Contract Awarded for Rocky Flats Cleanup : Environment: Kaiser- Hill will be paid $3.5 billion for project at nuclear weapons facility.

Kaiser-Hill Co. received a five-year, $3.5-billion contract Tuesday to manage the cleanup of plutonium and other dangerous wastes at the Rocky Flats nuclear weapons plant in Colorado.

Energy Secretary Hazel O’Leary said the company promised to shave $1.2 billion off previously anticipated cleanup costs.

Kaiser-Hill is a joint venture subsidiary of ICF Kaiser and CH2M Hill Co., two leading environmental management companies that already do extensive work for the Energy Department at other nuclear weapons facilities.

Work at Rocky Flats, which has been mired in controversy for years because of shoddy cleanup operations and safety violations, will be performed in conjunction with more than a dozen subcontractors, including Westinghouse, also a major contractor at Energy Department facilities.

Kaiser-Hill was selected over Parsons Rocky Flats Corp. The former plutonium-processing plant near Denver requires a cleanup that will cost an estimated $22.5 billion and take decades to complete.

O’Leary said the deal represents a dramatic shift in how the government deals with its contractors. Unlike many past contracts that guaranteed companies certain payment without regard to quality of work, the agreement with Kaiser-Hill will be pegged to performance.

“This team is going to hit the ground running,” O’Leary said at a news conference, adding that 85% of the contractor’s fees will be pegged to meeting specific performance goals, many of them over the next two years.

The announcement came a day after the department said it would cost about $230 billion to rid the government’s weapons-production facilities of wastes left over from decades of nuclear warhead research, production and testing.