Attachment 0012 - PWS 12 - ARMS.docx

RADFORD ARMY AMMUNITION PLANT

PERFORMANCE WORK STATEMENT (PWS)

PWS 12: Armament Retooling & Manufacturing Support (ARMS) April 2026

1. ARMS Program Scope and Objectives

1.1. Purpose: The ARMS Program (10 USC 7551-7555) reduces government-ownership costs at Government-Owned, Contractor-Operated (GOCO) facilities while maintaining readiness. The Contractor may be authorized to utilize Radford Army Ammunition Plant (RFAAP) assets for commercial, non-government, third-party, and tenant use in accordance with FAR Part 45.

1.2. Contractor Objectives: To participate in and execute the ARMS Program, the Contractor shall:

1.2.1. Actively market RFAAP capabilities and execute commercial use of the facility.

1.2.2. Promote small business utilization and the creation of commercial jobs to retain critical mission skills.

1.2.3. Track, maintain, and report all costs, revenues, and benefits within the Facility Contractor Account (FCA).

1.2.4. Ensure all commercial and tenant activities adhere to the most recent versions of applicable Army Regulations (ARs) and provide timely responses to all higher headquarters ARMS taskers.

2. Definitions

2.1. Consideration: The cause, motive, price or impelling influence inducing a party (government, contractor, tenant, etc.) into a contract/agreement. It can be either monetary or non-monetary. Monetary (rent) or non-monetary (pre-approved services in-lieu-of-rent) compensation for the use of Government assets.

2.2. Contractor Incentive fee (CIF): The portion of the gross ARMS consideration provided to the Contractor as compensation for property management and marketing.

2.3. Facility Contractor Account (FCA): The account tracking and holding gross ARMS consideration/revenue.

2.4. Request for Use of Facility (RUF): A proposal requesting use of Government assets for third-party work (direct sales by the Contractor to commercial industry, tenants, or the Government).

2.5. Tenant Use Agreement (TUA): An agreement between the Contractor and a authorizing the use of government assets. (The Government is not a party to a TUA).

2.6. Revenue: Total (cash) consideration generated at RFAAP under the ARMS program to include tenant rent and revenue from third-party activities.

3. TUAs and RUFs

3.1. General Authorization and Liability: The Contractor shall ensure tenants comply with all applicable installation regulations and flow-down clauses. Prior to any tenant occupying property under an approved Tenant Use Agreement (TUA), the Contractor shall decontaminate facilities and equipment to the appropriate degree necessary to ensure all buildings and equipment meet OSHA standards and explosive siting requirements are met in accordance with PWS 9, Safety, Occupational Health, and Industrial Hygiene. The Government is not a party to TUAs; the Contractor and tenants shall hold the Government harmless if a Request for Use of Facility (RUF) is not approved, renewed, or transferred.

3.2. Tenant RUFs: The Contractor shall submit one RUF request per tenant to the PCO for approval (CDRL A12-001). TUAs shall not exceed current ARMS legislative time limits (currently 25 years).

3.2.1. Creditworthiness: The Contractor shall verify tenant creditworthiness (e.g., Dunn & Bradstreet, bank references) prior to submission and provide results to the Government upon request.

3.2.2. Execution & Publishing: The Contractor shall provide a signed copy of the TUA to the PCO within 30 days of execution. All TUAs must include a release granting the Government full rights to publish the agreement for future competition or conveyance purposes.

3.2.3. Facility Condition: Following RUF approval but prior to occupancy, the Contractor and tenant shall conduct a joint walk-through to document asset conditions and contamination. This Condition Assessment Report shall be provided to the PCO and updated as conditions change (CDRL A12-002).

3.2.4. Expiration & Status: The Contractor shall submit an annual TUA Status Report to the PCO by 30 September (CDRL A12-003). TUA renewal/option requests must be submitted at least 60 calendar days prior to expiration.

3.2.5. Termination & Closeout: Upon TUA termination or expiration, the Contractor shall conduct an exit inspection to ensure all property, manuals, licenses, and modifications are returned in their original condition (less fair wear and tear). The Exit Inspection Report shall be provided to the PCO within 30 days of expiration (CDRL A12-004). Termination settlement costs shall be governed by FAR Part 49.

3.2.6. Prohibition on Subleasing: The Contractor shall not allow any ARMS tenant to sublease, assign, or otherwise transfer their rights or interest in the Government assets to any other entity. The Contractor shall ensure all TUAs explicitly prohibit subleasing or third-party occupancy of the authorized assets.

3.3. Third-Party Commercial Use (RUFs): The Contractor shall submit a RUF to the PCO for each third-party production order prior to beginning production (CDRL A12-005). RUFs shall not extend past the period of performance of the facility contract. If an order changes (e.g., quantity, End Use, assets used), a revised RUF must be submitted for re-approval.

3.4. Required Proposal Documentation (RUFs): All RUF submissions must include, at a minimum:

3.4.1.1. Justification of ARMS program benefits and the ARMS project scoring package.

3.4.1.2. Period of Performance and Statement of Work (SOW).

3.4.1.3. ARMS Mandatory Checklist and ARMS Safety Checklist.

3.4.1.4. Appropriate environmental documentation, permits, and Explosive Site Safety Plan (ESSP), if required.

3.4.1.5. A detailed cost breakdown (labor, materials, ODCs, indirect costs).

3.4.1.6. For TUAs: Request for 10 USC 2692 waiver if treating/storing non-DoD hazardous material. In addition, the Contractor shall include the nomenclature, national stock number, quantities, and owner of all non-DoD hazardous materials proposed. The Contractor shall not allow any material not owned by the Tenant to be treated/stored onsite.

