Atch 06 - Incentive Fee Plan_06 Feb 2012.pdf

Clear / Cape Cod Upgraded Early Warning Radar (UEWR)

HQ0147-11-R-0002

Incentive Fee Plan

6 Feb 2012

1.0 INTRODUCTION

1.1 GENERAL DESCRIPTION

1.2 GENERAL PROCESS

2. INCENTIVE FEE STRUCTURE

2.1 SP/DP SYSTEM PROGRAMMING AGENCY STRING #1 (CLINS 0004/0005)

2.1.1 CLIN 0004 COST INCENTIVE

2.1.2 CLIN 0005 SCHEDULE INCENTIVE

2.2. SPA TEST (CLINS0006/0007)

2.2.1 CLIN 0006 COST INCENTIVE

2.2.2 CLIN 0007 SCHEDULE INCENTIVE

2.3 SP/DP DEPLOYMENT TO BEALE (CLINs 0008/0009)

2.3.1 CLIN 0008 COST INCENTIVE

2.3.2 CLIN 0009 SCHEDULE INCENTIVE

3.0 SUMMARY OF COST PLUS FEE STRUCTURE

1.1 General Description: This incentive plan specifically discusses the role of cost and schedule incentives for CPIF CLINs 0004 through 0009 on the Clear/Cape Cod UEWR contract.

CPIF CLINs 0011, 0014 and 0019 are not covered by this incentive plan because they do not include performance incentives.

For the CPIF CLIN type, the Government pays allowable costs plus the applicable incentive fee.

The cost portion of the incentive fee is based upon a target fee, and the applicable incentive fee payable is calculated in accordance with the FAR provision 52.216-10 contained under Section I of the contract. The schedule portion of the incentive fee adds additional incentive fees that are payable to the contractor should certain schedule activities be completed/approved by the delivery dates defined herein. Deliveries are to be made by 1700 Eastern Standard Time. This incentive fee plan defines the process the Government will use to make Incentive Fee

Determinations.

1.2 General Process

For performance under CLINs 0004, 0006 and 0008, the Contractor will be eligible for a cost incentive fee IAW FAR 52.216-10 included under Section I of this contract.

For performance under CLINs 0004, 0006 and 0008, the Contractor shall also be eligible for schedule incentive fee that (if earned) will be awarded under CLINs 0005, 0007 and 0009. The

Contracting Officer Representative (COR) will review Contractor performance against the criteria established in this Plan to determine any fee earned by the contractor. Based on this evaluation, the COR will make a recommendation to the PCO for acceptance/rejection and identify the appropriate amount of fee dollars to be paid. The PCO will provide the Contractor with a notice of the earned schedule incentive that is deemed to be applicable. Should the contractor want to request reconsideration, a request for reconsideration shall be submitted to the

PCO within five (5) working days after the notification is received. This request shall contain complete rationale supporting the amount that the contractor contends is the appropriate incentive amount to be awarded. The PCO shall review and may request additional information from the Contractor or other sources required to make a full assessment. Subsequently, the PCO will make a determination of the appropriate schedule incentive. All PCO decisions will be final with fee payment provided by modification to the contract.

2. INCENTIVE FEE STRUCTURE

2.1 SP/DP Rehost and System Programming Agency String #1 (CLINs 0004/0005)

This modification effort is incentivized via a cost incentive attached to CLIN 0004 and two schedule/performance incentives attached to deliveries via CLIN 0005. The maximum incentive package is 15% with a potential cost incentive range of 2% to 4.5% and a potential schedule range of 0% to 10.5% for CLIN 0005.

2.1.1 CLIN 0004 Cost Incentive: The target fee shall be 3.5% of the target cost. This target fee will be earned for cost in the range of 97% to 103% of the target cost. The target fee of 3.5% will be adjusted based on a 40/60 share ratio for an under run below 97% of the target cost until it reaches a maximum of 4.5%. The target fee of 3.5% will be adjusted based on a share ratio of

60/40 for an over run above 103% of target until a minimum fee of 2% is reached (See figure 1, page 6, and clause 52.216-10 under Section I of the contract). The cost incentive computation is independent of the incentive earned for schedule performance.

2.1.2 CLIN 0005 Schedule Incentive: The schedule incentive fee structure targets two deliveries. The first schedule incentive target is for the timely successful completion of the

Critical Design Review (CDR) on the date that is proposed in the Contractor’s Integrated Master

Schedule (IMS). This date shall be considered the target date for CDR completion. Should this event occur by the target date, the target fee of 5% of the target cost shall be earned. Should this event complete two or more weeks earlier than the target date, the Contractor shall earn the maximum schedule incentive fee, 6% of the target cost established for CLIN 0004. No schedule incentive fee shall be earned should the contractor miss the CDR target date proposed in the IMS by five (5) or more weeks. The table provided as Figure 2 within this plan defines the schedule incentive that is to be earned across this range of schedule outcomes.

