Draft RPA PWS Appendix G

Solicitation No. FA4890-10-R-0009

APPENDIX G

DRAFT REMOTELY PILOTED AIRCRAFT (RPA) INCENTIVE PLAN

Appendix G – RPA Incentive Plan Page 1 of 11

1.0 INTRODUCTION.

1.1 This Plan describes the process that will be used to assess and determine the incentives earned by the Contractor. The objective is to motivate the Contractor to effectively manage costs and improve performance in the rated areas stated in the contract that directly impact performance of requirements described in the PWS and applicable to incentive plan categories and criteria. This

Plan describes the procedures and specific evaluation criteria used to assess the Contractor’s performance and to determine incentive earned. It consists of two elements, cost and performance. Each element will be evaluated and calculated separately on a semi-annual basis.

The results will be used in conjunction with the yearly Contractor Performance Assessment Report

System assessment to provide a complete program assessment of the Contractor’s performance on the RPA contract.

2.0 GENERAL PROCEDURES.

2.1 Evaluation Periods. Evaluations will occur on a semi-annual basis. The periods are as follows:

Evaluation

Period

Date

Period 1 TBD

Period 2 TBD

Period 3 TBD

Period 4 TBD

Period 5 TBD

Period 6 TBD

Period 7 TBD

Period 8 TBD

Period 9 TBD

Period 10 TBD

2.2 Assessment and Payment Overview. The evaluation criteria and calculations as described in paragraph 3.0 for Cost and paragraph 4.0 for Performance will be utilized to calculate incentive earned. Periodic feedback will be provided by the Program Manager (PM) to the Contractor.

The PM will present all semi-annual evaluation findings and preliminary results to an Incentive

Review Team (IRT) chaired by the Acquisition Management and Integration Center (AMIC)

Director (DR) or Deputy Director (DD) for validation. The final incentive fee determination is the unilateral decision of the Government. The CO will inform the Contractor in writing of the amount of incentive earned within 60 days after the end of the evaluation period. The CO will modify the contract to incorporate the incentive earned. Billing and payment of the incentive will be made semi-annually at the IDIQ contract level.

2.3 Procedures for Changing the Plan. Unilateral changes may be made to the Plan if the

Contractor is provided a modification no later than 15 days before the start of the upcoming evaluation period. Changes affecting the current evaluation period will be by mutual agreement

Appendix G – RPA Incentive Plan Page 2 of 11 between Government and Contractor.

2.4 Contract Termination. If the contract is terminated for the convenience of the

Government after the start of an evaluation period, the Government will use the normal evaluation process for the shortened period. After termination for convenience, the remaining incentive cannot be earned by the Contractor and, therefore, will not be paid.

3.0 COST INCENTIVE PROCEDURES.

3.1 Determination of Cost Incentive Earned. Cost incentives provide a focus for ensuring costs stay within allotted program budgets. Cost incentive will only be earned as a result of actual savings against the total target costs. The cost incentive will be based on the contractual target cost (TC), as proposed by the Contractor, for cost reimbursable expenses. The target fee will be zero. The cost incentive share ratio is 40/60 (Government/Contractor). The cost incentive will be calculated using cost data from the Cost Performance Report (PWS Para. 2.23.2) and paid semi-annually and is considered preliminary. The cost incentive calculation will be adjusted when the Contractor determines actual fiscal year indirect rates; the incentive will be finalized when the incurred cost submission for each year has been certified by DCAA/DCMA.

3.1.1 Calculations. TC and actual cost (AC) data will be provided for each OCONUS location.

TC and AC from each location will be summed to determine the overall TC and AC. The cost incentive will be calculated on a cumulative basis.

