Attch 4 FRAME Incentive Plan - Draft.docx

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ATTACHMENT X: INCENTIVE PLAN

Facility Readiness and Maintenance Execution (FRAME)

Space Launch Delta 30 (SLD 30) – Vandenberg Space Force Base (VSFB), CA

Contract FA4610-2X-D-00XX

Table of Contents

1. INTRODUCTION AND INCENTIVE PHILOSOPHY

1.1 Purpose and Philosophy

This Facility Readiness and Maintenance Execution (FRAME) Incentive Plan ("the Plan") establishes the comprehensive methodology, criteria, and responsibilities for evaluating Contractor performance and calculating the earned incentive fee under Contract [TBD]. Comment by HARRISON, BRANDON C CIV USSF SSC SLD 30/PM: Insert contract number As a key management tool for Space Launch Delta 30 (SLD 30), the Government’s underlying philosophy for this multiple-incentive structure is to reward a Contractor that delivers mission performance while simultaneously driving down costs. By integrating both cost and technical metrics, this Plan is designed to explicitly encourage and reward the following behaviors:

· Delivering exceptionally reliable, responsive, and predictive maintenance services that ensure facility and infrastructure readiness.

· Executing rigorous cost control, improving efficiency, and promoting innovation under the Cost-Plus-Incentive-Fee (CPIF) contract line items.

· Prioritizing proactive lifecycle management and asset preservation, actively identifying and correcting potential system degradations before they impact operations or become emergency failures.

· Cultivating a rapid-response, customer-focused culture that minimizes equipment downtime and ensures swift, high-quality resolution of work orders and service requests.

· Driving continuous process improvement and technical innovation, leveraging data trends to streamline workflows and modernize maintenance delivery over the life of the contract.

1.2 Administrative Note on Regulatory References:

All regulatory citations in this Plan referencing the Federal Acquisition Regulation (FAR) pertain specifically to the modernized version enacted under the recent Revolutionary FAR Overhaul (RFO). To signify adherence to this specific post-overhaul version of the regulations, all such references throughout this document are designated using the acronym RFO (e.g., RFO Subpart 16.4 or RFO 52.216-10) in place of the traditional "FAR" prefix.

1.3 Regulatory Alignment and Relationship to RFO 52.216-10

This Plan is designed to execute the multiple-incentive principles established under RFO Subpart 16.4 and its agency-level supplements. This document directly supplements RFO Clause 52.216-10, Incentive Fee, which is incorporated into Section I of the contract. While RFO 52.216-10 dictates the baseline mechanics for adjusting fee based purely on cost performance, this Plan provides the authorized bilateral methodology to adjust that cost-based fee using a Technical Performance Factor (TPF).

2. INCENTIVE STRUCTURE AND PARAMETERS

2.1 Cost Incentive Parameters

All core financial parameters for the CPIF contract line items—including the Target Cost, Target Fee, Maximum Fee, Minimum Fee, and the Government/Contractor Share Ratios (for both underruns and overruns)—are established, negotiated, and defined solely within Section B of the Contract Schedule for each applicable performance period. The calculations and evaluations executed under this Plan shall dynamically utilize the active values specified in Section B at the time of performance

2.2 Performance Incentive

The TPF is a composite score reflecting the Government's assessment of the Contractor's technical performance. The final TPF score is used as a multiplier against the earned cost incentive fee to determine the final total fee. The TPF methodology is detailed in Section 4.

3. ROLES AND RESPONSIBILITIES

This section describes the roles, responsibilities, and procedural workflows associated with the evaluation, determination, and potential appeal of the FRAME earned incentive fee.

3.1 Space Launch Delta 30 Commander (SLD 30/CC) – Appellate Fee Determining Official The SLD 30/CC serves as the final administrative Government authority for resolving formal disputes related to the TPF. The SLD 30/CC is responsible for:

· Reviewing Contractor appeals regarding performance metric data, Service Summary Item (SSI) scoring, or the Gate Criterion (Catastrophic Event) failures.

· Issuing the final, binding administrative TPF determination if the PCO and the Contractor cannot reach a resolution.