The second schedule incentive target is for the successful installation and achievement of

Government approval of a test-ready Consolidated Integrated Support Facility (CISF) System

Programming Agency (SPA) string and a Government approved Test Readiness Review (TRR) in accordance with contractor’s proposed target IMS date. Should this event occur by the target date the target fee of 4% of the target cost shall be earned. This percentage amount can increase to a maximum of 4.5% should the event occur one (1) or more weeks earlier than the proposed target IMS date. No schedule incentive fee shall be earned should the contractor miss the proposed target IMS date for Government approval of the two events described above by four (4) or more weeks. The table provided as Figure 2 within this plan defines the schedule incentive that is to be earned across this range of schedule outcomes.

Successful completion of the aforementioned events is defined as follows:

1. Government approval of the Critical Design Review (CDR) and the closure of all critical action items as described in SOW paragraph 3.3.2.2 in accordance with the CDR Checklist.

For purposes of establishing the applicable schedule incentive, the completion date for the CDR will be the submission date of the final documentation approved by the government. In the event of documentation disapproval, should the government exceed the review time established in the

CDRL, the delivery date that is applicable for the purpose of determining the schedule incentive shall be adjusted to be one day earlier for each day the Government exceeded the review timeframe. The government review timeframe established in the CDRL shall apply to the initial as well as each subsequent (if necessary) documentation submittal.

2. After successful completion of contractor testing as described in SOW paragraph 3.3.1.1 and

3.3.2.2, the contractor packages, ships, delivers, inventories, and installs the equipment at the

CISF SPA. Included in the installation is a power-on test of the equipment to verify the equipment is configured and functional to the level of the successfully completed contractor testing. Following these activities the contractor conducts system integration and testing of the equipment in the SPA. Final milestone is a Test Readiness Review (TRR) documenting the contractor’s readiness to enter Development Test & Evaluation (DT&E) in the SPA. For purposes of establishing the applicable schedule incentive, the completion date for the TRR will be the submission date of the final documentation approved by the government. In the event of documentation disapproval, should the government exceed the review time established in the

CDRL, the delivery date that is applicable for the purpose of determining the schedule incentive shall be adjusted to be one day earlier for each day the Government exceeded the review timeframe. The government review timeframe established in the CDRL shall apply to the initial as well as each subsequent (if necessary) documentation submittal.

2.2 SPA Test (CLINs 0006/0007)

This modification effort is incentivized via a cost incentive attached to CLIN 0006 and one schedule/performance incentive attached to deliveries via CLIN 0007. The maximum incentive is 15% with a potential cost incentive range of 2% to 4.5% and a potential schedule range of 0% to 10.5% for CLIN 0007.

2.2.1 CLIN 0006 Cost Incentive: The target fee shall be 3.5% of the target cost. This target fee will be earned for cost in the range of 97% to 103% of the target cost. The target fee of 3.5% of target cost will be adjusted based on a 40/60 share ratio for an under run below 97% of the target cost until it reaches a maximum of 4.5%. The target fee of 3.5% will be adjusted based on a 60/40 share ratio for an over run above 103% of the target cost until a minimum fee of 2% is reached. (See figure 1, page 6, and clause 52.216-10 under Section I of the contract). The cost incentive computation is independent of the incentive earned for schedule performance.

2.2.2 CLIN 0007 Schedule Incentive: The schedule incentive target is for the timely completion of testing of the SP-DP suite at the SPA in accordance with the contractor’s proposed

IMS. Should this event occur by the target date, the target fee of 8% of the target cost shall be earned. Should this event complete two or more weeks earlier than the targeted date, the

Contractor shall earn the maximum schedule incentive fee shown in Section B, or 10.5% of the target cost established for CLIN 0006. No schedule incentive fee shall be earned should the contractor miss the IMS schedule for completion of this event by four (4) or more weeks. The table provided in Figure 2 within this plan defines the schedule incentive that is to be earned across this range of schedule outcomes.

Acceptance of this delivery is determined by the successful completion of all SPA DT&E tests as described in SOW 3.3.1.1 and as specified in the Test Plans and Procedures approved by the Test

Planning Working Group. For purposes of establishing the applicable schedule incentive, the completion date for the DT&E will be when the final Test Report that is approved is submitted following the successful completion of DT&E. In the event of documentation disapproval, should the government exceed the review time established in the CDRL, the delivery date that is applicable for the purpose of determining the schedule incentive shall be adjusted to be one day earlier for each day the Government exceeded the review timeframe. The government review timeframe established in the CDRL shall apply to the initial as well as each subsequent (if necessary) documentation submittal.

2.3 SPDP Deployment to Beale (CLINs 0008/0009)

This modification effort is incentivized via a cost incentive attached to CLIN 0008 and two schedule/performance incentives attached to deliveries via CLIN 0009. The maximum incentive is 15% with a potential cost incentive range of 2% to 4.5% and a potential schedule range of 0% to 10.5% for CLIN 0009.

