J_8_Determination_of_AF_and_SBSIF__3_5_24.pdf

Attachment J-8 N00024-24-R-4110

Determination of Award Fee/Incentive Fee/SBSIF

PAYMENT OF AWARD FEE/INCENTIVE FEE/SMALL BUSINESS SUBCONTRACT INCENTIVE FEE

(Applicable to all CLINs except 0004, 0011, and 0021)

Fee payable under this contract shall be issued under CLIN 0011 and CLIN 0021

FEE DEFINED:

Fee payable under this contract shall be evaluated in two (2) Phases. Phase I will evaluate Award Fee (AF). Phase II will evaluate Incentive Fee (IF). The evaluation performed will be contingent upon the Contract Line Item Number

(CLIN) type selected for each respective delivery order.

The AF evaluation will be based on the Contractor’s performance in the areas of management and technical. AF maximum is four percent (4.0%) broken down as two percent (2.0%) maximum for management and two percent

(2.0%) maximum for technical. Base fee is six percent (6%).

The IF evaluation will be based on the Contractor’s performance in the areas of schedule and cost. The IF maximum is ten percent (10.0%). The IF minimum is zero percent (0%). The target fee is six percent (6.0%). The share ratio for over-runs is fifty percent (50%)/ fifty percent (50%), and the under-runs is thirty percent (30%)/ seventy percent

(70%). The ACO can prescribe any variation share ratios in each respective delivery order as negotiated by the

ACO. In a hybrid IF calculation, the base fee shall be six percent (6%) and incentive cost or schedule fees shall not exceed 4% (cumulative).

There will be no roll-over of any unearned fees.

PHASE I: AWARD FEE (Applicable to all CLINs except 0004, 0011, and 0021)

The Contractor may earn an AF for performance in the management and technical areas as determined by the Fee

Determining Official (FDO). The Government’s purpose in granting an AF is to encourage and reward superior

Contractor effort directed toward performance in the management and technical areas of this contract. The specifics for evaluation are set forth in the following paragraphs:

A. AF Evaluation Period: An AF Evaluation Period shall be established on an annual basis or as determined by the Administrative Contracting Officer (ACO), beginning at contract award. The AF Evaluation will be conducted for orders which have completed the associated performance period.

B. In the event of discontinuance of the work, the AF otherwise payable, shall be determined In Accordance

With (IAW) the Section H clause 5252.249-9015 of the Special Contract Requirements entitled "AWARD

FEE DETERMINATION IN EVENT OF TERMINATION OR DISCONTINUANCE."

C. AF Process: The Contractor’s performance will be evaluated in two (2) categories: management and technical. Specific AF pool values will be made available by the ACO after award provided that, IAW

Defense Federal Acquisition Regulations Supplement (DFARS) 216.405-2(1), in any annual contract period. Up to four percent (4%) of the potential award fee available for the full contract year shall be allocated to the AF pool for the final evaluation period, defined as the last evaluation period within each one (1) year period.

D. AF Evaluation: Each Delivery Order (DO) will be evaluated independently and based on its own merit.

a. Scope of Work Evaluated: The award fee evaluation is applicable to all Contract Line Item

Numbers (CLINs) except data CLINs.

b. Evaluation Categories and Factors: The Contractor's performance during each AF evaluation period will be in the following areas:

i. Management, 50%

ii. Technical Performance, 50%

The Contractor will be notified of changes in the evaluation categories and factors as well as any adjustments to the weighing of categories, if any, prior to commencement of each evaluation period. Unsatisfactory performance under an AF criterion may result in an increased weight for that factor in subsequent evaluation periods.

c. Award Fee Evaluation Board (AFEB): The Contractor's performance for AF evaluation period will be conducted by an AFEB consisting of five (5) voting members but not more than eight (8):

i. The Chairperson (PSNS & IMF or designated representative)

ii. Program Office Technical/Acquisition Representative

iii. Procuring Contracting Officer (PCO)

iv. ACO (PSNS & IMF or designated representative)

v. PEO Carriers Representative

vi. Type Commander (TYCOM), Technical Design Agent (TDA) or Field Activity

Representative

vii. Recorder (Non-voting Participant)

d. FDO: The FDO, PEO Carriers In-Service Aircraft Carrier Program Manager (PMS 312), shall make determinations of the AF due to the contractor based upon the performance evaluation conducted by the AFEB established pursuant to paragraph three (3) above.

e. AF Determination and Reclaim Procedures:

i. Contractor shall furnish to the AFEB such information as may be reasonably required, including a statement of cost incurred, to assist the AFEB in evaluating the Contractor’s performance during that evaluation period.

ii. Within ninety (90) calendar days after the end of each evaluation period under the contract, the AFEB shall meet to assess and derive an evaluated AF earned for that period as determined by reports submitted by the contractor as well as Government agents.

iii. Within ten (10) working days after the AFEB meeting, the AFEB shall prepare the performance evaluation letter and present it to the FDO. A copy will be provided to the

