Attachment 2 - Performance Incentive-Award Fee Plan - Amend 1.pdf

NELLIS AIRCRAFT MAINTENANCE AND SUPPORT SERVICES

PERFORMANCE INCENTIVE AND AWARD FEE PLAN

1.0 INTRODUCTION

This plan describes the process the Government will use to assess and determine the performance incentive and award fee earned by the Contractor. The objective is to motivate the Contractor to effectively implement quality processes and improve performance in areas that directly impact performance of requirements described in the PWS. This Plan describes the procedures and specific evaluation criteria used to assess the Contractor’s performance and to determine the performance incentive and award fee earned. It consists of four criteria: Service Summary Metrics, Quality Management System, Government Program Manager Subjective Evaluation and Special Interest Items (SII). Additionally, Positive Significant Incidents (PSI) and Negative Significant Incidents (NSI) will be considered. Performance is evaluated and award fee calculated using a combination of objective and subjective criteria designed to optimize contractor performance and incentivize process and program improvements throughout the life of the contract. Each element will be evaluated and calculated separately on a semi-annual basis. The Contractor’s earned Award Fee starts at zero at the beginning of each Award Fee Period and the Contractor earns Award Fee through superior performance that provides a tangible benefit to the Government.

2.0 GENERAL PROCEDURES

2.1 Assessment Overview. The PM will present all semi-annual evaluation findings to include objective criteria calculations and subjective criteria recommendations, to an Award Fee Review Board (AFRB) chaired by the Acquisition Management and Integration Center (AMIC) Director (DR) or Deputy Director (DD) for validation. The AFRB Chair shall recommend a total fee amount to the Fee Determining Official (FDO) who shall determine the final fee amount. The CO will modify the contract to incorporate the fee earned. Billing and payment of the fee will be made semi-annually. An AFRB will not be convened when the contractor’s performance is deemed “unacceptable” for award fee consideration by the AFRB Chair and approved by the FDO.

2.2 Award Fee Review Board Process. The AFRB will consist of 3 to 5 voting members identified in Attachment 1 to validate the proposed Performance Incentive/Award Fee results. The PM will present the proposed results each period to the AFRB to ensure consistency and integrity in application of this plan. The AFRB will validate the PM’s inputs, recommendations and calculations prior to reaching a final consensus on a recommended fee amount. The Contractor may provide an optional presentation to the AFRB in accordance with paragraph 2.8 but shall not be present during AFRB deliberations. The AFRB Chair will forward the recommended amount, rationale, and supporting documentation to the FDO for final approval.

2.3 FDO Responsibilities. The FDO considers the AFRB recommendation, but is solely responsible for the final fee determination. If the FDO decision differs from the recommendation of the AFRB, the FDO shall document their decision rationale for the contract file. The final results for each period will not be disclosed until the FDO approves the final fee amount. The final determination is the unilateral decision of the Government. The FDO will issue a written performance incentive/award fee decision and the Government shall notify the Contractor of the final decision.

2.4 Evaluation Periods and Available Fee. Table 1 provides evaluation periods and available fee. The Performance Incentive/Award Fee pool will not increase as a result of modifications or approved wage and benefit adjustments. The available fee will be a unilateral decision of the Government. The available fee for each Period is shown in Table 1 below. If the option for the A-10 AMU is not exercised the available fee will be $950,000 for Period 1 and $1,900,000 for Periods 2 through 10. If the A-10 AMU option is exercised or terminated during an award fee period, the available fee will be prorated for the percentage of work performed during the period.

Evaluation Period Date Available Fee Period 1 1 Apr 21 – 30 Jun 21 $1,175,000 Period 2 1 Jul 21 – 31 Dec 21 $2,350,000 Period 3 1 Jan 22 – 30 Jun 22 $2,350,000 Period 4 1 Jul 22 – 31 Dec 22 $2,350,000 Period 5 1 Jan 23 – 30 Jun 23 $2,350,000 Period 6 1 Jul 23 – 31 Dec 23 $2,350,000 Period 7 1 Jan 24 – 30 Jun 24 $2,350,000 Period 8 1 Jul 24 – 31 Dec 24 $2,350,000 Period 9 1 Jan 25 – 30 Jun 25 $2,350,000 Period 10 1 Jul 25 – 31 Dec 25 $2,350,000

Table 1. Performance Incentive & Award Fee Evaluation Periods

2.5 Fee Allocation. The percent of award fee allocated to each area is shown in Table 2. If no SII is assigned for the period or if an SII is assigned less than 25%, the uncommitted percentage will be reallocated to the Government Program Manager Subjective Evaluation.

