HO1-Air_Force_Payment_Methods_and_Limitation_of_Government_Liability_Clause.pdf

H01. AIR FORCE PAYMENT METHODS AND LIMITATION OF GOVERNMENT LIABILITY CLAUSE

(AIR FORCE)

1. The Air Force will utilize the Price per Flight Hour (PPFH) payment approach.

a. Under the PPFH payment approach the government shall pay the contractor a firm-fixed price amount for flying hours per applicable Contract Line Item Number (CLIN) or Sub Contract Line Item Number (SubCLIN) per each order. For each PPFH CLIN / SubCLIN, the funded flying hour’s amount shall be hereafter known as the “Total Power by the Flying Hour (PBFH) Price”. The government will establish estimated flying hours and the amount available for payment at the beginning of each annual order. Any contractor support for flying hours above the total estimated flying hours or ordered quantities, as funded on individual orders, is at the contractor’s risk and without liability on the part of the government.

b. The Order Schedule shall specify the amount available for payment by the government (the Total PBFH Price), the total estimated flying hours and/or other required line item quantities. In order to protect the government from excessive overpayment, the government shall withhold at a rate of 5 percent from each lot payment. The government may increase the estimated flying hours and CLIN /SubCLIN price and obligate additional funds in the event that total estimated flying hours are projected to exceed the total estimated flying hours previously established in the schedule funded at time of delivery order. Any increase in funds shall be accomplished via contract order modification reflected on the applicable CLIN / SubCLIN. Any adjustments to the funded flying hours shall be accomplished via delivery order modification. Any modification of funded total flying hours shall be at the annual aggregated flying hours per CLIN / SubCLIN and adjusted to the appropriate price per flying hour per pricing agreement specified at time of contract award.

c. Per CLIN / SubCLIN, the contractor is not obligated, nor authorized, to continue performance under this contract in excess of the funded total estimated flying hours under the Total PBFH Price or the quantity ordered on a CLIN / SubCLIN. Likewise, the contractor is only obligated and/or authorized to perform up to the total estimated flying hours funded and identified within the schedule.

The government program manager (PM) will monitor the flying hours per CLIN / SubCLIN subject to the PPFH approach, and shall notify the contracting officer (CO) in writing when actual flying hours have reached 80 percent of the Total Estimated Flying Hours for each associated CLIN / SubCLIN and every 5 percent thereafter, as specified within the Schedule. The contracting officer will notify the contractor when actual flying hours have reached 80 percent and every 5 percent thereafter. This notification process; PM-CO-contractor communication, will continue until the government has reached 100 percent of the total estimated flying hours or until the government funds more flying hours via contract order modification. The government shall have no obligation whatsoever to order additional flying hours or to pay the contractor for any costs in excess of the CLIN / SubCLIN prices.

2. The following reconciliation shall be applied to each order.

a. As required by the government, for each PBFH CLIN / SubCLIN, both parties shall reconcile the Total PBFH Price based on the total estimated flying hours previously funded by the government in the Schedule with the actual authorized charges (based on the total actual flying hours flown, hereafter known as the “Total Actual PBFH Price” and any applicable contract metric price adjustments per clause at H02. For each CLIN / SubCLIN, the difference between the Total PBFH Price funded at time of delivery order and the Total Actual PBFH Price and Contract Metric Price Adjustments, hereafter known as the “Reconciliation Amount”, shall be reconciled. For each CLIN / SubCLIN, the Reconciliation Amount actions shall:

1) Take place no later than 60 days-after each order’s latest delivery as specified in the order schedule.

2) Settle the Reconciliation Amount in the Schedule

a) The contractor shall withhold the final invoice from each annual order to facilitate the Reconciliation Amount payments.

b) If the final invoice indicates that a credit is owed to the government (amount paid for lots 1 thru 11 exceeds obligated funds):

(1) If Working Capital Funds were used and the Reconciliation Amount to be adjusted is greater than the final invoice, the applicable CLIN / SubCLIN of the follow-on order shall be decremented to account for the overpayment. The current order’s Schedule will be modified to reflect the Total Actual PBFH Price. The contractor shall submit a final invoice at zero dollars for the current order to close out the order.

