J5_IFP_FRFP_120215.pdf

Section J, Attachment 5 - Incentive Fee Plan

H95001-10-R-0001

Missile Defense Information Technology

Collaboration Services (MICS)

Incentive Fee Plan (IFP)

Date: 17 Feb 2012

TABLE OF CONTENTS

1.0 INTRODUCTION

2.0 PURPOSE

3.0 INCENTIVE TYPES

3.1 Incentives

3.2 Cost Incentive

3.3 Performance Incentive

4.0 ROLES AND RESPONSIBILITIES

4.1 The Contracting Officers Representative

4.2 Performance Monitors

4.3 Contracting Officer

5.0 COST INCENTIVE

6.0 PERFORMANCE INCENTIVE

7.0 PERFORMANCE INCENTIVE MATRIX

8.0 MONTHLY PERFORMANCE INCENTIVE FEE PROCESS

8.1 Funding Contract Line Item Number

8.2 Surveillance

8.3 Performance Incentive Monthly Report

8.4 Performance Incentive Fee Authorization Letter

8.5 Billing

8.6 Effective Dates

9.0 MONTHLY PERFORMANCE INCENTIVE FEE CALCULATION

9.1 Total Monthly Fee Available

9.2 Performance Incentive Fee Per Critical Performance Objective

9.3 Earned Performance Incentive Fee Per Critical Performance Objective

9.4 Total Performance Incentive Fee Earned

10.0 EXAMPLE MONTHLY PERFORMANCE INCENTIVE FEE CALCULATION

11.0 INCENTIVE FEE PLAN ADMINISTRATIVE CHANGES

12.0 CONTRACT TERMINATION

1.0 INTRODUCTION

The Incentive Fee Plan (IFP) provides guidance for objectively evaluating cost and performance criteria identified within the Quality Assurance Surveillance Plan (QASP), Performance Work

Statement (PWS), and this plan. By employing incentives, the Government expects to motivate the Contractor to aggressively manage resources to provide timely delivery of high-quality services.

2.0 PURPOSE

The purpose of this IFP is to document the incentive provisions of the contract as well as the procedures, metrics, roles, and responsibilities to administer the plan for the Missile Defense

Agency Information Technology Collaboration Services (MICS) contract. Through implementation of this plan, the Missile Defense Agency (MDA) seeks to provide incentives for the Contractor to perform at a level determined by MDA to be better than satisfactory. It is intended that this plan be utilized in conjunction with the PWS and QASP.

3.0 INCENTIVE TYPES

3.1 Incentives

In order to effectively incentivize Contractor cost and performance, this contract utilizes both

Cost Incentives and Performance Incentives in accordance with (IAW) Federal Acquisition

Regulation (FAR) Parts 16.402-1, 16.402-2, and 16.405-1.

For CLINs X100 and X200, the negotiated Target Fee will be divided between two fee pools, a

Cost Incentive Fee Pool and a Performance Incentive Fee Pool. Of the Target Fee, 30% will be applied to the Cost Incentive Fee Pool and 70% will be applied to the Performance Incentive Fee

Pool.

For CLINs X700 – X799 and X800 – X899, only a Performance Incentive Fee Pool will be utilized. The entire negotiated Target Fee will make up the Performance Incentive Fee Pool. Cost performance will be an element of the overall performance incentive evaluation for determining the amount of Performance Incentive Fee earned for these CLINs; cost performance will make up a minimum of 30% of the overall Performance Incentive Fee Pool.

3.2 Cost Incentive

The Cost Incentive, which incorporates a fee adjustment formula, is intended to motivate the

Contractor to effectively manage costs; all incentive contracts must include a cost incentive. The final Cost Incentive Fee will be determined using the Underrun/Overrun Share Ratios and

Maximum/Minimum Fee data in Section 5.0.

This Cost Plus Incentive Fee (CPIF) contract includes a target cost, a target fee, and a fee adjustment formula that (within the constraints of a maximum and minimum fee) provides that:

Actual cost that meets the target will result in the target fee;

Actual cost that exceeds the target will result in downward adjustment of target fee;

Actual cost that is below the target will result in upward adjustment of target fee.

