Attachment_12_-_PTES_Award_Fee_Plan.pdf

ATTACHMENT 12

AWARD FEE PLAN

FOR

Protected Tactical Enterprise Service (PTES)

20 February 2018

Revision History

Revision Modification # Approval Date Affected Pages Comments

Original N/A TBD All Original Document

Table of Contents 1 Introduction 2 Organizational Responsibilities

2.1 AFRB Member Responsibilities

2.2 Award Fee Processes

2.3 Award Fee Plan Change Procedure

2.4 Contract Termination

3 Award Fee Criteria 4 Appendices

1 Introduction The purpose of this Award Fee Plan is to encourage positive behavior, counterbalance unintended negative consequences of other incentives, and to incentivize Contractor performance in addressing program risk areas. Coupled with the cost and performance incentives, the award fee enables effective oversight of Agile Software Project Management and system-level architecture development. Award fee provides the flexibility to adapt to current program conditions and fact-of-life changes, and incentivizes the contractor to be responsive to Government priorities, which is fundamental to the Agile Project Management process.

The PTES contract includes a combination of incentives; a cost incentive (Pool 1), a performance incentive (Pool 2), and an award fee (Pool 3), discussed in greater detail below. The overall incentive fee structure is depicted in Figure 1-1. Pool 1 (Cost Incentive) will be implemented in accordance FAR 52.216-10. Pool 2 (Performance Incentive) will be implemented via Attachment 11 to the contract. Pool 3 (Award Fee) will be implemented via this Award Fee Plan (Attachment 12 to the contract. The dollars for each incentive pool are established as a percentage (as noted below) applied to the target cost for each CLIN (0001, 0002, and 0003), excluding the Facilities Capital Cost of Money (FCCOM). This plan defines the dollar amounts, criteria, and administration process associated with the award fee (Pool 3) under CLINs 0001, 0002, and 0003.

Figure 1-1 Overall Incentive Fee Structure

Pool 1 - Cost Fee Structure (Target Fee 3%): Pool 1 is a cost incentive applicable to CLINs 0001, 0002, and 0003. Pool 1 is based on overall cost control at the individual CLIN-level. The overrun share ratio is 70/30 and the underrun share ratio is 100/0; an underrun is not incentivized. The maximum fee is 3% and the minimum fee is 0%. The cost incentive will be implemented in accordance with FAR 52.216-10. Pool 1 is completely depleted after a 10% cost overrun at the CLIN-level.

Pool 2 – Performance Incentive Fee Structure (7%): Pool 2 is a performance incentive applicable to CLINs 0001, 0002, and 0003. Pool 2 is based on the successful completion of major system-level events and successful demonstrations of software. At the point the cost overrun of a CLIN (based on the Government Estimate at Complete (GEAC)) exceeds 10% of Target Cost, the amount of the incentive fee pool is decreased by $0.70 for every $1.00 of overrun until Pool 2 is depleted. Pool 2 is completely depleted at a 20% cost overrun at the CLIN-level.

Pool 3 - Award Fee Structure (4%): Pool 3 is an award fee applicable to CLINs 0001, 0002 and 0003. The Award Fee Pool is not affected by performance under Pool 1 or Pool 2. Additional details are available in Attachment 12 PTES Award Fee Plan.

The Award Fee earned and payable is unilaterally determined by the Fee Determining Official (FDO) based upon review of the contractor's performance against the criteria set forth in this plan.

Unearned award fee will not be returned to the Award Fee Pool. Therefore, there will be no opportunity to recapture any unearned Award Fee in subsequent Award Fee Periods.

2 Organizational Responsibilities The Award Fee organization consists of: the Fee Determining Official (FDO), an Award Fee Review Board (AFRB), the AFRB Chairperson, Performance Monitors, non-voting advisors, and a recorder (see Appendix 1).