(2) The reconciliation process outlined above assumes “no year” CSAG funding will be used for all Air Force obligations. If “one year” appropriations were used for this effort, the contractor shall refund any outstanding credits/refunds to the government treasury.

b. If the contractor’s final invoice sufficiently covers the Reconciliation Amount (amount paid for lots 1-11 is less than money due to contractor), the order will be modified to reflect the Total Actual PBFH Price and any applicable contract metric price adjustments. The contractor shall submit final invoice at the amount indicated in the order modification and the government shall deobligate excess funds as appropriate.

3. Disagreement with such change in the contract price shall be resolved in accordance with the disputes clause of this contract.

Example. Reconciliation Calculation

Delivery Order 0001

EFH X PBFH Rate = Total Est PBFH / 12 Lot Price 150,152 $151.00 $22,672,952.00 $1,889,412.67

EFH = Estimated Flying Hours PBFH Rate = Power By The Flying Hour

Payment Schedule (At Time of Award)

Lot# Lot Price Payment Amount (Lot Price minus 5% (clause H01)) 1 $1,889,412.67 $1,794,942.03 2 $1,889,412.67 $1,794,942.03 3 $1,889,412.67 $1,794,942.03 4 $1,889,412.67 $1,794,942.03 5 $1,889,412.67 $1,794,942.03 6 $1,889,412.67 $1,794,942.03 7 $1,889,412.67 $1,794,942.03 8 $1,889,412.67 $1,794,942.03 9 $1,889,412.67 $1,794,942.03

10 $1,889,412.67 $1,794,942.03 11 $1,889,412.67 $1,794,942.03 12 $1,889,412.67 Pending Reconciliation (clauses H01 and H02)

$22,672952.00 $19,744,362.37 (Amount Paid thru Lots 1-11)

Step 1. Calculate contract metric price adjustment per clause at H02. For example purposes, assume 3% decrement for midpoint evaluation and 1% for end of period evaluation. For example purposes, assume the subject NSN actual flying hours for months 1 – 6 was 45,000 hours and actual flying hours for months 7-12 was 105,152 hours. If contractor met performance targets, go to step 2 and do not apply decrement (i.e. use the awarded lot prices). (Note, PBFH Rate may change based on flying hour range.)

Step 1A. Apply midpoint contract metric price adjustment, if required. Per clause at H02, step 1A does not apply to Transition Period 1.

Awarded PBFH Rate minus Midpoint Contract Price Adjustment % (calculated from H02) $151.00 - 3% = $146.47 Adjusted PBFH Rate

Step 1B. Apply end of period contract metric price adjustment, if required.

Awarded PBFH Rate minus End of Period Contract Price Adjustment % (calculated from H02) $151.00 - 1% = $149.49 Adjusted PBFH Rate

Step 2. Calculate Reconciliation Amount using “Actual Flying Hours” and Adjusted PBFH Rate from Steps 1A and

1B. Divide by 12 months. (Note, PBFH Rate may change based on flying hour range.)

Actual

FH

X PBFH

Rate

= Total PBFH / 12 Lot Price

45,000 Months 1-6 $146.47 (step 1A) $6,591,150.00

105,152 Months 7-12 $149.49 (step 1B) $15,719,172.48 $22,310,322.48 $1,859,193.54

Step 2A. Subtract Actual Total PBFH (Step 2) from Total Estimated PBFH on Award

Total Estimated PBFH minus Total Actual PBFH = Reconciliation Amount $22,672,952.00 $22,310,322.48 $362,629.52

Step 3. Calculate final invoice amount (per SubCLIN).

Total Est PBFH $ 22,672,952.00 (from award) Less Reconciliation Amt $ 362,629.52 (step 2A) SubTotal $ 22,310,322.48 Less Amt Paid Lots 1-11 $ 19,744,362.37 Final Invoice Amount $ 2,565,960.11

Requires delivery order modification to reflect adjusted lot price and final invoice amount.

(end of clause)