CFM_COI_SOW_18_Nov_15_final.docx

C.1 Scope/Overview

C.1.1 Scope

The Contractor shall provide outcome based support for consumables and depot level repairables (DLRs) to the United States Air Force (USAF) and Foreign Military Sales (FMS) partner countries. The goal is to increase F108 engine availability through improving Order Response Time (ORT) (availability) for parts required to repair and rebuild F108 engines. The improved support will assist the USAF in achieving and maintaining its War Reserve Engine targets for the F108.

The desired end state parts support solution being acquired is a comprehensive supply chain management program delivering Contractor-sourced and DLA-sourced consumables and Depot Level Repairables supporting improved organic maintenance capability for the engine.

Additionally, the Contractor will provide Repair and Repatriation support as described in the Statement of Objectives at Appendix E.

The support defined in this agreement is to complement and not conflict or supersede those portions of the current Support Agreement contained in the Production Contract (F34601-03-D-0017). The Production Contract states that as long as 5 engines remain in service all engines purchased from CFM are covered by commercial sustaining engineering.

C1.2 Contract Duration

This contract includes one five year, six month base period, and one three year option period, to be exercised via unilateral modification by the Government.

The Government may extend the term of this contract through exercising the option by providing written notice to the Contractor of the intent to extend, within 12 months of contract expiration. The preliminary notice does not commit the Government to an extension.

C.1.3 Execution Strategy

The contract strategy includes multiple spirals.

C.1.3.1 Spiral 1 C.1.3.1.1 Support Categories Spiral 1 will include support for:

(A) Sole Source Consumables (Appendix A)

(B) Depot Level Repairables (Appendix B)

(C) CPUP Kit (Appendix C)

(D) DLA Back-up Support (Appendix D)

(E) IUID for USAF defined components

(F) Repair Repatriation Planning

(G) Repair Repatriation for Module 13/15

(H) Spot Buys during implementation

C.1.3.1.2 Overview of Objectives for Spiral 1

Specifically, the objectives of Spiral I of this contract are:

(A) Decrease F108 Engine repair delays due to the unavailability of consumable parts. Accelerate OC-ALC repair turnaround time and increase engine “time on wing” through enhanced engine repair status monitoring and management support;

(B) Enhance DLA supply chain management activities for DLA-sourced parts through forecasting of OC-ALC demand associated with DLA-sourced items. This objective requires monitoring the DLA supply chain, providing acquisition and expediting recommendations as well as providing material to ensure OC-ALC production is not delayed due to consumable material shortages.

(C) Provide engineering and sustainment support designed to improve and expand organic maintenance capabilities at OC-ALC as described in the Statement of Objectives at Appendix E.

C.1.3.2 Future Spirals

The contract provides for an expansion as requirements develop through subsequent spirals which may include support for the repair and repatriation of additional modules as well as additional requirements developed by the USAF to combat obsolescence, improve maintenance throughput and reduce engine life cycle costs.

C.1.4 Pricing C.1.4.1 Spiral 1 C1.4.1.1 Basis for Price Spiral 1 will be priced as follows:

(A) Material pricing similar to the existing JOC contract based on Lead Time Away Delivery measured with on time delivery metrics only. Applies to Appendix A, B and C in C.1.3.1.1 above, and CLINs 0001, 0002, 0003.

(B) Additional Costs to provide outcome based support as described below in Section C.3.2.2.1 for the CFM Sole Source Consumables listed in Appendix A, CLIN 0006.

(C) Cost to support DLA Back-up responsibilities for the DLA Supply chain to ensure material is available to satisfy all OC-ALC demands. This function is described in Section C.3.2.2.2, CLIN 0005.

(D) Repatriation engineering and sustainment support planning for F108 maintenance. The USAF repair repatriation planning assistance and the detailed requirements to establish, transition, and offload repair work required while OC-ALC ramps up capability will be subject to standard Repair of Repairables pricing strategies. The requirement is described in more detail in the Statement of Objectives. Transition maintenance capability for Module 13/15 will be priced as a lump sum, CLIN 0007

(E) Detailed repatriation requirements for Module 13/15 including all transition and workload to fully establish capability at OC-ALC, while ensuring components are available during transition, CLIN 0008 and 0009.

(F) Spot buy requirements are described in Section C.3.1.1, CLIN 0010.

C.1.4.1.2 Duration of Pricing

Pricing for the material listed in Appendix A, B and C is established herein for the first year of the five year base period only. Pricing for each remaining year of the base period and each year of the three year option period shall be provided in accordance with FAR 52.216-2.

C.1.4.2 Future Spirals

Additional services described as future spirals above may be included as potential additions to this contract. Pricing for these potential future additions shall be negotiated between DLA and/or USAF as applicable, and the Contractor at a later date.

C.1.4.3 Changes to Bill of Materials

The scope of this contract provides for support of the entirety of the F108 Engines Bill of Materials (BOM) and therefore, as the BOM changes[footnoteRef:1] during the contract term, the overall contract value and requirements will be adjusted as outlined below. Pricing for increases to the BOM and DLA Back-up Support shall be negotiated between the Government and the Contractor as future requirements are defined. [1: Changes to the BOM may include new consumables being added to the BOM, consumables being removed, and also includes new or superseded items based on Engineering Change Proposals as described at C.3.2.4.3 below.]

