Attachment_15_-_Performance_Incentive_Fee_Plan.pdf

Attachment J-15

ATTACHMENT J-15

PERFORMANCE INCENTIVE FEE PLAN

AEGIS Ship Integration and Test (SI&T)

N00024-13-R-5100

Applicable to:

Option Year Three Option Items 3003, 3004

Option Year Four Option Items 4003, 4004, 4010, 4011, 4012 Option Year Five Option Items 5003, 5004, 5010, 5011, 5012 Option Year Six Option Items 6003, 6004, 6010, 6011, 6012

Option Year Seven Option Items 7003, 7004, 7010, 7011, 7012 Option Year Eight Option Items 8003, 8004, 8010, 8011, 8012 Option Year Nine Option Items 9003, 9004, 9010, 9011, 9012

1.0 INTRODUCTION

1.1 Purpose

The purpose of this plan is to establish the predetermined, formula-type incentives, responsibilities, and procedures for evaluating Contractor performance and determining the performance incentive fee earned under this contract. See FAR 16.402-2, entitled “Performance incentives” and DFARS PGI 216.402-2, entitled “Technical Performance Incentives”.

1.2 Objective

The performance incentive fee is designed to provide economic motivation for the Contractor to perform high quality service and produce high quality products on a timely basis, as well as to encourage adoption of practices that support continuous process improvement. The purpose of this plan is to clearly articulate these performance incentives, and to establish the procedures for identifying, evaluating, and funding performance incentive fee earned.

1.3 Performance Incentive Fee Periods

The Government will evaluate Contractor performance for each evaluation period in accordance with the criteria identified in this plan. These periods are described in Paragraph 3.4 and identified in Paragraph 5.0.

1.4 Performance Evaluation

Evaluation will take place no later than forty-five (45) calendar days after each evaluation period and the calculated fee will be provided in writing to the Contracting Officer within sixty (60) calendar days after the evaluation period. The Contracting Officer will issue a unilateral modification setting forth the specified performance incentive fee earned as soon as practicable.

The Contractor shall submit relevant evidence to the Government that it wishes to have considered in the evaluation for performance incentive fee not later than fifteen (15) calendar days after completion of each period via CDRL A003, Contractor’s Progress, Status, and Management Report. As a part of the relevant evidence considered for performance evaluation, the Contractor shall note all circumstances caused by direct action of the Government, such as late GFE or funding or changed milestone scheduling, which impacted their ability to execute scope as planned. The Government, at its sole discretion, will consider those inputs in evaluating the Contractor performance subject to Section 2.1 of this Incentive Fee Plan.

2.0 SCOPE

Items 3003, 3004, 4003, 4004, 4010, 4011, 4012, 5003, 5004, 5010, 5011, 5012, 6003, 6004, 6010, 6011, 6012, 7003, 7004,7010, 7011, 7012, 8003, 8004, 8010, 8011, 8012, 9003, 9004, 9010, 9011, 9012 are subject to performance incentives identified in this plan. For these items the performance incentive fee pool will be accumulated and earned under corresponding Performance Incentive Plan CLINs – 3017, 3018, 4017, 4018, 4021, 4022, 4023, 5017, 5018, 5021, 5022, 5023, 6017, 6018, 6021, 6022, 6023, 7017, 7018, 7021, 7022, 7023, 8017, 8018, 8021, 8022, 8023, 9017, 9018, 9021, 9022, and 9023. Each CLIN/SLIN will be evaluated separately in each period independently. Each CLIN’s/SLIN’s score will be calculated by dividing the total points earned under that effort by the maximum score.

Table 1 describes the performance metrics, which include Quality, Schedule, and Technical described in further detail under Section 5. The performance incentive fee pool per period will be a product of the maximum costs authorized during that period, and the incentive fee rate stated in Section B. Fee earned is a product of the score received for its efforts and the calculated performance incentive fee pool. In no event shall the total performance incentive fee earned per CLIN/SLIN be greater than the maximum fee identified in Section B of the contract.