2.3.1 CLIN 0008 Cost Incentive: The target fee shall be 3.5% of the target cost. This target fee will be earned for cost in the range of 97% to 103% of the target cost. The target fee of 3.5% of target cost will be adjusted based on a 40/60 share ratio for an under run below 97% of the target cost until it reaches a maximum of 4.5%. The target fee 3.5% of target cost will be adjusted based on a share ratio of 60/40 for an over run above 103% of target cost until a minimum fee of

2% is reached. (See figure 1, page 6, and clause 52.216-10 under Section I of the contract). The cost incentive computation is independent of the incentive earned for schedule performance.

2.3.2 CLIN 0009 Schedule Incentive: The first schedule incentive target is for the successful completion of DT&E on the target date defined in the Contractor’s proposed IMS. Successful completion requires that there be no Category 1 Deficiency Reports. Should this event occur by the target date, the target fee of 5% of the target cost shall be earned. Should this event successfully complete two or more weeks earlier than the targeted date, the Contractor shall earn the maximum schedule incentive fee, 6% of the target cost established for CLIN 0008. No schedule incentive fee shall be earned should the contractor miss the IMS schedule for completion of this event by five (5) or more weeks. The table provided in Figure 2 within this plan defines the schedule incentive that is to be earned across this range of schedule outcomes.

For purposes of establishing the applicable schedule incentive, the completion date for the

DT&E will be when the final Test Report that is approved is submitted following the successful completion of DT&E. In the event of documentation disapproval, should the government exceed the review time established in the CDRL, the delivery date that is applicable for the purpose of determining the schedule incentive shall be adjusted to be one day earlier for each day the

Government exceeded the review timeframe. The government review timeframe established in the CDRL shall apply to the initial as well as each subsequent (if necessary) documentation submittal.

The second schedule incentive is for the successful final delivery of the Technical Data Package

(TDP) for the signal processor and data processor replacement design less than 60 calendar days after Beale’s operational test. Should this event occur by the target date, the target fee of 4% of the target cost shall be earned. Should this event successfully complete one (1) or more weeks earlier than the targeted date, the Contractor shall earn the maximum schedule incentive fee, 4.5% of the target cost established for CLIN 0008. No schedule incentive fee shall be earned should the contractor miss the completion of this event by four (4) or more weeks. The table provided in Figure 2 within this plan defines the schedule incentive that is to be earned across this range of schedule outcomes. For purposes of establishing the applicable schedule incentive, the completion date for the TDP will be the submission date of the final documentation approved by the government. In the event of documentation disapproval, should the government exceed the review time established in the CDRL, the delivery date that is applicable for the purpose of determining the schedule incentive shall be adjusted to be one day earlier for each day the

Government exceeded the review timeframe. The government review timeframe established in the CDRL shall apply to the initial as well as each subsequent (if necessary) documentation submittal.

Figure 1

0.5

1.5

2.5

3.5

4.5

Fee %

% of Target Cost

Cost Incentive (CLINs 4,6,8)

Fee %

Figure 2

Summary of Cost plus Incentive Fee Structures

CRITICAL SCHEDULE/PERFORMANCE OBJECTIVES MATRIX

PROGRAM

EVENT

COST INCENTIVE

SCHEDULE

INCENTIVE #1

SCHEDULE

INCENTIVE #2

2.1

CLIN 0004

Target Fee: 3.5%

Target Range 97% -103%

Max Fee: 4.5%

Min Fee: 2.0%

Share Ratio:

40/60 Below Target

60/40 Above Target

CLIN 0005

CDR – 5.0% if completed by IMS date; 6% if two or more weeks early; 5.5% if

1 week early; 4% if one week late; 3% if 2 weeks late; 2% if 3 weeks late;

1% if 4 weeks late; 0% if 5 or more weeks late

CLIN 0005

SPA Test/TRR Ready -

4.0% if completed by IMS date; 4.5% if 1 or more weeks early; 3% if 1 week late; 2% if 2 weeks late; 1% if 3 weeks late; 0% if 4 or more weeks late

2.2

CLIN 0006

Target Fee: 3.5%

Target Range: 97% - 103%

Max Fee: 4.5%

Min Fee: 2%

Share Ratio:

40/60 Below Target

60/40 Above Target

CLIN 0007

SPA Test – 8.0% if completed by IMS date;

9% if 1 week early; 10.5% if 2 or more weeks early;

6% if 2 weeks late; 4% if 2 weeks late; 2% if 3 weeks late; 0% if 4 or more weeks late.

Not applicable

2.3

CLIN 0008

Target Fee: 3.5%

Target Range: 97% - 103%

Max Fee: 4.5%

Min Fee: 2.0%

Share Ratio:

40/60 Below Target

60/40 Above Target

CLIN 0009

SP/DP Deployment to

Beale - 5.0% if DT&E completed by IMS date;

6% if completed 2 or more weeks early; 5.5% if 1 week early; 4% if one week late; 3% if 2 weeks late; 2% if 3 weeks late;

1% if 4 weeks late; 0% if 5 or more weeks late

CLIN 0009

Tech. Data Package –4% if completed by IMS date;

4.5% if 1 or more weeks early; 3% if 1 week late;

2% if 2 weeks late; 1% if 3 weeks late; 0% if 4 or more weeks late