Appendix_I_-_AFEC_PMEL_II_Incentive_Plan.docx

FA4890-17-R-0011

APPENDIX I

AF ENTERPRISE CONTRACTED II PRECISION MEASUREMENT EQUIPMENT LABORATORY (AFEC PMEL) SERVICES INCENTIVE PLAN

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 three elements; performance, schedule and cost. Each element will be evaluated and calculated separately on an annual basis. This total will then be multiplied by a customer satisfaction percentage to obtain the final results. The results will be used in conjuction with the yearly Contractor Performance Assessment Report System assessment to provide a complete program assessment of the Contractor’s performance on the AF Enterprise Contracted PMEL Services contract.

2.0 GENERAL PROCEDURES.

2.1 Evaluation Periods. Evaluations will occur on an annual basis and conincide with the base year and nine, one year options. The periods are anticipated as follows:

2.2 Assessment and Payment Overview. The evaluation criteria and calculations as described in paragraph 3.0 for Performance, paragraph 4.0 for Schedule, and paragraph 5.0 for Cost will be utilized. The sum of these three areas will then be multiplied by a customer satisfaction percentage to calculate incentive earned for the period. Periodic feedback will be provided by the Program Manager (PM) to the Contractor. The PM will present all annual evaluation findings and preliminary results to the Functional Director 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 unilaterally modify the contract to incorporate the incentive earned. Invoicing and payment of the incentive will be made annually at the delivery order 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 calendar days before the start of the upcoming evaluation period. Changes affecting the current evaluation period will be by bilateral agreement 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 PERFORMANCE INCENTIVE (PI) PROCEDURES.

3.1 PI Pool: The total PI pool is determined by the Government and will be a percentage of the value of delivery orders issued. The PI pool will not exceed 2% of the annual fixed price value of the delivery order.

3.2 Determination of PI Earned: The PI will be based on Quality of the contractor’s performance. The overall PI determination will be calculated at the delivery order level.

3.2.1 Quality Criteria (includes Service Summary (SS) items except for Turn Around Time which is covered under the schedule incentive). The Quality portion of the PI will use a Quality Performance Index (QPI) where the Contractor can earn points for exceeding critical SS minimum required thresholds to the benefit of the Government. The Contractor can earn up to twenty four (24) points per period per base under the Quality Criteria: two (2) points per month per base as defined below. The SS sections will be evaluated IAW the PWS SS and Quality Assurance Surveillance Program (QASP).

3.2.1.1 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.

3.2.1.2 A minor nonconformance is defined as: A nonconformance that does not necessarily adversely impact mission, safety of personnel and/or equipment, environment, performance (quality), schedule (delivery), and/or cost.

3.2.1.2 QMS (SS1) Point Assignment Explanation (12 possible points).

Minus one (-1) points will be awarded for a calendar month during a calendar month when the Government issues a major nonconformance OR

Zero (0) points will be awarded for a calendar month during a calendar month when the Government issues a minor nonconformance OR

One (1) point will be awarded for a calendar month when the Government does not issue any non-conformances.

3.2.1.3 Calibration and Maintenance Process (SS2) Point Assignment Explanation (12 possible points).

Minus one (-1) points will be awarded for a calendar month during a calendar month when the Government issues a major nonconformance OR

Zero (0) points will be awarded for a calendar month during a calendar month when the Government issues a minor nonconformance OR

One (1) point will be awarded for a calendar month when the Government does not issue any non-conformances.

3.2.1.4 AFMETCAL Certification (SS4) Assignment Explanation.

Minus two (-2) points will be awarded during a calendar month when a PMEL has either a withheld or pending certification for areas within the contractor’s control before the Government has accepted the contractor’s corrective action plan or whenever the corrective action plan has been deemed ineffective and an update has been requested OR

Minus one (-1) points will be awarded during a calendar month when a PMEL has either a withheld or pending certification for areas within the contractor’s control after the Government has accepted the contractor’s corrective action plan but before the reevaluation OR

Zero (0) point will be awarded for a calendar month when the PMEL is AFMETCAL certified.

3.2.1.5 Quality Criteria Calculation. The overall PI 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:

3.2.1.5.1 Formula.

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

3.2.1.5.1.1 Sample Calculation. Assumption: PI pool = $100K

Contractor earns 16 of 24 available points:

Available Pool: $100K (16/24) x $100K = $66.7K

4.0 SCHEDULE INCENTIVE (SI) PROCEDURES.

4.1 SI Pool: The total SI pool is determined by the Government and will be a percentage of the delivery orders issued. The SI pool will not exceed 1% of annual fixed price value of the delivery order.

