B-2_F-16_Aux_Power_DLA_SIO_PWS 02 June 2020.pdf

SECTION C – REQUIREMENTS

Performance Work Statement (PWS)

Hamilton Sundstrand Corporation, a part of Collins Aerospace

Supplier Initiated Ordering (SIO)

02 June 2020

TABLE OF CONTENTS

1.0 INTRODUCTION/PURPOSE

2.0 SCOPE

3.0 SUPPLIER INITIATED ORDERING (SIO) REQUIREMENTS

4.0 PERFORMANCE MANAGEMENT

5.0 DELIVERY REQUIREMENTS AND PERFORMANCE METRICS

6.0 INCENTIVE AND DISINCENTIVE RECONCILIATION AND COLLECTION

7.0 ATTACHMENTS

1.0 INTRODUCTION/PURPOSE

This Performance Work Statement (PWS) defines the scope of Supplier Initiated Ordering (SIO) between Defense Logistics Agency (DLA) Aviation and Hamilton Sundstrand Corporation a part of Collins Aerospace (Collins) in support of the DLA-managed National Stock Numbers (NSNs) in the jointly-determined power systems F-16 Auxiliary Drive Gearbox (ADG), Hydraulic Start Motor (HSM), and B-2 Airframe Mounted Accessory Drive (AMAD) Bill Of Material (BOM) population identified in the NSN list attached to this PWS. These NSNs are subject to Material Availability (MA) and Inventory Turns (IT) performance metrics as detailed below.

2.0 SCOPE

2.1 DLA identified approximately two hundred fifty three (253) sole source NSNs in the SIO population. Under a SIO arrangement, Collins will institute a process of continuous management and replenishment of the SIO NSNs. The Collins process will include demand history collection and analysis, forecasting, inventory requirements determination, inventory levels replenishment and delivery management. On a monthly basis, Collins will provide DLA with a monthly replenishment plan that advises which National Item Identification Numbers (NIINs) and in what quantity of those NIINs needs to be ordered.

Collins will coordinate with DLA to ensure sufficient data is provided so DLA can load appropriate delivery order and advance shipping notice information into DLA’s Enterprise Business System (EBS). Collins will provide replenishment NIINs in a mutually agreeable electronic flat file format within two (2) weeks of the month they need to be ordered. Any Government-directed changes to the Collins replenishment plan that change replenishment activity and adversely affect Material Availability (MA) and Inventory Turns (IT) plans will be considered when determining any performance assessment.

The Government Contracting Officer is the only Government official with the authority to direct changes and make binding agreements on behalf of the Government.

2.2 All Collins forecasting & management support costs incurred to support the SIO process will be priced as (5) year Firm Fixed Prices. Prior to exercising the option, the government will request pricing for the five-year option period, via letter solicitation. Option years six thru ten (6-10) could be exercised during year five via bilateral modification. Collins’ performance in supporting the NSN population will be measured and incentives and disincentives will be used to ensure performance.

3.0 SIO REQUIREMENTS

3.1 Collins shall provide demand forecasts for all NSNs in the SIO population. Collins shall advise DLA which NSNs need to be ordered and in what quantity on a monthly basis using inventory posture data provided monthly by DLA. Collins shall monitor DLA’s on-hand inventory posture for the SIO population to develop its monthly forecast for DLA ordering.

Representatives from DLA and Collins shall conduct periodic demand planning meetings to align on forecasted demand issues and real-time situational changes. Either party may initiate these meetings based on, but not limited to, data discrepancies and customer demand spikes. During these meetings, Collins shall notify DLA during regularly scheduled Program Management Reviews and other ad hoc meetings (during regularly scheduled meetings) of gaps in asset position and recommend solutions for DLA approval.

3.2 In support of the SIO program, DLA will provide Collins with the following information to develop its monthly replenishment forecast:

1. Three (3) years of Government historical demand consumption data, which may include, but is not limited to, procurement history, corresponding shipping location(s) (DoDAACs), and demand history from MILSTRIP data.

2. Government’s current inventory levels. DLA will provide inventory position and demand history data on or about the fifteenth (15th) working day of every month in an agreed upon electronic format.

3. No later than 30 days after contract award, DLA shall provide the current USAF replacement rate data, to be used in Collins forecasting analysis. This data is provided as an aid only. This contract supports USAF and worldwide customers. The replacement rate is only for USAF. The primary data source is the monthly DLA data submission.

