Attachment_026_SEMA_Performance_Incentive_Plan

PERFORMANCE INCENTIVE PLAN

Firm Fixed Price

Contract Number:

W58RGZ-15-R-

Coordination:

Integrated Product Team Lead

Concurrence:

Approval:

Performance Incentive Approval Authority

Contracting Officer

Table of Contents

PERFORMANCE INCENTIVE PLAN

1.0 INTRODUCTION

2.0 GOVERNMENT PERFORMANCE INCENTIVE EVALUATION TEAM

3.0 ROLES OF GOVERNMENT PERFORMANCE INCENTIVE EVALUATION TEAM ... 4

4.0 PERFORMANCE INCENTIVE EVALUATION REQUIREMENTS

5.0 PERFORMANCE INCENTIVE EVALUATION METHODOLOGY

6.0 PERFORMANCE EVALUATION PROCESS

7.0 PERFORMANCE INCENTIVE PERIODS

8.0 CHANGES AND/OR MODIFICATIONS TO PERFORMANCE INCENTIVE PLAN

9.0 PERFORMANCE INCENTIVE PAYMENT

(Annex A)

PERFORMANCE INCENTIVE ORGANIZATION

(Annex B)

PERFORMANCE INCENTIVE MEASUREMENT DEFINITION / COMPUTATION

METHODOLOGY

Logistics Measures

Supply

Readiness Indicators

Transition Measures

Quality/Safety Measures

List of Tables

Table 1 Logistics Performance Incentive Percentage of Quarterly Pool Table 2 Transition Period Performance Incentive Payout Table 3 Quality/Safety Performance Incentive Payout

PERFORMANCE INCENTIVE PLAN

1.0 INTRODUCTION

1.1 The purpose of this document is to outline overall strategy, define responsibilities, establish procedures, and identify criteria for determining Incentives that will be applicable to the Contractor under the contract. There exists both a negative and positive incentive structure for this contract. This plan outlines the positive incentive structure and the negative structure is outlined in the contract. This plan specifically relates to sustainment support for the SEMA Platforms and only contributes a portion to the overall CPARS rating. Execution of these life cycle fixed wing services requires the contractor to demonstrate a level of proficiency that is performance oriented and mission focused. In order to maximize successful performance, the FW PO will require a superior level of contractor technical expertise and will incentivize the contractor to perform at a level above minimum performance requirements by offering monetary incentive rewards. This plan describes contract performance measurements and provides an explanation of data sources, methodology, and performance thresholds associated with applicable Performance Incentives. Detailed definitions of all measurements are defined in Section H of the contract and Appendix B of the PWS.

Definitions of specific Performance Incentive measurements, how each is computed and the full range of incentives are provided in Annex B of this plan. The performance measurements are:

Logistics Measures Supply

• Perfect Order Fulfillment (Maintenance Actions)

• Perfect Order Fulfillment (Spares Replenishment)

• Inventory Accuracy Readiness Indicators

• Partial Mission Capable

• Not Mission Capable Maintenance

• Not Mission Capable Supply

Transition Measures Plan Completeness Execution of Plan

Quality/Safety Measures Ground Incidents

1.2 The contract wi l l contain provisions for a Performance Incentive program. The primary goals of the Performance Incentive program are: to motivate the Contractor to provide products and services that consistently meet all Government threshold requirements and focus the Contractor's efforts toward performance, in accordance with the performance measures.

1.3 The Contractor’s performance will be assessed using the methodology outlined in Annex B of this plan. The Performance Incentive will be allocated from a designated Contract Line Item Number (CLIN), which recognizes improved performance and rewards contractor accordingly. Annex B contains the thresholds and levels of performance that will be evaluated by this Performance Incentive program. The specific process for determining the Contractor’s performance metrics are contained in Section H of the contract.

