and environmental impact
assessments for surface water projects. The development of this knowledge base
has strategically positioned Tetra Tech as an authority on regulations affecting
discharges to surface water and best management practices.
Examples of past and current projects in the surface water field include
the following:
. Stormwater Runoff. The Company recommended methods to manage
stormwater runoff and other point and nonpoint sources of pollution
for a variety of clients including Guilford County, North Carolina;
Baltimore and Prince Georges Counties, Maryland; Suffolk County, New
York; Prince William County, Virginia; and the City of Tucson,
Arizona. For Prince Georges County, Tetra Tech developed several new
investigative technologies to assess and manage stormwater pollution
under the NPDES program. Predictive models and statistical algorithms
integrated with GIS help prioritize water quality efforts. Models are
also being developed to assess water quality benefits derived from
wetland systems and other best management practices. The Company is
assisting the California Department of Transportation to establish a
statewide stormwater quality monitoring program to meet state and
federal regulations.
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. Water Supply Protection. Tetra Tech is assisting several local
agencies in watershed restoration and pollution source assessments in
areas where surface water supplies are susceptible to land activities
(e.g., urbanization, agriculture). These include, for example, the
assessment of pathogen sources and fate in the Occoquan Watershed,
Virginia, and the development of stream channel restoration methods in
several watersheds within New York City's water supply system.
. Watershed Assessment Tool Development. Under contracts with the EPA
and Prince Georges County, Maryland, Tetra Tech has developed a number
of watershed assessment tools that provide integration of watershed
and receiving water models, databases, monitoring and design data, and
watershed attribute information within a GIS platform (PC-Windows and
UNIX workstations). These tools range from "BASINS," which was
developed for EPA to be used by states to perform local and regional
scale watershed assessments, to "SAM," which was developed for Prince
Georges County for detailed assessment and optimization of best
management practices.
. Coastal Nonpoint Pollution. As the prime contractor to the EPA's
Assessment and Watershed Protection Division, Tetra Tech is assisting
in the development of implementation strategies and technical guidance
for nonpoint source pollution control within the coastal zone under
the Coastal Nonpoint Pollution Control Program. The Company is also
assisting the EPA in developing guidance for the assessment of
stormwater discharges and combined sewer overflows as required under
NPDES regulations. The Company is also assisting the government of
the Philippines in addressing problems related to the management of
the country's vital coastal resources. Under this contract, the
Company provides scientific and engineering services and policy
support for the development and implementation of effective community-
based coastal resources and watershed management.
. Municipal Flood Control Design. The Company has provided design
services for numerous flood control projects in western states. The
Company provided design and construction engineering services for the
Talbert Channel ocean outlet, a major component of the U.S. Army Corps
of Engineers' Santa Ana River flood control project. This project is
the largest of its kind west of the Mississippi River. For the city
of Federal Way, Washington, the Company performed the feasibility
assessment, predesign and final design for a regional stormwater
detention basin to address existing and predicted future flooding on a
rapidly urbanizing portion of Hylebos Creek. The results of the
analysis identified flood frequency levels, identified unstable
downstream channel reaches, and predicted typical water quality
expected for the site. The subsequent design required balancing
various environmental (wetlands, fisheries, water quality) and
physical (property availability, geologic) constraints.
. Flood Control Planning. The Company is currently providing flood
control related planning services to the U.S. Army Corps of Engineers'
Los Angeles District. Individual projects include flood
investigations of 72 sites in Arizona; an analysis of flooding effects
to 300 in-stream structures in California, Arizona, Nevada, and Utah;
a reconnaissance study for habitat restoration along the Gila River in
Arizona; and development of multiple-use flood mitigation alternatives
for 35 miles of the Salt River through the metropolitan Phoenix area.
. Power Plant Discharges. Under a contract with the Electric Power
Research Institute, the Company developed RIVRISK, a multi-purpose
mathematical model used to assess potential human health risks from
power plant discharges into rivers. The model is designed to help
utilities evaluate options, design new or restored wetlands, and
obtain permits for activities involving existing and constructed
wetlands such as power corridors, road construction and habitat
improvement.
. Water Quality Survey of Lower Columbia River. Tetra Tech conducted
a three-year investigation of the overall status and health of the
Columbia River from the mouth of the river to the first dam at
Bonneville, Oregon. The project included identification of point and
nonpoint sources of contamination; development of modeling approaches
for estimating contaminant transport and fate;
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human health risk assessment of consumption of fish; identification of
beneficial river uses and their susceptibility to changes in water
quality; water, sediment and biological field investigations; and
preparation of a comprehensive initial assessment of water quality in
the lower Columbia River.
GROUNDWATER SERVICES
According to the EPA, groundwater contamination is one of the most severe
environmental problems currently confronting the United States. Groundwater is
located in the saturated zone beneath the land surface, is the source of
drinking water for approximately 50% of the population and accounts for
approximately 25% of all water consumed for residential, industrial and
agricultural purposes. Tetra Tech's activities in the groundwater field are
diverse and typically include such projects as the investigation and
identification of sources of chemical contamination in groundwater; the
examination of the extent of contamination; the analysis of the speed and
direction of contamination migration; and the design and evaluation of remedial
alternatives. In addition, the Company conducts monitoring studies to assess
the effectiveness of groundwater treatment and extraction wells. Tetra Tech's
professionals have the ability to analyze complex groundwater data using
sophisticated computer models.
Examples of past and current projects in the groundwater field include the
following:
. Groundwater Studies and Regulatory Negotiation at a Superfund Site.
At the Pagel's Pit CERCLA site in Illinois, the Company has
demonstrated the effectiveness of a sparge curtain remedy that will
save the client an estimated $8 million compared to the remedy
originally specified. To support this documentation, Tetra Tech
conducted a study of groundwater impacts and remedial alternatives,
prepared an Explanation of Significant Difference and presented the
recommended remedy to the regulatory agency, which has conceptually
approved the preliminary design. The sparge curtain will include
approximately 31 wells to remove TCE contamination in groundwater at
the facility.
. Groundwater Cleanup at Former Municipal Solid Waste Landfill in New
Hampshire. The Company has provided technical analysis to the
landfill Trust in support of regulatory negotiations regarding remedy
selection and development of a Scope of Work for Remedial Design and
Remedial Action (RD/RA). The management of migration remedy includes
groundwater extraction from the bedrock. In addition, Tetra Tech has
assisted with the identification and evaluation of adjacent
contributors to contamination at the site. The Company is also
evaluating the use of an innovative chemical reactive wall to be
installed downgradient of the landfill.
. Aerospace Site. Tetra Tech performed a remedial investigation of
possible subsurface contamination at five manufacturing plants of a
large aerospace company. Over 400 soil borings, 15,000 feet of
drilling and over 3,500 samples were collected and analyzed in 5
months. An innovative database was developed for analysis and
presentation of data to the client and governmental regulators. Tetra
Tech also designed and installed a Phase I remedial well field to
extract 6,000 gallons-per-minute ("gpm") of contaminated groundwater.
Subsequent phases will culminate in a 12,000 gpm treatment plant.
. Utilities Cleanup. The Company is supporting activities ranging
from initial site investigations through cleanup and demolition at
approximately 50 former manufactured gas plant sites across the United
States, including work in Oregon, Washington, California, Iowa,
Wisconsin, New York, New Jersey, West Virginia, and Washington, DC.
Of primary concern at most of these sites are dense non-aqueous phase
liquids (DNAPL). The Company is the author of the standard reference
text, DNAPL Site Characterization, and has taught seminars for the EPA
in all ten regions focusing on DNAPL investigation, cleanup and
control strategies.
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WASTE MANAGEMENT
The Company has utilized its experience and technical expertise in water-
related environmental services to expand into complementary environmental
services. For example, Tetra Tech established a hazardous waste capability
in the early 1980s which focused on water and soil contamination problems. Tetra
Tech currently provides a wide range of engineering and consulting services for
hazardous waste projects, from initial site assessment through design and
implementation of remedial solutions. In addition, the Company performs risk
assessments to determine the probability of adverse health effects that may
result from exposure to toxic substances in environmental media. The Company
also provides waste minimization and pollution prevention services, and
evaluates the effectiveness of innovative technologies.
Examples of past and current projects in hazardous waste management
include:
. Technical Analyses and Regulatory Support at Superfund Site in Rhode
Island. The Company is assisting in the implementation of remedial
design/remedial action activities at a site at which liquid bulk
wastes and more than 10,000 drums containing hazardous waste were
disposed in several trenches. Tetra Tech has assisted the PRP Group
in negotiating a revised scope of work that includes sequential pilot
testing of remedy components. This allows the effectiveness of the
proposed remedy to be evaluated prior to full scale implementation.
. Navy Installation Restoration Program. The Company is providing
program management and technical support for the Navy CLEAN program
under a ten-year contract. Activities include installation
restoration, base realignment and closure, and underground storage
tank programs. The Company has conducted numerous treatability
studies of both conventional and innovative treatment technologies to
assist in selecting cleanup strategies for naval installations. The
Company supports the Navy Environmental Leadership Program by
identifying and demonstrating innovative methods for the Navy to
achieve compliance with applicable laws and regulations, accelerate
cleanup, implement pollution prevention techniques, and conserve
natural resources.
. Innovative Technology Evaluation. The Company is the prime
contractor for the nationwide Superfund Innovative Technology
Evaluation (SITE) program, to demonstrate and evaluate the performance
and cost of various processes for treating contaminated soil and
groundwater. Under SITE and similar federal government efforts for
the Department of Defense (DOD) and Department of Energy (DOE), as
well as state and private industry partners, Tetra Tech has tested,
evaluated, and disseminated information on hundreds of new and
emerging treatment technologies and have supported government and
industry efforts to foster the continued development of these and
other new technologies.
. RCRA Support at Industrial Plant. The Company is performing a RCRA
Facility Investigation and streamlined Corrective Measures Study in a
fractured aquifer in Stonewall, Virginia. A phased and risk-based
screening approach was used at the site to delineate 22 source areas,
resulting in the consolidation of 22 areas into five areas of concern.
The Company negotiated a streamlined approach that focuses on passive
remediation and limited source reduction, thus limiting costs at the
site.
. Municipal Solid Waste Landfills. The Company is participating in
remedial action at a landfill in Howard County, Maryland, including
contractor oversight, waste characterization, air monitoring, and
reporting functions at a hazardous waste removal action for more than
500 buried drums. Work included setting up site zones, health and
safety procedures, and standard procedures for drum removal, as well
as comprehensive community relations activities. As part of the same
contract, the Company performed remedial investigation/feasibility
studies ("RI/FS") activities at three municipal solid waste landfills.
. Site Investigation and Remediation Services. The Company is providing
investigation and remediation services to the California Department of
Transportation in connection with hazardous
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waste sites encountered during freeway construction; and site
investigation, risk assessment and remedial design services for State
superfund sites for the California Department of Toxic Substances
Control.
. Support for Ordnance Remediation. The Company supported a first-of-
its-kind, large-scale demonstration of over 50 state-of-the-art
technologies that detect, identify, and remediate buried unexploded
ordnance (UXO) for the U.S. Army Environmental Center's UXO Advanced
Technology Demonstration Program.
. RI/FS Activities. The Company is engaged in RI/FS activities at 12
sites for a Fortune 50 company.
. Army Depot Cleanup. The Company is providing site investigation and
remedial design services for the Army Corps of Engineers at various
Army Depots in western states.
. Port of Long Beach. Tetra Tech is conducting site investigation and
remediation of petroleum-contaminated soils for the Port of Long
Beach, California.
NUCLEAR ENVIRONMENTAL PROGRAMS
The DOE's nuclear weapons plants and research laboratories have a wide
variety of environmental needs, including groundwater and surface water
contamination, as well as hazardous waste management and environmental
compliance. Tetra Tech's services to the DOE are focused in areas compatible
with the Company's core businesses and include NEPA analysis and documentation,
environmental audits and risk assessments, regulatory compliance support,
groundwater characterization, RI/FS and project management and oversight. The
end of the Cold War and subsequent arms reduction agreements have reduced the
Nation's requirements for nuclear weapons. These changes have resulted in
increased opportunities for Tetra Tech's nuclear environmental services. The
Company's environmental analyses will assist DOE with the storage or disposition
of surplus materials from dismantled nuclear components from weapons no longer
required for the U.S. weapons stockpile.
Examples of DOE projects performed by the Company include the following:
. Environmental Impact Analysis. Programmatic Environmental Impact
Statement ("PEIS") for Reconfiguration of the Nuclear Weapons Complex
involving environmental analysis of planned modernization activities
at 13 sites nationwide. Tetra Tech has received contract
modifications expanding the PEIS contract to over seven times its
original value.
. Nuclear Test Site. The Company is a subcontractor under a multi-
year DOE contract for an RI/FS of radioactive contamination resulting
from activities, including nuclear test explosions, at the DOE's
Nevada Test Site. This contract includes investigation of the
magnitude and extent of groundwater contamination, preparation of
environmental impact statements and corrective action under RCRA.
. Savannah River Site. The Company is a prime contractor to the DOE
Savannah River Site operator in South Carolina. Ongoing programs are
being conducted by Tetra Tech to aid in the assessment of closure and
remedial action options for various waste units at this site. The
Company is also providing multi-disciplinary support for low-level
radioactive and mixed waste management activities including the
assessment of waste characterization, sampling and analysis,
treatment, and disposal alternatives.
. Pantex Plant. The Company is preparing the site-wide Environmental
Impact Statement for the Pantex Plant, Amarillo, Texas.
. Support to Environmental Management Office. The Company is providing
technical support to the Office of Environmental Management at DOE
Headquarters on a wide range of issues. The
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focus of this program is on applying successful environmental
practices to improve the efficiency and cost-effectiveness of
environmental restoration and waste management activities throughout
the DOE complex.
RESOURCE MANAGEMENT
The Company's resource management services include the full spectrum of
regulatory requirements under RCRA, the CWA, the Clean Air Act, the National
Environmental Policy Act ("NEPA") and other environmental laws. Although
services are provided to both public and private sector clients, the Company's
current emphasis is on providing resource management services to Army, Navy and
Air Force installations. Activities have been conducted at bases which are
closing as well as those which are remaining open.
Examples of Tetra Tech's resource management projects include the
following:
. Philippines Resource Management. The Company is assisting the
government of the Philippines, through the U.S. Agency for
International Development, with managing the country's natural
resources, including the nation's coastal environments. The Company
provides services supporting Philippine environmental and resource
management policies which focus on market-driven incentives that
encourage industry to comply with standards.
. U.S. Air Force. A nationwide contract with the Air Mobility Command
to perform environmental compliance activities at Air Force bases.
. U.S. Navy. Performance of a wide variety of task orders for
environmental assessment of proposed projects for a Southwest Division
Naval Facilities Engineering Command contract covering Naval and
Marine Corps facilities in California, Arizona and New Mexico.
. Edwards Air Force Base. Environmental documentation for Base
Comprehensive Planning at Edwards Air Force Base, California.
Services performed for this project have included the assessment of
air, wastewater and nonpoint source emissions, as well as technical
support for source reduction and spill prevention contingency
planning.
. U.S. Navy. Environmental documentation for base realignment and
closure activities at U.S. Naval bases in the San Francisco Bay area.
. U.S. Army. A nationwide contract with Army Material Command ("AMC")
to support compliance requirements of AMC installations and facility
tenants.
FACILITIES MANAGEMENT
The Company works in partnership with government and some of the world's
leading corporations to develop long-term solutions to their total facility
management and operation needs. Tetra Tech's approach to Operations &
Maintenance (O&M) services is to provide a fully integrated capability that
targets improving technical effectiveness at the operating unit and process
levels.
The Company's O&M services include the operation and maintenance of
facilities as well as oversight and support for day-to-day compliance
activities. Tetra Tech has operated treatment plants, soil and groundwater
remediation systems, air monitoring stations, hazardous waste
transfer/collection stations, landfills, and industrial systems. The Company's
approach to O&M services focuses on improving operating efficiencies and
maintaining continued effectiveness of operating units. O&M services offered by
the Company range from overall facility operating management to obtaining a
facility's operating permits and licenses and providing the necessary
documentation through automated data management systems. In addition, Tetra Tech
has the capability to manage its customer's complete waste management
requirements; to mitigate environmental impact from past management practices;
and also to ensure that operations meet the stringent operating, reporting and
administrative demands placed on today's facility managers.
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. Large Air Force Base Facilities. The Company is prime contractor for
O&M services at a large Air Force Base in California. The Company
provides O&M services for a wastewater treatment plant and a hazardous
waste collection plant, as well as air monitoring and other services.
The Company's contract represents the consolidation of numerous
individual contracts into one contract to provide cost savings and
improve efficiency, a model which is expected to be adopted at
additional military bases in the future.
. Aerospace Corporation Landfills. The Company is providing O&M services
of wastewater treatment plants to treat leachate from several
landfills owned by a private corporation.
. Large Air Force Base Site. The Company is providing O&M services of
the Facilities' soil biofarm/bioventing systems.
OTHER ENGINEERING PROJECTS
The Company also provides engineering and construction management services
for projects which are not necessarily environmental in nature, such as
governmental, industrial and commercial buildings, as well as flood control,
recreation and water storage dams and reservoirs. Net revenue from these civil
engineering projects in fiscal 1994, 1995 and 1996 represented 5.7%, 3.7% and
10.3%, respectively, of the Company's net revenue.
CLIENTS
The Company has developed a diverse client base of over 500 current
clients, including Federal, state and local government agencies, utilities,
private companies, professional firms (such as law, consulting and engineering
firms) and real estate development firms. As a result of the diversity of the
Company's services, it may support multiple programs within a specific Federal
agency. Tetra Tech's private sector clients include chemical, mining,
pharmaceutical, aerospace, petroleum and utility companies.
CONTRACTS
The Company enters into various types of contracts with its clients which
include fixed-price, fixed-rate time and materials, cost-reimbursement plus
fixed fee and cost-reimbursement plus fixed and award fee contracts. In fiscal
1996, 17.1%, 32.5% and 50.4% of the Company's net revenue was derived from
fixed-price, fixed-rate time and materials, and cost-reimbursement plus fixed
fee and award fee contracts, respectively. Under a fixed-price contract, the
customer agrees to pay a specified price for the Company's performance of the
entire contract. Fixed-price contracts carry certain inherent risks, including
risks of losses from underestimating costs, problems with new technologies and
economic and other changes that may occur over the contract period.
Consequently, the profitability of fixed-price contracts may vary substantially.
The amount of the fee received for a cost-reimbursement plus fixed and award fee
contract partially depends upon the government's discretionary periodic
assessment of the Company's performance on that contract. The Company's fee
from a cost-reimbursement plus fixed and award fee contract may vary based upon
the Company's performance.
Agencies of the Federal government are among the Company's most significant
clients. During fiscal 1996, the EPA, DOD and DOE accounted for 11.6%, 33.7%
and 11.5%, respectively, of the Company's net revenue. Some contracts made with
the Federal government are subject to annual approval of funding. Limitations
imposed on spending by Federal government agencies may limit the continued
funding of the Company's existing contracts with the Federal government and may
limit the Company's ability to obtain additional contracts. These limitations,
if significant, could have a material adverse effect on the Company. To date,
spending limitations have not had a significant effect on the Company. All
contracts made with the Federal government may be terminated by the government
at any time, with or without cause. Federal government agencies have formal
policies against continuing or awarding contracts that would create actual or
potential conflicts of interest with other activities of a contractor. These
policies, among other things, may prevent the Company in certain cases from
bidding for or performing contracts resulting from or relating to certain work
the Company has performed for the government. In addition, services performed
for a private client may create conflicts of interest which preclude or limit
the Company's ability to obtain work for another private entity. The Company
attempts to identify actual or potential
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<PAGE>
conflicts of interest and to minimize the possibility that such conflicts would
affect its work under current contracts or its ability to compete for future
contracts. The Company has, on occasion, declined to bid on a project because of
an existing potential conflict of interest. However, the Company has not
experienced disqualification during a bidding or award negotiation process by
any government or private client as a result of a conflict of interest. None of
the Company's government contracts are subject to renegotiation of profits
without a change in the contractual scope of work.
The Company provides its services pursuant to contracts, purchase orders or
retainer letters. Company policy provides that, where possible, all contracts
will be in writing. The Company bills all of its clients periodically based on
costs incurred, on either an hourly-fee basis or on a percentage of completion
basis, as the project progresses. Generally, Tetra Tech's contracts do not
require that it provide performance bonds. Most of the Company's agreements
permit termination by the client upon payment of fees and expenses through the
date of the termination.
MARKETING
The Company's marketing activities are managed by the corporate marketing
department, which establishes the Company's business plan, target markets and
develops overall marketing strategies. The marketing department also identifies
and tracks the development of large Federal programs, positions the Company for
new business areas, selects appropriate partners, if any, for new projects and
assists in the bid process for new projects. In addition, the corporate
marketing department supports marketing activities firm-wide by coordinating
corporate promotional and professional activities, including appearances at
trade shows, direct mailings, telemarketing and public and media relations.
Local marketing activities for the Company are implemented through its over
70 local offices. A local presence enables the Company's professionals to gain
greater knowledge of local environmental issues and a better understanding of
local laws and regulations. Local marketing activities are coordinated by full
time marketing staff located in certain local offices and include meetings with
potential clients and local regulators, presentations to civic and professional
organizations and seminars on current regulatory topics.
COMPETITION
The market for the Company's services is highly competitive. The Company
competes with many other firms, ranging from small local firms to large national
firms having greater financial and marketing resources than the Company.
Competition in the environmental services industry is likely to increase as the
industry matures, as more companies enter the market and expand the range of
services which they offer and as the Company and its competitors move into new
geographic markets. Historically, competition has been based primarily on the
quality and timeliness of service. However, as the industry matures, the
Company believes that price will become an increasingly important competitive
factor.
BACKLOG
At September 29, 1996, Tetra Tech's gross revenue backlog was approximately
$206.3 million, compared to $190.2 million at October 1, 1995. The Company
includes in gross revenue backlog only those contracts for which funding has
been provided and work authorizations have been received. The Company estimates
that approximately $167.8 million of the gross revenue backlog at September 29,
1996 will be recognized during fiscal 1997. No assurance can be given that all
amounts included in backlog ultimately will be realized, even if evidenced by
written contracts. See "Contracts."
ENVIRONMENTAL LEGISLATION
The demand for the Company's environmental services is a result of public
concern over environmental issues and the ensuing legislative response. As a
result, the Company's clients have become subject to an increasing number of
frequently overlapping Federal, state and local laws concerned with the
protection of the environment, as well as regulations promulgated by
administrative agencies pursuant to such laws.
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The Company has provided services to clients with respect to the following
Federal statutes and regulations:
The Clean Water Act. Under the CWA, as amended, a system of permits and
enforcement procedures for the discharge of pollutants into waters of the United
States from industrial, municipal and other wastewater sources was established.
The EPA sets discharge standards for certain wastewater discharges and provides
grants to assist municipalities in complying with treatment requirements.
The CWA requires pretreatment of industrial wastewater before discharge
into municipal systems and gives the EPA the authority to set pretreatment
limits under certain circumstances. These efforts by the EPA will prompt
facility upgrading and better control of industrial discharges. The surface
water toxics regulations require states to identify waters adversely affected by
toxics and propose control strategies. Promulgated regulations require permits
for stormwater discharges for industrial activities and large (populations
greater than 100,000) municipal stormwater systems.
The Resource Conservation and Recovery Act of 1976. RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984 ("HSWA"), provides a comprehensive
scheme for the regulation of hazardous waste from the time of generation to its
ultimate disposal (and sometimes thereafter), as well as the regulation of
persons engaged in generation, handling, transportation, treatment, storage and
disposal of hazardous waste. The RCRA scheme includes both a permitting and a
manifest tracking system. With few exceptions, every facility that treats,
stores or disposes of hazardous waste must obtain a RCRA permit from the EPA, or
a state agency which has been authorized by the EPA to administer the RCRA
program, and must comply with certain operating, financial responsibility and
disclosure requirements. Although most states have obtained authority to
administer this program within their respective states, the applicable state
statutes must be at least as stringent as the Federal standards and the Federal
government retains enforcement authority. Regulations have been issued pursuant
to RCRA in the following areas, among others: permitting assistance, remediation
of environmental complications associated with underground storage tanks,
municipal solid waste disposal and land disposal of hazardous waste. HSWA also
imposes land disposal restrictions on certain listed hazardous wastes which do
not meet specified treatment standards, prescribes more stringent standards for
hazardous waste disposal sites, sets standards for underground storage tanks and
provides for corrective action at or near sites of waste management units.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980. This legislation, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), established the Superfund program to
identify and clean up inactive hazardous waste sites and provides for penalties
and punitive damages for noncompliance with EPA orders. Superfund also covers
the emergency cleanup of spills. Superfund may impose strict joint and several
liability on certain hazardous substance generators, transporters and disposal
facility owners and operators for the costs of removal or remedial action, other
necessary response costs and damages for injury, destruction or loss of natural
resources, and the cost of any health effects study. Federal funds may be used
to pay for the cleanup. SARA provided a separate fund, supported by a tax on
gasoline, for the cleanup of leaks from underground storage tanks. In addition,
under SARA, the EPA has the mandate to emphasize permanent remedies and
treatment at Superfund sites, developing a technology oriented market.
The National Environmental Policy Act. NEPA is the basic national charter
for protection of the environment. The purpose of NEPA is to guide public
officials in making decisions that are based on an understanding of the
environmental consequences of those decisions.
NEPA requires that an environmental impact statement ("EIS") be prepared
for "major federal actions significantly affecting the quality of the human
environment." A "major federal action" includes actions with effects that may
be major and which are potentially subject to Federal control and
responsibility. The term includes legislation proposed by an agency; adoption
of agency rules, regulation and policies; adoption of formal plans; and approval
of specific Federal projects. In addition, Federal permits, licenses, loans,
grants, leases and other Federal actions that are necessary for private
developments may require preparation of an EIS, although actual Federal
involvement in the activity may be minimal.
NEPA requires the EIS to contain a detailed statement on: the environmental
impact of the proposed action; any adverse environmental effects which cannot be
avoided should the proposal be implemented; alternatives
11
<PAGE>
to the proposed action; the relationship between local short-term uses of the
environment and the maintenance and enhancement of long-term productivity; and
any irreversible and irretrievable commitments of resources which would be
involved in the proposed action should it be implemented.
In addition to NEPA, several states have adopted legislation requiring
environmental impact analysis to be prepared for actions at the state level.
The Safe Drinking Water Act. Under the SDWA and its subsequent
reauthorizations, the EPA is empowered to set drinking water standards for water
supply systems in the United States. The SDWA requires that the EPA set maximum
groundwater contamination levels for 83 previously unregulated toxic substances
and also requires the EPA to establish a priority list every three years of
contaminants that may cause adverse health effects and may require regulation.
The first priority list was published in January 1988. Water supply systems are
required to begin monitoring within defined time limits following the
publication of the final regulations. The SDWA also requires that the EPA set
criteria specifying when utilities using surface water supplies should filter
their water and issue national primary drinking water regulations requiring all
utilities to disinfect their water. By June 1993, all surface water supply
systems must provide filtration and disinfection. The EPA regulations under the
SDWA are expected to result in significant expenditures by water supply systems
for evaluation and, ultimately, for upgrading of many facilities.
Other Regulations. The Company's services are also utilized by its clients
in complying with the following Federal laws: the Oil Pollution Act of 1990, the
Toxic Substances Control Act, the Clean Air Act, the Emergency Planning and
Community Right-to-Know Act of 1986, and the Marine Protection, Research and
Sanctuaries Act of 1972.
Many states have passed legislation and established policies to cover more
detailed aspects of hazardous waste management. The State of California, for
example, has consistently been a leader in passing and implementing waste
management legislation. These laws, and similar laws in other states, address
such topics as air pollution control, underground storage tanks, water quality,
solid waste, hazardous materials, surface impoundments, site cleanup and waste
discharge. Several states have modeled their environmental laws and regulations
on those of California. The Company believes that its experience in California
makes it prepared to respond to the regulatory environment in such states.
Because much of the Company's business is generated either directly or
indirectly as a result of Federal and state governmental programs and
regulations, changes in governmental policies affecting such programs, or
regulations or administrative actions affecting the funding or sponsorship of
such programs, could have a material adverse effect on the Company's business.
However, the Company believes that it will benefit from current regulatory
initiatives emphasizing risk management, cost/benefit analysis, pollution
prevention and source control, and natural resources conservation and disaster
planning.
POTENTIAL LIABILITY AND INSURANCE
Because of the type of environmental projects in which the Company is or
may be involved, the Company's current and anticipated future services may
involve risks of potential liability under Superfund, common law or contractual
indemnification agreements. It is difficult to assess accurately both the areas
and magnitude of potential risk to the Company.
The Company maintains comprehensive general liability insurance in the
amount of $1,000,000. This amount, together with $9,000,000 umbrella policies,
provide total general liability coverage of $10,000,000. The Company's
professional liability insurance ("E&O") policy, which included pollution
coverage, for 1996 provided $10,000,000 in coverage, with $100,000 self-insured
retention. For 1997, the Company expects to maintain similar coverages as to
1996 for current services including pollution-related services rendered by the
Company. However, because there are various exclusions and retentions under the
Company's insurance policies, there can be no assurance that all liabilities
that may be incurred by the Company are subject to insurance coverage. In
addition, the E&O policy is a "claims made" policy which only covers claims made
during the term of the policy. If a policy terminates and retroactive coverage
is not obtained, a claim subsequently made, even a claim based on events or
12
<PAGE>
acts which occurred during the term of the policy, would not be covered by the
policy. In the event the Company expands its services into new markets, no
assurance can be given that the Company will be able to obtain insurance
coverage for such activities or, if insurance is obtained, that the dollar
amount of any liabilities incurred in connection with the performance of such
services will not exceed policy limits. The premiums paid by the Company for its
professional liability policies during 1996 were approximately $726,000 for E&O.