Evaluation Area Allocation Service Summary Metrics 25% Quality Management System 25% Government PM Subjective Evaluation 25% Special Interest Item 25%

Table 2. Evaluation Area Allocations

2.6 Procedures for Changing the Plan. Unilateral changes may be made to this 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 bilateral contract modification between Government and Contractor. Any substantial changes to the plan must be approved by AMIC/DD. Changes each period to the Special Interest Items are not considered substantial. The contractor will be notified of a SII no later than 15 days before the start of the evaluation period to which the SII applies.

2.7 Contract Termination. If the contract is terminated for the convenience of the Government after the start of an evaluation period, the Government will prorate the performance incentive/award fee pool to reflect months in which work was performed. After termination for convenience, the remaining fee cannot be earned by the Contractor and will not be paid.

2.8 Contractor Presentation. The Contractor will be provided the opportunity to make a presentation to the AFRB prior to the PM’s presentation to the board. The presentation shall be in MS PowerPoint, limited to thirty minutes and may complement, but not duplicate inputs already submitted for consideration or any portion of the PM’s briefing. The Contractor shall include the following subjects in the briefing.

2.8.1 Contractor’s QMS objectives and metrics for the period.

2.8.2 Contractor’s success in meeting mission and Service Summary requirements.

2.8.3 Management/supervisory engagement in executing the Contractor’s QMS.

2.8.4 Identification of Government- and self-identified deficient areas, trends, preventive and corrective actions, successes.

2.8.5 Safety incidents and mishaps; preventive measures taken to prevent recurrence.

2.8.6 Compliance with statutory and regulatory requirements to include self-identified deficiencies and correction actions.

3.0 PERFORMANCE INCENTIVE AND AWARD FEE PROCEDURES

3.1 Service Summary (SS) Metrics (25%). The SS portion will be assessed using a Quality Performance Index (QPI) where the points are earned for exceeding SS standards. The Contractor can earn up to 15 points per 6 month period.

3.1.1 One point will be awarded one point for each calendar month where all Service Summary metrics are met.

3.1.2 One-quarter point will be earned monthly for each critical Service Summary standard met listed below for up to a total of 1.5 points when the critical standard is exceeded. A total of 1.5 points may be earned each month.

Critical Service Summary Metrics A/C Non-Availability Rate Critical Standard Lightning/Bolt (combined) <8.8% Strike <5.5% Eagle <5.8% Viper <7.4% Tomahawk <7.2% Raptor <17.4%

Table 3. Critical Service Summary Metrics

3.1.4 Service Summary Metrics Criteria Calculation. The overall result shall be calculated by dividing the SS points earned by the SS points available during the period and multiplying the result by the available fee for this factor.

Formula. (Points Awarded/Points Available) x (AF Pool x % Allocation) = Fee Earned

Sample Calculation. Assumption: Available Fee pool = $2M Points Awarded = 10 Points Available = 15 Fee Amount Earned = (10/15) x ($2M x 25%) = 0.67 x $500,000 = $335,000

3.2 Quality of Services (25%). The Quality of Services portion of the Award Fee will use a Quality Performance Index (QPI) where the points are earned for exceeding Quality standards.

The Contractor can earn up to six (6) points per period.

3.2.1 One-half point will be deducted when three CARs are issued in a calendar month or a repeat CAR is issued from the previous 180 calendar days. One point will be deducted when four or more CARs are issued in a calendar month.

3.2.2 Zero points will be earned for a calendar month when the Government issues one or two CARs and each CAR is not a repeat from the previous 180 calendar days.

3.2.3 One point will be earned for a calendar month when the Government does not issue any CARs.

3.2.4 CARs issued under SS criteria shall not be counted in the QS criteria.

3.2.5 Quality of Services Criteria Calculation. The overall result shall be calculated by dividing the QMS points earned by the QMS points available during the period and multiplying the result by the available fee for this factor.

Formula. (Points Awarded/Points Available) x (AF Pool x % Allocation) = Fee Earned

Sample Calculation. Assumption: Available Fee pool = $2M Points Awarded = 3 Points Available = 6 Fee Amount Earned = (3/6) x ($2M x 25%) = 0.5 x $500,000 = $250,000

3.3 Government Program Manager Subjective Evaluation (25%). The Government PM shall submit a written evaluation of the Contractor’s overall performance for each Award Fee Period to the AFRB. The PM may use any and all information available to include, but not limited to, mission partner feedback, Service Summary metrics, Government Quality performance results, PSIs, NSIs, major events during the period, Contractor performance and areas of concern. The evaluation may contain objective data however the evaluation remains subjective by design and intent. The Government recognizes that some information considered in the subjective evaluation may already be covered in other sections of the Award Fee Plan. The PM, with the assistance of the multi-functional team, shall assign an adjectival rating from Table 4 below and recommend a corresponding percentage. The AFRB will reach consensus on the exact percentage earned based on the assigned adjectival rating.

Adjectival

Rating Percentage Description

Excellent 91%-100% Contractor achievement(s) significantly exceeded expectations for overall cost, schedule, or technical performance requirements of the contract.