3.2 Procuring Contracting Officer (PCO) – Routine Fee Determining Official Operating under delegated authority, the PCO acts as the Routine Fee Determining Official for all standard, uncontested incentive fee determinations. The PCO is responsible for:

· Receiving and reviewing the certified TPF recommendation from the Program Manager.

· Issuing the Preliminary Fee Determination to the Contractor.

· Executing the final mathematical CPIF formula against the Actual Allowable Costs.

· Executing the bilateral contract modification to formally authorize and obligate the final earned incentive fee.

3.3 Program Manager (PM)

The PM is responsible for the overall technical evaluation aggregation. Responsibilities include:

· Receiving and reviewing the objective metric data provided by the Government Surveillance Team.

· Performing the Gate Criteria check to determine if a Catastrophic Event occurred.

· Calculating the Composite TPF using the methodology in this Plan.

· Submitting the calculated technical TPF recommendation to the PCO at the end of the evaluation period.

3.4 Government Surveillance Team

The Government Surveillance Team is responsible for the daily, ground-level monitoring of the Contractor. Responsibilities include:

· Monitoring daily contract execution.

· Collecting, auditing, and validating the objective metric data (e.g., system availability, work order response times, Reliability Centered Maintenance [RCM] completion rates).

· Providing this validated data to the PM for TPF calculation.

3.5 Contractor

The Contractor is responsible for:

· Providing accurate, timely performance data and self-assessments.

· Reviewing the Government's Preliminary Fee Determination.

· Signing the fee modification for uncontested periods, or formally submitting a written, evidence-based appeal within the allotted timeframe.

3.6 Source Documentation and Audit Trail

The determination of the final earned incentive fee shall be based on objective data and supported by a comprehensive audit trail. Both the Government and the Contractor have distinct responsibilities for generating and maintaining the documentation that constitutes this audit trail.

3.6.1 Contractor-Provided Documentation

The Contractor is responsible for generating, providing, and ensuring the accuracy of the following documentation:

· Accurate and timely performance data and maintenance system entries generated during the execution of work that is used to measure compliance against SSI thresholds.

· Contractor self-assessment reports with supporting data.

· Validated cost reports (e.g., Integrated Cost, Labor, Reimbursable, and Invoicing Report) and other financial data to support Actual Allowable Cost.

· Minutes from performance review meetings.

· Corrective Action Request (CAR) responses, plans, and closure verification documentation.

· All required data inputs into Government-mandated systems (e.g., NextGenIT, maintenance databases).

3.6.2 Government-Maintained Documentation

The Government is responsible for generating and maintaining the following documentation as part of the official contract file and evaluation record:

· Government surveillance records, inspection reports, and quality assurance audits.

· The official record of CARs issued to the contractor.

· The official incentive fee evaluation package and mathematical calculation compiled by the PM to justify the final fee determination.

4. TPF METHODOLOGY

The TPF is a quantitative metric determined on a contract-wide basis for each performance period. The specific start and end dates for each performance period are defined in Appendix B. It reflects the Government's overall assessment of the Contractor's performance across the entirety of the PWS effort.

4.1 TPF Weighting Allocation

A total of 100 basis points (1.00 total weight) is distributed across the 4 SSIs defined in this plan. The weights are allocated according to the relative criticality of each objective to the space launch and facility support mission:

Table 1: Technical Performance Weights

TOTAL WEIGHT

1.00 (100%)

4.2 Gate Criterion and Penalties

To enforce a high standard of mission safety, critical systems availability, and procedural compliance, the technical scoring process is subject to a strict, pass/fail Gate Criterion. If the Contractor is found responsible for a catastrophic event during a performance period (such as a major facility, utility, or infrastructure failure that directly causes a launch scrub, launch failure, severe damage to mission hardware, a preventable safety event resulting in loss of life or serious injury, or a critical security violation), the Contractor shall fail the Gate. Upon a Gate failure, the Contractor’s Composite TPF automatically becomes Zero (0%) for that period, and no further technical scoring is performed. This will result in the final calculated fee for that period being $0, subject to any contractually established Minimum Fee.