3.2 Example Calculation.

3.2.1 Cost Incentive Formula.

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

3.2.1.1 Sample Calculation (Underrun).

Location 1 Location 2 Location 3 Total

TC $10M $10M $20M $40M

AC $12M $9M $14M $35M

TC = $40M = $10M + $10M + $20M

AC = $35M = $12M + $9M + $14M

Underrun = $5M

Contractor Share = 60%

Cost Saved = ($40M - $35M) = $5M

Cost incentive earned = Cost saved x Contractor Share = $5M x 60% = $3M

3.2.1.2 Sample Calculation (Overrun).

Appendix G – RPA Incentive Plan Page 3 of 11

TO 1 TO 2 TO 3 Total of all TO

TC $10M $10M $20M $40M

AC $12M $10M $19M $41M

TC = $40M = $10M + $10M + $20M

AC = $41M = $12M + $10M + $19M

Overrun = $1M = Zero incentive earned

4.0 PERFORMANCE INCENTIVE (PI) PROCEDURES.

4.1 PI Pool: The total PI pool is determined by the Government and will be based on size and scope of OCONUS task orders issued. The PI for each awarded task order will be summed to determine the total available PI pool. The PI pool will not exceed $3M semi-annually.

4.2 Determination of PI Earned: The PI will be based, as outlined below, on four (4) criteria:

Quality (35%), Warfighter Servicing/Process Improvements (35%), Small Business (10%), and a

Special Interest Item (SII) (20%), along with any considerations resulting from Positive

Significant Incidents (PSI) and Negative Significant Incidents (NSI). The SII will be determined by the PM, and the Contractor will be notified IAW paragraph 2.3. If there is no SII assigned, the uncommitted percentage will be divided equally between Quality and Warfighter

Servicing/Process Improvement. The overall PI determination will be calculated at the total contract level, considering performance on all awarded task orders.

4.2.1 Quality Criteria (includes Service Summary (SS) items & Quality Management

System (QMS)) – 35%. The Quality portion of the PI will use a Quality Performance Index

(QPI) where the Contractor can earn points for exceeding critical SS standards and for successfully executing the Contractor’s QMS to the benefit of the Government. The Contractor can earn up to twenty-four (24) points per period under the Quality Criteria: four (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 will be evaluated IAW the PWS SS and Appendix H.

4.2.1.1 A major nonconformance is defined as: A nonconformance that adversely impacts (or has the potential to) mission, safety of personnel and/or equipment, environment, performance

(quality), schedule (delivery), and/or cost.

4.2.1.2 SS Point Assignment Explanation (12 possible points).

Zero (0) points will be awarded for a calendar month when the Government issues a major non-conformance for any of the following SS 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

Appendix G – RPA Incentive Plan Page 4 of 11

FSST Operational Readiness Rate

Reachback Circuits Operational Readiness Rates; OR

One (1) point will be awarded for each calendar month when the Government does not issue a major non-conformance for failure to meet any of the SS standards identified above; OR

Two (2) points will be awarded for each calendar month when the Government does not issue a major non-conformance for failure to meet any of the SS standards identified above and all of the following more stringent critical standards are met or exceeded at each deployed site:

Standard MQ-1 MQ-9

Aircraft Availability Rate 82% 85%

Total Abort Rate 7% 4%

Repeat/Recur Rate (see exception below) 4% 5%

12-Hour Fix Rate 82% 74%

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.

4.2.1.3 QMS Point Assignment Explanation (12 possible points).

Zero (0) points will be awarded for a calendar month during a calendar month when the

Government issues a major nonconformance for a technical data violation, OR

One (1) point will be awarded for a calendar month when the Government does not issue more than three (3) total major non-conformances, and none are a repeat from the previous 90 calendar days, OR

Two (2) points will be awarded for a calendar month when the Government does not issue any major non-conformances.

4.2.1.4 Quality Criteria Calculation. The overall QPI shall be calculated by dividing the

Quality points earned by the Quality points available (24) during the PI period and multiplying the result by the available incentive for this factor:

4.2.1.4.1 Formula.

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

4.2.1.4.1.1 Sample Calculation. Assumption: PI pool = $3M

Contractor earns 18 of 24 available points:

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

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

Appendix G – RPA Incentive Plan Page 5 of 11

4.3 Warfighter Servicing/Process Improvement Criteria – 35%. The following evaluations will be performed during each period:

4.3.1 Warfighter Servicing. The Warfighter Servicing calculation is based on the average score of surveys submitted rather than total points. The PM will complete a Warfighter Servicing

(WS) Survey using the format at Attachment 1 and obtain completed surveys from supported

Maintenance Group Commanders, and other warfighter customers as deemed appropriate by the

PM. The overall score of each survey will be equal to the average value of the point value assigned to each question.