2.1 AFRB Member Responsibilities

a. Fee Determining Official: The Air Force Program Executive Officer for Space (SMC/PEO) will serve as the initial FDO for this plan. Following initial approval, SMC/PEO delegates authority for the Award Fee Plan to the Director of the MILSATCOM Systems Directorate (SMC/MC). This delegation authorizes SMC/MC to approve any subsequent revisions to the plan. The FDO reviews the recommendation(s) of the AFRB, considers all pertinent data, and determines the earned Award Fee amount for each evaluation period. The FDO will record their final determination in a fee determination letter.

b. Award Fee Review Board Chairperson: The SMC/MCD Director will serve as the AFRB Chairperson, and is responsible for the overall functioning of the AFRB and the performance of its members. The AFRB Chairperson chairs the AFRB, briefs the FDO on the AFRB recommendation, and recommends award fee plan changes to the FDO. Ensures the Recorder schedules all Award Fee meetings and notifies members of the AFRB.

c. Award Fee Review Board Members: AFRB members review the performance monitors’ evaluation of the Contractor's performance, review the Contractor’s self-assessment (reference paragraph 2.2.h. below) and consider all information from pertinent sources, present evaluations, prepare interim performance reports, and arrive at an earned award fee recommendation to be presented to the FDO. The AFRB may also recommend changes to this plan to the AFRB Chairperson.

d. AFRB Recorder: The AFRB Recorder is responsible for coordinating the administrative actions required by the performance monitors, the AFRB, and the FDO, to include:

(1) Receipt, processing, and distribution of evaluation reports and Contractor self-assessment;

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

(3) Accomplishing other actions required to ensure the smooth operation of the award fee process;

(4) Documenting the AFRB and FDO activities and results; and

(5) Providing the Procurement Contracting Officer with documentation from both the AFRB briefing and the FDO briefing, to be incorporated within the contract file.

e. Procurement Contracting Officer (PCO): The PCO is the liaison between the Contractor and Government personnel. The PCO transmits the FDO’s fee determination letter to the Contractor, prepares and distributes the contract modification, awarding the fee authorized upon FDO decision, and maintains appropriate award fee documentation as part of the official contract file. The PCO is the only individual authorized to monetarily obligate the Government.

f. Performance Monitors: Performance monitors maintain written records of the Contractor's performance in their assigned evaluation area(s) so that a fair and accurate evaluation is obtained. Conduct assessments according to the contract requirements and the criteria identified in the award fee plan. Assessments should detail specific examples where improvement is desired, or improvement has occurred, describe how performance meets, exceeds, or lags contract requirements, identify the Contractor’s strengths and weaknesses, and assess the impact to the program of each strength and weakness. Prepare interim and end-of-period evaluation reports as directed by the AFRB. Performance monitors are not voting AFRB members.

2.2 Award Fee Processes

a. Available Award Fee Amount: The Award Fee earned will be paid based on the contractor’s performance during each evaluation period. The available Award Fee for each evaluation period is shown in Appendix 2.

b. Evaluation Criteria: The Award Fee Criteria are defined in Table 3-2. If an update or change to the criteria is required, the PCO will issue a unilateral modification updating the Award Fee Plan prior to the start of the Award Fee evaluation period. If the PCO does not give specific notice to the contractor of any change to the award fee criteria prior to the start of a new evaluation period, the same criteria for the preceding period will be used in the new award fee evaluation period.

c. Focus Areas: Prior to the beginning of each award fee period, the AFRB Chairperson will determine the award fee focus areas to be evaluated during that period – see Appendix 3 for Sample Focus Areas. For the first Award Fee Period, the Focus Areas will be briefed to the Contractor at Contract kick-off. Depending on mission priorities, the government may assign one or more focus areas per general criterion (see Table 3-2; Program Management, Agile

Product Management, and Systems Engineering). The focus areas for the following evaluation period will be presented at the previous period’s final award fee out-brief.

d. Score Determination: During each evaluation period, Performance Monitors will document positive and negative feedback based on the Award Fee Criteria. The AFRB Recorder will consolidate and organize the feedback. The AFRB voting members will review the feedback and determine their individual Overall Award Fee Rating (Excellent, Very Good, Good, Satisfactory, or Unsatisfactory) and Percentage Score (see Table 3-1). The AFRB will brief a recommended Overall Award Fee Rating and Percentage Score, along with supporting rationale, to the FDO. The FDO will consider the AFRB Chairperson’s recommendation and make the final decision for the Overall Award Fee Rating and Percentage Score*. These results will be documented through an FDO letter.