The amounts to be paid for 1997 will be determined by March 14, 1997. The
Company expects no significant increase in rates.
EMPLOYEES
At September 29, 1996, the Company had 1,899 employees, including 1,303
professionals. The Company's professional staff includes archaeologists,
biologists, cartographers, chemists, chemical engineers, civil engineers,
electrical engineers, environmental engineers, environmental scientists,
geologists, hydrogeologists, mechanical engineers, oceanographers and
toxicologists. The Company's ability to retain and expand its staff of
qualified professionals will be an important factor in determining the Company's
future growth and success. None of the Company's employees is represented by a
labor organization, and management considers its relations with its employees to
be good.
RISK FACTORS
Statements regarding the Company's performance prospects could contain
forward-looking information that involves risk and uncertainties such as the
level of demand for the Company's services, funding delays for projects, lack of
regulatory clarity affecting the marketplace and industry-wide competitive
factors. The following risk factors should be reviewed in addition to the other
information contained in this Annual Report on Form 10-K.
POTENTIAL LIABILITY AND INSURANCE. Because of the type of environmental
projects in which the Company is or may be involved, the Company's current and
anticipated future services may involve risks of potential liability under
superfund, common law or contractual indemnification agreements. It is
difficult to assess accurately both the areas and magnitude of potential risk to
the Company.
The Company maintains comprehensive general liability insurance in the
amount of $1,000,000. This amount, together with $9,000,000 coverage under
umbrella policies, provide total general liability coverage of $10,000,000. The
Company's professional liability insurance ("E&O") policy, which includes
pollution coverage, for 1996 provides $10,000,000 in coverage, with a $100,000
self-insured retention. For 1997, the Company expects to maintain similar
coverages for current services including pollution-related services rendered by
the Company. However, because there are various exclusions and retentions under
the Company's insurance policies, there can be no assurance that all liabilities
that may be incurred by the Company are subject to insurance coverage. In
addition, the E&O policy is a "claims made" policy which only covers claims made
during the term of the policy. If a policy terminates and retroactive coverage
is not obtained, a claim subsequently made, even a claim based on events or acts
which occurred during the term of the policy, would not be covered by the
policy. In the event the Company expands its services into new markets, no
assurance can be given that the Company will be able to obtain insurance
coverage for such activities or, if insurance is obtained, that the dollar
amount of any liabilities incurred in connection with the performance of such
services will not exceed policy limits. The premiums paid by the Company for
its professional liability policies during 1996 were approximately $726,000 for
E&O. The amounts to be paid for 1997 will be determined by March 14, 1997.
The Company does not maintain funded reserves to provide for payment of
partially or completely uninsured claims and, accordingly, a partially or
completely uninsured claim, if successful and of significant magnitude, could
have a material adverse effect on the Company.
SIGNIFICANT COMPETITION. The market for the Company's services is highly
competitive. The Company competes with many other firms, ranging from small
local firms to large national firms having greater financial and marketing
resources than the Company. Competition in the environmental services industry
is likely to increase as the industry matures, as more companies enter the
market and expand the range of services which they offer and as the Company and
its competitors move into new geographic markets. Historically, competition has
been based
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primarily on the quality and timeliness of service. However, as the
industry continues to mature, the Company believes that price will become an
increasingly important competitive factor.
CONTRACTS. The Company's contracts with the Federal and State governments
and some of its other client contacts are subject to termination at the
discretion of the client. Some contracts made with the Federal government are
subject to annual approval of funding and audits of the Company's rates.
Limitations imposed on spending by Federal government agencies may limit the
continued funding of the Company's existing contracts with the Federal
government and may limit the Company's ability to obtain additional contracts.
These limitations, if significant, could have a material adverse effect on the
Company. All of the Company's contracts with the federal government are
subject to audit by the government. The Company's government contracts are
subject to renegotiation of profits in the event of a change in the contractual
scope of work to be performed.
CONFLICTS OF INTEREST. Many of the Company's clients are concerned about
potential or actual conflicts of interest in retaining environmental consultants
and engineers. For example, Federal government agencies have formal policies
against continuing or awarding contracts that would create actual or potential
conflicts of interest with other activities of a contractor. These policies,
among other things, may prevent the Company in certain cases from bidding for or
performing contracts resulting from or relating to certain work the Company has
performed for the government. In addition, services performed for a private
client may create a conflict of interest which precludes or limits the Company's
ability to obtain work from another private entity. The Company has, on
occasion, declined to bid on a project because of an actual or potential
conflict of interest. However, the Company has not experienced disqualification
during a bidding or award negotiation process by any government or private
client as a result of a conflict of interest.
POTENTIAL VOLATILITY OF STOCK PRICE. The market price of the Company's
Common Stock may be significantly affected by factors such as quarter-to-quarter
variations in the Company's results of operations, changes in environmental
legislation and changes in investors' perception of the business risks and
conditions in the environmental services business. In addition, market
fluctuations, as well as general economic or political conditions, may adversely
affect the market price of the Company's Common Stock, regardless of the
Company's actual performance.
QUALIFIED PROFESSIONALS. The Company's ability to attract and retain
qualified scientists and engineers is an important factor in determining the
Company's future growth and success. The market for environmental professionals
is competitive and there can be no assurance that the Company will continue to
be successful in its efforts to attract and retain such professionals.
ITEM 2. PROPERTIES.
The Company's corporate headquarters facilities are located in Pasadena,
California. These facilities contain approximately 25,000 square feet of office
space. A portion of these facilities are subject to a lease which expires in
February 1998 and gives the Company an option to extend the term for one
additional five-year period. Another portion of these facilities is subject to
a lease which expires in January 2001. The Company leases office space in
approximately 70 locations in the United States. The Company also rents some
additional office space on a month-to-month basis.
The Company believes that its existing facilities are adequate to meet
current requirements and that suitable additional or substitute space will be
available as needed to accommodate any expansion of operations and for
additional offices.
ITEM 3. LEGAL PROCEEDINGS.
The Company is subject to certain claims and lawsuits typically filed
against the engineering and consulting professions, primarily alleging
professional errors or omissions. The Company carries professional liability
insurance, subject to certain deductibles and policy limits against such claims.
Management is of the opinion that
14
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the resolution of these claims will not have a material effect on the Company's
financial position or results of operations. See "Item 1. Business - Potential
Liability and Insurance."
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
The information required by Items 5 through 8 of this report is set forth
on pages 17 through 32 of the Company's Annual Report to Stockholders for the
fiscal year ended September 29, 1996. Such information is incorporated in this
report and made a part hereof by reference. Item 9 is not applicable.
PART III
The information required by Items 10 through 13 of this report is set forth
in the sections entitled "Security Ownership of Principal Stockholders,
Directors and Executive Officers," "Election of Directors," and "Executive
Officers, Compensation and Other Information" in the Company's Proxy Statement
for its 1997 Annual Meeting of Stockholders. Such information is incorporated in
this report and made a part hereof by reference.
PART IV
<TABLE>
<CAPTION>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
<C> <S>
(a) 1. and 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
The Financial Statements filed as part of this report are
listed in the accompanying index at page 16.
3. EXHIBITS.
3.1 Restated Certificate of Incorporation of the Company, as
amended to date (incorporated herein by reference to
Exhibit 3.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 1, 1995).
3.2 Bylaws of the Company, as amended to date (incorporated
herein by reference to Exhibit 3.2 to the Company's
Registration Statement on Form S-1, No. 33-43723).
10.1 Credit Agreement dated as of Sept. 15, 1995 between the
Company, and Bank of America Illinois, as amended by the
First Amendment to Credit Agreement dated as of Nov. 27,
1995 (incorporated herein by reference to Exhibit 10.1 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 1, 1995).
10.2 Security Agreement dated as of September 15, 1995 among
the Company, GeoTrans, Inc., Simons Li & Associates, Inc.,
Hydro-Search, Inc., PRC Environmental Management, Inc. and
Bank of America Illinois (incorporated herein by
reference to Exhibit 10.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 1, 1995).
10.3 Pledge Agreement dated as of September 15, 1995 between
the Company and Bank of America Illinois (incorporated
herein by reference to Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 1, 1995).
</TABLE>
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<TABLE>
<C> <S>
10.4 Guaranty dated as of September 15, 1995, executed by the
Company in favor of Bank of America Illinois
(incorporated herein by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 1, 1995).
*10.5 Architect-Engineer Contract No. N62474-88-R-5086 dated as
of June 6, 1989 between PRC Environmental Management, Inc.
(a subsidiary of the Company) and the Western Division,
Naval Facilities Engineering Command.
10.6 1989 Stock Option Plan dated as of February 1, 1989
(incorporated herein by reference to Exhibit 10.13 to the
Company's Registration Statement on Form S-1, No. 33-
43723).
10.7 Form of Incentive Stock Option Agreement executed by the
Company and certain individuals in connection with the
Company's 1989 Stock Option Plan (incorporated
herein by reference to Exhibit 10.14 to the Company's
Registration Statement on Form S-1, No. 33-43723).
10.8 Executive Medical Reimbursement Plan provided to Messrs.
Hwang, Rodrigue and Gherini (incorporated herein by
reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-1, No. 33-43723).
10.9 1992 Incentive Stock Plan (incorporated herein by
reference to Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 3, 1993).
10.10 Form of Incentive Stock Option Agreement used by the
Company in connection with the Company's 1992 Incentive
Stock Plan (incorporated herein by reference to Exhibit
10.19 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 3, 1993).
10.11 1992 Stock Option Plan for Nonemployee Directors
(incorporated herein by reference to Exhibit 10.20 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 3, 1993).
10.12 Form of Nonqualified Stock Option Agreement used by the
Company in connection with the Company's 1992 Stock Option
Plan for Nonemployee Directors (incorporated herein by
reference to Exhibit 10.21 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 3, 1993).
10.13 1994 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit 10.22 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 2, 1994).
10.14 Form of Stock Purchase Agreement used by the Company in
connection with the Company's 1994 Employee Stock Purchase
Plan (incorporated herein by reference to Exhibit 10.23 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 2, 1994).
11. Computation of Net Income Per Common Share.
13. Annual Report to Stockholders for the fiscal year ended
September 29, 1996, portions of which are incorporated by
reference in this report as set forth in Part II hereof.
With the exception of these portions, such Annual Report
is not to be deemed filed as part of this report.
</TABLE>
16
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<TABLE>
<C> <S>
21. Subsidiaries of the Company.
23. Independent Auditors' Consent.
27. Financial Data Schedule.
</TABLE>
_______________
* Certain portions of this Exhibit were omitted from the copies filed as part
of this Annual Report on Form 10-K. Complete copies of this Exhibit have
been filed separately, together with an application to obtain confidential
treatment with respect thereto.
(b) No Report on Form 8-K was filed during the quarter ended September 29,
1996.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TETRA TECH, INC.
Date: December 20, 1996 By: /s/ Li-San Hwang
_________________________________________
Li-San Hwang, Chairman of the Board of
Directors, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Li-San Hwang Chairman of the Board of Directors, December 20, 1996
- ------------------------ President and Chief Executive Officer
Li-San Hwang (Principal Executive Officer)
/s/ James M. Jaska Vice President, Chief Financial December 20, 1996
- ------------------------ Officer and Treasurer (Principal
James M. Jaska Financial and Accounting Officer)
/s/ J. Christopher Lewis Director December 20, 1996
- ------------------------
J. Christopher Lewis
/s/ Patrick C. Haden Director December 20, 1996
- ------------------------
Patrick C. Haden
/s/ James J. Shelton Director December 20, 1996
- ------------------------
James J. Shelton
</TABLE>
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INDEX TO FINANCIAL STATEMENTS
The consolidated financial statements, together with the Notes thereto and
report thereon of Deloitte & Touche LLP dated November 12, 1996, appearing on
pages 21 through 32 of the accompanying 1996 Annual Report to Stockholders, are
incorporated by reference in this Form 10-K Annual Report. With the exception
of the aforementioned information and Part II information set forth on pages 17
through 32, the 1996 Annual Report to Stockholders is not to be deemed filed as
part of this report.
FINANCIAL STATEMENTS SCHEDULES
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Report of Independent Accountants on Financial Statement
Schedules........................................................... 20
Financial Statement Schedules
Schedule II -- Valuation and Qualifying Accounts and
Reserves.................................................... 21
</TABLE>
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INDEPENDENT AUDITORS' REPORT
Tetra Tech, Inc.:
We have audited the consolidated financial statements of Tetra Tech, Inc. and
its subsidiaries as of September 29, 1996 and October 1, 1995, and for each of
the three years in the period ended September 29, 1996, and have issued our
report thereon dated November 12, 1996; such financial statements and report are
included in your 1996 Annual Report to Stockholders and are incorporated herein
by reference. Our audits also included the financial statement schedule of
Tetra Tech, Inc. and its subsidiaries, listed in Item 14. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, prevents fairly in all material respects
the information set forth therein.
Los Angeles, California
November 12, 1996
20
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TETRA TECH, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED
OCTOBER 2, 1994, OCTOBER 1, 1995 AND SEPTEMBER 29, 1996
<TABLE>
<CAPTION>
Balance at Charges to
Beginning of Costs and Balance at
Period Expenses Deductions End of Period
------------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
Fiscal year ended October 2, 1994
Allowance for loss on accounts
receivable......................... $ 993,000 $ 720,000(b) $ (72,000)(a) $ 1,641,000
Fiscal year ended October 1, 1995
Allowance for loss on accounts
receivable......................... $ 1,641,000 $9,579,000(c) $ (67,000)(a) $11,153,000
Fiscal year ended September 29, 1996
Allowance for loss on accounts
receivable......................... $11,153,000 $1,606,000(d) $(1,658,000)(a) $11,101,000
</TABLE>
- ------------------------
(a) Represents write-offs of uncollectible accounts, net of recoveries on
accounts previously written off.
(b) Includes $293,000 for Simons, Li & Associates, Inc. and Simon Hydro-Search,
Inc. as of acquisition date.
(c) Includes $9,635,000 for PRC Environmental Management, Inc. as of
acquisition date.
(d) Includes $1,365,000 for PRC Environmental Management, Inc. and KCM, Inc. as
of acquisition date.
21
<PAGE>
EXHIBIT 10.5
- --------------------------------------------------------------------------------
1. CONTRACT NO.
N62474-88-R-5086
ARCHITECT-ENGINEER CONTRACT -------------------------------------
2. DATE OF CONTRACT
- --------------------------------------------------------------------------------
3A. NAME OF ARCHITECT-ENGINEER 3B. TELEPHONE NO. (Include Area Code)
PRC ENVIRONMENTAL MANAGEMENT, INC. (415) 543-4880
- --------------------------------------------------------------------------------
3C. ADDRESS OF ARCHITECT-ENGINEER (Include ZIP Code)
120 Howard Street, Suite 700
San Francisco, California 94105
- --------------------------------------------------------------------------------
4. DEPARTMENT OR AGENCY AND ADDRESS (INCLUDE ZIP CODE)
Western Division (Code 024)
Naval Facilities Engineering Command
P. O. Box 727
San Bruno, California 94066-0720 Telephone No. (415) 742-7820
- --------------------------------------------------------------------------------
5. PROJECT TITLE AND LOCATION
Comprehensive Long-Term Environmental Action Navy (CLEAN), Central Area
- --------------------------------------------------------------------------------
6. CONTRACT FOR (General description of services to be provided)
The purpose of this contract is to obtain program management and technical
environmental services in support of the Nav's Environmental Engineering
Program at Activities under the cognizance of Western Division, Naval
Facilities Engineering Command. The principal geographical area this contract
will encompass is Northern California and Nevada. However, the Contractor may
be required to perform work in any of the programs outlined at the Naval
activity in the nine states covered by Western Division, Naval Facilities
Engineering Command. The contractor may also, on occassion, be tasked to
provide the services described herein to other Department of Defense or other
Federal agency activities.
- --------------------------------------------------------------------------------
7. CONTRACT AMOUNT (Express in words and figures)
NOT TO EXCEED One hundred thirty million (BASE PERIOD PLUS 9 OPTION PERIODS)
*
- --------------------------------------------------------------------------------
8. NEGOTIATION AUTHORITY
U.S.C. 2304(c)(1) X
- --------------------------------------------------------------------------------
9. ADMINISTRATIVE, APPROPRIATION, AND Payments will be made by:
ACCOUNTING DATA -------------------------
Disbursing Officer, Code 244
AA 1791804.K7Q6 000 62474 3 062474 Naval Construction Battalion
Center
2D 0000P3 62474CL0199C - * Port Hueneme, CA 93043
Submit invoices to:
-------------------
DCAA East Bay Branch
#8 Union Square Blvd.
Union City, CA 94587-3524
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
10. The United States of America (called the Government) represented by the
Contracting Officer executing this contract, and the Architect-Engineer
agree to perform this contract in strict accordance with the clauses and the
documents identified as follows, all of which are made a part of this
contract:
TABLE OF CONTENTS
PART I - Schedule of Services
PART II - Description/Specifications
PART III - Packaging and Marking
PART IV - Inspection and Acceptance
PART V - Deliveries or Performance
PART VI - Contract Administration Data
PART VII - Special Contract Requirements
PART VIII - Contract Clauses
PART IX - List of Attachments
- --------------------------------------------------------------------------------
If the parties to this contract are comprised of more than one legal entity,
each entity shall be jointly and severally liable under this contract. The
parties hereto have executed this contract as of the date recorded in Item 2.
- --------------------------------------------------------------------------------
SIGNATURES NAMES AND TITLES (Typed)
- --------------------------------------------------------------------------------
11. ARCHITECT-ENGINEER OR OTHER PROFESSIONAL SERVICES CONTRACTOR
- --------------------------------------------------------------------------------
A /s/ Robert J. Van Osten ROBERT J. VAN OSTEN, VICE PRESIDENT,
CHIEF FINANCIAL OFFICER
- --------------------------------------------------------------------------------
B
- --------------------------------------------------------------------------------
C
- --------------------------------------------------------------------------------
D
- --------------------------------------------------------------------------------
12. THE UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------
ROBERT M. GRIFFIN JR., DIRECTOR,
ENVIRONMENTAL CONTRACTS DIVISION
/s/ Robert M. Griffin Jr. Contracting Officer
- --------------------------------------------------------------------------------
<PAGE>
N62474-88-D-5086
Part I
Page 1 of 4
PART I
SCHEDULE OF SERVICES
--------------------
1. The fo11owing items shall be furnished to the Government in accordance with
Part II, Description/Specifications. The estimated costs are for the base
contract period.
<TABLE>
<CAPTION>
Budget Est. Estimated Cost
Item Description Rate Hours Estimated
- ---- ----------- ------ ---- --------------
<S> <C> <C> <C> <C>
0001 Program Management Office *
(Negotiated Rates and Costs
are estimated. Reimbursement
will be based on actual
rates and hours subject to
this PMO Contract Line Item
Ceiling Price.
0001AA Recurring Costs *
Program Manager * * *
Financial Mgr/Project
Controls Mgr * * *
Contracts Admin Manager * * *
Quality Assurance Manager * * *
Health & Safety Manager * * *
Accounting * * *
Subcontract Admin * * *
Accounting Clerks * * *
Trng Coord/Tech Trng * * *
Secretary * * *
Clerical * * *
Fringe Benefits * *
Overhead * *
Other Direct Costs:
Reproduction *
Computer *
Telephone/Communications *
Postage/Freight *
Supplies *
H&S Training *
G&A * *
</TABLE>
* CONFIDENTIAL
<PAGE>
N62474-88-D-5086
Part I
Page 2 of 4
<TABLE>
<CAPTION>
Budget Est. Estimated Cost
Item Description Rate Hours Estimated
- ---- ----------- ------ ---- --------------
<S> <C> <C> <C> <C>
0001AB Non-Recurring Costs *
Contract Management Plan *
QC Management Plan *
Safety Plan *
Fringe Benefits * *
Overhead * *
G&A * *
0001AC Maximum Award Fee Pool * *
0001AD Travel *
0002 Total Estimated CTO Costs *
0002AA Maximum CTO Award Fee Pool * *
--------------
TOTAL (Base Period) *
</TABLE>
*Funding obligated upon award of the base contract period.
All negotiated forward pricing rate agreements for applicable direct and
indirect rates, as well as award fee, will be applied proportionately to
individual CTOs for estimating purposes.
2. ESTIMATED COST AND AWARD FEE
a. Base Year
The estimated cost of this contract for the base year is
* exclusive of the maximum award fee of *
Total estimated cost and award fee is * .
b. Option Year One
If the first option year is exercised, the estimated cost is
* exclusive of the maximum award fee of * .
Total estimated cost and award fee for Option Year One is
* .
* CONFIDENTIAL
<PAGE>
N62474-88-D-5086
Part I
Page 3 of 4
c. Option Year Two
If the second option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. The total estimated cost,
base fee and award fee for Option Year Two is *.
d. Option Year Three
If the third option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. Total estimated cost and
award fee for Option Year Three is *.
e. Option Year Four
If the fourth option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. Total estimated cost and
award fee for Option Year Four is *.
f. Option Year Five
If the fifth option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. Total estimated cost and
award fee for Option Year Five is *.
g. Option Year Six
If the sixth option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. The total estimated cost
and award fee for Option Year Six is *.
h. Option Year Seven
If the seventh option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. Total estimated cost and
award fee for Option Year Seven is *.
* CONFIDENTIAL
<PAGE>
N62474-88-D-5086
Part I
Page 4 of 4
i. Option Year Eight
If the eighth option year is exercised, the estimated cost is *,
exclusive of the maximum award fee of *. Total estimated cost and
award fee for Option Year Eight is *.
j. Option Year Nine
If the ninth option year is exercised, the estimated cost is *,
exclusive of the base fee of the maximum award fee of *. Total
estimated cost and award fee for Option Year Nine is *.
* CONFIDENTIAL
<PAGE>
N62474-88-D-5086
Part II
Page 1 of 19
PART II
DESCRIPTION/SPECIFICATIONS
--------------------------
1. The Contractor shall, in conformance with the terms and conditions
hereinafter set forth, provide all of the necessary management, personnel,
services, material, equipment, and facilities (except as otherwise specified) to
perform the work identified in the following Statement of Work.
2. PURPOSE. The purpose of this contract is to obtain program management and
-------
technical environmental services in support of the Navy's Environmental
Engineering Program at activities under the cognizance of Western Division,
Naval Facilities Engineering Command. The principal geographical area this
contract will encompass is Northern California and Nevada.
However, the Contractor may be required to perform work in any of the programs
outlined herein at any Naval activity in the nine states covered by Western
Division, Naval Facilities Engineering Command. It should be noted that although
the contracts encompass a nine state area, the majority of the Naval activities
and most of the requirements of these contracts will be in more localized areas.
For the Northwest area contract, most of the assignments will be at activities
in the Northern California.
The contractor may also, on occasion, be tasked to provide the services
described herein to other Department of Defense or other Federal agency
activities. These projects will be assigned on an exception basis, and will be
used, for example, to take advantage of the contractor's specialized expertise
to address unique technical problems, and where necessary, undertake expedited
response action.
<PAGE>
N62474-88-D-5086
Part II
Page 2 of 19
3. MAJOR FUNCTIONS.
----------------
a. The work to be performed under this contract is divided into the
following functions:
(1) Program Management
(2) Technical Services
(3) Technical Services Support
(4) Construction Subcontracting
b. The work to be performed under this contract is of two types: a portion
which constitutes the base contract and covers all work described in paragraph
4., Program Management, and the remainder which is authorized by Contract Task
Orders (CTOs) (i.e., paragraphs 5.; Technical Services, 6.; Technical Services
Support Subcontracting, and 7.; Construction Subcontracting). All work
accomplished by CTOs shall be authorized, performed, and reported according to
each issued Contract Task Order.
c. The Contractor shall be responsible for the acquisition of all
necessary services, supplies, etc. for the accomplishment of the Scope of Work
(SOW), ensuring adherence to Government regulations and providing appropriate
reporting and tracking information.
4. PROGRAM MANAGEMENT.
-------------------
a. The contractor shall provide overall contract management to plan,
monitor, and control all CTOs issued under this contract, and to assure that
CTOs are completed in a timely, cost-effective, and highly competent manner.
b. The Program Management shall be performed on a completion basis, meaning
that all functions necessary to perform Program Management activities under this
contract shall be provided on an ongoing basis for the duration of the contract.
Program Management is deemed to constitute those technical, management,
administrative, clerical, and secretarial activities to be performed by the
Program Management Office (PMO) and those support functions to be performed by
the corporate office which are allocable to the PMO. Attachment F to this
contract provides the Program Management Office Functions Chargeable to Contract
Task Orders.
<PAGE>
N62474-88-D-5086
Part II
Page 3 of 19
c. Because of the number, complexity, and diversity of the projects that
may be implemented under this contract, successful execution will require
dedication of personnel principally responsible for planning, coordinating,
monitoring, and controlling large, long-term and technically complex projects.
The Contractor shall be responsible for the acquisition of specialized skills
and experience as required for the performance of CTOs and for any management or
administrative support required to accomplish the tasks. The Contractor is
responsible for providing all administrative and personnel functions required to
support this effort. Program management activities shall include but not be
limited to the following:
(i) Coordinating of work assignments between Navy and contractor project
officers as designated per CTO.
(2) Identifying project needs in terms of manpower and subcontractors'
resources.
(3) Monitoring and controlling projects in terms of quality, schedules, and
costs.
(4) Preparing financial and technical reports on both individual projects
and on overall programs.
(5) Subcontracting Services.
5. TECHNICAL SERVICES.
-------------------
a. The Contractor shall provide the necessary technical services required
to accomplish the work effort identified in all CTOs.
b. Technical Services include personnel such as engineers, scientists,
draftsmen, technicians, statisticians, and other support personnel as required.
c. Programs to be supported by technical services are listed in paragraphs
5.1. through 5.4.
5.1. INSTALLATION RESTORATION (IR) PROGRAM.
a. The major emphasis of this contract is to provide technical assistance
in the IR program. The IR program is designed to address uncontrolled hazardous
waste sites at Navy activities, with the ultimate goal of site cleanup. The
Superfund Amendments and Reauthorization Act (SARA) of 1986 requires Naval
activities to comply with the National Contingency Plan and all U.S.
Environmental Protection Agency (EPA) guidelines, rules, regulations, and
criteria.
<PAGE>
N62474-88-D-5086
Part II
Page 4 of 19
b. The Contractor shall furnish environmental engineering services, field
services, and laboratory testing and related services to perform Preliminary
Assessment/Site Inspection (PA/SI), Remedial Investigation/Feasibility Study
(RI/FS), Remedial Design (RD), and Remedial Action (RA) at specified Naval
activities. All work shall be performed in a manner consistent with: the
Comprehensive Environmental Response and Liability Act of 1980 (CERCLA), as
amended; the National Oil and Hazardous Substances Pollution Contingency Plan
(NCP), Title 40, Code of Federal Regulations (CFR), Part 300, as amended; and
other appropriate federal, state and local guidelines, rules, regulations, and
criteria.
5.1.1. APPLICABLE LAWS AND REGULATIONS. A comprehensive description of the
major applicable laws and regulations that will relate to the scope and goals of
activities to be performed as part of this effort are provided below. The
regulatory elements described are not all inclusive and other applicable laws
and regulations may impact work performed under this contract.
a. CERCLA. CERCLA as amended by SARA requires all federal entities to
comply with CERCLA and NCP in the same manner and to the same extent, both
procedurally and substantively, as any non-governmental entity in response to
releases of hazardous substances. All work performed as part of this scope of
work must be consistent with these requirements and applicable or relevant and
appropriate guidelines, rules, regulations, and criteria. Specific requirements
which may affect the approach and effort for performance include, but are not
limited to: (1) coordination of work plan review with the EPA and relevant State
and local agencies; (2) implementation of community relations activities; and
(3) review of all data by the EPA and relevant State and local agencies relating
to any cleanup activity, as the data becomes available.
b. NCP. The National Oil and Hazardous Substances Pollution Contingency
Plan (NCP), Part 300, Chapter 40, Code of Federal Regulations provides the
regulatory framework for implementing the response activities established under
CERCLA at sites where hazardous substances have been released to the
environment. The NCP defines a five step response process: (1) site discovery or
notification; (2) preliminary assessment and site inspection (PA/SI); (3)
establishment of priorities for remedial action; (4) implementation of remedial
investigations/feasibility studies (RI/FSs); and (5) remedial action design and
construction. The NCP provides the regulatory model under which the activities
described in this scope of work are to be performed.
<PAGE>
N62474-88-D-5086
Part II
Page 5 of 19
c. State and Local Guidelines and Regulations and Criteria. CERCLA mandates
that State laws concerning removal and remedial actions are applicable at
Federal facilities. Therefore, work performed as part of this scope of work at
Navy facilities must be consistent with applicable State laws.
5.1.2. Project Objectives. In accordance with the aforementioned laws and
regulations, site inspections, Remedial Investigation/Feasibility Studies
(RI/FS), remedial designs, and remedial actions are to be conducted or
implemented at various locations. The objectives are to:
a. Evaluate the lateral and vertical extent of contamination in air, soil,
surface water, and ground water.
b. Evaluate the existing and potential migration pathways.
c. Evaluate the existing or potential threat to human health and/or the
environment.
d. Identify and evaluate the appropriate remedial actions to address
identified sites.
e. Collect and evaluate the data needed to formulate and prepare a Remedial
Action Plan (RAP) in accordance with state and federal regulations.
f. Design, construct, and implement appropriate remedial actions.