C.1.4.3.1 No Effect on Metrics.

Excluding a future and explicit change in contract performance requirements, any changes to the BOM will not impact performance expectations as those stated in existing performance metrics calculations.

C.1.4.3.2 Contractor Proposal

(A) Upon identification of a BOM change, the Contractor shall propose support within 60 days, as follows:

(1) For any increase to the BOM, the Contractor shall submit a demand forecast (and the price for the material to be provided.

(2) Proposed material prices shall be based on the current catalog and negotiated discounts unless otherwise agreed to by the parties.

(3) Adjustment to Outcome Based Support and DLA Back-up Support Fees

· BOM Transitions DLA Sourced to Contractor Sourced Negotiations will address any appropriate increase to the Outcome Based Support Fee and decrease to the DLA Back-up Support fee for the remainder of the contract term.

· BOM Transitions CFM Sourced to DLA Sourced. Negotiations will address any appropriate increase to the DLA Back-up Support fee and decrease to the Outcome Based Support fee for the remainder of the contract term.

(B) An increase to the BOM will be executed only if the negotiated price supports required savings to the Government.

C.2 Program Management

C.2.1 Overall Management

C.2.1.1 Contractor Program Manager

The Contractor shall provide a Program Manager (PM) who has the authority and necessary staff to accomplish program performance requirements. Responsibilities of the PM include, but are not limited to:

· The PM shall schedule and support, at a minimum, semi-annual program review meetings (PMRs) with DLA.

· The PM shall coordinate program requirements and information with DLA.

· The PM or PM’s representatives shall be available to the Government 24x7x365.

· The PM shall ensure timely resolution of business and technical problems.

· The PM shall implement corrective action in accordance with the terms and conditions of this contract.

C.2.1.2 Government Representatives

The Government shall assign a Procuring Contracting Officer (PCO) and Program Manager (PM) to be the primary points of contact for the Contractor’s Program Manager. All contract changes shall be made via the PCO, or during contract execution, the ACO if one is assigned.

C.2.2 Performance Management

The Contractor shall implement requisite operational and contract metrics and performance management practices (e.g., reporting, monitoring of performance, etc.) to ensure successful management and completion of contract requirements. While primarily intended for internal purposes, the metrics and performance management practices shall be shared with DLA and/or OC-ALC monthly or more frequently as appropriate, to ensure DLA and OC-ALC resources are aware and aligned with the performance management requirements.

C.2.3 Customer Relationship Management

The Contractor shall interface with the Government to facilitate improved forecasting, maintenance and production planning, material procurement to prevent work stoppages, shipment of required material to the Government, and resolution of engineering and technical problems, as follows:

C.2.3.1 DLA – Air Force Interface at OC-ALC

(A) The Contractor shall establish “permanent party” representatives at OC-ALC to support contract transition and subsequent contract execution.

(B) The Contractor shall interface with the Government and the respective DLA Aviation personnel at the customer site. The Contractor shall monitor requirements as they develop, and ensure that the customer’s support requirements are satisfied. A key requirement for the Contractor is the ability to work with the various Government repair and supporting activities. The Contractor shall attend production and supply planning meetings with USAF Maintenance Planners and DLA Aviation Forward Presence Personnel on an as needed basis. Therefore, the Contractor shall team with and establish long-term relationships and agreements with activities that are to be supported. DLA shall assist the Contractor in establishing agreements and teaming arrangements when appropriate and requested by the Contractor.

(C) The Contractor shall support MRO activity through integration with OC-ALC support teams, presence in production meetings and material replacement rates reviews to understand demand fluctuations and enable more accurate forecasting. The Contractor shall conduct reviews with OC-ALC production personnel in accordance with existing OC-ALC timelines and the pending USAF MoU to ensure the consumables bill of material is accurate.

C.2.3.2 Meetings

The Contractor shall meet with USAF and DLA representatives twice a year (or as needed) to discuss the Shop Visit plans, module exposures, shelf stock, production lead times and replacement rates of F108 spare parts.

C.2.3.3 Deep Look Support

The Contractor shall support USAF Deep Look or equivalent part usage adjustment planning meetings as needed with either the local representative or shall travel at the Contractor’s expenses to support the meeting.

C.2.3.4 Security Requirements

C.2.3.4.1 Base Access

OC-ALC access clearance requirements shall apply. The Contractor shall comply with all access and security requirements set forth at Appendix F (the MOU between the Contractor and USAF) for each employee requiring regular base access. The Contractor shall complete and return applicable forms with during contract implementation and the information required at USAF FARS 5352.242-9000, incorporated herein.

C.2.3.4.2 Requirements at Award

DLA security officials shall complete a background check for each Contractor employee requiring OC-ALC access. Upon contract award, the Contractor shall provide the PCO the personal information for each of these employees including, but not limited to, name, address, date of birth and Social Security Number. The Contractor shall be required to maintain a record of this information and update it throughout the life of the contract.

