J_18_West_Coast_Incentive-Awd_Fee_Plan 24March2010.doc

J-18

FOR OFFICIAL USE ONLY

PROCUREMENT SENSITIVE – FAR 3.104

INCENTIVE/AWARD FEE PLAN

USMC REGIONAL GARRISON FOOD SERVICE CONTRACT II (RGFSC II)

For ______________ East Coast RGFSC II

______________West Coast RGFSC II

INCENTIVE/AWARD FEE PLAN DATE: ______________

REVISION: _______

ACQUISITION PROGRAM MANAGER:

SABRINA MARTIN, RGFSC II Program Manager

Date

PROCURING CONTRACTING OFFICER:

GUY COLLINS, RGFSC II Contracting Officer

Date

APPROVED BY:

RICHARD F. SWEENEY

Date

Director, Installations and Logistics Contracts Division

Table of Contents

Section Title Page

1.0

Program Description

2.0

Introduction

3.0

Program Goals

4.0

Organization and Responsibilities 5.0

Process 6.0

Evaluation Methodology 7.0

Incentive/Award Fee Application Example 8.0

Incentive/Award Fee Plan Changes 1.0 Program Description

The Director of Food Services, Headquarters, U.S. Marine Corps, Code LFS-4, operates 53 garrison mess halls within the continental United States. Thirty two mess halls are located on the East Coast of the United States in the District of Columbia, Virginia, North Carolina and South Carolina, and 21 mess halls are located on the West Coast in California and Arizona. These mess halls currently provide approximately 66,000 meals per day. The requirements associated with these mess halls and the corresponding contracts, are referred to as the Regional Garrison Food Service Contracts, or RGFSC.

The management and operation of these mess halls has been outsourced since the mid-1980s. Two eight-year, $450 million contracts were awarded to Sodexho Management Inc. in 2002 to provide for the day-to-day management and operation of these mess halls, with one contract serving the East and another serving the West Coast, respectively. Five years of performance under these contracts has been completed, and the contracts are currently in the first year of three (possible) one-year option periods. The combined value of these contracts, with modifications, is projected to reach $1.2 billion, with the cost of each contract approximately the same.

Two regional contracts are currently in process to replace the current mess hall contracts when they expire on 30 September 2010. The scope of these follow-on contracts is planned to closely match the scope of the current contracts, however several changes to the current contracting approach are planned. The follow-on contracts will be performance-based, and contain incentive/award fee provisions. This document details the incentive/award fee plan for this effort.

2.0 Introduction

This Incentive/Award Fee Plan provides the basis for the RGFSC evaluation of the contractor’s performance, for determining semi-annual incentive fee payments and for developing an assessment of subjective elements of performance. It describes specific formulas for application of incentive fee payments as well as criteria and procedures used to assess the contractor’s performance and to determine the amount of award fee earned. Actual award-fee determinations and the methodology for determining award fee are unilateral decisions made solely at the discretion of the Government and is not subject to the Disputes clause.

The incentive and award fee authorizations will be provided to the contractor through contract modifications. The award fee earned and payable will be determined by the Award Fee Determining Official (AFDO) based upon review of the contractor’s performance against the criteria set forth in this plan. The AFDO may unilaterally change this plan prior to the beginning of an evaluation period. The contractor will be notified of changes to the plan by the Contracting Officer, in writing, before the start of the affected evaluation period. Changes to this plan that are applicable to a current evaluation period may only be incorporated by mutual consent of both parties.

3.0 Program Goals and Incentive/Award Fee Goals 3.1 The USMC has developed the following 4 primary goals which provide a clear focus for all activities relating to the RGFSC II:

· GOAL 1: Provide Marines with high quality meals that meet or exceed the nutritional requirements of each Marine;

· GOAL 2: Provide meals that are prepared to food safety standards under management processes that negate the possibility of food-borne illness;

· GOAL 3: Provide meals in a clean and pleasant environment in a manner that is pleasing to the Marine and conducive to Marine Corps esprit-de-corps and quality of life;

· GOAL 4: Provide capable and responsive food service management services that will allow the Marine Corps to reduce the direct and indirect costs of administering the resulting contracts.

3.2 Performance incentives and Award Fee criteria have been developed to focus contractor efforts toward accomplishment of these goals. This plan provides four objective performance incentives based on a Marine Customer Satisfaction Index along with an award fee based on clearly articulated, regular feedback on business and operations management criteria. The application of these incentives is described in detail in Evaluation Methodology. They are:

· Food Quality Incentive

· Service Quality Incentive

· Cleanliness Incentive

· Speed of Service Incentive

· Award Fee

4.0 Incentive Fee Evaluation Methodology The Incentive Fee Pool represents 80% of the Total Fee Pool and is to be divided among four elements as follows: the Food Quality Incentive represents 30% of the fee pool, the Service Quality Incentive represents 20% of the fee pool, the Cleanliness Incentive represents 15% of the fee pool, and the Speed of Service Incentive represents 15% of the fee pool.

