Air Force Uses Cost Cap Alternative For 2nd Time As Substitute To Obtain Fixed-Price Cleanup

Given its prior success in using an innovative Cost Cap Alternative following traditional Insurers’ 2011 exit from the Cost Cap market, the Air Force again used the Cost Cap Alternative to achieve cleanup and transfer of over 200 acres of property under a Fixed-Price Cleanup Contract.  Alba helped develop the Cost Cap Alternative, which is the subject of a detailed article published in the Chemical Waste Litigation Reporter.

 

Alba has, since 2005, helped the USAF with other property transfers at McClellan and other bases across the U.S., including two prior transfers at McClellan.  Over 3,000 permanent jobs have already been created as result of these transfers.

 

Each of the prior transfers at McClellan (and most at other locations) used Cost Cap insurance.  Cost Cap insurance emerged in the late 1990’s to cover cost overruns for cleanups of “known conditions” for which a cleanup is already known to be required.  It was used by the USAF and numerous other entities, public and private, to reduce cleanup cost risks as well as cleanup costs themselves.  A 2006 DoD study shows that FPCs are done at costs that are, on average, more than 20% below the cost of cleanups done without the risk-shifting benefits that FPCs bring.  EPA and other regulators have come to support FPCs across the U.S. because of the societal benefits they bring, and in March 2013 EPA committed to using more FPCs.  A CWLR article that Michael Hill published to detail the means and benefits of the Air Force’s use of CCAs can be found here.

 

CCAs can be used at non-military sites as well. Although they are particularly suited for governments, they offer cost reduction and risk transfer advantages for any “Potentially Responsible Party.”  CCAs offer the same benefits and more to Remediation Contractors as did Cost Cap policies.  Any entity that might previously have considered a Cost Cap should consider a CCA.