17.__DRAFT_Vance_FOS_PCP_(28_Aug_13).pdf

FA3002-13-R-0008

VANCE FOS PERFORMANCE COMPENSATION 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 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 compensation for quality performance. Unearned compensation 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 compensate 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 compensation amount.

2.1. Performance Sub-areas

Compensation will be based upon the Contractor’s success at meeting quality performance objectives and will be evaluated and disbursed quarterly with the ability to move to semiannually if deemed appropriate. The primary focus of the plan is on the evaluation of the sub-areas of

Technical Inspections (TI) and Observation Guide Inspections (OGI); however, it also utilizes

As Observed Findings (AOFs) and Corrective Action Reports (CARs) tied to the entire services summary.

TABLE 1

*Note: The Government reserves the right to adjust TI and OGI Quarterly Performance weights prior to the execution of each contract option year (up to a 90/10 or 10/90 split).

2.2. Compensation Determination

The quality criteria will be assessed through Government surveillance results. The

Government’s Quality Assurance Surveillance Plan (QASP) will be the basis of Government evaluations of contractor compliance with the Performance Work Statement for determining 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 Compensation Percentage

Total Annual % of TV-FFP 4%

Total Quarterly % of TV-FFP 1%

Adjusted Quarterly % Total Quarterly % less Quarterly % Deductions

TI Quarterly % weight *25%

OGI Quarterly % weight *75%

Initial CAR Deduction 5%

CAR Deductions (Day 1-89) .2% per calendar day

CAR Deductions (>90 days) .4% per calendar day

As Observed Findings (AOF) .1% per AOF performance objectives defined in the Performance Work Statement. All evaluations will be conducted in accordance with the QASP standard operating procedures.

3. Total Quarterly Percentage Deductions

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

3.1. Corrective Action Reports (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, and systemic or programmatic deficiencies.

The pre-determined amount (based on a quarterly percentage of TV-FFP) shall be reduced by 5% at the time the government issues a CAR to the contractor. There will be an additional deduction of 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 90 or more days. The government reserves the right to reduce deducted amounts if it is determined that performance issues are caused by factors outside of the contractor’s control (e.g. government caused delay).

Sample Calculation 1:

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 4 Apr (open 63 days total | 59 days within evaluation quarter)*

5% (initial) + 59 days x .2 (or 11.8%) = 16.8% reduction

Total CAR 1 st Quarter reductions = 26.8%

*Note: A CAR that crosses an evaluation quarter continues to be deducted at the rate determined by the number of days it is open. For instance, in CAR #2, the deducted amount for the next quarter would total .8%.

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 TI or OGI inspection (to include Quality

Control findings).

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.

Sample Calculation:

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 =26.8%

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

Total deductions = 26.8% + 3% = 29.8%

Adjusted Quarterly Percentage = 70.2% 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 Sub-area 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 sub-area (TI and OGI) using the total number of applicable inspections rated satisfactory divided by total number of inspections accomplished in that sub-area then multiplied by one hundred. Once quarterly TI and OGI pass rates are determined, the

Compensation tables (Tables 2 and 3) will be used to determine final payment amount in each sub-area.

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 sub-area’s Quarterly

Percentage amount.

The government schedules 559 Technical Inspections between January – March, and the contractor rates satisfactory on 535 of 559 inspections: 535/559 = .9571 x 100 = 95.7% (TI

Pass Rate rounded to nearest .1%)

The government schedules 47 Observation Guide Inspections between January – March, and the contractor rates satisfactorily on 39 of 47 inspections: 39/47 = .8297 = 83.0% (OGI Pass

Rate rounded to the nearest .1%)

TABLE 2

Quality – Technical Inspections

Technical Inspections

TI

(rounded to nearest 0.1%)

% of TI

Compensation

> 85.0 % 100 %

≤ 84.9 % 0%

TABLE 3

Quality - Observation Guide Inspections

Observation Guide Inspections

OGI

(rounded to nearest 0.1%)

% of OGI

Compensation

> 80.0 % 100 %

≤ 79.9 % 0 %

Overview:

RFP identifies 4% of annual TV-FFP is at risk for performance, compensated 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 = $600,000 (rounded to nearest 0.1)

$600,000 / 4 = $150,000 quarterly performance pool

DEDUCTIONS:

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

Total CAR deductions for the quarter Jan - Mar = 26.8%

Total deductions = 26.8% + 3% = 29.8% | 100% - 29.8% = 70.2% Adjusted Quarterly

Percentage

ADJUSTED QUARTERLY POOL:

Adjusted Quarterly Percentage = 70.2% of Total Quarterly Pool

.702 x 150,000 = $105,300

TI Quarterly Pool (25%) = .25 x $105,300 = $26,325

OGI Quarterly Pool (75%) = .75 x $105,300 = $78,975

COMPENSATION DETERMINATION:

Jan - Mar TI Pass Rate: 95.7% [Rated satisfactory on 535 of 559 inspections]

From Table 2, compensation for 95.7% pass rate equates to TI calculation of 100%

$26,325 x 1.0 = $26,325 [No deduction]

Jan - Mar OGI Pass Rate: 83.0% [Rated satisfactory on 39 of 47 inspections]

From Table 3, compensation for 83% pass rate equates to OGI calculation of 100%:

$78,975 x 1.0 = $78,975 [No deduction]

TOTAL PERFORMANCE COMPENSATION TO CONTRACTOR =

$26,325 + $78,975 = $105,300 (out of possible $150,000)