The application of the four incentives is provided below using the following calculations:

(1) Food Quality Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Food Quality Rating)

(2) Service Quality Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Service Quality Rating)

(3) Cleanliness Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Cleanliness Rating)

(4) Speed of Service Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Speed of Service Rating) 5.0 Award Fee Evaluation Methodology 5.1 The Award Fee, which is the fifth element of the fee pool, represents 20% of the pool.

5.2 The application of the Award Fee is provided below using the following calculation:

Award Fee = (# of meals served during period) x (KTR Fee CLIN) x (Award Fee Weight) x (Award Fee Board Rating) x (Fee Conversion Table Index) 5.3 For the Award Fee, the contractor will be evaluated on a two criteria – Operations Management and Business Management criteria, which include several components listed below.

(1) Operations Management criteria (60% weight) includes, but is not limited to proper utilization of resources, menu development and control, staff and Marine training, accounting and records keeping, schedule adherence and responsiveness to changes and emergencies, innovation and utilization of technology, implementation of QC program, cooperation and support of FSO & QAE personnel.

(2) Business Management criteria (40% weight) includes, but is not limited to planning, organizing and managing program components, compliance with contract provisions, Subcontracting Plan implementation and accomplishment of Small Business goals, cooperation and communication with Government Program Management staff and responsiveness to management requests, recognition of management problems and program issues as well as implementation of solutions.

5.4 Based on the AFRB evaluation, which will provide an adjectival performance rating and a numeric evaluation score for the period, the fee conversion table below will be utilized to determine the fee percentage to be applied to the predetermined pool.

6.0 Award Fee Organization and Responsibilities The Award Fee organization consists of the Fee Determining Official (AFDO); an Award Fee Review Board (AFRB) which consists of a chairperson, the contracting officer, a customer representative and a recorder.

6.1 Award Fee Determining Official. The AFDO approves the award-fee plan and any significant changes. The AFDO reviews the recommendation(s) of the AFRB, considers all pertinent data, and determines the earned award fee amount for each evaluation period. Any and all changes to the Award Fee Plan must be approved by the AFDO prior to the start of the period in which the changes take effect.

6.2 Award Fee Review Board. AFRB members must attend a semi-annual meeting to evaluate the contractor’s performance, consider all information from pertinent sources, prepare Award Fee Board Report, and arrive at an earned award fee recommendation to be presented to the AFDO. The AFRB may also recommend changes to this plan.

6.3 Award Fee Review Board Chairperson. The Chairperson of the AFRB is responsible for the overall functioning of the AFRB in the performance of its members. Specific responsibilities include:

(1) Scheduling meetings of the AFRB and notifying its members of the meetings;

(2) Conducting the AFRB meeting, coordinating deliberations, and preparing and recommendations.

(3) Presenting the Award Fee Board Report and Recommendations to the AFDO regarding earned award fee or plan changes.

6.4 AFRB Recorder. The AFRB recorder is responsible for coordinating the administrative actions required by the Performance Monitors, the AFRB and the AFDO, including:

(l) Maintenance of records of all meetings in developing the award fee plan including documenting all meetings and reasoning for developing the plan as established (a copy of which will be provided to the CO for retention in the contract file);

(2) Receipt, processing and distribution of evaluation reports from all required sources;

(3) Scheduling and assisting with internal evaluation milestones, such as briefings; and

(4) Accomplishment of other actions required to ensure smooth operation of the process.

6.5 Contracting Officer (CO). The CO is the liaison between contractor and Government personnel on all issues, forwarding AFDO decision with regard to the Award Fee Determination and maintaining the contract file.

6.6 AFRB Presenter. The Regional Contracting Officer and ACO for the respective contracts are responsible for assembling comments of Performance Monitors who maintain written records of the contractor’s performance in their assigned evaluation area(s) and preparing an end-of-period Award Fee Evaluation Report and presenting it to the AFRB.

Actual award-fee determinations and the methodology for determining award fee are unilateral decisions made solely at the discretion of the Government and is not subject to the Disputes clause.

7.0 Process 7.1 Award Fee Board Preparation. At the completion of each award fee period, the AFRB Chairperson shall schedule an AFRB Meeting to take place within 30 days following the end of the period. Simultaneously, the Contracting Officer shall determine the Incentive and Award Fee Pools for the period, obtaining concurrence from the contractor’s Program Manager.

7.2 AFRB Meeting. The AFRB Chairperson shall conduct a review meeting whereby Government Representatives (RCOR and ACO) give a presentation on their perspective regarding Contractor performance during the period. The Contractor will be invited to give a presentation providing performance information from their perspective. Following the meeting, the AFRB will deliberate, and then write an AFRB Report and Award Fee Recommendation. The AFRB Chairperson will brief the AFDO on the report and recommendation.

