16.2 - Performance Evaluation and Measurement Plans for Cost

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

Performance Evaluation and Measurement

Plans for Cost-Reimbursement, Non-

Management and Operating Contracts

[Reference: FAR 6, FAR 16, FAR 22, FAR 32, FAR 46, DEAR 915.404-4-72, DEAR

916.405-2, DEAR 970.1504-1, and Acquisition Guide Chapter 16.1]

Overview

The policy of the DOE is to maximize contractor performance and to align costs with

performance through the use of performance-based management as a strategic contract

management tool to plan for, manage, and evaluate contractor performance.

An important function of contract administration is the ability, or the opportunity, to

manage the environment within which the contracted effort is proceeding and, most

importantly, to facilitate adjustments to that effort to meet the demand and changes as

they occur. Performance Evaluation and Measurement Plans provide a tool or means of

evaluating contractor performance.

The purpose of this guide is to provide the acquisition team assistance in utilizing

Incentive contracts to support and implement this policy. Cost-reimbursement,

incentive contracts are of two types. Award-Fee contracts are a type of incentive

contract that utilizes a subjective method to evaluate performance and the conditions

under which it was achieved to determine the award fee earned. Cost-reimbursement,

incentive contracts that are not award-fee contracts utilize predetermined, formula-type

incentives to measure performance. Under incentive contracts the contractor’s profit

rate varies based on its performance as measured against cost, technical, and/or schedule

metrics.

Guiding Principles

 Provide the Acquisition Team

assistance in utilizing Incentive

contracts

 Understanding the difference

between a predetermined, formula-

type incentive and an award–fee

incentive

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

This guidance does not apply to Management and Operating contracts although the

general principles herein discussed are applicable.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

Table of Contents

Chapter 1 – General.

1.0 Introduction

1.1 Establishing Total Fee for the Contract

1.2 Base Fee

1.3 Incentive Fee

1.4 Award Fee

Chapter 2 – Performance Evaluation Criteria for Incentive Contracts.

2.1 Predetermined, Formula-Type Incentive Criteria.

2.2 Award Fee Criteria

2.3 Structure for Fee Evaluation Criteria

Chapter 3 – Qualitative Standards for Award Fee

Chapter 4 – Weight of Evaluation Criteria

Chapter 5 – Evaluation Periods

Chapter 6 – Fee Allocation

6.1 Unequal Allocation for Fee

6.2 Reallocation for Incentive Fee and Award Fee Contracts.

Chapter 7 – Roles and Responsibilities for Incentive Fee and Award Fee Contracts

Attachments

Attachment 1, Acronyms and Definitions

Attachment 2, DOE Sample Criteria

Attachment 3, Rating/Definitions Fee Pool

Attachment 4, Performance Evaluation and Measurement Plan

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

1.0 General

FAR 16.401 through FAR 16.402-4 discuss incentive contracts and place incentives in

two major categories: award-fee incentives and predetermined, formula-type incentives.

This guide chapter addresses both award-fee incentives and predetermined, formula-type

incentives. The term Performance Evaluation and Measurement Plan (PEMP) is used to

address a fee plan that includes both types of incentives. When using award-fee

incentives, Contracting Officers (COs) must use the adjectival ratings, associated

descriptions, and award-fee earned percentages prescribed in Table 16.1 in FAR 16.401.

For the list of acronyms and definitions, please see attachment 1.

1.1 Establishing Total Fee for the Contract

The total fee for the contract may include:

Base Amount;

Fee Pool for Award-fee Incentives; and

Fee Pool for Predetermined, Formula-type Incentives (Commonly referred to

Performance Based Incentives in DOE)

Establishing the total fee available for the base amount and for all of the incentives in the

contract is critical and must be accomplished utilizing a structured approach in

accordance with law, regulation, and DOE policy.

For award-fee contracts, FAR uses the terms base amount and award amount/award-fee

pool; DEAR uses the terms base amount and award-fee pool. For a contact that includes

both award-fee incentives and predetermined, formula-type incentives, it is possible the

total available fee would comprise a base amount, an amount for award-fee incentives,

and predetermined formula-type incentives.

DEAR 915.404-4-72 applies to cost-plus-award-fee contracts. It contains the DOE

approach for determining the base fee and the award-fee pool. The maximum fee

permitted for cost-plus-award-fee contracts shall also be the maximum fee permitted for

contracts that contain both award-fee incentives and predetermined formula-type

incentives.

1.2 Base Fee

There is no requirement that a contract include a base fee, with the exception of award-

fee contracts (the base may be zero). If there is a base fee it is often appropriate to

allocate it equally among the contract’s evaluation periods for the award-fee incentives

of the contract.