1.4 The Performance Incentive pool set forth in paragraph 7.0, Table 1, of this plan is established for the contract. A portion of the total Performance Incentive pool will be available for award in each of the evaluation periods specified. The Performance Incentive for each evaluation period is in addition to the agreed pricing in the FFP CLINs of the contract and no portion of any unearned incentive is earnable in future evaluation periods.. Performance Incentive determinations are independent of other program assessments (i.e. CPARS, QASP evaluations, CARs) for the SEMA Platform programs and are not subject to dispute.

1.5 Performance Incentive amounts earned by the Contractor shall be earned IAW the Performance Incentive computation methodology outlined in Annex B. Changes to the metrics or the methodologies may be incorporated up to sixty (60) days prior to the beginning of any evaluation period. Measures and methodologies in place at the beginning of a period will remain in place throughout the period so that Performance Incentives earned by the Contractor are not sacrificed as a result of changing methodologies during an evaluation period.

1.6 Contractor’s performance and Performance Incentive eligibility will be based on attainment of the objective performance measures outlined in Para 1.1 of this plan and in Annex B.

1.7 The contract includes Optional CLINs for Elective Improvements, which may include Monetary Performance Incentives. The government will clearly identify elective improvements, which include Incentive Fees in the Request for Proposal. If Incentive Fees are applicable the government will provide a separate Incentive Plan, which will identify the performance incentives, how the performance will be evaluated, and the maximum amount of performance incentive for the specific Elective Improvement in the

RFP.

2.0 GOVERNMENT PERFORMANCE INCENTIVE EVALUATION TEAM

2.1 The Government Performance Incentive Evaluation Team consists of the Performance Incentive Approval Authority (PIAA), Integrated Product Team (IPT) Lead, IPT Members and the Performance Incentive Recorder will be designated for a period no less than one year.

3.0 ROLES OF GOVERNMENT PERFORMANCE INCENTIVE EVALUATION TEAM

3.1 Performance Incentive Approval Authority (PIAA). The PIAA will:

3.1.1 Approve the Performance Incentive Plan.

3.1.2 Approve changes to the Performance Incentive Plan, and/or associated Performance Incentive criteria or methodology of determining amount(s) of Performance Incentive.

3.1.3 Review with the IPT Lead and approve the Performance Incentive Award during the evaluation period.

3.2 IPT Lead. The IPT Lead will:

3.2.1 Be designated by the PIAA and serve as the primary point of contact with the contractor on all issues related to this process.

3.2.2 Designate IPT members to monitor and collect performance data, as required, to accomplish IPT tasks necessary to support the requirements of this plan and Annex B.

3.2.3 Provide executive-level feedback to t h e Contractor on a regular basis in accordance with the areas of evaluation and criteria in the Performance Incentive Plan.

3.2.4 Appoint an IPT member to serve as Performance Incentive Recorder.

3.2.5 Recommend Performance Incentive Plan changes to the PIAA.

3.2.6 Present the IPT’s recommended rating to the PIAA for approval.

3.3 Select IPT Members. The designated IPT Member(s) will:

3.3.1 Participate in the IPT meetings and briefings.

3.3.2 Review performance data for submission to the Performance Incentive Recorder.

3.3.3 Be familiar with the contract requirements and the Performance Incentive plan, especially the performance rating criteria.

3.3.4 Maintain records of the contractor’s performance data in their IPT assigned evaluation area(s) that detail specific examples where (1) improvement is necessary or desired; (2) improvement has occurred; and (3) performance is below, meets or exceeds contract requirements.

3.3.5 Provide briefings and documents to the Performance Incentive Recorder in preparation for a performance evaluation to determine the Performance Incentive.

3.3.6 Understand and monitor the Contractor’s performance levels and the performance requirements necessary to achieve each level of performance as defined in Section 5.0, Performance Incentive Evaluation Methodology.

3.3.7 Be prepared to provide input to the IPT Lead on their specific IPT assigned evaluation area(s).

3.3.8 Recommend changes to the Performance Incentive Plan; e.g., Performance Incentive pool reallocations, and criteria for weighting of performance areas, through the Performance Incentive Recorder.