C.2.3.5 Government Provided Workspace

The Government shall provide the Contractor with workspace and the ability to connect to the Internet at or near the specific, high volume SSCs supporting Contractor engine related repairs, and other locations as appropriate, for approximately X Contractor personnel. The Contractor shall be responsible for paying for initial internet connectivity costs and any monthly recurring charges rendered by the internet provider.

C.2.4 Performance Review Boards (PRBs)

C.2.4.1 PRBs shall be held semi-annually. The intent of the PRBs is to monitor and assess contract performance against contract objectives and defined contract requirements, and to coordinate responses and foster solutions to challenges encountered during and after contract implementation.

C.2.4.2 If Contractor performance warrants it, the PCO may reduce the PRBs frequency to meet annually. If performance warrants it, the PCO can reinstate the semi-annual PRB requirements at the conclusion of an annual PRB. Less formal in-process meetings, occurring telephonically, are anticipated to occur throughout the contract term, as necessary.

C.2.4.3 PRBs shall be held in-person, if possible, at predetermined locations. The Contractor shall host the first PRB and the Government shall alternate hosting subsequent PRBs.

C.2.4.4 The PRBs shall be co-chaired by DLA Aviation and the Contractor. The Contractor shall develop an agenda (in accordance with the list of elements below and as approved by the PCO) and distribute the agenda to prospective attendees no later than 5 days before the PRB.

C.2.4.5 During the PRB, the Contractor shall provide status of schedules and support goals, any process improvement initiatives, and provide status on the following elements:

· Support Overview – to include overall schedule status (Delays, Concerns)

· Impact to USAF War Reserve Engines (WRE) Goals

· Metric Performance

· Supplier Issues

· Item Support Issues

· Recommendations for reutilization of used / refurbished material

· Repair repatriation progress and issues

· Quality/Safety Issues

· Obsolescence / DMSMS Issues

· Other Issues or Challenges

· Opportunities to further the partnership and overall repair performance

· Previous PRB Open Action Items/New Action Item

C.2.4.6

Meeting minutes shall be developed and submitted in Contractor format. The Contractor shall submit PRB minutes for approval by the PCO within 10 days after each PRB. DLA and the Contractor are mutually responsible for tracking and resolving, as appropriate, action items identified during the PRB. Action items shall be assigned aggressive due dates and shall be the first agenda item on subsequent PRB.

C.3 Requirements

The Contractor shall support, and be responsible to fulfill, all demand from OC-ALC for material covered in this contract. DLA and/or the USAF (as outlined in a pending MoU) shall provide the Contractor with access to USAF System and DLA Systems or data[footnoteRef:2] to support demand tracking and forecasting. [2: Note: In regards to any USAF System and/or DLA Systems or data references throughout this document, the terms “USAF System” and/or “DLA Systems or data” refers to the respective systems of file sharing directly, or any associated, relevant, similar, replacement, or future upgraded system required to fulfill the operational intent alluded to in this contract.]

C.3.1 Transition and Implementation

(A) The transition / implementation period allows the Contractor time to establish the resources and activities needed to support the required performance metrics. The implementation phase of this contract shall begin immediately after contract award and continue for 180 days. The contractor shall report implementation progress in contractor format every 30 days (1st of the month) during the transition process. A transition plan covering the minimum requirements is provided at Appendix G.

(B) During implementation, the Contractor shall perform all functions necessary to enable full performance commencing 180 days (six (6) months) after the date of the last signature on the contract. These functions include, but are not limited to: establishing (or modifying) business partnerships and supplier agreements, material acquisition, and establishing systems (e.g. EDI testing) necessary to perform the requirements herein. Within 180 days, the Contractor shall submit the first requirement for Contractor-sourced consumables, as necessary, utilizing the data sharing and communication processes described in C.4.2.1.5.1. Subsequent Contractor submissions shall be at the discretion of the Contractor to fulfill contract requirements.

(C) During the transition, DLA shall retain responsibility for support (e.g., overall demand forecasting, material acquisition, distribution, OC-ALC engagement, etc.).

C.3.1.1 Government Attrition and Contractor Assumption of Responsibility

(A) Stock on hand and contract due-in quantities shall be extracted from the DLA EBS system at contract award date and refreshed at the end of the transition period.

(B) DLA and/or OC-ALC shall provide inventory, demand, and backorder position data via DLA Systems or data and USAF systems that is required to facilitate Contractor monitoring of the attrition and fulfillment of requisitions and/or orders. The Contractor shall supplement DLA systems data and USAF systems data by leveraging unique engineering and maintenance data to refine the demand forecast.

(C) During contract transition, the Contractor and DLA shall conduct joint consumable forecasting and ordering to support a seamless customer support experience.

(D) DLA orders processed and due-in on contract as of the date of contract award shall be completed and delivered into Government inventory.

(E) In the event DLA has a requirement for a part identified at Appendix A during the contract implementation period as specified herein, DLA may request the Contractor support the DLA spot buy outside the performance based requirement. If the Contractor has material to support such individual spot buy, a delivery order will be issued via CLIN 0010 of the contract. Spot buy unit prices will be calculated using unit prices from the current catalog pricing and appropriate discount or Performance Period 1 price if catalog pricing is not available. CLIN 0010 is not subject to performance metrics, incentives or disincentives.

