Section J - Section H Attachment - H.5 Award Fee Plan.doc

Internal Revenue Service

ATTACHMENT H.5

IRS Web Portal Acquisition

Award Fee Plan

Version 2.0

January 12, 2010

A.1 Background

A.1.1 Organization

The Award Fee organization consists of: the Fee Determination Official (FDO); an Award Fee Review Board (AFRB), the Performance Oversight Staff (POS) and the Contracting Officer (CO).

A.1.2 Responsibilities

Fee Determination Official (FDO). This individual will ordinarily be the Chief, Corporate Support Branch, Office of Information Technology Acquisition. The FDO approves the Award Fee plan and any significant changes. The FDO reviews the recommendation(s) of the AFRB, considers all pertinent data, and unilaterally determines if the overall Award Fee ratings warrant the granting of an Award Fee to the contractor and if the amount coincides with the level of performance.

Contracting Officer (CO). The CO is the liaison between the Contract and Government personnel. The CO evaluates the Award Fee ratings available prior to the FDO decision. It is the CO’s responsibility to ensure that the recommendation(s) of the AFRB depicts an accurate reflection of contractor performance and is justifiable based on supporting documentation and/or records. Subsequent to the FDO’s decision, the CO will provide written notification of the fee determination to the Contractor, and if appropriate, will modify the contract amount to reflect the decision

Award Fee Review Board (AFRB). These individuals will ordinarily be the Senior Technical Director, Portal and Wage & Investments Division; Technical Director, Modern Information Technology Services Division; and Director, Program Portal Management Division. The AFRB briefs the FDO and the CO on the recommended overall performance rating, and recommends if an Award Fee should be granted as well as an amount. The FDO makes the final decision to grant the Award Fee.

Performance Oversight Staff (POS). The POS will ordinarily be comprised of the Contracting Officer Technical Representative(s) (COTR) and the Project Manager. These staff will monitor the contractor’s performance as it relates to the performance measures detailed in Section A.2 of this plan. The COTR will complete an assessment of the contractor’s performance on a semiannual basis with the Award Fee determination being made at the end of the each evaluation period.

A.1.3 Award Fee Plan

The evaluation of the Contractor’s performance under this contract and the determination of Award Fees, if any, will be accomplished within the Award Fee Plan.

The Award Fee Plan will be based on a methodology and criteria established by the Government for determination of Award Fee. An initial copy of the plan will be provided to the Contractor along with the SOW/PWS/SOO of each task order issued. The plan will be finalized within 30 days of award of each task order. As task orders are issued during a given evaluation period, the plan will be revised accordingly. The Government may unilaterally change the Award Fee Plan at any time; however, any revisions to the methodology in the plan shall be provided to the contractor at least 15 working days prior to the evaluation period in which it will be used.

The Contractor will be evaluated on the basis of its Technical, Management and Cost performance.

· Technical performance will be evaluated at the task order level taking into consideration the Contractor’s ability to meet or exceed the Performance Standards in the Quality Assurance Surveillance Plan (QASP) required by FAR Subpart 37.6. The QASP shall incorporate, at a minimum, the Service Level Objective (SLO) performance metrics which apply to each task order.

· The Government will assess the Contractor’s Management performance with respect to its ability to maintain an open, collaborative, and productive relationship with the Government that accomplishes the portal objectives in a timely and efficient manner.

· Cost performance will evaluate the efficacy of the Contractor’s cost/price control efforts.

The Contractor will submit self-evaluations of performance for each period under consideration, including a summary of performance achieved against all SLOs. These self-evaluations will be considered by the POS and AFRB in reaching its determination.

A.1.4 Determination of Award Fee

(a) The Government will evaluate the Contractor’s performance at the end of each specified evaluation period(s) to determine the amount of Award Fee. This determination and the methodology for determining the fee are unilateral decisions made solely at the discretion of the Government.

(b) The Contractor will promptly be advised, in writing, of the determination and reasons why the Award Fee was or was not earned. The amount of Award Fee is at the sole discretion of the Government, but any self-evaluation received within five (5) days after the end of the current evaluation period will be given such consideration as may be deemed appropriate by the Government.

A.1.5 Distribution of Award Fee

(a) The total amount of Award Fee available will be determined by the combined ratings (see Section A.2 below) of the Contractor’s performance under all task orders in effect during the semi-annual evaluation periods. For task orders which do not span the entire evaluation period, a pro rata adjustment will be made by the Government to the Award Fee pool to allow consideration of any fees that may be applicable.

