Section_J_Atch_21 _Transition_Incentive_Fee_Plan.pdf

SECTION J, ATTACHMENT 21, TRANSITION INCENTIVE FEE PLAN

Section J, Attachment 21, Transition Incentive Fee Plan: FA8723-16-R-0005

SHARED EARLY WARNING SYSTEM (SEWS) PRIME CONTRACT RE-COMPETE

(SEWS II)

TRANSITION TASK ORDER 0001

INCENTIVE FEE PLAN (IFP)

SOLICITATION NO.: FA8723-16-R-0005

CONTRACT NO.: FA8723-16-X-XXXX

ATTACHMENT 21

23 SEPTEMBER 2016

Air Force Materiel Command

Air Force Life Cycle Management Center

Battle Management Directorate

Strategic Warning and Surveillance Systems Division

(AFLCMC/HBQS)

Revision Change Record

Revision Eff. Date Description Initials

001 6 February Revised calculation method EJF

002 23 September Final FS

1. INTRODUCTION

This Incentive Fee Plan (IFP) is applicable to all Cost Plus Incentive Fee (CPIF) Contract Line Item Numbers (CLINs) used in the execution of the Contractor proposed Transition Plan IAW the SEWS II Transition Performance Work Statement (PWS). The CPIF Transition CLINs will follow a straight CPIF structure. To ensure superior performance, the Government will use a combination of cost and performance incentives. The cost incentive pool is 50% and the performance incentive pool is 50%.

For application specifics, reference FAR 52.216-10. To ensure a seamless transition, the Government will use a combination of cost and performance incentives.

The SEWS Contractor’s incentive fee for the CPIF CLINs will be determined by adding the realized cost incentive to the earned performance incentive. The performance incentive will be determined through the use of Quality Performance Indicators (QPIs) listed in Appendix A.

Sample calculations specific to QPI application are given in Appendix B for the Transition CLINs.

2. TRANSITION CLINS

The CPIF CLINs for Transition will become effective upon award of TO 0001. The Offerer shall not make adjustments to the table below. The cost incentive parameters for the Transition CLINs are dictated by the Government and identified in Table 1 below.

Table 1: Transition Incentive Fee and Share Ratio Structure

Transition CLIN - CPIF Description FY17 Target Fee 6% Share Ratio- Govt/Contractor 80/20 Minimum Fee 3% Maximum Fee 9%

Execution of the incentives for Transition CLINs 0001 and 0003 will be in accordance with

FAR 52.216-10.

3. QUALITY PERFORMANCE INDEX (QPI)

The QPIs for the SEWS II Transition IFP have been developed as objective-oriented measures of Contractor performance. The QPIs directly tie to elements contained in the

SEWS II Transition PWS. Evaluation will be based upon the observed performance, as compared to the standards listed in Appendix A.

The QPI table in Appendix A identifies the specific QPIs, specific evaluation criteria, and scoring scale. The Contractor will self-report the QPI ratings on a weekly basis as part of the Contractor’s transition status report with the Program Manager.

4. DETERMINATION OF SHARE RATIO PAYMENT

The cost sharing payment, in either an underrun or overrun scenario, will be determined at the end of contract transition for the respective transition CLINs. Once the Contractor incentive fee for the CPIF CLINs has been determined, the Government will make a determination on the payment to the Contractor based on the stated share ratios in Table 1 for CLINs 0001 and 0003.

5. CONTRACT TERMINATION

In the event of the termination of this contract for convenience pursuant to FAR 52.249-2 or default, FAR 52.249-8, the performance period during which such termination occurs will end and the cost and performance incentive pools will be pro-rated to match the period of performance end date. The Government will evaluate the Contractor’s performance for the period of performance completed.

APPENDIX A: QUALITY PERFORMANCE INDEXES FOR TRANSITION OF

CONTRACT

QPI 1: Transition Plan Execution (PWS tasks 2.2 and 2.3)

Intent: This metric evaluates the Contractor’s ability to develop and execute a seamless and orderly transition not to exceed 90 days. The Contractor shall complete all scheduled tasks identified in its Transition Plan on time.

Criteria: If the Contractor is unable to assume full responsibility of the contract, as defined by the SEWS Overarching Scope Document and Individual Task Orders (TOs), no later than the end of the transition period, unacceptable performance disruption will occur. The Contractor shall minimize the amount of deviations to the Contractor’s Transition Plan. A deviation is defined as any change the Contractor makes to the Transition Plan not approved by the Government.

Data Source: Data for this metric is obtained from progress documented in Weekly Status Meetings and observations with the transition manager.