1.3 Predetermined, Formula Type Incentive Fee

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

FAR 16.4 defines predetermined, formula-type incentives differently than award-fee

incentives and requires predetermined, formula-type incentives be used in preference to

award-fee incentives, which are permitted only if it is neither feasible nor effective to

use predetermined, formula-type incentives. Predetermined, formula-type incentives fall

into three categories: cost incentives; technical incentives; and schedule incentives.

Because these types of incentives are earned based upon meeting objective performance

measures, they are evaluated separately from award-fee incentives, which are earned

based upon subjective performance measures.

Formula or objective performance measurement standards are based on well-defined

parameters for measuring performance. They include customer surveys, inspection

reports and test results. Quantitative measures should be used whenever the given

performance can be precisely or finitely measured. Sufficient information or experience

must be available to permit the identification of realistic standards against which

quantitative measurements may be compared.

1.4 Award Fee

Award-fee contracts are appropriate when predetermined, formula-type incentives are

not appropriate. Keep in mind that any reasonable assessment of effectiveness when

using award-fee incentives requires a judgmental evaluation process that addresses both

performance levels and the conditions under which those levels were achieved. The

major advantage of the use of award fee from other types of incentives is the

Government gives the contractor a detailed evaluation of performance, pointing out

deficiencies and weaknesses. Unfortunately, this advantage is often overshadowed due

to the substantial costs incurred through the continual evaluations and processing of

award fee decisions. From the contractors’ point of view, the award fee is typically

advantageous in that it usually yields higher fees than other incentives.

2.0 Performance Evaluation Criteria for Incentive Contracts

The best practice is to tailor performance evaluation plans or Performance Evaluation

Management Plans (PEMP) and criteria to fit the goals and objectives of the statement of

work, the contractor’s internal systems, and the business arrangements within the

contract. Since the Government may well have different desired outcomes for individual

phases of a contract or project, evaluation criteria may change among the performance

periods. The PEMP for the current evaluation period shall include only the criteria that

apply to the current evaluation period. Note that the contract permits the CO to make

unilateral modifications of the detailed evaluation plan, if the modifications are made in

a specified amount of time in advance of the related evaluation period.

It is neither necessary nor desirable to include all processes or functions required by the

statement of work as part of the performance evaluation plan (PEMP). The best practice

is to focus on desired outcomes that are critical to the mission of the Department, the

program, and/or the site. The performance evaluation criteria selected must be balanced

so that contractors, when making trade-offs among evaluation criteria, assign the proper

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

importance to each of the critical functions identified and keep the Department’s desired

outcomes in mind at all times. For example, the PEMP emphasizing technical

performance must also address cost considerations, because an evaluation plan limited to

technical performance might result in increased costs out of proportion to any benefits

gained. To achieve the appropriate balance the criteria must be usually limited to a

significant few to focus the contractor’s attention in the areas we want to emphasize

performance.

Furthermore, spreading the potential fee over a large number of areas in the contract’s

scope of work or performance evaluation criteria dilutes the impact on each area and

individual criterion and can actually reduce the ability of the contractor to achieve

world-class results. When using incentives, the effort of tracking a multitude of metrics

simply distracts management from focusing on the “big picture” end goals.

Predetermined, formula-type incentive fee evaluation criteria should be as specific and

focused as possible. Award fee evaluation criteria must often be broad criteria in areas

such as technical, project management and cost control, supplemented by a limited

number of sub-criteria describing significant evaluation elements over which the

contractor has effective management control. Prior experience can be helpful in

identifying those key problem or improvement areas that should be subject to fee

evaluations.

Basic areas of performance should be evaluated, but not every area evaluated results in

earning a fee. However, some areas of performance need to be evaluated on every

incentive-type contract, and have a fee associated with that area. Other areas are critical

only in certain contracts. For example, all incentive-type contracts (including contracts

with award fee only, contracts with only predetermined formula-type incentives, or

contracts with both types of incentives) are required to contain a cost incentive or

constraint (see FAR 16.402). Therefore, cost control will always be included as an

evaluation criterion, if there isn't a separate cost incentive in the contract. In general,

cost, schedule (on time delivery), and performance (technical merit, design innovation,

reliability, etc.), will always be important-- although their relative importance and the

criteria for determining what constitutes good performance may vary by procurement.

The relative importance of the criteria and the parts of the contract’s statement of work

to which they apply should be tailored to fit the needs of the procurement. For example,

providing a cleaned up area or building, or a system design on time is generally critical

to the contract. However, in some instances earlier delivery will also be of benefit to the

Government and therefore worth incentivizing if it would reduce costs or allow effort to

be redirected to other critical segments of the project without increasing the overall cost.

The earlier a site area can be cleaned up, the earlier the Department can begin work on

the rest of its cleanup needs. In other instances, early deliveries might be of no benefit,

or even cost the Government money. For instance, early delivery of furniture may

require the Department to pay storage costs if the facility the furniture is supposed to be

used in is still being renovated. In that case, a later “just in time” delivery would result

in a lower overall cost to the Government.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

2.1 Predetermined, Formula-Type Incentive Criteria

Predetermined formula-type incentive criteria are objective, the least administratively

burdensome type of performance evaluation criteria, and, should, provide the best

indicator of overall success. Predetermined Formula-type oriented criteria should

therefore be the first type of criteria considered for use, and are often ideal for non-

routine efforts. Criteria may also include sub-criteria used to evaluate performance.

