16._Draft_Vance_FOS_Performance_Incentive_Plan_(19_June_13).pdf

FA3002-13-R-0008

Vance FOS DRAFT RFP Attachment 16 – Vance FOS Performance Incentive Plan

VANCE FOS PERFORMANCE INCENTIVE PLAN

1. Scope

The Government considers the performance and quality of aircraft maintenance services critical.

Due to the dynamic nature of flying operations and unpredictable variables, an incentivized approach focused on the quality of maintenance will assist wing leadership in ensuring the best possible product is delivered to the flight line each day. As such, this section of the PWS describes how a percentage of the contractor’s Total Value of Firm Fixed Price (TV-FFP) CLINs will be used as an incentive. Unearned incentive is not “rolled” from one evaluation period to the next.

2. Quality

The Government has determined that a percentage of the TV-FFP CLINs will be set aside as a separate CLIN each contract year to incentivize performance in the area of Quality. This annual percentage will be divided into four equal quarterly amounts which will then be adjusted based on deduction criteria outlined herein to determine the incentive amount.

2.1. Performance Incentive Sub-areas

The incentive will be based upon the Contractor’s success at meeting quality performance objectives. The incentive is split into the evaluation subareas of Technical Inspections (TI) and

Observation Guide Inspections (OGI). The incentive for each subarea will be evaluated and dispersed quarterly based on the fiscal-year calendar (Oct-Dec, Jan-Mar, Apr-Jun, Jul-Sep). The

Government reserves the right to adjust TI and OGI Performance Pool weighting prior to the execution of each contract option year (up to a 90/10 or 10/90 split).

TABLE 1

Performance Incentive Percentage

2.2. Incentive Determination

The Quality criteria will be assessed through Government surveillance results and Corrective

Action Requests (CARs). The Government’s Quality Assurance Surveillance Plan (QASP) will be the basis of Government evaluations in accordance with the Performance Work Statement and applicable regulations for determining grading criteria (satisfactory or unsatisfactory compliance). Quarterly Technical Inspection and Observation Guide Inspection pass rates will be used to indicate the contractor’s success in achieving the performance objectives defined in the Performance Work Statement. All evaluations will be conducted in accordance with the

QASP standard operating procedures.

Performance Incentive Percentage

Total Annual % of TV-FFP 4%

Total Quarterly % of TV-FFP 1%

Adjusted Quarterly % Total Quarterly % less Quarterly % Deductions

TI Quarterly % 25%

OGI Quarterly % 75%

3. Total Quarterly Percentage Deductions

Both Corrective Action Request and As-Observed Finding deductions shall be applied to the pre-determined percentage of the TV-FFP.

3.1. Corrective Action Requests (CARs)

CARs may be issued at the discretion of the Government in accordance with applicable guidance for reasons including, but not limited to any major non-conformance of the contract, failure to meet Services Summary requirements, repeat or multiple related findings, failure to adequately address or follow-up on previous findings, systemic or programmatic deficiencies, etc.

The pre-determined amount (based on percentage of TV-FFP) shall be reduced by 5% per CAR.

This amount shall also be reduced by 0.2% for every calendar day the CAR is open from 1-89 days, and 0.4% for every calendar day the CAR stays open over 90 days.

Sample Calculation:

CAR 1 issued 2 Jan, closed 27 Jan (open 25 days)

5% (initial) + 25 days x .2 (or 5%) = 10% reduction

CAR 2 issued 31 Jan, closed 22 Mar (open 50 days)

5% (initial) + 50 days x .2 (or 10%) = 15% reduction

Total CAR 1 st Quarter reductions = 25%

3.2 As-Observed Findings (AOF)

As-Observed Findings are issued by the Government if deficiencies or non-compliances are identified but are not associated with a scheduled inspection (TI or OGI).

The Total Quarterly Percentage shall be reduced by 0.1% per AOF issued within the evaluation period regardless of the duration that each AOF is open.

Jan – 11 AOFs were issued = 1.1% deduction

Feb – 13 AOFs were issued = 1.3% deduction

Mar – 6 AOFs were issued = 0.6% deduction

Total AOF deductions for the quarter Jan – Mar = 3%

3.3 Adjusted Quarterly Percentage

The Adjusted Quarterly Percentage is determined by totaling the CAR and AOF deductions and subtracting that from the Total Quarterly Percentage.