Table 2: Transition QPIs

QPIs for CLINs 0001 and 0003 Transition - CPIF

# Fee % Min Fee -3% -2% -1% Target Fee –

6% +1%

+2% Max Fee +3% 1 Transition

Plan Execution

Contractor has more than 5 deviations from the Contractor’s Transition Plan no more than 5 deviations from no more than 4 deviations from the Contractor’s Transition Plan

Contractor has no more than 3 deviations from the Contractor’s Transition Plan

Contractor has no more than 2 deviations from no more than 1 deviations from

Contractor had no deviations from the Contractor’s

QPI Process and Procedures for Transition:

The following are the processes and procedures that will be applied between the Government and Contractor with regards to QPI reporting and adjudication.

The Government PM, PCO, Government transition manager, and COR, along with the Contractor’s Program Manager, Contracting Representative, and Contractor Technical Lead will comprise the QPI Assessment Group (QAG).

At the end of the transition period, the QAG will meet and hold a QPI Review (QPIR). At the QPIR, the Contractor will present a QPI assessment for each QPI identified as relevant to the effort. The QPI assessment will also include supporting technical data. If any QPI assessment is not fully supported by accurate, relevant technical data, or is otherwise challenged by the QAG, the Contractor will have 3 business days to provide the required data or a default rating of zero (0) will be assessed against the specific QPI.

At the conclusion of the QPIR, a QPI assessment document formalizing the QPI ratings will be signed by all members of the QAG. If additional data is required, as noted above, then the QPI assessment document will be signed at the first opportunity. Failure to sign will be documented and the PCO’s signature will finalize the quarterly rating. A signed copy of the QPI assessment will be provided to the Contractor within 48 hours.

In the event a QPI rating cannot achieve consensus among the members of the QAG, the Government PM will make a final rating determination and provide documented rationale supporting the decision. The rationale will be attached to the quarterly QPI assessment.

The intent of this process is to achieve consensus, accountability and efficiency.

APPENDIX B: SAMPLE CALCULATIONS, TRANSITION (CPIF) – QPI IMPACT

NOTE: VALUES IN THE FOLLOWING EXAMPLES ARE ONLY APPLICABLE TO

THE EXAMPLES AND ARE FOR DEMONSTRATION PURPOSES ONLY

QPI Calculations

This Appendix provides an example of how the QPI score will be used to generate a QPI rating which will be applied against a performance incentive Pool. The following example will use data supporting QPI #1. A unique specific log sheet for the QPI will be used to track and monitor performance in support of the QPI assessment. The impact of the QPI assessment on total profit will be shown later in this section. Again, the values used are purely hypothetical in an effort to demonstrate how the calculations are conducted.

Using QPI #1 for sample purposes

The following table is hypothetical Contract Data:

Table 3: Contract Cost Data

Target Cost (CPIF) $1,000,000

Target Fee (6%) $60,000

Minimum Fee (3%) $30,000

Maximum Fee (9%) $90,000

Share Ratio 80/20

UNDERRUN EXAMPLE

During transition, the Contractor had 3 deviations from the Contractor’s proposed Transition Plan and its actual costs were $950,000 (a $50,000 underrun).

Table 4: Sample - QPI #1

QPIs for CLINs 0001 and 0003 Transition - CPIF

# Fee % Min Fee -3% -2% -1% deviations from deviations from deviations from the Contractor’s Transition Plan

Contractor has no more than 3 deviations from no more than 2 deviations from deviations from from the

Performance Incentive Fee Pool (50%): $30,000

60,000 x 50% = 30,000

Performance Incentive Fee Earned: $30,000

Target Fee

Cost Fee Pool (50%): $30,000

60,000 x 50% = 30,000

Underrun - Cost Incentive Fee Earned: $40,000

30,000 + [(1,000,0000 - 950,000) x 20%]

Underrun with 3 deviations – Total Incentive Fee Earned: $70,000

Total Government Payment = $950,000 + $70,000 = $1,020,000

Actual Fee Percentage = 7.37%

OVERRUN EXAMPLE

During transition, the Contractor had 3 deviations from the Contractor’s proposed Transition Plan and its actual costs were $1,050,000 (a $50,000 overrun).

Table 4: Sample - QPI #1

QPIs for CLINs 0001 and 0003 Transition - CPIF

# Fee % Min Fee -3% -2% -1% deviations from deviations from deviations from the Contractor’s Transition Plan

Contractor has no more than 3 deviations from the Contractor’s Transition Plan

Contractor has no more than 2 deviations from deviations from from the

Performance Incentive Fee Pool (50%): $30,000

60,000 x 50% = 30,000

Performance Incentive Fee Earned: $30,000

Target Fee

Cost Fee Pool (50%): $30,000

60,000 x 50% = 30,000

Overrun - Cost Incentive Fee (20%): $20,000

30,000 + [(1,000,0000 – 1,050,000) x 20%]

Overrun with 3 deviations – Total Incentive Fee Earned: $50,000

Total Government Payment = $1,050,000 + $50,000 = $1,100,000

Actual Fee Percentage = 4.76%