Very Good 76%-90% Contractor achievement(s) exceeded expectations for overall cost, schedule, or technical performance requirements of the contract.

Good 51%-75% Contractor achievement(s) slightly exceeded expectations for overall cost, schedule, or technical performance requirements of the contract.

Satisfactory No Greater than 50%

Contractor met overall expectations for cost, schedule, and technical performance requirements of the contract. No additional fee will be awarded in this area.

Unsatisfactory 0%

Contractor has failed to meet overall cost, schedule, and technical performance requirements of the contract in the aggregate as defined and measured against the criteria in the award-fee plan for the award-fee evaluation period.

Table 4. Government PM Subjective Evaluation Adjectival Ratings

Formula. % Awarded x (AF Pool x % Allocation) = Fee Earned

Sample Calculation. Assumption: Available Fee pool = $2M Adjectival Rating: Very Good, recommended 85% AFRB awards 85% Fee Amount Earned = 0.85 x ($2M x 25%) = 0.75 x $500,000 = $425,000

3.4 SII Criteria (up to 25%). An SII is an item contained within the existing contract requirements the Government deems critical and/or requires special attention. The Government may assign one or more SIIs during a performance period. SIIs are evaluated using a “Pass” or “Fail” rating to calculate amount earned. SIIs are evaluated based on whether the Contractor met or did not meet the requirements as contained in the PWS.

3.5 Positive and Negative Significant Incidents (PSI/NSI). A PSI is an event, action or innovation that provides significant savings or improvements at either the Base or Air Force level.

Examples include but are not limited to innovations significantly improving aircraft availability rates, providing significant cost savings/avoidance, or production efficiencies; extraordinary management actions significantly improving 57 MXG mission success; or extraordinary proactive actions taken to ensure sustained aircraft and equipment readiness. A NSI is an event or action that significantly impacts contract performance or the Government in a negative manner.

Examples include but are not limited to serious damage/destruction to Government property as a result of the contractor’s actions or inaction; or 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 Performance Incentive/Award Fee evaluation criteria.

3.5.1 PSIs and NSIs can significantly affect the final board results. PSIs or NSIs are presented after the initial calculation of Board results. A PSI or NSI identified during the period may increase (PSI) or decrease (NSI) the overall incentive/award fee at the discretion of the Government. The AFRB and/or FDO may unilaterally increase or decrease the total fee earned for the period without regard to Contractor performance in the areas scored. An NSI may warrant zero incentive/award fee to be approved by the FDO and result in no AFRB to be convened. The Government will notify the contractor of any NSI that will be reviewed by the

AFRB.

3.5.2 The Government may submit an unlimited number of PSI/NSIs and the contractor may submit up to five PSIs during each six-month Award Fee Period. Contractor-submitted PSIs must be submitted to the PM within 10 calendar days of the incident or the fifth (5th) calendar day following the end of a performance period, whichever comes first, using the format at Attachment 2. The PM will evaluate all PSI/NSI submissions with the assistance of Government functional representatives as required and make a recommendation to the AFRB regarding the impact of each submission. Contractor submissions must show a clear tangible benefit to the Government directly resulting from the Contractor’s actions.

3.5.3 If the cause of a NSI (i.e., aircraft mishap/incident, etc.) is determined a contractor responsibility after the period in which the event occurred, the Government can consider the finding in the period during which the responsibility determination was made or if no formal determination is or will be made, when the investigation is closed. The AFRB should consider if any action was already taken in regard to the NSI.

Attachment 1 AFRB Members

Voting Members ACC AMIC/DR or DD (Chairperson)

57 MXG/CC

ACC AMIC/PM

ACC AMIC/PK or PKC

ACC AMIC/PMA

Note: AMIC/PM or PK will serve as chairperson in the absence of AMIC/DR or DD.

Non-Voting Members/Advisors

ACC AMIC/DRJ

ACC AMIC/DRR

ACC AMIC/DRQ

ACC AMIC/PCE

ACC AMIC/PKC

ACC AMIC/PLG

ACC AMIC/PMAB

Fee Determining Official

AFPEO/CM

Attachment 2

Postive Significant Incident Award Fee Input Format

All inputs are due to the Program Manager within 10 days of the event occurrence but not later than five (5) days after the end of the Award Fee period.

Award Fee Period XX – Title

ACTION: (Specifically state what, where, how, and why – must be detailed)

DATE (S): (Self-explanatory)

JUSTIFICATION: (Bullet format – state why the action was accomplished and how the action exceeded contract requirement; must be specific)

IMPACT: (Bullet format – state how this action will improve the program; at what level the action was incorporated, the resulting cost savings, increased aircraft availability, recurring gains, efficiencies, etc.; how did this action improve quality, safety, etc.)

OPR: (Name, Location, and Phone)

GOVERNMENT EVALUATION: (Validate justification and impact to the Government – This section is to be completed by Government personnel only.)