3.3 Performance Incentive

The Performance Incentive allows the Government to target performance objectives which are of significant value to MDA and reward the Contractor when those performance objectives are met or exceeded. The criteria for this determination are set forth in Exhibit 1 – Critical Performance

Objective Matrix. The Performance Incentive Fee (PIF) will be determined using the Monthly

Performance Incentive Fee Calculation in Section 9.0, and paid on a monthly basis.

The Critical Performance Objectives (CPO) and subject criteria are contained in the QASP, and

Exhibit 1 of this plan.

PIF will be calculated IAW Sections 8 and 9 with an example shown in Section 10.

4.0 ROLES AND RESPONSIBILITIES

4.1 The Contracting Officers Representative

The principle roles and responsibilities of the Contracting Officers Representative (COR) include:

Propose and implement timely modifications to the IFP, as required, throughout the entire period of contract performance; Manage and ensure successful execution of the Incentive Fee (IF) process; appoint Performance Monitor(s) in writing;

Ensure that surveillance of CPOs, as defined in the QASP and this plan, are completed in a timely manner by appointed Performance Monitor(s);

Receive, evaluate, and validate the Quality Assurance Monthly Report (QAMR) from the

Performance Monitor(s);

If discrepancies are noted during the validation of the QAMR, reconcile the findings with appropriate Government and/or Contractor personnel;

Prepare the Performance Incentive Monthly Report (PIMR) and submit to the Contracting

Officer (CO) no later than 10 business days after the completion of the monthly performance period.

Provide monthly performance feedback to the Contractor IAW the QASP.

4.2 Performance Monitors

The principle roles and responsibilities of the Performance Monitors (PM) include:

Continuously maintain insight of the Contractor’s performance by using surveillance techniques defined in the QASP;

Perform monthly surveillance of Critical Performance Objectives IAW the QASP and this plan;

Prepare the QAMR and submit to the COR no later than 5 business days after the completion of the monthly performance period;

If discrepancies are noted by the COR during the validation of the QAMR, assist the COR in reconciling the findings with appropriate Government and/or Contractor personnel.

4.3 Contracting Officer

The principle roles and responsibilities of the CO include:

If discrepancies are noted by the COR during the validation of the QAMR, assist the COR in reconciling the findings with appropriate Government and/or Contractor personnel;

Upon receipt of the PIMR from the COR, prepare and submit the Incentive Fee Authorization

Letter to the Contractor no later than 15 business days after the completion of the monthly performance period;

Retain historical files and other documentation relating to incentive matters for the contract;

Execute modifications to the IFP, as required.

5.0 COST INCENTIVE

The Government will continually incentivize the Contractor to effectively manage contract cost.

If applicable, the Cost Incentive Fee for CLIN X100 will be calculated and paid IAW FAR

Clause 52.216-10 – Incentive Fee and CPO Number 1 in Exhibit 1 to the Contractor on an annual basis after the close of each 12 month contract performance period.

The final Cost Incentive Fee will be calculated based on whether there is an Underrun or an

Overrun at the end of the contract. In accordance with FAR 52.216-10, the Underrun/Overrun calculation will be based upon final actual allowable costs compared to Target Cost. The

Maximum and Minimum fee constraints shall apply to the final Cost Incentive Fee calculation and an overpayment of the Cost Incentive Fee by the Government will result in a fiscal liability of the Contractor to reimburse the Government for the full amount of any overpayment.

Table 5-1 shows the Government and Contractor Share Ratios for Underruns and Overruns.

Both the Underrun and Overrun fee calculations shall be limited by the Maximum and Minimum

Fee identified in Table 5-2. Table 5-3 provides an example of the Cost Incentive Fee calculation.

Government Share Contractor Share

Underrun 30 % 70 %

Overrun 40 % 60 %

Table 5-1: SHARE RATIOS

Target Fee % (Negotiated) Maximum Fee % Minimum Fee %

TBD 8% 0%

Table 5-2: MAXIMUM AND MINIMUM FEE

Structure Elements Structure Amounts Underrun Share (Gov/Ctr) Target Cost $ 5,000,000.00 30/70

Target Fee $ 150,000.00 Overrrun Share (Gov/Ctr) Fee Rate at Target Cost 3% 40/60