(b) In the event of a termination for convenience, either in whole or in part, the amount of Award Fee available shall represent a pro rata distribution associated with evaluation period activities or events as determined by the Government.

(c) The Government will promptly make payment of any Award Fee upon the submission by the Contractor to the COTR of a public voucher or invoice in the amount of the total fee earned for the period evaluated.

A.2 Performance Assessment and Incentives

A.2.1 Introduction

A performance-based contracting strategy is being used for acquiring the services needed to achieve IRS’s web portal objectives and supporting managed services. Measurable outcome-oriented objectives have been established for this program and are defined in the RFP. Task orders will incorporate some or all of these objectives.

A.2.2 Performance Evaluation Methodology

The Government will assess the Contractor’s overall performance based on both quantitative and qualitative measures to determine if IRS’s web portal objectives and supporting managed services are being met through the PAP contract. Accordingly, in the quantitative area, Award Fee determination will be based upon an assessment of the QASP agreed to by the Government and the Contractor (and forming a part of this contract). From a qualitative perspective, the Contractor’s performance will be assessed based on the extent to which it achieves a high score relative to Management and Cost factors. The Technical, Management and Cost assessments performed by the Government will be combined into a single rating reflecting the percentage of Award Fee pool, if any, available to the Contractor.

A.2.3 Evaluation of Task Order Technical Performance

Task order technical performance will be evaluated on the basis of a negotiated QASP which will define, at a minimum, measurable performance standards, collection metrics, and Acceptable Quality Levels (AQLs) for every task order. The purpose of the QASP is to provide a basis for the COTR to evaluate the quality of the Contractor’s performance. It also provides the COTR with a proactive way to avoid unacceptable or deficient performance, and provides verifiable support to the required Past Performance Information Assessments.

The performance standards in the QASP will incorporate the agreed upon SLO metrics for each task order. The Government will assess the Contractor’s performance with respect to its ability to meet or exceed the target Performance Standards and Acceptable Quality Levels.

The Contractor will be evaluated on the totality of its ability to meet the performance objectives stated in the QASP for all task orders being worked on during the performance period. For example, if there are 25 performance standards identified in the QASP for task order 001, and 15 performance standards in task order 002, the Contractor would be evaluated on its ability to meet or exceed the total number of performance standards (i.e., 40). The Contractor must meet or exceed at least 96 percent (rounded to the nearest whole number) of the total number of performance standards to qualify for the technical portion of the Award Fee. The IRS reserves the right to apply weighting factors to targeted performance standards or particular time periods to support IRS objectives. For example, service level deficiencies occurring during the filing season, from February 1 through April 15, may carry a greater weight than non-Filing Season service level deficiencies. The methodology to calculate Percentage of Total QASP Performance Standard shown in Table A.2-1 will be available prior to the start of the performance period. The maximum percentage of the Award Fee that can be earned for technical performance is 50%. The following table shows the percentage of the Award Fee that can be earned by meeting or exceeding 96% of the Performance Standards:

Table 0‑1. Score Earned for Technical Performance

Technical Performance

The Contractor’s performance with regard to the extent that it is able to exceed Acceptable Quality Levels in the QASPs will also be taken into consideration as an indication of strong management performance that is beneficial to the IRS and will be evaluated as such.

A.2.4 Evaluation of Management Performance

The Government’s assessment of these factors, many of which are qualitative, will be subjective and viewed in terms of the Contractor’s overall management performance spanning all Task Orders. The following table defines the Management Performance Factors which represent 30% of the total Award Fee pool.

Table 0‑2. Management Performance Factors

Management Performance Factors

Management Approach

- The extent to which the Contractor facilitates a partnership and demonstrates a commitment to establishing an open and collaborative relationship with IRS Leadership and assumes end-to-end responsibility for the integration of services.

- The extent to which the Contractor engages in proactive leadership to head off and manage problems.

- The extent to which the Contractor’s services are scalable, responsive to change, support continuous improvement, and are aligned with IRS’s evolving business needs.

- The extent to which the Contractor improves SLA/SLO goals to achieve business value.

- The extent to which the maturation of the Contractor’s services (CMMI, Lean Six Sigma, utility model, end user self-service, global delivery) support the quality objectives of the portal transformation effort.