4. Material Availability (MA) and Market Share information.

5. Any other data Collins identifies as relevant to the SIO population. This data will be requested by Collins, discussed with the Government, and agreed upon by both the parties. If both parties cannot come to an agreement, the Government Contracting Officer has the final authority to make a decision.

3.3 In addition to its own Production Lead Times (PLTs), Collins shall consider DLA historical demand, DLA on-hand inventory, and DLA due-in material when developing its monthly replenishment forecast. In order to align most current PLTs between both parties, Collins shall provide revised PLTs to DLA prior to contract award. Once received, DLA will adjust its current PLTs of Record in Enterprise Business System (EBS) with the revised PLTs provided.

3.4 Collins shall provide DLA with a replenishment forecast each month representing firm deliveries to DLA stock points. Collins shall coordinate with DLA to ensure, at a minimum, the NSN, quantity, and location data is provided so DLA can load appropriate delivery order and advance shipping notice information into EBS. Collins shall provide replenishment requirements to the Government within two (2) weeks of the month the items are required to be ordered and in a mutually agreed to flat file format.

3.5 Once DLA receives Collins’ monthly replenishment forecast, DLA will input the forecast buy-quantities into EBS in order to generate a Purchase Order (PO) or multiple Purchase Orders (POs). DLA’s SIO PO(s) to Collins will generate (published to DIBBS and EDA) on or about the fifteenth (15th) of the month following the month the replenishment forecast was received. For instance, if Collins submits it monthly replenishment forecast on the twenty second (22nd) of the month, Collins can expect to receive DLA’s SIO PO(s) on or about the fifteenth (15th) of the following month.

3.6 Should DLA have any concerns regarding a given month’s replenishment plan, the

Government Contracting Officer or DLA Aviation’s Program Manager will raise its concerns with Collins as needed. The parties will discuss and jointly resolve the concerns raised by the Government.

4.0 PERFORMANCE MANAGEMENT

4.1 Collins shall be responsible for the Material Availability (MA) and Inventory Turns (IT) as described in the performance metrics for an aggregate of the SIO NSNs. Detailed explanations of the performance metrics are incorporated in this PWS.

4.2 The Government anticipates improvement in IT over the term of the Base contract through implementation of the SIO program. Therefore, DLA reserves the right to adjust the IT target goal for the Option period years six through ten (6-10). All changes to the IT performance goal will be mutually agreed upon by Collins and DLA prior to contract modification.

4.3 The performance metrics will be measured by DLA on a quarterly and annual basis using data from EBS. DLA will provide the quarterly performance data to Collins for review to mitigate any unforeseen performance issues prior to the annual performance assessment. If DLA fails to provide the quarterly performance data, Collins shall request the data from the DLA Aviation Program Manager. A quarterly business review will be held at a mutually agreeable location, or virtually. One annual business review will be held each period of the base contract at a mutually agreeable location. As the program matures the frequency of the meetings can be changed if the Government approves.

4.4 MA percentages and IT figures will be used to calculate the annual incentive earned or disincentive owed as indicated in Sections 5.1 and 5.2.

5.0 DELIVERY REQUIREMENTS AND PERFORMANCE METRICS

5.1 SIO contract performance will be evaluated using MA and IT metrics.

1. Collins shall be responsible for forecasting and order fulfillment for the SIO NSN population and shall provide all supply chain management support to ensure the SIO NSN population meets the established material availability and inventory turns requirements defined in Sections 5.2.6 and 5.3.5.7 of this document.

2. Collins shall monitor DLA’s inventory posture to develop its monthly replenishment forecast, shall notify DLA of any support gaps in DLA’s asset position, and shall recommend achievable solutions to resolve performance issues. DLA will provide inventory position and demand history data on or about the fifteenth (15th) working day of every month in an agreed upon electronic format.

3. Both DLA and Collins are responsible for maintaining real-time communication on

SIO performance and forecast issues and concerns.

5.2 MATERIAL AVAILABILITY METRIC

5.2.1 DLA shall evaluate the Collins’ performance in supporting worldwide demand for the SIO

NSNs through a Material Availability (MA) performance metric at an aggregate level. The MA percentage will be monitored quarterly and at the end of the performance period. DLA will provide quarterly and period-end MA percentages by NSN and in aggregate to Collins for review to mitigate any MA challenges at the end of the performance period.