4.3 Handling SSIs with Multiple Performance Criteria (e.g., SSI 1):

Certain SSIs are measured using a two-tiered approach consisting of a "Critical" metric (requiring 100% compliance) and a "Non-Critical" metric (scored on a graduated scale). In these instances, the Critical metric acts as a strict pass/fail prerequisite for the entire SSI for that period.

· Pass (100% Achieved): If the Contractor achieves the mandatory 100% Minimum threshold on the Critical metric, the Period TPF Score for the SSI is calculated using solely the Actual Performance % of the Non-Critical metric.

· Fail (<100% Achieved): If the Contractor fails to achieve 100% on the Critical metric, the Period TPF Score for that entire SSI automatically becomes 0% for the period, regardless of how well they performed on the Non-Critical metric.

4.4 Calculation Methodology for Composite TPF

The calculation of the Composite TPF is a sequential process based on the observed performance metric(s) recorded for each SSI.

Step 1: Calculate the Period TPF Score for each SSI The formula for the Period TPF score is:

Period TPF Score = 50%+[(Actual Performance % - Minimum %) / (Maximum % - Minimum %)]*50% Where:

· Actual Performance % = The contractor’s actual evaluated performance percentage for the period.

· Minimum % = The lowest acceptable performance percentage.

· Maximum % = The highest achievable performance percentage.

· The Period TPF score is set to Zero (0%) if the Actual Performance % is less than the Minimum % By the formula

· If the Actual Performance % falls below the Minimum % threshold, the Period TPF is 0%.

· If the Actual Performance % exactly meets the Minimum % threshold, the TPF score is 50%.

· If the Actual Performance % meets or exceeds the Maximum % threshold, the TPF score is 100%.

· If the Actual Performance % falls between the Minimum and Maximum thresholds, the Period TPF will fall between 50% - 100% Step 2: Calculate the Average Period TPF The Average Period TPF for each SSI is calculated by summing all of its individual Period TPF Scores and dividing by the number of periods measured during the performance period (e.g., 12 for monthly, 4 for quarterly).

Average Period TPF = (Σ Period TPF Scores) / (Number of Periods Measured) Step 3: Calculate the SSI Weighted Contribution The SSI Weighted Contribution is calculated by multiplying the Average Period TPF for an SSI by its assigned TPF Weight as defined in Table 1 (Technical Performance Weights).

SSI Weighted Contribution = Average Period TPF × TPF Weight Step 4: Calculate the Composite TPF The Composite TPF is the final technical performance score for the evaluation period, calculated by summing the SSI Weighted Contribution from all SSIs.

Composite TPF = Σ (All SSI Weighted Contributions) Appendix C shows examples for multiple scenarios.

Table 2: SSI Scoring Parameters

Notes:

*For SSIs 1 and 2, specific high-priority tasks—critical systems and P1/P3A responses—have a strict 100% compliance requirement. If this is not met, the period TPF score is 0% regardless of other metrics.

** SSI 7 Launch Support Penalty (Omission & Failure to Respond): This quarterly penalty is distinct from the catastrophic Gate Criterion (which addresses active contractor actions that directly cause a launch scrub or catastrophic safety mishap). In alignment with the PWS performance standard, this penalty targets contractor inaction or omission. If there is one (1) or more validated instances of a mission date slip due to a validated failure of the Contractor to respond or to take necessary corrective action during a launch countdown, the Period TPF Score for SSI 7 will automatically be rated as 0% for that entire quarter.

4.5 Evaluation of Shortened Performance Periods

For any performance period that is shortened (for example, due to termination for convenience), the Government will evaluate the Contractor’s performance and calculate the Composite TPF and Final Earned Incentive Fee based solely on the actual period of performance that occurred. No proration or “as-if completed” adjustment will be applied.

5. FINAL INCENTIVE FEE CALCULATION

The Final Earned Incentive Fee is determined through a sequential process that establishes the Cost-Driven Fee Pool first, and then applies the Composite TPF as a multiplier.