Contractor upon transmittal to the FDO.

iv. Within five (5) working days from receipt of the copy of the performance evaluation letter, the Contractor may submit to the FDO any comments with respect thereto. In support of his comments, the Contractor may furnish a written description of his performance during the period under consideration. This description shall clearly identify specific evaluation categories, factors and elements, and the Contractor's own rating thereof.

v. Within five (5) working days from the receipt of the Contractor evaluation comments, the

FDO shall provide the ACO a final performance evaluation and determination of the AF.

vi. Within five (5) working days from receipt of the final determination, the ACO shall notify the Contractor in writing of that final determination and issue a unilateral modification to the DO to provide for the AF.

f. Finality of the FDO’s Determination: Determinations of the FDO with respect to the amount of the

AF to be paid to the Contractor are unilateral decisions made solely at the discretion of the

Government.

g. AF Computation:

i. The AFEB may use any information, Contractor deliverables, or other materials available to evaluate the Contractor in the categories of management and technical, as illustrated herein. The categories will ii.

iii. have appropriate weights assigned, which were established, prior to the state of the AF evaluation period.

iv. The AFEB shall determine through the use of information, contractor deliverables, or other materials, specific adjective grade to be assigned for each category as follows:

1. Dark Blue (Excellent)

2. Purple (Very Good)

3. Green (Good)

4. Yellow (Satisfactory)

5. Red (Unsatisfactory)

v. The AFEB shall determine and assign a numerical score within each adjective category.

vi. A weighted average will be computed by multiplying the numerical score assigned within each adjective category by the weight assigned to the specific overall category. The weighted average for each of the two (2) categories will be summed to derive a numerical performance rating which will represent the overall rating for AF calculation.

vii. The actual amount of AF will be calculated in accordance with the performance rating section below, in addition to the management and technical charts that follow.

1. Performance Ratings: The following performance ratings are derived from Table

16-1 under FAR 16.401:

Performance Ratings:

FAR 16.401

Award Fee

Adjective Rating

Award-Fee

Pool Available to be Earned

Description

DARK BLUE

(Excellent)

91% - 100%

Contractor has exceeded almost all of the significant AF criteria and has met overall cost, schedule, and technical performance requirements of the contract in the aggregate as defined and measured against the criteria in the AF plan for the AF evaluation period.

PURPLE

(Very Good)

76% - 90%

Contractor has exceeded many of the significant AF criteria and has met overall cost, schedule, and technical performance requirements of the contract in the aggregate as defined and measured against the criteria in the AF plan for the AF evaluation period.

GREEN

(Good)

51% - 75% Contractor has exceeded some of the significant AF criteria and has met overall cost, schedule, and technical performance requirements of the contract in the aggregate as defined and measured against the criteria in the AF plan for the AF evaluation period.

YELLOW

(Satisfactory)

No Greater Than

50%

Contractor has met overall cost, schedule, and technical performance requirements of the contract in the aggregate as defined and measured against the criteria in the AF plan for the AF evaluation period.

RED

(Unsatisfactory)

0% Contractor has failed to meet overall cost, schedule, and technical performance requirements of the contract in the aggregate as defined and measured against the criteria in the AF plan for the AF evaluation period.

2. AF Determination: The relationship of the percent of AF pool paid for each

CLIN evaluated during the AF Evaluation Period (subject to the determination of the FDO) to the performance rating will be as follows:

• AF = Numerical score (expressed as a percentage with a maximum of

100%) X AF Pool for that period

• For numerical scores 91-100, the fee earned by the Contractor will be 100% of the AF Pool for that period.

• For numerical scores 76-90, AF = Numerical score (expressed as a percentage with a maximum of 90%) X AF Pool for that period.

• For numerical scores 51-75, the AF earned by the Contractor will be 50% of the AF Pool for that period. For numerical scores 1-50, the AF earned by the Contractor will be 25% of the AF Pool for that period. For numerical score of 0, the AF earned by the Contractor will be 0% of the AF Pool for that period.

• Note: A performance rating of 0 is deemed unsatisfactory. The

Contractor is not entitled to any AF for a rating of 0.

MANAGEMENT (50%)

DARK BLUE PURPLE GREEN YELLOW RED

91-100% 76-90% 51-75% No Greater Than 50% 0%

CONTRACTOR'S

MANAGEMENT SYSTEM

CONTRACTOR'S

MANAGEMENT

SYSTEM

CONTRACTOR'S

MANAGEMENT

SYSTEM

CONTRACTOR'S

MANAGEMENT

SYSTEM

CONTRACTOR'S

MANAGEMENT

SYSTEM

Management System Effectiveness Management System Effectiveness

Management System Effectiveness

Management System Effectiveness

Management System Effectiveness

The Contractor met contractual requirements, and the management team demonstrates a policy of total corporate commitment across all levels of the organization.