3.3.9 Maintain open, honest, and frequent communications between IPT members.

3.4 Performance Incentive Recorder. The Performance Incentive Recorder will:

3.4.1 Coordinate all activities associated with the Performance Incentive process including receipt of contractor performance data for current assessment and potential performance data that may be needed during future periods.

3.4.2 Consolidate assessments and recommendations for presentation to the IPT Lead and PIAA at the quarterly evaluation periods.

3.4.3 Prepare the Determination Letter for PIAA concurrence and KO signature to include a description of the Contractor’s performance, strengths, weaknesses, improvement opportunity areas, and expectations for future performance.

3.4.4 Notify IPT members of when and what required reports/briefings are due.

3.4.5 Maintain and update the Performance Incentive Plan as approved by the PIAA and KO.

3.4.6 Perform other duties as assigned by the IPT Lead, including notification and scheduling of any advisory personnel that may be needed by the IPT.

3.5 Contracting Officer (KO). The KO will:

3.5.1 Act as the liaison between the Contractor and Government personnel.

3.5.2 Sign and distribute Performance Incentive determination letter.

3.5.3 Execute modification of contract authorizing payment of the incentive as determined.

3.5.4 Approve and execute modifications to the contract that make changes to the Performance Incentive Plan, the methodology in which any Incentive is determined and distributed, or changes to the Incentive pool available for Performance Incentive consideration.

4.0 PERFORMANCE INCENTIVE EVALUATION REQUIREMENTS

4.1 The Performance Incentive determination periods are applicable to the FFP effort only and will be evaluated quarterly with the exception of Quality/Safety Measures, Inventory Accuracy and the Transition Measures whose determination periods are discussed in Annex B. The specific evaluation periods are shown in paragraph 7.0, Table 2. Performance Incentive evaluation and determination will cover areas of emphasis which reflect the approach desired in order to achieve the performance goals of the Life Cycle Services Performance Incentive Program.

4.2 The Performance Incentive basis creates a continuous monitoring of performance associated with iden t i f ied Performance measures. Scheduled evaluation of performance will serve to advise the Cont rac to r of trends indicating strengths and/or weaknesses that might result in increases or decreases of Performance Incentive during an evaluation period.

4.3 All Performance Incentive periods (quarterly and/or annually) will include an evaluation of the Contractor's m e a s u r e d performance. The purpose of the performance evaluations is to provide an assessment of the Contractor’s performance during the evaluation period, identify strengths and improvements that occurred during the period, and recommend an appropriate Performance Incentive to be paid to the Contractor, if any.

4.4 For each evaluation period, the designated IPT member(s) will review data f o r t h e Contractor’s performance and discuss Performance Incentive rating in accordance with the performance assessment methodology set forth in Annex B.

5.0 PERFORMANCE INCENTIVE EVALUATION METHODOLOGY

5.1 Objective assessments will be used to evaluate the Contractor’s overall performance and corresponding e a r n e d Performance Incentive during each evaluation period. The Performance Incentive criteria have been structured to achieve the performance-based objectives listed in paragraph 1.1. Once the available Performance Incentive pool for the period of performance is identified, 25% of the a n n u a l pool will be considered available for award commensurate with the q u a r t e r l y evaluation with the remaining amount available for the remaining three quarterly periods.

6.0 PERFORMANCE EVALUATION PROCESS

6.1 Fourteen (14) days prior to the end of the evaluation period the Performance Incentive Recorder will establish a schedule for each required evaluation process step and notify the IPT Lead, and IPT Members of the upcoming Performance Incentive process requirements.

6.2 IPT members will develop an evaluation of the performance measures and submit to the Performance Incentive Recorder. The assessment will be prepared cooperatively by the IPT and reflect a recommended rating w i th areas of recommended improvement as applicable.

