RFP_Incentive_Language.pdf

Special Contract Requirements

BAT EMD Incentive Criteria

The Government has developed a performance/schedule and cost incentive structure which focuses on the Contractor successfully adhering to its proposed milestone schedule for completing the Critical

Design Review (CDR), System Verification Review (SVR), and Production Readiness Review (PRR) in the three Engineering and Manufacturing Design (EMD) increments (SVR is not incentivized in Increments II and III) for development of a complete Bomber Armament Tester System. The Government RFP and resulting contract establishes specific performance/schedule incentive amounts that the Contractor may earn in addition to the cost incentive fee. In order to earn the full performance/schedule incentive at each milestone, the Contractor must successfully complete:

All CDRLs and activities (to include previous reviews) required to be submitted and approved

(ref: SOW paragraphs denoted below), hereby referred to as the “entrance criteria”;

o CDR: SOW Paragraph 4.1.4; 5.1.2; 6.1.2 o SVR: SOW Paragraph 4.1.5, including all subparagraphs o PRR: SOW Paragraph 4.1.10; 5.1.7; 6.1.7; and

All stated criteria required for successful completion of a review (ref: SOW Paragraph 3.7), hereby referred to as “exit criteria”; and

Adhere to its proposed, Government‐approved schedule for that event.

NOTE: If CDRLs are submitted late, the Government reserves the right to delay the event start date on a day‐for‐day basis. Any delays in the event start date will result in a commensurate reduction in the 30‐ day post‐event review window for completion of Exit Criteria. Because the Government will still require

7 calendar days to review post‐event contractor submittals, any reduction in the 30‐day post‐event window will be taken from the contractor’s period for accomplishing all post‐event requirements.

Schedule slips will be determined based on calendar days

Accomplishment of each event shall be governed by a defined incentive window (see Figures 1A and

1B).

EMD Incentive Structure:

Structure and management of the EMD incentives will be as follows: The EMD incentives will be based on an overall proposed Target Fee (TF) of 9% which will be multiplied against the proposed EMD Target

Cost (TC). The TF is then split into two different incentive pools—one for performance/schedule and the other for cost. The performance/schedule incentive is assigned 65% of the proposed TF and the cost incentive is assigned the remaining 35%.

In EMD Increment I, the percentage assigned to performance/schedule is further divided as follows: 20% may be earned at CDR, 30% at SVR, and 50% at PRR (see CLINs 0003AA ‐ 0003AC).

In EMD Increments II and III, SVR is not incentivized. Therefore, the percentages assigned are

30% at CDR and 70% at PRR (see CLINs 1003AA ‐ 1003AB and 2003AA ‐ 2003AB).

The performance/schedule incentives become firm‐fixed price amounts upon contract award and are not subject to further adjustment, with the exception that they could be reduced to either 50% or 0%, as shown in Figure 1. The cost incentive portion of the TF will be subject to the conditions set forth in FAR

Clause 52.216‐10.

NOTE: The total amount of the Target Fee for CLINs 0001, 1001, and 2001, when added to their corresponding performance/schedule incentive CLINs (i.e., 0003AA, 0003AB, and 0003AC, when added to the fee on CLIN 0001; 1003AA and 1003AC, when added to the fee on CLIN 1001, etc.), must equate to 9% of the Target Cost of CLINs 0001, 1001, and 2001, respectively.

Scheduled Event Date

Conclusion of 30 calendar day window for completion of all Exit Criteria

Incentive Window – 100% payment

Incentive Window – 50% payment

Conclusion of 30 calendar day extended period for completion of all Exit Criteria

Notes:

1) Any contractor delay in the accomplishment of a required Entrance Criteria action prior to the

Scheduled Event Date or a delay in the accomplishment of the Event itself on the date established in the contract will be reduced from the 30 calendar day post‐event Exit Criteria accomplishment window on a day‐for‐day basis.

2) The 30‐day windows for completion of Exit Criteria actions will not be increased if an event should be accomplished prior to its scheduled date.

3) Each 30 calendar day post‐event window includes a 7 calendar day period for government review/approval of Exit Criteria submittals for each action item.

BAT CDR and SVR Incentive Windows

Entrance/Exit Process for Incentive Reviews

Figure 1A

Scheduled PRR Event

Date

Conclusion of 30 calendar day window for completion of all PRR Exit Criteria

Incentive Window – 100% payment

Incentive Window – 50% paymentNotes:

1) Any contractor delay in the accomplishment of a required PRR Entrance Criteria action prior to the Scheduled PRR Event Date or a delay in the accomplishment of the PRR Event itself on the date established in the contract will be reduced from the 30 calendar day post‐PRR event Exit Criteria accomplishment window on a day‐for‐day basis.

2) The 30‐day window for completion of PRR Exit Criteria actions will not be increased if the PRR event should be accomplished prior to its scheduled date.

3) The 30 calendar day post‐event window includes a 7 calendar day period for government review/approval of Exit Criteria for each action item submitted.

4) In the event the PRR and required Exit Criteria are not accomplished within the 100% payment Incentive Window, the PRR completion schedule will be contractually re‐baselined. If the PRR Exit Criteria are then successfully completed within the re‐baselined schedule, the Contractor will earn 50% of the PRR incentive. If PRR Exit Criteria are still not completed within the re‐baselined schedule, the PRR incentive will be reduced to 0%. The PRR schedule can be re‐baselined only once in each EMD increment.

PRR Incentive Windows

Conclusion of re‐ baselined schedule for completion of all PRR Exit Criteria

BAT Entrance/Exit Process for Incentive Reviews

Figure 1B

The below numerical example is provided to aid in the understanding of the incentive splits and associated computations.

CLIN

Pricing

Arrangement

Percentage of

Total 9%

Target Fee

Effective

Percentage of Total

9% Target Fee Target Cost Target Fee Target Price

0001 CPIF 35.00% 3.15% 30,000,000.00$ 945,000.00$ 30,945,000.00$

0002 CPIF NSP NSP NSP

Percentage of

Total 9%

Target Fee

Percentage of

Performance/

Schedule

Incentive

Effective

Percentage of Total

9% Target Fee

Fixed Incentive

Amount

(Effective % x

Target Cost)

0003 65.00% 5.85%

0003AA FFP 20.00% 1.170% 351,000.00$

0003AB FFP 30.00% 1.755% 526,500.00$

0003AC FFP 50.00% 2.925% 877,500.00$

Total Fee (0001

Target Fee +

0003AA‐0003AC) 2,700,000.00$

Figure 2

EMD Increment I Numerical Example

(Target Cost of $30M is used for demonstration purposes only)