CLIN

Number

Description

SOW

Section

Metrics Applied

Quality Schedule Performance

3003,4003, 5003, 6003, 7003,8003, New Construction Combat System

Waterfront Integration and Test -

ACB-16/TI-16 New Construction Test

Execution - One Ship

3.3.1 x x x

3004, 4004, 5004, 6004, 7004, 8004, New Construction Combat System

Waterfront Integration and Test -

ACB-16/TI-16 New Construction Test

Execution - One Ship

3.3.1 x x x

4010, 5010, 6010, 7010, 8010, 9010

ACB-16/TI-16 AEGIS Modernization Test

Execution - One DDG 51 Class Ship

3.7.1 x x x

4011, 5011, 6011, 7011, 8011, 9011

ACB-16/TI-16 AEGIS Modernization Test

Execution - One DDG 51 Class Ship

3.7.1 x x x

4012, 5012, ACB-16/TI-16 AEGIS Modernization Test 3.7.1 x x x

6012, 7012, 8012, 9012

Execution - One DDG 51 Class Ship

Table 1. Contract Line Item Number (CLIN) Mapping to Incentive Fee Plan Metrics

The Government reserves the right to make changes in evaluation categories and factors or weights assigned to evaluation categories by unilateral modification prior to any evaluation period.

The Contractor may also propose performance objectives for any period; however, only those received at least sixty (60) calendar days prior to the start of an evaluation period will be considered for that evaluation period. The Contractor shall be notified of any changes to criteria or weights thirty (30) calendar days prior to the start of an evaluation period. Unsatisfactory performance under a performance incentive fee criterion may result in increased weighting for that factor in subsequent evaluation periods.

Performance incentive fees will not be obligated until the effective date of the written contract modification that specifically identifies the amounts earned under a particular performance incentive fee. Fee will be billed by the Contractor after the Government has made a determination as to the appropriate value and allocated funding to the contract. The Contractor shall not be held accountable for circumstances beyond their control, e.g., delayed or inadequate funding, late GFE, rescheduling of program milestones at the Government’s discretion, etc., which could impact its ability to achieve a performance incentive criteria.

2.1 Scope Negotiation

The Contractor may propose a reasonable mechanism for negotiating schedule, quality, or performance adjustments that may affect incentive fee award. The Government will make the final determination on reasonable mechanisms for schedule, quality, or performance adjustments and will notify the Contractor at least thirty (30) calendar days prior to the start of an evaluation period; or, prior to contract award if this contract has not yet been awarded.

3.0 TERMINOLOGY

3.1 Days/Months

The use of days throughout this plan shall be considered to be calendar days with a nominal thirty-day calendar day month, except in the calculation of “Total Float,” which is expressed in “work days.”

3.2 Incentive Fee Period

The Government will evaluate the Contractor’s performance against performance incentive fee criteria in a series of incentive fee periods as specified in this plan. Incentive fee periods will each be six months in duration, therefore the Contractor will be evaluated semi-annually. The first incentive fee period will begin upon option exercise of Items 4003 and 4004. A contract modification will fund the performance incentive fee awarded for each incentive fee period after the determination is made and the Contractor is notified.

3.3 Occurrence

For some performance incentive fee criteria, multiple events will be identified in each CLIN for a performance incentive fee evaluation. Each of these discrete events constitutes an occurrence (this may include, but is not limited to: deliverables, design reviews, technical objectives/technical performance measures and test event results).

3.4 Performance Incentive Fee

An additional amount identified as part of each exercised CLIN/SLIN, which the Contractor may earn in whole or in part under the contract. The amount of performance incentive fee is determined subsequent to each test period per Section 1.4 of this Incentive Fee Plan for Contractor performance evaluation using the performance incentive fee evaluation criteria specified in Table 1.

3.5 Comments

Comments are any written or electronic comments provided by the Government via the Contracting Officer’s Representative (COR) or the Contracting Officer during the performance incentive period, provided against deliverables that were made in the current or any previous periods.

3.6 Milestones

Milestones are significant program achievements as delineated in the IMS or specifically defined by a Technical Instruction.

4.0 RESPONSIBILITIES AND PROCEDURES

4.1 Responsibilities

4.1.1 Program Manager

The Program Manager:

Appoints a Performance Monitor (see 4.1.3 below), and releases the appropriate funding to the Contracting Officer for performance incentive fee earned.