C.3.1.2 Information Technology Requirements

C.3.1.2.1 Systems and Data Integration

(A) During the transition period, DLA IT personnel shall collaborate with Contractor IT personnel to establish a data transfer system, where Contractor systems can deliver and obtain necessary information seamlessly from DLA systems.

(B) Final data sharing and communication processes will be defined during contract implementation and shall be incorporated as an Appendix to the SOW via contract modification.

(C) Order placement shall be by EDI transmissions in accordance with ANSI X12 Standards through a registered Value Added Network (VAN). An EDI transmission from the PCO constitutes a binding order; the Contractor is required to commence performance upon receipt of a binding order. See DLAD 52.204.9001 Electronic Order Transmission. The following EDI transactions are required for the purpose of transmitting orders and tracking customer performance:

527R – Contractor notice to DLA of stock availability 940R – Stock Transfer Order (STO) from DLA to Contractor 945A – Contractor notice to DLA of shipment 870S – Contractor status transmission

(D) As the data sharing and communication processes are further defined and tested during contract implementation, the EDI transactions required as listed above may be modified or supplemented through mutual agreement of the parties via bilateral contract modification.

(E) Subject to mutual agreement, the Contractor shall use (or upgrade to) the latest EDI transactions as they become available. As outlined, other EDIs may be required to complete contract requirements.

(F) As intended for inclusion in the pending USAF MoU, the Contractor shall have access to appropriate USAF and DLA systems to monitor and provide oversight and guidance regarding inventory levels and delivery schedules to ensure the Contractor shall satisfy the requirements of this contract. The Contractor shall have access to consumable-level inventory via the flat file transfer process developed during transition. As required to fulfill the contractual requirements the Contractor intends to establish a capability to deliver critical emergent consumables in accordance with the pending USAF MoU. The Contractor onsite representative shall maintain situational awareness of physical location and storage of F108 material.

C.3.1.2.2 Metrics Measurement

DLA will generate metrics from standard DLA systems for ORT, MA, Backorders and Inventory Reduction. Contractor systems can be used to validate, but DLA systems will be the official “scorecard”. To enable more accurate reporting, DLA and the Contractor shall collaborate to clarify any data inconsistencies, and reconcile metrics calculations as specified at C-5 below.

C.3.1.3 Item Unique Identification (IUID) Implementation Plan

C.3.1.3.1 IUID shall be implemented in accordance with the following plan:

(A) Phase 1 – within 30 days of contract award, the Contractor shall work with DLA to evaluate the potential to incorporate IUID for those parts identified by the USAF at Appendix H, and reach agreement on the IUID candidate list. Of those items that cannot be marked due to part physicality constraints (e.g., physical space limitations, surface finish, stress margins, coatings, etc.), the Contractor shall list alternative methods to meet the intent of IUID (e.g., bag and tag, etc.).

(B) Phase 2 - after the candidate list, is finalized, the Contractor shall submit implementation schedules and cost proposals in accordance with the re-opener clause in the resultant contract. These proposals will be delivered in three stages (with milestone dates below), and will identify, at a minimum, required drawing changes, vendor marking setup costs and schedules (including NRE costs), and commencement dates by which parts will be shipped with IUID markings or the applicable alternative method that meets IUID intent identified in Phase 1:

· 1st Stage: proposals will be delivered NLT 210 days after the candidate list is finalized

· 2nd Stage: proposals will be delivered NLT 360 days after the candidate list is finalized

· 3rd Stage: proposals will be delivered NLT 540 days after the candidate list is finalized

(C) Phase 3 – the Contractor shall implement IUID marking on parts as awarded based on the proposals in Phase 2.

C.3.2 F108 Engines Support

This section defines the tasks the Contractor must perform to satisfy the integrated supply chain management requirements to support the depot maintenance of F108 Engines and components at OC-ALC. It is imperative that the Contractor executes a disciplined integrated support approach in order to meet the requirements of maximizing F108 Engines availability. The Contractor shall leverage and synchronize existing engineering expertise with supply chain management support to reduce engine repair turnaround times through increased availability of consumables in Appendix A and D, facilitate reliability improvements, manage configurations and obsolescence, improve engine maintenance/repair processes and reduce overall supply chain costs. All Contractor support processes shall be transparent to the customer, and the customer shall continue to use existing DOD IT consumables ordering and material management systems.

C.3.2.1 Forecasting

The Contractor shall provide demand forecasting for consumables included in this contract. Representatives from DLA, OC-ALC, and the Contractor shall conduct demand planning meetings consistent with scheduled cadence to align on forecasted demand issues and real-time situational changes.

C.3.2.2 Supply Chain Management

(A) The Contractor shall manage quality to ensure that Contractor-sourced consumables are delivered on time to satisfy all customer demands and meet required technical specifications.

(B) The Contractor shall employ strategies to manage both every day and exceptional risks along the supply chain to reduce vulnerabilities, eliminate counterfeit consumables, and ensure continuity to fulfill contractual metric requirements as outlined in this contract.

C.3.2.2.1 Sole Source Consumables

(A) For Contractor-sourced consumables, the Contractor shall forecast, source and supply material based on demand planning as required to meet order response time and material availability requirements outlined in this contract.