6.3 The Performance Incentive Recorder will compile a report with recommended Performance Incentive for review by the IPT SME’s. An IPT assessment briefing based on the evaluation report will be prepared for review with the IPT members no later than twenty (20) days after the close of the evaluation periods.

6.4 No later than twenty-five (25) days after the evaluation periods, the IPT Lead will present the assessment briefing to the PIAA. This will include the Government’s assessment of strengths, improvement areas, and recommended ratings. On a case by case basis, the Contractor, at the discretion of the PIAA, shall be given an opportunity to present additional pertinent information concerning the Performance Incentive Evaluation to the PIAA.

6.5 The PIAA will make the final determination and approves the appropriate Performance Incentive no later than thirty-five (35) days after the evaluation period. The PIAA through the KO will notify the Contractor in writing of the Performance Incentive earned and will provide a summary evaluation of the Contractor's performance.

6.6 The PIAA will authorize the KO to award the determined Performance Incentive. The KO will issue a contract modification for the payment of the Performance Incentive to the Contractor within twenty-five (25) working days after receiving authorization from the PIAA. The goal is to have the Performance Incentive payment to the Contractor sixty

(60) days from the end of the period.

6.7 The IPT Lead, in coordination with the KO, may discuss with the Contractor, at an executive level, the decision of the PIAA.

7.0 PERFORMANCE INCENTIVE PERIODS

7.1 Table 1 identifies the Performance Incentive pool yearly breakout by percentage.

The pool will be split across three performance measures in the first and last year of the contract with the pool being split across two performance measures in the second through seventh year of the contract period of performance (PoP).

YEAR/ Base 1 2 3 4 5 6 7 8

MEASURE

Logistics 50% 75% 75% 75% 75% 75% 75% 75% 50%

Transition 33% 0% 0% 0% 0% 0% 0% 0% 33%

Quality/Safe t

17% 25% 25% 25% 25% 25% 25% 25% 17%

Table 1. Performance Incentive Pool Yearly % Breakout

7.2 Table 2 identifies the evaluation periods and corresponding Performance

Incentive pools for the applicable CLINS of the contract. Performance Incentive evaluation periods will be three (3) months in duration with the exception of those previously noted as annually. There will be four quarterly awards for each one (1) year contract period of t h e Contractor’s performance. The calculation used to determine the earned Performance Incentive will be the cumulative average of the monthly performance figures for the Performance Incentive period.

PERIOD TOTAL* QUARTER #1 QUARTER #2 QUARTER #3 QUARTER #4

1 $TBD 01 Feb 0X – 30 Apr 0X

2 $TBD 01 May 0X – 31 Jul 0X 3 $TBD 1 Aug 0X – 31 Oct 0X 4 $TBD 1 Nov 0X – 31 Jan 0X

TOTAL $

Table 2. Performance Incentive Quarterly Schedule (Example Only)

* Reflects the total a v a i l a b l e Performance Incentive pool for the respective periods.

There are no rollover provisions for the Performance Incentive pool.

8.0 CHANGES AND/OR MODIFICATIONS TO PERFORMANCE INCENTIVE PLAN

8.1 Changes to the Plan: P erformance Incentive evaluation methodology, areas of emphasis and/or their respective weighting, period of evaluation, distribution of remaining Performance Incentive, individual metrics, and other matters covered in this plan may be changed at the discretion of the government.

8.2 The Government may propose changes to the Performance Incentive Plan sixty (60) days prior to the beginning of the next Performance Incentive evaluation period to allow for review, comment, and contract modification, if appropriate.

8.3 Method for Implementation of Changes: Change requests to the Performance Incentives will be submitted to the KO for presentation to the IPT Lead for coordination with the IPT members. Changes recommended by the IPT will be submitted to the PIAA for approval. Once approved, the contracting officer will submit a modification to the Contractor to implement the approved changes

8.4 Reviews. A Government and Contractor review of the Performance Measures will be conducted to determine if the Performance Incentive process is accomplishing the desired overall Performance Based customer support objectives.