The management team effectively develops and implements process improvements in support of planning and production efforts, and proactively facilitates a coordinated and integrated production effort across their area of authority.

Upper management is actively involved in management of the availability, efficiently coordinating all production efforts.

The Contractor met contractual requirements, and the management team actively engages in continuous process improvements throughout the organization to improve planning and production efforts.

Management fosters a cooperative customer service program that anticipates and responds to the Government requirements.

Contractor integrates ship’s work, training and habitability requirements into the overall production plan, maximizing efficiencies and maintaining schedule and cost.

The Contractor met contractual requirements, and the management team effectively utilizes lessons learned to identify and preclude adverse incidents that impact schedule, cost or quality.

The contractor manages schedules and tracks all availability activities, identifying problems and coordinating resolutions while maintaining schedule.

Contractor establishes management procedures to identify behind schedule conditions and unfavorable variances.

Contractor applies systems and procedures and provides timely identification of scheduling problem areas to permit prompt management action to correct unsatisfactory conditions.

Contractor management team is unavailable and ineffective, requiring

Government intervention to prevent avoidable incidents and schedule disruptions.

Management does not provide adequate response to changes in work scope, operational or crew training requirements, and have major impact to schedule or cost.

Production efforts are not coordinated.

Contractor progress met or exceeded

97.5% of scheduled work, with no delays caused to key events and milestones as delineated in Section C

SOW Tables C-2 thru C-4.

Contractor progress met or exceeded 95% of scheduled work, with all work completed to all but

1 key events and milestones as delineated in

Section C SOW Tables

C-2 thru C-4.

Contractor progress met or exceeded 92.5% of scheduled work, with all work completed to all but

2 key events and milestones as delineated in

Section C SOW Tables C-

2 thru C-4.

Contractor progress met or exceeded 90% of scheduled work, with all work completed to all but 3 key events and milestones as delineated in Section C

SOW Tables C-2 thru C-4.

Contractor progress failed to meet 90% of scheduled work, or caused delays to more than 4 key events and milestones as delineated in

Section C SOW Tables C-2 thru C-4.

Contractor provided notification of excess funds before the 50% duration point of the availability for all CNO availabilities greater than 90 days in duration.

Contractor provided notification of excess funds before the 60% duration point of the availability for all CNO availabilities greater than 90 days in duration.

Contractor provided notification of excess funds before the 75% duration point of the availability for all CNO availabilities greater than 90 days in duration.

Contractor did not provide notification of excess funds before the 90% duration point of the availability for all CNO availabilities greater than 90 days in duration.

Contractor did not provide notification of excess funds by the completion date of the availability for all CNO availabilities greater than

90 days in duration.

Contractor completed documentation of CFRs and RCCs on time and did not delay or affect the overall availability schedule.

Average turnaround time for pricing growth was within three (3) days or less from determination of the growth work.

Contractor completed documentation of CFRs and

RCCs on time and did not delay or affect the overall availability schedule.

Average turnaround time for pricing growth was within five (5) days or less from determination of the growth work.

Contractor completed documentation of CFRs and RCCs on time and did not delay or affect the overall availability schedule.

Contractor completed documentation of CFRs and

RCCs on time and did not delay or affect the overall availability schedule.

Contractor average turnaround time for completion of work item/CFR/RCC pricing growth exceeded 15 days and negatively affected the end date of the availability.

Cost proposals were submitted with sufficient data to support the accuracy and derivation of the price.

Cost proposals were submitted with sufficient data to support the accuracy and derivation of the price.

Cost proposals were submitted with sufficient data to support the accuracy and derivation of the price.

Cost proposals were submitted with sufficient data to support the accuracy and derivation of the price.

Contract costs are documented and the program is on schedule relating to the task milestones and/or completion dates.

EAC/ BAC ratio remained within

+5% for the last 25% of the availability for CNO availabilities greater than 90 days in length and

+10% for all other availabilities.

Contract costs are documented and the program is on schedule relating to the task milestones and/or completion dates.

EAC/ BAC ratio remained within +10% for the last

25% of the availability for

CNO availabilities greater than 90 days in length and

+20% for all other availabilities.

Contract costs are documented and the program is on schedule relating to the task

Contractor did not provide final EAC/ BAC ratio until after the end of the availability.

Contract costs are documented and the program is on schedule relating to the task

Documentation identifies variance analysis information for each work item with a variance of

+15% and variances in excess of $10,000, whichever is higher, for

CNO availabilities greater than 90 days in length and

+24% for all other availabilities.

Contractor did not provide final EAC/ BAC ratio until after the end of the availability.

Contract costs were not documented or provided as required, and the program is not on schedule relating to the task milestones and/or

EAC to BAC ratio was greater than 20% for CNO availabilities greater than 90 days in length and greater than 25% for all other availabilities.