(B) The Contractor shall support requisitions for Contractor-sourced consumables (Appendix A) by resupplying DLA inventory through the data sharing and communication processes described in C.3.1.2, that facilitates the Contractor’s supply of material to DLA through push mechanisms and thus, outside of standard delivery order processes. The Contractor shall be able to view the data the Government uses to forecast demand in USAF systems and DLA Systems or shared data.

(C) As the USAF is not party to this contract, the Contractor shall pursue a separate MoU with the USAF, to be incorporated as Appendix F, to define data requests and associated activities to fulfill the requirements of this contract. To the degree possible, DLA shall work with the Contractor and the USAF to ensure data requests are fulfilled.[footnoteRef:3] [3: Terms in this contract are contingent upon USAF support and becoming a party to the intended MoU; inability of the Contractor and USAF to mutually agree to the intended MoU is subject to potential contract renegotiations.]

(D) The Contractor shall initiate buy recommendations through the appropriate EDI transaction based on the Contractor demand forecast. Upon receipt, the DLA system will process the Contractor buy recommendation and create a due-in in the DLA distribution system and release an order to the Contractor via the nightly fulfillment process runs. The Contractor shall maintain electronic access into DLA Systems available for use or through flat-file sharing to validate and verify DLA purchase order position. The Contractor shall be able to recommend local allowances at OC-ALC and push material into those new allowances within the data sharing and communication parameters and contract inventory reduction goals established in the contract. Consistent with contract intent, DLA shall promptly revise allowances to comply with Contractor demand forecast quantities.

(E) DLA has established an inventory reduction objective for this contract in paragraph C.4.4. DLA reserves the right to monitor and challenge Contractor initiated shipments if the inventory balances exceed planned targets.

C.3.2.2.2 DLA-Sourced Consumables For DLA-sourced consumables (Appendix D), the Contractor shall have several major and related responsibilities. The Contractor shall provide a suite of support services to ensure no line stoppages at OC-ALC due to a shortage in DLA-sourced supply.

(A) Monitor Asset Levels

Primarily, the Contractor has a responsibility to ensure material is available when OC-ALC maintenance requests it. The Contractor will monitor DLA’s consumables pipeline and OC-ALC demand rates, and develop recommended adjustments to DLA’s retail allowances at OC-ALC, as well as DLA’s acquisition planning timelines. Recommendations may include considerations for DLA to increase or decrease recommended allowances or existing buy quantities, generate new purchase requests (PRs), or expedite deliveries of current contracts. Initially, the Contractor shall submit these recommended adjustments via Microsoft Excel spreadsheet to DLA’s PCO on a monthly basis. The reporting requirement shall focus only on items with recommended pipeline changes and the analysis generating and justifying the recommendations. DLA shall provide the Contractor with access to DLA Systems or flat files in support of this function.

(B) Back-up Source of Supply

Leveraging the Contractor’s end-to-end supply chain and engineering insight, the Contractor shall take proactive actions and responsibility to ensure supply is available to fulfill DLA-sourced parts requirements in the event that DLA’s existing inventory and pipeline are insufficient or inadequate to fulfill demand within established service levels. Representative Contractor actions may include additional parts engineering and reclamation, accelerated rework, alternative sourcing practices, and preemptive inventory shipping and positioning. Additionally, the Contractor may proactively purchase and/or stock inventory to rectify potential gaps in DLA-sourced supply.

In the event that DLA’s supply chain is not able to satisfy the demand, the contractor is ultimately responsible to provide the required material to ensure production is not interrupted.

C.3.2.2.3 CPUP Kit

The CPUP Kit (Appendix C) (NIIN 01-610-7172) is a unique item that needs to be managed separately from the balance of the requirements on this contract. The CPUP Kit is a planned and scheduled upgrade with a unique pricing formula. CPUP requirements are jointly forecasted through a bi-annual collaboration process that will continue under this contract. On-time / as scheduled delivery for CPUP kits will be monitored, but not subject to incentives and disincentives.

C.3.2.2.4 Depot Level Repairables

The contractor shall provide necessary support required to process F108 (CFM56-2A/2B) engine replenishment Depot Level Repairable (DLRs) spare parts purchase orders issued by DOD agencies under this contract. The DLRs are listed in Appendix B. This shall include, but not be limited to, release of spare parts orders, consummation of prices and delivery schedules, maintenance of schedule status, and material handling including NSN/Bar Coding and Hardware shipments. This will also include joint forecasting of hardware in accordance with commercial practices.

The contractor shall assess changes required to incorporate DoD packaging and marking changes for application on CFM56. Actual packaging/marking requirements will be stated elsewhere in the contract.

C.3.2.2.5 Repatriation

USAF provided Statement of Objectives (SOO) for Repatriation Planning support and Module 13/15 capability development. This section is provided as a SOO to support joint determination of the best path forward to repatriate repair capabilities generally as well as define and price the requirement to establish capability for Module 13/15. The SOO is provided at Appendix E.