This review will tentatively be conducted in the third (3rd) quarter of each PoP of the contract.

9.0 PERFORMANCE INCENTIVE PAYMENT

9.1 The Performance Incentive is not subject to the “Allowable Cost and Payment” or “Dispute” clauses of the contract. However, t h e C o n t ra c t o r shall be entitled to t h e Performance Incentive as a prorated share of any work completed if this contract is terminated for convenience.

(Annex A)

PERFORMANCE INCENTIVE ORGANIZATION

Performance Incentive Approval Authority (PIAA) (TBD)

The Incentive Review Team is composed of the following:

IPT Lead (TBD)

IPT Members (TBD)

Performance Incentive Recorder (TBD)

(Annex B)

PERFORMANCE INCENTIVE MEASUREMENT DEFINITION / COMPUTATION

METHODOLOGY

Logistics Measures

The contractor shall maintain supply information in the Government provided Fixed Wing Fleet Information Tracker (FFIT) database and shall maintain Mission Capable (MC) rate for individual FW aircraft at a rate of 80% per month long reporting period as an entry gate to the below measures. The Supply indicator measurements of Perfect Order Fulfillment (POF) in support of Maintenance Actions (MA) and Perfect Order Fulfillment (POF) for Spares Replenishment (SP) will be assessed quarterly. Inventory Accuracy (IA) will be assessed annually. Each Supply indicator is further defined as follows:

Supply

POF MA: Measures the percentage of orders that meet on time delivery, with accurate documentation, correct quantity, correct/complete item component/part, accurate documentation, and serviceable condition. Specific definitions are in Section H. (Entry Gate to POF SP)

POF SP: The percentage of requisition for replenish of Government spares that are on time delivery, correct and complete item, component/part, correct quantity, accurate documentation and serviceable condition. Specific definitions are in Section H. (Entry Gate to Inventory Accuracy)

Inventory Accuracy: The percent of agreement between on hand quantity (perpetual) inventory records and actual assets on hand. (Entry Gate to PMC Incentive)

Specifically, the technical measurements will take place as follows:

POF MA – Did the contractor accomplish POF in the supplies delivered such that the POF was equal to or greater than 97%?

POF SP – Did the contractor accomplish POF for replenishment of Government spares such that POF was equal to or greater than 97%?

Inventory Accuracy – Did the contractor maintain supply accuracy such that the inventory accuracy was equal to or greater than 97% IAW AR 710-2 & AR 740-26?

Performance Incentive for each respective quarter is earned based on achieving and/or exceeding the above goals.

Readiness Indicators

PMC: Measures did the contractor maintain the aircraft such that the PMC was equal to or less than 5 percent? PMC for the purpose of this contract will be the Configuration Deviation List (CDL) provided for each aircraft as indicated in Appendix R. If the Government elects to fly an aircraft prior to return to FMC status, the contractual status for that aircraft shall be MC for the complete 24 hour period that coincides with the date of aircraft dispatch. (Entry Gate to NMCM Incentive)

NMCM: Measures did the contractor maintain the aircraft such that the NMCM was equal to or less than 10 %? (Entry Gate to NMCS Incentive)

NMCS: Measures did the contractor maintain the aircraft such that the NMCS was equal to or less than 10 %?

QUARTER / 1 2 3 4

MEASURE

POF MA >= 97% 20% 20% 20% 12.5%

POF SP >= 97% 20% 20% 20% 12.5%

IA >= 97% 0% 0% 0% 37.5%

PMC <= 5% 20% 20% 20% 12.5%

NMCM <= 10% 20% 20% 20% 12.5%

NMCS <= 10% 20% 20% 20% 12.5%

Table 1 Logistics Performance Incentive Percentage of Quarterly Pool

Transition Measures

The Contractor provided Transition Plan for both the Phase In and Phase Out efforts will be evaluated for completeness to include the presence of measurable tasks with a measurable timeline to complete the Phase In and Phase Out efforts in 90 days or less.