4.3.2 Process Improvements. The Process Improvements calculation is based on the average score of process improvements submitted rather than total points.

4.3.2.1 Contractor Process Improvement Inputs (CPII). The Contractor shall provide process improvement inputs using the format at Attachment 3 as they occur within 20 calendar days of the event occurrence but not later than five (5) days after the end of the PI period (via email distribution) to the PM. Process improvement inputs must provide a tangible benefit to the government and be consistent with the performance requirements of the RPA contract .

4.3.2.2 Government Process Improvement Inputs (GPII). The Government will provide inputs using the format at Attachment 3 as they occur (via email distribution) to the PM. Process improvement inputs must provide a tangible benefit to the government and be consistent with the performance requirements of the RPA contract.

4.3.2.3 Process Improvement Input Evaluations. 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 or any Government representative (e.g., monetary savings, man-hours avoided etc.). OPRs will evaluate individual CPIIs and GPIIs, and assign a numerical value using the rating scale in Attachment 2. The Government’s evaluation of the Contractor’s inputs will be provided to the Contractor when the contractor is notified of the incentive award amount to promote timely feedback. The PM shall calculate an Overall Process

Improvement Score (OPIS) as an average of the individual CPII and GPII ratings.

4.3.3 Warfighter Servicing/Process Improvement Calculation. The overall score for this criteria will be computed by adding all Warfighter Survey Scores (WSS) and the OPIS and dividing the result by the total number of inputs with the OPIS considered as a single input. The resulting percentage will be multiplied by the available incentive pool for this factor.

4.3.3.1 Formula.

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

Incentive Earned

4.3.3.1.1 Sample Calculation. Assumption: PI pool = $3M

Appendix G – RPA Incentive Plan Page 6 of 11

Question 1 Question 2 Question 3 Question 4 WSS Count

Survey 1 Scores 1 2 1 1 1.25 1

Survey 2 Scores -1 0 1 0 0.00 1

Survey 3 Scores 2 2 1 2 1.75 1

OPIS 2.00 1

(Sum of WSS + OPIS) / (Count of WSS +1)

Overall Average Rating

5.00 / 4 =

1.25

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

Highest Possible Rating: 2

$1.05M x 1.25 /2 = $ 656,250.5K

4.4 Small Business Criteria -10%. The Contractor can earn one (1) point for every full 1% it exceeds the contractor proposed small business participation percentage (minimum is 15%). No fractional points will be awarded. The ceiling is five (5) points.

Potential Earnings:

Small Business

Participation*

Points Awarded Incentive 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

* based on contractor proposed small business participation of 15%

4.4.1 Sample Calculation. Assumption: PI pool = $3M

Contractor earns 3 out of 5 points by achieving 18%

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

4.5 SII Criteria – 20%. The PM may assign a SII for up to 20% of the total PI pool prior to the beginning of period. When identified, the SII is an area of performance that the Government deems critical and requires special attention. The SII is defined in Attachment 4 to this appendix.

4.5.1 Sample Calculation. Assumption: PI pool = $3M

Contractor received an Outstanding SII rating:

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

4.6 Significant Incidents. In the event of any significant positive or negative incident that, in the opinion of the government, was within the contractor’s control, the government reserves the right to unilaterally modify up or down the amount of PI earned for the period without regard to

Appendix G – RPA Incentive Plan Page 7 of 11 contractor performance in the areas scored. The PI will not be modified as a result of events that are outside the control of the contractor.

Positive Significant Incidents:

Examples include but are not limited to:

• Major innovations that significantly improved weapon system capabilities or provided vast savings to the government.