*Note: the Award Fee Score will begin at 0% and may be adjusted based on the feedback documented during the award fee period.

e. Award Fee Computation: The award fee earned by the contractor will be calculated at the completion of the evaluation periods listed in Appendix 2, Table A4-1. The earned award fee per evaluation period will be computed by multiplying the Available Award Fee Pool for the period by the Award Fee Percentage Score as determined by the FDO. In the award fee computation, earnings (if any) are rounded to the nearest dollar. See Table 3-1 for overall ratings and percentage scores. In order for the contractor to earn any award fee dollars for a period, the contractor must meet the minimum essential requirements for that period (“Satisfactory”). If the contractor receives a “Satisfactory” rating, then the contractor shall earn 50% of the available award fee pool. Therefore, if the contractor receives an “Unsatisfactory” rating, then the contractor shall earn 0% of the available award fee pool. Once the fee is determined, the PCO will unilaterally execute a contract modification recognizing the earned award fee and authorizing payment. See Appendix 5 for sample scenario calculations.

f. Interim Evaluation Process: The AFRB Recorder notifies each AFRB member and performance monitor that the mid-point of the evaluation period is approaching. Performance monitors submit their evaluation reports to the AFRB Recorder upon this notification. The AFRB determines the interim feedback results and the AFRB Chairperson notifies the contractor of strengths and weaknesses for the current evaluation period via a PCO letter – See Appendix 4. The AFRB Chairperson may also provide feedback at any other time when it is deemed necessary to highlight areas of Government concern. Government failure to provide interim feedback does not preclude the FDO from considering failures in contractor performance in the award fee determination.

g. End-of-Period Evaluations: The AFRB Recorder notifies each AFRB member and performance monitor that the end of the evaluation period is approaching. Performance monitors submit their evaluation reports to the AFRB Recorder after the end of the evaluation period – see Appendix 4. The AFRB prepares a summary of the evaluation reports and recommendation for earned Award Fee. The AFRB briefs the evaluation report and recommendation to the FDO. At this time, the AFRB may also recommend any changes to the Award Fee plan for FDO approval. The FDO determines the overall score and earned Award Fee amount for the evaluation period. The FDO letter informs the contractor of the earned rating/Award Fee amount which will be forwarded to the contractor by the contracting officer.

The CO issues a contract modification authorizing the payment of the Award Fee earned.

h. Contractor’s Self-Assessment: When the contractor chooses to submit a self-assessment, it must be submitted to the PCO before the interim evaluation and final evaluation periods. This self-assessment of the contractor’s performance throughout the evaluation period may also contain any information that may be reasonably expected to assist the AFRB in evaluating the contractor’s performance. The contractor’s self-assessment may not exceed 10 (ten) slides and use no smaller than 10-point font.

i. Schedule: The following actions will be accomplished within the number of calendar days shown following the completion of each evaluation period within Table 2-1 below:

Calendar Days After Interim and Final Evaluation Period

Contractor Self-Assessment Submitted 7

Interim Feedback presented to Contractor 25

Calendar Days After Final Evaluation Period

Provide Contractor with Revised Focus Areas and Award Fee Pool available for the Next Award Fee Period 25

Modify Contract (if needed for payment) 40

Table 2-1 Award Fee Actions

2.3 Award Fee Plan Change Procedure

The Contractor will be notified of changes to the plan by the PCO, in writing, before the start of the affected evaluation period. The FDO may unilaterally change this plan prior to the beginning of a new evaluation period. All substantive changes to this plan that are applicable to a current evaluation period will be incorporated by mutual agreement of both parties.