4.1.2 Procuring Contracting Officer (PCO)

The PCO:

Issues a unilateral modification to the contract to fund the performance incentive fee payment of the performance incentive fee and reviews the performance incentive fee documentation and advises the Program Manager as to when the performance incentive fee authorization to the Contractor is required

4.1.3 Performance Monitor

The Performance Monitor:

Monitors Contractor performance, vouches for the integrity of the performance metrics, and validates evidence that requirements for performance incentive fee criteria have been satisfied.

4.1.4 Change Procedure

It is anticipated that performance incentive fee performance evaluation criteria may need to be revised to place increased emphasis on specific areas, to take advantage of lessons learned, and to employ new approaches to measuring the quality of Contractor performance. Contractor proposed changes in the methodology or content of the Performance Incentive Fee Plan shall be submitted to the Government no later than sixty (60) calendar days prior to the start of the performance incentive fee period for which the changes are proposed to take effect. Changes to the methodology or content of this plan will be made by the Government via a unilateral contract modification, no later than thirty (30) calendar days prior to the start of the next performance incentive fee period.

5.0 PERFORMANCE INCENTIVE CRITERIA AND EVALUATION – Items 3003, 3004, 4003, 4004, 4010, 4011, 4012, 5003, 5004, 5010, 5011, 5012, 6003, 6004, 6010, 6011, 6012, 7003, 7004, 7010, 7011, 7012, 8003, 8004, 8010, 8011, 8012, 9003, 9004, 9010, 9011, 9012

The following sections describe the performance incentive fee criteria.

The Contractor’s performance will be evaluated in accordance with the performance incentive fee criteria and weights detailed in Paragraphs 5.1 through 5.3 of this plan. The Contractor will have the opportunity to earn a maximum score of one hundred (100) points in each performance incentive period, valued as shown in Table 2, below.

Total Maximum Fee Points per Performance Incentive Category, by Phase

Schedule Quality Technical Incentive

Total Performance Incentive

30 pts 50 pts 20 pts 100 pts Table 2: Performance incentive fee total score table

Calculation of Performance Incentive Fee:

Performance incentive fee earned by the Contractor for each evaluation period will be calculated using the following formula: (Total Points Earned / 100) * Performance Incentive Fee Pool for that period. There will be no deferral of unearned performance incentive fee into subsequent periods.

5.1 Schedule Performance Incentive

5.1.1 Description

The purpose of the schedule performance incentive is to provide performance incentives for the

Contractor to deliver work and products in a timely manner. Maintaining the schedule as defined by the critical path as agreed to by the COR and the contractor will be key to the successfully meeting this Performance Incentive. In certain cases, the COR may designated this authority to an onsite government representative such as and Aegis Test Officer (ATO). The schedule baseline for Items 3003, 3004, 4003, 4004, 4010, 4011, 4012, 5003, 5004, 5010, 5011, 5012, 6003, 6004, 6010, 6011, 6012, 7003, 7004, 7010, 7011, 7012, 8003, 8004, 8010, 8011, 8012, 9003, 9004, 9010, 9011, and 9012 shall be based on the IMS established upon contract award.

The schedule baseline for these items may be updated based on individual ship IMS and program information prior to the ship alteration/modernization period.

5.1.2 Definitions

Schedule Efficiency: A measure of the efficiency of the test schedule that compares the days scheduled in the Test Sequence Network (TSN) against the actual completed tests (80% or greater), for each incentive period, and will be measured against the progress toward completing Critical Path tests.

Critical Path: At least two (2) weeks prior to ALO, the COR, or their designated representative, and the contractor shall agree to a schedule for the completion of combat system test prior to the end of the test program. This schedule shall determine the most efficient and technically correct way to ensure that the Combat System on that ship will be prepared for operational cycle training at the end of the test program. This schedule will be known as the critical path.

5.1.3 Measurement

At the completion of each week the COR, or their designated representative, will determine the number of days the contractor is ahead, on, or behind schedule based on comparing the composite completion to the established critical path. At the end of the test program as defined in paragraph 5.1.1, the weekly average will be calculated. Performance points will be based on the table 3 below.