90% or more of the COPAs received provided detailed estimates with all trades and subcontractor breakdowns and complied with cost/pricing data submission requirements of FAR

52.215-21. COPAs were submitted in accordance with the RFP target date, proposal deemed complete with all supporting documentation included technical and cost review within 10% of the independent government estimate and ready to put on contract at submission with no revisions necessary.

67-89% of the COPAs received provided detailed estimates with all trade and subcontractor breakdowns and complied with cost/pricing data submission requirements of

FAR 52.215-21. COPAs were submitted in accordance with the RFP target date, proposal deemed complete with all supporting documentation included technical and cost review within 10% of the independent government estimate and ready to put on contract at submission with no revisions necessary.

51-66% of the COPAs received provided detailed estimates with all trade and subcontractor breakdowns and complied with cost/pricing data submission requirements of FAR 52.215-21.

COPAs were submitted in accordance with the RFP target date, proposal deemed complete with all supporting documentation included technical and cost review within 10% of the independent government estimate and ready to put on contract at submission with no revisions necessary.

Contractor submitted cost proposals with sufficient data to support the accuracy and derivation of the price.

Justification provided for costs were inadequate or did not comply with cost/pricing data submission requirements of FAR

52.215-21.

The milestone plan and production schedule was submitted in accordance with NAVSEA Standard Item 009-60 with no discrepancies. Minor issues were highlighted and updated accurately as they occurred.

The milestone plan and production schedule was submitted in accordance with NAVSEA Standard

Item 009-60 with no discrepancies. Significant issues were highlighted and updated accurately as they occurred.

The milestone plan and production schedule was submitted in accordance with NAVSEA Standard

Item 009-60 with minor discrepancies. Planned activities supported contract milestones.

Contractor provided milestone plan was not sufficient to integrate planned activities from multiple providers.

Progress updates were inaccurate or late.

A formal scheduling system was not maintained, or the scheduling system did not integrate planned activities by multiple maintenance providers, or no progress updates provided.

TECHNICAL

(50%)

DARK BLUE PURPLE GREEN YELLOW RED

91-100% 76-90% 51-75% No Greater Than

50% 0%

CONTRACTOR'S

TECHNICAL

PERFORMANCE

CONTRACTOR'S

TECHNICAL

PERFORMANCE

CONTRACTOR'S

TECHNICAL

PERFORMANCE

CONTRACTOR'

S TECHNICAL

PERFORMANCE

CONTRACTOR'

S TECHNICAL

PERFORMANCE

Technical Technical Technical Technical Technical Reports, execution planning products, Reports, execution planning Reports, execution Reports, execution Reports, execution procedures and data requirements products, procedures and planning products, planning products, planning products, were comprehensive, accurate, and data requirements were procedures and data procedures and data procedures and data delivered on time or early. Reports comprehensive, accurate, requirements were requirements were requirements lacked identified all potential problem areas and delivered on time or comprehensive, accurate, comprehensive, accurate, specificity and were and the path(s) to resolve them. early. Reports identified and delivered early with and delivered on time. delivered late or after potential problem areas. no deficiencies. documented issues could be resolved.

Inspection rejection rates are less than 2.5% for availabilities

Inspection rejection rates are less than 5% for availabilities

Inspection rejection rates are less than 7.5% for availabilities

Inspection rejection rates are less than 10% for availabilities

Inspection rejection rates exceeded 10% for availabilities

Contractor-procured material was correct, available, and supported all planned work.

No contractor-responsible material issues affecting production schedules. Any few minor issues were communicated and quickly resolved without impact to availability end date and internal milestones.

Contractor-procured material was correct, almost always available, and supported all planned work.

No contractor-responsible material issues affecting production schedules. Few minor issues were communicated and quickly resolved without impact to availability end date. Minor impacts to internal milestones resulted.

Contractor-procured material adequately supported planned work with some delay but did not impact ship delivery.

Some delays to internal milestones resulted.

Contractor-procured material supported planned work with some delays.

With Government assistance, delays did not impact ship delivery. Some material issues had a significant impact to cost.

Contractor-procured material was delayed and correction required

Government participation to resolve.

Some issues were not disclosed in sufficient time to apply corrective actions within the availability period.

A comprehensive quality assurance program was documented and executed.

Contract Action Report (CAR) average response time was 2 days or less and the greater majority provided acceptable responses.

A comprehensive quality assurance program was documented and executed.

CAR average response time was 3 days or less and the greater majority provided acceptable responses.

A quality assurance program successfully utilized with only minor faults. CAR response time was, on average, within 5 days of issuance.

Contractor submitted quality assurance forms in accordance with the Quality Management System (QMS) and CAR response time was, on average, within 10 days of issuance.

No comprehensive quality assurance program was

Provided or CAR response time was, on average, within 14 or more days of issuance.

