SMORS_Pre-Proposal_Conference_-_Sample_Fee_Calculation.pdf

SUSTAINMENT & MODIFICATION OF RADAR SENSORS (SMORS)

PRE-PROPOSAL CONFERENCE HANDOUT

SAMPLE FEE CALCULATION

The following scenario provides an example of the how the Government will apply criteria to calculate the cost, performance and schedule incentive fees earned by the contractor. This example is based on the Ballistic Missile Early Warning System (BMEWS) and PAVE Phased Array Warning System (PAWS) (BPP) High-Altitude Electromagnetic Pulse (HEMP) Hardness Maintenance (HM) and Hardness Surveillance (HS)(HM/HS) Task Order (TO) [FA8723-17-F-0004 (F0004)]. This example will show the caluclations of the various elements to show the overall resulting incentive fee for the Base Period of HM/HS (CLINs 0001, 9001 and 9002). The incentive fees are based on the contractor’s Target Cost. The values used throughout the scenario are for illustration purposes only and do not reflect any estimates, budgets or other data associated with this TO.

Sample Data

CLIN 0001

Target Cost (TC): $5,000,000 (proposed amount)

Target Fee (cost) (1.20%): $60,000 $5,000,000 x 1.2%

Maximum Fee (cost) (2.00%): $100,000 $5,000,000 x 2.0%

Minimum Fee (cost) (0.40%): $20,000 $5,000,000 x 0.4%

Underrun share ratio: 75/25

Overrun share ratio: 75/25

CLIN 9001

Performance Incentive Fee Pool (5.00%): $250,000 $5,000,000 x 5.0%

CLIN 9002

Schedule Incentive Fee Pool (3.00%): $150,000 $5,000,000 x 3.0%

F0004 Incentive Fee Plan Performance Incentive Fee Criteria

The contractor will earn the allocated portion of the incentive based upon the number of discrepancies contained per TM/TO in the delivered TM/TOs. The average number of TM/TO discrepancies will be calculated by dividing the total number of TM/TO discrepancies within the contractor’s control assigned at each In-Process Review (IPR) (30-40% completion and 70-80% completion) and TO Certification by the total number of IPRs and TO Certifications during each evaluation period.

Performance incentive will be based on the average number of TM/TO discrepancies according to:

100% of Available PIF (Max) = Average # of discrepancies ≤ 1

84% of Available PIF = Average # of discrepancies = 2

72% of Available PIF = Average # of discrepancies = 3

60% of Available PIF = Average # of discrepancies = 4

40% of Available PIF = Average # of discrepancies = 5

20% of Available PIF (Min) = Average # of discrepancies ≥ 6

F0004 Incentive Fee Plan Schedule Incentive Fee Criteria

Schedule is measured when the Contractor, as a result of accomplishing depot maintenance activities, delivers to the Government technical baseline data that has been created and/or updated. The contractor will earn the allocated portion of the schedule incentive according to the measures below:

100% of Available SIF (Max) = Completes technical baseline data ≥ 10 business days ahead

60% of Available SIF = Zero (0) days behind ≥ completes technical baseline data < 10 business days ahead

20% of Available SIF (Min) = Completes technical baseline data ≥ one (1) business day behind

Sample Contract Results and Incentive Fee Calculations

After the end of the period of performance of the Base Period, the Governemnt determined the contractor delivered all the required Technical Manuals and Technical Orders. The Government determined the average number of TM/TO discrepancies to be two (2) discrepancies, and delivered seven (7) business days ahead of the contractually agreed to schedule. The Total Allowable Cost was $4,851,502.

Sample Cost Incentive Fee Calculation for CLIN 0001

𝑇𝑇𝑇𝑇 ≡ 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑇𝑇𝐶𝐶𝐶𝐶𝑇𝑇 𝑖𝑖𝑖𝑖𝑇𝑇𝑖𝑖𝑇𝑇𝑖𝑖𝑖𝑖𝑖𝑖𝑇𝑇𝑖𝑖 𝑖𝑖𝑖𝑖 𝑇𝑇𝐶𝐶𝐶𝐶𝐶𝐶

𝑇𝑇𝑇𝑇 ≡ 𝑇𝑇𝑇𝑇𝑇𝑇 𝑇𝑇𝐶𝐶𝐶𝐶𝐶𝐶𝑎𝑎𝑖𝑖𝑇𝑇𝑇𝑇𝑇𝑇𝑖𝑖 𝑤𝑤𝑖𝑖𝑇𝑇ℎ 𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇𝑇 𝑇𝑇𝐶𝐶𝐶𝐶𝑇𝑇 (1.2%)

𝑇𝑇𝐶𝐶𝐶𝐶 ≡ 𝑇𝑇𝐶𝐶𝑖𝑖𝑇𝑇𝑇𝑇𝑇𝑇𝑎𝑎𝑇𝑇𝐶𝐶𝑇𝑇′𝐶𝐶 𝐶𝐶ℎ𝑇𝑇𝑇𝑇𝑇𝑇 𝐶𝐶𝑇𝑇𝑇𝑇𝑇𝑇 (25%)

𝑇𝑇𝑇𝑇𝑇𝑇 ≡ 𝑇𝑇𝐶𝐶𝑇𝑇𝑇𝑇𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇𝐶𝐶𝑤𝑤𝑇𝑇𝐴𝐴𝑇𝑇𝑇𝑇 𝑇𝑇𝐶𝐶𝐶𝐶𝑇𝑇

𝑇𝑇𝑇𝑇 ≡ 𝑇𝑇𝑎𝑎𝑇𝑇𝐴𝐴𝑇𝑇𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇 𝑇𝑇𝐶𝐶𝐶𝐶𝐶𝐶𝑎𝑎𝑖𝑖𝑇𝑇𝑇𝑇𝑇𝑇𝑖𝑖 𝑤𝑤𝑖𝑖𝑇𝑇ℎ 𝑇𝑇𝐶𝐶𝑇𝑇𝑇𝑇𝑇𝑇 𝑇𝑇𝑇𝑇𝑇𝑇𝐶𝐶𝑤𝑤𝑇𝑇𝐴𝐴𝑇𝑇𝑇𝑇 𝑇𝑇𝐶𝐶𝐶𝐶𝑇𝑇

𝑇𝑇𝑇𝑇 = 𝑇𝑇𝑇𝑇 + [𝑇𝑇𝐶𝐶𝐶𝐶 × (𝑇𝑇𝑇𝑇 − 𝑇𝑇𝑇𝑇𝑇𝑇)]

Cost Incentive Fee Earned: $97,125 $60,000 + [25% * ($5,000,000 – $4,851,502)]

Sample Performance Incentive Fee Calculation for CLIN 9001

Performance Incentive Fee Earned: $210,000 $250,000 x 84%

Sample Schedule Incentive Fee Calculation for CLIN 9002

Schedule Incentive Fee Earned: $90,000 $150,000 x 60%

Sample Total Incentive Fee Calculation (Cost, Performance & Schedule))

Total Incentive Fee Earned: $397,125 $97,125 + $210,000 + $90,000

Total Fee Percentage: 8.19% $397,125 / $4,851,502