Total CAR deductions for the quarter Jan –Mar = 25%

Total AOF deductions for the quarter Jan – Mar = 3%

Total deductions = 25% + 3% = 28%

Adjusted Quarterly Percentage = 72% of Total Quarterly Percentage

3.4. Additional Deductions

If extreme contract non-compliances or circumstances result in the issuance of a Letter of

Concern (LOC) or more severe formal Government action, a deduction of 100% may be made to the Total Quarterly Percentage for any evaluation period during which the LOC or more severe action is open or ongoing at the discretion of the government.

4. Determination of Subarea Quarterly Percentage

The TI and OGI Quarterly Percentages are determined by multiplying the Adjusted Quarterly

Percentage by the proportions listed in Table 1. Monthly inspections as defined in the QASP will be used to determine quarterly TI and OGI percentages. Any required monthly inspection scheduled but not completed by the Government will not be counted in the calculation of inspection pass rates. Quarterly percentages will be computed using COR inspection results from the evaluation period for each subarea (TI and OGI) using the total number of applicable inspections rated satisfactory divided by total number of inspections accomplished in that subarea then multiplied by one hundred. Once quarterly TI and OGI pass rates are determined, the Incentive Fee tables (Tables 2 and 3) will be used to determine final payment amount in each subarea.

Round the quarterly TI or OGI pass rate to the nearest 0.1%. Find the corresponding percentage in the appropriate table. Read across to determine the amount of that subarea’s Quarterly

Percentage amount.

The government schedules 85 TI inspections in a quarter, and the contractor rates satisfactory on 73 of 85 inspections: 73/85 = .8588 x 100 = 85.9 (TI Pass Rate rounded to nearest .1%)

TABLE 2

Quality – Technical Inspections

Technical Inspections

TI

(rounded to nearest 0.1%) % of TI Incentive

98.6 – 100 % 100 %

97.1 – 98.5 % 95 %

95.6 – 97.0 % 85 %

94.1 – 95.5 % 75 %

92.6 – 94.0 % 65 %

91.1 – 92.5 % 55 %

89.6 – 91.0 % 45 %

88.1 – 89.5 % 35 %

86.6 – 88.0 % 25 %

85.1 – 86.5 % 15 %

≤ 85% 0 %

TABLE 3

Quality - Observation Guide Inspections

Observation Guide Inspections

OGI

(rounded to nearest 0.1%) % of OGI Incentive

96.1 – 100 % 100 %

94.1 – 96.0 % 90 %

92.1 – 94.0 % 80 %

90.1 – 92.0 % 70 %

88.1 – 90.0 % 60 %

86.1 – 88.0 % 50 %

84.1 – 86.0 % 40 %

82.1 – 84.0 % 30 %

80.1 – 82.0 % 20 %

≤ 80% 0 %

Overview:

RFP identifies 4% of annual TV-FFP is at risk for performance, incentivized quarterly

Contract awarded for base plus 6 options with a $100M TV-FFP.

$100M / 7yrs = $14.3M Annual TV-FFP (rounded to nearest 0.1)

$14.3M x 4% = $.6M/yr (rounded to nearest 0.1)

$.6M / 4 = $150K quarterly performance pool

DEDUCTIONS:

Total AOF deductions for the quarter Jan - Mar = 3%

Total CAR deductions for the quarter Jan - Mar = 25%

Total deductions = 25% + 3% = 28% | 100% - 28% = 72% Adjusted Quarterly Percentage

ADJUSTED QUARTERLY POOL:

Adjusted Quarterly Percentage = 72% of Total Quarterly Pool

.72 x 150,000 = $108,000

TI Quarterly Pool (25%) = .25 x $108,000 = $27,000

OGI Quarterly Pool (75%) = .75 x $108,000 = $81,000

INCENTIVE DETERMINATION:

Jan - Mar 2012 TI Pass Rate: 95.7%

From Table 2, incentive for % of TI is 85%: $27,000 x .85 = $22,950

Jan - Mar 2012 OGI Pass Rate: 83.0%

From Table 3, incentive for % of OGI is 30%: $81,000 x .30 = $24,300

TOTAL PERFORMANCE INCENTIVE = $22,950 + $24,300 = $47,250 (out of possible

$150,000)