Maximum Fee 8% $ 400,000.00

Minimum Fee 0% $ 00.00

Target Price $ 5,150,000.00

Cost/Fee Tradeoffs to

Estimate Minimum Fee Underrun Overrun Estimated Final Cost $ 4,642,857.00 $ 5,250,000.00 Less Target Cost $ 5,000,000.00 $ 5,000,000.00 Difference $ 357,143.00 $ (250,000.00) Times Contractor Share 70% 60% Incentive Fee Earned $ 250,000.10 $ (150,000.00) Plus Target Fee $ 150,000.00 $ 150,000.00 Total Fee $ 400,000.10 $ - Estimated Final Cost $ 4,642,857.00 $ 5,250,000.00 Estimated Final Price $ 5,042,857.10 $ 5,250,000.00

Range of Incentive

Effectiveness Underrun Overrun Target Fee $ 150,000.00 $ 150,000.00

Max. Fee and Min. Fee $ 400,000.00 $ -

Fee Difference $ 250,000.00 $ (150,000.00) Divided by CTR Cost Share 70% 60%

Change in Cost $ (357,143.00) $ 250,000.00 Target Cost $ 5,000,000.00 $ 5,000,000.00

Range of Incentive Effectiveness $ 4,642,857.00 $ 5,250,000.00

Table 5-3: EXAMPLE COST INCENTIVE CALCULATION FOR CLINs X100

6.0 PERFORMANCE INCENTIVE

The Government intends to incentivize the Contractor using predetermined objective criteria for the CPOs, as defined in Exhibit 1 of this plan and the QASP. Contractor performance will be measured, reported, validated, and rewarded if appropriate. The earned amount of the PIF shall depend on the Contractor’s performance. The PIF will be calculated using the process described in Sections 8 and 9, with an example shown in Section 10. The Contractor’s failure to meet the

Acceptable Quality Level (AQL) will result in the Contractor forfeiting the Monthly PIF for that

CPO.

A PIF shall be applicable to the Program and Collaboration Services - Baseline and Special

Emphasis Item (SEI) Projects and Discrete Tasks Contract Line Item Numbers (CLINs) X100 and X700 – X799. The fee associated with these CLINS will be placed in Performance Incentive

Fee Pool CLINs X200 and X800 – X899 respectfully.

For SEI Projects and Discrete Tasks CLINs X700 – X799 and X800 – X899, unique CPOs will be established for each project or task. For these CLINs only a Performance Incentive Fee Pool will be utilized. The entire negotiated Target Fee will make up the Performance Incentive Fee

Pool. Cost performance will be an element of the overall performance incentive evaluation for determining the amount of Performance Incentive Fee earned for these CLINs; cost performance will make up a minimum of 30% of the overall Performance Incentive Fee Pool. Based upon the individually negotiated Target Fee, funding will be applied to the Performance Incentive Fee

Pool CLINs X800 - X899 at time of contract modification. The Performance Incentive Fee will be calculated in a manner similar to that depicted in Table 10-1 and paid at the completion of the project or task IAW the negotiated CPOs. There will be no final Cost Incentive Fee calculation or pay out based upon an Underrun at the end of the contract for these CLINs.

7.0 PERFORMANCE INCENTIVE MATRIX

The CPO Matrix, Exhibit 1, describes the AQL, Midrange Quality Level (MQL), and Target

Quality Level (TQL) for each CPO.

8.0 MONTHLY PERFORMANCE INCENTIVE FEE PROCESS

8.1 Funding Contract Line Item Number

At the beginning of each contract period of performance, to the extent that funding is available, funding will be applied to the Performance Incentive Fee Pool Contract Line Item Number

(CLIN) (X200) based upon the previously negotiated Target Fee.

8.2 Surveillance

Performance Monitors will continuously surveil the performance of the Contractor by using the methods and criteria defined in the QASP, and this plan. At the end of the monthly performance period, the Performance Monitors will provide the QAMR to the COR.

8.3 Performance Incentive Monthly Report

The COR will develop, based upon the QAMR, the PIMR and provide to the CO. The PIMR shall include the Earned Quality Level and the Earned PIF for each CPO, and the Total Monthly

Earned PIF.