5.1.3. Regulatory Agency Coordination. Regulatory agency involvement in the
RI/FS process and associated tasks is critical to the compliance with the NCP,
CERCLA and other applicable laws and regulations. The nature and extent of
regulatory involvement will depend upon the extent of public interest in the
project, physical conditions encountered at the project location, negotiated
agreements between the Navy and regulatory agency officials, and/or applicable
compliance orders issued by relevant regulatory agency officials.
<PAGE>
N62474-88-D-5086
Part II
Page 6 of 19
5.1.4. Specific Requirements.
a. Preliminary RI/FS Work. The Contractor shall conduct or verify the
Preliminary Assessment (PA) and Site Inspection (SI). The preliminary
assessment (PA) involves collection and review of all available information and
includes tasks such as records review, site personnel interviews, and site
reconnaissance. Results of the PA may require a Site Inspection (SI) to collect
and analyze samples to determine the extent of alleged releases, to assess the
need for removal actions, and to obtain data for ranking the hazards of a site.
A PA/SI is necessary to provide a basis for defining the scope of the RI/FS
relative to current site information. Conduct PA/SIs in accordance with
appropriate local, state, and federal guidelines, rules, regulations, and
criteria. In particular, the PA/SI should follow the EPA "Guidance on
Preliminary Assessments and Site Investigations."
b. PA/SI Verification. If a PA/SI has already been performed, review all
background information used to prepare the PA/SI and all recent relevant
information obtained since its completion, to determine if the findings and
conclusions of the existing PA/SI are current. Tasks which may be required
include, but are not limited to: (1) records review, (2) personnel interviews,
and (3) site reconnaissance.
c. Supplemental SI Work Plan. If assessment of the PA/SI identifies
deficiencies in its findings and conclusions, prepare a work plan for
accomplishing a supplemental SI to resolve data deficiencies and to establish an
initial base from which to define the scope of the RI/FS and subsequent tasks.
Accomplishment of the Supplemental SI work plan will be done in a manner
consistent with applicable health and safety requirements and generally accepted
practices for sample collection and analysis in order to maintain data quality
control and quality assurance (QC/QA) consistent with the requirements of
applicable guidelines, rules, regulations, and criteria.
d. Supplemental SI Implementation. The results, conclusions, and
recommendations obtained from this task will be presented in a supplemental SI
report. Examples of the content of the supplemental SI report include, but are
not limited to a summary of the SI scope and approach, site specific conditions
encountered, data summary, assessment of the need for removal actions, hazard
ranking of sites, and identification of sites which should be investigated
within the RI/FS.
<PAGE>
N62474-88-D-5086
Part II
Page 7 of 19
5.1.5. Remedial Investigation/Feasibility Study (RI/FS) Work Plan. An RI/FS
Work Plan shall be prepared to address all the activities necessary to conduct a
complete RI/FS at the sites where there is a release or threatened release of
hazardous substances. The specific contents, structure, and format of the RI/FS
Work Plan will be consistent with applicable guidelines, rules, regulations, and
criteria as negotiated with appropriate regulatory agency officials. The
following work plan elements are anticipated, but may be modified, supplemented,
or deleted as project conditions demand:
a. Health and Safety Plan (Site Safety Plan). A health and safety plan will
be prepared describing specific personnel, procedures and equipment to be used
during field activities at specific sites and locations in order to protect
project personnel and the general public from exposure to hazardous substances.
The plan should be prepared in accordance with 29 CFR 1910.120 (Hazardous Waste
Operations and Emergency Response) and other applicable guidelines, rules,
regulations, and criteria.
b. Quality Assurance Project Plan (QAPP). A site specific QAPP will be
prepared describing the procedures for collection, preservation chain of
custody, and transport of samples; the calibration and maintenance of
instruments; the processing, verification, storage, and reporting of data; and
other relevant requirements in accordance with applicable guidelines, rules,
regulations, and criteria. This will require generation and recording of
adequate analytical information such as raw data, instrumentation printouts,
instrument calibration standards, check data and other relevant information in
order to provide complete data validation.
c. Sampling Plan(s). An event-specific Sample Plan(s) will be prepared
describing activities to completely characterize the extent of hazardous
substance contamination in all relevant environmental media such as air, soil,
water, and biota, on and off-site, due to operations and activities at the
project location. The Sample Plan(s) will be prepared in accordance with
applicable guidelines, rules, regulations, and criteria.
d. Project Performance Plans. Project Performance Plans will be prepared
describing how the RI/FS will be managed, how all technical data will be managed
and stored, how previously gathered data will be validated for intended use, and
schedules for the project as a whole and individual sub-tasks. These work plan
documents shall be prepared in accordance with applicable guidelines, rules,
regulations, and criteria.
<PAGE>
N62474-88-D-5086
Part II
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e. Community Relations Plan. A Community Relations Plan will be prepared
which will describe how the community will be kept informed of project planning
and field activities. Scoping of community concerns will be required in
development of the community relations plan and will require activities such as,
but not limited to, organization and implementation of community scoping
meetings, interviews with community members, and preparation of press releases
and community fact sheets. Implementation of the final Community Relations Plan
after review and comment by the relevant regulatory agencies may be required.
Periodic community meetings, preparation of press releases and community fact
sheets, and maintenance of a community relations information office and/or
depository are examples of possible requirements for the Community Relations
Plan. Preparation and implementation of the Community Relations Plan will be in
accordance with applicable guidelines, rules, regulations, and criteria.
5.1.6. Remedial Investigation (RI) Field Investigation. Work plan elements
will be implemented upon completion of the review and comment process by
regulatory agency officials and incorporation of applicable final revisions.
Specific field investigation methods will be consistent with procedures defined
in the final work plan elements (e.g., Sample Plan, QAPP, etc.), and applicable
guidelines, rules, regulations, and criteria. Examples of potentially applicable
field investigation methods are described in A Compendium of Superfund Field
-------------------------------
Operations Methods (EPA/540-87/001a, OSWER directive 9355.0-14, September 1987).
- ------------------
a. RI Field Investigations. Implement field activities in accordance with
final work plan elements and appropriate field methods. To achieve RI/FS goals,
primary investigations may be an iterative process requiring assessment and
revision of sampling strategies in response to discoveries of new site specific
conditions. Elements of the primary RI Field Investigations will include, but
not be limited to:
(1) Installation of wells and sample borings.
(2) Sampling of soil, water (surface and ground water), sediments, air,
and biota.
(3) Assessment and revision of sampling strategies.
b. Chemical Analysis. Chemical analysis of the samples taken during the
field investigations must be performed by a certified laboratory. All data
generated must be in accordance with the requirements of the QAPP.
<PAGE>
N62474-88-D-5086
Part II
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c. Data Evaluation. Data verified as being acceptably accurate and precise
shall be analyzed and evaluated to determine if RI goals and objectives have
been completely achieved. Examples of data evaluation tasks include, but are
not limited to:
(1) Data validation.
(2) Data reduction and tabulation.
(3) Environmental fate and transport modeling/evaluation.
5.1.7. Remedial Investigation (RI) Report.
a. A report will be prepared when sufficient information is obtained from
the RI field investigations to completely support the goals and objectives of
the RI (e.g., identifying site characteristics, sources of contaminants, nature
and extent of contamination, migration pathways and contaminant fate, receptor
populations and risk assessment).
b. A baseline risk assessment may be performed to evaluate the potential
threat to human health and the environment in the absence of any remedial
action. The risk assessment will be consistent with approved work plan
elements, applicable regulatory requirements, and RI data.
c. A separate report(s) shall be prepared presenting the findings of the
risk assessments to provide complete information to be utilized for screening
and assessing feasible remedial alternatives.
5.1.8. Feasibility Study. In this step, the site-specific alternatives will be
developed and screened by the contractor to eliminate those elements that are
clearly infeasible or inappropriate, prior to undertaking detailed evaluation of
the remedial alternatives. The initial screening of site-specific alternatives
may occur in conjunction with the RI step. The evaluation shall include
technical, environmental, public health, institutional, cost and cost-
effectiveness analyses. The final report shall contain all the information
needed to select a logical course of remedial action. A list of remedial
alternatives will be developed including:
a. Alternatives for on-site treatment or disposal.
b. Alternatives for off-site treatment or disposal.
<PAGE>
N62474-88-D-5086
Part II
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c. Alternatives which attain applicable and/or relevant public health or
------
environmental standards.
d. Alternatives which exceed applicable and/or relevant public health or
------
environmental standards.
e. Alternatives which may not attain but closely approach applicable and/or
relevant public health or environmental standards but will reduce the likelihood
of present or future threat from contaminants.
5.1.9. Remedial Design. This step will furnish required permits and detailed
plans and specifications needed to implement the remedial action selected as a
result of the RI/FS phases of the work.
a. Preliminary Design 35%. This task incorporates all work efforts related
to the preparation of preliminary plans, specifications, cost estimates,
detailed design criteria (Basis of Design Report), unit process and equipment
alternatives evaluations, preliminary process and equipment selections,
identification of long-lead equipment procurement items, geotechnical
investigations, identification of additional permits, approvals, and site access
agreements. All preliminary project documentation will be prepared in
accordance with written instructions provided in the CTO. Also included as a
deliverable during the preliminary design phase is the preparation of a cost
estimate.
b. Equipment/Services Procurement. This task includes all efforts
necessary to produce/initiate/procure long-lead equipment and/or services
identified during the preliminary design phase. Efforts may include preparation
of necessary plans and specifications, advertisement, evaluation of bids, pre-
bid conference, etc.
c. Intermediate Design 50%. This task includes all effort necessary to
prepare plans and specifications to a level of approximately 50% completion.
Also part of this task is the incorporation of review comments, the preparation
of plan profile sheets, lists of key submittals, implementation of Value
Engineering Analysis, preparation of preliminary plans of operation, and
preparation of an intermediate (budget level) cost estimate (i.e., plus 30 to
minus 15 percent).
d. 100 Percent Design. This task includes all prefinal design effort
necessary to finalize plans and specifications to a level of 100% completion.
Included are design revisions resulting from incorporation of review comments
and the development of a Definitive Estimate of Construction Cost (i.e., plus 15
to minus 5 percent). Work is submitted for final review at the 100% completion
and will be subject to a Value Engineering Analysis prior to any Final
submittal.
<PAGE>
N62474-88-D-5086
Part II
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e. Final Design. This task includes the final submittal of plans,
specifications, and cost estimates incorporating the comments from the 100
percent design submittal as well as those from the Value Engineering Analysis.
The Contractor will provide final completion of camera-ready documents as a
complete bid package suitable for open bidding and award after the final review.
5.1.10. Remedial Implementation. Implementing the design remedy involves
procuring a construction contract, and/or managing the construction effort,
and/or providing technical engineering services during the remedial action. The
Contractor may be asked to provide any or all of these services depending on the
specific organizational arrangement for the project as described in paragraph
7.1, Specific Requirements, hereinafter. In addition, the Contractor may be
required to perform construction inspection services and/or Quality
Assurance/Quality Control (QA/QC) during the course of construction.
5.2. UNDERGROUND STORAGE TANK PROGRAM (UST).
a. The intent of the Underground Storage Tank (UST) Program is to establish
a continuing program for addressing and preventing contamination from, and
improper storage of, hazardous substances or petroleum products stored
underground. The program will determine and implement a course of action to
follow on each underground tank studied in order to bring all tanks into
compliance with current local, state and federal laws and regulations. It will
determine whether or not releases of hazardous substances or petroleum products
previously stored in the underground tanks have contaminated the environment at
these various locations. Subsequent contamination abatement action will be
conducted depending upon the study findings and the recommendations of the
local, state or federal regulatory agencies.
b. The Underground Storage Tank Program implements ongoing Navy policy to
comply with applicable Federal, state and local environmental laws and
regulations. Section 6991a-i of the Resource Conservation and Recovery Act, 42
U.S.C. 6991a-i (RCRA) comprises newly enacted federal legislation to control and
monitor all operational underground tanks and to close all nonoperational
storage tanks. These regulations also require Naval activities to comply with
all state and local regulations regarding underground tanks.
c. The Contractor shall furnish environmental engineering services, field
services, laboratory testing and related services, and any incidental
construction work that may be required in accordance with the provisions of this
contract to perform any of the services described under the Specific
Requirements indicated below.
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5.2.1. Specific Requirements. The Navy's program consists of three distinct
subprograms - one for operational tanks, one for abandoned tanks, and one for
leaking tanks. The following outline generally describes the tasks involved in
the overall study:
a. Operational Tank Program
(1) Preparing applications to obtain operating permits for active tanks.
(2) Performing on-site investigations including physical precision
testing.
(3) Confirming or refuting the existence of leakage.
(4) Evaluating economically feasible monitoring alternatives to effect
compliance with applicable environmental standards where required; recommending
a permanent monitoring plan.
(5) Installing monitoring systems based on approval of above
recommendations and preparing standard operating procedures.
b. Abandoned Tank Program
(1) Locating tanks which are not on property record cards and those for
which the exact location is in question.
(2) Developing a plan for removal of current contents of tank;
inspecting underground storage tank for indication of leakage; verifying the
presence or absence of contamination; coordinating with local regulatory
agencies.
(3) Developing a closure plan for non-leaking, abandoned tanks.
c. Leaking Tank Program
(1) For tanks determined to be leaking by actions completed in sub-
programs 5.2.1.a. and b. above or otherwise, characterizing the extent and rate
of migration of contaminants using hydrogeological, geophysical, and chemical
analysis procedures; screening alternatives to achieve compliance at the least
cost and risk to human health and environment.
(2) Additional tasks may include:
(a) Preparing a detailed analysis of likely alternatives,
reliability, implementability, public health and environmental impact and
corresponding cost.
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(b) Conducting pilot studies to evaluate alternative remedial
technologies.
(3) Monitoring the site and the implementation of remedial action to
insure compliance with plans and specifications and applicable regulations.
5.2.2. Type of Services. All services provided will be performed in accordance
with applicable federal, state and local regulations. Specific services include,
but are not limited to:
a. Records Searches
b. Site Visits
c. Hydrogeological Studies
d. Geophysical Studies
e. Engineering Investigations and Analyses
f. Microbiological Studies
g. Pilot Studies
h. Engineering Designs
i. Installation of Groundwater Monitoring Wells
j. Installation of vadose zone monitoring systems
k. Performance of tank and associated piping leak testing
1. Preparation of permit applications
5.3. ASBESTOS ABATEMENT PROGRAM
a. The intent of the Asbestos Abatement Program is to identify areas of
Asbestos Containing Materials (ACM), to assess the potential health impacts of
the ACM areas, and to make recommendations and implement appropriate abatement
actions.
b. The contractor shall furnish the appropriate personnel, services,
material, and equipment to perform any or all of the various elements of the
program at specified activities. This includes, but is not limited to,
providing technical services, field services, laboratory testing and related
services.
5.3.1. Specific Requirements. The Navy's program consists of three distinct
phases:
a. Asbestos Inventory. The contractor will be responsible for locating,
verifying, and recording all friable asbestos materials at specified activities.
The contractor will also prepare a priority list for each activity for
subsequent assessment and abatement actions.
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b. Asbestos Assessment. The contractor will be responsible for assessing
each identified area of asbestos containing material at specified activities.
The contractor will assess the likelihood of fiber release by evaluating current
condition and the potential for future disturbance, damage, or erosion. The
intent of the assessment will be to determine the need for further action, to
prioritize the abatement actions at each activity, and to make recommendations
as to the most appropriate abatement action.
c. Asbestos Abatement. The contractor will be responsible for preparing
plans and specifications for the remedial action, such as removal,
encapsulation, or enclosure. The plans and specifications shall be prepared in
accordance with Navy requirements provided with the CTO and shall comply with
all appropriate federal, state and local regulations regarding asbestos
abatement. The contractor may be requested to award the abatement contract
under the Construction Subcontracting portion (Paragraph 7.) of the Scope of
Work. The contractor may also provide oversight of the abatement contractor,
whether awarded as a sub-contractor under this contract, or awarded by the Navy,
to assure compliance with the abatement specifications and health and safety
requirements.
5.3.2. Type of Services
a. All services provided will be performed in accordance with applicable
federal, state, and local regulations. Specific services include, but are not
limited to:
(1) Record searches
(2) Site visits
(3) Building inspections
(4) Sampling and analysis of materials
(5) Air sampling
(6) Engineering designs and cost estimates
(7) Oversight of abatement contractors
(8) Preparation of removal and disposal permits or notifications
b. Inventories and Assessments under the program shall be performed under
the direction of certified industrial hygienists. Engineering designs and
specifications shall be signed by registered engineers.
5.4. OTHER TECHNICAL ASSISTANCE. Naval activities are required to comply with
applicable federal, state and local environmental regulations. In addition to
the technical support identified in the other programs (IR, UST, and Asbestos
Abatement), the contractor may be assigned work at specific activities in other
environmental areas. The contractor shall furnish the personnel, services,
material and equipment required to perform work assignments in any of the areas
described under specific requirements.
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5.4.1. Specific Requirements. The contractor may be assigned work at specified
activities in other environmental areas. These areas include, but are not
limited to the following areas:
a. Drinking Water Program. The Safe Drinking Water Act requires Navy
activities that own and operate public/community domestic water supply systems
consisting of a raw water source(s), water treatment plant, storage tank(s)
distribution systems and appurtenances, to comply with applicable federal,
state, or local requirements, whether substantive or administrative.
b. Spill Prevention, Control and Countermeasures (SPCC) Plan. Most Navy
shore activities with non-transportation-related oil storage facilities are
required to have an SPCC plan. Federal law (40 CFR 112) requires that the SPCC
plans be reviewed at least once every three years, or whenever there is a change
in facility design, construction, operation, or maintenance which materially
affects the potential for discharge of oil into or upon navigable water of the
U.S. or adjoining shorelines. The SPCC plan outlines the steps to be taken if
an actual spill occurs. The intention is to be prepared to immediately take
response actions to minimize pollution damage.
c. Hazardous Waste (HW) Minimization Program. The objective of the Navy HW
Minimization Program is to reduce or eliminate the hazardous wastes generated
from various Navy industrial operations. The 1984 Resource Conservation and
Recovery Act (RCRA) Amendments require minimization of hazardous waste at the
point of generation. Under the program, the Navy has been conducting various
hazardous waste minimization studies and technology assessments in the areas of
process modification, material substitution, and used solvent recycling.
d. Resource Conservation and Recovery Act (RCRA). Navy regulations
require all activities which generate HW to have a current HW Management Plan in
addition to complying with all federal and state regulations for HW generation,
storage, treatment and disposal. The regulations cover HW definitions,
labeling, record keeping, containers, transportation, storage and disposal.
Various permits/licenses are required to operate or close HW facilities.
e. Industrial Waste Treatment/Pretreatment Program. The Navy requires that
industrial wastewater discharges shall meet all applicable federal, state and
local requirements. The Industrial Waste Treatment Plant (IWTP) discharges and
other industrial processes discharges to "navigable" water shall comply with the
EPA Best Practicable Control Technology (BPCT) currently available, the Best
Available Technology (BAT) economically achievable, and any other effluent
limitations prescribed by discharge permit. The industrial wastewater
discharges to an IWTP or Publicly Owned Treatment Works (POTW) shall meet all
applicable general and categorical pretreatment standards.
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f. PCB Program. The Navy follows federal regulations for PCB transformers
including labeling, inspections, records, fire safety, and use restrictions. It
is the Navy's policy to eliminate PCB transformers as soon as possible. A risk
assessment may be required of all PCB transformers to prioritize their
elimination.
g. Wastewater Program. The National Pollution Discharge Elimination System
(NPDES) is a federal wastewater program directed at surface water discharges.
The program is being expanded to include non-point storm water runoff. Naval
activity discharges comply with applicable discharge permit conditions
established by appropriate federal, state, or local agencies.
h. Air Pollution Program. The Navy air pollution program is designed to
assure that activities fulfill their obligation to control air emissions. Navy
activities accomplish this in part by maintaining air permits with the
regulatory agencies. New sources may require emission offsets to keep overall
air pollution levels low. Emissions from shutdown sources may be deposited in
an air pollution emission bank, for use in offsetting new source emissions.
The contractor may be required to conduct air pollution audits,
modeling studies, air pollutant risk assessments, and air contaminant
inventories; and prepare new source permit applications.
6. TECHNICAL SERVICES SUPPORT SUBCONTRACTING
-----------------------------------------
a. The Contractor shall provide the necessary "Technical Services Support"
subcontracting as required by each individual CTO. The term "technical services
support" refers primarily to field support and laboratory analytical services
that are neither professional engineering nor construction services. "Technical
Services Support" subcontracting are services not provided through either the
Program Management Staff, Technical Services staff or the Construction
Subcontractor. "Technical Services Support" may include such items as drilling,
physical and chemical laboratory analysis, surveying, mapping, disposal of
contractor-generated hazardous waste, etc.
b. The Contractor may be authorized by the Contracting Officer to provide
the technical services support required on individual CTOs from in-house
resources. The Contractor shall provide the necessary information to the
Contracting Officer to demonstrate that the contractor's in-house resources:
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(1) are capable of satisfying the requirements of the work assignment,
including proper lab certification, capacity to perform,
availability and health and safety requirements, and
(2) can be provided at a cost favorable to the Government.
7. CONSTRUCTION SUBCONTRACTING (Remedial Action/Abatement). The ultimate goal
---------------------------
of the Installation Restoration, Underground Storage Tank and Asbestos Abatement
programs included in this contract is site restoration. In most cases, the
various studies performed under this contract will lead to award of
"construction" contracts for the purposes of removal actions, remedial actions,
or abatement actions. "Construction" contracts are defined as contracts awarded
to actually alter the site conditions via cleanup actions. These actions may
include soil removal and disposal; construction of fences, dikes or waste
impoundments; removal of abandoned tanks; removal, encapsulation or enclosure of
asbestos containing areas or implementing a long-term remedial action as a
result of the Remedial Investigation/Feasibility Study. The Navy may require
the contractor to perform the tasks necessary to procure and award these
subcontracts for various assigned projects. This activity, if required, may be
authorized at different stages of the individual project and may be for
individual sites under a specific project. The contractor that develops the
remedial design for a specific site will not be permitted to also construct or
implement that designed remedy. This restriction includes divisions,
subsidiaries, affiliates and other organizational entities held under common
ownership. The construction of the remedy must be conducted by firms procured
through a competitive award of subcontracts consistent with Federal Acquisition
Regulations (FAR).
7.1. Specific Requirements
a. Implementing the removal, abatement, or remedial action may involve
procuring a construction contractor, managing the construction effort, and
providing technical engineering services during the remedial action. The
Contractor may be asked to provide any or all of these services depending on the
specific organizational arrangement for the project. There are two possible
arrangements:
(1) The Navy will issue a separate contract for remedial
implementation. The Contractor may be required to provide
acquisition assistance to the Navy and subsequently shall provide
construction management support and technical engineering
services. The following items are typical activities
included (but not limited to) under this task:
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(a) Tabulate and evaluate bids
(b) Make recommendations for award
(c) Assist in resolution of bid protests
(d) Provide community relations support
(e) Provide resident inspection and engineering services to ensure overall
quality of the remedial implementation
(f) Prepare daily logs/reports/photo history
(g) Prepare or approve shop/record drawings
(h) Interpret, clarify, and modify design plans and specifications
(i) Monitor and control progress
(j) Monitors adherence to health and safety plan requirements
(k) Review and evaluate change orders and claims and make
recommendations for Navy approval
(1) Conduct final inspection and system start-up testing
(m) Ensure preparation of as-built drawings
(2) The Contractor will issue a subcontract(s) for remedial implementation in
accordance with Federal Acquisition Regulations (FAR). The Contractor also
will manage the construction effort and provide technical engineering
services. In this arrangement, the Contractor shall furnish the personnel,
services, materials, and equipment required to manage remedial action
activities. This includes selecting a subcontractor(s) and issuing a
subcontract(s) to implement the action. The Contractor shall manage
construction services and direct the implementation process to accomplish
the objectives of the design.
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b. For remedies involving operating treatment systems (e.g., on-site
incineration, air stripping, granular activated carbon), the contractor shall
furnish the personnel, services, materials, and equipment required to operate
and maintain such systems until the activity assumes operation and maintenance
responsibilities. These services may include but are not limited to the
following:
(1) Conduct operator training for treatment systems
(2) Operate and maintain facilities to ensure functional operation and
treatment effectiveness
(3) Prepare and adjust Operations and Maintenance (O&M) Manual to
reflect actual operating conditions/parameters
(4) Close-out construction contract
The contractor may issue subcontracts for facility operation activities.
7.2. Remedial Response Action.
a. Under construction subcontracting, the Contractor may also be required
to award subcontracts for time-critical or non-time critical removal actions.
This activity may involve construction of fences, surface waste removal,
stabilization of surface impoundments, repair of leaking pipelines, or other
similar actions. This activity may include but will not be limited to;
development of engineering evaluation and cost analysis (EE/CA) documentation,
technical support in preparation of Action Memoranda, preparation of removal
action plans, specifications and cost estimates, issuance of subcontracts to
implement removal actions, and oversight of removal action construction.
b. The Contractor shall furnish the general management support and, through
subcontracts awarded using competitive procedures on a site-by-site basis, the
personnel, services, materials, and equipment required to undertake removal
actions. This work, if required, may be undertaken at different stages of the
remedial planning process.
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PART III
PACKAGING AND MARKING
---------------------
1. Preservation, packaging, and packing for shipment of all submittals and
reports shall be in accordance with commercial practice and adequate for
acceptance by common carrier and safe transportation at the most economical
rates unless otherwise specified in each Contract Task Order.
2. The Contractor shall provide a cover page with all submittals and reports.
This page shall be marked as follows:
a. Complete name and address of agency receiving the submittal or
report.
b. The complete contract number.
c. The complete Contract Task Order (CTO) number.
d. The title and location of the project.
e. Typed name and signature of individual designated for certification
by the CTO.
f. Complete name, address, and telephone number of Contractor.
g. Date of submittal or report.
h. Brief description or title of submittal or report being submitted.
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PART IV
INSPECTION AND ACCEPTANCE
-------------------------
1. INSPECTION AND ACCEPTANCE. In addition to FAR Clause 52.246-5, incorporated
by reference in Part VIII, the following applies:
a. Inspection and acceptance of all submittals shall be accomplished by
the Contracting Officer or his/her duly authorized representative.
b. For the purpose of this clause, the Remedial Project Manager (RPM)
designated in each individual Contract Task Order (CTO) is the only authorized
representative of the Contracting Officer.
2. INSPECTION BY REGULATORY AGENCIES. All effort performed under this contract
is subject to inspection by various agencies. The Contractor may be required to
provide personnel to accompany the regulatory agency inspection or review teams.
Contractor personnel shall be knowledgeable concerning the work being inspected.
In addition, the Contractor may be required to participate in responding to the
requestor for information or other findings by regulatory agencies.
3. TECHNICAL ADEQUACY. Approval by the RPM of drawings, designs,
specifications, and other architectural-engineering work furnished hereunder
shall not in any way relieve the Architect-Engineer of responsibility for the
technical adequacy of the work.
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PART V
DELIVERIES OR PERFORMANCE
-------------------------
1. PERIOD OF PERFORMANCE
The period of performance for this contract shall be for one calendar year
from date of contract award, with nine one year options which the Government
may exercise unilaterally. Notwithstanding this, specific performance periods
shall be included in each CTO issued under this contract. In consequence
thereof, no CTO shall be issued after the initial contract period and/or
anniversary date of the final option exercised and no delivery required after
two years beyond the date of the final CTO, without written notice from the
Contracting Officer and acceptance by the Contractor.
2. PLACE OF PERFORMANCE
The place of performance for the work required hereunder shall be specified
in each individual CTO.
3. DELIVERY OF REPORTS
The reports described in "Reports Description", Attachment A to this contract
shall be due on a regular basis, as specified. All reports shall be
addressed to the Contracting Officer at:
Commander (Code 024)
Western Division
Naval Facilities Engineering Command
900 Commodore Drive, P.O. Box 727
San Bruno, CA 94066-0720
4. DELIVERY OF REPORTS FOR CTOs
The time of deliveries shall be set forth in each individual CTO. Delivery
shall be made to the address in paragraph 3 above unless otherwise specified
in said CTO.
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PART VI
CONTRACT ADMINISTRATION DATA
----------------------------
1. CONTRACT FUNDING
a. For purposes of payment of cost, exclusive of fee, pursuant to the
Limitation of Funds clause, the total amount allotted by the Government to this
contract is * . The above allotment is for cost only and covers the following
period of performance: Base Year.
b. An additional amount of * is obligated under this contract for
payment of award fee for the base year.
2. INVOICING INSTRUCTIONS.
a. Preparation of Invoices. Invoices must be prepared in accordance
with the instructions entitled: "Guide for the Preparation of Contractor's
Invoices for Reimbursement of Costs and Fees Under Cost-Plus-Award-Fee (CPAF)
Type contracts." (See Attachment B)
b. Submission of Invoices. Invoices shall be prepared and submitted in
quadruplicate (an original and three copies), shall reference the contract
number, and be identified by denoting the numerical sequence of the invoice.
Invoices shall be submitted to:
DCAA East Bay Branch
#8 Union Square Blvd., Suite 104
Union City, CA 94587-3524
3. DIRECTIVES. Specifications, directives and instructions which cannot be
ordered pursuant to Clauses FAR 52.210-1 and 52.210-2 as referenced in Part VIII
will be made available by the RPM or the Contracting Officer.
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PART VII
SPECIAL CONTRACT REQUIREMENTS
1. OPTION TO EXTEND THE TERM OF THE CONTRACT - SERVICES
a. The Government may extend the term of this contract by written notice to
the contractor within the time specified below for an additional period of
twelve months, subject to re-negotiation of labor rates, re-occuring costs and
fee prior to award of each extension year. The following Price Redetermination
Clause shall be used for the above, provided, that the Government shall give the
--------
Contractor a preliminary written notice of its intent to extend at least 60 days
before the contract expires. The preliminary notice does not commit the
Government to an extension.
b. If the Government exercises this option, the extended contract shall be
considered to include this option provision.
c. The total duration of this contract, including the exercise of any
options under this clause, shall not exceed 10 years.