3.4.1.7. For RUFs: Customer purchase order, End Use Certification, and specific list of Government assets to be utilized.

4. Consideration and Financial Management

4.1. Consideration Calculation:

4.1.1. Tenant Use: Consideration (rent or services-in-lieu) shall be calculated IAW FAR Part 45 and FAR 52.245-9. Services-in-lieu require written PCO pre-approval.

4.1.2. 4.1.2. Third-Party Use: The consideration shall be calculated as 4% of the total contract value of the third-party commercial use workload. Contractor Use: The Contractor may use vacant Government assets but must compensate the Government at a fair market rate IAW FAR 52.245-9 or the rates charged to ARMS tenants.

4.2. Consideration Collection & Delinquency: The Contractor shall collect all consideration and maintain it in the FCA. If a tenant is delinquent, the Contractor shall notify the PCO within 30 calendar days and submit a corrective action plan. Failure to notify the PCO or take appropriate remedy actions may result in the Contractor being held financially responsible for the defaulted consideration.

4.3. FCA Distribution and Contractor Incentive Fee (CIF): The CIF is calculated annually based on the ARMS Validation Report and current Government fiscal year (FY) consideration/revenue against the prior year's baseline. The PCO will authorize the CIF payment in the following FY. Funds in the "ARMS Portion" of the FCA are reserved for Government use (facility repairs/upgrades), while CIF funds are at the Contractor's sole discretion. The PCO reserves the right to decrement the CIF payment for poor PWS performance.

Table 1

5. ARMS Program Management and Reporting

5.1. Marketing Execution Plan: The Contractor shall submit an annual Marketing Execution Plan detailing expected TUA language changes, planned tenant audits, expected rental rates, cross-functional tenant meetings, and prioritized FCA projects for the current and out-years. (CDRL A12-006)

5.2. Monthly Activity Report & IPT: The Contractor shall lead monthly Government meetings supported by a Monthly Activity Report (CDRL A12-007). This report shall detail the FCA balance, completed/planned marketing, TUA changes, tenant audit results, rent collection issues, tenant corrective actions, and ARMS project statuses.

5.3. Program Reviews & Annual Validation: The Contractor shall attend scheduled ARMS program reviews/workshops and fully support the Annual ARMS Validation effort by compiling all records of cost, revenue, headcount, third-party sales, and facility benefits as of the last day of the Government FY.

5.4. Transition and Asset Continuity: In the event of a contract transition to a New Operating Contractor (NOC), the incumbent Contractor shall transfer all TUAs and the FCA balance to the NOC, who shall assume the existing TUA terms and conditions. Furthermore, to ensure uninterrupted facility operations, the incumbent Contractor shall strictly execute the Transition and Asset Continuity strategy incorporated from its Strategic Investment Plan. This shall include, as applicable, executing the pre-negotiated licensing of self-funded Intellectual Property to the NOC, initiating the orderly transfer of assets, or formally transitioning the incumbent Contractor's self-funded operations to a standard commercial tenant status under ARMS authority.

6. Strategic Investment and Commercialization Plan Execution

6.1. General Execution: The Contractor shall fully execute the Strategic Investment and Commercialization Plan submitted in its proposal and incorporated into this contract at award. All commercial use, facility utilization, and private investment strategies shall be executed in accordance with the ARMS Act (10 U.S.C. § 7561-7564) to sustain the military industrial base and offset Government ownership costs. The Contractor's execution shall scale seamlessly into any exercised option periods.

6.2. Financial Commitment and Investment Tracking: The Contractor shall execute the Total Self-Investment Dollars committed in its incorporated proposal.

6.2.1. Prohibition on Sunk Costs: Only new, forward-looking capital expenditures executed post-award shall satisfy this contractual commitment. The Contractor is strictly prohibited from claiming historical research and development (R&D) or pre-award sunk costs against this obligation.

6.2.2. Financial Reporting: The Contractor shall track and report the execution of its self-funded investments (cost-burn rate and milestone completion) as a distinct section within the Monthly Activity Report (CDRL A12-007).

6.3. Commercialization Execution: The Contractor shall execute its incorporated ARMS Market Strategy. The Contractor shall utilize its self-funded investments to establish ARMS agreements (TUAs and RUFs) that generate third-party revenue, offset the Government's base cost of ownership, and mitigate the disposal costs of legacy assets.

6.4. Realization Schedule and Risk Mitigation: The Contractor shall adhere to the milestone-driven Realization Schedule incorporated at award. The Contractor shall implement the self-funded investments such that they tangibly contribute to operational capabilities on schedule.

6.4.1. Variance Reporting: The Contractor shall brief any schedule variances, execution risks, or shortfalls in commercial Return on Investment (ROI) during the monthly ARMS IPT meeting (ref PWS 5.2). The Contractor shall concurrently present actionable mitigation strategies to correct variances and protect the Government’s baseline benefits.

6.5. Operational Integration and IP continuity: The Contractor shall maintain a highly skilled critical workforce by integrating personnel into the newly established commercial supply chains generated by this investment.

6.5.1. IP Data Rights: The Contractor shall be bound by the specific IP assertions and data rights licensing terms established in its incorporated proposal for any technologies or facility enhancements developed exclusively at private expense under this plan.