4.2 Determination of SI Earned: The SI will be based on the contractor’s performance in Turn Around and Throughput Time. The overall SI determination will be calculated at the delivery order level.

4.2.1 Schedule Criteria, (includes Service Summary (SS) item Turn Around Time). The Schedule portion will use a Schedule Performance Index (SPI) where the Contractor can earn points for exceeding critical SS minimum required thresholds to the benefit of the Government. The Contractor can earn up to twenty-four (24) points per period per base under the Schedule Criteria: two (2) points per month per base as defined below. The SS sections will be evaluated IAW the PWS SS and QASP.

4.2.1.2 TAT (SS3) Point Assignment Explanation (12 possible points).

SS requirement: At least 92% of the total monthly production shall meet TAT requirement

Minus one (-1) points will be awarded for a calendar month when the Government issues a nonconformance for not meeting SS requirement OR

Zero (0) points will be awarded for a calendar month when contract requirement are met; points can be earned for improved schedule when the following thresholds are realized:

One half (.5) points will be awarded when at least 92% of the total monthly production meets 93% of TAT requirement (i.e. 13 days on 14 day requirement) OR

One (1) point will be awarded when at least 92% of the total monthly production meets 78.57% of requirement (i.e. less than 11 days on a 14 day requirement)

4.2.1.3 Throughput Point Assignment Explanation (12 possible points).

Zero (0) points will be awarded for a calendar month when average monthly Throughtput is greater than TAT requirement (i.e. 14 days or greater on 14 day requirement) OR

One half (.5) points will be awarded for a calendar month when average monthly Throughput is between 60% and 100% of TAT requirement (i.e. 8.4 calendar days or greater on 14 calendarday requirement) OR

One (1) point will be awarded for a calendar month when average monthly Throughput is less than 60% of TAT requirement (i.e. less than 8.4 calendar days on a 14 calendar day requirement)

(Throughput fractional days are determined as part of the whole number, not in terms of hours)

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: SI pool = $50K

Contractor earns 16 of 24 available points:

Available Pool: $50K (16/24) x $50K = $33.3K

5.0 COST INCENTIVE (CI) PROCEDURES.

5.1 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 60/40 (Government/Contractor). The cost incentive will be calculated using cost data from the Financial Report (CDRL 2) and paid annually.

5.1.1 Calculations. TC and actual cost (AC) data will be provided for each task order to determine the overall TC and AC. The cost incentive will be calculated on a cumulative basis.

5.2 Example Calculation.

5.2.1 Cost Incentive Formula.

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

5.2.1.1 Sample Calculation (Underrun).

TO 1

TC = $30K

AC = $25K

Contractor Share = 40%

Cost Saved = ($30K - $25K) = $5K Cost incentive earned = Cost saved x Contractor Share = $5K x 40% = $2K

5.2.1.2 Sample Calculation (Overrun).

TO 1

TC = $30K

AC = $35K

Overrun = $5K = Zero cost incentive earned

6.0 CUSTOMER SATISFACTION SURVEY FACTOR. The customer satisfaction survey calculation is based on the average score of surveys submitted rather than total points. The PM/QAM will complete a Customer Satisfaction (CS) Survey using the format at Attachment 1 and obtain completed surveys from supported Maintenance Group Commanders and other supported customers as deemed appropriate by the PM/QAM. The government will strive to receive survey results from at least 20% of the customers supported. The overall score of the customer survey will be equal to the average value of the point value assigned to each question. These will then be summed and a percentage developed by dividing the earned average/total available (5). The percentage earned, down to a 70% satisfaction, based on the bands below will then be multipled by the sum of the PI, SI, and CI. This will result in the total incentive earned for the period. Below 70% satisfaction will result in zero fee earned.

6.1 Survey Bands.

6.2 Example Calculation.

6.2.1 Formula.

(PI+SI+CI) x Customer Satisfaction Survey Percentage = Incentive Earned

6.2.1.1 Sample Calculation. Assumption: Customer Satisfaction Rating 83.7%

(66.7K + 33.3K + 2K) x 85% = $86.7K

7.0 INCENTIVE PLAN RESULTS. The PM will present the proposed incentive results each period to the FD to ensure consistency and integrity in application of the Incentive Plan. The FD will validate the PM’s inputs, recommendations, and calculations. Incentive results each period are not closed until final coordination with the FD. The final determination is the unilateral decision of the Government and will be communicated to the contractor by the CO within 60 days after the end of the evaluation period.

Attachment 1

Customer Satisfaction Survey

Appendix I – AFEC PMEL Incentive Plan Page 8 of 8 image1.wmf image2.wmf