DRAFT - Appendix G - Incentive Plan.pdf

FA4890-12-C-XXXX

DRAFT - APPENDIX G

REMOTELY PILOTED AIRCRAFT INCENTIVE FEE PLAN 1

REMOTELY PILOTED AIRCRAFT INCENTIVE FEE PLAN

1.0 INTRODUCTION

This Incentive Fee Plan (IFP) documents the structure and implementation of fee provisions.

The overall intent is to incentivize the Contractor to deliver quality products and services within program performance, cost and schedule constraints. The Contractor’s performance in achieving these results will be measured in accordance with the methods detailed in this plan. The

Incentive Fee shall be calculated on a semi-annual basis.

2.0 COST INCENTIVE

2.1 Cost incentives provide a focus for ensuring costs stay within allotted program budgets.

Cost incentive shall only be earned as a result of real savings against the target costs. The cost incentive shall be based on the contractual Target Cost (TC), as proposed by the contractor, for cost reimbursable expenses. The target fee shall be zero. The target reduction (TR) shall be

10%. The maximum incentive earned shall be based on a 40/60 share ratio

(government/contractor). Semi-annual calculation is considered preliminary. Cost incentive calculation will be finalized annually.

2.2 Example:

Formula:

Final Cost Incentive = (TC – Actual Costs) x Contractor Share Percent

Sample Calculation:

TC = $40M

TR = 10%

Contractor Share = 60%

Actual Cost = $36M

Final Cost Incentive = ($40M - $36M) x 60% = $2.4M

3.0 PERFORMANCE INCENTIVE FEE

3.1 Performance Incentive Fee (PIF). The PIF shall be based on four factors: Quality (35%), Warfighter Servicing/Process Improvements (35%), Small Business (10%), and a Special

Interest Item (SII) (20%). If there is no SII assigned, the uncommitted percentage will be divided equally between Quality and Warfighter Servicing/Process Improvement. The amount of the overall PIF shall be calculated at 4% of total contract value. The PIF shall only be earned for meeting the following criteria.

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3.2 Quality. The Quality portion of the PIF shall use a Quality Performance Index (QPI) where the contractor earns points for exceeding critical Service Summary (SS) standards and for successfully executing the organization’s Quality Management System (QMS) to the benefit of the Government. The contractor shall earn up to -4 points per month as defined below with two

(2) points available for SS and two (2) points for QMS sections of the QPI. The SS and QMS sections shall be evaluated IAW the PWS Service Summary and Appendix H. The SS portion of the Incentive Fee shall only apply to criteria defined in section 3.2.2 for deployed sites and communication reachback sites.

3.2.1 A major nonconformance is defined as: A government quality assurance audit result that is below standards (non-conformance) which adversely impacts (or has the potential to impact) mission, safety of personnel and/or equipment, environment, performance (quality), schedule

(delivery), and/or cost.

3.2.2 Service Summary. The contractor may earn up to 2 points monthly:

3.2.2.1 Zero (0) points for a major non-conformance for any of the following service summary standards:

Aircraft Availability Rate

Total Abort Rate

Repeat/Recur Rate

12-Hour Fix Rate

Ground Control Station Operational Readiness Rate

Tactical Field Terminal Operational Readiness Rate

FSST Operational Readiness Rate

Reachback Circuits Operational Readiness Rates; or

3.2.2.2 One (1) point for no major non-conformances in any of the service summary metrics identified above; and

3.2.2.3 One (1) additional point for meeting or exceeding the following higher critical standards at each deployed site:

Standard MQ-1 MQ-9

Aircraft Availability rate 82% 84%

Total Abort Rate 7% 4%

Repeat/Recur Rate (see exception below) 4% 6%

12-Hour Fix Rate 82% 74%

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Exception: MTS-Ball repeats and recurs directly attributable to repair actions by another organization shall not be counted against the higher critical Repeat/Recur rate.