The Contractor notified the The Contractor notified the The Contractor notified

The Contractor notified the The Contractor

Government of routine or recurring Government of routine or the Government of Government of routine or documented repair repairs and a path for process recurring repairs and a path routine or recurring recurring repairs and a path requirements in a CFR, but improvement. The Contractor for process improvement. repairs and a path for for process improvement. did not assess the potential developed written recommendations The Contractor developed process improvement. When tasked, the for process or design for corrections or improvements for written recommendations for The Contractor developed Contractor developed improvement, nor further translation into detailed corrections or improvements written recommendations written recommendations document repair processes engineering changes, and completed for further translation into for corrections or for corrections or as lessons learned.

the work, where appropriate and detailed engineering improvements for further improvements for further possible. Over 90% of the Condition changes, and completed the translation into detailed translation into detailed

Found Reports were: correct, work, where appropriate and engineering changes, and engineering changes.

submitted on or ahead of time, possible. 66-89% of the completed the work, completed in accordance with the Condition Found Reports where appropriate and specification, and included a were: correct, submitted on possible. 50-65% of the recommendation repair, with the or ahead of time, completed Condition Found Reports impact to the availability production in accordance with the were: correct, submitted schedule, ready to put on contract. specification, and included a on or ahead of time, recommendation repair, with completed in accordance the impact to the availability with the spec, and production schedule, ready included a to put on contract. recommendation repair, with the impact to the availability production schedule, ready to put on contract.

The Contractor provided the

Government work specifications for approval to PSNS & IMF greater than one week prior to the due date. The

Contractor ensured the necessary management, material and resources are available to execute the maintenance were on-site prior to the availability. The Contractor developed a production schedule to help ensure on-time completion.

Further, the Contractor bundled work to improve efficiencies in execution and to minimize impact to the ship during execution.

The Contractor provided the

Government work specifications for approval to

PSNS & IMF one week prior to the due date. The

Contractor ensured the necessary management, material and resources are available to execute the maintenance were on-site prior to the availability. The

Contractor developed a production schedule to help ensure on- time completion.

The Contractor provided the Government work specifications for approval to PSNS & IMF a few days before the required due date. The

Contractor ensured the necessary management, material and resources were available to execute the maintenance were on-site prior to the availability. The

Contractor developed a production schedule to help ensure on-time completion.

The Contractor provided the Government work specifications for approval to PSNS & IMF by the required date. The

Contractor ensures the necessary management, material and resources were available to execute the maintenance. The

Contractor developed a production schedule to help ensure on-time completion.

The Contractor did not provide the Government work specifications for approval by the required date. The Contractor did not have the necessary management, material and resources available to execute the maintenance.

The Contractor did not develop or provide the

Government a production schedule.

All systems disturbed for awarded work and limited to the areas directly affected by the repairs were fully operational at contract completion.

Ship’s force was able to operate all equipment that the contractor repaired as designed.

No Casualty Reports (CASREPS) submitted on contractor work.

Assistance to meet ship’s force needs during the availability (i.e. temp A/C, power, and ventilation) was outstanding. All services were provided ahead of the requested dates.

Ship was able to meet scheduled commitments.

All systems disturbed for awarded work and limited to the areas directly affected by the repairs were fully operational at contract completion.

Assistance to meet ship’s force needs during the availability (i.e. temp A/C, power, ventilation) was very good. Most services were provided ahead of the requested dates with the remaining provided by the requested dates.

No Casualty Reports

(CASREPS) submitted on contractor work.

Ship was able to meet scheduled commitments.

All systems disturbed for awarded work and limited to the areas directly affected by the repairs were fully operational at contract completion.

availability (i.e. temp

A/C, power, ventilation) was good. Most services were provided by the requested dates. Those that were not did not have any significant impact to ship’s force milestones.

No Casualty Reports

(CASREPS) submitted on contractor work.

All systems disturbed for awarded work and limited to the areas directly affected by the repairs were fully operational at contract completion.

availability (i.e. temp A/C, power, and ventilation) was adequate. Some services were provided by the requested dates. Those that were not had minor impacts to ship’s force milestones with none slipping by more than a week.

One or more Casualty

Reports (CASREPS) submitted on contractor work.

Ship unable to meet scheduled commitments due to faulty systems/equipment specified for repairs by the contractor.

Assistance to ship’s force needs during the availability (i.e. temp A/C, power, ventilation) was inadequate. Services were not provided by requested dates and led to significant delays of more than a week to ship’s force milestones.

Deviation: The FDO may deviate from the AF derivation method described above to address unique considerations, or circumstances, not otherwise incorporated in this clause.

Such unique considerations, or circumstances, must be documented and relevant to the applicable AF Evaluation Period under consideration.

PHASE II: INCENTIVE FEE (Applicable to all CLINs except 0004, 0011, and 0021)

The Government shall pay the contractor an IF as provided in this contract (FAR 52.216-10 Incentive Fee (March

1997)).

A. Incentive Fee Evaluation Period (IFEP): The IFEP shall be established to coincide with the AFEP defined in paragraph (A) above of page 1.