2.4 Contract Termination

a. Termination for Convenience: In the event that the contract is terminated for the convenience of the Government, the amount of Award Fee to which the contractor is entitled shall be determined as follows:

(1) Award Fee earned by the contractor for award fee evaluation periods completed prior to the effective date of the termination will not be affected by the termination.

(2) Award Fee deemed earned and to be paid for performance during the period in which the termination becomes effective will be determined by the FDO in accordance with the approved award fee criteria and will not be subject to negotiation as part of the equitable adjustment in accordance with the termination clause of the contract. For purposes of fee determination, contractor performance evaluation will end as of the date of termination.

(3) The remaining Award Fee dollars for all periods subsequent to the period in which the termination becomes effective will not be considered earned and, therefore, will not be paid.

b. Termination for Default: If the Government terminates this contract for default (i.e., Contractor's performance is less than “Satisfactory”), the contractor shall not earn any fee for the period in which the default occurred. Consequently, no additional Award Fee shall be paid during the termination settlement of the contract. Award Fee determined to be earned or earnable by the contractor for Award Fee evaluation periods completed prior to the effective date of the termination will not be affected by the termination, unless other provisions of the contract or Award Fee plan require payback of previously earned Award Fee.

3 Award Fee Criteria Table 3-1. The table below identifies the Overall Ratings and Percentage Scores (Table 3-1).

Overall Rating Overall Rating Description

Percentage Score

Excellent

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

Greater than 90% and less than or equal to 100%

Very Good

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

Greater than 75% and less than or equal to 90%

Good

The Contractor has exceeded some of the significant award fee 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 award fee plan for the award fee evaluation period.

Greater than 50% and less than or equal to

75%

Satisfactory

The 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 award fee plan for the award evaluation period. 50%

Unsatisfactory

The 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 award fee plan for the award fee evaluation period. 0%

Table 3-1 Overall Ratings and Percentage Score

Table 3-2. The table below identifies the Award Fee Criteria and the associated adjectival ratings (Table 3-2).

Award Fee Criteria Excellent Very Good Good Satisfactory Unsatisfactory

Program Management

Applicable SOW reference:

paragraphs 1.1.3, 2.1.3, and 3.1.3

The Contractor’s efforts to plan, manage, direct, control and report on all activities contributing to the design of the PTES System and its interfaces to external systems and organizations, resulted in significant cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts to plan, manage, direct, control and report on all activities contributing to the design of the PTES System and its interfaces to external systems and organizations, resulted in some cost, schedule, or performance benefits to the Government, or reduced program risk.

manage, direct, control and report on all activities contributing to the design of the PTES System and its interfaces to external systems and organizations, resulted in minimal cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor met the SOW requirements to plan, manage, direct, control and report on all activities contributing to the design of the PTES System and its interfaces to external systems and organizations.

The Contractor failed to meet SOW requirements to plan, manage, direct, control and report on all activities contributing to the design of the PTES System and its interfaces to external systems and organizations, resulting in adverse impact to cost, schedule, performance or program risk

Program Management Focus Area(s) – reference paragraph

2.2.c

Applicable SOW reference:

paragraphs 1.1.3, 2.1.3, and 3.1.3 efforts with respect to the Program Management Focus Area resulted in significant cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts with respect to the Program Management Focus Area resulted in some cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts with respect to the Program Management Focus Area resulted in minimal cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor met the SOW requirements with respect to the Program Management Focus Area.

The Contractor failed to meet SOW requirements with respect to the Program Management Focus Area resulting in adverse impact to cost, schedule, performance or

Agile Product Management develop and test, The Contractor’s efforts to plan, develop and test, The Contractor’s efforts to plan, develop and test, The Contractor met the SOW requirements to

The Contractor failed to meet SOW requirements

Appendix A – Agile Product Management conduct Build Decision Reviews, and deliver Builds and Releases using Agile Product Management resulted in significant cost, schedule, or performance benefits to the Government, or reduced program risk.

conduct Build Decision Reviews, and deliver Builds and Releases using Agile Product Management resulted in some cost, schedule, or performance benefits to the Government, or reduced program risk.