3.2.3 Quality Management System. The contractor may earn up to two (2) points monthly:

3.2.3.1 Zero (0) points for a calendar month during which the contractor received a major nonconformance for a technical data violation, or

3.2.3.2 One (1) point for a calendar month when contractor is not issued more than three (3) total major non-conformances, and none are a repeat from the previous 90 calendar days, or

3.2.3.3 Two (2) points for a calendar month when contractor is not issued any major non-conformances.

3.2.4 The overall QPI shall be calculated by dividing the Quality points earned by the Quality points available during the PIF period and multiplying the result by the available incentive fee for this factor:

(Points Awarded / Total Points Available) x Available Pool = Quality Fee Earned

Contractor earns 18 of 24 available points:

Available Pool: $3M x 35% = $1.05M

(18/24) x $1.05M = $787.5K

3.3 Warfighter Servicing/Process Improvement. The following evaluations will be performed during each incentive fee period:

3.3.1 Warfighter Servicing. The Program Manager (PM) will complete a Warfighter Servicing

(WS) Survey (Attachment 1) and obtain completed surveys from supported Maintenance Group

Commanders, Squadron Commanders, and other warfighter customers as deemed appropriate by the PM. The score of each survey will be based upon averaging the rating of each question.

3.3.2 Process Improvements

3.3.2.1 Contractor Process Improvement Inputs (CPII). The contractor shall provide process improvement inputs as they occur within 20 calendar days of the event occurrence but not later

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than five (5) days after the end of the PIF period (via email distribution) to the Program

Management Office. The PM will assign an office of primary responsibility (OPR) for evaluation of the inputs as required, and set a suspense for completion of the evaluation. The

OPR is responsible for providing a coordinated validation of the input to include a validation of the claims made by the contractor (e.g., monetary savings, man-hours avoided etc.). OPRs will use the rating scale in Attachment 2. The government’s evaluation of the contractor’s inputs will be provided to the contractor to promote timely feedback.

3.3.2.2 Government Process Improvement Inputs (GPII). The government will provide inputs as they occur (via email distribution) to the PM. The PM will assign an OPR as required for evaluation of the inputs, and set a suspense for completion of evaluation. The OPR is responsible for providing a coordinated validation of the input. All inputs shall be submitted as they occur within 20 calendar days of the event occurrence, but not later than the fifth calendar day following the end of a PIF period.

3.3.2.3 Process Improvement Input Evaluations. The PM shall evaluate all CPIIs and GPIIs, and then assign an Overall Process Improvement Score (OPIS) using the rating scale in

Attachment 2. The PM shall draft a memo justifying the OPIS and forward it for review and approval by HQ ACC AMIC/DD or HQ ACC AMIC/PM.

3.3.3 Overall Warfighter Servicing/Process Improvement Score. The overall score will be computed by adding all Warfighter Survey Scores (WSS) and the OPIS and dividing the result by the total number of inputs. The resulting percentage will be multiplied by the available incentive fee pool for this factor.

Available Fee Pool*[(Sum of WSS + OPIS) / (Count of WSS + 1)]/Highest Scale Rating

= Fee Earned

Available Pool: $3M x 35% = $1.05M

Question 1 Question 2 Question 3 Question 4 WSS Count

Survey 1 Scores 3 4 3 3 3.25 1

Survey 2 Scores -1 2 3 0 1.00 1

Survey 3 Scores 4 4 3 4 3.75 1

OPI 4 1

(Sum of WSS + OPI) / (Count of WSS +1) 12 / 4 = 3

Highest Scale Rating: 4

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$1.05M x 3/4 =$ 787.5K

3.4 Small Business For this factor, the contractor shall earn one (1) point for every 1% it exceeds the 15% contractual small business subcontract requirement . No fractional points will be awarded. Ceiling is five (5) points.

Small Business Participation Requirement: 15% of total contract value

Available Pool: $3M x 10% = $300K

Potential Earnings:

Small Business Participation: Points Awarded Fee Earned

16% 1 20% of $300K ($60K)

17% 2 40% of $300K ($120K)

18% 3 60% of $300K ($180K)

19% 4 80% of $300K ($240K)

20% 5 100% of $300K

3.5 Special Interest Item (SII). The PM may assign an SII for up to 20% of the total

Performance Incentive Fee Pool prior to the beginning of an Incentive Fee period. When identified, the SII is an area of performance that the government deems critical and requires special attention. The PM shall obtain approval from AMIC/PM or AMIC/DD prior to furnishing an SII to the Contracting Officer (CO). The CO will notify the contractor of the SII prior to the start of an Incentive Fee period. After the start of an Incentive Fee period, a SII can only be implemented by bilateral contract agreement between the contractor and government.

The SII shall be defined in Attachment 3 to this appendix.

