Draft_RFP_Atch_3_-_Performance_Incentive_Plan.docx

Sheppard Aircraft Maintenance Services Performance Incentive Plan

This Performance Incentive Plan (PIP) is comprised of two distinct incentive tools: Performance Incentive Reductions (PIR) and Incentive Option Periods (IOP). This plan details the PIR and IOP processes and explains how these incentives are applied. The objective of this dual incentive approach is to motivate the Service Provider (SP) to consistently perform at least “satisfactorily” in areas of key importance related to aircraft maintenance.

1.0 PIR

1.1. PIR Introduction

The PIR is a negative incentive whereby the Government reduces SP invoice payments a predefined amount for failing to meet definitive and objective Service Summary metric thresholds. This plan details the process to calculate PIR in the following areas described in PWS Section 3-2: Aircraft Availability (AA), Average Fleet Time, Repeat/Recurring Rate for each type of aircraft maintained under this contract (T-6A, T-38C UPT and T-38C IFF), and Program Management Inspections. Performance is monitored continuously and assessed on a monthly basis for AA, Average Fleet Time, Repeat/Recurring Rate. Program Management Inspections are monitored continuously and assessed on a quarterly basis. PIR results may be addressed in Contractor Performance Assessment Report System (CPARS) assessments.

1.2. PIR Implementation

1.2.1. Performance Incentive (PI) Evaluation Periods. Evaluations occur daily, monthly, and/or quarterly, as applicable. However, PIR is calculated and applied on a fiscal year quarterly basis (Q1, Q2, Q3 and Q4). The PI evaluation periods are as follows:

1.2.2. Assessment and Payment Overview. Performance criteria described in PWS Section 3-2 and paragraph 1.3., Performance Incentive Procedures of this PIP will be utilized. Results will be considered on a “pass/fail” basis for each respective measurement threshold. The Chief Contracting Officer’s Representative (COR) will present all quarterly performance evaluations and PIR calculations to the Functional Commander (FC) for validation. The final PIR determination is the unilateral decision of the Government. Within 10 business days after the close of a PI evaluation period, the Administrative Contracting Officer (ACO) will inform the SP in writing of the PIR amount assessed and the total amount the SP may invoice for CLIN X001, X002, X003 and X004. The PIR will be applied to SP invoices on a quarterly basis and one month in arrears. For example, Quarter 3 PIR (performance occurring April – June), if applicable, would be deducted from the July invoice.

1.2.3. Procedures for Changing the Plan. Administrative changes to this plan (dates, validation process, etc.) may be executed unilaterally via a letter signed by the ACO no less than 15 calendar days prior to the start of the affected evaluation period. All other changes will be executed via a bilateral agreement between the Government and the SP.

1.3. PIR Procedures

1.3.1. PIR Table. While a PIR is executed/withheld on a quarterly basis, it is assessed either monthly or quarterly, depending on the Performance Measurement Area(s) being assessed. As a result, while an area that is assessed quarterly is subject to a fixed 3% withhold for the quarter, an area that is assessed monthly can range from a 1% - 3% withhold for the quarter, depending on the number of months during the quarter where performance thresholds were not achieved:

Aircraft Availability (AA):

T-6A

Average Fleet Time (Hours):

T-6A

Aircraft Availability (AA):

T-38C UPT

Average Fleet Time (Hours):

T-38C UPT

Repeat/Recurring Rate:

T-38C UPT

Aircraft Availability (AA):

T-38C IFF

Average Fleet Time (Hours):

T-38C IFF

Repeat/Recurring Rate:

T-38C IFF

(*The AA Target is computed using the Primary Aircraft Inventory (PAI) multiplied by the most current AETC Mission Capable (MC) standard (updated annually). The AA Targets for each MDS will be provided to the SP prior to entry of each option year by HQ AETC/A4M. The AA computation formula is detailed in the PWS, paragraph 3.2.1., Note A.)

1.3.2. PIR Formulas.

1.3.3. Sample Calculation.

- Assume the following:

(* Values are notionally assigned for illustrative purposes only.)

- Earned Performance Incentive calculations:

Example: 1st Qtr FY17 Performance: The SP achieved all thresholds with the exception of performing at only 78% (performance threshold is 80% or higher) on Program Management Inspections for the quarter and maintaining only 147 hours (performance threshold is 150 hours or higher) for T-6A Average Fleet Time for the months of Nov and Dec 16.

1st Qtr PIR:

Quarterly Program Management Inspections: $250,000 x 3% = $7,500 Monthly T-6A Average Fleet Time: ($350,000 x 1%) x 2 = $7,000

Jan 17 invoice reduction as submitted on 1 Feb 17:

CLIN X001: $250,000 - $7,500 = $242,500

CLIN X002: $350,000 - $7,000 = $343,000

Therefore, the SP may invoice for $242,500 on CLIN X001 and $343,000 on CLIN X002 for the month of Jan 17.

1.3.4. Determination of Achieved Performance. SP performance will be continuously monitored/evaluated, and objective performance measurements will be calculated at the end of each incentive period. The SP may contend to performance calculations and/or the PI determination, provided the SP notifies the CO within three (3) business days of the objection(s) and provides substantiating supporting documentation. In these instances, the Government will initiate an adjudication process to reassess and resolve the objection(s). The process may include Government requests for additional factual data and will normally conclude within ten (10) business days; however, should the process exceed the billing cycle for the contested quarterly evaluation period, reductions to the subsequent month’s invoice will be limited to uncontested and/or adjudicated withholds. Upon final adjudication, any residual PI reduction will occur during the next invoice cycle.