5.2.2 Material Availability (MA) is defined as the aggregate number of DLA requisitions filled completely divided by the total number of requisitions received by DLA. The MA metric is measured as a percentage and data will be provided from EBS. This performance metric measures how well Collins provides material to enable DLA to fulfill customer material requisitions. Non-fulfillment or partial fulfillment of a requisition is considered incomplete.

5.2.3

Performance Period

Material Availability Metric

Performance Schedule

Performance Assessment

Period 1 Contract award plus 12 months No Period 2 Months 13-24 Yes Period 3 Months 25-36 Yes Period 4 Months 37-48 Yes Period 5 Months 49-60 Yes Option Period Months 61-120 Yes

The baseline and subsequent periods MA figures will be provided by DLA using EBS. The MA baseline figure will be provided to Collins at contract award. DLA will also provide aggregate MA performance data by NIIN at time of solicitation release to support Collins’ proposal preparation.

5.2.4 The MA metric will be measured as a percentage (Section 5.2.6).

1. While MA will be measured in Period One (1), there will be no performance assessment for the period. Performance Assessments will apply to Periods Two (2) through five (5) and the Option period if exercised.

2. Using EBS data, DLA determines MA performance percentage for the period of performance by NSN.

3. To calculate the performance period’s MA, DLA will sum the total demand orders missed & total orders received for all NIINs for the entire period of performance.

MA would then be calculated using the below equation:

MA Percentage = 1-(Total Demand Orders Missed/Total Orders Received)

For example, if total demand orders missed was 1,200 and total orders received was 12,000 for a performance period, MA for the performance period would be calculated as follows:

MA Percentage = 1-(1,200/12,000) = 90% MA

4. Government-caused cancellations will not be included in the metric and disincentive calculations. Collins caused cancellations will be included as incomplete in the metric measurement and incentive/disincentive calculations. Fifteen (15) calendar days will be allowed to scrub the data for concurrence and elimination of any Government cancellations.

5. Collins is authorized to deliver partial quantity shipments and/or early shipments provided there is no additional cost to the Government. However, unless Collins is specifically directed otherwise, the partial shipments must be shipped against the delivery order with the earliest delivery date.

5.2.5 If the option period of the contract is exercised, the Government has the discretion to re-baseline the MA metric and adjust the incentive or disincentive based on the new data. All changes will be re-negotiated by both the Government and Collins.

5.2.6 The MA metric will be measured as a percentage and an incentive or disincentive dollar amount will be applied at the conclusion of each performance period based on performance against this metric.

Using the table below, the aggregate MA percentage will be used to determine whether an incentive or disincentive will be applied. Contractor-caused cancellations will be included as incomplete in the metric and incentive or disincentives calculations.

Material Availability Incentive/Disincentive Table

MA Percentage Incentive/Disincentive Percentage

97% or Higher 3.00%

95.0% to 96.99% 2.50%

93.0% to 94.99% 1.50%

91.0% to 92.99% 1.00%

88.0% to 90.99% Neutral/No incentive or disincentive 85.0% to 87.99% (1.50%)

Below 85.0% (2.50%)

The incentive or disincentive will be applied as a percentage of the Actual Cost of Sales for the SIO population during the performance period. For example, if Actual Cost of Sales was $ 5,000,000 for a performance period and Collins earned a 1.5% MA incentive, Collins would receive a $ 75,000 MA incentive for the performance period.

5.3 INVENTORY TURNS METRIC

5.3.1 DLA will evaluate Collins’ performance in reducing or maintaining DLA’s on-hand inventory using an IT performance metric. The Inventory Turns metric allows the Government to compare how DLA would likely perform based on current projected inventory turns versus how Collins performs inventory planning and management under a SIO arrangement. DLA requires contractual inventory performance metrics in order to prevent the accumulation of excess stock and promote inventory velocity.

DLA will utilize an aggregate inventory turns calculation. DLA will provide quarterly and period-end inventory values in aggregate to Collins for its review.

5.3.2

Performance Period

Inventory Turns Metric

Performance Schedule

Performance Assessment

Period 1 Contract award plus 12 months No Period 2 Months 13-24 Yes Period 3 Months 25-36 Yes Period 4 Months 37-48 Yes Period 5 Months 49-60 Yes Option Period Months 61-120 Yes The initial target and subsequent periods IT target is provided below.

5.3.3 Each period’s actual cost of sales will be divided to the period’s average inventory value to determine the applicable inventory turns figure (See.5.3.5).