Negative Significant Incidents:

Examples include but are not limited to:

• Serious damage/destruction to government property as a result of the contractor’s actions.

• Serious, significant, and/or chronic management problems or performance problems that can be reasonably attributed to a general lack of contractor management oversight in areas not necessarily delineated in the incentive fee criteria.

4.6.1 If the cause of a NSI (i.e., aircraft mishap, etc.) is determined a contractor responsibility after the Performance Incentive period in which the event occurred, then the government can consider the finding in the next Performance Incentive period as part of the IRT review in

Paragraph 4.7. The IRT should consider if any action was already taken in regard to the NSI.

The Government will ensure the contractor is aware of any NSI that will be reviewed by the IRT.

4.6.2 Positive significant incidents shall not be issued for any CPII or GPII as defined in

Paragraphs 4.3.2.1 and 4.3.2.2.

4.7 Incentive Results. The PM will present the proposed incentive results each period to the

IRT to ensure consistency and integrity in application of the Incentive Plan. The IRT will validate the PM’s inputs, recommendations, and calculations. Incentive results each period are not closed until final coordination with the team. The final determination is the unilateral decision of the Government and will be communication to the contractor by the CO within 60 days after the end of the evaluation period.

Appendix G – RPA Incentive Plan Page 8 of 11

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?

RATING:__________________________

2. How well has the Contractor’s management team aggressively pursued and provided timely response to Government issues to enhance organizational-level maintenance support and mission effectiveness?

3. How well has the Contractor met the needs of your organizational-level maintenance requirements, mission and flying program?

4. How well has the Contractor performed maintenance services?

Rating Description Point

Value*

Outstanding Contractor consistently exceeds mission requirements 2

Good Contractor occasionally exceeds mission requirements 1

Satisfactory Contractor meets mission requirements 0

Unsatisfactory Contractor fails to meet mission requirements -1

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

Appendix G – RPA Incentive Plan Page 9 of 11

Attachment 2

Process Improvement Ratings

The following point definitions shall be applied to individual Process Improvement evaluations:

Outstanding: (2 Points). Process improvement provides exceptional benefit to the Government through: dollar savings or cost avoidance; program wide effects; or very large impacts over an extended period of time.

Good: (1 Points). Process improvement provides appreciable benefit to the Government through dollar savings or cost avoidance, program wide effects, or large impacts over an extended period of time.

Satisfactory: (0 Points). Process improvement provides little benefit to the Government.

Appendix G – RPA Incentive Plan Page 10 of 11

Attachment 3

Contractor/Government Process Improvement Input Format

All process improvement inputs are due to the Program Manager as they occur within 20 days of the event occurrence but not later than five (5) days after the end of the PI period (via email distribution) to the PM.

CPII/GPII FY-XX - Title

ACTION:

Fully identify and explain specific actions taken by contractor personnel.

IMPACT:

Provide specific impact of actions. Examples include, but are not limited to actual dollar savings or cost avoidance to the government or other efficiencies provided to the government’s advantage.

Appendix G – RPA Incentive Plan Page 11 of 11

Attachment 4

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 to the RPA organizational-level

(O-level) maintenance requirements IAW the Contractor’s 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 full performance start.

The SII will be rated as follows:

Outstanding. Exceeded all transition plan objectives and milestones. Fully capable to commence RPA O-level maintenance requirements at full performance start. The Contractor will earn 100% of the available SII incentive pool for achieving an Outstanding rating.

Good. Fully met 100% of all transition plan objectives and milestones, and exceeded some.

Fully capable to commence RPA O-level maintenance requirements at full performance start.

The Contractor will earn 85% of the available SII incentive pool for achieving an Good rating.

Satisfactory. Fully met all transition plan objectives and milestones. Fully capable to earn 50% of the available SII incentive pool for achieving a Satisfactory rating.

Unsatisfactory. Failed to meet transition plan objectives and milestones. Not fully capable to earn 0% of the available SII incentive pool for achieving an Unsatisfactory rating.