The incentive for this measurement will be evaluated against the tasks/timeline proposed to determine level of execution.

There will be a one-time payment for Phase In and a one-time payment for Phase Out that will paid to the contractor based on the evaluated achievement.

The Performance Incentive for Phase In and Phase Out will be determined by 100% (percent) of tasks successfully completed per proposed timeline with the incentive being based on a minimum of 60 days to a maximum of 90 days. Special attention for Phase In evaluation will be paid to the following task areas (but not limited to):

- Execution for recruiting (both locally and nationally), training, qualifying, screening, and certifying employees to provide fully qualified employees, with complete and required background checks to begin assuming responsibility for contract functions by the contract PoP start date.

- Acceptance and inventory transfer approach for Government Furnished Property and Facilities. This includes establishment of system(s) for recording and maintaining Government furnished property for the basic PoP and all option periods.

- Accomplishment of Phase In events, e.g. site setup to include inventory transfer, personnel interviewing, hiring, human resource actions, training, start work dates, etc.

Special attention for Phase Out evaluation will be paid to the following task areas (but not limited to):

- Handover plan with Incoming contractor, e.g. personnel, Government Furnished Property and Facilities inventory transfer, etc.

- Accomplishment of all other related Phase Out events.

The proposed Phase Out plan will be readdressed six (6) months prior to contract end date to coordinate any changes that have occurred during the life of the contract.

Table 2 describes the percentage of Performance Incentive that can be earned per the number of days that the team completes the transition effort.

Days >=90 80 - 89 70 - 79 60 - 69

Percentage

0% 33% 67% 100%

Table 2 Transition Period Performance Incentive Payout

Quality/Safety Measures

As part of the contract the contractor will accomplish ground operations regardless of an aircraft’s of intent for flight. Specific operations include, but are not limited to the requirements of AR 95-20 with special attention to the following:

• Aircraft maintenance/overhaul/modification/ repair, towing, subsystem warm-up/checkout, taxiing (other than high speed taxi operations), engine run or other operation of installed engines, and/or propeller(s), as appropriate;

• Preflight/post flight and operation of associated aerospace ground support equipment. As required by AR 95-20 and this contracts PWS the contractor shall develop and use written Ground Operations Procedures (GOPs) (the aircraft ground operations portion of the Procedures) to ensure that only trained, qualified, and or certified personnel perform all aircraft ground operations. Contractor will develop Core Procedures to be approved by the FW GFR for all sites prior to beginning operations. The Site Lead will develop and submit Local Ground Operating Procedures (LGOPs) that will be submitted and approved by the Local GFR to address local operations and requirements that conflict or cannot meet the Core Procedures. These procedures will include procedures for housekeeping, flight line vehicle operation, and selecting, training, testing and certification, of personnel in all normal and emergency operations (e.g. fire, explosions, severe weather, etc.). Contractors perform many ground operations related to aircraft not specifically mentioned in AR 95-20, however, all hazardous ground operations performed in, on, and around aircraft must be addressed in the Procedures. The Local GFR will approve and certify all AR 95-20 requirements for engine run and ground operational personnel.

Measurement - Did the contractor accomplish GOPs in support of this contract such that there were < 2 occurrences of ground incidents (GI) per month that result in damages exceeding $1,000 (with a cumulative total GI’s not to exceed (NTE) six (6) occurrences annually) or no one ground incident exceeding $100,000 annually?

The Quality/Safety Performance Incentive is evaluated yearly and 100% of the available incentive is earned based on achieving the above performance level.

Table 3 describes the percentage of Performance Incentive that can be earned per the number of GI occurrences.

Measure GI < 2 per Month (Cumulative Annual Total

NTE 6) or no one ground incident exceeding $100,000 annually

GI >= 2 per Month (Cumulative Annual Total > 6) or one ground incident exceeding

$100,000 annually

Percentage 100% 0%

Table 3 Quality/Safety Performance Incentive Payout