conduct Build Decision Reviews, and deliver Builds and Releases using Agile Product Management resulted in minimal cost, schedule, or performance benefits to the Government, or reduced program risk.

plan, develop and test, conduct Build Decision Reviews, and deliver Builds and Releases using Agile Product Management.

to plan, develop and test, conduct Build Decision Reviews, or deliver Builds and Releases using Agile Product Management resulting in adverse impact to cost, schedule, performance or program risk

Agile Product Management Focus Area(s) - reference paragraph 2.2.c

Appendix A – Agile Product Management to the Agile Product Management Focus Area resulted in significant cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts with respect to the Agile Product Management Focus Area resulted in some cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts with respect to the Agile Product Management Focus Area resulted in minimal cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor met the SOW requirements with respect to the Agile Product Management Focus Area.

The Contractor failed to meet SOW requirements with respect to the Agile Product Management Focus Area resulting in adverse impact to cost, schedule, performance or program risk

Systems Engineering

Applicable SOW reference:

paragraph 1.1.1

The Contractor’s efforts in Systems Engineering to perform systems engineering planning, support to external organizations, system level design, The Contractor’s efforts in Systems Engineering to perform systems engineering planning, support to external organizations, system level

The Contractor’s efforts in Systems Engineering to perform systems engineering planning, support to external organizations, system level

The Contractor met the SOW requirements for Systems Engineering planning, support to external organizations, system level

The Contractor failed to meet SOW requirements for Systems Engineering resulting in adverse impact to cost, schedule, configuration and data management, risk management, and cybersecurity and program protection resulted in significant cost, schedule, or performance benefits to the Government, or reduced program risk.

design, configuration and data management, risk management, and cybersecurity and program protection resulted in some cost, schedule, or performance benefits to the Government, or reduced program risk.

design, configuration and data management, risk management, and cybersecurity and program protection resulted in minimal cost, schedule, or performance benefits to the Government, or reduced program risk.

design, configuration and data management, risk management, and cybersecurity and program protection.

performance or program risk

Systems Engineering Focus Area(s) - reference paragraph

2.2.c paragraph 1.1.1 to the Systems Engineering Focus Area resulted in significant cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts with respect to the Systems Engineering Focus Area resulted in some cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor’s efforts with respect to the Systems Engineering Focus Area resulted in minimal cost, schedule, or performance benefits to the Government, or reduced program risk.

The Contractor met the SOW requirements with respect to the Systems Engineering Focus Area.

The Contractor failed to meet SOW requirements with respect to the Systems Engineering Focus Area resulting in adverse impact to cost, schedule, performance or

Table 3-2 Award Fee Criteria and Adjectival Ratings

5 Appendices

1. Award Fee Organization

2. Award Fee Allocation by Evaluation Periods

3. Sample Focus Areas for Period 1

4. Award Fee Board Report

5. Sample Award Fee Calculations

Appendix 1 Award Fee Organization

Members

Fee Determining Official: AFPEO or MC Director, if delegated

PEO or SMC/MC

Award Fee Review Board Chairperson: MCD Director

SMC/MCD

Award Fee Review Board Members (all members below are mandatory voting members unless designated otherwise):

PTES Program Manager SMC/MCDT Deputy Division Chief Deputy Program Manager

SMC/MCD

SMC/MCDT

Chief Engineer Chief of Contract Office Contracting Officer

SMC/MCDT

SMC/PKJ

Legal# Business Lead# Recorder#

#Advisors & Performance Monitors: as appropriate and approved by the FDO or AFRB Chairperson (these are non-voting members)

SMC/JAQ

SMC/MCDT

SMC/MCDT

Appendix 2 Award Fee Allocation by Evaluation Periods

The Award Fee earned by the Contractor will be determined at the completion of evaluation periods, in Table A4-1 below. The award fee periods are six months, with the first period ending 6 months after authority to proceed (ATP). The Award Fee will be allocated evenly across the total number of Evaluation Periods determined upon contract award. The maximum Available Award Fee Pool, per evaluation period, is calculated by multiplying the Total Target Cost (excluding FCCOM) at the individual CLIN-level (CLINs 0001, 0002, and 0003) by 4% and then multiplying by the Award Fee Allocation Percentage assigned to the evaluation period. The allocation to periods is shown below:

