Final_Luke_Performance_Incentive_Plan_Attachment_5-PIP_12_May_15_(2).docx

FA3002-16-R-0005

ATTACHMENT 5

LUKE AIRCRAFT MAINTENANCE SUPPORT SERVICES

PERFORMANCE INCENTIVE PLAN

1.0 INTRODUCTION

1.1 The objective of this plan is to motivate the Service Provider (SP) to consistently perform satisfactorily in areas of key importance related to Luke Aircraft Maintenance Support Services. This plan details the process that will be applied to calculate Performance Incentive Reductions (PIR) to be withheld from payment invoices when objective performance incentive thresholds are not met in the following areas described in PWS Section 3-2: Monthly Aircraft Availability (AA), Monthly Maintenance Loss Rate, Monthly Repeat, Monthly Recur and Monthly Maintenance Scheduling Effectiveness. Performance will be monitored continuously and assessed on a monthly basis. PIR results may be addressed in Contractor Performance Assessment Report System (CPARS) assessments.

2.0 GENERAL PROCEDURES

2.1 Evaluation Periods. PIR will be calculated and applied on a monthly basis. The PI evaluation periods are as follows: (5 year ordering period and two 1-year options

Note: This plan and the Performance Incentive Reductions will continue month to month, as necessary, until the Taiwan Phoenix Rising Retrofit Program for the 21 FS F-16 Aircraft occurs (see PWS para 3.1.51.). At that time, the CO will inform the SP in writing when this plan and the Performance Incentive Reductions will be suspended. At the conclusion of the Taiwan Phoenix Rising Retrofit Program for the 21 FS F-16 Aircraft, if the CO, CORs, the FC and HQ AETC/A4PM determine that this plan and the Performance Incentive Reductions should resume, the CO will inform the SP in writing of the Government's intent to resume this plan and the Performance Incentive Reductions. Should the SP wish to contend the resumption of this plan and the Performance Incentive Reductions, the SP shall notify and provide substantiating documentation to the CO within 30 calendar days. The final determination to resume this plan and the Performance Incentive Reductions is the unilateral decision of the Government and will be communicated to the SP by the CO within 10 business days.

2.2 Assessment and Payment Overview. The performance criteria described in PWS Section 3-2 and paragraph 3.0 Performance Incentive Procedures will be utilized. Results will be considered on a “pass/fail” basis for each respective measurement threshold. The Chief Contracting Officer Representative (COR) will present all monthly performance evaluations and PIR calculations to the Functional Commander (FC) for validation. The final PIR determination is the unilateral decision of the Government. The CO will inform the SP in writing of the PIR amount assessed and the total amount the SP may invoice for CLIN X001. The CO will provide this notice within 10 business days after each month in the PI evaluation period. The PIR will be applied to SP invoices on a monthly basis and one month in arrears. For example, a PIR performance occurring in June and any withhold will be implemented on the July invoice.

2.3 Procedures for Changing the Plan. Administrative changes to this plan (dates, validation process, etc.) may be executed unilaterally via letter signed by the CO no less than 15 calendar days prior to the start of the affected evaluation period. Otherwise, changes will require a bilateral agreement between the Government and SP. All changes to incentivized performance thresholds require a PWS revision and bilateral agreement between the Government and SP.

2.4 Contract Termination. If the contract is Terminated for the Convenience of the Government during an active evaluation period, the standard evaluation process will apply on a prorated basis for the reduced period. Inclusion and implementation of this plan does not limit the Government’s rights to execute Termination for Default actions as authorized by contract clause 52.249-8, Default (Fixed-Price Supply and Service) or any other authority provided by the terms and conditions of the contract.

3.0 PERFORMANCE INCENTIVE PROCEDURES.

3.1 PIR Table: The PI applies rate reductions (PIR %) for substandard performance in the Performance Measurement Areas identified below:

3.2 PIR Formulas.

Monthly Aircraft Availability (AA): PIR = 5% x Monthly FFP CLIN X001 Monthly Maintenance Loss Rate: PIR = 1% x Monthly FFP CLIN X001 Monthly Repeat: PIR = 1% x Monthly FFP CLIN X001 Monthly Recur: PIR = 1% x Monthly FFP CLIN X001 Monthly Maintenance Scheduling Effectiveness: PIR = 1% x Monthly FFP CLIN X001

3.2.1 Sample Calculation.

Assume the following:

Jan 2017 and Feb 2017 Monthly FFP CLIN X001 Amounts: $250,000* Performance Thresholds: See table in Para. 3.1 above

* Value is notionally assigned for illustrative purposes only.

Earned Performance Incentive calculations:

· SP achieved all thresholds with the exception of performing at only 94.5% in Jan 2017 on Aircraft Monthly Maintenance Scheduling Effectiveness.

· Aircraft Monthly Maintenance Scheduling Effectiveness PIR = $250,000 x 1% = $2500

· Jan 2017 Invoice reduction as submitted on 1 Feb 17: CLIN X001: $250,000 - $2500 = $247,500 Therefore, SP may invoice for $247,500 on CLIN X001

· SP achieved all thresholds with the exception of reaching 3.5% on Monthly Maintenance Loss Rate and 5.1% for Monthly Repeat in Feb 2017.

· Monthly Maintenance Loss Rate PIR = $250,000 x 1% = $2500

· Monthly Repeat PIR = $250,000 x 1% = $2500

· Feb 2017 Invoice reduction as submitted on 1 Mar 17:

· CLIN X001: $250,000 – ($2500 +$2500) = $245,000

Therefore, SP may invoice for $245,000 on CLIN X001

3.3 Determination of Achieved Performance: SP performance will be monitored and evaluated continuously. Performance measurements and thresholds are objective in nature and will be calculated at the end of the incentivized period. Should the SP wish to contend the performance calculations and/or the PI determination are in error, the SP shall notify and provide substantiating documentation to the CO within five business days.

4.0 PERFORMANCE INCENTIVE PLAN RESULTS. The PM will present the proposed performance incentive results to the FC at the end of each evaluation period to ensure consistency and integrity in application of the Incentive Plan. The FC will validate the PM’s inputs, recommendations, and calculations. Performance Incentive results each period are not closed until final coordination with the FC. The final determination is the unilateral decision of the Government and will be communicated to the SP by the CO within 10 business days after the end of the evaluation period.