C.3.2.3 Distribution

(A) The Contractor shall plan and acquire all the material required to satisfy the requirements at OC-ALC. Appropriate levels of inventory shall be pushed into the DLA Distribution System. Existing DLA distribution infrastructure shall be utilized to store consumables and materials in support of consumable requirements. Distribution is defined as movement from DLA storage facilities (DDOO and/or SSCs) to the OC-ALC PLS receiving location. The Contractor shall monitor the performance of distribution based on the terms developed in a MoU with DDOO and DLA-A OC-ALC distribution personnel, incorporated at Appendix F. The Contractor shall be able to monitor requisition and issue data through the DLA Data Systems agreed to in the MoU.

(B) The Contractor shall distribute outbound Contractor-sourced consumables from the Contractor supply chain to the DLA warehouse facility (DDOO). The Contractor shall plan, handle and submit advanced shipment notification for all Contractor-sourced consumables, and utilize Government Bill of Lading (GBL) transportation to deliver consumables. All consumables delivered by the Contractor shall be FOB Origin (Freight on Board). On an exception basis, the Contractor, at its own cost, may utilize commercial transportation means to expedite Contractor-sourced consumable deliveries.

(C) If DLA or the Contractor determines a requisition involves a critical material requirement; both parties shall work with the Government transportation office to ensure timely delivery from DDOO to the appropriate USAF receiving point.

(D) DLA shall receive and subsequently manage material in the DLA distribution system as well as design, plan, and prepare for consumable distribution.

C.3.2.4 Engineering Expertise

C.3.2.4.1 Configuration Control. The Government shall maintain configuration control and change authority for all modifications or changes regarding the material acquired under this contract. DLA shall notify the Contractor of any configuration changes implemented by the Services. If the Contractor should identify configuration control issues, the Contractor shall initiate the configuration control issues in writing to the PCO.

(A) The Contractor may review configuration of F108 Engines items and recommend other known available items that meet or exceed the current application of the item(s) and represent a better value to the Government.

(B) The Contractor shall submit for approval by the PCO all known configuration changes that affect the applicable F108 Engines items to include impacted system(s), old and new part numbers, and the reason for the proposed change. The known configuration change may be accompanied by a Request for Equitable Adjustment / ECP with the corresponding details as required by FAR 15.403-1.

(C) The Contractor shall not supply any item under the contract that incorporates a known departure from technical or contractual requirements unless a request for a deviation, submitted from the Contractor to the PCO, has been approved by the Engineering Support Activity (ESA). Authorized deviations are a temporary departure from the requirements only and do not authorize a change to the item’s configuration baseline. Deviation requests shall be prepared in accordance with DI-CMAN-80640C-Request for Deviation. Guidelines for preparing deviations may also be found in MIL-HDBK-61A, Configuration Management Guidance and ANSI/EIA-649, National Consensus Standard for Configuration Management.(D) For any ECP developed that impacts a Contractor-sourced part the Contractor shall maintain the sourcing and replacement of that part if the consumable remains under supervision of the DLA. Any configuration changes that require a change in non-CFM sources shall satisfy the Contractor quality standards.(E) DLA shall inform the Contractor of any configuration changes to DLA-sourced material that impact demand forecasting accuracy (lead time, usage, etc.).

C.3.2.4.2 As to be included in the pending USAF MoU, DLA shall facilitate Contractor access to engine failure and repair data to include failure mode, life use information, and any factors that impact consumable and repairable part life. The Contractor may use this information to identify opportunities for life extensions, alternative manufacturing and material considerations, repair opportunities and consumable cost reductions, and improved demand forecasting, in support of end-to-end cost reduction.

C.3.2.4.3 Obsolescence and DMSMS. The Contractor shall assist the DLA in mitigating obsolescence and Diminishing Manufacturing Sources and Material Shortages (DMSMS) occurrences for the population of items covered under this contract.

(A) The Contractor is responsible for managing and resolving obsolescence and DMSMS challenges applicable to the Contractor-sourced population of items throughout the life of the contract by providing timely notice, briefs and recommended solutions. Obsolescence management includes ongoing review and identification of actual and potential obsolescence issues, including obsolescence of consumables and material to support the repair of engines or components.

(B) Obsolescence responsibilities of the Contractor shall include, but are not limited to, Life of Type buys, bridge buys, sourcing replacement consumables from secondary suppliers, recommending and documenting the process to reuse commercial parts and finding or developing new suppliers.

(C) Recommendations for the utilization of used / refurbished material will be subject to USAF review and approval. The Contractor shall present the requirement, recommendation and justification to USAF F108 Engineering for review. If the cognizant Engineering Support Authority approves the use of used / refurbished consumable material the contractor will not physically “push” this material into the DLA System. This material will be managed as Customer Direct material and will be delivered directly from the Contractor facility to the USAF end user. DLA systems do not have the capability to separate reused material from new material or direct specific parts to only the depot customer.

(D) Class I Engineering Change Proposal (ECP) redesigns (non-recurring and recurring engineering) for obsolescence are neither included nor required in this contract. Contractor will not be held accountable for failure to implement ECPs that address obsolescence provided the Contractor has exhausted and documented all efforts made to provide support during transition to the replacement part. Any exceptions shall be reviewed on a case-by-case basis. All NRE and recurring engineering costs for Class I changes due to obsolescence shall be paid for under separate ECP and subject to availability of funding in consultation and support to USAF and DLA, as appropriate.