3.6 Sample Incentive Fee Calculation.

3.6.1 Cost Incentive:

TC = $20M

TR = 10%

Contractor Share = 60%

Actual Cost = $18M

Final Cost Incentive = ($20M - $18M) x 60% = $1.2M

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3.6.2 Performance Incentive (assume $3M pool):

Quality:

Contractor earns 18 of 24 available points

($3M x 35%) x (18/24) = $787,500 incentive earned

Warfighter Servicing/Process Improvement:

Contractor earns overall score of 3 out of 4 available points

($3M x 35%) x (3/4) = $787,500 incentive earned

Small Business:

Contractor earns 3 out of 5 points by achieving 18%

($3M x 10%) x (3/5) = $180,000 incentive earned

Special Interest Item:

Contractor achieves all SII requirements

($3M x 20%) = $600,000 incentive earned

Total Performance Incentive earned:

$2,355,000

3.6.3 Total Cost and Performance Incentive earned: $3,555,000

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Attachment 1

Warfighter Servicing Survey

Please answer the following questions using the ratings provided:

1. How well has the contractor’s management team openly communicated, participated in problem-solving, and worked to enhance positive working relationships with the

Government’s management team, Group/Squadron CCs/leaders, other key personnel?

2. How well has the contractor’s management team aggressively pursued and provided timely response to Government issues to enhance mission effectiveness?

3. How well has the contractor met the needs of your mission and flying program?

4. How well has the contractor performed maintenance services?

Rating Description Point Value*

Outstanding Contractor significantly exceeds nearly all mission requirements 4

Excellent Contractor significantly exceeds most mission requirements 3

Very Good Contractor appreciably exceeds many mission requirements 2

Commendable Contractor exceeds some mission requirements 1

Satisfactory Contractor meets mission requirements 0

Unsatisfactory Contractor fails to meet many minor mission requirements -1

*Point Value will be removed prior to sending surveys to the Warfighting Customers

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Attachment 2

Process Improvement Ratings

The following rating definitions shall be applied to individual Process Improvement evaluations and to the overall score in that category.

Outstanding: (4 Points) Nearly all process improvements provide exceptional benefit to the government through exceptional dollar savings/or cost avoidance, program wide effects or very large impacts over an extended period of time, Excellent: (3 Points) Most process improvements provide significant benefit to the government through dollar savings/cost avoidance, program wide effects, or large impacts over an extended period of time.

Very Good: (2 Points) Some process improvements provide appreciable benefit to the government through dollar savings/cost avoidance, program wide effects, or large impacts over an extended period of time.

Good: (1 Point) A few process improvements provide benefit to the government through dollar savings/cost avoidance, program wide effects, or large impacts over an extended period of time.

Satisfactory: (0 Points) Nearly all process improvements meet existing contractual requirements or provide little benefit to the government.

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Attachment 3

Special Interest Item

Description: This SII will evaluate the contractor’s efforts in transitioning from the current

MQ-1 and MQ-9 organizational level maintenance operations in accordance with the contractor’s approved Transition Plan. Evaluation will include, but not be limited to whether all major milestones were properly identified and met on schedule, and the contractor’s success in dealing with the outgoing incumbent contractor and warfighter customers. This SII will evaluate the contractor’s ability to successfully assume requirements at contract start.

The PM shall use the contractor’s Transition Plan, including objectives and milestones, to rate the contractor’s transition performance in a justification memo that shall be reviewed and approved by HQ ACC AMIC/DD or HQ ACC AMIC/PM.

The SII shall be rated as follows:

Outstanding: Exceeded most objectives of the transition plan and met most milestones ahead of schedule in a beneficial manner to the customer. Met 100% of all objectives and milestones on schedule. Exceeded all staffing requirements. Met 100% of CONUS and OCONUS mission requirements on Day 1 of contract performance. The contractor shall earn 100% of the available

SII incentive pool for achieving an Outstanding rating.

Excellent: Fully met 100% of all objectives of transition plan on schedule and exceeded some.

Met all milestones on schedule and fully met all staffing requirements. The contractor shall earn

85% of the available SII incentive pool for achieving an Excellent rating.

Good: Fully met all objectives of transition plan. Fully met all staffing requirements and assumption of risks. The contractor shall earn 50% of the available SII incentive pool for achieving a Good rating.

Satisfactory: Met objectives of transition plan for a smooth transition. Provided most of required staffing and assumed most tasks in an acceptable manner The contractor shall earn 0% of the available SII incentive pool for achieving a Satisfactory rating.

Unsatisfactory: Failed to meet the objectives for transition plan to allow a smooth transition with the incumbent contractor, provide required staffing, required Operating Instructions, MIS and an orderly assumption of tasks IAW Section D of the PWS. The contractor shall earn 0% of the available SII incentive pool for achieving a Satisfactory rating.