B. Scope of Work Evaluated: The IF evaluation will include Inter-Availability Planning and Administration

(IAPA), all scheduled availabilities and inter-availability work (i.e. continuous maintenance and emergent maintenance) completed within the IFEP. Scheduled availability, execution planning, emergent work, and inter-availability work CLINS will be considered completed sixty (60) days following completion of the work for each specific CLIN.

C. Evaluation Categories: The Contractor's performance during each IFEP will be evaluated in the following areas:

a. Cost

b. Schedule

The Contractor will be notified of changes in the evaluation categories as well as any adjustments to the weighing of categories, if any, prior to commencement of each evaluation period.

D. Incentive Fee Process:

a. Cost Incentive

i. Cost Incentive Fee Parameter:

1. Maximum Cost Incentive Fee: The Maximum Cost Incentive Fee payable shall not exceed two percent (4.0%).

2. Minimum Cost Incentive Fee: The Minimum Cost Incentive Fee payable shall be zero percent (0.0%).

ii. Withholding of Payment

1. Normally, the Government shall pay the fee to the Contractor as specified in the

Schedule. However, when the ACO considers that performance or cost indicates that the Contractor will not achieve target, the Government shall pay on the basis of an appropriate lesser fee. When the Contractor demonstrates that performance or cost clearly indicates that the Contractor will earn a fee significantly above the target fee, the Government may, at the sole discretion of the ACO, pay on the basis of an appropriate higher fee.

2. Payment of the incentive fee shall be made as specified in the Schedule;

provided that the ACO withholds a reserve not to exceed fifteen percent (15%) of the total incentive fee or $100,000, whichever is less, to protect the

Government's interest. The ACO shall release seventy- five percent (75%) of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years' settlements. The

ACO may release up to ninety percent (90%) of the fee withholds under this contract based on the Contractor's past performance related to the submission and settlement of final indirect cost rate proposals.

iii. Equitable adjustments. When the work under this contract is increased or decreased by a modification to this contract or when any equitable adjustment in the target cost is authorized under any other clause, equitable adjustments in the target cost, target fee, minimum fee, and maximum fee, as appropriate, shall be stated in a supplemental agreement to this contract.

iv. Fee payable. Under the cost incentive provision, the fee payable shall be a maximum of four percent (4.0%). The cost incentive fee shall be payable in accordance with table 1 shown below. Evaluation criteria/factors and incentive fee/avails will be established in each respective delivery order as negotiated by the ACO.

v. Incentive Fee Evaluation Criteria Hybrid Sample

1. The criteria as described is objective in nature and based on achievable and measurable metrics. The following is the criteria and weightings for each CLIN:

a. CLIN 0001 – IAPA – BASE FEE = 6%, INCENTIVE FEE = 4% (Cost is 1.0%/ Schedule 3.0%)

SAMPLE – EVALUATION FACTORS (COST + SCHEDULE)

EVALUATING FACTORS IAPA

Cost Performance

If Actual Cost falls between 90% & 110% of Negotiated Target Cost 1.00%

If Actual Cost falls between 85% & 115% of Negotiated Target Cost 0.50%

If Actual Cost falls below 85% or above 115% of Negotiated Target Cost 0.00%

Maximum Incentive Fee for Cost Performance 1.00%

Departure Report

Submittal of Cost Return Data in NMD < = 60 Calendar Days 1.00%

Submittal of Cost Return Data in NMD on or between 61 & 67 calendar days 0.50%

Submittal of Cost Return Data in NMD > 67 calendar days 0.00%

Maximum Incentive Fee for Departure Report 1.00%

Proposal Submission

Baseline Proposal Submitted on Mutually Established Due Date 1.00%

Baseline Proposal Submitted 1 to 5 days after Mutually Established Due Date 0.50%

Baseline Proposal Submitted 5 beyond days after Mutually Established Due Date 0.00%

Maximum Incentive Fee for Delivery of Proposal 1.00%

Tracking and Management of Contractor Furnished Material / Long Lead Time Material

If all CFM and LLTM reports are submitted monthly and with 0contractor responsible material issues affecting production schedules

1.00%

If all CFM and LLTM reports are submitted monthly, with < 5contractor responsible material issues affecting production schedules

0.50%

If all CFM and LLTM reports are submitted monthly, with > 5contractor responsible material issues affecting production schedules

0.00%

Maximum Incentive Fee for Tracking and Management of Contractor Furnished Material/LLTM 1.00%

OVERALL MAXIMUM INCENTIVE FEE 4.000%

b. The fee shall be subject to adjustment, to the extent provided in paragraph (d) above, and within the minimum and maximum fee limitations in subparagraph (1) above (page 8), when the total allowable cost is increased or decreased as a consequence of (i) payments made under assignments or (ii) claims excepted from the release as required by paragraph (h)(2) of the FAR 52.216-7, Allowable

Cost and Payment clause.

c. If the respective delivery order is terminated in its entirety, the portion of the target fee payable shall not be subject to an increase or decrease as provided in this paragraph. The termination shall be accomplished

