T108 Incentive Document.pdf

T108

PROPULSION

INCENTIVE

DOCUMENT

RFP: FA8124-21-R-0003

1 February 2022

CHRISTOPHER W. PARRY, NH-04, DAF Date Chief, Propulsion Sustainment Division

Air Force Life Cycle Management Center

1.0 INTRODUCTION

The goal of a Performance Based Logistics (PBL) program is to set threshold performance requirements and incentivize the support provider to meet or exceed those performance requirements. This incentive plan defines the boundaries and processes for accomplishing the above stated goals to support the T108-RR-100 and T108-RR-101 Type Model Series (TMS) engines. This Performance Incentive Document (PID) outlines overall strategy, establishes procedures and identifies criteria for determining the amount of total Performance Incentives (PI) the Contractor can earn for performing at, below, or above threshold performance requirements.

This plan also describes the contract performance measures and provides an explanation of the data sources, methodology and levels required of performance. The Contractor’s performance will be evaluated for maintaining individual incentive metric thresholds for each TMS engine.

The methodology contained herein for determining the actual PI is a unilateral decision made solely at the discretion of the Government.

The PI earned and payable will be determined by review of the Contractor’s performance against the criteria set forth in this document. The intent of this PI is to incentivize the Contractor to maintain the availability of a requisite number of serviceable engines at each C-130J operating location, as well as C-130J variants, increase engine operating hours inherent Mean-Time Between Removal (MTBR) and performance reliability, and improve propeller availability and responsiveness. The measures are:

War Readiness Engines (WRE) Propeller Availability Mean Time Between Removals (MTBR)

2.0 PERFORMANCE INCENTIVE FEE BASIS

This PID covers the basic contract (1 Feb 22 – 31 Jan 27) and will be re-evaluated for changes or updated performance criteria when negotiating the pricing for each option year.

Contractor’s performance will be subject to both positive and negative incentives. Each evaluation period will cover 12 consecutive months, each year, starting with the first month of the period of performance following contract award (1 Feb – 31 Jan). The evaluation period will cover 12 months/4 quarters and will be used to calculate the performance incentive fee earned.

For recording purposes, metrics will be calculated on a monthly/quarterly basis and assessed every twelve months for incentive fee payments. The incentive pool dollars will be 3% of the Priced per Flying Hour rate (PPFH). Disincentives will result in a deduction of 0.20% of the PPFH rate (WRE and Propeller Availability only). The performance criteria for the incentive are WRE, Propeller Availability and inherent MTBR. Table 2.1 indicates the assigned weight/value for each area of emphasis for the performance and evaluation period for the stated performance criteria. Table 2.1 further breaks down each performance criteria by TMS or aircraft.

TABLE 2.1

Performance Criteria

AREA OF EMPHASIS

PWS

REFERENCE

PERFORMANCE

MONITOR

WEIGHT

War Readiness Engines

(WRE)

1.4.2 Propulsion IPT

(Government)

40%

T108-RR-100 50%

T108-RR-101 50%

Propeller Availability 1.4.2 Propulsion IPT (Government)

40%

WC-130J 50%

Remainder Aircraft 50%

Inherent Mean-Time Between Removal

(MTBR)

1.4.2 Propulsion IPT

(Government)

20%

Incentive earnings will be assessed at the end of each month/quarter and will be tracked throughout the evaluation period by the USG. At the end of the evaluation period (31 Jan), incentives and disincentives will be calculated by the USG. The Contractor will receive notification of incentive earning and/or disincentive deductions within 90 calendar days after the end of the evaluation period. The Contractor will use this information to issue an invoice.

Invoices must be issued within 30 days upon incentives/disincentives notification. If the Contractor wants to appeal incentive/disincentives, they will have 10 calendar days from receipt of incentive/disincentive notification to provide appeal justifications. Appeals must be submitted to the USG’s contracting officer in writing. The USG will review the appeal and provide a determination to the Contractor within 30 days of appeal receipt.

3.0 Incentive Metrics

WRE: WRE will be weighted at 40% of the total incentive pool dollars (PPFH x # of FHs for the year x 0.03 x 0.40). Of the 40% weight dedicated to WRE, 50% of this pool will be dedicated to the T108-RR-100 WRE metric and 50% of this pool will be dedicated to the T108-RR-101 WRE metric. Each TMS will have a respective WRE metric in which must be maintained by the Contractor.

United States Government (USG) will provide WRE performance ranges for each TMS as early as the spring Maintenance Planning Working Group (MPWG) and No Later Than (NLT) 10 business days prior to start of the Fiscal Year (FY) (1 Oct). Each year the Contractor’s performance will be evaluated monthly, starting on the Period of Performance (PoP) anniversary date (1 Feb) for a period of 12 consecutive months. The Contractor’s performance will be computed and tracked via CEMS. Contractor’s performance results will be recorded each week on Thursday, except for the last Thursday of each month. On the last Thursday of the month, the average of all Thursdays for the month will be reported. Each week, the USG will provide a report to the Contractor detailing WRE status.

