Billie Smith GSFC Procurement Operations Division June 15, 2005

1. Award Fee and Performance Evaluation Plans Billie Smith GSFC Procurement Operations Division June 15, 2005

2. Contents • Brief Review of Award Fee Process • Decision to Use Award Fee • Award Fee Clauses/Base Fee • Award Fee Evaluation Periods • Elements of a Performance Evaluation Plan • Evaluation Factors • Award Fee Scoring • Contractor Self-Evaluation • Allocation of Award Fee/Provisional Award Fee Payments • Timeliness • Time-Saving Tips • Samples

3. Lesson Learned “Government personnel tend to deal with problems by complicating the award fee evaluation and source selection criteria, and doing either is usually counter-productive.” Dr. John Klineberg, Former GSFC Director

4. Cost Plus Award FeeFAR 16.305 A cost-plus-award-fee contract is a cost-reimbursement contract that provides for a fee consisting of (a) a base amount (which may be zero) fixed at inception of the contract and (b) an award amount, based upon a judgmental evaluation by the Government, sufficient to provide motivation for excellence in contract performance.

5. Brief Review of Award Fee Process • Performance Incentive/Report Card • Provides Positive & Negative Incentives • Unilateral Evaluation – Subject to Disputes Clause • Efforts to Be Objective & Consistent • Evaluation Tied to Performance Periods/Milestones/Subfactors • Multiple Evaluators, One Performance Evaluation Board (PEB) Chair, and One Fee Determination Official (FDO) • Award Fee can be used in conjunction with Fixed Price contracts, however, neither base fee nor the evaluation of cost control apply to FPAF contracts. • NASA Award Fee Contracting Guide: http://www.hq.nasa.gov/office/procurement/regs/afguidee.html • GSFC Cir. 00-04 – Award Fee Contracts-GSFC Procedures: http://gsfc-artemis.gsfc.nasa.gov/210/flashes/PC00-04.html

6. Decision to Use Award FeeNFS 1816.405-270(a) • Procurement Officer Written Approval to Use Award Fee is Required--in addition to ASM/Acquisition Plan • Award Fee Memo should include: • Discussion of Other Contract Types Considered • Justify Why Award Fee is the Appropriate Contract Type • Cost Benefit Analysis • Concurrence of Cognizant Resource Analyst • Award Fee should not be used on contracts valued at less than $2M/year unless specifically authorized by Procurement Officer in the Award Fee memorandum

7. Award Fee ClausesNFS 1816.406-70 • NFS 1852.216-85 Estimated Cost and Award Fee • NFS 1852.216-76  Award Fee for Service Contracts The award fee determination each evaluation period is final. • NFS 1852.216-77  Award Fee for End Item Contracts The award fee determination period is considered interim (provisional) pending the final award fee determination made in the final evaluation period at contract completion. • NFS 1852.216-88  Performance Incentive Used when the primary deliverable is hardware (End Item) and the total estimated cost and fee is greater than $25 million. Required unless waived in writing and approved by the Center Director.

8. Base FeeNFS 1816.405-271 • Not used in Service Contracts • Can be used in End-Item (Hardware) Contracts • Requires Procurement Officer approval • Not to exceed 3 percent • Paid only if final award fee evaluation is “Satisfactory” or better • If final award fee evaluation is “Poor/Unsatisfactory” all provisional base fee payments shall be refunded to the Government

9. Award Fee Evaluation PeriodsNFS 1816.405-272(a) • At least every 6 months but not longer than every 12 months. • PO may authorize shorter evaluation periods (less than 6 months) but the additional administrative costs must be offset by benefits accruing to the Government. • IDIQ contracts – Recommend evaluation period be every 12 months if issuing task orders with a 12-month period of performance.

10. Elements of a Performance Evaluation Plan • Introduction – Contract Information • Organizational Structures for Award Fee Administration • Evaluation Requirements • Method for Determining Award Fee • Changes/Updates to the PEP • Evaluation Periods & Maximum Award Fee Matrix • Evaluation Factors/Subfactors • Types of Factors • Weightings • Evaluation Criteria • Award Fee Grading Table • Actions and Schedules for Award Fee Determinations • General Instructions for Evaluation

11. GSFC Differences from HQ PEP Template • Initial PEP Approval: • GSFC – PO approves plan after FDO • HQ – FDO approves • PEP Changes Approval: • GSFC – PO approves significant changes after FDO • HQ – FDO approves all changes • Organizational Structure: • GSFC – Seven organizations identified • GSFC – FDO shall be at the Directorate Level and PEB Chair should be at least at the Division Chief Level or equivalent (exceptions require concurrence by Director of and approval by the PO) • HQ – Just three organizations identified • Award Fee Determination Letter: • GSFC – COTR drafts letter with CO coordination • HQ – PEB Chair drafts letter

12. Evaluation FactorsNFS 1816.405-274 • Technical must include (unless waived in writing at a level above CO): • Risk Management • Health & Safety • Export Control • Security • Schedule (separate factor in End-Item) • Business Management will assess: • Contract Changes – Responsiveness to Change Proposals & Definitization • Small Business Subcontracting Plan Goals • Small Disadvantaged Business (SDB) Participation Targets • Mentor Protégé • Equal Employment Opportunity (EEO) Program • Cost Control (Weighted no less than 25%)

13. Evaluation FactorsNFS 1816.405-274 • Technical Factor must contain language regarding Major Breach of Safety or Security: • Service Contracts – Overall fee determination of zero in the evaluation period a major breach occurs • End-Item Contracts – Overall fee determination of zero in the interim evaluation period a breach occurs AND the maximum available award fee amount (in the PEP and contract) shall be reduced by the fee available in that evaluation period • Assistance Administrator for Procurement shall be notified prior to zero award fee determination because of major breach

14. Evaluation FactorsNFS 1816.405-274 Cost Control Guidelines: • Normally, the Contractor should be given a score of 0 for cost control when there is a significant cost overrun within its control. • The Contractor should normally be rewarded for an underrun within its control, up to the maximum score allocated for cost control, provided the average numerical rating for other award fee evaluation factors is 81 or higher. An underrun will be rewarded as if the Contractor has met the estimated cost of the contract when the average numerical rating for all other factors is less than 81 but greater than 60. • The Contractor should be rewarded for meeting the estimated cost of the contract, but not to the maximum score allocated for cost control, to the degree that the Contractor has prudently managed costs while meeting contract requirements. No award will be given in this circumstance unless the average numerical rating for all other award fee evaluation factors is 61 or greater.