IAW other applicable clauses of the respective delivery order.

d. For the purpose of fee adjustment, "total allowable cost" shall not include allowable costs arising out of--

i. Any of the causes covered by the excusable delays clause to the extent that they are beyond the control and without the fault or negligence of the Contractor or any subcontractor;

ii. The taking effect, after negotiating the target cost, of a statute, court decision, written ruling, or regulation that results in the

Contractor's being required to pay or bear the burden of any tax or duty or rate increase in a tax or duty;

iii. Any direct cost attributed to the Contractor's involvement in litigation as required by the ACO pursuant to a clause of this contract, including furnishing evidence and information requested pursuant to the Notice and Assistance Regarding

Patent and Copyright Infringement clause;

iv. The purchase and maintenance of additional insurance not in the target cost and required by the ACO, or claims for reimbursement for liabilities to third (3rd) persons pursuant to the Insurance Liability to Third (3rd) Persons clause;

v. Any claim, loss, or damage resulting from a risk for which the

Contractor has been relieved of liability by the Government

Property clause; or

vi. Any claim, loss, or damage resulting from a risk defined in the contract as unusually hazardous or as a nuclear risk and against which the Government has expressly agreed to indemnify the Contractor.

e. All other allowable costs are included in "total allowable cost" for fee adjustment in accordance with this paragraph (e), unless otherwise specifically provided in this contract.

i. Delivery Order modification. The total allowable cost and the adjusted fee determined as provided in this clause shall be evidenced by a modification to the respective delivery order signed by the Contractor and ACO.

ii. Inconsistencies. In the event of any language inconsistencies between this clause and provisioning documents or

Government options under this contract, compensation for spare parts or other supplies and services ordered under such documents shall be determined in accordance with this clause.

b. Schedule Incentive

i. Schedule Incentive Fee Computation: The total amount of the schedule IF is four percent

(4.0%) of the target cost negotiated at the time the delivery order is executed. The fee will be evaluated by the PSNS & IMF among the milestones chosen as incentives for work to be performed. The Contractor shall earn the schedule IF if the work associated with each milestone is completed on or prior to the associated milestone date and verified by the local PSNS & IMF after onsite review of the completed work. The Contractor shall be paid this fee, if any, upon submittal of a proper invoice or voucher to the cognizant payment office, together with a copy of the unilateral modification to the delivery order authorizing payment of the fee. The Contractor’s invoice must cite the appropriate accounting data in order for payment to be effected.

ii. Schedule Milestones: The milestones, descriptions, amounts and dates for milestones/key events will be established, by the Government, at the time work to be performed is definitized, negotiated and invoked.

iii. Potential milestones/key events (not all inclusive):

1. Docking and Undocking

2. Crew Move Aboard

3. Specific Equipment and /or System Production Completion

4. Light-Off Assessment

5. Combat Systems Testing

6. Production Completion Date

7. All Work Complete

8. Dock Trial

9. Fast Cruise

10. Sea Trials

11. Availability Completion

iv. Equitable Adjustments: When the work under each delivery order is increased or decreased by a modification to the respective delivery order, or when any equitable adjustment in the target cost is authorized under any other clause, equitable adjustments in the milestone completion dates, as appropriate, shall be stated in a supplemental agreement to the respective delivery order.

v. Schedule Incentive Fee payable: Under the schedule incentive provision, the fee payable shall be a negotiated with the ACO. Target fee is payable if the contractor completes all work associated with each milestone/key event on or prior to the associated milestone/key event date as verified by the PSNS & IMF Program Manager after onsite review of the completed work. If the contractor does not complete all work associated with “All Work Complete” and/or “Complete Availability” milestones/key events, schedule IF payable will be zero percent (0.0%). In no event shall the fee payable under this schedule IF provision be greater than the fee of four percent (4.0%). Minimum fee is zero percent (0.0%).

vi. Delivery Order modification: The total allowable cost and the adjusted fee determined as provided in this clause shall be evidenced by a modification to the respective delivery order signed by the Contractor and ACO.

vii. Inconsistencies: In the event of any language inconsistencies between this clause and provisioning documents or Government options under this contract, compensation for spare parts or other supplies and services ordered under such documents shall be determined in accordance with this clause.

PHASE III: SBSIF DETERMINATION (Applicable to CLINs except 0004, 0011, and 0021)

The incentive fee determination covers the Contractor’s subcontracting performance over a range of all repair and alteration work, to give the Contractor flexibility in exceeding the Small Business Subcontracting Requirement. The incentive will only be available to be earned, if the Contractor meets the one of the below criteria (at the delivery order level) set by PEO Carriers, as determined by the ACO:

• 25% Small Business Utilization = 0.5% Incentive

• 30% Small Business Utilization = 1.0% Incentive

• 35% Small Business Utilization = 1.5% Incentive

• 40% Small Business Utilization = 2.0% Incentive

PEO Carriers is committed to increasing small business participation in development, production and support efforts consistent with cost/benefit considerations and attainment of acquisition objectives. Evaluation and payment (by the

ACO) of the incentive fee based on the utilization of Small Business Subcontracting opportunities will be conducted to the extent which the prime contractor meets the defined Small Business Subcontracting requirement above, of the direct cost per delivery order.