(E) Obsolescence and DMSMS briefings shall include recommended solutions and workarounds to maintain support. If a fully developed solution has not been developed, the briefings shall include a timeline including Milestones and interface / approval requirements with Government personnel. Obsolescence and DMSMS will be included in the PMRs. However, the Contractor shall provide the Government with immediate, written notification of any known manufacturer discontinuations, including a recommendation for and potential substitute of replacement items and substantiation of such recommendations when they are discovered.

(F) The final decision making authority for the recommended solution shall remain with the Government. All approval on engineering changes shall be administered and executed through bilateral modification by the PCO.

C.4 Performance Metrics and Incentives The contract includes Delivery Metrics and Incentives and an Inventory Reduction Metric and Incentive. The table below summarizes the performance metrics and incentives that appy to this contract.

C.4.1 Metrics and Incentive Governance

C.4.1.1 Definitions

A requisition is defined as an order for a single NIIN or part number and may be for multiple quantities of a single NIIN or part number.

Backorder age is defined as the number of calendar days between requisition date and fulfillment date (MRA date).

Periods of Performance is defined as the 12-month period beginning on the contract start “GO LIVE” date (after completion of the transition period) and each successive 12-month period during the remainder of the contract.

C.4.1.2 Assessment of Metrics and Incentives C.4.1.2.1 Systems of Record. The systems of record for all performance metrics will be DLA EBS or USAF requisition fulfillment systems, including in the workload management utility program known as COPA that is maintained by DLA functional experts.

C.4.1.2.2 Delivery of Metric Data. The Government shall provide the Contractor monthly performance and backorder reports, no later than the 15th day of the following month. Reports shall include performance calculations to date for all metrics and applicable information for each performance metric to include the NSN list, requisition date, requisition fill date, open delivery orders, open backorders, closed backorders, and backorder age. The Government may provide metric data more frequently per the Contractor’s request.

C.4.1.2.3 Challenges to Metric Data. The Contractor may challenge metric data if failure to perform is outside of the Contractor’s control and/or due to DLA’s failure to implement its responsibilities. Examples include, but are not limited to, DLA inventory shrinkage, unusually large world-wide requisitions, DLA’s delay or non-action (with appropriate substantiation and sufficient time) to acquire DLA-sourced items when Contractor notifies DLA of impending stock shortage, etc. For each requisition challenged, the Contractor will provide DLA with rationale for relief as part of a monthly CDRL within 15 days after receipt of the metric data to the Contractor under C.4.1.2.2. DLA will review each challenge on a case-by-case basis and provide Contractor written notice of acceptance or rejection (with rationale) for granting metric relief and updating metric data, as appropriate, within 15 days.

C.4.1.2.4 Data Delivery and Challenge Timeframes. The timeframes for delivery of metric data and challenges identified in Section C.4.1.2.2 and C.4.1.2.3 are goals. The Parties agree to strive to achieve or exceed these goals, but neither contracting party shall have any right of action, claim for breach, or the like, as a result of the other party’s failure to achieve these timeframes despite good faith efforts to do so.

C.4.1.2.5 Computation of Incentives/Disincentives. Metric performance and associated incentives and disincentives shall be calculated within 60 days of the end of each performance period. The resulting incentives or disincentives will be applied to the negotiated discount to the catalog prices for the next performance period.

C.4.1.2.6 Incentives and Disincentives for the Final Performance Period. Incentives and disincentives earned due to performance in the final performance period will be paid in a lump sum, based on the value of the orders in the final performance period. For example, if $100 million worth of orders are issued in the final performance period, if the discount is 10% for that period, and if the contractor earns a combined incentive/disincentive of 1.5%, the Contractor will be paid a lump sum incentive of $150,000 ($100,000,000 x 0.1 x 0.015). Under the same scenario, if the contractor earned a disincentive of 1.2%, the Contractor would pay a lump sum of $120,000 ($100,000,000 x 0.1 x 0.012)

C.4.2 Delivery Metrics and Incentives

The contract shall use three metrics to evaluate contract performance: Custom - Order Response Time (C-ORT), Lead-Time Away, and Backorder. C-ORT and Backorder metrics will apply to material listed in Appendices A and D. Lead-Time Away Metric will apply to the CPUP Kit and DLR items (Appendix B and C). Incentives and disincentives will apply to C-ORT and Backorder metrics.

C.4.2.1 C-ORT. C-ORT represents the full range of demands for DLA material at OC-ALC. C-ORT is a combination of direct maintenance demands from the USAF Maintenance DoDAAC FB2039 and indirect demands from the Industrial Prime Vendor (IPV) contractor DoDAAC SD0550.

C.4.2.1.1: Direct maintenance demand (FB2039) portion of the C-ORT

This portion of C-ORT is considered “local material availability” within 48 hours of demand. Accordingly, to be successful the material has to be delivered to the customer’s receiving facility within 48 hours of a requisition.

C-ORT considers the number of requisitions filled within 48 hours and the total number of requisitions during the performance period.

C.4.2.1.2 Indirect IPV demand (SD0550) portion of the C-ORT

DLA shall evaluate Contractor performance for support for the Industrial Prime Vendor contract by measuring demand from the IPV Contractor’s DODAAC (SD0550). These indirect demands for material DLA has required the IPV Contractor to acquire from DLA flow to DLA through DoDAAC SD0550. C-ORT includes the number of requisitions filled on time and the total number of requisitions issued during the performance period.