15. Award Fee ScoringNFS 1816.405-275 • Excellent 100-91 – Of exceptional merit; exemplary performance in a timely, efficient and economical manner; very minor (if any) deficiencies with no adverse effect on overall performance • Very Good 90-81 – Very effective performance, fully responsive to contract requirements; contract requirements accomplished in a timely, efficient, and economical manner for the most part; only minor deficiencies • Good 80-71 – Effective performance; fully responsive to contract requirements; reportable deficiencies, but with little identifiable effect on overall performance • Satisfactory 70-61 – Meets or slightly exceeds minimum acceptable standards; adequate results; reportable deficiencies with identifiable, but not substantial, effects on overall performance • Poor/Unsatisfactory 60-0 – Does not meet minimum acceptable standards in one or more areas; remedial action required in one or more areas which adversely affect overall performance

16. Award Fee ScoringNFS 1816.405-275 • Any factor receiving a grade of “Poor/ Unsatisfactory” (less than 61 points) will be assigned zero performance points for purposes of calculating the award fee amount (includes cost performance). • The contractor will not be paid ANY award fee when the total award fee score is "Poor/Unsatisfactory" (less than 61 points). • In order to earn a total overall rating of "Excellent," the contractor must be under cost, on or ahead of schedule, and be rated "Excellent" for Technical Performance.

17. Contractor Self-Evaluation • Contractor’s MAY submit a self-evaluation assessment to the CO (who will provide copies to all monitors and PEB members) • Monitors must reconcile differences between Contractor self-evaluation and their rating in their Event Report

18. Allocation of Award Fee • Completion contracts – Portion of Total Available Award Fee dollars shall be allocated to each evaluation period (NFS 1816.405-273(b)) • Award Fee Matrix Allocation guidance: • Service Contracts – Straight-lined (risks & scope similar each period) • Service IDIQ Contracts – Distributed during the evaluation periods that coincide with the period of performance of the Task Orders issued (Task Plan) • End-Item (Hardware) Contracts – Larger portion distributed to the periods of greater risk or critical milestones (PDR, CDR, I&T, Pre-Ship, Launch, etc) • Update Matrix when Award Fee Dollars in Contract Increased or Decreased (CO administrative change that requires no approvals).

19. Provisional Award Fee PaymentsNFS 1816.405-276(b) • Definition: Payments made within evaluation periods prior to an interim or final evaluation for that period • Negotiated on a case-by-case basis • Provisional payment schedule must be specified—Not less than monthly. Recommend one payment at the end of first quarter to reduce administration. • Total amount of provisional payment in a period: Services – Is the lesser of the percentage specified in contract (which cannot exceed 80%) OR the prior period’s evaluation score End-Item – Not to exceed 80% of the prior interim period’s evaluation score

20. Timeliness • PEP changes are unilateral PROVIDED the Contractor receives notice of the change 30-days prior to the affected evaluation period (1816.405-274(j)) • PEP changes made without 30-days prior notice or within an active period require Contractor concurrence • FDO Award Fee Determination letter signed and forwarded to the Contractor No Later Than (NLT) 45 days after the end of the evaluation period (1816.405-276(c)) • Award Fee Payment Modification issued NLT 60 days after the end of the evaluation period (1816.405-276(c)) • Draft PEP included in PBC RFPs marked for information purposes only

21. Time-Saving Tips • Use GSFC Strawman Templates as Starting Point BUT tailor it to your specific requirement • Take ownership of your Award Fee Plan—Don’t just rely on what the technical evaluators and others are telling you • Award Fee Allocation Table – Use of Excel spreadsheets with formulas helps avoid careless math errors (can be incorporated into a Word file) several formats are available on O drive (O:/210.S/210.7/Misc) and P:/Focused Training/Award Fee. Especially useful for dynamic contracts. • Schedule the PEB & FDO Meetings Far in Advance • Ask Principal Attendees What Dates They “Cannot” Attend • Ensure the PEB has an odd number of members (easier for quorum determination)

22. Time-Saving Tips • Allow Contractor to Present Oral and/or Written Self-Evaluation • Can Clarify Government Uncertainty • Focuses Evaluation on Principal Areas • Keep to a Strict Time Limit • Begin with the End in Mind – Take notes for the FDO Letter During the PEB (watch for key phrases, terms, etc.) • Have a calculator at the Meetings • Remember that EEO, Small Business, and other inputs are Advisory—Business Coordinator Determines the Business subfactor ratings to be presented to the PEB. • For Tracking Fee in Contract Mods, Use of Excel spreadsheets with formulas helps avoid careless math errors (can be incorporated into a Word file) several formats are available on O drive (O:/210.S/210.7/Misc). Especially useful for dynamic contracts.

23. Samples Strawman PEP & Award Fee Spreadsheets for: • Service (completion) contracts • IDIQ Service contracts • End-Item (Hardware) contracts