CLIN 0001

Evaluation Period*

Award Fee Allocation

Available Award Fee Pool

($) Earned ($) Earned (%) Period 1

(Contract Award + 6 months) TBD ** ** Period 2

(dd mm yy – dd mm yy) ** ** Period X

(dd mm yy – dd mm yy) ** ** Total 100% $ ** **

NOTE: Rows will be added as necessary ** To be inserted/modified by the PCO upon contract award

Table A4-1 Award Fee Allocation Evaluation Period*

Appendix 3 Sample Focus Areas for Period 1

PROGRAM MANAGEMENT

• Thorough and accurate completion of Integrated Master Schedule

• Establish and Maintain Adequate Staffing Levels with the correct skill-set

• Be Collaborative and Responsive to the Government inquires and concerns

AGILE PRODUCT MANAGMENT

• Build and Establish an Effective Architecture and Infrastructure during Build 0

• Generate accurate and complete BDR-1 Documents

SYSTEMS ENGINEERING

• Submit NSA certification CDRLs on time and complete

Appendix 4 Award Fee Board Report

The Award Fee Board Report will be presented to the Contractor at both the interim and end-of-period evaluation periods. The report may include the following:

Interim Evaluation Feedback

1. Award Fee Allocation by Evaluation Period (See Appendix 2)

2. Current Period Focus Areas (See Appendix 3)

3. Feedback for evaluation period

End-of-Evaluation Period Feedback

1. Award Fee Allocation by Evaluation Period (See Appendix 2)

2. Current period Focus Areas (See Appendix 3)

3. Feedback for evaluation period

4. Overall Rating and Percentage Score for evaluation period

5. Focus Areas for next period

6. FDO letter

Appendix 5 Sample Award Fee Calculations

Scenario 1

The sample award fee calculation is for illustration purposes only.

For this illustration, assume:

• Target Cost of CLIN 0001 (excluding FCCOM) = $100,000,000

• Total Award Fee = 4%

• Total Award Fee Pool (CLIN 0001) = $4,000,000 (Target Cost excluding FCCOM multiplied by 4%)

• Evaluation Period 1: DD MM YEAR – DD MM YEAR

• Assume total number of Award Fee Periods = 6 (evenly allocated)

• Award Fee Allocation Percentage = 100% ÷ 6 = 16.7%

• Available Award Fee Pool for Evaluation Period = $4,000,000 * 0.167= $668,000

• FDO determines the Overall Award Fee Rating is “Very Good,” with Award Fee Earned

Percentage of 83%

Award Fee Earned = Award Fee Allocation Percentage * Total Award Fee Pool (CLIN 0001) Dollars * Award Fee Earned Percentage Award Fee earned = 0.167* $4,000,000 * 0.83 = $554,440

Scenario 2

The sample award fee calculation is for illustration purposes only.

For this illustration, assume:

• Target Cost of CLIN 0001 (excluding FCCOM) = $100,000,000

• Total Award Fee = 4%

• Total Award Fee Pool (CLIN 0001) = $4,000,000 (Target Cost excluding FCCOM multiplied by 4%)

• Evaluation Period 1: DD MM YEAR – DD MM YEAR

• Assume total number of Award Fee Periods = 6 (evenly allocated)

• Award Fee Allocation Percentage = 100% ÷ 6 = 16.7%

• Available Award Fee Pool for Evaluation Period = $4,000,000 * 0.167= $668,000

• FDO determines the Overall Award Fee Rating is “Satisfactory,” with Award Fee Earned

Percentage of 50%

Award Fee Earned = Award Fee Allocation Percentage * Total Award Fee Pool (CLIN 0001) Dollars * Award Fee Earned Percentage Award Fee Earned = 0.167* $4,000,000 * 0.50 = $334,000