2.0. IOP

2.0.1. Definitions

“Incentive Option Period (IOP),” refers to a period of performance established under this competitively awarded contract in which the awardee may be awarded an option in the future based on a contingency. In this case, the contingency is defined as the awardee receiving exclusively “Satisfactory” or higher Contractor Performance Assessment Reporting System (CPARS) documented ratings in all evaluated areas of contract performance considered at the effective Determination Point.

“Determination Point (DP),” refers to the scheduled point in time when the ACO makes a unilateral decision as to whether the SP has become eligible or ineligible for an opportunity to perform a future IOP. An affirmative determination does not automatically entitle the SP to perform during a particular IOP, but rather affords the SP an opportunity to perform during a particular IOP contingent upon the ACO determining the requirements of FAR Part 17.202 – Use of Options are met and exercising the IOP IAW FAR 52.217-9, Option to Extend the Term of the Contract.

“Eligible,” refers to the ACO’s affirmative decision that the SP has met the required criteria, (i.e., received exclusively “Satisfactory” or higher CPARS ratings) which in turn, supports the ACO’s decision to exercise either Option 6 (IOP1) or Option 7 (IOP2).

2.1. Introduction

2.1.1. This plan describes the process that will be applied by the ACO to determine whether the SP is eligible or ineligible for the IOPs. The figure in Paragraph 2.3. depicts the DPs when the ACO may determine the SP is eligible or ineligible to be awarded either future IOP.

2.1.2. The objective of this incentive approach is to motivate consistent, “Satisfactory” or better performance in all CPARS rated areas from the outset of SP performance. For this reason, the DP for IOP1 eligibility relates directly to initial performance quality (the base period of performance and first option period). Subsequent IOP DPs consider performance occurring after the first option period.

2.2. IOP Parameters

2.2.1. As previously mentioned in Section 2.1., the SP becomes eligible or ineligible for IOPs based on CPARS performance ratings. One or more CPARS rating(s) below “Satisfactory” in any rated area (i.e. Quality, Schedule, Cost Control, Management, Small Business Utilization, and Regulatory Compliance) may result in the loss of eligibility for the IOPs. Only “Satisfactory” or higher CPARS ratings in all rated areas will guarantee continued IOP eligibility.

2.2.2. All IOPs will be executed in accordance with FAR 52.217-9, Option to Extend the Term of the Contract, as the unilateral right of the Government. As such, it should be understood that becoming “eligible” for IOPs does not guarantee future performance of 6th or 7th Option Periods. In addition to maintaining eligibility through “Satisfactory” or higher CPARS ratings, the IOPs remain contingent upon the requirements of FAR Part 17.207 – Exercise of Options criteria being met.

2.2.3. Within approximately 45 days of CPARS finalization, at the applicable DP described in Section 2.3. below, the ACO will determine whether the SP is eligible or ineligible for a particular IOP. The ACO will notify the SP as soon as practicable upon making the determination.

2.3. IOP Implementation

This section illustrates the DPs and IOP eligibility process. There are up to three possible DPs (DP #1, DP #1A and DP #2) and each is described below. Each DP makes reference to “IOP1”, and/or “IOP2”. IOP1 refers to the 6th Option Period, and IOP2 refers to the 7th Option Period. To merit an opportunity to become eligible for IOP2, the SP must be eligible for IOP1 first. The below figure is a visual chart depicting the IOP DPs and IOP eligibility process:

***Note: The contract durations (5-yr, 6-yr and 7-yr) depicted in this chart indicates maximum periods of performance if ALL options are exercised IAW FAR 52.217-9.

2.3.1. DP #1.

2.3.1.1. Eligible. The SP has achieved CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the base and Option 1 periods. The SP becomes eligible for IOP1, therefore, the possible contract duration becomes six years. Although eligible for IOP1, this option may or may not be exercised by the ACO in accordance with FAR 52.217-9. If the SP becomes eligible for IOP1 at this determination point, the SP establishes an opportunity to become eligible for IOP2 at DP #2.

2.3.1.2. Ineligible. The SP did not achieve annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the base and Option 1 period of performance. Since the SP must be eligible for IOP1 to merit an opportunity to become eligible for IOP2, the SP becomes ineligible for IOP2. However, the SP will be afforded an opportunity to become eligible for IOP1 at DP #1A.

2.3.2. DP #1A.

2.3.2.1. Eligible. DP #1A is applicable only when the SP did not become eligible for IOP1 at DP #1. The SP has achieved CPARS rating of “Satisfactory” or better in all evaluated performance areas during the Option 2 period. The SP becomes eligible for IOP1, therefore, the possible contract duration becomes six years. Although eligible for IOP1, this option may or may not be exercised by the ACO in accordance with FAR 52.217-9.

2.3.2.2. Ineligible. The SP did not achieve annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the Option 2 period. The SP becomes ineligible for both IOPs, therefore, the possible contract duration becomes five years.

2.3.3. DP #2.

2.3.3.1. Eligible. DP #2 is applicable only when the SP became eligible for IOP1 at DP #1. The SP achieved annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the Option 2 and Option 3 periods. The SP becomes eligible for IOP2, therefore, the possible contract duration becomes seven years. Although eligible for IOP2, this option may or may not be exercised by the ACO in accordance with FAR 52.217-9.

2.3.3.2. Ineligible. The SP did not achieve annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the Option 2 and Option 3 periods. The SP becomes ineligible for IOP2, therefore, the possible contract duration remains six years.

(Draft) FA3002-14-R-0015 Sheppard Acft MX Attachment 3 image1.png image2.png