- The extent to which the Contractor keeps pace with modernization and consumerization of technology and delivers useful views of industry trends, predictions, technology roadmap information and other information that can be input into IRS’s forward planning.

- The extent to which the Contractor provides lighter, simpler, more effective IT solutions that contributes to the success of portal transformation.

- The extent to which the Contractor’s services are rated highly in end user satisfaction surveys and generate few complaints.

- The extent to which the Contractor’s program management organization is adequate to perform the tasks in the SOW, and provides an appropriate level of corporate project oversight.

- The extent to which the Offeror’s proposed program management planning addresses individual project (TO level) management processes and procedures, operations management processes and procedures, and software management procedures in accordance with an "Industry Best Practices" Software Development Lifecycle model.

- The extent to which the Contractor’s escalation and governance process facilitates the identification and escalation of critical information, as well as the associated decision-making process.

- The extent to which the Contractor’s Engagement Model defines a comprehensive and effective governance plan with IRS, responds to identified risks, and minimizes organizational resistance.

Key Personnel

- The extent to which the Contractor’s staffing plan provides sufficient resources to support the proposed solutions.

- The extent to which the qualifications and experience of Contractor’s key personnel are commensurate with the proposed position/role.

- The extent to which the Contractor has established a comprehensive, effective, and efficient methodology and capability for identifying and maintaining a pool of qualified personnel as requirements change.

- The extent to which the Contractor has identified comprehensive, effective, and efficient practices, methodologies and tools for training new staff and institutionalizing project experience and knowledge.

A.2.5 Evaluation of Cost Performance

The Government’s assessment of these factors, many of which are qualitative, will be subjective and viewed in terms of the Contractor’s overall cost performance covering all Task Orders. The following table defines the Cost Factors which represent 20% of the total Award Fee pool.

Table 0‑3. Cost Performance Factors

Cost Performance Factors

Operational Savings

- The extent to which the IRS receives the benefits of resource optimization tools and techniques and technology-driven price/performance improvements during the contract term.

Pricing

- The extent to which the Contractor anticipates change without the need to negotiate and enter into a change order every time a change occurs (i.e., the services definitions and pricing mechanisms in the contract accommodate a reasonable degree of change without the need for frequent renegotiation.

- The extent to which the Contractor’s pricing of its services remains market-competitive throughout the term of the contract.

- The extent to which the Contractor’s business improvement processes, innovations and cost savings initiatives provide high quality services while achieving a reduction in the cost to the Government.

A.2.6 Management and Cost Performance Grading Scale

The following grading scale will be used to assess the performance factors in the Management and Cost areas.

1. Below Average – the Contractor’s level of performance is deficient in many areas and areas that exceed expected performance are few. Score is 0.

2. Average – the Contractor’s level of performance produces acceptable results and if any areas of performance are deficient, they do not significantly impact the project. Scores range from 1 to 3.

3. Above Average – the Contractor’s level of performance exceeds standards in many areas and if any areas performance is deficient, they are minor in nature. Scores range from 4 to 7.

4. Outstanding – the Contractor’s level of performance exceeds most of the standards and there are no noted deficiencies. The Contractor demonstrates a very high level of performance that benefits the PAP program. Scores range from 8 to 10.

A.2.7 Scoring Method

The Contractor’s performance will be scored with respect to each of the three categories, as described above in Section A.2.6, from 0 to 10:

(1) Technical – Scores range from 0 to 10, in increments of 2 as shown in the table above, depending upon the percentage of QASP performance objectives met or exceeded. A score of 0 will result if the percentage of QASP performance objectives met is 95% or below.

(2) Management – Scores range from 0 to 10 in increments of 1 and are determined by applying the degrees of success and associated rating criteria as shown in Section A.2.6 above.

(3) Cost – Scores range from 0 to 10 in increments of 1 and are determined by applying the degrees of success and associated rating criteria as shown in Section A.2.6 above.

A.2.8 Fee Determination Method

The Contractor’s performance will be evaluated with respect to the categories and weights shown below. Scores will be multiplied by their respective weightings and totaled.

Category

Score Weight

Totals

(1) Technical

50%

(2) Management

30%

(3) Cost

20%

The combined score, for purposes of establishing the percentage of the Award Fee that is available for the period, is calculated by adding the totals for each of the three categories.