1. While IT will be measured in Period One (1), there will be no performance assessment for the period. Performance Assessments (i.e. Incentive or Disincentive if applicable) will apply to Performance Periods Two (2) through Five (5) and the Option period if exercised.

2. DLA will calculate the average inventory value for the period of performance by NSN using DLA’s EBS system and BCA Simulator.

3. DLA will determine the actual cost of sales at the end of the period of performance by NSN using EBS.

4. Each period’s actual inventory turns will be measured against the target inventory turns to determine if an incentive or disincentive applies for the period.

5.3.4 At the end of each the Base period, the Government has the discretion to re-baseline the IT metric and may adjust the incentive or disincentive for the Option period based on the new data. All changes will be re-negotiated by both the Government and Collins.

5.3.5 The inventory turns ratio will be measured quarterly with the end of the period inventory turns figure being used to calculate if an incentive or disincentive will be applied. DLA will provide quarterly and period-end Inventory Turns figures by NSN and in aggregate to Collins for its review. The baseline inventory figures will be provided to Collins on or about the contract award date. The inventory turns will be calculated in the following manner:

1. Using EBS data, DLA will determine the quarterly inventory value for the period of performance by NSN.

2. DLA will roll-up the collective quarterly inventory values to determine the total quarterly inventory value.

3. Each performance period’s actual Material Cost of Sales and average inventory value

(calculated using all four quarters figures) will be determined using EBS data. Should additional NSNs be added to the SIO population, the value of the newly added SIO inventory will be added to the baseline inventory figure and the IT calculation in the subsequent performance period.

4. Using the equation below, the actual inventory turns figure for the period will be calculated to determine whether an incentive or disincentive will be applied.

5. The incentive/disincentive percentage from the chart below will be multiplied by the Actual Material Cost of Sales for the SIO population for the period of performance to calculate any incentive or disincentive.

6. The actual turn is the measurement of the Collins’ turns performance during the performance period.

7. Inventory turns will be calculated using the below equation.

Inventory Turns = Actual Material Cost of Sales / Average Inventory Value

Where:

Material Cost of Sales = Sum of Monthly Demand Order Quantities x DLA’s Into- Stock Cost per NSN

Average Inventory Value = Sum of quarterly inventory values for the SIO population divided by four (quarters) to calculate an average inventory value

Inventory Turns Incentive/Disincentive Table

Inventory Turns Incentive/Disincentive

1.7 or Higher 2.5%

1.5 to 1.69 2.00

1.3 to 1.49 1.00%

1.1 to 1.29 Neutral/No incentive or disincentive

1.0 to 1.09 (1.50%)

0.90 to 0.99 (2.00%) Below 0.90 (3.00%)

Incentive structure for years 6-10 will be established prior to exercising the five year option period.

6.0 INCENTIVE AND DISINCENTIVE RECONCILIATION AND COLLECTION

6.1 INCENTIVE AND DISINCENTIVE RECONCILIATION

6.1.1 As mentioned above, DLA will provide quarterly and period-end Material

Availability and Inventory Turns calculations in aggregate for Collins’ review. In the event that Collins and DLA fail to agree upon the performance achieved, Collins shall provide the Contracting Officer its written rationale for its performance position within fifteen (15) days of receiving DLA’s initial performance report. Should Collins and DLA still disagree after thirty (30) days of Collins’ submitting its position, and if elevation through their respective management teams does not resolve the disagreement, the Contracting Officer may issue a unilateral decision.

The incentives and disincentives will be combined annually, at the end of the performance period to create a net incentive or disincentive that will be paid or collected on an annual basis.

6.2 INCENTIVE PAYMENT AND DISINCENTIVE COLLECTION

6.2.1 Approximately forty-five (45) days after the end of the performance period, DLA will combine the calculated annual incentives and disincentives from the Material Availability and Inventory Turns metrics to determine the net incentive to be paid by DLA or disincentive to be collected from Collins.

If a net incentive is due to Collins, a delivery order will be executed funding the incentive under an incentive fee CLIN that will be identified in the contract. Collins shall submit an invoice and payment will be made in accordance with FAR 52.232-25 Prompt Payment clause unless otherwise specified in the delivery order.

If a net disincentive is owed to DLA, Collins shall decrement its first SIO invoice for the new performance period by the net disincentive owed.

7.0 ATTACHMENTS

7.1 DLA CLINS