Step 1: Determine the Cost Incentive Fee Pool At the end of the performance period, the Government will compare the Actual Allowable Cost (AAC) to the negotiated Target Cost to determine the Cost Incentive Fee Pool.

· In the event of a Cost Underrun (AAC is less than Target Cost):

· Contractor Underrun Share (in dollars) = (Target Cost - AAC) × Contractor Underrun Share Ratio

· Cost Incentive Fee Pool = Target Fee + Contractor Underrun Share

· In the event of a Cost Overrun (AAC is greater than Target Cost):

· Contractor Overrun Share (in dollars) = (AAC - Target Cost) × Contractor Overrun Share Ratio

· Cost Incentive Fee Pool = Target Fee - Contractor Overrun Share Step 2: Apply the TPF The Composite TPF is calculated as a percentage (e.g., 90% or 0.90) based on the methodology detailed in this plan.

· Final Calculated Fee = Cost Incentive Fee Pool × Composite TPF Step 3: Apply Minimum/Maximum Fee Constraints The Final Calculated Fee is then compared against the contractual minimum and maximum fee boundaries established in Section B of the contract. The Final Earned Incentive Fee shall not exceed the Maximum Fee, nor fall below the Minimum Fee.

6. PRELIMINARY DETERMINATION AND APPEAL PROCESS

Because this Plan is formula-driven, determinations are predominantly objective. However, to ensure fairness and accuracy in data calculation, the following determination and appeal process shall be utilized:

· Step 1: Preliminary Determination. Within 60 days following the end of the evaluation period, the PCO shall issue a Preliminary TPF and Fee Determination (representing the Government's initial calculation of the Composite TPF and Final Earned Incentive Fee) to the Contractor in writing.

· Step 2: Contractor Review. The Contractor shall have 10 calendar days to review the preliminary determination. If the Contractor agrees, they will sign the determination and the PCO will execute the contract modification.

· Step 3: Rebuttal and PCO Resolution. If the Contractor disagrees with the data or calculations (including Gate Check failures), they must submit a formal written rebuttal to the PCO within the 10-day review window, including objective evidence supporting their claim. The PCO and PM will review the evidence and attempt to resolve the discrepancy at the Contracting Officer level.

· Step 4: Elevation to SLD 30/CC. If the PCO and the Contractor cannot resolve the discrepancy, the PCO will elevate the Contractor’s rebuttal package, along with the Government's data, to the SLD 30/CC. The SLD 30/CC will review the documentation and issue a final administrative TPF decision.

· Step 5: Final Execution. The PCO will calculate the final earned fee based on the SLD 30/CC’s final TPF decision and issue the contract modification. (Note: This administrative process does not waive the Contractor's right to submit a formal claim under the standard RFO 52.233-1 Disputes clause after the final execution).

7. PERFORMANCE INCENTIVE PLAN CHANGES

The Government reserves the right to evaluate and modify this Incentive Plan at any time to ensure it remains aligned with evolving mission requirements.

Revisions to the metrics, weightings, or evaluation criteria may be executed bilaterally at any point during contract performance. Additionally, the Government reserves the right to make unilateral changes to the technical performance criteria, metrics, and weightings, provided such changes are formally issued in writing to the Contractor at least 30 days prior to the start of the evaluation period in which they will take effect. Any modifications to the financial parameters (Target Cost, Target Fee, Share Ratios, or Minimum/Maximum Fee limits) must be executed via a bilateral contract modification.

8. TERMINATION

8.1 Termination for Convenience

In the event that the contract is terminated for convenience pursuant to RFO 52.249-2, the performance period during which such termination occurs will end on the effective date of the termination. The Government will evaluate the Contractor’s performance and calculate the Final Earned Incentive Fee based on completed work up to the termination date as if the period had been fully completed.

8.2 Disposition of Unearned Fee

Any incentive fee not earned during a given evaluation period is permanently lost and shall not be available for rollover or payment in any future period. This policy preserves the integrity of the incentive structure by ensuring that fee is tied directly to performance within the period it is measured.