2. PRICE REDETERMINATION
a. The negotiated costs for any contract period will be utilized for
budgeting purposes only. Costs actually incurred shall be billed. Prior to the
Government exercising the award of an option period, the direct and indirect
costs will be renegotiated for budgeting purposes for that option period. A
post audit will be conducted by the cognizant Defense Contract Audit Agency
(DCAA) for utilization in the renegotiation of the costs.
b. Definitions. (i) "Costs" as used in this clause, means the Program
Management Office recurring and non-recurring costs; travel and relocation
costs; direct labor rates; estimated CTOs costs and award fees. Attachment G
provides the budgeting labor rates for the base contract period.
c. Price Redetermination Period. Performance of this contract is divided
into successive periods. The first period shall extend from the date of the
contract twelve (12) months, and the second and each succeeding period shall
extend for the duration of any corresponding option period. The first day of
the second and each succeeding period shall be the effective date of price
redetermination for that period. For the purpose of this clause, the terms --
price redetermination period and contract period -- are synonymous.
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RATE ESCALATION LIMITATION
3. a. An adjustment to the award fee will be made whenever the increase in the
composite labor rate exceeds the maximum rate increase allowed by the Joint
Logistic's Command (JLC). The adjustment in the Award Fee Pool for the base
contract and the CTO's will be adjusted in accordance with this clause.
b. The base contract period labor rates will be used as a baseline for all
adjustments. The most current contract period's actual labor hours will be used
to establish composite labor rates.
c. The following factors will be utilized in determining adjustments to the
award fee.
Projected Composite Labor Rate (PCLR) The PCLR is calculated by computing an
- -------------------------------------
average hourly rate using the next years negotiated labor rates and the previous
years actual labor hours.
Maximum Composite JLC Labor Rate (MCJLR) The MCJLR is calculated by computing
- ----------------------------------------
an average hourly rate using the maximum labor rates allowed by the current JLC
guidance and the previous years actual labor hours.
JLC Adjustment Factor (JAF) The JAF is calculated by taking a percentage of the
- ---------------------------
PCLR compared to the MCJLR. The JAF is only calculated when the PCLR is greater
than the MCJLR.
JAF (%) = ((PLCR-MCJLR)/MCJLR)X1OO
Award Fee Adjustment (AFA) The AFA is calculated by multiplying the JAF by the
- --------------------------
Award Fee for the Base Contract (PMO) and each CTO awarded in that contract
year. The Award Fee shall be reduced by the amount of the AFA. This adjustment
will be made prior to the award of the Base Contract (PMO) and each CTO. Award
Fee available in any evaluation period will be in accordance with the "Award Fee
Approach" clause.
d. The previous years labor rates may be extrapolated from the data
available at the time of negotiation.
e. If the PCLR exceeds the MCJLR, the AFA will apply. The JAF will be
calculated when the rates for the following year are negotiated. The AFA will be
applied to the base contract (PMO) and to all CTO's.
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4. Schedule of Option Periods
Option Year One 1990 through 1991
Option Year Two 1991 through 1992
Option Year Three 1992 through 1993
Option Year Four 1993 through 1994
Option Year Five 1994 through 1995
Option Year Six 1995 through 1996
Option Year Seven 1997 through 1997
Option Year Eight 1997 through 1998
Option Year Nine 1998 through 1999
5. CONTRACT TASK ORDERS (CTOs)
a. Each project assigned under this contract shall be issued via Contract
Task Order (DD 1155).
b. Each CTO will include 1) a numerical designation; 2) the period of
performance and schedule of deliverables; 3) the description of the work; and 4)
sufficient funds to commence work immediately upon receipt of the CTO.
c. The Contractor shall acknowledge receipt of each CTO by returning to the
Contracting Officer a signed copy of the document within 10 calendar days after
its receipt. The Contractor shall begin work immediately upon receipt of a CTO.
d. As requested by the undefinitive CTO or by a request for proposal, the
Contractor shall submit 3 copies of a work plan to the Contracting Officer. The
work plan shall include a detailed technical and staffing plan and a detailed
cost estimate.
e. Within 30 calendar days (unless otherwise designated) after receipt of
the work plan for an undefinitive CTO, the Contracting Officer will provide
written approval or disapproval of the technical issues contained in the plan to
the Contractor. The cost estimate will be utilized for negotiation purposes.
The work plan submitted in response to a Request for Proposal will be utilized
as the contractor's proposal for negotiations. Approval of the plan (as
revised, if necessary) will be granted by the issuance of a CTO.
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f. For undefinitive CTOs, if the Contractor has not received approval on a
work plan within 45 calendar days after its submission, the Contractor shall
stop work on that work assignment. Also, if the Contracting Officer disapproves
a work plan, the Contractor shall stop work until the problem causing the
disapproval is resolved. In either case, the Contractor shall resume work only
when the Contracting Officer finally approves the work plan.
g. CTOs shall not allow for any change to the terms or conditions of this
contract. Where any language in the CTO may suggest a change to the terms or
conditions, the Contractor shall immediately notify the Contracting Officer.
h. Any CTO issued during the effective period of this contract and not
completed within that period shall be completed within the time specified in the
CTO.
i. Included as attachments to each CTO shall be a detailed scope of work
stating the specific tasks required to be performed by the contractor at the
activity; and applicable Navy furnished information, e.g., as-built drawings,
utility plans, previous studies, sampling data, geotechnical studies, etc.
6. LIMITATION OF FUNDS
a. FAR Clause 52.232-22, as referenced in Part VIII, of this contract,
wherever the word "schedule" appears in the clause, the designation "schedule
and CTO's" shall be substituted. The Contractor shall notify the Contracting
Officer in writing whenever it has reason to believe that the costs it expects
to incur under this contract in the next 60 days, when added to all costs
previously incurred, will exceed 75 percent of the total amount so far allotted
to the contract by the Government. The notice shall state the estimated amount
of additional funds required to continue performance for the period specified in
the Schedule. This clause pertains to the Program Management Office estimated
costs and CTO estimated costs.
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7. AWARD FEE APPROACH
a. The award fee (see Attachment C for the Award Fee Plan) will be applied
against the negotiated aggregate estimated cost of all CTOs issued during a
given evaulation period and not against the total negotiated estimated cost of
the contract for the applicable year.
b. For the purpose of calculating the negotiated aggregate estimated cost,
referenced above, the cost of any CTO which is not completed within the
evaluation period will be calculated as follows:
The Government shall develop a percentage of physical completion
determination in order to establish the corresponding percentage of the
negotiated estimated cost for each incomplete CTO against which the
award fee rating shall be applied. For any CTO which is not 100%
complete within an evaluation period, no less than 25% of the available
award fee will be retained until the completion of the CTO. Upon
completion, all the remaining award fee for the CTO is eligible. The
percentage of completion will be a Government determination not subject
to the disputes clause.
8. SUBCONTRACTING PROGRAM FOR SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS
CONCERNS
The subcontracting plan submitted and approved by the Contracting Officer
for this requirement is incorporated in Part X, Attachment E.
9. SUBCONTRACTING REPORTS--SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS
CONCERNS
a. The Contractor shall submit subcontracting reports on Standard Forms 294
and 295. The reports shall be submitted semi-annually and quarterly
respectively in accordance with the General Instructions on the reverse side of
the forms.
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b. In addition to the distribution specified on the reverse side of the
forms copies of these reports shall be delivered to:
Distribution Addressee
1 original of SF 294 Contracting
Officer
1 copy of SF 295 Small Business Specialist
1 copy of both the Western Division
SF 294 and SF 295 Naval Facilities Engineering Command
P.O. Box 727
San Bruno, California 94066
10. SUBCONTRACT CONSENT
a. The Contractor shall submit the information required by FAR
52.244-2, "Subcontracts" (JUL 1985), to the Contracting Officer. The
Contracting Officer will provide written notice to the Contractor of his/her
decision.
b. Within 30 days of contract award, the contractor will submit data
required by FAR 52.244-2, for the following subcontractors, upon whose use the
contractor's selection as successful awardee had been contingent:
James M. Montgomery, Consulting Engineers
Versar, Inc.
c. Consent in some instances may be granted contingent upon inclusion of
performance bond requirements incorporated in the proposed subcontracts.
11. CONSULTANT SERVICES AND CONSENT
The Contractor shall obtain the consent of the Contracting Officer prior to
using any consultant on this contract. The Contractor shall determine whether
any consultant that is used has in effect an agreement with another Federal
agency for similar or like services and, if so, shall notify the Contracting
Officer.
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12. SUBCONTRACTOR SELECTION PROCEDURES
For the Installation Restoration Program the contractor shall select
subcontractors for program management, construction management, architectural
and engineering, surveying and mapping, and related services in accordance with
Title IX of the Federal Property and Administrative Services Act of 1949.
13. LIMITATION ON FUTURE CONTRACTING
The prime contractor as well as subcontractors, and/or consultants
responsible for fact findings or other types of work which directly contributes
to the formulation of recommendations as to the need for remedial action
projects will be ineligible to compete for such remedial action projects under
this or other resulting contracts.
14. FUTURE EXPERT CONSULTING SERVICES
It is recognized that, subsequent to the performance period of this
contract, the need may arise to provide expert testimony during hearings and/or
court proceedings involving site specific activities or other matters, with
regard to which personnel provided by the Contractor under this contract
(including subcontractor personnel) would have gained expertise as a result of
tasks performed under this contract. Therefore, the Contractor agrees to make
available expert consulting services in support of such future proceedings,
including litigation support and to enter into intent agreements as necessary
with subcontractors to ensure the availability of subcontractor personnel
provided under this contract to provide expert consulting services. Agreement
to provide such services in the future serves as a notice of intent only. Such
services are not purchased hereby and will be obtained through a separate
contractual agreement.
Should the Contractor, or any subcontractors of any tier, ever have to
testify in court in any case related to this contract, all his/her work will be
considered proprietary to the Government. In such a case, the Contractor and/or
subcontractor of any tier shall not release any information to adverse parties.
<PAGE>
N62474-88-D-5086
Part VII
Page 8 of 18
15. ORGANIZATIONAL CONFLICTS OF INTEREST
a. The Contractor warrants that, to the best of the Contractor's knowledge
and belief, there are no relevant facts or circumstances which could give rise
to an organizational conflict of interest, as defined in FAR Subpart 9.5, or
that the Contractor has disclosed all such relevant information prior to award.
b. The Contractor agrees that if an actual or potential organization
conflict of interest is discovered after award, the Contractor will make a full
disclosure in writing to the Contracting Officer. This disclosure shall include
a description of actions which the Contractor has taken or proposes to take,
after consultation with the Contracting Officer, to avoid, mitigate, or
neutralize the actual or potential conflict. In addition, the Contractor will
notify the Contracting Officer in writing when the Contractor participates in
competition for and receives an award of an EPA Contract which may involve Navy
sites.
c. In addition, the Contractor will notify the Government, in writing, of
its intention to compete for, or accept the award of any contract which may
involve Navy sites. Such notification will be made before the contractor either
competes for, or accepts any such contract.
d. Remedies - The Contracting Officer may terminate this contract for
convenience, in whole or in part, if it deems such termination necessary to
avoid an organizational conflict of interest. If the Contractor was aware of a
potential organizational conflict of interest prior to award or discovered an
actual or potential conflict after award and did not disclose or misrepresented
relevant information to the Contracting Officer, the Government may terminate
the contract for default, debar the Contractor from Government contracting, or
pursue such other remedies as may be permitted by law or this contract.
e. The Contractor further agrees to insert in any subcontract or consultant
agreement hereunder, provisions which shall conform substantially to the
language of this clause, including this paragraph (d).
<PAGE>
N62474-88-D-5086
Part VII
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16. KEY PERSONNEL
a. The Contractor shall provide to the Contracting Officer within 30 days
following contract award a list of key personnel to be assigned to the Program
Management Office and specified Project Managers.
b. During the first one hundred eighty (180) calendar days of performance,
the Contractor shall make no substitutions of key personnel unless the
substitution is necessitated by illness, death, or termination of employment.
The Contractor shall notify the Contracting Officer within 15 calendar days
after the occurrence of any of these events and provide the information required
by paragraph (c) below. After the initial one hundred eighty (180) calendar day
period, the Contractor shall submit the information required by paragraph (c) to
the Contracting Officer at least 30 days prior to making any permanent
substitutions.
c. The Contractor shall provide a detailed explanation of the circumstances
necessitating the proposed substitutions, complete resumes for the proposed
substitutes, and any additional information requested by the Contracting
Officer. Proposed substitutes should have comparable qualifications to those of
the persons being replaced. The Contracting Officer will notify the Contractor
within 30 calendar days after receipt of all required information of the
decision on substitutions.
17. HEALTH AND SAFETY TRAINING
The Contractor shall certify to the Government in writing that each of its
employees, subcontractors, or consultants has completed a training program (IAW
29 CFR 1910.120), in relation to this project, prior to assignment of any such
employee, subcontractor, or consultant to a hazardous waste site.
<PAGE>
N62474-89-D-0205
Part VII
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18. PRINTING
Unless otherwise specified in this contract, the Contractor shall not engage
in, nor subcontract for, any printing (as that term is defined in Title I of the
Government Printing and Binding Regulations in effect on the effective date of
this contract) in connection with the performance of work under this contract.
Provided, however, that performance of a requirement under this contract
involving the duplication of less than 5,000 units of only one page, or less
than 25,000 units in the aggregate of multiple pages, such pages not exceeding a
maximum image size of 10 3/4 by 14 1/4 inches, will not be deemed to be
printing.
19. DISCLOSURE OF INFORMATION
The Contractor agrees to notify and obtain the written approval of the
Contracting Officer prior to releasing any information to any third parties
including the news media regarding any work under this contract except as
required by law. The Contractor shall immediately notify the Contracting
Officer of the receipt of a demand by a third party for the disclosure of field
test data generated under the contract. This requirement shall flow down to all
subcontractors.
20. ADVERTISING AND NEWS RELEASES
The Contractor agrees not to refer to this contract and all resulting CTOs
in commercial advertising in such a manner as to state or imply that the product
or service provided is endorsed or preferred by the Federal Government, or
considered by the Government to be superior to other products or services. News
releases pertaining to this procurement will not be made without the concurrence
of the Contracting Officer. After having notified the successful offeror,
announcement of the contract award will be made in the Commerce Business Daily.
-----------------------
21. CONTRACTOR ACCOUNTING SYSTEM
The contractor shall employ an accounting system for this contract to
identify and record site specific costs on a site specific basis and by CTO.
Site specific cost documentation for each CTO must be readily retrievable and
sufficiently identifiable to enable cross-referencing with payment vouchers.
The foregoing is in addition to and/or complementary to the CAS requirements.
<PAGE>
N62474-88-D-5086
Part VII
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22. MODIFICATION PROPOSALS - COST BREAKDOWN
a. For modification for which an equitable adjustment is necessitated, the
Contractor shall furnish a cost breakdown, itemized as required by the
Contracting Officer within 30 days of effective date of said modification.
Unless otherwise directed, the breakdown shall be in sufficient detail to permit
an analysis of all material, labor, equipment, subcontract, and overhead costs,
as well as fees, and shall cover all work involved in the modification, whether
such work was deleted, added, or changed.
23. WORKING FILES
The Contractor shall maintain accurate working files on all work
documentation including calculations, assumptions, interpretations of
regulations, sources of information, and other raw data required in the
performance of this contract. The Contractor shall retain these files for a
minimum of seven years after completion of all work under this contract. The
Contractor shall provide the information contained in its working files upon
request of the Contracting Officer.
24. GOVERNMENT FURNISHED DATA
Government furnished data to be delivered to the Contractor shall be
specifically set forth in the CTO as deliverables to the Contractor.
Accordingly, it is the Contractor's responsibility to secure any other cited
data; i.e., military specifications, regulatory citations, etc.
If the data to be delivered is (1) not suitable for its intended use and/or
(2) not delivered or (3) not delivered in a timely manner and such untimely
delivery impedes work, then the Contractor may request equitable adjustment
pursuant to the Notification of Changes Clause FAR 52.243-7 (See Part VIII).
Additionally,:
1) title to Government furnished data shall remain in the Government,
and
2) the Contractor shall use the Government - furnished data only in
connection with this contract.
<PAGE>
N62474-88-D-5086
Part VII
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25. FABRICATION OR ACQUISITION OF NONEXPENDABLE PROPERTY
The Contractor shall not fabricate nor acquire under this contract, either
directly or indirectly through a subcontract, any item of nonexpendable property
without written approval from the Contracting Officer. The equipment is subject
to the provisions of FAR 52.245-5, "Government Property" (JAN 1986).
26. DECONTAMINATION OF GOVERNMENT PROPERTY
In addition to the requirements of FAR 52.245-5, "Government Property" (JAN
1986), the Contractor shall certify in writing that any Government-furnished
property or Contractor-acquired property is returned to the Government free from
contamination by any hazardous or toxic substances.
27. SECURITY REQUIREMENTS
a. The Contractor shall comply with all security requirements as set forth
in each individual CTO as well as all Activity security requirements. Upon
request, the Contractor shall submit the name and address of each employee hired
for work on this contract and shall cause to be filled out questionnaires and
other forms as may be required for security.
b. Neither the Contractor nor any of its employees shall disclose or cause
to be disseminated any information concerning the operations of the activity
which could result in or increase the likelihood of the possibility of a breach
of the activity's security or interrupt the continuity of its operations.
c. Disclosure of information relating to the services hereunder to any
person not entitled to receive it, or failure to safeguard any classified
information that may come to the Contractor or any person under his control in
connection with work under this contract, may subject the Contractor, his agents
or employees to criminal liability under 18 U.S.C. Sec. 793 (Gathering,
Transmitting, or Loosing Defense Information) and Sec. 798 (Disclosure of
Classified Information).
d. All inquiries, comments or complaints arising from any matter observed,
experienced, or learned as a result of or in connection with the performance of
this contract, the resolution of which may require the dissemination of official
information will be directed to the EIC.
<PAGE>
N62474-88-D-5086
Part VII
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e. Deviations from or violations of any of the provisions of this paragraph
will, in addition to all other criminal and civil remedies, provided by law
subject the Contractor to immediate termination for default and/or the
individuals involved to a withdrawal of the Government's acceptance and approval
of employment.
28. ACTIVITY REGULATIONS
The Contractor and his employees shall become acquainted with and obey all
Government regulations as posted, or as requested by the EIC.
29. FIRE PREVENTION
The Contractor shall insure that he and his employees shall know how to turn
in a fire alarm. The Contractor shall observe all requirements for handling and
storage of combustible supplies, materials, waste and trash. Contractor
employees operating critical equipment shall be trained to properly respond
during a fire alarm or fire in accordance with Activity instruction procedures.
30. WILDLIFE PRESERVATION
Before commencing work which may disturb wildlife the Contractor shall
obtain all necessary state, local or federal permits.
31. SALVAGE
FAR Clause 52.245-5 is applicable as referenced in Part VII. In addition
for the purpose of clarification, upon completion of work at each individual
work site all material and equipment which are removed or disconnected, and
which are sound and of value, but are not indicated or specified for reuse shall
remain the property of the Government.
32. DISPOSAL
a. All nonusable surplus material and debris resulting from work under this
contract shall be removed from the site by the Contractor. The Contractor shall
be responsible for transportation and disposal of nonhazardous debris, rubbish
and nonusable material resulting from work under this contract. Nonhazardous
waste must be disposed of by the contractor either off Government property or at
a site on the Activity approved by the EIC and the Activity coordinator.
<PAGE>
N62474-88-D-5086
Part VII
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b. The Contractor shall be responsible for assuring that all hazardous
waste generated as a result of work under this contract is packaged, labeled,
and stored in accordance with the Resource Conservation and Recovery Act and its
associated state and local laws and regulations.
c. The Contractor may be tasked to properly dispose of hazardous waste
generated as a result of work under this contract. Transportation of hazardous
waste to Government designated disposal sites shall be the responsibility of the
Contractor; however, manifests for the waste shall be signed by a Navy
representative designated by the Commanding Officer of the Activity.
d. In connection with the disposal of hazardous or non-hazardous materials,
the Contractor may be tasked to provide a list of recommended disposal sites.
33. UTILITY SERVICE INTERRUPTIONS
If any utility services must be disconnected (even temporarily) due to
scheduled contract work, the Contractor shall notify the EIC and Activity, at
least ten (10) working days in advance. If the discontinued service is due to
any emergency breakdown, the Contractor shall notify the EIC and the Activity as
soon as possible.
34. PASSES AND BADGES
a. All Contractor employees shall obtain the required employee and vehicle
passes. The Contractor shall, prior to the start of each work assignment,
submit to the EIC an estimate of the number of personnel expected to be utilized
at any one time on a CTO. The Government will issue badges without charge.
b. No employee or representative of the Contractor will be admitted to the
site of work unless he is a citizen of the United States, or, if an alien, his
employment within the United States is legal.
35. CONTRACTOR EMPLOYEES
a. The Contractor shall provide to the Contracting Officer the name or
names of the responsible supervisory person or persons authorized to act for the
Contractor.
b. The Contractor shall furnish sufficient personnel to perform all work
specified within the contract.
c. Contractor employees shall conduct themselves in a proper, efficient,
courteous and businesslike manner.
<PAGE>
N62474-88-D-5086
Part VII
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d. The Contractor shall remove from the site any individual whose continued
employment is deemed by the EIC to be contrary to the public interest or
inconsistent with the best interests of National Security.
36. REIMBURSEMENT OF TRAVEL
a. Area of Travel. Performance under this contract may require travel by
Contractor personnel. If travel is required, the Contractor is responsible for
making all needed arrangements for his personnel.
b. Travel policy. The Government will reimburse the Contractor for
allowable travel costs incurred by the Contractor in performance of the contract
and determined to be in accordance with FAR Subpart 31.2, subject to the
following provisions:
Travel required for tasks assigned under this contract shall be governed in
accordance with rules set forth for temporary duty travel in the Federal Travel
Regulations.
c. Travel. Travel, subsistence, and associated labor charges for travel
time are authorized for travel beyond a 50-mile radius of the local office,
whenever a CTO requires work to be accomplished at a temporary alternate
worksite. No subsistence for travel time shall be charged for work performed
within a 50-mile radius of the Contractor's local office. Travel performed for
personal convenience and daily travel to and from work at Contractor's
facility will not be reimbursed.
d. Per Diem. Per Diem for travel on work under this contract will be
reimbursed to employees consistent with company policy, but not to exceed the
amount authorized in the Federal Travel Regulations.
NOTE: To the maximum extent practicable without the impairment of the
effectiveness of the mission, transportation shall be tourist class. In the
event that only first class travel is available, it will be allowed, provided
justification therefore is fully documented and warranted.
<PAGE>
N62474-88-D-5086
Part VII
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e. Privately owned conveyance (POC). POC travel by owner or as a
passenger shall not be directed, but the use of this travel should be encouraged
when advantageous to the Government. The use of privately owned conveyance by
the traveler will be reimbursed to the Contractor at the mileage rates allowed
by Federal Travel Regulations. Authorization for the use of privately owned
conveyance shall be indicated on the order.
f. Car Rental. The Contractor shall be entitled to reimbursement for car
rental as authorized by each order, when the services are required to be
performed outside the normal commuting distance from the Contractor's
facilities.
37. INDEMNIFICATION FOR PENALTIES, FINES AND/OR INTEREST DUE TO LATENESS
a. Contractor agrees to indemnify the Government for all fines or penalties
(however characterized), including interest, incurred by the Government as the
result of delays caused by the contractor's failure to successfully meet all
schedules set forth in each Contract Task Order (CTO).
b. The amount of Indemnification due under this clause shall be limited to
the amount of the Award Fee earned for the evaluation period in which the late
performance occurred. The aggregate sum due under this clause for any single
evaluation period, shall not exceed the amount of the Award Fee the Contractor
actually earned in the affected evaluation period. Should late performance
continue through two or more evaluation periods, the Contractor shall be liable
up to an amount equal to the sum of the Award Fee earned in aggregate for the
evaluation periods affected.
c. If delivery or performance is so delayed, the Government may terminate
this contract in whole or in part under the Termination (Cost-Reimbursement)
clause. Furthermore, any indemnification required pursuant to this clause will
be due the Government in addition to excess costs under the Termination (Cost-
Reimbursement) clause.
d. The Contractor shall not be charged for such costs as described above
when the delay arises out of causes beyond the control and without the fault or
negligence of the Contractor.
e. Where the delay is caused by both parties and results in the assessment
of penalties, fines and/or interest, such assessment shall be apportioned
between the parties of the same proportion their respective contribution of the
delay.
<PAGE>
N62474-88-D-5086
Part VII
Page 17 of 18
38. INDEMNIFICATION
a. As of the date of contract execution, the official DOD position on
indemnification is that contractors shall not be indemnified for third party
liability. The issue of indemnification, as it applies to this contract, is
predicated on the official DOD policy. If the DOD policy should change during
the life of this contract, the Navy agrees to reconsider the issue of
indemnification. If the Navy determines that it shall indemnify the Contractor
for third party liability, an equitable adjustment shall be negotiated in
exchange for the inclusion of such indemnification.
39. AVAILABILITY OF FUNDS FOR THE NEXT FISCAL YEAR (APR 1984)
a. Funds are not presently available for performance under this contract
beyond 30 September 1989. The Government's obligation for performance of this
contract beyond that date is contingent upon the availability of appropriated
funds from which payment for contract purposes can be made. No legal liability
on the part of the Government for any payment may arise for performance under
this contract beyond 30 September 1989, until funds are made available to the
Contracting Officer for performance and until the Contractor receives notice of
availability, to be confirmed in writing by the Contracting Officer.
40. INSURANCE
a. Workers' compensation and employer's liability. Contractors are
required to comply with applicable Federal and State workers' compensation and
occupational disease statutes. If occupational diseases are not compensable
under those statutes, they shall be covered under the employer's liability
section of the insurance policy, except when contract operations are so
commingled with a contractor's commercial operations that it would not be
practical to require this coverage. Employer's liability coverage of at least
$100,000 shall be required, except in States with exclusive or monopolistic
funds that do not permit workers' compensation to be written by private
carriers.
b. General liability. Bodily injury liability insurance coverage written
on the comprehensive form of policy of at least $500,000 per occurrence shall be
required.
<PAGE>
N62474-88-D-5086
Part VII
Page 18 of 18
c. Automobile liability. Automobile liability insurance written on the
comprehensive form of policy shall be required. The policy shall provide for
bodily injury and property damage liability covering the operation of all
automobiles used in connection with performing the contract. Policies covering
automobiles operated in the United States shall provide coverage of at least
$200,000 per person and $500,000 per occurrence for bodily injury and $20,000
per occurrence for property damage. The amount of liability coverage on other
policies shall be commensurate with any legal requirements of the locality and
sufficient to meet normal and customary claims.
d. Cost of Professional Liability Insurance and Pollution Liability
Insurance may be allowed as a direct cost or in the Contractor's General &
Administration (G&A) rate if the applicable requirements set for in FAR Part 31
are met.
41. MEDICAL EXAM
a. Cost for annual medical examinations may be allowed as direct costs for
only those key personnel assigned to the Program Management Office. If
personnel are dedicated as full-time employees for this contract, the medical
examinations costs will be reimbursed in full. If the employees are employed on
a part-time basis for this contract, the allowed costs will be appropriately
allocated.
42. CONTRACTOR'S ACCESS TO RECORDS
a. Upon issuance of CTO, the Navy shall make available to the contractor
any relevant records or documents, relating to work to be performed under this
contract, which are necessary to reflect the existence, location, type, quality
and quantity of hazard/toxic materials and chemicals at the site of the work.
<PAGE>
N62474-88-D-5086
Part VIII
Page 1 of 4
PART VIII
CONTRACT CLAUSES
1. CLAUSES INCORPORATED BY REFERENCE (FAR 52.252-2) (APR 1984)
This contract incorporates the fo11owing clauses by reference, with the same
force and effect as if they were given in full text. Upon request, the
Contracting Officer will make their full text available.
1. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES
<TABLE>
<CAPTION>
CLAUSE
NUMBER DATE TITLE
------ ---- -----
<S> <C> <C>
52.202-1 APR 1984 DEFINITIONS
52.203-1 APR 1984 OFFICIALS NOT TO BENEFIT
52.203-3 APR 1984 GRATUITIES
52.203-5 APR 1984 COVENANT AGAINST CONTINGENT FEES
52.203-6 JUL 1985 RESTRICTIONS ON SUBCONTRACTOR SALES TO
THE GOVERNMENT
52.203.7 FEB 1987 ANTI-KICKBACK PROCEDURES
52.210-1 JUN 1988 AVAILABILITY OF SPECIFICATIONS LISTED
IN THE INDEX OF FEDERAL
SPECIFICATIONS AND STANDARDS
52.210-2 APR 1988 AVAILABILITY OF SPECIFICATIONS LISTED
IN THE DOD INDEX OF SPECIFICATIONS
AND STANDARDS (DOD ISS)
52.212.13 APR 1984 STOP WORK ORDER ALTERNATE I
52.215-1 APR 1984 EXAMINATION OF RECORDS BY COMPTROLLER
GENERAL
52.215-2 APR 1988 AUDIT -- NEGOTIATION
52.215-22 APR 1988 PRICE REDUCTION FOR DEFECTIVE COST OR
PRICING DATA
52.215-23 APR 1988 PRICE REDUCTION FOR DEFECTIVE COST OR
PRICING DATA -- MODIFICATIONS
52.215-24 APR 1985 SUBCONTRACTOR COST OR PRICING DATA
52.215-25 APR 1984 SUBCONTRACTOR COST OR PRICING DATA --
MODIFICATIONS
52.215-30 SEP 1987 FACILITIES CAPITAL COST OF MONEY
52.215-31 APR 1987 WAIVER OF FACILITIES CAPITAL COST OF
MONEY
52.215-33 JAN 1986 ORDER OF PRECEDENCE
52.216-7 APR 1984 ALLOWABLE COST AND PAYMENT
52.217-8 APR 1984 OPTION TO EXTEND SERVICES
52.219-8 JUN 1985 UTILIZATION OF SMALL BUSINESS CONCERNS
AND SMALL DISADVANTAGED BUSINESS
CONCERNS
</TABLE>
<PAGE>
N62474-88-D-5086
Part VIII
Page 2 of 4
<TABLE>
<CAPTION>
CLAUSE
NUMBER DATE TITLE
- ------ ---- -----
<S> <C> <C>
52.219-9 APR 1984 SMALL BUSINESS AND SMALL DISADVANTAGED
BUSINESS SUBCONTRACTING PLAN
52.219-13 AUG 1986 UTILIZATION OF WOMEN-OWNED SMALL
BUSINESSES
52.220-3 APR 1984 UTILIZATION OF LABOR SURPLUS
AREA CONCERNS
52.220-4 APR 1984 LABOR SURPLUS AREA SUBCONTRACTING
PROGRAM
52.222-1 APR 1984 NOTICE TO THE GOVERNMENT OF LABOR
DISPUTES
52.222-2 APR 1984 PAYMENT FOR OVERTIME PREMIUMS
(PARAGRAPH (a) - INSERT DOLLAR
AMOUNT, TO BE NEGOTIATED)
52.222-3 APR 1984 CONVICT LABOR
52.222-4 MAR 1986 CONTRACT WORK HOURS AND SAFETY
STANDARDS ACT-OVERTIME COMPENSATION
52.222-11 FEB 1988 SUBCONTRACTS (LABOR STANDARDS)
52.222-26 APR 1984 EQUAL OPPORTUNITY
52.222-28 APR 1984 EQUAL OPPORTUNITY PREAWARD CLEARANCE
OF SUBCONTRACTS
52.222-35 APR 1984 AFFIRMATIVE ACTION FOR SPECIAL DIS-
ABLED AND VIETNAM ERA VETERANS
52.222-36 APR 1984 AFFIRMATIVE ACTION FOR HANDICAPPED
WORKERS
52.222-37 JAN 1988 EMPLOYMENT REPORTS ON SPECIAL DISABLED
VETERANS AND VETERANS OF THE VIETNAM
ERA
52.223-2 APR 1984 CLEAN AIR AND WATER
52.223-3 AUG 1987 HAZARDOUS MATERIAL IDENTIFICATION
52.223-5 MAR 1989 CERTIFICATION REGARDING A DRUG-FREE
WORKPLACE
52.227-1 APR 1984 AUTHORIZATION AND CONSENT
52.227-2 APR 1984 NOTICE AND ASSISTANCE REGARDING PATENT
AND COPYRIGHT INFRINGEMENT
52.227-12 JUL 1981 PATENT RIGHTS - RETENTION BY THE
CONTRACTOR (LONG FORM)
52.227-17 JUN 1987 RIGHTS AND DATA - SPECIAL WORKS
52.230-3 SEP 1987 COST ACCOUNTING STANDARDS
52.230-4 SEP 1987 ADMINISTRATION OF COST ACCOUNTING
STANDARDS
52.230-5 SEP 1987 DISCLOSURE AND CONSISTENCY OF COST
ACCOUNTING PRACTICES
52.232-17 APR 1984 INTEREST
</TABLE>
<PAGE>
N62474-88-D-5086
Part VIII
Page 3 of 4
<TABLE>
<CAPTION>
CLAUSE
NUMBER DATE TITLE
- ------ ---- -----
<S> <C> <C>
52.232-22 APR 1984 LIMITATION OF FUNDS
52.232-23 JAN 1986 ASSIGNMENT OF CLAIMS
52.232-25 FEB 1988 PROMPT PAYMENT II (FEB 1988)
52.233-1 APR 1984 DISPUTES ALTERNATE I (APR 1984)
52.233-3 JUN 1985 PROTEST AFTER AWARD ALTERNATE I
(JUN 1985)
52.236-8 APR 1984 OTHER CONTRACTS
52.236-9 APR 1984 PROTECTION OF EXISTING
VEGETATION,
STRUCTURES, EQUIPMENT,
UTILITIES AND
IMPROVEMENTS
52.236-12 APR 1984 CLEANING UP
52.236-13 APR 1984 ACCIDENT PREVENTION
52.236-23 APR 1984 RESPONSIBILITY OF THE ARCHITECT-
ENGINEER CONTRACTOR
52.236-25 APR 1984 REQUIREMENTS FOR REGISTRATION OF
DESIGNERS
52.237-2 APR 1984 PROTECTION OF GOVERNMENT
BUILDINGS,
EQUIPMENT, AND VEGETATION
52.242-1 APR 1984 NOTICE OF INTENT TO DISALLOW
COSTS
52.243-2 AUG 1987 CHANGES -- COST REIMBURSEMENT
ALTERNATE I (APR 1984)
52.243-7 APR 1984 NOTIFICATION OF CHANGES
(PARAGRAPHS
(b) AND (d) - INSERT NUMBER OF
CALENDAR DAYS TO BE NEGOTIATED)
52.244-2 JUL 1985 SUBCONTRACTS (COST-REIMBURSEMENT
AND
LETTER CONTRACTS) ALTERNATE I
52.244-5 APR 1984 COMPETITION IN SUBCONTRACTING
52.245-5 JAN 1986 GOVERNMENT PROPERTY
(COST-REIMBURSE-
MENT, TIME-AND-MATERIAL, OR
LABOR-
HOUR CONTRACTS)
52.246-5 APR 1984 INSPECTION OF SERVICES - COST
REIMBURSEMENT
52.249-6 MAY 1986 TERMINATION (COST-REIMBURSEMENT)
52.249-14 APR 1984 EXCUSABLE DELAYS
</TABLE>
<PAGE>
N62474-88-D-5086
Part VIII
Page 4 of 4
II. DEPARTMENT OF DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT (48 CFR
CHAPTER 2) CLAUSES
<TABLE>
<CAPTION>
CLAUSE
NUMBER DATE TITLE
- ------ ---- -----
<S> <C> <C>
52.203-7001 APR 1987 SPECIAL PROHIBITION ON EMPLOYMENT
52.203-7003 OCT 1987 DISPLAY OF DOD HOTLINE POSTER
52.204-7005 AUG 1986 OVERSEAS DISTRIBUTION OF DEFENSE SUBCONTRACTS
2.205-7000 FEB 1988 RELEASE OF INFORMATION TO
COOPERATIVE
AGREEMENT HOLDERS
52.215-7000 APR 1985 AGGREGATE PRICING ADJUSTMENT
52.215-7003 FEB 1988 COST ESTIMATING SYSTEM
REQUIREMENTS
52.219-7000 APR 1984 SMALL BUSINESS AND SMALL
DISADVANTAGED
BUSINESS SUBCONTRACTING PLAN
(MASTER PLANS)
52.227-7022 MAR 1979 GOVERNMENT RIGHTS (UNLIMITED)
52.227-7024 APR 1984 NOTICE AND APPROVAL OF RESTRICTED
DESIGNS
52.227-7030 JUL 1976 TECHNICAL DATA - WITHHOLDING OF
PAYMENT
52.227-7036 MAY 1987 CERTIFICATION OF TECHNICAL DATA
CONFORMITY
52.227-7037 MAY 1987 VALIDATION OF RESTRICTIVE
MARKINGS
ON TECHNICAL DATA
52.231-7000 APR 1984 SUPPLEMENTAL COST PRINCIPLES
52.233-7000 FEB 1980 CERTIFICATION OF REQUESTS FOR
ADJUSTMENT OR RELIEF EXCEEDING
$100,000
52.251-7000 APR 1984 ORDERING FROM GOVERNMENT SUPPLY
SOURCES
</TABLE>
<PAGE>
N62474-88-D-5086
Part IX
Page 1 of 1
PART IX
LIST OF ATTACHMENTS
-------------------
<TABLE>
<CAPTION>
ATTACHMENTS TITLE
- ----------- -----
<S> <C>
A Reports of Work
B Guide for the Preparation of Contractors' Invoices
C Award Fee Determination Plan
D Certificate of Current Cost or Pricing Data
E Subcontracting Plan
F Program Management Office Functions Chargeable to Contract Task
Orders
G Estimated Rates for Use in Establishing "NOT TO EXCEED" Amounts
on CTO's and Escalation Estimates for Options Years
</TABLE>
<PAGE>
ATTACHMENT A - REPORTS OF WORK
<PAGE>
REPORTS DESCRIPTION
-------------------
1. The Contractor shall be required to submit the reports listed in
Table 1. Additional requirements may be imposed by the program's
-
management information system. All documents (with the exception of
monthly progress reports) must be approved by the cognizant Contracting
Officer or Engineer-In-Charge before final publication.
2. The purpose of the reports is to provide Navy managers with an
overall guide for tracking the progress of work, assisting with budgeting
requirements, and evaluating contractor performance. The reports will
also provide the primary vehicle for highlighting variations from the
cost baseline plan, for projecting impacts of the variations, and for
proposing actions to get back within the baseline.
TABLE 1
REPORTS AND OTHER DOCUMENTS REQUIRED (a)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
DOCUMENT Versions (b) Timing (c) NO. OF COPIES (D)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Contract Management Plan D/F 30/15 5
QC Management Plan D/F 30/15 5
Project Work Plans D/F To be specified in individual
CTOs.
Project Completion D/F 30 6
Reports
Progress Reports
- Summary (Technical, F Monthly 6
Financial and Sub-contracting)
- Site-Specific F Monthly 6
(Technical and Financial)
Analytical Services F Annually 6
Reports
Special Patent Reporting F 10 5
- --------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(a) Certain activities require special reports noted in the statement of
work.
A(2)
<PAGE>
(b) D - draft, F - final
(c) The due date, indicated in terms of calendar days after the pertinent event
(issuance of CTO, end of reporting period, completion of work), applies to
the preliminary or draft versions. The final version is due usually within
15 days after receipt of Navy's comments by the Contractor.
(d) The number provided here is only an estimate. A more definitive number
may be specified in the CTO.
3. CONTRACT MANAGEMENT PLAN
a. The Contractor shall prepare a Management Plan delineating the management
strategy and cost plan for implementing the contract. The plan is to provide
general policy and procedural guidance for all work to be performed.
b. The Contractor shall submit a draft version of the Management Plan to the
Contracting Officer for review within thirty (30) calendar days after the
effective date of the contract. This version shall reflect the management
concept presented in the Contractor's successful proposal as augmented through
negotiations and post-award consultations. The approved Contract Management Plan
will be incorporated into the contract as Attachment______.
c. In the event the Government delays review and return of the Draft
Management Plan beyond the period specified, the Contractor shall immediately
notify the Contracting Officer. The Contractor shall deliver the Final
Management Plan within ninety (90) calendar days after the effective date of the
contract.
d. The Contract Management Plan shall include but will not necessarily be
limited to the following elements:
- Introduction
- purpose and scope of the program
- objectives and organization of the plan
- Project Organization
- functional organization structure
- key personnel assignments
- flow of authority and responsibility staffing plans
- Management Process
- initiating work assignment and progress controls
- program and performance review
- administrative procedures
- scheduling
- accounting and cost control procedures
- management information system(s)
- reporting requirements
- document production and distribution
A(3)
<PAGE>
- Subcontracting
- subcontracting decision process
- procurement process
- flow of authority and responsibility
- performance review and quality control
- accounting and cost control procedures
- Property Management
- existing in-house inventory
- acquisition and disposition procedures
- maintenance and calibration
- Technical Approach (technical policies and SOP's to be
incorporated during life of project)
- overview
- planning activities
- design and implementation
- management support
4. QUALITY CONTROL (QC) MANAGEMENT PLAN
a. The Contractor shall submit to the Contracting Officer a Draft Management
Plan for QC within thirty (30) calendar days after the effective date of the
contract.
b. The Contracting Officer will review and return the Draft QC Management
Plan indicating approval or disapproval, and comments, if necessary, within
forty-five (45) calendar days. In the event the Government delays review and
return of the Draft QC Management Plan beyond the period specified, the
Contractor shall immediately notify the Contracting Officer. The Contractor
shall deliver the Final QC Management Plan within ninety (90) calendar days
after the effective date of the contract.
c. The Contracting Officer will incorporate the approved QC Management Plan
into the contract as part of the overall Contract Management Plan.
(Attachment ______).
5. PROJECT WORK PLANS
a. Project work plans shall be submitted for all CTOs and will serve as a
baseline from which Contractor progress can be monitored. The project work plan
shall include a detailed cost estimate prepared in accordance with Navy
guidance, which will identify specific costs for completing the CTO. The
estimate will include all major cost elements. Additional cost elements may be
required depending on the specific activity being performed. For example,
additional cost elements for construction activities such as equipment,
materials, etc., may be required.
A(4)
<PAGE>
b. The project work plan should address but will not necessarily be
limited to the following elements:
- Objectives and scope of the proposed project and its relationship to
other projects
- Technical approach, anticipated problems, proposed solutions
- Work to be performed under each task, including objectives and scope,
information sources, and methods to be used
- Safety and contingency measures (if applicable)
- Schedule, including critical path and milestones, and staffing of each
task
- Anticipated number of man-hours to complete the project and names of key
personnel.
- Detailed cost-estimate for the project
- Cash flow scheduling and cost control procedures
- Subcontracting plan
- Document production and distribution.
- Quality Control Project Plan (if applicable)
6. PROJECT COMPLETION REPORTS
a. The Contractor shall prepare completion reports for each project, or
combination, as specified in the CTO. The purpose of these reports is to
document the conduct of the work; present findings, conclusions and
recommendations; account for the funds expended; and provide guidance for future
efforts. Specific requirements for these reports will be identified in the CTOs.
b. Completion reports concerning remedy selection, i.e., the RI/FS Report
and the Record of Decision, will become part of the Navy's Administrative Record
for each site. The Remedial Design Plans and Specifications, the Remedial Action
Report, and Operation and Maintenance Plan will be required for subsequent
actions. All reports may be subject to public review. Additionally, less formal
deliverables may be required at interim stages of a project. These may be in the
form of concise technical direction memoranda, briefings or meetings that enable
the transfer of information and facilitate decisions necessary to progress to
the next stage of work. They are not intended to be formally reviewed nor delay
site progress. For example, at the completion of the first phase of the RI, the
Contractor would present a technical direction memorandum indicating results and
recommended next steps. The EIC could then take whatever steps are necessary to
approve the next phase of work with minimum delay.
c. Project completion reports should address but will not necessarily be
limited to the following elements:
- Executive summary
- Purpose, objectives and scope of the project and relationship to other
projects
- Approach and techniques used
- Major problems encountered and solutions adopted
- Deviations from work plan
A(5)
<PAGE>
- Detailed accomplishments and results of study
- Costs incurred and deviations from budget
- Recommendations.
d. The schedule for submitting draft and final project reports will be
specified in each CTO.
7. PROGRESS REPORTS
a. The Contractor shall prepare monthly progress reports. The purpose of
these reports will be to apprise the Navy of the status of the individual
activities and the overall program and to call attention to any departures from
the applicable management and work plans. The technical sections will provide
baseline schedules for performing work and monitoring progress, and will
document the work that has been accomplished at a site. The financial sections
will provide a baseline for planned expenditures for the total project and for
each site and CTO, and monitor actual expenditures against the baseline to
assess the financial status of the project.
(1) Summary Progress Report
The executive level summary progress report shall consist of the pertinent
technical and financial information for the reporting period. Its focus shall
be the Contractor's overall effort on all CTOs, highlighting key activities and
any deviations from planned schedules and budgets.
- - Technical
This section shall consist of a concise, executive level summary of all
technical activities performed under the contract during the reporting period.
The summary shall highlight the activities of the Program Management Office and
progress achieved under each project. Specific areas of interest shall include
difficulties encountered during the reporting period and corrective actions
taken, a statement of activity anticipated during the subsequent reporting
period, and a schedule showing accomplishments versus planned activities. The
report shall include any changes of key personnel concerned with the project.
- - Financial
This section shall begin with a narrative statement supplying the following
information:
- - Available estimated costs under the contract
- - Total estimate required to complete ongoing CTOs
- - Total contract variances and a plan for corrective actions, if applicable.
Next, this section shall clearly delineate, in spreadsheet format, cumulative
and monthly expenditures of direct labor hours, direct labor costs, program
management costs, indirect costs, sample analysis costs, and total costs for the
total contract. The spreadsheet format will report monthly and cumulative
expenditures for each cost element.
<PAGE>
The graphic format will demonstrate the rate of planned expenditures versus
cumulative actual expenditures. A separate graph will be prepared for each cost
element. The graphs will be prepared as follows:
- Identification - contract #, reporting period, cost element or
activity being reported
- Vertical Axis - dollars
- Horizontal Axis - time (contract period of performance in months)
- Solid line depicting the projected rate of expenditure of the cost
element on a cumulative basis.
- Dotted line representing the actual cumulative cost incurred to
date.
Additionally, an expenditures forecast for the next three (3) months shall be
presented. If the need to reapportion budget estimates among the constituent
elements of the budget exists, then a recommendation for a revised budget shall
be presented along with supporting rationale.
This section will also contain a copy of the project site-specific financial
management reports. These provide financial statements for each CTOs in terms
of standard tasks.
- - Subcontracts
This section will list all subcontracts awarded monthly by title, contractor,
and dollar value; percentage of small business subcontracts awarded, the
percentage of small disadvantaged business subcontracts awarded, and how these
percentages compare to the Subcontracting Plan percentages listed in Attachment
____.
(2) Site-Specific Progress Reports
The site-specific progress report shall contain technical and financial
summaries for each CTO. The report shall be submitted to the responsible EIC
within twenty (20) calendar days after the end of each reporting period.
- - Technical
The reports will present a summary and highlights of progress and problems
experienced during the reporting period and shall contain detailed activity
progress reports for each active remedial project. A tabular summary showing
planned and actual start and completion dates for each of the standard tasks,
percent complete for each active task, and schedule variances also will be
provided. Schedule variances will be highlighted in the narrative with options
for correcting problems as appropriate. In addition, the report will identify
the number of samples analyzed at laboratories for the site during the reporting
period and where the analyses were performed.
A(7)
<PAGE>
- - Financial
Site-specific financial status reports shall contain detailed cost summaries for
each active CTO. They will compare planned versus actual expenditures for all
standard tasks. The reports will contain tabular and graphic summaries. In
addition, the report shall contain six-month cost projections and explain any
variances in a narrative summary.
8. ANALYTICAL SERVICES REPORT
The Contractor shall be required to maintain a data base of the following
nine factors related to analytical services performed by laboratories in support
of CTOs:
- Number of samples analyzed
- Where samples were sent for analysis, keyed to the
source of the samples
- Cost
- Turnaround time for analysis
- QA/QC requirements
- Cost per sample
- Parameters measured and sample matrix
- Protocol used
- Acceptance rate of product.
In addition, the Contractor shall generate an annual report on all nine
factors with an overall analysis of the effectiveness of the analytical
programs/services used.
9. SPECIAL PATENT REPORTING REQUIREMENTS
In order to avoid, mitigate or neutralize an actual or potential conflict
of interest, if the Contractor anticipates the use of corporate patents or other
proprietary technologies unique to the Contractor for use in remedial design
and/or remedial action, the Contractor shall notify the Contracting Officer in
writing of the intent to use such patents or proprietary technologies within ten
(10) days of the issuance of the CTO or before work commences.
<PAGE>
ATTACHMENT B
GUIDE FOR THE PREPARATION OF CONTRACTOR'S INVOICES FOR REIMBURSEMENT
OF COST AND FEES UNDER COST-PLUS-AWARD FEE
(CPAF) TYPE CONTRACTS
<PAGE>
GUIDE FOR THE PREPARATION OF CONTRACTOR'S INVOICES FOR REIMBURSEMENT
OF COST AND FEES UNDER COST-PLUS-AWARD FEE
(CPAF) TYPE CONTRACTS
1. Responsibility for Preparation
------------------------------
The Contractor is responsible for preparing and submitting reimbursement
invoices according to the terms of the contract. Invoices should not contain any
classified information and should not be submitted more than monthly, unless
other arrangements are made with the Contracting Officer.
The contractor must prepare invoices on the prescribed Government forms (see
next section) and submit them to the Contracting Officer.
2. Prescribed Government Forms
---------------------------
NAVCOMPT Form 2277, "Voucher for Disbursement and/or Collection," (original)
must be used to show the amount claimed for reimbursement. The Contractor is not
required to certify or otherwise sign the voucher.
SF 1035 and lO35A, "Public Voucher for Purchases and Services Other
Than Personal - Continuation Sheet," will be used for additional information
required by the Contracting Officer.
The voucher forms may be reproduced or obtained from the appropriate
Administrative Contracting Officer or, at a nominal cost, from the Government
Printing Office.
3. Preparing Vouchers
------------------
The information required to be submitted on the NAVCOMPT Form 7722 is
explained below. The numbered items correspond to the block entries on Figure 1.
<TABLE>
<CAPTION>
Block No. Title/Description/Explanation
--------- -----------------------------
<S> <C>
7 PAID BY - Provides space for the paying
-------
officer to affix stamp after payment,
including the check number, when applicable.
8 TO - Name and address of payee, the
--
contractor as shown on the dealer's bill or,
in the case of reimbursable order billings,
the name and address of the office or
activity being billed.
9 ARTICLES, SERVICES OR ITEMS - Information to
be entered under the various columns of this
block will be the same as that presently
being entered under the comparable columns
of the NAVCOMPT FORM 2277. It should be
noted that money amounts entered in Column F
will always be gross. All deduction amounts
will be entered in the appropriate column(s)
under Block 12 below.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Block No. Title/Description/Explanation
--------- -----------------------------
<S> <C>
10 TYPE OF PAYMENT OR BILL - An "X" will be
-----------------------
entered in the appropriate box in accordance
with the following:
COMPLETE - This block will be used when the
voucher represents a complete payment or billing
for all the items and/or work or services
requested in the document cited in Block 3.
Thus, such vouchers represent the first and only
payment or bill that will be rendered against
the document cited in Block 3.
PARTIAL - This block is to be used when the
voucher covers only a portion of the items
and/or work or services requested in the
document cited in Block 3.
FINAL - This block will be used only when the
voucher represents the very last payment or bill
to be rendered against the document cited in
Block 3.
PROGRESS - This block is to be used when the
voucher represents a payment or bill for costs
incurred by a contractor or by a performing
activity, chargeable to the document cited in
Block 3, but for which delivery of the items or
services requested has not yet been made.
ADVANCE - This block is to be used when the
voucher represents a payment made to a
Contractor or performing activity prior to
incurring any costs.
11 ACCOUNTING CLASSIFICATION TO BE CREDITED
----------------------------------------
(COLLECTION) The accounting data, including
------------
related ACRNs when applicable, and amount to be
credited in connection with the collection of
cash. This block will also be used in connection
with reimbursable order billings for indicating
the accounting data of the billing to be
credited.
12 DEDUCTIONS - Provides for identifying the type
----------
of deductions made by the paying officer; if
any.
13 ACCOUNTING CLASSIFICATION TO BE CHARGED
---------------------------------------
(DISBURSEMENT) - The accounting data, including
--------------
related ACRNs, to be charged in connection with
funds disbursed regardless of whether by cash,
check or no-check transfer. It should be noted
that the total net amount to be entered under
Block 13L is the difference between Block 9H
minus Block 12I.
14 INSPECTION REPORT NOS - Enter the related
---------------------
inspection report numbers, when applicable.
</TABLE>
B(3)
<PAGE>
<TABLE>
<CAPTION>
Block No. Title/Description/Explanation
--------- -----------------------------
<S> <C>
15 GOV'T B/L NOS. - Enter the related Government
--------------
bill of lading numbers when applicable.
16 APPROVED - The signature and title of the
--------
official authorized to approve payment of the
voucher as well as the date of such approval. If
the ability to certify and authority to approve
are combined in one person, that person shall
sign in Block 17; otherwise the approving
officer will sign in Block 16 over his official
title.
17 CERTIFIED - The signature and title of the
---------
official authorized to certify the voucher for
payment as well as the date of such
certification.
18 PAYMENT RECEIVED - Provides space for
----------------
identifying the name of the individual, company
or corporation and the name and title of the
person signing for such company/corporation when
payment is made in cash.
</TABLE>
GUIDE FOR PREPARING SF 1035 OR CONTRACTOR'S EQUIVALENT ATTACHMENT (FIGURE 2)
- -----------------------------------------------------------------
a. Insert the name of the military department or agency which
negotiated the contract.
b. Voucher No. - insert the appropriate serial number of the voucher
as shown on NAVCOMPT Form 2277.
c. Schedule No. - leave blank.
d. Insert the sheet number in numerical sequence if more than one
sheet is used. Use as many sheets as necessary to show the information required
by the Contracting Officer.
e. Insert payee's name and address as shown on NAVCOMPT Form 2277.
f. Insert the contract number and the task order number when
applicable.
g. Insert the latest: target or estimated costs, target or fixed-fee
total contract value, and amount of fee payable.
h. Insert: "Analysis of Claimed Current and Cumulative Costs and Fee
Earned."
i. Insert the major cost elements. Use additional SF 1035s if
necessary to show the detail of direct transportation charges, the computations
of overhead adjustments from provisional rates to negotiated rates or allowable
actual rates.
j. Insert the amount billed by the major cost elements, contract
reserves and adjustments, and adjusted amounts claimed for the current period.
B(4)
<PAGE>
k. Insert the cumulative amounts billed by the major cost elements,
contract reserves, and adjusted amounts claimed to date of this billing.
1. Insert the total costs for current and cumulative periods.
m. Insert the target for base-fee earned and due for the current and
cumulative periods and the formula for the computation (percentage of
completion).
n. Insert the total costs claimed and the base fee due for the current
and cumulative periods.
o. Insert the details of the contract reserves withheld in the current
period and for the cumulative period. The contractor is responsible for reducing
its claims for contract reserves.
p. Show the status of all outstanding DCAA Form 1, "Notice of Contract
Costs Suspended and/or Disapproved." The DCAA Form 1 is the form used to effect
suspension and disapproval of costs or fees claimed for payment on contractor's
reimbursement vouchers. In general, an item of cost, either direct or
indirect which lacks adequate explanation or documentary support for definitive
audit approval or disapproval will be suspended until the required data is
received and a determination can be made as to the allowability of the item.
Costs for which audit action has been completed and which are not considered
allowable, will be disapproved. When amounts on an outstanding DCAA Form 1 are
resubmitted they will be shown in the current period column, and the
corresponding cumulative total of outstanding suspensions or disapprovals will
be reduced to cover the resubmission so that the cumulative amounts will be
"net."
q. Insert net reserves and adjustments.
r. Show the costs and fee subject to reimbursement for the current and
cumulative periods.
s. Amount to be carried forward NAVCOMPT Form 2277.
This completes the requirements for preparing SF 1035
-----------------------------------------------------
4. Contractor's Claim for the Reimbursement of Purchased Material and
------------------------------------------------------------------
Subcontracted Items (Applicable to other than small business concerns)
- -------------------
Claims for Purchased Material and Subcontracted Items will be made on the
basis of cash disbursed by the contractor. Where it is found that Purchased
Material and Subcontracted Items costs are being billed to the Government before
being paid in cash by the contractor, such portion of the claim, together with
its associated costs, will be disallowed until payment is made.
B(5)
<PAGE>
5. Withholding and Release of Contract Reserves
----------------------- --------------------
Contractual provisions covering Base Fee, patents royalties, etc., usually
provide for the accumulation of a withholding reserve until certain contract
requirements are met to the satisfaction of the Contracting Officer. It is the
Contractor's responsibility to include appropriate adjustments in his
reimbursement claims to cover the required accumulation and release of contract
withholding reserves. The contractor should resolve with the Contracting Officer
any questions regarding the amount of these reserves.
6. Contractor's Completion Voucher
-------------------------------
The completion voucher is the last voucher to be submitted on a contract or
task order. A separate completion voucher will be submitted for each CTO for
which a separate series of public vouchers had been submitted.
FAR 52.216-7(h) requires the contractor to submit the completion voucher
promptly (not later than 1 year) following completion of the work under the
contract, unless approved by the contracting officer in writing.
However, prior to submitting the completion voucher, DCAA must have
completed an audit of the contractor's operations and costs relating to the
contract. FAR 52.216-7(d) provides for final overhead rates to be established by
the appropriate Government representative. Refer to the clauses in the contract
to determine the responsible agency. In all cases, an audit is performed by
DCAA. Within 9O days after the end of each of its fiscal years for estimating,
accumulating and reporting contract costs, the contractor should submit to the
Contracting Officer or cognizant DCAA office, a proposed final overhead rate
submission for the period. It should be based on the actual cost experienced
during that period, and be submitted with supporting cost data, specifying the
contracts and subcontracts to which the rates apply. (A sample format of this
submission is contained in this package.)
After submission, the contractor's costs will be audited as soon as
possible. Normally, a contract cannot be closed out unless the applicable costs
have been audited. Therefore, the contractor should not prepare or submit the
completion invoice, until the DCAA audit of the contractor's fiscal years during
which costs have been incurred under the contract, has been completed.