8.4 Performance Incentive Fee Authorization Letter

The CO will prepare and provide the Performance Incentive Fee Authorization Letter to the

Contractor authorizing billing of the Monthly PIF. The letter shall include the Earned Quality

Level and the Earned PIF for each PIF Item, Total Monthly Earned PIF, and the appropriate

Accounting Classification Reference Number (ACRN) for billing (ref. Contract Section G). The

Contractor shall not bill for Monthly PIF until authorized in writing by the CO.

8.5 Billing

The Contractor, upon receipt of a Performance Incentive Fee Authorization Letter, will bill according to the letter and payment instructions contained in the contract. After receiving CO notification, the Contractor shall have five (5) business days to challenge the monthly incentive fee determination. PIF determinations and amounts rendered by the CO are final and not subject to the Disputes Clause.

8.6 Effective Dates

The PIF Plan and structure is effective for the entire contract period of performance unless a written contract modification is issued by the CO effecting changes.

9.0 MONTHLY PERFORMANCE INCENTIVE FEE CALCULATION

9.1 Total Monthly Fee Available

The annual negotiated Performance Incentive Fee Pool will be divided in to 12 equal parts and applied to the 12 monthly performance periods under separate subCLINs.

9.2 Performance Incentive Fee Per Critical Performance Objective

The monthly Performance Incentive Fee Pool is then divided by the number of CPOs to arrive at the potential PIF amount for each CPO. (PIF CPOs may be weighted and factored into the calculations to provide more or less emphasis on any particular CPO).

9.3 Earned Performance Incentive Fee Per Critical Performance Objective

The PIF amount for each CPO is then multiplied by the earned quality level percentage amount to arrive at the earned PIF amount for each CPO.

9.4 Total Performance Incentive Fee Earned

The earned PIF amounts for all CPOs are summed to arrive at the Monthly PIF earned by the

Contractor. Unearned PIF will not be carried forward into subsequent monthly performance periods.

10.0 EXAMPLE MONTHLY PERFORMANCE INCENTIVE FEE CALCULATION

Annual Performance Incentive Fee Pool: $648,000

Annual Performance Incentive Fee Pool of $648,000 / 12 monthly performance periods =

Monthly Performance Incentive Fee Pool of $54,000

Monthly Performance Incentive Fee Pool $54,000 / 10 CPO Items = $5,400 Performance

Monthly Incentive Fee (potential) per CPO.

Earned Quality Level (e.g. 70%) * Performance Incentive Fee (potential) per item ($5,400) =

Earned Performance Incentive Fee Per CPO of $3,780.

Sum all Earned Performance Incentive Fee lines (e.g. 1-10 below) = Total Monthly Earned

Performance Incentive Fee of $38,340.00.

Critical

Performance

Objectives

(CPO)

Earned

Quality

Level

Potential Monthly

Performance Incentive Fee Per

CPO

Earned Performance Incentive

Fee Per CPO

1 100% $ 5,400.00 $ 5,400.00

2 70% $ 5,400.00 $ 3,780.00

3 50% $ 5,400.00 $ 2,700.00

4 100% $ 5,400.00 $ 5,400.00

5 0% $ 5,400.00 $ -

6 70% $ 5,400.00 $ 3,780.00

7 50% $ 5,400.00 $ 2,700.00

8 100% $ 5,400.00 $ 5,400.00

9 70% $ 5,400.00 $ 3,780.00

10 100% $ 5,400.00 $ 5,400.00

Total Monthly Earned Performance Incentive Fee $ 38,340.00

Table 10-1: MONTHLY PERFORMANCE INCENTIVE FEE CALCULATION

11.0 INCENTIVE FEE PLAN ADMINISTRATIVE CHANGES

The COR, Contractor, PCO, or responsible Government Personnel may recommend changes to the IFP. In an attempt to develop criteria that are acceptable to both parties and are helpful toward improving the overall goals of the program, this may include how CPOs are measured and the percentages of the Performance Incentive Pool applied to each CPO.

All proposed changes must be coordinated with the CO for final disposition and the Government reserves the right to set all CPO criteria unilaterally in the event an agreement is not reached. If changes are proposed by Government personnel, the CO will coordinate proposed changes with the COR and Contractor.

The CO will notify the Contractor in writing of any changes to the IFP not later than 15 business days prior to the start of the new evaluation period. The revised IFP shall take effect on the subsequent monthly performance period after contract modification.