APPENDIX A: DEFINITIONS

Actual Performance %: The contractor’s raw, evaluated performance percentage for an SSI during a discrete measurement period.

Average Period TPF: The average of all Period TPF Scores for a single SSI, calculated over the entire performance period.

Composite TPF: The single, aggregate technical performance score for the entire performance period. This is the final percentage used as the multiplier against the Cost Incentive Fee Pool.

Cost Incentive Fee Pool: The initial incentive fee amount calculated based on the Contractor's cost performance against the Target Cost, prior to the application of the Composite TPF.

Final Calculated Fee: The fee amount determined after multiplying the Cost Incentive Fee Pool by the Composite TPF score.

Final Earned Incentive Fee: The final, definitive incentive fee amount payable to the Contractor for a given performance period after the Final Calculated Fee has been adjusted to comply with the contractual Minimum and Maximum Fee boundaries. This is the amount that will be paid on the contract.

Maximum % - The highest achievable performance percentage.

Minimum % - The lowest acceptable performance percentage.

Period TPF Score: The technical performance score (0%-100%) calculated for a single SSI during one discrete measurement period (e.g., one month or one quarter), using the TPF formula.

SSI Weighted Contribution: The result of multiplying an SSI's Average Period TPF by its assigned TPF Weight. This value represents the SSI's contribution to the overall Composite TPF.

APPENDIX B: TPF BY PERFORMANCE PERIOD

The incentive-fee earned by the Contractor will be determined at the completion of the evaluation periods shown below:

APPENDIX C: SAMPLE TPF AND INCENTIVE FEE CALCULATIONS

Example 1: Gate Check Failure (Catastrophic Event) Assume the following occurred during the evaluation period:

· The Contractor caused a severe facility failure resulting in a launch scrub.

· Result: The Contractor FAILS the Gate Criteria. The Composite TPF automatically becomes 0%, and no further technical scoring is performed. The Final Earned Incentive Fee for this period is $0.

Example 2: Normal Execution (Gate Passed) Assume the following occurred during the evaluation period:

· The Contractor had successful performance during the evaluation period

· No catastrophic events occurred

· The Contractor met or exceeded all SSI minimum threshold values throughout the year

· The Contractor underran on the CPIF CLINs

Part 1: Calculate the Composite TPF:

The following table shows the Period TPF scores and the Composite TPF.

The following is an example calculation for the first month of SSI 1, which is a multi-criteria SSI. Since the Contractor met the 100% prerequisite for the "Critical Items" metric, the calculation proceeds using the "Non-critical Items" metric's Actual Performance % of 97%.

Period TPF Score = 50% + [ (Actual Performance % - Minimum %) / (Maximum % - Minimum %) ] * 50% Period TPF Score = 50%+[(97%-95%)/(100%-95%)]*50% = 50%+[(2)/(5)]*50% = 50%+20% = 70% The average is then taken across all Period TPF Scores calculated for SSI 1, which results in an Average Period TPF of 87.5%. This value is multiplied by the weighting factor for SSI 1 (0.20) to give an SSI Weighted Contribution of 17.5%. The SSI Weighted Contribution for each SSI is then added to determine the Composite TPF of 93.6%.

Part 2: Calculate the Cost Underrun/Overrun

· Target Cost: $1,000,000

· Target Fee Percentage: 8%

· Target Fee Calculation: $1,000,000 × 0.08 = $80,000

· Underrun Share Ratio: 80% Government / 20% Contractor

· AAC: $900,000 (A $100,000 underrun)

· Composite TPF: 93.6% (from Part 1, Example 2) Calculation:

1. Contractor Underrun Share: ($1,000,000 - $900,000) × 0.20 = $20,000

2. Cost Incentive Fee Pool: $80,000 (Target Fee) + $20,000 (Underrun Share) = $100,000

3. Final Calculated Fee: $100,000 × 0.936 (Composite TPF) = $93,600 (Note: The $93,600 Final Calculated Fee is then checked to ensure it is within the contract's Minimum (0%) and Maximum (15%) fee boundaries to determine the Final Earned Incentive Fee.)