Guides for preparing SF 1035 or Contractor's Equivalent Attachment (Figure
--------------------------------------------------------------------------
3) Completion Voucher
- ---------------------
Note: The example of the SF 1035 for the completion voucher is separate and
distinct from the preceding NAVCOMPT Form 2277 and SF 1035 examples.
a. Insert the name of the military department or agency which negotiated
the contract.
b. Insert the sheet number in numerical sequence if more than one sheet
is used. Use as many sheets as necessary to show the information required by the
Contracting Officer or the auditor.
B(6)
<PAGE>
c. Insert the voucher number, as shown on NAVCOMPT Form 2277 and mark
"final" or "completion" after it.
d. Insert payee's name and address as shown on NAVCOMPT Form 2277.
e. Insert the contract number and the task order number when
applicable.
f. Insert the latest: target or estimated costs, target or base-fee,
and total contract value.
g. Insert: "Contractor's Cumulative Claim and Reconciliation
Statement."
The final audit determined or negotiated fringe, overhead and G&A
rates should be listed by contractor's fiscal year as shown. However, if the
contract specifies ceiling rates, the rates shown cannot exceed the ceiling in
the contract.
Insert the major cost elements. Use additional SF 1035s if
necessary to show the detail of certain changes or computations. A separate
column should be prepared for each of the contractor's fiscal years. The
amounts shown for direct costs should always tie in to the costs shown on the
submission prepared for audit as explained above under "COMPLETION INVOICE." Any
direct costs questioned during our audit of costs should be excluded from the
applicable contractor's fiscal year. Fringe, overhead and G&A should be computed
using the rates as explained above. The total costs being billed cannot be
claimed. Any amount in excess of the contract value should be subcontracted from
the total.
Bill for any portion of the fee not previously billed. If the
contract provides for an incentive fee, show the computations of the total fee
claimed. Use separate sheets if necessary.
h. Insert the amount of total previous payments received on interim
vouchers.
ADDITIONAL DOCUMENTS TO BE SUBMITTED ON COMPLETION VOUCHERS
-----------------------------------------------------------
In addition to the NAVCOMPT Form 2277s and the SF 1035s, the contractor
is required to submit an original and four copies of the following documents to
DCAA.
1. Contractor's release of claims, or Assignee's release of claims, if
applicable. The amount listed on this form should be the total contract value,
including fee. It should tie in to the total amount claimed on the SF 1035.
2. Contractor's assignment of refunds, rebates, credits and other
amounts, or Assignee's assignment of refunds, rebates, credits and other
amounts, if applicable.
3. Contractor's affidavit of waiver of lien, when required by the
contract
B(7)
<PAGE>
The following listing provides a breakdown of functions for each part-time
position subject to charges to PMO or CTO's. (Only recurring costs are
considered here.)
<TABLE>
<CAPTION>
POSITION/FUNCTION PMO CTO
- ----------------- --- ---
<S> <C> <C>
Quality Assurance Manager:
- -------------------------
Audit and subcontractor procedures X
Interface with Navy QA Officer X
Potential subcontractors that will work on more than
one project or site X
Potential subcontractors to address special needs
of individual site or project X
Maintain control of project documents, records, reports X
Technical or QA/QC review of PMO or CTO deliverables X
Quality Assurance Manager (continued):
- -------------------------
Development of project- and site-specific QA/QC Plans X
Development of general QA/QC procedures (exclusive of QC Management Plan) X
Preparation of annual Analytical Services Report X
QA/QC validation of project lab data X
Provide input into monthly reports X
Attend meetings, non site-specific X
Attend meetings, site-specific X
Staff training X
Health and Safety Manager:
- -------------------------
Audit and subcontractor H&S procedures X
Interface with Navy H&S Officer X
Monitor and maintain control of staff health records X
Review of PMO or CTO deliverables X
Development of project- and site-specific H&S Plans X
Development of general H&S procedures (exclusive of Safety Plan) X
Provide input into monthly reports X
Attend meetings, non site-specific X
Attend meetings, site-specific X
Staff training X
Safety equipment maintenance and calibration X
Subcontract Admin:
- -----------------
Procurement and administration of subcontracts usable at more than
one site or project X
Procurement and administration of subcontracts for highly specialized
services needed at one site under a CTO X
Award fee related duties X
Other duties X
Secretary/Clerical:
- ------------------
Clerical duties associated with PMO reporting and/or deliverables X
Clerical duties directly required to prepare deliverables under
a specific CTO X
Other miscellaneous clerical duties X
</TABLE>
<PAGE>
Appendix
Estimated Rates
For Use in Establishing
"Not to Exceed" Amount on CTO's
<TABLE>
<CAPTION>
Title Base Rate
<S> <C>
*
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
</TABLE>
* CONFIDENTIAL
<PAGE>
Appendix
Estimated Rates
For Use in Establishing
"Not to Exceed" Amount on CTO's
<TABLE>
<CAPTION>
Title Base Rate
<S> <C>
James M. Montgomery
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
</TABLE>
* CONFIDENTIAL
<PAGE>
Appendix
Estimated Rates
For Use in Establishing
"Not to Exceed" Amount on CTO's
<TABLE>
<CAPTION>
Title Base Rate
<S> <C>
Versar Inc.
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
</TABLE>
* CONFIDENTIAL
<PAGE>
FIGURE 1
--------
<TABLE>
<CAPTION>
VOUCHER FOR DISBURSEMENT AND/OR COLLECTION - NAVCOMPT FORM 2277 (2-87) NAVCOMPTINST 7000 43
Page 1 0f 1 Page
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
1. Purpose 2. Date 3. Reference Document No. 4. Bill Number 5. Voucher No.
DISB. [X] COLLECT [_] 1-25-80 Nobs 4443 54953
- ------------------------------------------------------------------------------------------------------------------------------------
6. FROM: 7. PAID BY:
Supervisor of Shipbuilding Conversion and Repair, USN CHECK NO. 13787849
Groton, Connecticut 06340
USNRFC
NORVA 60951
Jan. 28, 1980
SYMBOL 5245
- ------------------------------------------------------------------------------------------------------------------------------------
8. TO:
ABC Corporation
100 Main Street
Anywhere, USA
- ------------------------------------------------------------------------------------------------------------------------------------
9. ARTICLES, SERVICES OR ITEMS
- ------------------------------------------------------------------------------------------------------------------------------------
A. B. C. D. E. UNIT PRICE F.
INVOICE OR DATE OF DELIVERY/ DESCRIPTION QUANTITY ---------------- AMOUNT
ORDER NO. SERVICE !REMITTER, EXPLANATION, DETAILS, ETC! COST PER
- ------------------------------------------------------------------------------------------------------------------------------------
JO 695 $1,767.00
Inv. 92602
- ------------------------------------------------------------------------------------------------------------------------------------
G. DISCOUNT TERMS H. TOTAL $1,767.00
- ------------------------------------------------------------------------------------------------------------------------------------
10. TYPE OF PAYMENT OR BILL: COMPLETE [_] PARTIAL [X] FINAL [_] PROGRESS [_] ADVANCE [_]
- ------------------------------------------------------------------------------------------------------------------------------------
11. ACCOUNTING CLASSIFICATION TO BE CREDITED (COLLECTION)
- ------------------------------------------------------------------------------------------------------------------------------------
A. B. C. D. E. F. G. H. I. J. K.
ACRN APPROPRIATION SUB-HEAD OBJ. BUREAU SA AAA TT PAA COST CODE AMOUNT
CLASS CONTROL (U.S. CURRENCY ONLY)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
12. DEDUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
A. B. C. D. E. F. G.
ACRN TRANSPORTATION DISCOUNT TAX RESERVE MISCELLANEOUS TOTAL ???? ACRN
(U.S. CURRENCY ONLY)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
H. CURRENCY: EXCHANGE RATE = $1.00 I. TOTAL DEDUCTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
13. ACCOUNTING CLASSIFICATION TO BE CHARGED (DISBURSEMENT)
- ------------------------------------------------------------------------------------------------------------------------------------
A. B. C. D. E. F. G. H. I. J. K.
ACRN APPROPRIATION SUB-HEAD OBJ. BUREAU SA AAA TT PAA COST CODE AMOUNT
CLASS CONTROL (U.S. CURRENCY ONLY)
- ------------------------------------------------------------------------------------------------------------------------------------
BE 1781810 81HR 025 01048 0 000129 2D 000000 0081980695DA $1,767.00
- ------------------------------------------------------------------------------------------------------------------------------------
L. TOTAL NET AMOUNT TO BE PAID (BLOCK 9-H MINUS BLOCK 12-I) $1,767.00
- ------------------------------------------------------------------------------------------------------------------------------------
14. INSPECTION REPORT NOS: 15. GOV'T B/L NOS:
- ------------------------------------------------------------------------------------------------------------------------------------
16. APPROVED 17. CERTIFIED
BY Jane Doe BY John Doenut
-------------------------------------------- --------------------------------------------------
10-4-79 TITLE Fiscal Officer 1-25-80 TITLE Voucher Examiner
- ------- ------------------------------------- ------- -------------------------------------------
(Date) (Date)
- ------------------------------------------------------------------------------------------------------------------------------------
18. PAYMENT RECEIVED:
PAYEE -
PER -
TITLE -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B(8)
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FIGURE 2
- ----------------------------------------------------------------------------------------------------
STANDARD FORM 1035 PUBLIC VOUCHER FOR PURCHASES AND VOUCHER NO
SEPTEMBER 1973 SERVICES OTHER THAN PERSONAL (b) 10
4 TREASURY FRM 2000 -----------
1035-116 SCHEDULE NO
(c)
-----------
CONTINUATION SHEET SHEET NO
(d)
- ----------------------------------------------------------------------------------------------------
U.S. DEPARTMENT, BUREAU OR ESTABLISHMENT
(a)
- ----------------------------------------------------------------------------------------------------
ARTICLES OF SERVICES
(ENTER DESCRIPTION, ITEM # OF
NUMBER DATE OF CONTRACTS, OR FEDERAL SUPPLY UNIT PRICE
AND DATE DELIVERY SCHEDULE, AND OTHER INFORMATION ----------
OF ORDER OR SERVICE DEEMED NECESSARY) QUANTITY COST PER AMOUNT
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(e) ABC Corporation (f) Contract No. NOas 84-010c (g) Target/Estimated
100 Main Street Costs $250,000
Anywhere, USA (g) Target/Fixed Fee 15,000
--------
(g) Total $265,000
========
(g) 85% of Fixed Fee $ 12,000
(h) Analysis of Claimed Current and
-------------------------------
Cumulative Costs and Fee Earned (k)
------------------------------- (j) Amount for Cumulative
Current Period From Inception
Billed To Date of Current
Billing
------------------ -------------------
(i) Major Cost Elements:
-------------------
Direct Materials $ 700 $ 25,900
Subcontracts (Cost & Redeterminable) 1,500 8,100
Interplant Charges 200 1,200
Special Tooling 200 3,700
Direct Transportation Costs 175 500
Direct Labor) 650 60,000
-----(Manufacturing, Engineering, etc.)
Overhead ) 925 90,000
General & Administrative Expenses 435 18,800
------- ---------
(l) Total Costs $ 4,785 $ 207,500
(m) Fixed Fee Earned (Formula) 287 12,400
------- ---------
(n) Total Amounts Claimed $ 5,072 $ 219,900
------- ---------
Contract Reserves and Adjustments:
---------------------------------
(o) Contract Reserves Withheld) $ (500) $ (15,000)
-----(Identify)
(o) Contract Reserves Cleared) 700 11,000
(p) DCAA Form 1 - - Resubmitted (Voucher No.) 100 XXXXXXXXX
(p) DCAA Form 1 - - Conceded by Contractor (1,600)
(p) DCAA Form 1 - - Outstanding Suspensions (1,700)
(p) DCAA Form 1 - - Disapprovals Subject to Appeal (2,000)
------- ---------
(q) Net - Reserves and Adjustments $ 300 $ (9,300)
------- ---------
(r) Adjusted Amounts Claimed:
------------------------
Current and Cumulative Costs $ 5,085 $ 198,220
Fixed-Fee 287 12,450
------- ---------
Total (s) $ 5,372 $ 210,670
======= =========
</TABLE>
<PAGE>
FIGURE 3
--------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
STANDARD FORM 1035 PUBLIC VOUCHER FOR PURCHASES AND (c) VOUCHER NO
SEPTEMBER 1973 SERVICES OTHER THAN PERSONAL 30 FINAL
4 TREASURY FRM 2000 -----------
1035-116 SCHEDULE NO
-----------
CONTINUATION SHEET SHEET NO
(b)
- -------------------------------------------------------------------------------------------------
U.S. DEPARTMENT, BUREAU OR ESTABLISHMENT
(a) Department of the Army - Picatinny Arsenal
- -------------------------------------------------------------------------------------------------
ARTICLES OF SERVICES
(ENTER DESCRIPTION, ITEM # OF
NUMBER DATE OF CONTRACTS, OR FEDERAL SUPPLY UNIT PRICE
AND DATE DELIVERY SCHEDULE, AND OTHER INFORMATION ----------
OF ORDER OR SERVICE DEEMED NECESSARY) QUANTITY COST PER AMOUNT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(d) XYZ Corporation (e) Contract DAAA21-76-C-XXXX
200 Main Street
Anywhere, USA 20005
(g) Contractor's Cumulative Claim and (f) Established Cost $400,000
Reconciliation Statment --------
(f) Fixed Fee 36,000
--------
(f) Total $436,000
========
Final Rates FY 82 FY 83 FY 84 Total
- ----------- ----- ----- ----- -----
Fringe Benefit Rate 10.92% 12.15% 13.33%
Overhead Rate 112.99 92.30 92.12
G&A Rate 2.91 14.97 12.33
Major Cost Elements
- -------------------
Salaries $115,572.17 $ 16,068.11 $3,033.44 $134,673.72
Fringe Benefits 12,632.04 1,952.28 404.36 14,988.68
----------- ----------- --------- -----------
Total Direct Labor 128,204.21 18,020.39 3,437.80 149,662.40
Overhead 144,857.94 16,632.82 3,166.90 164,657.66
Travel 4,193.94 297.76 4,491.70
Consultants 1,071.76 1,071.76
Other Direct Costs 770.10 8.34 9.00 787.44
----------- ----------- --------- -----------
Subtotal 279,097.95 34,959.31 6,613.70 $320,670.96
Material 2,242.16 2,242.16
Subcontract 62,351.00 62,351.00
Subtotal 343,691.11 34,959.31 6,613.70 385,264.12
G&A 10,001.41 5,233.41 815.47 16,050.29
----------- ----------- --------- -----------
Total Cost Incurred $353,692.52 $ 40,192.72 $7,429.17 $401,314.41
Amount in Excess of Contract Amount (1,314.41)
-----------
Total Costs Claimed 400,000.00
Fixed Fee 36,000.00
-----------
Total $436,000.00
Less Previous Payments (h) 433,871.23
-----------
Amount Due (i) $ 2,128.77
===========
</TABLE>
<PAGE>
ATTACHMENT "C"
AWARD FEE DETERMINATION PLAN
(AFDP)
<PAGE>
I. INTRODUCTION
A. This plan covers the administration of the award fee provisions of
Contract No. N62474-88-D-5086, dated with
---------------- ---------------- --------------
PRC Environmental Management, Inc.
- ---------------------------------
B. The following matters, among others, are covered in the contract:
1. The contractor is required to furnish Program Management and
Technical Environmental Services in support of the Navy's Environmental
Engineering Program at activities under the cognizance of Western Division,
Naval Facilities Engineering Command.
2. The term of the contract is from 98 through a base year
-- ------------
with nine (9) one year options.
3. The estimated cost of performing the contract is * .
4. The award fee pool for Year 1 is * .
---------
C. The amount of the award fee pool as measured by the aggregate of CTO
estimated costs.
D. When CTO's are not completed within an evaluation period, the Government
shall develop a percentage of physical completion determination in order to
establish the corresponding percentage of the negotiated estimated cost for each
incomplete CTO against which the award fee rating shall be applied. For any CTO
which is not 100% complete within an evaluation period, only 75% of the
available award fee can be earned. Upon completion, the remaining award fee for
the CTO is eligible. The percentage of completion will be a Government
determination not subject to the disputes clause.
E. The award fee earned and payable will be determined 3 times annually.
The estimated time for completion of the Government's evaluation is 60 days
following the conclusion of each award fee period.
F. Award fee determinations are not subject to the Disputes clause of the
contract.
G. The FDO may unilaterally change the criteria and weights set forth in
this plan, Part IV, providing the contractor receives notice of the changes at
least thirty (30) calendar days prior to the beginning of the evaluation period
to which the changes apply.
H. Objectives of the Award Fee:
1. The objectives of the award fee provisions of the contract is to
afford the contractor an opportunity to earn increased fee commensurate with the
achievement of optimum performance in pursuit of contractual objectives and
goals.
<PAGE>
B. Performance Evaluation Categories:
---------------------------------
The Contractor's performance will be evaluated on the basis of its
ability to provide the necessary personnel, services, equipment, and material to
support the program in various performance categories. The evaluation categories
cover the two main organizational components of the contract - Program
Management and Technical Performance of Work Assignments.
1. Program Management
Program Management constitutes technical, management,
administrative and clerical activities performed by the contractor in order to
assure quality control of all work performed under the CLEAN contract. The
evaluation categories for program management are listed in Attachment C-2.
2. Technical Performance
An overall evaluation of the Contractor's technical performance on
work assignments will be performed on a collective basis based on the individual
evaluation provided by each EIC. The evaluation categories for technical
performance are listed in Attachment C-3.
C. Rating Guidelines
-----------------
1. Rating Guidelines for each of the performance evaluation criteria
are provided in Attachment C-4. The guidelines are provided to establish a
uniform system of evaluating performance for each of the evaluation criteria.
2. The average of the rating for each of the evaluation criteria will
be used to determine the overall performance points. Attachment C-5, the Award
Fee conversion chart, will be used to determine the percentage of available
award fee earned.
IV. CHANGES IN PLAN COVERAGE
A. Right to Make Unilateral Changes
--------------------------------
The Award Fee Plan may be changed unilaterally by the FDO 30 days
prior to the beginning of an evaluation period by notice to the contractor in
writing.
<PAGE>
3. Award Fee - The award fee is an award amount that may be earned by the
Contractor in whole or in part, based upon an evaluation by WESTNAVFACENGCOM of
the Contractor's performance. The Award Fee is to motivate the Contractor to
provide excellence in performance of activities evaluated both collectively and
individually, in areas of Program Management and Technical Services.
II. EVALUATION REQUIREMENTS
A. The applicable evaluation requirements are attached as indicated below:
<TABLE>
<CAPTION>
Requirement Attachment
----------- ----------
<S> <C>
Performance Areas and Evaluation
Criteria C-1
Evaluation Criteria for Performance
Area No. 1 C-2
Evaluation Criteria for Performance
Area No. 1 C-3
Rating Guidelines for Performance
Evaluation Criteria C-4
Award Fee Conversion Chart C-5
</TABLE>
B. Once each four (4) months (each six (6) months for the first year) the
-------- -------
PEB will submit a formal evaluation report to the FDO with a recommendation as
to the numerical grade rating, which shall be a measure of the contractor's
performance for that evaluation period.
C. The contractor shall submit a concise written self-evaluation of
his/her performance, limited to 10 pages with no appended material, within 15
calendar days after each evaluation period. This report will be submitted to
the FDO.
III. PERFORMANCE EVALUATION CATEGORIES, CRITERIA, AND RATING GUIDELINES
A. In order to evaluate the contractor's performance, two evaluation
categories and a set of evaluation criteria have been developed. This section
highlights these components of the plan by defining each of the performance
evaluation categories and describing rating guidelines for scoring each of the
criteria.
<PAGE>
ATTACHMENT C-1 TO AFOP FOR
Contract No._____________________________ With _________________________
PERFORMANCE AREAS AND EVALUATION CRITERIA
The performance areas to be evaluated are identified below.
The evaluation criteria for each area are attached, as indicated
<TABLE>
<CAPTION>
Area Brief Area Area
No. Identification Weight
- ---- -------------- ------
<S> <C> <C>
1 * *
2 * *
</TABLE>
C(6)
* CONFIDENTIAL
<PAGE>
ATTACHMENT C-2 TO AFDP FOR
Contract No. With
-------------------------- --------------------------
EVALUATION CRITERIA FOR PERFORMANCE AREA NO. 1
PROGRAM MANAGEMENT
------------------
Area Weight *
Description of Area:
- -------------------
PROGRAM MANAGEMENT: All Contract Management, Planning, Monitoring, and Control
of the CTO's issued under this contract.
CRITERIA ELEMENTS
- -----------------
1. PROGRAM PLANNING
- Development of plans
- Development of cost estimates and schedules
- Screening for organizational conflicts of interest
- Elimination of duplicative efforts
- Scheduling and budgeting multiple projects within cost and priority
2. SCHEDULE AND COST CONTROL
- Maintenance of planned budgets and schedules (e.g., prompt reporting
of projected cost and schedule variances)
- Adjustment of schedule and priority requirements (e.g., ability to
expedite schedules)
- Ability to minimize costs
3. REPORTING
- Timeliness and deliverables
- Clarity and thoroughness of project documentation (e.g.,
identification of problem and recommended solution, discussion of
alternatives
4. RESOURCE UTILIZATION
- Responsiveness
- Suitability of staffing, recruiting and training of personnel
- Ability to obtain subcontractors and outside consultant (e.g.,
lead time minimization, quality)
- Attention to equipment maintenance and accounting, minimization of
travel costs, etc.
* CONFIDENTIAL
<PAGE>
ATTACHMENT C-3 TO AFDP FOR
Contract No. With
---------------------- -------------------------
EVALUATION CRITERIA FOR PERFORMANCE AREA NO. 2.
TECHNICAL SERVICES
------------------
Area Weight *
Description of Area:
- ------------------
TECHNICAL SERVICES: Provide necessary Technical Personnel and Consultant Labor
Hours to accomplish the work identified in each CTO.
CRITERIA ELEMENTS
- -----------------
1. PROJECT PLANNING
- Development of plans (e.g., work plans, management plans, etc.)
- Development of project cost estimates and schedules
- Screening for organizational conflicts of interest
- Elimination of duplicative efforts
2. TECHNICAL COMPETENCE AND INNOVATION
- Effectiveness and thoroughness of analyses
- Meet plan goals and objectives
- Development of alternatives and implementation of courses of
action
- Adherence to federal, state and other regulations, procedures, and
guidelines (e.g., health and safety, chain-of custody/document
control, CERCLA and RCRA regulations, subcontracting, etc.)
- Provision of technical support
- Creativity and ingenuity in approach (e.g., cost-effective or
technically innovative control/remedy schemes)
3. SCHEDULE AND COST CONTROL
- Maintenance of planned budgets and schedules (e.g., prompt reporting
of projected cost and schedule variances)
- Adjustment of schedule and priority requirements (e.g., ability to
expedite schedules)
- Ability to minimize costs
4. REPORTING
- Timeliness of deliverables (e.g., progress reports, project reports,
work plans)
- Clarity and thoroughness of project documentation (e.g., identification
of problem and recommended solution, discussion of alternatives)
C(8)
* CONFIDENTIAL
<PAGE>
EVALUATION CRITERIA FOR PERFORMANCE AREA NO. 2 (CONT'D)
5. RESOURCE UTILIZATION
- Capability of program managers
- Suitability of staffing, recruiting and training of personnel
- Ability to obtain subcontractors and outside consultants (e.g.,
lead-time minimization, quality)
- Attention to equipment maintenance and accounting, minimization
of travel costs, etc.
6. EFFORT
- Responsiveness
- Preparedness and mobilization of resources for contract and assignments
- Regularity and effectiveness of day-to-day support/communication
with WESTNAVFACENGCOM personnel and other organizations and
individuals involved with site
- Performed in special situation (e.g., adverse/dangerous conditions or
expedited time frames)
- Timely and effective coordination with activity personnel during field
work
C(9)
<PAGE>
<TABLE>
<CAPTION>
ATTACHMENT C-4 (CONT'D)
RATING GUIDELINES FOR PERFORMANCE EVALUATION CRITERIA
- -----------------------------------------------------------------------------------------------------------------------------------
PERFORMANCE EVALUATION CRITERIA
- -----------------------------------------------------------------------------------------------------------------------------------
RATING
RESOURCE
REPORTING UTILIZATION EFFORT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Reports provide such insight into All of the contractor resources Contingency plans always developed
96 - 100 key problems and potential solutions are applied to minimize costs
as to service ?? master plan for and time, while enhancing overall Response actions taken in extreme
corrective action work quality weather conditions ?? high risk
OUTSTANDING areas
No re-write of reports required
by WESTNAVFACENGCOM personnel Personal effort well beyond
contract requirements
- -----------------------------------------------------------------------------------------------------------------------------------
All reports are of consistent One or a few of the contractor Appropriate resource allocation
high quality both in content and resources are utilized effici- to counter operational impediments
86 - 95 presentation ently, resulting in cost or time
EXCEEDED savings and providing specified Responsive to minor changes in
EXPECTATIONS No re-write of reports required quality of work scope of work and priority
by WESTNAVFACENGCOM personnel adjustments
- -----------------------------------------------------------------------------------------------------------------------------------
All required reports were delivered Staffing, subcontracting, equipment, Resource monitored in sufficient
76 - 85 on time and with contents as and other resources (e.g., travel time to meet established budget/
SATISFACTORY specified adequately utilized to meet project schedule
and contract requirements)
Regular communication and
Instruction with Navy personnel
- -----------------------------------------------------------------------------------------------------------------------------------
Required reports were delivered One or a few of contractor resources Effort was below average of expe-
61 - 75 within 15 days after due date but are not used efficiently, resulting rience with similar type con-
without adequate justification or in cost overruns and time delays tractors over the last two years
warning under similar circumstances
MARGINAL
Contents of reporting not as
specified
- -----------------------------------------------------------------------------------------------------------------------------------
Required reports delivered more Consistent poor utilization of Ad hoc requests and operational
0 - 60 than one week late without ade- resources which hinders the impediments unaddressed, and ade-
quate justification or warning implementation of the program quate warning or justification
UNSATISFACTORY was not provided or was unaccept-
Contents or reports inadequate to able
permit interpretation of problems
or action
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT C-4 TO AFDP
RATING GUIDELINES FOR PERFORMANCE EVALUATION CRITERIA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
RATING PERFORMANCE EVALUATION CRITERIA
TECHNICAL COMPETENCE SCHEDULE AND
PLANNING AND INNOVATION COST CONTROL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ensures that cost/time is mini- Innovative technical solution Original schedule in spite of
96 - 100 mized to meet technical direction applied major operational impediments
specification
Results may establish state of Services completed ahead of schedule
OUTSTANDING "Fast tracking" or streamlined the art approach to address at a reduced cost to the Government
approaches implemented as problems than originally estimated
necessary
Met original established reme-
dial action goals and objectives
- -----------------------------------------------------------------------------------------------------------------------------
Provides for a significant cost/ Quality was above average of ex- Original schedule met in spite of
86 - 95 time savings and contains ade- perience with similar type con- minor operational impediments
EXCEEDED quate approaches to address re- tractors over past two years
EXPECTATIONS quirements contain in WA Services completed on schedule at a
reduced cost to the Government
- -----------------------------------------------------------------------------------------------------------------------------
Adequate to meet requirements Quality was average of experience Original schedule met
76 - 85 specified in Statement(s) of work, with similar type contractors
SATISFACTORY and goals and objectives of the over past two years Cost was reasonable considering
program and/or contract require- scope of effort
ments
- -----------------------------------------------------------------------------------------------------------------------------
Work assignment or contract Quality was below average of Original schedule slipped without
61 - 75 specifications not completely experience with similar type adequate warning or justification
MARGINAL addressed contractors over past two years
Available cost savings not taken
Cost and/or time disproportionate advantage of
to required level of effort
- -----------------------------------------------------------------------------------------------------------------------------
Incorrect identification of re- Lack of technical competence in Activities completed so late as to
0 - 60 quirements needed to meet SOW any of major technical or have resulted in loss of utility
UNSATISFACTORY management areas addressed or negatively impacted program
Inadequate schedule to provide
quality product or service
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ATTACHMENT C-5
AWARD FEE CONVERSION CHART ILLUSTRATION
<TABLE>
<CAPTION>
Performance Percentage of Available Performance Percentage of
Points Award Fee Points Award Fee
<S> <C> <C> <C>
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* * * *
* *
</TABLE>
* CONFIDENTIAL
<PAGE>
ATTACHMENT D
CERTIFICATE OF CURRENT COST OR
------------------------------
PRICING DATA
This is to certify that, to the best of my knowledge and belief, the cost or
pricing data (as defined in Section 15.801 of the Federal Acquisition Regulation
(FAR) and required under FAR Subsection 15.804-2) submitted, either actually or
by specific identification in writing, to the Contracting Officer or to the
Contracting Officer's Representative in support of Sol. N62474-38-R-5086*
----------------------
are accurate, complete, and current as of 4May 1989 **. This certification
------------
includes the cost or pricing data supporting any advance agreements and forward
pricing rate agreements between the offeror and the Government that are part
of the proposal.
FIRM PRC Environmental Management, Inc.
----------------------------------
NAME Michael C. Richards
----------------------------------
TITLE Vice President
----------------------------------
DATE OF EXECUTION *** 4May 1989 /s/
---------------------------------
* Identify the proposal, quotation, request for price adjustment, or other
submission involved, giving the appropriate identifying number (e.g., RFP No.).
** Insert the day, month, and year when price negotiations were concluded and
price agreement was reached.
*** Insert the day, month, and year of signing, which should be as close as
practicable to the date when the price negotiations were concluded and the
contract price was agreed to.