The Contractor will receive maximum incentive for maintaining WRE level in green (100% to 125%) status monthly, for 12 consecutive months. There will be no incentive and no penalty for each month WRE level is in green/yellow (greater than 125%) status or yellow (greater than or equal to 70%, less than 100%) status. For each month WRE level is in red (less than 70%) status the Contractor will receive a penalty of 0.20% from the PPFH rate for each month red for up to six months (PPFH x # of FHs for the year x 0.002). See Table 3.1. If the WRE remains in a red status for 6 months or more during the evaluation period (consecutive or non-consecutive), then the earning potential for an incentive for that evaluation period will be forfeited. Table 3.2 shows an example of the WRE incentive for one evaluation period for each respective TMS.

Table 3.1

WRE Incentive Ranges

Green/Yellow Status

WRE > 125%

No Incentive No Disincentive

Green Status

100% ≤ WRE ≤ 125%

Incentive Earned

Yellow Status

70% ≤ WRE < 100%

No Incentive No Disincentive

Red Status

WRE < 70%

Disincentive Earned 0.20% of PPFH Rate

Table 3.2 WRE Incentive Example

T108-RR-100 PoP Year 1

*T108RR100 Incentive Pool = (PPFH x # of FHs for the year x 3% * 40%) x 50% 7 months of incentive earned for T108-RR-100 engine 4 months of disincentive earned for T108-RR-100 engine

T108-RR-101 PoP Year 1

*T108RR101 Incentive Pool = (PPFH x # of FHs for the year x 3% * 40%) x 50% Due to being in the red status for six months during this evaluation period, there will be no incentive earned and a disincentive for six months

Propeller Availability: Propeller Availability will be weighted at 40% of the total incentive pool dollars (PPFH x # of FH for the year x 0.03 x 0.40). Of the 40% weight dedicated to Propeller Availability, 50% of this pool will be dedicated to the propellers for the WC-130J and 50% of this pool will be dedicated to the propellers for the remaining aircrafts. WC-130J propellers and propellers dedicated to the remaining aircraft will each have a respective Propeller Availability metric in which must be maintained by the Contractor.

USG will provide Propeller Availability performance ranges for each aircraft category as early as the spring MPWG and NLT 10 business days prior to start of the FY (1 Oct). Each year the Contractor’s performance will be evaluated monthly, starting on the PoP anniversary date (1 Feb) for a period of 12 consecutive months. The Contractor’s performance will be computed and tracked via daily reports provided by the Contractor. Contractor’s performance results will be recorded each week on Thursday, except for the last Thursday of each month. On the last Thursday of the month, the average of all Thursdays for the month will be reported.

The Contractor will receive maximum incentive for maintaining Propeller Availability level in green (100% to 125%) status monthly, for 12 consecutive months. There will be no incentive and

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Green Incentive for 6 months

(𝑇𝑇108𝑅𝑅𝑅𝑅100 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ 50%)

Red Disincentive for 4 months

�𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ # 𝑃𝑃𝑜𝑜 𝑃𝑃𝑃𝑃𝐹𝐹 𝑜𝑜𝑃𝑃𝑓𝑓 𝑦𝑦𝐼𝐼𝑦𝑦𝑓𝑓 ∗ (−0.20%)�

∗ 4

Yellow No

Incentive

Disincentive

Green Incentive for 1 month

(𝑇𝑇108𝑅𝑅𝑅𝑅100 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ 50%)

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Incentive for 3 months

(𝑇𝑇108𝑅𝑅𝑅𝑅101 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ 50%) ∗

No Incentive

No Disincentive

Disincentive for 6 months

�𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ # 𝑃𝑃𝑜𝑜 𝑃𝑃𝑃𝑃𝐹𝐹 𝑜𝑜𝑃𝑃𝑓𝑓 𝑦𝑦𝐼𝐼𝑦𝑦𝑓𝑓 ∗ (−0.20%)� ∗ 6

This forfeits the potential to earn an incentive for this year. Incentives earned for Feb-Apr will not be received.

no penalty for each month Propeller Availability level is in green/yellow (greater than 125%) status or yellow (greater than or equal to 70%, less than 100%) status. For each month Propeller Availability level is in red (70% < ) status the contractor will receive a penalty of 0.20% from the PPFH rate for up to six months (PPFH x # of FHs x 0.002). See Table 3.3. If the Propeller Availability remains in a red status for 6 months or more (consecutive or non-consecutive), then the earning potential for an incentive for that evaluation period will be forfeited. Table 3.4 shows an example of the Propeller Availability incentive for one evaluation period for the respective aircrafts.