7.3 Fee Determination. The AFDO will make an Award Fee Determination and prepare an Award Fee Determination letter to be sent to the contractor informing them of the results.

7.4 Contractor Rebuttal. While the determination is not subject to the Disputes clause, the contractor may possess rebuttal information that they wish to have the AFDO consider. If so, the contractor must respond, in writing, within 10 days of AFDO Determination, requesting AFDO reconsideration of the Award Fee Determination. Once rebuttal is received, the AFDO will respond, in writing, within 10 days of receipt of contractor response, as to final determination.

7.5 Payment of Fees. Upon conclusion of the 10-day rebuttal period following AFDO letter transmittal, and subsequent reconsideration, should that be required, the Contracting Officer will execute a modification within 10 days providing payment authorization for incentive fees based on formula calculations and award fees based on the Award Fee Determination.

Award Fee Conversion Table

All scores below 60 will receive 0% of fee

8.0 Incentive/Award Fee Application Example

The following represents a hypothetical example of the process for employing the evaluation methodology in calculating Incentive and Award Fees for a sample 6-month evaluation period.

8.1 Prior to AFRB Meeting, establish Incentive and Award Fee Pool(s)

Meals Served in Period:

6,158,722 meals served

Fee CLIN:

$.36 fee per meal served

Total Pool for Period:

$2,217,139.92

1. Food Quality Incentive Fee Pool:

$2,217,139.92 x 30% = $665,141.98

2. Service Quality Incentive Fee Pool:

$2,217,139.92 x 20% = $443,427.98

3. Cleanliness Incentive Fee Pool:

$2,217,139.92 x 15% = $332,570.98

4. Speed of Service Incentive Fee Pool:

$2,217,139.92 x 15% = $332,570.98

5. Award Fee Pool:

$2,217,139.92 x 20% = $443,427.98 8.2 Calculate Fee Earned

(1) Food Quality Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Food Quality Rating)

# of meals served in period = 6,158,722

KTR Fee CLIN = $0.36 per meal

Quality Incentive Weight = 30%

Composite Food Quality Rating = 8.9 out of 10.0

Food Quality Incentive Fee = $591,976.36 earned

(2) Service Quality Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Service Quality Rating)

Service Quality Incentive Weight = 20%

Composite Service Quality Rating = 8.2 out of 10.0

Service Quality Incentive Fee = $363,610.94 earned

(3) Cleanliness Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Cleanliness Rating)

Cleanliness Incentive Weight = 15%

Composite Cleanliness Rating = 7.4 out of 10.0

Cleanliness Incentive Fee = $246,102.53 earned

(4) Speed of Service Incentive Fee = (# of meals served during period) x (KTR Fee CLIN) x (Quality Incentive Weight) x (Composite Speed of Service Rating)

Quality Incentive Weight = 15%

Composite Speed of Service Rating = 6.7 out of 10.0

Speed of Service Incentive Fee = $222,822.56 earned

(5) Award Fee = (# of meals served during period) x (KTR Fee CLIN) x (Award Fee Weight) x (Award Fee Board Rating) x (Fee Conversion Table Index)

Quality Incentive Weight = 20%

Award Fee Rating: Excellent with an Evaluation Score of 94

Converts to Award Fee % Earned = 90%

Award Fee = $399,085.18 earned 7.3 Modification total for Sample Period Incentive/Award Fee Earned is:

Incentive Fee Earned

(1) Food Quality Incentive Fee Earned $ 591,976.36

(2) Service Quality Incentive Fee Earned + $ 363,610.94

(3) Cleanliness Incentive Fee Earned + $ 246,102.53

(4) Speed of Service Incentive Fee Earned + $ 222,822.56

Incentive Fee Earned

$1,424,512.39

(5) * Award Fee Earned $ 399,085.18

Total Incentive/Award Fee Earned $1,823,597.57

* Only Award Fee Determination is not subject to Disputes Clause 8.0 Incentive/Award Fee Plan Changes Should the Government wish to make changes to the Incentive/Award Fee Plan, they must be approved by the AFDO and the contractor must be notified in writing prior to the start of the period. The contractor may recommend changes to the Contracting Officer no later than 30 days prior to the beginning of the new evaluation period. There may be no changes to the Incentive Fee application without mutual agreement of both parties. Additionally, once the Award Fee Period begins, there may not be any changes to the Incentive/Award Fee Plan without mutual agreement of both parties. Examples of changes include revising evaluation criteria, adjusting weights to redirect contractor’s emphasis to areas needing improvement, and amending the distribution of the award-fee dollars displayed in the Award Fee Conversion Table.