<PAGE>
[LETTERHEAD OF PLANNING RESEARCH CORPORATION]
May 8, 1989
Ms. Gail McKay
Environmental Contracts Division (024 GM)
Department of the Navy
Western Division, Naval Facilities Engineering Command
900 Commodore Way
San Bruno, California 94066-0720
RE: Clarification and Addendum to Contract
No. N62474-88-C-5086 Small and Small
Disadvantaged Business Subcontracting Plan
Dear Ms. McKay:
In order to clarify several points in our Small and Small Disadvantaged Business
Subcontracting Plan for the Navy CLEAN contract, please accept the following
addendum to the indicated sections.
Section I.C.1 - Add the following as the last sentence of this section.
"Overhead supplies and service items will not be included in the
subcontracting goals as stated above."
Section I.D.3 - Add the following as the last sentence of this section.
"All such subcontracts will require the adoption of similar goals as
contained within this plan for the Navy CLEAN Contract."
Section II, item 11 - Add before SF295: "SF294 and ..."
I hope these changes clarify our intent. Please let me know if you require any
additional information.
Sincerely,
Michael C. Richards
Vice President
MCR:geo
Enclosures
cc: Bob Van Osten
Glen Barwegen
<PAGE>
POLICY, PLAN, AND PROCEDURES
FOR SMALL BUSINESS AND SMALL
DISADVANTAGED BUSINESS SUBCONTRACTING
February 1989
PRC ENVIRONMENTAL MANAGEMENT, INC.
303 East Wacker Drive
Chicago, Illinois 60601
(312) 856-8700
<PAGE>
W800256-EI
Zone II
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Title Page No.
- ------- ----- --------
<S> <C> <C>
I. Policy and Plan for Small Business and Small I
Disadvantaged Business Subcontracting
A. Policy Statement I-1
B. Organizational Commitment I-1
C. Goals I-1
D. Program Administration I-2
E. Reporting I-4
II. Procedures for Small Business and Small
Disadvantaged Business Subcontracting
</TABLE>
<PAGE>
PRC ENVIRONMENTAL MANAGEMENT, INC.
SECTION I
POLICY AND PLAN
FOR SMALL BUSINESS AND
SMALL DISADVANTAGED BUSINESS
SUBCONTRACTING
Prepared by: Approved by:
/s/ Glen W. Barwegen /s/ Robert J. Van Osten
- ----------------------- -----------------------------
Glen W. Barwegen Robert J. Van Osten
Contracts Manager Vice President
<PAGE>
I-1
I.A POLICY STATEMENT
----------------
This document reflects the formalization of PRC Environmental
Management, Inc.'s (PRC EMI) commitment to afford the maximum consideration and
opportunity for small business and small disadvantaged business concerns to
participate in all PRC EMI contract work which must be supplied from outside
sources.
I.B ORGANIZATION COMMITMENT
-----------------------
Each manager of PRC EMI listed hereunder affirms their commitment, and
that of the organization, to assist in achieving the goals and objectives
presented in this Subcontracting Plan. This evidences the strong commitment of
the entire PRC EMI organization to an orderly and progressive program to
implement the spirit and the letter of the Small Business Act of 1958, as
amended by Public law 95-507, and this Plan consistent with the company's
subcontracting policies.
PRC ENVIRONMENTAL MANAGEMENT, INC.
/s/ Thomas D. Brisbin
-------------------------------
Thomas D. Brisbin
President
/s/ Robert J. Van Osten
-------------------------------
Robert J. Van Osten
Vice President
I.C GOALS
-----
1. PRC Environmental Management, Inc., herein establishes the following
goals for the Navy CLEAN Contract No. N62474-88-R-5086.
. * to Small Business
. * to Small Disadvantaged Business
These percentages relate to the total amount subcontracted under this
contract. The structure of the contract is by task order. Therefore,
it is not possible to provide the equivalent dollar amount for these
percentage goals. However, dollar amounts will be included in the
reports submitted to the contracting agencies.
2. Subcontractor services shall be solicited from the current PRC EMI
Subcontractor Source list and any other sources which may be reviewed.
Since the Navy CLEAN contract is a task order contract, specific
supplies and services to be subcontracted to small and small
disadvantaged businesses cannot be identified. However, it is intended
to subcontract the following areas of services and supplies from small
and small disadvantaged firms:
. Laboratory supplies
. Field equipment
. Well installation services
. Computer hardware
<PAGE>
. Clerical services
. Hauling services
. Technological services
. Office supplies
I.D. PROGRAM ADMINISTRATION
----------------------
1. The following individual is designated as the Small and
Disadvantaged Business Administrator.
Name: Glen W. Barwegen
Address: PRC Environmental Management, Inc.
303 East Wacker Drive, Suite 500
Chicago, Illinois 60601
The duties of the Small and Disadvantaged Business Administrator are:
. Participate in the preparation and advertisement of subcontract
solicitations.
. Participate in the preparation and negotiation of subcontract
instruments.
. Monitor small and disadvantaged business subcontract opportunities.
. Monitor PRC EMI's activities and accumulate the necessary data to assure
all matters relative to subcontracting activities are performed in
accordance with applicable regulations and PRC EMI subcontracting
policies and procedures, and report pertinent information to appropriate
government entities.
2. PRC EMI will undertake the following efforts to assure that small and
disadvantaged business concerns have an equitable opportunity to participate
in subcontracts:
. Disseminate PRC EMI subcontracting policies and procedures through
distribution of SB/SDB Subcontracting Plan, policy statements at the
Corporate, Company, and Division level, and all applicable documents
such as internal and external memos and, bulletins.
. Furnish advice and assistance to division and project management
personnel on methods to aid in developing and achieving small and
disadvantaged business concern subcontracting goals.
. Consult with division and project management personnel regarding "make-
or-buy" decisions to determine whether they could be converted into
opportunities for small and/or disadvantaged business concern
participation.
. Advise qualifying firms on how to improve their solicitation practices
and assist them in developing company policies and
<PAGE>
1-3
procedures that may enhance their opportunities in future
procurement activities.
. Contact the following organizations, when appropriate, for
assistance and advise when establishing source lists for
particular services:
- The National Minority Purchasing Council
- The Office of Minority Business Administration
- The Small Business Administration Procurement
Automated Source System (PASS)
- The National Minority Business Directory
3. PRC EMI herein assures that the clause entitled Utilization of
--------------
Small Business and Small Disadvantaged Business Concerns (FAR
--------------------------------------------------------
52.219-8) will be included in all subcontracts which offer
further subcontracting possibilities in the United States, and
will require all subcontractors (except small business
concerns) who receive subcontracts in excess of $500,000, or,
in the case of a contract for the construction of any public
facility, $1,000,000 to adopt a plan in consonance with this
clause.
I.E. REPORTING
---------
PRC EMI will maintain those records listed below to demonstrate
procedures which have been adopted to comply with the requirements and
goals set forth in this plan:
. Source lists, guides, and various data which identify small and
disadvantaged business concerns
. Organizations contracted for advice and assistance in developing
source lists
. Records on a contract-by-contract basis for all subcontract
solicitations over $100,000 indicating:
- Whether small businesses were solicited and if not, why
- Whether small disadvantaged businesses were solicited and if
not, why
- Reasons why responding small and disadvantaged businesses
failed to receive the subcontract award
. Records to support such efforts as:
- Contacts with small and disadvantaged trade associations
- Contacts with business development organizations
- Attendance at a small and disadvantaged business procurement
conferences and trade fairs
<PAGE>
I-4
. Records to support internal activities, such as those listed
below, which guide and encourage buyers
- Workshops, seminars, and training programs
- Monitoring activities to evaluate subcontractor compliance
. Records to support award data submitted to the Government on a
contract-by-contract basis including name, address, and size
status of subcontractor.
PRC EMI herein assures that it will submit periodic reports and cooperate in any
studies or surveys as may be required by the contracting agency and/or the Small
Business Administration to determine the extent to which PRC EMI is in
compliance with this Subcontracting Plan.
<PAGE>
PRC ENVIRONMENTAL MANAGEMENT, INC.
SECTION II
PROCEDURES FOR SMALL BUSINESS AND
SMALL DISADVANTAGED BUSINESS SUBCONTRACTING
<PAGE>
II-I
The Small and Disadvantaged Business Administrator will perform the following:
1. Periodically review PRC EMI purchasing policies and procedures and amend
them, as required, to reflect current SB/SDB program requirements and
Company policy.
2. Establish annual PRC EMI goals for subcontracting to SB/SDB concerns and
disseminate goals to all appropriate personnel.
3. Arrange Company participation in area trade fairs, procurement conferences,
symposiums, and other business opportunity functions sponsored by local
associations and councils and maintain record(s) of same.
4. Maintain source lists of SB/SDB concerns identified and qualified from both
Government sources (SBA Procurement Automated Source System, Minority
Purchasing Council Directories) and internally developed sources.
5. Supervise and assist subcontracting, procurement, and technical employees
in counseling and assisting SB/SDB concerns referred by the customer or
identified by Company outreach efforts.
6. Review subcontracting and procurement planning actions (make or buy) of
$100,000 or more to assure maximum solicitation from SB/SDB concerns.
7. Amend individual contract subcontracting plans as required to reflect
appropriate changes.
8. Evaluate quarterly progress in attaining division and individual contract
SB/SDB subcontracting goals.
9. Evaluate overall compliance with customer and division SB/SDB program
requirements on a quarterly basis.
10. Prepare and distribute quarterly audit reports.
11. Prepare and distribute customer required forms (SF 295) pertaining to
SB/SDB subcontracting as specified by the Customer on a quarterly basis.
12. Review each subcontract valued at $500,000 or more planned for award to a
large business supplier to ensure incorporation of the proper flow down
clauses with regard to SB/SDB subcontracting.
13. Review and approve subcontracting plans and evaluate subcontractor
compliance with subcontract plans as required.
14. Represent the Company in all required customer studies, surveys, and
conferences pertaining to SB/SDB subcontracting plans and programs.
15. Coordinate PRC EMI employee training and motivation programs regarding use
of SB/SDB concerns and maintain records of same.
<PAGE>
II-2
To provide SB/SDB concerns with maximum opportunity to compete for subcontracts,
Contract/Subcontract Administrators and Procurement personnel will:
1 Review the following source lists to identify potential SB/SDB concerns.
. PRC EMI Vendor Supplier List
. National Minority Purchasing Council
. The Small Business Administration Procurement Automated Source System
(PASS)
. Local Minority (and WOB) Directories
2. For each competitive subcontract/purchase order, attempt to identify and
solicit at least one SB or SDB concern for each item or service previously
procured from a large business (single source).
3. Solicit at least one SDB and three SB sources for each procurement valued
at $10,000 or more and where adequate competition is known to exist.
4. Assure that each solicitation package (format/terms/wording, response time,
SOW/specifications/drawings, quantities, delivery schedules, terms of
payment) is sufficiently simple and attainable to attract maximum SB/SDB
response.
5. All things being equal, make awards in the following order of priority -(1)
SDB, (2) SB, (3) Other.
6. Provide appropriate assistance (technical, financial, management) to SB/SDB
suppliers as required and practicable.
7. Submit outstanding or unsatisfactory supplier performance data to the Small
and Disadvantaged Business Administrator for inclusion in PRC EMI's Source
list file.
8. Complete and distribute for each procurement the following records, as
required and appropriate.
a. Purchase order request and memo to include narrative explanation of all
efforts to identify and solicit SB/SDB concerns for all procurements
awarded to a large business (single source).
b. Report of a SB/SDB award, either by memo or copy of letter to customer
advising award.
c. Report organizations contacted for additional SB/SDB sources by such
means as memo to file or copy of telephone contact.
d. Report contacts with, or attendance at, SB/SDB trade associations,
business development organizations, and conference by way of memo to
the Small and Disadvantaged Business Administrator.
<PAGE>
EXHIBIT 11
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
Sept. 29, Oct. 1, Oct. 2,
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Primary:
Common stock outstanding, beginning of
year........................................ 13,235,309 13,140,044 12,922,618
Payment for fractional shares................ (169) (195) (391)
Stock options exercised...................... 101,626 109,896 63,632
Issuance of common stock..................... 790,236 165,440
Treasury stock purchased-net................. (11,255)
Stock purchased and retired.................. (14,436)
----------- ----------- -----------
Common stock outstanding, end of year........ 14,127,002 13,235,309 13,140,044
=========== =========== ===========
Weighted average shares outstanding
during the period assuming the
exercise of options and warrants............ 15,200,351 14,175,840 13,769,698
Shares assumed repurchased under the
treasury stock method at an assumed
fair market value per share of
$18.27, $13.38, and $6.80 at
September 29, 1996, October 1, 1995
and October 2, 1994, respectively........... (748,735) (642,302) (450,568)
----------- ----------- -----------
Total..................................... 14,451,616 13,533,538 13,319,130
=========== =========== ===========
Net Income as reported in consolidated
financial statements........................ $10,105,000 $ 7,553,000 $ 5,709,000
=========== =========== ===========
Primary net income per common share.......... $ 0.70 $ 0.56 $ 0.43
=========== =========== ===========
FULLY DILUTED:
Weighted average shares outstanding
during the period assuming the
exercise of options and warrants............ 15,200,351 14,175,840 13,769,698
Shares assumed repurchased under the
treasury stock method at an assumed
fair market value per share of
$23.75, $18.60 and $12.24 at
September 29, 1996, October 1, 1995
and October 2, 1994, respectively........... (576,681) (462,062) (359,864)
----------- ----------- -----------
Total..................................... 14,623,670 13,713,778 13,409,834
=========== =========== ===========
Net income as reported in consolidated
financial statements........................ $10,105,000 $ 7,553,000 $ 5,709,000
=========== =========== ===========
Fully diluted net income per common.......... $0.69 $0.55 $0.43
share....................................... =========== =========== ===========
</TABLE>
<PAGE>
EXHIBIT 13
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------------------------------------
Sept. 29, (2) Oct. 1, (3) Oct. 2, (4) Oct.3, Sept. 27,
($ in thousands, except per share data) 1996 1995 1994 1993 1992
- --------------------------------------- ------------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Gross revenue $220,099 $120,034 $96,472 $74,488 $65,626
Subcontractor costs 59,062 32,160 28,653 23,323 22,087
-------- -------- ------- ------- -------
Net revenue 161,037 87,874 67,819 51,165 43,539
Cost of net revenue 122,084 65,484 51,069 38,628 33,791
-------- -------- ------- ------- -------
Gross profit 38,953 22,390 16,750 12,537 9,748
Selling, general and administrative
expenses 21,218 10,634 7,589 5,696 4,609
-------- -------- ------- ------- -------
Income from operations 17,735 11,756 9,161 6,841 5,139
Net interest income (expense) (776) 833 354 290 (61)
-------- -------- ------- ------- -------
Income before income taxes 16,959 12,589 9,515 7,131 5,078
Income tax expense 6,854 5,036 3,806 2,852 2,031
-------- -------- ------- ------- -------
Net income $ 10,105 $ 7,553 $ 5,709 $ 4,279 $ 3,047
======== ======== ======= ======= =======
Net income per share(1) $ 0.70 $ 0.56 $ 0.43 $ 0.33 $ 0.25
======== ======== ======= ======= =======
Weighted average shares
outstanding(1) 14,452 13,534 13,319 13,067 12,126
<CAPTION>
Sept. 29, Oct. 1, Oct. 2, Oct.3, Sept. 27,
($ in thousands) 1996 1995 1994 1993 1992
- --------------------------------------- ------------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital $ 32,739 $ 39,872 $24,833 $23,722 $19,335
Total assets 88,463 92,930 51,606 38,572 30,078
Long-term obligations, excluding
current installments -- 19,045 -- -- --
Stockholders' equity 63,269 41,496 33,507 26,446 21,984
</TABLE>
(1) Reflects the effect, on a retroactive basis, of a 5-for-4 stock split,
effected in the form of a 25% stock dividend, in June 1996.
(2) Includes the results of operations and financial position of KCM, Inc.
(acquired November 7, 1995).
(3) Includes the results of operations and financial position of PRC
Environmental Management, Inc. (acquired September 15, 1995).
(4) Includes the results of operations and financial position of Simons, Li &
Associates, Inc. (acquired October 4, 1993) and Hydro-Search, Inc.
(acquired June 3, 1994).
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Tetra Tech, Inc. (the "Company"), in the course of providing its services,
routinely subcontracts for services such as laboratory testing, soil cartage
and other services and capabilities. These costs are passed through to clients
and, in accordance with industry practice, are included in the Company's gross
revenue. Because subcontractor services can change significantly from project to
project, changes in gross revenue may not be indicative of business trends.
Accordingly, the Company also reports net revenue, which is gross revenue less
the cost of subcontractor services. One of the Company's business strategies is
to serve as the prime contractor on contracts, which results in the use of
subcontractors. The Company believes that in the early stages of establishing a
new service capability, ongoing fixed expenses must be controlled by selectively
utilizing qualified subcontractors to assist in providing such capability.
Additionally, qualified subcontractors are utilized to provide services in areas
in which the Company does not intend to develop internal capabilities.
Net revenue includes the fees for services provided directly by the Company
and fees charged by the Company for arranging subcontractor services. Cost of
net revenue incorporates the expenses of the Company's 87 locations performing
services under contracts, including professional salaries and certain direct and
indirect overhead costs such as rents, utilities and travel.
Selling, general and administrative ("SG&A") expense is comprised primarily
of corporate headquarters costs related to the executive offices, corporate
accounting, data processing, marketing and bid and proposal costs. These costs
are generally unrelated to specific client projects. In addition, amortization
of certain intangible assets resulting from purchase accounting adjustments
associated with acquisitions is included in SG&A expense.
The Company provides services to a diverse base of Federal, state and local
government agencies, and private and international clients. The following table
presents for the periods indicated the approximate percentage of the Company's
net revenue attributable to Federal government, state and local government, and
private and international clients:
<TABLE>
<CAPTION> Percentage of Net Revenue
-------------------------
Fiscal Fiscal Fiscal
Client 1996 1995 1994
- ------ ------ ------ ------
<S> <C> <C> <C>
Federal government 61.7% 54.8% 52.2%
State and local government 16.6 11.1 14.5
Private 20.1 34.1 33.3
International 1.6 -- --
------ ------ ------
Total 100.0% 100.0% 100.0%
====== ====== ======
</TABLE>
A significant portion of the Company's net revenue is derived from contracts
with the Federal government which are subject to termination at any time by the
client. Some of these contracts are subject to annual approval of funding.
Accordingly, Federal budget allocation changes may have an effect on the future
operations of the Company.
RESULTS OF OPERATIONS
The Results of Operations table presents for the periods indicated the
percentage relationship which certain items in the Company's Consolidated
Statements of Operations bear to net revenue and the percentage increase or
(decrease) in the dollar amount of such items.
<TABLE>
<CAPTION>
Percentage Relationship to Net Revenue Period to Period
Fiscal Years Ended Change
-------------------------------------- ------------------------
Sept.29, Oct. 1, Oct. 2, 1996 vs. 1995 vs.
RESULTS OF OPERATIONS 1996 1995 1994 1995 1994
- --------------------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenue 100.0% 100.0% 100.0% 83.3% 29.6%
Cost of net revenue 75.8 74.5 75.3 6.4 28.2
----- ----- ----- ----- -----
Gross profit 24.2 25.5 24.7 74.0 33.7
Selling, general and
administrative expenses 13.2 12.1 11.2 99.5 40.1
----- ----- ----- ----- -----
Income from operations 11.0 13.4 13.5 51.0 28.3
Net interest income (expense) (0.5) 0.9 0.5 (193.2) 135.3
----- ----- ----- ----- -----
Income before income taxes 10.5 14.3 14.0 34.7 32.3
Income tax expense 4.2 5.7 5.6 36.1 32.3
----- ----- ----- ----- -----
Net income 6.3% 8.6% 8.4% 33.8% 32.3%
===== ===== ===== ===== =====
</TABLE>
<PAGE>
FISCAL 1996 COMPARED TO FISCAL 1995
Net Revenue. Net revenue increased from $87,874,000 to $161,037,000, or 83.3%,
from fiscal 1995 to fiscal 1996. All four client sectors--Federal government,
state and local government, and private and international--continued to show net
revenue increases in actual dollars. The increase in net revenue associated with
entities acquired in fiscal 1996 (see Note 2 to Consolidated Financial
Statements) totalled $77,678,000. Gross revenue increased from $120,034,000 to
$220,099,000, or 83.4%, from fiscal 1995 to fiscal 1996. In both fiscal 1995 and
fiscal 1996, subcontractor costs were 26.8% of gross revenue.
Cost of Net Revenue. Cost of net revenue increased from $65,484,000 to
$122,084,000, or 86.4%, from fiscal 1995 to fiscal 1996. This increase was
attributable to costs incurred in connection with the additional net revenue
from the PRC Environmental Management, Inc. ("EMI") and KCM, Inc. acquisitions,
and growth in project volume. The number of employees increased from 1,706 at
the end of fiscal 1995 to 1,899 (118 from the fiscal 1996 acquisitions) at the
end of fiscal 1996. As a percentage of net revenue, cost of net revenue
increased from 74.5% in fiscal 1995 to 75.8% in fiscal 1996 due primarily to the
acquisitions. Gross profit increased from $22,390,000 to $38,953,000, or 74.0%,
from fiscal 1995 to fiscal 1996. However, as a percentage of net revenue, gross
profit decreased from 25.5% in fiscal 1995 to 24.2% in fiscal 1996, primarily as
a result of the amount of EMI's cost-type contracts.
Selling, General and Administrative Expenses. SG&A expenses increased from
$10,634,000 to $21,218,000, or 99.5%, from fiscal 1995 to fiscal 1996. As a
percentage of net revenue, SG&A expenses increased from 12.1% in fiscal 1995 to
13.2% in fiscal 1996. These increases were due principally to the entities
acquired (see Note 2 to Consolidated Financial Statements), associated goodwill
amortization and to the Company's continuing efforts to identify and secure new
contracts by increasing its business development expenditures.
Net Interest Income/Expense. Net interest income decreased from $833,000 in
fiscal 1995 to $776,000 of interest expense in fiscal 1996, or 193.2%, due to
the cost of long-term obligations incurred for the purchase of EMI in September
1995.
Income Tax Expense. Income tax expense increased from $5,036,000 to $6,854,000,
or 36.1%, from fiscal 1995 to fiscal 1996 as a result of an increase in income
before taxes.
FISCAL 1995 COMPARED TO FISCAL 1994
Net Revenue. Net revenue increased from $67,819,000 to $87,874,000, or 29.6%,
from fiscal 1994 to fiscal 1995. All three client sectors in those
years--Federal government, state and local government, and private--continued to
show net revenue increases in actual dollars. The increase in net revenue
associated with entities acquired in fiscal 1994 and 1995 (see Note 2 to
Consolidated Financial Statements) totalled $10,409,000. Gross revenue increased
from $96,472,000 to $120,034,000, or 24.4%, from fiscal 1994 to fiscal 1995. In
fiscal 1995, subcontractor costs were 26.8% of gross revenue as compared to
29.7% in fiscal 1994.
Cost of Net Revenue. Cost of net revenue increased from $51,069,000 to
$65,484,000, or 28.2%, from fiscal 1994 to fiscal 1995. This increase was
attributable to costs incurred to support the growth in project volume. The
number of employees increased from 893 at the end of fiscal 1994 to 1,706 (776
from the 1995 acquisition) at the end of fiscal 1995. As a percentage of net
revenue, cost of net revenue decreased from 75.3% in fiscal 1994 to 74.5% in
fiscal 1995. The percentage decline was a result of overall improved project
management. As a result, gross profit increased from $16,750,000 to $22,390,000,
or 33.7%, from fiscal 1994 to fiscal 1995.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selling, General and Administrative Expenses. SG&A expenses increased from
$7,589,000 to $10,634,000, or 40.1%, from fiscal 1994 to fiscal 1995. As a
percentage of net revenue, SG&A expenses increased from 11.2% in fiscal 1994 to
12.1% in fiscal 1995. These increases were due principally to the entities
acquired (see Note 2 to Consolidated Financial Statements) and to the Company's
continuing efforts to identify and secure new contracts by increasing its
business development expenditures.
Net Interest Income. Net interest income increased from $354,000 in fiscal 1994
to $833,000 in fiscal 1995, or 135.3%, due to the generation of interest income
on invested funds throughout fiscal 1995.
Income Tax Expense. Income tax expense increased from $3,806,000 to $5,036,000,
or 32.3%, from fiscal 1994 to fiscal 1995 as a result of an increase in income
before taxes.
INFLATION
Management believes that the Company's operations have not been adversely
affected by inflation or changing prices.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital as of September 29, 1996 was $32,739,000, a
decrease of $7,133,000 from October 1, 1995. Cash and cash equivalents as of
September 29, 1996 totalled $6,129,000. In fiscal 1995, the Company augmented
cash generated from operations with a $30,000,000 credit facility, while in
fiscal 1996, the Company financed its operations through cash generated from
operations. In fiscal 1996, the Company generated $21,124,000 from operating
activities and used $8,755,000 for investing activities ($6,441,000 of which
related to business acquisitions). In fiscal 1995, the Company generated
$13,578,000 in cash from operating activities and used $36,729,000 for investing
activities ($35,462,000 of which related to business acquisitions). The increase
in cash from operating activities in both fiscal 1996 and fiscal 1995 resulted
primarily from the management of receivables and increase in net income.
The Company has a credit agreement (as amended, the "Credit Agreement") with
a bank to support its working capital and acquisition needs. The Credit
Agreement provided a revolving credit facility (the "Facility") of $30,000,000,
although the Company voluntarily reduced the Facility to $15,000,000 at
September 29, 1996. Interest on borrowings under the Facility is payable at the
Company's option (a) at a base rate (Federal funds rate plus 0.50% or the bank's
reference rate) as defined in the Credit Agreement or (b) at a eurodollar rate
plus a margin which ranges from 1.25% to 1.75%. Borrowings under the Facility
are secured by the Company's accounts receivable and the stock of four of the
Company's subsidiaries. The Credit Agreement contains various covenants
including, but not limited to, restrictions related to tangible net worth, net
income, additional indebtedness, asset sales, mergers and acquisitions, creation
of liens, and dividends on capital stock (other than stock dividends). The
Facility matures on September 15, 1998 or earlier at the discretion of the
Company upon payment in full of loans and other obligations. Throughout fiscal
1996, maximum borrowings under the Facility were $20,000,000. At September 29,
1996 there were no borrowings under the Facility, however, standby letters of
credit issued thereunder totalled $1,815,000.
Capital expenditures during fiscal years 1996, 1995 and 1994 were
approximately $2,385,000, $1,453,000 and $1,433,000, respectively. The
expenditures were principally for computer equipment, leasehold improvements and
office expansion.
The Company expects that internally generated funds, its existing cash
balances, and its available line of credit will be sufficient to meet the
Company's capital requirements through the end of fiscal 1997.
<PAGE>
CONSOLIDATED BALANCE SHEETS
Tetra Tech, Inc.