Table 3.3 Propeller Availability Incentive Ranges

Green/Yellow Status

Propeller Availability > 125% No Incentive

No Disincentive Green Status

100% ≤ Propeller Availability ≤ 125% Incentive Earned

Yellow Status 70% ≤ Propeller Availability < 100%

No Incentive No Disincentive

Red Status Propeller Availability < 70%

Disincentive Earned 0.20% of PPFH Rate

Table 3.4 Propeller Availability Example

WC-130J PoP Year 1

*WC-130J Incentive Pool = (PPFH x # of FHs for the year x 3% * 40%) x 50% 6 months of incentive earned for WC-130J propellers 2 months of disincentive earned for WC-130J propellers

Remainder Aircraft PoP Year 1

*Remainder Aircraft Incentive Pool = (PPFH x 3 of FHs for the year x 3% * 40%) x 50%

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Green

Incentive for 6 months

(𝑃𝑃𝑓𝑓𝑃𝑃𝑃𝑃𝑃𝑃𝐼𝐼𝑦𝑦𝐼𝐼𝑃𝑃 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ 50%) ∗

Disincentive for 2 months

�𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ # 𝑃𝑃𝑜𝑜 𝑃𝑃𝑃𝑃𝐹𝐹 𝑜𝑜𝑃𝑃𝑓𝑓 𝑦𝑦𝐼𝐼𝑦𝑦𝑓𝑓 ∗ (−0.20%)� ∗ 2

Green/Yellow No incentive or disincentive for 2 months

No Incentive or disincentive for 2

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

Incentive for 3 months

(𝑃𝑃𝑓𝑓𝑃𝑃𝑃𝑃𝑃𝑃𝐼𝐼𝑦𝑦𝐼𝐼𝑃𝑃 𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼𝐼 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ 50%) ∗

No Incentive

Disincentive

*Red Disincentive for 6 months

�𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 ∗ # 𝑃𝑃𝑜𝑜 𝑃𝑃𝑃𝑃𝐹𝐹 𝑜𝑜𝑃𝑃𝑓𝑓 𝑦𝑦𝐼𝐼𝑦𝑦𝑓𝑓 ∗ (−0.20%)� ∗ 6

This forfeits the potential to earn an incentive for this evaluation period.

Incentives earned for Feb-Apr will not be received. Disincentive caps at 6

Due to being in the red status for eight months during this evaluation period, there will be no incentive earned and a disincentive for six months only. Disincentives cap out at 6 months. No further disincentive will be earned after 6 months in a red status

MTBR: MTBR will be weighted at 20% of the total incentive pool dollars (PPFH x # of FHs for the year x 0.03 x 0.2). Before the completion of the 5-year basic, MTBR incentives will be re-evaluated and an updated incentive criteria will be provided that will potentially break out MTBR by the T108-RR-100s and T108-RR-101s. The re-evaluation of MTBR incentives will occur during the pricing negotiation phase of future option years.

The Contractor’s performance will be computed and tracked; results will be recorded. MTBR is based on # of FHs ÷ # of removals. Each year the Contractor’s performance will be evaluated quarterly (every three months), starting on the PoP anniversary date (1 Feb), for a period of four consecutive quarters. Contractor’s performance results will be calculated quarterly, using an average of that quarter. At the end of the evaluation period (Jan 31), a four quarter rolling average will be calculated ((Q1 Avg + Q2 Avg + Q3 Avg + Q4 Average)/4). MTBR data will come from the USG’s actuarial data calculations. The USG will provide the Contractor with quarterly MTBR reports.

The Contractor will receive max incentive for maintaining a minimum rolling average of 4400 MTBR, for four consecutive quarters. The contractor will receive 75% of the incentive for maintaining a minimum rolling average of 4320 MTBR, but below 4400 MTBR, for four consecutive quarters. The contractor will receive 50% of the incentive for maintaining a minimum rolling minimum average of 4200 MTBR, but below 4320 MTBR, for four consecutive quarters. The contractor will receive no incentive for maintaining a rolling average of less than 4200 MTBR, for four consecutive quarters. See table 3.5. Table 3.6 is an example of MTBR calculations for one evaluation period.

Table 3.5 MTBR Incentive Ranges

MTBR

4 Quarter Rolling Average

Incentive

FH ≥ 4400 100% Incentive 4320 ≤ FH < 4400 75% Incentive 4200 ≤ FH < 4320 50% Incentive

FH < 4200 No Incentive

Table 3.6 MTBR Example

MTBR PoP Year 1

* MTBR Incentive Pool = 𝑷𝑷𝑷𝑷𝑷𝑷𝑷𝑷 ∗ 𝑷𝑷𝑷𝑷𝑭𝑭 ∗ 𝟑𝟑% ∗ 𝟐𝟐𝟐𝟐%

Q1 Q2 Q3 Q4 Feb 4100 FH

March 4900 FH April 4250 FH

Q1 Average = 4416.7

May 3850 FH

June 4650 FH July 3675 FH

Q2 Average = 4058.3

August 4300 FH

September 3705 FH October 4690 FH

Q3 Average = 4231.7

November 4300 FH

December 3800 FH January 4500 FH

Q4 Average = 4200

Rolling Average = (Q1 Avg + Q2 Avg + Q3 Avg + Q4 Avg)/4

= (4416.7 + 4058.3 + 4231.7 + 4200)/4

= 4226.7

MTBR - 50% Incentive Earned