CFM_COI_SOW-Updated_Mar-25-16.docx

C.1 Scope/Overview

C.1.1 Scope

The Contractor shall provide support for new sole source consumables and depot level repairables (DLRs) to the Defense Logistics Agency, the United States Air Force (USAF) and Foreign Military Sales (FMS) partner countries. The Government’s 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 meeting the F108 engine repair project directive and achieve and maintain its War Reserve Engine targets for the F108 engine program.

This contract captures customer support expectations that are a result of being a continued customer of CFM, and use of commercial procurement methods. These customer support tasks mirror commercial support tasks related to jet engine spare part customers, which may or may not be formalized in writing with other commercial customers. Documentation of these major support elements is intended to assist the government contracting officer in assessing the reasonableness of spare part prices and to facilitate understanding by all parties of the support expectations on long-term contracts. The support covered in this element is distinctly separate from those that came as a result of the whole engine purchase that was described in the whole engine purchase contract. This element does not limit the customer support CFM may provide. 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 base, and one three year option period, to be exercised via 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 6 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) Sole Source Depot Level Repairables (Appendix B)

(C) CPUP Kit (Appendix C)

(D) IUID for USAF defined components

C.1.3.1.2 Overview of Objectives for Spiral 1

The objectives of Spiral I of this contract are to provide material ordered by the government to decrease F108 Engine repair delays due to the unavailability of parts.

C.1.3.2 Future Spirals

The contract provides for an expansion as requirements develop through subsequent spirals which may include: holistic parts support including metrics linked to customer outcomes; maintenance capability and capacity improvement tools identified as well as additional requirements developed by the USAF to combat obsolescence and reduce engine life cycle costs. All future spirals will be confirmed as Sole Source to the OEM through market research prior to execution.

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 Joint Opportunity Contract (JOC) 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) Costs and requirements to implement IUID requirements are described in Section C.3.1.1, CLIN 0004.

C.1.4.1.2 Pricing Methodology

Initial contract prices will be established based on the CFM commercial catalog. Additionally, a discount will be negotiated and applied to regular catalog item prices. Other special discounts may be negotiated for specific items (i.e. kit discount AF33K100SPK/C-Pup Kit, etc.). These special discounts apply to a set quantity per identified item. The maximum quantity eligible for discount will be identified in the contract attachments. Updates based upon either part or engine usage will be provided by CFM on a monthly basis. The out year pricing will be accomplished using the CFM commercial catalog, the agreed upon discounts and shall be provided in accordance with FAR 52.216-2. The terms of the specific discounts will be negotiated as required. Special discounts are not added to the standard discount.

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 entire F108 Engine Bill of Materials (BOM) that is sole sourced to CFM and therefore, as the BOM changes 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.

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.2 Program Management Spiral 1

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 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.2.3.2 Program Management Review (PMR) Meetings

The government and contractor representatives will conduct meetings at least annually to provide a technical and logistics review. Discussions may include but are not limited to current status, issues, forecasting projections, initiatives and innovations, environmental opportunities, action item(s), continuous process improvements, and future developments. The contractor shall prepare minutes for PMR meetings containing a brief summary of each major issue; identify all agreements achieved, and any open issues which require further coordination or action. These minutes shall be furnished to the Contracting Officer within two weeks after each PMR Meeting.

a. During these reviews, the Government will identify the anticipated requirements for each item to the contractor. The contractor will make a business decision to advance release material for production after receiving this information from the Government. The placement of items within the advance release category will be based on mutual agreement between the contractor, DLA and requiring Service at no cost to the government.

b. The parties acknowledge that the Contractor’s commitment to improved performance relies upon it taking financial risks, without contractual coverage, in order to accomplish the lay-in and delivery requirements for which the primary means of compensation will be authorized by the appropriate Service organization.

The Government will retain item management responsibilities for all items; however, the Government will benefit from the shared collaborative forecasting process. These open communications will ensure greater accuracy of forecasts, reductions in order excess, and parts obsolescence.

During the PMR, 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 F108 Engine Production Goals

· Metric Performance

· Supplier Issues

· Item Support Issues

· Quality/Safety Issues

· Obsolescence / DMSMS Issues

· Other Issues or Challenges

· Opportunities to further the partnership and improve overall sole source parts support Previous PRB Open Action Items/New Action Item

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. CFM's participation in Deep Look is limited to discussions of sole source parts only.