- ---------------
<TABLE>
<CAPTION>
Sept. 29, Oct. 1,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
- --------------
Cash and cash equivalents $ 6,129,000 $ 13,130,000
Accounts receivable--net 22,306,000 22,886,000
Unbilled receivables--net 25,201,000 29,618,000
Prepaid and other current assets 1,939,000 1,869,000
Deferred income taxes 2,358,000 4,758,000
------------ ------------
Total Current Assets 57,933,000 72,261,000
------------ ------------
Property and Equipment:
Equipment, furniture and fixtures 13,072,000 10,959,000
Leasehold improvements 733,000 433,000
------------ ------------
Total 13,805,000 11,392,000
Accumulated depreciation and amortization (6,790,000) (5,001,000)
------------ ------------
Property and Equipment--Net 7,015,000 6,391,000
------------ ------------
Intangible Assets--Net 22,047,000 14,044,000
Other Assets 1,468,000 234,000
------------ ------------
Total Assets $ 88,463,000 $ 92,930,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
- -------------------
Accounts payable $ 13,423,000 $ 14,820,000
Accrued compensation 7,311,000 8,287,000
Other current liabilities 3,356,000 2,954,000
Purchase price payable -- 5,000,000
Income taxes payable 1,104,000 328,000
Current portion of long-term obligations -- 1,000,000
------------ ------------
Total Current Liabilities 25,194,000 32,389,000
------------ ------------
Long-Term Obligations -- 19,045,000
------------ ------------
Commitments and Contingencies (Notes 7 and 9)
Stockholders' Equity:
- -------------------
Preferred stock--authorized 2,000,000 shares; none issued
and outstanding
Common stock--authorized 15,000,000 shares of $.01 par value;
issued and outstanding 14,127,002 shares at September 29, 1996,
and 13,235,309 shares at October 1, 1995 141,000 132,000
Additional paid-in capital 33,452,000 21,793,000
Retained earnings 29,676,000 19,571,000
------------ ------------
Total Stockholders' Equity 63,269,000 41,496,000
------------ ------------
Total Liabilities and Stockholders' Equity $ 88,463,000 $ 92,930,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Tetra Tech, Inc. Fiscal Years Ended
- --------------- -------------------------------------------------------------
Sept. 29, Oct. 1, Oct. 2,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
REVENUE:
Gross revenue $ 220,099,000 $ 120,034,000 $ 96,472,000
Subcontractor costs 59,062,000 32,160,000 28,653,000
------------- ------------- -------------
Net Revenue 161,037,000 87,874,000 67,819,000
Cost of Net Revenue 122,084,000 65,484,000 51,069,000
------------- ------------- -------------
Gross Profit 38,953,000 22,390,000 16,750,000
Selling, General and Administrative Expenses 21,218,000 10,634,000 7,589,000
------------- ------------- -------------
Income From Operations 17,735,000 11,756,000 9,161,000
Interest Expense 1,076,000 90,000 22,000
Interest Income 300,000 923,000 376,000
------------- ------------- -------------
Income Before Income Taxes 16,959,000 12,589,000 9,515,000
Income Tax Expense 6,854,000 5,036,000 3,806,000
------------- ------------- -------------
Net Income $ 10,105,000 $ 7,553,000 $ 5,709,000
============= ============= =============
Net Income Per Common and
Common Equivalent Share $ 0.70 $ 0.56 $ 0.43
============= ============ =============
Weighted Average Shares Outstanding 14,451,616 13,533,538 13,319,130
============= ============ =============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Tetra Tech, Inc. Fiscal Years Ended September 29, 1996, October 1, 1995 and October 2, 1994
- --------------- -------------------------------------------------------------------------------------------
Common Common Additional
Stock Stock Paid-in Retained Treasury
Shares Amount Capital Earnings Stock Total
---------- ---------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE,
OCTOBER 3, 1993
as previously reported 10,338,094 $104,000 $20,123,000 $6,309,000 $(90,000) $26,446,000
Five-for-four
common stock
split (Note 6) 2,584,523 26,000 (26,000) 0
---------- -------- ----------- ---------- --------- -----------
BALANCE,
OCTOBER 3, 1993
as adjusted 12,922,617 130,000 20,097,000 6,309,000 (90,000) 26,446,000
Net income 5,709,000 5,709,000
Payment for
fractional shares (390) (4,000) (4,000)
Shares issued in Simons,
Li & Associates, Inc.
acquisition 136,891 1,000 1,112,000 1,113,000
Stock options exercised 63,633 1,000 150,000 151,000
Stock purchase plan 28,548 219,000 219,000
Treasury stock
purchased (11,255) (127,000) (127,000)
---------- --------- ----------- ------------ ---------- -----------
BALANCE,
OCTOBER 2, 1994 13,140,044 132,000 21,574,000 12,018,000 (217,000) 33,507,000
Net income 7,553,000 7,553,000
Payment for
fractional shares (195) (3,000) (3,000)
Stock options exercised 109,896 1,000 628,000 629,000
Treasury stock retired (217,000) 217,000 0
Stock purchased
and retired (14,436) (1,000) (189,000) (190,000)
---------- -------- ----------- ----------- --------- -----------
BALANCE,
OCTOBER 1, 1995 13,235,309 132,000 21,793,000 19,571,000 0 41,496,000
Net income 10,105,000 10,105,000
Payment for fractional
shares (169) (3,000) (3,000)
Shares issued in
KCM, Inc. acquisition 790,236 8,000 10,305,000 10,313,000
Stock options exercised 101,626 1,000 683,000 684,000
Tax benefit for
disqualifying
dispositions of
stock options 674,000 674,000
---------- -------- ----------- ---------- --------- -----------
BALANCE,
SEPTEMBER 29, 1996 14,127,002 $141,000 $33,452,000 $29,676,000 $ 0 $63,269,000
========== ======== =========== =========== ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Tetra Tech, Inc. Fiscal Years Ended
- ---------------- --------------------------------------------
Sept. 29, Oct. 1, Oct. 2,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
Net income $ 10,105,000 $ 7,553,000 $ 5,709,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,613,000 1,894,000 1,372,000
Deferred income taxes (519,000) (278,000) 129,000
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable 18,043,000 4,335,000 465,000
Unbilled receivables (5,916,000) (1,581,000) 810,000
Prepaid and other assets 246,000 (226,000) (428,000)
Accounts payable (4,080,000) 446,000 1,276,000
Accrued compensation (1,431,000) 1,165,000 1,234,000
Other current liabilities (192,000) 716,000 142,000
Income taxes payable 1,255,000 (446,000) 406,000
------------ ------------ ------------
Net Cash Provided By Operating Activities 21,124,000 13,578,000 11,115,000
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for short-term investments -- (3,003,000) --
Proceeds from short-term investments -- 3,173,000 --
Capital expenditures (2,385,000) (1,453,000) (1,433,000)
Proceeds from sale of property and equipment 71,000 16,000 3,000
Payment for business acquisitions, net
of cash acquired (6,441,000) (35,462,000) (7,067,000)
------------ ------------ ------------
Net Cash Used In Investing Activities (8,755,000) (36,729,000) (8,497,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (25,048,000) (2,045,000) (335,000)
Proceeds from issuance of long-term obligations 5,003,000 22,000,000 --
Payments on obligations under capital leases (6,000) -- --
Proceeds from issuance of common stock 681,000 626,000 366,000
Payments to acquire common stock -- (190,000) (127,000)
------------ ------------ ------------
Net Cash Provided By (Used In)
Financing Activities (19,370,000) 20,391,000 (96,000)
------------ ------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents (7,001,000) (2,760,000) 2,522,000
Cash and Cash Equivalents at Beginning of Year 13,130,000 15,890,000 13,368,000
------------ ------------ ------------
Cash and Cash Equivalents at End of Year $ 6,129,000 $ 13,130,000 $ 15,890,000
============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------------------------
Sept. 29, Oct. 1, Oct. 2,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 1,149,000 $ 18,000 $ 24,000
Income taxes $ 6,123,000 $ 5,879,000 $ 3,270,000
SUPPLEMENTAL NON-CASH INVESTING AND
FINANCING ACTIVITIES:
In fiscal 1996, the Company purchased all of the
capital stock of KCM, Inc. In conjunction with
this acquisition, liabilities were assumed as follows:
Fair value of assets acquired $ 20,393,000
Cash paid (2,645,000)
Issuance of common stock (10,313,000)
Other acquisition costs (415,000)
------------
Liabilities assumed $ 7,020,000
============
In fiscal 1995, the Company purchased all of the
capital stock of PRC Environmental Management,
Inc. In conjunction with this acquisition, liabilities
were assumed as follows:
Fair value of assets acquired $ 47,377,000
Cash paid (35,000,000)
Purchase price payable (5,000,000)
Other acquisition costs (600,000)
------------
Liabilities assumed $ 6,777,000
============
In fiscal 1994, the Company purchased all of the
capital stock of Simons, Li & Associates, Inc.
and acquired substantially all of the assets and
assumed certain liabilities of Simon Hydro-Search,
Inc. In conjunction with these acquisitions,
liabilities were assumed as follows:
Fair value of assets acquired $ 11,360,000
Cash paid (7,194,000)
Issuance of common stock (1,113,000)
------------
Liabilities assumed $ 3,053,000
============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tetra Tech, Inc.
Fiscal Years Ended September 29, 1996,
October 1, 1995 and October 2, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
Business--Tetra Tech, Inc. (the "Company") provides comprehensive environmental
engineering and consulting services addressing complex water contamination and
other environmental matters.
Principles of Consolidation--The consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, GeoTrans, Inc.
("GeoTrans"), Simons, Li & Associates, Inc. ("SLA"), Hydro-Search, Inc. ("HSI"),
PRC Environmental Management, Inc. ("EMI"), KCM, Inc. ("KCM"), and Tetra Tech
Technical Services, Inc. ("TtTS"). All significant intercompany balances and
transactions have been eliminated in consolidation.
Fiscal Year--The Company reports results of operations based on 52- or 53-week
periods ending on the Sunday nearest to September 30. Fiscal years 1996, 1995
and 1994 each contained 52 weeks.
Contract Revenues and Costs--In the course of providing its services, the
Company routinely subcontracts for services such as laboratory testing, soil
cartage and other services and capabilities. These costs are passed through to
clients and, in accordance with industry practice, are included in the Company's
gross revenue. Because subcontractor services can change significantly from
project to project, changes in gross revenue may not be indicative of business
trends. Accordingly, the Company also reports net revenue, which is gross
revenue less the cost of subcontractor services. Contract revenues and contract
costs on both cost-type and fixed-price-type contracts are recorded using the
percentage-of-completion (cost-to-cost) method. Under this method, contract
revenues on long-term contracts are recognized in the ratio that contract costs
incurred bear to total estimated costs. Costs and income on long-term contracts
are subject to revision throughout the lives of the contracts and any required
adjustments are made in the period in which the revisions become known. Losses
on contracts are recorded in full as they are identified.
General and administrative costs are expensed in the period incurred.
Contract revenues under United States government contracts and subcontracts
accounted for approximately 62%, 55% and 52% of net contract revenue for the
years ended September 29, 1996, October 1, 1995 and October 2, 1994,
respectively.
Cash and Cash Equivalents--Cash equivalents include all investments with initial
maturities of 90 days or less.
Property and Equipment--Property and equipment are recorded at cost and are
depreciated over their estimated useful lives using the straight-line method.
Expenditures for maintenance and repairs are expensed as incurred.
Generally, estimated useful lives range from three to ten years for
equipment, furniture and fixtures. Leasehold improvements are amortized on a
straight-line basis over the shorter of their estimated useful lives or the
remaining terms of the leases.
Intangible Assets--The Company reviews the recoverability of intangible assets
to determine if there has been any impairment. This assessment is performed
based on the estimated undiscounted cash flows compared with the carrying value
of intangible assets. If the future cash flows (undiscounted and without
interest charges) are less than the carrying value, a writedown would be
recorded to reduce the related asset to its estimated fair value. Intangible
assets as of September 29, 1996 and October 1, 1995 consists principally of
goodwill resulting from business acquisitions which is being amortized over
periods ranging from 15 to 40 years.
Income Taxes--The Company files a consolidated federal income tax return and
combined California franchise tax reports, which include the Company and its
subsidiaries. Income taxes are recognized for (a) the amount of taxes payable or
refundable for the current period, and (b) deferred income tax assets and
liabilities for the future tax consequences of events that have been recognized
in the Company's financial statements or income tax returns. The effects of
income taxes are measured based on enacted tax laws and rates.
Net Income Per Common Share--Per share information is computed using the
weighted average number of shares of common stock outstanding and dilutive
common equivalent shares from stock options and warrants (using the treasury
stock method).
<PAGE>
Fair Value of Financial Instruments--
Cash and Cash Equivalents, Accounts Receivable, Unbilled Receivables and
Accounts Payable--The carrying amounts approximate fair value because of the
short maturities of these instruments.
Revolving Credit Facility--The carrying amount approximates fair value because
the interest rates are based upon variable reference rates.
Concentration of Credit Risk--Financial instruments which subject the Company
to credit risk consist primarily of temporary cash investments and accounts
receivable. The Company places its temporary cash investments with high credit
qualified financial institutions and, by policy, limits the amount of investment
exposure to any one financial institution. Approximately 70% of accounts
receivable is due from various agencies of the Federal government. The remaining
accounts receivable are generally diversified due to the large number of
entities comprising the Company's customer base and their geographic dispersion.
The Company performs ongoing credit evaluations of its customers and maintains
an allowance for potential credit losses.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Accounting Pronouncements--During the fiscal year ended September 29, 1996, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of. Among other provisions, the statement changed current accounting
practices for the evaluation of impairment of long-lived assets. The adoption
did not have a material effect on the Company's financial statements.
In 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, which will be effective for the Company beginning September 30,
1996. SFAS No. 123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require) compensation
cost to be measured based on fair value of the equity instrument awarded.
Companies are permitted, however, to continue to apply APB Opinion No. 25, which
recognizes compensation cost based on the intrinsic value of the equity
instrument awarded. The Company will continue to apply APB Opinion No. 25 to its
stock-based compensation awards to employees and will disclose the required pro
forma effect on net income and earnings per share upon adoption of SFAS No.
123.
2. ACQUISITIONS
In November 1995, the Company acquired 100% of the capital stock of KCM, Inc.
("KCM"), an engineering services firm specializing in areas of water quality,
water and wastewater systems, surface water management, fisheries and
facilities. The purchase price of $12,958,000 consisted of cash and Company
stock which was issued under Regulation D under the Securities Act of 1933, as
amended, and had a value of $10,313,000.
On September 15, 1995, the Company acquired 100% of the capital stock of PRC
Environmental Management, Inc. ("EMI") from The Black & Decker Corporation. EMI
provides a full range of environmental consulting and engineering services,
including feasibility studies, remedial investigations and design, construction
management, economic and financial analysis, environmental audits, risk
management services and regulatory compliance assistance. EMI's customers
include the U.S. Environmental Protection Agency, U.S. Department of Defense and
other governmental and commercial entities. The purchase price was approximately
$40,000,000.
The acquisitions of EMI and KCM have been accounted for as purchases. The
excess of the purchase cost of the acquisitions over the fair value of the net
assets acquired was recorded as goodwill and is included in Intangible
Assets--Net in the accompanying balance sheets. The results of operations of EMI
and KCM have been included in the Company's financial statements from their
respective acquisition dates.
<PAGE>
NOTES TO CONSOLIDATD FINANCIAL STATEMENTS
Tetra Tech, Inc.
- ---------------
The following table presents summarized unaudited pro forma operating
results assuming that the Company had acquired KCM and EMI on October 3, 1994:
<TABLE>
<CAPTION>
Fiscal Years Ended
-------------------------
Sept. 29, Oct. 1,
($ in thousands, except per share data) 1996 1995
- --------------------------------------- --------- ---------
<S> <C> <C>
Gross revenue $ 222,150 $ 232,008
Income before income taxes 17,119 10,842
Net income 10,200 6,505
Net income per share 0.70 0.45
Weighted average shares outstanding 14,546 14,324
</TABLE>
3. ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following at September 29, 1996 and October
1, 1995:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Billed accounts receivable $ 23,338,000 $ 24,782,000
------------ ------------
Unbilled accounts receivable:
Billable amounts not invoiced, amounts
billable at stipulated stages of
completion of contract work, and unbilled
amounts pending negotiation or receipt of
contract modifications 25,067,000 28,207,000
Costs and fee retention billable upon
audit of total contract costs 10,203,000 10,668,000
------------ ------------
Total unbilled accounts receivable 35,270,000 38,875,000
------------ ------------
Allowance for uncollectible accounts and
disallowed costs (11,101,000) (11,153,000)
------------ ------------
Total $ 47,507,000 $ 52,504,000
============ ============
</TABLE>
The accounts receivable valuation allowance includes amounts to provide for
doubtful accounts and for the potential disallowance of billed and unbilled
costs. Disallowance of billed and unbilled costs is primarily associated with
contracts with the U.S. government which contain clauses that subject
contractors to many levels of audit. Payments made to EMI on U.S. government
contracts are subject to proposed adjustments upon audit. Audits for the years
1986, 1987, 1992 and 1993 have been completed, and cost disallowances of
approximately $2.3 million have been proposed. Final negotiations between EMI
and the U.S. government are in process, and EMI is vigorously contesting
substantially all of the proposed disallowances. Audits for the years 1988,
1989, 1990, 1991, 1994 and 1995 and the period from January 1, 1996 to September
29, 1996 have yet to be completed. Allowances to provide for doubtful accounts
have been determined through reviews of specific amounts determined to be
uncollectible, plus a general allowance for other amounts for which some
potential loss has been determined to be probable based on current events and
circumstances. Given the above, management believes that resolution of these
matters will not have a material adverse impact on the Company's financial
position or results of operations.
The Company has approximately $2,400,000 under retainage provisions of
contracts. Accounts receivable include approximately $4,748,891 that may not be
realized within one year.
4. INCOME TAXES
The provision for income taxes for the years ended September 29, 1996, October
1, 1995 and October 2, 1994 consisted of the following:
<TABLE>
<CAPTION>
Sept. 29, Oct. 1, Oct. 2,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $ 5,849,000 $ 4,185,000 $ 2,915,000
State 1,462,000 1,129,000 762,000
Deferred (457,000) (278,000) 129,000
----------- ----------- -----------
Total provision $ 6,854,000 $ 5,036,000 $ 3,806,000
=========== =========== ===========
</TABLE>
Temporary differences comprising net deferred income taxes shown on the
consolidated balance sheets were as follows:
<TABLE>
<CAPTION>
Sept. 29, Oct. 1,
1996 1995
----------- -----------
<S> <C> <C>
Allowance for doubtful
accounts $ 4,458,000 $ 4,635,000
Cash to accrual (2,265,000) (211,000)
Accrued vacation 606,000 547,000
Prepaid expense (584,000) (324,000)
Depreciation (399,000) (157,000)
Other 542,000 268,000
----------- -----------
Deferred income taxes $ 2,358,000 $ 4,758,000
=========== ===========
</TABLE>
<PAGE>
Total tax expense was different than the amount computed by applying the
federal statutory rate as follows:
<TABLE>
<CAPTION>
Sept. 29, 1996 Oct. 1, 1995 Oct. 2, 1994
-------------------------------------------------------------------------------------
Amount % Amount % Amount %
----------- ----- ----------- ----- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
Tax at federal statutory rate $ 5,936,000 35.0% $ 4,406,000 35.0% $ 3,330,000 35.0%
State taxes, net of federal benefit 933,000 5.5 692,000 5.5 528,000 5.5
Other (15,000) (0.1) (62,000) (0.5) (52,000) (0.5)
----------- ---- ----------- ---- ----------- ----
Total provision $ 6,854,000 40.4% $ 5,036,000 40.0% $ 3,806,000 40.0%
=========== ==== =========== ==== =========== ====
</TABLE>
5. LONG-TERM OBLIGATIONS
In September 1995, the Company entered into a credit agreement (as amended, the
"Credit Agreement") with a bank to support its working capital and acquisition
needs. The Credit Agreement initially provided a revolving credit facility of
$30,000,000 which the Company voluntarily reduced to $15,000,000 at September
29, 1996. Under the Credit Agreement, the Company may also request standby
letters of credit up to the aggregate sum of $5,000,000 outstanding at any one
time.
Interest on borrowings under the Credit Agreement is payable at the
Company's option (a) at a base rate (Federal funds rate plus 0.50% or the bank's
reference rate) as defined in the Credit Agreement or (b) at a eurodollar rate
plus a margin which ranges from 1.25% to 1.75%. The interest rate on outstanding
borrowings at October 1, 1995 was 7.5625%.
Borrowings under the Credit Agreement are secured by the Company's accounts
receivable and the stock of four of the Company's subsidiaries.
The Credit Agreement contains various covenants including, but not limited
to, restrictions related to tangible net worth, net income, additional
indebtedness, asset sales, mergers and acquisitions, creation of liens, and
dividends on capital stock (other than stock dividends).
The Credit Agreement matures on September 15, 1998 or earlier at the
discretion of the Company upon payment in full of loans and other obligations.
As at September 29, 1996, there were no borrowings outstanding, however, standby
letters of credit totalled $1,815,000.
6. STOCKHOLDERS' EQUITY
On May 23, 1996, the Board of Directors declared a five-for-four split of the
Company's Common Stock, effected in the form of a 25% stock dividend, payable on
June 21, 1996 to shareholders of record on June 7, 1996. All agreements
concerning stock options and other commitments payable in shares of the
Company's Common Stock are affected by the five-for-four split. All references
to number of shares (except shares authorized), stock options and per share
information in the consolidated financial statements have been adjusted to
reflect the stock split on a retroactive basis.
Pursuant to the Company's 1989 Stock Option Plan, key employees may be
granted options to purchase 610,351 shares of the Company's Common Stock at
prices ranging from 85% to 100% of the market value on the date of grant. All
options granted to date by the Company have been at 100% of the market value as
determined by the Board of Directors at the date of grant. These options become
exercisable beginning one year from date of grant, become fully vested in four
years and terminate ten years from date of grant. Additionally, in connection
with acquisitions in 1988 and 1990, the Company issued options to purchase
281,605 shares of the Company's Common Stock.
The Company also has a 1992 Incentive Stock Plan under which key employees
may be granted options to purchase 2,156,250 shares of the Company's Common
Stock at prices not less than the market value on the date of grant. From such
date of grant, these options become exercisable after one year, are fully vested
no later than five years after grant and terminate no later than ten years after
grant.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tetra Tech, Inc.
- ---------------
Pursuant to the Company's 1992 Nonemployee Director Plan, nonemployee
directors may be granted options to purchase 73,241 shares of the Company's
Common Stock at prices not less than the market value on the date of grant.
These options vest and become exercisable when, and only if, the optionee
continues to serve as a director until the Annual Meeting following the year in
which the options were granted.
The Company also has an Employee Stock Purchase Plan (the "Purchase Plan")
which provides for the granting of Purchase Rights to purchase Common Stock to
regular full-time and regular part-time employees and officers of the Company or
any of its Subsidiaries, including directors who are also employees or officers
of the Company and its Subsidiaries. Under the Purchase Plan, shares of Common
Stock will be issued upon exercise of the Purchase Rights. Under the Purchase
Plan, 562,500 shares may be issued pursuant to the exercise of Purchase Rights.
Each Purchase Right lasts for a period of 52 weeks ("Purchase Right
Period"). The first Purchase Right Period began after the stockholders adopted
the Purchase Plan at the Annual Meeting on February 8, 1996. However, the
Committee may elect to suspend and/or recommence the Purchase Plan at anytime
following the end of a Purchase Right Period.
Prior to the beginning of each Purchase Right Period, employees may elect to
contribute fixed amounts to the Purchase Plan during that Purchase Right Period
to purchase Common Stock. Employees can only commence participation in the
Purchase Plan on the first day of a Purchase Right Period. The maximum amount
that an employee can contribute during a Purchase Right Period is $4,000, and
the minimum contribution per payroll period is $25.
Under the Purchase Plan, the exercise price of a Purchase Right will be the
lesser of 100% of the fair market value of such shares on the first day of the
Purchase Right Period or 85% of the fair market value on the last day of the
Purchase Right Period. For this purpose, the fair market value of the stock is
its closing price as reported on the Nasdaq Stock Market on the day in question.
The amounts that employees contribute to the Purchase Plan will
automatically be used to purchase Common Stock on the last day of the Purchase
Right Period, unless they elect to withdraw from the Purchase Plan or are
terminated prior to that date. If the Company is sold, all Purchase Rights will
become exercisable immediately preceding the sale. Employees who elect to
suspend their contributions can elect either to withdraw their contributions or
leave those amounts in the Purchase Plan to be used to purchase Common Stock at
the end of the Purchase Right Period. No interest is credited on any amounts
contributed to the Purchase Plan.
If the Common Stock is disposed of by a participant prior to the expiration
of the holding periods required to qualify for long-term capital gains
treatment, the participant is required to notify the Company in the event of
such a premature disposition.
During the three years ended September 29, 1996, option activity was as
follows:
<TABLE>
<CAPTION>
Number of Option Price
Options Per Share Total
--------- ----------------- ------------
<S> <C> <C> <C>
Balance,
October 3,
1993 435,961 $ 1.08 - $ 7.98 $ 1,992,000
Granted 512,158 $ 8.06 - $ 12.16 4,826,000
Exercised (63,633) $ 1.08 - $ 7.53 (151,000)
Cancelled (41,026) $ 1.47 - $ 9.22 (266,000)
--------- ----------------- ------------
Balance,
October 2,
1994 843,460 $ 1.08 - $ 12.16 6,401,000
Granted 347,770 $ 10.88 - $ 17.30 4,038,000
Exercised (109,896) $ 1.08 - $ 10.24 (629,000)
Cancelled (79,561) $ 1.47 - $ 11.04 (690,000)
--------- ----------------- ------------
Balance,
October 1,
1995 1,001,773 $ 1.08 - $ 17.30 9,120,000
Granted 412,587 $ 16.00 - $ 21.00 7,318,000
Exercised (101,626) $ 1.08 - $ 12.48 (684,000)
Cancelled (52,417) $ 1.08 - $ 17.60 (583,000)
--------- ----------------- ------------
Balance,
September 29,
1996 1,260,317 $ 1.08 - $ 21.00 $ 15,171,000
========= ================= ============
</TABLE>
<PAGE>
At September 29, 1996, the status of each plan was as follows:
1989 Stock Option Plan: Options to purchase 114,674 shares were exercisable and
no further options will be granted under this plan.
1992 Incentive Stock Plan: Options to purchase 293,283 shares were exercisable
and options to purchase 954,111 shares were available for future grant.
1992 Nonemployee Director Plan: Options to purchase 9,764 shares were
exercisable and options to purchase 56,154 shares were available for future
grant.
7. LEASES
The Company leases land, buildings and equipment under various operating leases.
Rent expense under all operating leases was approximately $9,462,000, $5,332,000
and $3,732,000 for the years ended September 29, 1996, October 1, 1995 and
October 2, 1994, respectively. Amounts payable under noncancelable operating
lease commitments are as follows during the fiscal years ending in:
<TABLE>
<S> <C>
1997 $ 7,873,000
1998 6,065,000
1999 4,029,000
2000 3,083,000
2001 2,575,000
Thereafter 5,136,000
------------
Total $ 28,761,000
============
</TABLE>
8. RETIREMENT PLANS
The Company and its subsidiaries have established defined contribution plans and
401(k) plans. Generally, employees are eligible to participate in the defined
contribution plans upon completion of one year of service and in the 401(k)
plans upon commencement of employment. For the years ended September 29, 1996,
October 1, 1995 and October 2, 1994 expenses relating to the plans were
approximately $4,002,000, $1,971,000 and $1,479,000, respectively.
9. CONTINGENCIES
The Company is subject to certain claims and lawsuits typically filed against
the engineering and consulting professions, primarily alleging professional
errors or omissions. The Company carries professional liability insurance,
subject to certain deductibles and policy limits against such claims. Management
is of the opinion that the resolution of these claims will not have a material
adverse effect on the Company's financial statements.
10 QUARTERLY FINANCIAL INFORMATION--UNAUDITED
In the opinion of management, the following unaudited quarterly data for the
years ended September 29, 1996 and October 1, 1995 reflect all adjustments
necessary for a fair statement of the results of operations. All such
adjustments are of a normal recurring nature. (In thousands, except per share
data.)
<TABLE>
<CAPTION>
First Second Third Fourth
Fiscal 1996 Quarter Quarter Quarter Quarter
- ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross revenue $ 54,162 $ 53,929 $ 54,152 $ 57,856
Net revenue 38,023 40,076 40,314 42,624
Gross profit 8,540 9,400 9,835 11,178
Income from operations 3,730 4,119 4,506 5,380
Net income 2,029 2,297 2,625 3,154
Net income per share $ 0.14 $ 0.16 $ 0.18 $ 0.22
Weighted average shares outstanding 14,151 14,504 14,565 14,601
Fiscal 1995
- -----------
Gross revenue $ 27,646 $ 27,852 $ 29,150 $ 35,386
Net revenue 19,947 21,151 21,499 25,277
Gross profit 4,897 5,244 5,277 6,972
Income from operations 2,403 2,613 2,919 3,821
Net income 1,551 1,688 1,907 2,407
Net income per share $ 0.12 $ 0.13 $ 0.14 $ 0.18
Weighted average shares outstanding 13,439 13,449 13,551 13,670
</TABLE>
<PAGE>
SECURITIES INFORMATION
Tetra Tech, Inc.
- ---------------
Tetra Tech's Common Stock is traded on the Nasdaq Stock Market under the symbol
WATR. There were 337 stockholders of record as of December 2, 1996. Tetra Tech
has not paid any cash dividends since its inception and does not intend to pay
any cash dividends on its Common Stock in the foreseeable future. The high and
low sales prices for the Common Stock for the last two fiscal years, as reported
by the National Association of Securities Dealers, Inc., are set forth in the
following tables. The prices have been adjusted to reflect the effect, on a
retroactive basis, of a 5-for-4 stock split, effected in the form of a 25% stock
dividend, in June 1996.
<TABLE>
<CAPTION>
Fiscal 1996 High Low
- ----------- ------- -------
<S> <C> <C>
First Quarter $ 19.00 $ 16.40
Second Quarter 19.00 15.60
Third Quarter 22.40 15.80
Fourth Quarter 24.50 17.25
Fiscal 1995 High Low
- ----------- ------- -------
First Quarter $ 12.80 $ 10.40
Second Quarter 12.96 10.24
Third Quarter 14.88 12.48
Fourth Quarter 19.00 14.00
</TABLE>
INDEPENDENT AUDITORS' REPORT
TETRA TECH, INC.:
We have audited the accompanying consolidated balance sheets of Tetra Tech, Inc.
and its subsidiaries as of September 29, 1996 and October 1, 1995, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended September 29, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Tetra Tech, Inc. and its
subsidiaries as of September 29, 1996 and October 1, 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended September 29, 1996 in conformity with generally accepted accounting
principles.
Los Angeles, California
November 12, 1996
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF TETRA TECH, INC.
GeoTrans, Inc., a Virginia corporation
Simons, Li & Associates, a Colorado corporation
Hydro-Search, Inc., a Delaware corporation
PRC Environmental Management, Inc., a Delaware corporation
KCM, Inc., a Washington corporation
Tetra Tech Technical Services, Inc., a Delaware corporation
IWA Engineers, a California corporation
FLO Engineering, Inc., a Colorado corporation
All of such subsidiaries are wholly-owned by Tetra Tech, Inc.
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos. 33-
46240, 33-47533, 33-80606 and 33-94706 of Tetra Tech, Inc. on Form S-8 and
333-2766 of Tetra Tech, Inc. on Form S-3 of our reports dated November 12, 1996,
appearing in, and incorporated by reference in, this Annual Report on Form 10-K
for the year ended September 29, 1996.
Los Angeles, California
December 26, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-END> SEP-29-1996
<CASH> 6,129
<SECURITIES> 0
<RECEIVABLES> 58,608
<ALLOWANCES> 11,101
<INVENTORY> 0
<CURRENT-ASSETS> 57,933
<PP&E> 13,805
<DEPRECIATION> 6,790
<TOTAL-ASSETS> 88,463
<CURRENT-LIABILITIES> 25,194
<BONDS> 0
0
0
<COMMON> 141
<OTHER-SE> 63,128
<TOTAL-LIABILITY-AND-EQUITY> 88,463
<SALES> 220,099
<TOTAL-REVENUES> 220,099
<CGS> 181,146
<TOTAL-COSTS> 181,146
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,076
<INCOME-PRETAX> 16,959
<INCOME-TAX> 6,854
<INCOME-CONTINUING> 10,105
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,105
<EPS-PRIMARY> .70
<EPS-DILUTED> .69
</TABLE>