WRT 80% or greater completion, if schedule is: Award Performance is ten or more working days ahead of schedule 30 pts.

Performance is five or more working days ahead of schedule, but less than ten days ahead of schedule

25 pts.

Performance is two or more working days ahead of schedule but less than five days ahead of schedule

15 pts.

Performance is less than two working days ahead of schedule 10 pts.

Performance is two or less working days behind schedule 0 pts.

Performance is more than two working days behind schedule -10 pts.

Table 3: Schedule performance incentive fee calculation

Prior to the beginning of each Incentive Fee period, utilizing the Contractor-developed Test Sequence Network (TSN), the Contractor shall develop a Schedule Performance Chart including an estimated 80% completion line, for each ship tested. This Schedule Performance Chart, with completed test data shall be provided to the Government no later than 30 days after each Incentive Fee period ends.

5.2 Quality Performance Incentive– Deliverable Quality

5.2.1 Description

The purpose of this performance incentive is to provide incentives for the Contractor to deliver optimal quality work products.

5.2.2 Definitions

Testing quality – a measure of deliverable quality delivered to the Government throughout an evaluation period. Testing quality will be measured by computing a score for the Detect, Track, and Engage (DTE) sequence of the AEGIS Weapon System. The testing quality score will be determined by the AEGIS test manager and reported to the Program Office upon completion.

The criteria for completion of the DTE sequence are found in FXP-2, AW-24-SF.

5.2.3 Measurement

Quality levels will be computed per Table 4 for each performance incentive period. Test execution and quality will be used as the metric to calculate the value of this performance incentive.

The following quality calculation applies:

Testing Quality

If score is Award 95-100 50 pts.

94.9 to 88 25 pts.

87.9 to 75 10 pts.

74.9-62 0 pts.

61.9 to 0 -15 pts.

Table 4: Quality performance incentive fee calculation

5.2.4 Consideration

Prior to conducting the DTE sequence, the AEGIS Test Manager (ATM) will determine if the hardware and software of the AEGIS Combat System is capable of completing the DTE successfully. If the system or any element of the ACS is not capable, the ATM will document any discrepancies with input from the Contractor and will recommend modifications to the grading scale accordingly. The modified grading scale will be agreed upon by the COR, Contracting Officer and Contractor.

5.3 Technical Objectives for the Ship Integration and Test Agent (SI&T Agent)

5.3.1 Description

The purpose of this technical performance incentive is to provide performance incentives for the Contractor to deliver technically acceptable work products. These items are subject to the technical performance incentive criteria defined below.

5.3.2 Definitions

The performance evaluation criteria shall be the test observation report (TOR) adjudication period. For tasks that are assigned to the Contractor, rapid completion of the assigned actions ensures that the technical capabilities required to be provided by the contractor are in fact being provided. For periods that submit more than one TOR, the aggregate TOR time shall be the arithmetic mean of all TORs submitted during a test phase.

5.3.3 Measurement

The Contractor shall be incentivized to achieve combat systems integration and test (SI&T) performance thresholds. In order to earn the maximum technical performance incentive for the applicable milestone, the Contractor must both successfully plan and document completion of assigned tasks and discrepancies. These items shall be evaluated against the adjudication of task observation reports.

For the Contractor to receive the maximum incentive in each category, the criteria in Table 5, is as follows:

Time To Adjudicate Assigned TOR Award Performance takes less than five working days 20 pts.

Performance takes five or more working days but less than fourteen working days

0 pts.

Performance takes more than fourteen working days but less than twenty working days

-5 pts.

Performance takes more than twenty working days -15 pts.

Table 5: Technical performance incentive fee calculation

6.0 Payment of Performance Incentive Fee

The Contractor shall be paid performance incentive fee upon submittal of a proper invoice or voucher to the cognizant Payment Office, together with a copy of the unilateral modification to the contract authorizing payment of performance incentive fee for the applicable Evaluation

Period. The Contractor's invoice shall also show the amount of performance incentive fee payable to each sub-line item and the appropriate accounting data in order for payment to be affected. There will be no provisional, interim or advance billing of Incentive Fee prior to execution by the Contracting Officer of a unilateral contract modification obligating the Incentive Fee earned.