C.3 Requirements

The contractor shall provide necessary support required to process F108 (CFM56-2A/2B) engine replenishment spare parts purchase orders issued by DOD agencies under any existing Government Spare Supply contract during the period of this contract. 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 meet 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. The contractor shall supply commercial formatted spare part projections data needed for procurement planning.

C.3.1 Collaborative Forecasting (CoFo) Intitiative.

The Collaborative Forecasting (CoFo) Initiative utilizes a Collaborative Planning, Forecasting and Replenishment (CPFR) approach where a standard set of business processes for collaboration on Demand Plans and Supply Plans are developed for specified NSNs. This process enables trading partners (Air Force and Suppliers) to have visibility into one another’s critical demand, requirements forecasts and supply orders through a systematic process of shared information, exception identification and resolution. CoFo is a continuous process improvement plan that opens communication between business partners through data sharing and improves warfighter support by improving demand plan accuracy and supply capabilities.

a. CoFo conferences will be held on mutually agreed upon dates and locations. Frequency will target quarterly, but shall be no less than semi-annually. Conference may be in person or electronic/virtual. The customer and CFM teams will look over past history as well as future projections to more effectively forecast material needs.

b. CFM and the customer will share pertinent data in a common electronic format that can be manipulated to accomplish further analysis to reduce inventories, improve efficiencies and improve services.

c. CPFR is a concept that aims to enhance supply chain integration by supporting and assisting joint practices. CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between partners, assists in planning and satisfying customer demands through a supportive system of shared information. This allows for continuous updating of inventory and upcoming requirements, making the end-to-end supply chain process more efficient. Efficiency is created through the decrease in expenditures for inventory, logistics, and transportation across all partners.

d. Expected CoFo conference results may include, but are not limited to:

a. ALT improvements

b. PLT improvements

c. Forecast accuracy improvement

d. Out-of-production part avoidance

e. Reduced backorders

f. Decreased MICAPs

g. Reduction of slow moving inventory

e. All metrics and targets will be updated on an annual basis.

C.3.2 Item Unique Identification (IUID) Implementation Plan

C.3.2.1 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.3.3 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 configuration changes approved for incorporation by the USAF that affect the sole source F108 Engines items to include impacted system(s), old and new part numbers, and the reason for the proposed change. The USAF approved 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 sole source 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 Source Authority (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.).

(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.3.3.1 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.

C.4 Performance Metrics A key component of the Strategic Supplier Alliance will be the ability to effectively provide management visibility into efficiency and productivity of the contract. This requirement necessitates the creation of a meaningful set of performance measures/metrics that drive enhanced contract performance and continuous process improvement. The metric listed below will be utilized to evaluate contract performance and efficiency. The evolution of contract metrics will be achieved through government/contractor partnerships to determine appropriate measures based on contract objectives and performance standards. This partnering shall continue throughout the life of the contract to ensure the metrics remain valid and relevant to government priorities and contractor performance. At a minimum the performance metrics goal and required level(s) of performance will be evaluated against current performance.

C.4.1 On time Delivery Metric The specified Production Lead Time (PLT) shown in the contract attachments represents the time after receipt of an order (ARO) by CFM until parts are ready for shipment in reasonable quantities. Reasonable quantities shall normally be three months’ customer usage to a mutually agreed upon delivery schedule. Delivery Metrics as well as lead times will be tracked against mutually agreed upon goals.

C.6 Reporting Requirements

C.6.1 Following is a list of the Contractor reporting requirements established for OC-ALC F108 Engines shops & Operational Customer support and required for submission to the PCO.

3. Contractor Performance Management Practices

Sec 2.2

C.6.2 All reports shall contain the minimum elements identified in the “Report Definition” column above and be submitted in a Microsoft Excel format (for raw data) and Microsoft PowerPoint or Word (for charts pertaining to raw data), unless otherwise directed by the PCO.

C.6.3 Additional reporting elements may be required by the PCO and shall be mutually agreed to with the Contractor, including compensation for any additional costs, and corresponding adjustment to price(s).

C.7 List of Appendicies A. Appendix A – Sole Source Consumables – Pricing Sheet B. Appendix B – Sole Source DLRs – Pricing Sheet C. Appendix C – CPUP kit – Pricing Sheet D. Appendix H – F108 IUID List – CEMS Tracked PNs