Attachment A11-A14.docx

Attachment A11

RMA ERS Contract Target Cost Re-baselining procedure

As discussed in Section C1.22, the objective of the Incentive Fee Program is to use monetary incentives that encourage the Contractor to align its goals and vision for the long-term operations and maintenance work at the RMA with those of the Government. As part of that incentive, the Government has established the Target Cost Savings program which is described in more detail in Section C1.22 of the contract. The Target Cost is evaluated in three-year periods consistent with the Base and two Option Periods in the contract. For each three-year period, if total costs are under the established Target Cost the Contractor will receive 30% of the documented savings at the end of that period. The initial Target Cost for the three-year Base Period will be established as set forth in Section C1.22.

The Target Cost Savings portion of the Incentive program is not intended to be an area where savings are predictable, expected, or built into the Contractor’s anticipated profit. The base ERS scope at RMA has reached a consistent level of maturity and predictability and achieving additional savings is expected to require significant effort and innovation on the Contractor’s part. To account for any cost changes that are realized during each period, the Target Cost will be Re-Baselined at the beginning of each Option Period. The following sets forth the process for Re-Baselining.

1. The Contractors proposal includes reimbursable costs, fixed price items, and fee.

2. The original Target Cost is established from the Contractor’s proposed costs for the reimbursable CLINs Labor (XX01) and Reimbursable expenses (XX02) for the initial three-year Base Period.

Example: Assume the following was proposed on the bid schedule:

Note: $ values shown in the example bear no relationship to the actual scope and should not be inferred to have any meaning other than to provide a basis to explain how Re-Baselining will occur.

For this example, it is assumed that the Contractor proposed an escalation rate of 2% per year. Each year’s proposed costs are equal to the prior year plus the 2% escalation.

The initial Target cost for the Base Period is set at $4,590,600.

3. Assume the Contractor’s actual cost over the first 3-year base period was as follows:

Base Period Actual Cost

4. The target cost savings is the difference between the established Base Period Target Cost of $4,590,600 minus the actual cost of $4,425,000 or $165,600. The Contractor’s share of the Target Cost savings would be 40% of $165,600 or $66,240 which would be earned in addition to 100% of the Cost Fee Pool.

5. At the beginning of each Option Period the target cost will be Re-Baselined using the average actual cost realized during the prior three-year period. Using the 2% escalation rate discussed in item 2 above each year’s actual cost is escalated to the first year of the current option period as shown in the following example:

6. The New Target Cost for the First Option Period would then be established using the 3-year average above ($1,534,020) for the 1st year of the option period and escalating for each subsequent year as proposed in the Contractor’s original proposal. In this example using the 2% escalation rate described in item 1 above. The Re-Baselined Target Cost for the first Option Period would then be $4,694,714.81 as shown below.

New Target Cost – Option Period 1

7. If a significant change to the base PWS is directed by the Contracting Officer and is not the result of any Contractor efforts to achieve Target Cost savings, the Contracting Officer, at their discretion, may make an equitable adjustment to the existing Incentive Fee Pool and the Target Cost.

Attachment A12 – WBS Matrix

Attachment A13 – Computer Applications Recurring Costs

Attachment A14 – Commercial Cloud Current Usage Requirements

Current Usage (Amazon Web Services)

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