Example 3: Normal Execution (Gate Passed) Assume the following occurred during the evaluation period:

· The same conditions apply as in example 2, except the Contractor had an overrun on the CPIF CLINs

The TPF will be the same, but the incentive pool will be diminished:

· Target Cost: $1,000,000

· Target Fee Percentage: 8%

· Target Fee Calculation: $1,000,000 × 0.08 = $80,000

· Overrun Share Ratio: 90% Government / 10% Contractor

· AAC: $1,100,000 (A $100,000 overrun)

· Final Calculated TPF: 93.6% (from Part 1, Example 2) Calculation:

1. Contractor Overrun Share: ($1,100,000 - $1,000,000) × 0.10 = $10,000

2. Cost Incentive Fee Pool: $80,000 (Target Fee) - $10,000 (Overrun Share) = $70,000

3. Final Calculated Fee: $70,000 × 0.936 (Composite TPF) = $65,520 (Note: The $65,520 fee is then checked to ensure it is within the contract's Minimum (0%) and Maximum (15%) fee boundaries to determine the Final Earned Incentive Fee.)

Example 4: Unsatisfactory Execution (Gate Passed) Assume the following occurred during the evaluation period:

· The Contractor failed to consistently meet the minimum performance thresholds for each SSI during the evaluation period.

· No catastrophic events occurred.

· The Contractor underran on the CPIF CLINs.

Part 1: Calculate the Composite TPF:

The following table shows the Period TPF values and the final TPF.

The Contractor struggled during various periods, causing their performance to fall below the minimum threshold on each SSI at least once:

· SSI 1 (Month 3): The Contractor had a critical system failure. Per the multi-criteria rule in Section 4.3, failing the 100% prerequisite for the "Critical Items" metric results in an automatic Period TPF Score of 0% for that month.

· SSI 2 (Q2 & Q3): In Q2, the P1/P3A response was 90%. Per the multi-criteria rule, failing to meet the strict 100% minimum requirement results in a Period TPF Score of 0% for Q2. Furthermore, in Q3, the P3B/P3C compliance fell to 69% (below the 80% minimum), resulting in a 0% TPF for Q3.

· SSI 4 (Q4): Completed tasks fell to 82% (below the 90% minimum), resulting in a 0% TPF for Q4.

· SSI 7 (Q3): The Contractor caused a countdown hold, resulting in a 0% TPF for Q3.

Because these 0% Period TPF Scores are averaged into the Average Period TPF for each SSI, the overall Composite TPF drops to 62.6%.

Part 2: Calculate the Cost Underrun/Overrun

· Target Cost: $1,000,000

· Target Fee Percentage: 8%

· Target Fee Calculation: $1,000,000 × 0.08 = $80,000

· Underrun Share Ratio: 80% Government / 20% Contractor

· AAC: $900,000 (A $100,000 underrun)

· Composite TPF: 62.6% (from Part 1, Example 4) Calculation:

1. Contractor Underrun Share: ($1,000,000 - $900,000) × 0.20 = $20,000

2. Cost Incentive Fee Pool: $80,000 (Target Fee) + $20,000 (Underrun Share) = $100,000

3. Final Calculated Fee: $100,000 × 0.626 (Composite TPF) = $62,600 (Note: The $62,600 Final Calculated Fee is then checked to ensure it is within the contract's Minimum (0%) and Maximum (15%) fee boundaries to determine the Final Earned Incentive Fee.)

APPENDIX D: ACRONYMS AND ABBREVIATIONS

30 CONS - 30th Contracting Squadron AAC - Actual Allowable Cost CLIN - Contract Line Item Number CAR - Corrective Action Request COR - Contracting Officer Representative CPIF - Cost Plus Incentive Fee FRAME - Facility Readiness and Maintenance Execution P&E - Property and Equipment PCO - Procuring Contracting Officer PWS - Performance Work Statement TPF – Technical Performance Factor RCM - Reliability Centered Maintenance SLD 30 - Space Launch Delta 30 SLD 30/CC - Space Launch Delta 30 Commander SSI - Service Summary Item VSFB - Vandenberg Space Force Base

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