A. Evaluation Criteria:

a. Small Business Subcontracting Goals:

The Government desires a maximum of forty percent (40%) overall small business participation goal to be set by the Offeror, inclusive of the congressionally mandated five percent (5%) minimum for Small Disadvantaged Business (SDB) concerns.

The application of the subcontracting categories and percentages shall be proposed by the

Contractor for each respective delivery order, if applicable for SBSIF earnings.

The following example provided in the table below identifies percentages for the purposes of demonstrating how the SBSIF may be accomplished for the evaluation period under each respective CLIN per delivery order.

Table 5- SBSIF Goal

Subcontract Category Goal*

Small Business (SB) overall 40.0%

HUBZone Small Business (HUBZone) 10.0%

Service-Disabled Veteran-Owned Small Business (SDVOSB) 10.0%

Small Disadvantaged Business (SDB) 10.0%

Women-Owned Small Business (WOSB) 5.0%

Historically Black Colleges & Universities and Minority Institutions (HBCU/MI)** 5.0%

* Base for measurement is total subcontract dollars, SBSIF may be earned for meeting these goals.

** HBCU/MI obligations above 7.5% may be counted toward the SDB goal.

b. SBSIF Available:

The SBSIF pool contingency in each of these periods will be one half (0.5%), one (1%), one point five (1.5%) or two percent (2%) of the total cost obligated for all CLINs except 0004, 0011, and

0021.

The incentive fee under this clause will be earned or not earned on an order basis. Failure to earn the amount available under one (1) CLIN does not preclude the Contractor from earning fee available under the remaining CLINs of the respective delivery order (should multiple CLINs be established on any one delivery order).

B. Procedures:

a. Within one (1) month of the end of each evaluation period identified in paragraph (c), the

Contractor shall submit to the Contracting Officer’s Representative (COR) and ACO of each delivery order a Subcontracting Program Performance Report that includes the information required for the Government to determine the amount of SBSIF earned. At a minimum, the

Contractor’s report shall include the total amount obligated against target cost for the applicable

CLIN, the total labor hours worked during the evaluation period by CLIN, and any other data required for the Government to evaluate the Contractor’s Small Business Subcontracting performance.

b. Within fifteen (15) working days of receipt of the Contractor’s Report, the COR for each DO will review and evaluate the Contractor’s report to determine if all required data was provided and if any SBSIF was earned. If the Contractor’s input is inadequate, the COR will ask the Contractor to correct the inadequacies of their report and to submit a revised report.

c. Within thirty (30) working days of receipt of the Contractor’s report, the COR of each DO will meet with the ACO to make a final determination of whether any such special incentive has been earned. The ACO will issue a unilateral modification providing earned special incentive.

C. Finalities of ACO’s Determination:

a. The parties agree that determinations of the ACO with respect to the amount of special incentives to be paid to the contractor are unilateral decisions made solely at the discretion of the

Government. Notwithstanding other terms or conditions of the contract, a payment under this incentive is not incurred or earned until the effective date of a written contract modification.

D. Payment of Special Incentive:

a. The Contractor will be paid the special incentive amount(s) earned upon submittal of proper invoices to the cognizant payment office. The Contractor’s invoice shall show the amount of special performance incentives payable by CLIN. The Contractor’s invoice must cite the appropriate accounting data in order for payment to be effected.

E. Single Point of Contact

a. The Contractor shall establish a single point of contact to deal with the Government on its small business subcontracting activities relating to this contract. The Government encourages the

Contractor to pursue activities that will support increasing the level of small business subcontracting participation under this contract including, but not limited to, internal education and training, participation in matchmaking conferences and other outreach efforts to post subcontracting opportunities.

i. Fee Adjustment Computation: The Government will evaluate actual performance for the fee evaluation period using the information in paragraphs (a) and (b) below reported by the Contractor IAW Contract Data Requirements List (CDRL) Data Item A004 and applying the formula in paragraph (1) below.

1. Direct costs related to all efforts within the fee evaluation period

2. Total dollars, with corresponding percentages of direct cost during the fee evaluation period will be determined for the following:

a. Small Business Concerns;

i. VOSB;

ii. SDVOSB;

iii. HUBZone;

iv. SDB;

v. WOSB, and

vi. HBCU/MI.

3. Divide (b) by (a) to compute a percentage of subcontracted work (e.g., $1,600,000/$4,000,000 = .40 X 100 = 40.0%).

NOTE: FEE EVALUATION PERIODS WILL BE PROMULGATED FOLLOWING CONTRACT

AWARD.