C.4.2.1.3 C-ORT Calculation

(A) The C-ORT metric will be a percentage of filled requisitions, measured by combining the monthly direct maintenance and indirect IPV demand as follows:

Number of Filled FB2039 Reqns within 48 hours + Number of SD0550 Reqns Filled Total Number of FB2039 Reqns + Total Number of SD0550 Reqns

(B) C-ORT will be rounded to the nearest 0.1% (one-tenth) in accordance with standard rounding procedures of 0.05 or above rounded up.

C.4.2.1.4 C-ORT Incentive/Disincentive

The Contractor’s performance on C-ORT will have an increase or decrease in the negotiated discount for catalog items, as follows:

Table will be developed once baseline performance is established and performance incentive and disincentive ranges have been agreed to … here is an example

For example, if the negotiated discount for the next performance period is 10%, and the contractor’s C-ORT is at 98.2%, the government’s discount would be reduced by 0.83%, to 9.17%. Conversely, if the C-ORT is 90.1%, the Government’s discount would be increased by 0.85% to 10.85% in the next performance period.

C.4.2.2 Lead-Time Away Metric. Delivery of orders for CPUP kits and DLR items will be measured based on whether the requisitions are delivered within the contractual lead time. Although this performance will be monitored, no incentive or disincentive will apply.

C.4.2.3 Backorder Metrics & Incentives. Contractor performance regarding backorders will be evaluated through two metrics: percentage of backorders closed within 30 days and percentage of backorders greater than 180 days old. For purposes of metric evaluation, a requisition is considered in backorder status for any unfulfilled demand. For OC-ALC requisitions, both Contractor-sourced and DLA-sourced items will be included. Any backorders with a requisition date prior to start of the initial performance period will be excluded.

C.4.2.3.1 30-Day Backorder Metric and Incentive

(A) Closing backorders in the first 30 days helps a maintenance activity plan its work and allocate its resources. In order to provide this additional level of support to the USAF, this contract an incentive if the Contractor resolves within 30 days more than 50% of all backorders created during that performance period. If the Contractor clears more than half of the backorders generated in the performance period (in less than 30 days), the contractor will receive a 0.25% decrease in the discount rate applied to requisitions issued in the following period of performance.

(B) Data to calculate the 30 day resolution backorder metric will be extracted from DLA’s EBS system. Individual requisitions that have been backordered (i.e., material was not available to fulfill the demand on the first pass) will be measured from the date the requisition is created by the customer to the Material Receipt Acknowledgement (MRA) date. Open backorders generated in that performance period will be included as part of the total backorders.

(C) The calculation will be completed as follows. Examples are from the following table (Status SS means shipped and BB means still backordered)

Backorders created in this performance period filled in <= 30 days Total Backorders created in that performance period

In the example table below, backorder resolution is 2 / 3 = 66.7% which is greater than 50% and thus, the Contractor would earn 0.25% incentive. If the negotiated discount is 25%, the incentive would decrease the discount to 24.75% for the following performance period

C.4.2.3.2 180-day backorder Metric and Disincentive.

(A) Aged backorders are a critical challenge for DLA and the maintenance organizations it supports. As such, the contract will include a 1% decrement to the discount if 15% of backorders are greater than 180 days old at the end of a performance period.

(B) Data will be collected DLA’s EBS system. The calculation will be different as the aged backorder calculation will include all backorders that were filled in this performance period (regardless of when they were generated) as well as all open backorders at the end of the period. At the end of the performance period all backorders fulfilled (closed) and current backorders unfulfilled (still open) will have their age calculated and the percentage over 180 days derived. Backorders remaining open at the end of the performance period will also be included in the 180-day Backorder disincentive calculation, with their age calculated based on its original creation date.

(C) The percentage of backorders over 180 days old calculation would be:

Open and Closed Backorders >180 days old Total open and closed backorders

For example, if there are 500 total backorders and 100 (20%) of them were 180 days old or older, the disincentive would be applied. If the negotiated discount is 10%, the disincentive would increase the discount to 11% for the following performance period.

C.4.4 Inventory Reduction Incentive for Contractor Sourced Consumables

Inventory reduction or right sizing is a measure of success for DLA in this contract. That said, improving material support is the primary goal and has to be balanced against this objective. For this contract, inventory reduction targets apply to Contractor-sourced consumables (Appendix A).

C.4.4.1 Baseline Inventory Value Calculation. The inventory baseline position will be calculated from DLA’s EBS system at the time of award and will include current stock on hand quantities as well as contract due in quantities. The total value will be SOH + Contract Due in. This quantity will be multiplied by the average DLA acquisition cost (DLA MAUC / ZPDR) prices at that time. The beginning inventory MAUC price will be used to value inventory throughout the contract’s 5 year base term.

C.4.4.2 Incentive for Inventory Reduction. Beginning in the second performance period, the contractor will be incentivized to reduce DLA on-hand and due-in inventory by at least 10% within the first 24 months after contract award and continue to reduce by an additional percent listed in the table by year for a total reduction of 31% through the base period of the contract.