7._Incentive_Option_Plan.docx

LUKE AFB AIRFIELD AND BASE PAVING

INCENTIVE OPTION PLAN

1.0 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 contract 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 Service Provider (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 (first IOP) or Option 7 (second IOP).

2.0 INTRODUCTION

2.1. In conjunction with FAR Clause 52.217-9 and DFAR Clause 252.216-7006, this Incentive Option 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 Para 4.1. below depicts the DPs when the ACO may determine the SP is eligible or ineligible to be awarded either future IOP.

2.2. 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 first IOP DP relates directly to initial performance quality (the first ordering year). Subsequent IOP DPs consider performance occurring after the first ordering year.

3.0 PARAMETERS

3.1. The SP becomes eligible or ineligible for IOPs based on CPARS performance ratings. A single CPARS rating below “Satisfactory” in any rated area (i.e. Quality, Schedule, Cost Control, Management, Small Business Utilization, and Regulatory Compliance) guarantees ineligibility for at least one IOP. Exclusively “Satisfactory” or higher CPARS ratings in all rated areas guarantee continued IOP eligibility.

3.2. 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 Option 6 or Option 7. In addition to maintaining eligibility through acceptable CPARS ratings, the IOPs remain contingent upon the requirements of FAR Part 17.207 – Exercise of Options criteria being met.

3.3. Within approximately 45 days of CPARS finalization, at the applicable DP described in Section 4.1. below, the ACO will determine whether the SP is eligible or ineligible for a particular IOP. The ACO will notify the contractor as soon as practicable upon making the determination.

FA4887-17-R-0002 – Attachment 7

4.0 IMPLEMENTATION

4.1. This section illustrates the IOP eligibility process. There are up to three possible DPs, and each is described below. Each DP makes reference to a “first IOP” and/or a “second IOP”. The first IOP refers to the 1st Option Period (6th Year), and the Second IOP refers to the 2nd Option Period (7th Year), as depicted in the figure below.

Determination Point #2 SP becomes eligible or ineligible for the 1st IOP if it became ineligible for the 2nd IOP at DP #1 Determination Point #3 SP becomes eligible or ineligible for the 2nd IOP if it became eligible for the 1st IOP at DP #1

30 Mar

30 Mar

30 Mar

30 Mar

30 Mar

30 Mar

1st Option Period 2nd Option Period

30 Mar

30 Mar

Determination Point #1 SP becomes eligible for the 1st IOP or ineligible for the 2nd IOP

1st

IOP 2nd

IOP

4.2. Determination Point #1:

4.2.1. Eligible. The SP has achieved CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the first ordering year period of performance. The SP becomes eligible for the first IOP. The exercise of this option period may or may not, depending on the circumstances, be exercised by the contracting officer in accordance with FAR 52.217-9. If the SP becomes eligible for the first IOP at this determination point, the SP establishes an opportunity to become eligible for the second IOP at DP #3.

4.2.2. Ineligible. The SP did not achieve annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas during the first ordering year period of performance. The SP becomes ineligible to receive the second IOP; however, the SP retains the opportunity to become eligible for the first IOP at DP #2.

4.3. Determination Point #2: This DP is implemented only if eligibility for the second IOP was lost at DP #1.

4.3.1. Eligible. The SP achieved annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas for ordering years two and three. The SP becomes eligible for the first IOP. The exercise of this option period may or may not, depending on the circumstances, be exercised by the contracting officer in accordance with FAR 52.217-9.

4.3.2. Ineligible. The SP did not achieve annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas for ordering years two and three. The SP becomes ineligible for the first IOP.

4.4. Determination Point #3: This DP is implemented only if the SP became eligible for the first IOP at DP #1.

4.4.1. Eligible. The SP achieved annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas for ordering years two, three, and four. The SP becomes eligible for the second IOP. The exercise of this option period may or may not, depending on the circumstances, be exercised by the contracting officer in accordance with FAR 52.217-9.

4.4.2. Ineligible. The SP does not achieve annual CPARS ratings of “Satisfactory” or better in all evaluated performance areas for ordering years two, three, and four. The SP becomes ineligible for the second IOP.