12.0 CONTRACT TERMINATION

In the event of contract Termination for Convenience, the monthly PIF period in which termination occurs shall end, and the fee process shall be implemented as if the period had been completed. The Government will evaluate the Contractor’s performance for the period in which the termination occurs and the amount of fee will be adjusted, based upon the amount of work completed as determined by the CO.

In the event of contract Termination for Default, the PIF is payable only to the extent earned throughout the last period prior to termination.

Page Intentionally Left Blank

CPO

PWS

PARAGRAPH

DESIRED

OUTCOME

CPO ACCEPTABLE

QUALITY LEVEL

(AQL)

CPO MIDRANGE

QUALITY LEVEL

(MQL)

CPO PERFORMANCE

OBJECTIVE

(TARGET QUALITY

LEVEL)

(TQL)

1 2.1 Effective and Efficient Program Management

Actual Costs for CLINs X100 are >= 0% and <= 2% lower than Estimated Cost (Contractor will earn 50% of the Annual Cost Incentive Fee Pool)

Actual Costs for CLINs X100 are > 2% and <= 5% lower than Estimated Cost (Contractor will earn 75% of the Annual Cost Incentive Fee Pool)

Actual Costs for CLINs X100 are > 5% lower than

Estimated Cost (Contractor will earn 100% of the Annual Cost Incentive Fee Pool)

2 3.1.2

Effective and Efficient Operations of

Collaboration Systems and Business Applications

Overall quality of service rating of 2 (acceptable quality) (Contractor will earn 50% of the Monthly Performance

Incentive Fee)

Overall quality of service rating of 3 (met expectations)

(Contractor will earn 75% of the Monthly Performance

Incentive Fee)

Overall quality of service rating of 4 (exceeded expectations)

(Contractor will earn 100% of the Monthly Performance

Incentive Fee)

3 3.1.2.1

Successful Execution of Routine and Special Video Conferencing

Events

Greater than 99% successful VTC sessions

(Contractor will earn 50% of the Monthly Performance

Incentive Fee)

Greater than 99.5% successful VTC sessions

(Contractor will earn 75% of the Monthly Performance

Incentive Fee)

Greater than 99.9% successful VTC sessions

(Contractor will earn 100% of the Monthly Performance

Incentive Fee)

4 3.1.2.2

Successful Execution of the MDA

Knowledge Online (MKO) Collaboration

Systems.

99.99% availability of Classified and Unclassified

MKO

(Contractor will earn 50% of the Monthly Performance Incentive Fee)

99.999% availability of Classified and Unclassified

MKO

(Contractor will earn 75% of the Monthly Performance Incentive Fee)

100% availability of

Classified and Unclassified

MKO

(Contractor will earn 100%

CPO

PWS

PARAGRAPH

DESIRED

OUTCOME

CPO ACCEPTABLE

QUALITY LEVEL

(AQL)

CPO MIDRANGE

QUALITY LEVEL

(MQL)

CPO PERFORMANCE

OBJECTIVE

(TARGET QUALITY

LEVEL)

(TQL)

5 3.1.2.3

End User adequately skilled to use

Collaboration Systems and Applications

Average rating 4 or greater (Contractor will earn 50% of the Monthly Performance

Incentive Fee)

Average rating 4.25 or greater

(Contractor will earn 75%

Average rating 4.5 or greater

(Contractor will earn 100% of the Monthly Performance

Incentive Fee)

6 3.1.2.5

Effective and Successful Executive Collaboration Service and Support

No more than 3 instances of negative Executive

Customer feedback per month

(Contractor will earn 50% of the Monthly Performance

Incentive Fee)

No more than 2 instance of negative Executive

Customer feedback per month

(Contractor will earn 75%

No more than 1 instance of negative Executive Customer feedback per month (Contractor will earn 100% of the Monthly Performance Incentive Fee)

7 3.1.3.1 Effective and Timely Incident Resolution

Greater than 97% of incidents supported successfully (Contractor will earn 50% of the Monthly Performance

Incentive Fee)

Greater than 98% of incidents supported successfully

(Contractor will earn 75%

Greater than 99% of incidents supported successfully

(Contractor will earn 100% of the Monthly Performance

Exhibit 1: CRITICAL PERFORMANCE OBJECTIVES MATRIX