Types of Criteria for predetermined formula-type incentives:

Range Specific: (e.g., Target = 600 barrels of waste; exceeds Target = 675 barrels

of waste; & significantly exceeds Target/excellent= 725 barrels of waste).

Range Specific: (e.g., below baseline, /unsatisfactory = 500-599 barrels of waste

moved (deduction of Fee); Target/satisfactory = 600-674 barrels of waste moved

(Target Fee); exceeds baseline/very good = 675-724 barrels of waste moved (Target

+ Fee); significantly exceeds baseline/excellent= >725 barrels of waste moved

(Target + Fee).

Point Specific: (e.g., below baseline, unsatisfactory = 601 milli-roentgen

equivalent man (rem) (mrem) of exposure; baseline = 600 mrem of exposure; &

exceeds baseline = 599 mrem of exposure).

2.2 Award-Fee Criteria

Award fee criteria differ from other types of criteria because they are subjective and/or

judgmental. The amount of the award fee available to be earned is fixed at inception of

the contract and the award fee criteria must be structured to provide the contractor the

proper motivation for excellence in such areas as quality, timeliness, technical ingenuity,

and cost-effective management. To be realistic, any standard to measure performance

when using award-fee incentives should reflect the nature and difficulty of the work

involved (FAR 16.401).

2.3 Structure of Fee Evaluation Criteria

The amount of fee the contractor may earn must be commensurate with the contractor’s

performance measured against contract requirements and acquisition objectives in

accordance with the criteria stated in the fee plan. The areas of evaluation are cost,

schedule and technical performance. Several sub- areas should be added to each area to

identify in more detail specific criteria that the contractor must meet in order to achieve

desired outcomes. Weights assigned to areas and sub-areas should reflect the

importance/criticality for the successful program execution, delivery of a product or

service.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

a. Cost: Each acquisition must be analyzed to ensure that evaluation of cost

receives the appropriate attention in determining the amount of available fee.

The contractor's ability to control, adjust and accurately project contract costs

(estimated contract costs, not budget or operating plan costs) is of key

importance. How much weight (emphasis) is to be put on this area will depend

on the type of acquisition. A contract awarded for research and development of a

product will have less emphasis on cost than a contract for the manufacture

and/or delivery of a product or a contract that is for services. Some criteria to

consider may be:

• Control of indirect and overtime costs

• Control of direct labor costs

• Economies in use of personnel, energy, materials, computer resources,

facilities, etc.

• Cost reductions through use of cost savings programs, cost avoidance

programs, alternate designs and process methods, etc.

• "Make versus buy" program decisions

• Reduced purchasing costs through increased use of competition, material

inspection, etc.

b. Schedule: Weights assigned to this area should reflect the importance of this

area. Sub-areas should be established with criteria focused on getting the

contractor to meet or exceed minimum delivery requirements. This can be

defined in terms of early delivery, attaining or exceeding milestones, or meeting

rapid-response or urgent requirements. Sometimes schedule risks may be very

high since the customer requirements may not remain firm and the impact of

changes cannot be predicted with reasonable accuracy. A

s an example pre-

production schedule objectives and risks would differ significantly from

production schedule objectives and risks. The pre-production challenges usually

are unknowns in technology and instability in requirements and funding –

placing more risk on the contractor. On the other hand, manufacturing unknowns

that drive a production schedule such as supply of materials/parts and labor

represents a greater risk to the customer. Some criteria to consider may be:

• Assignment and utilization of personnel

• Recognition of critical problem areas

• Cooperation and effective working relationships with other

contractors and Government personnel to ensure integrated operation

efficiency

• Support to interface activities

• Technology utilization

• Effective use of resources

• Planning, organizing and managing all program elements

• Management actions to achieve and sustain a high level of

productivity

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

• Response to emergencies and other unexpected situations

• Compliance with contract provisions

• Effectiveness of property and material control

• Occupational safety and security

• Subcontracting; Subcontract direction and coordination

• Purchase order and subcontractor administration.

• Timely and accurate financial management reporting.

c. Technical performance (Quality of Work): Evaluation criteria should be tied to

technical requirements documents, risk reduction plans, applicable test plans and

procedures, milestones for completion of reports, testing, product delivery, or

other completion of events or deliverables set forth in the contract. Weights

assigned should reflect the importance/criticality for successful program

execution, design or delivery of a product or the successful performance of a

service to ensure that the contractor’s performance is measured against mission

outcomes and basic requirements of the contract. In order to achieve this, sub-

areas should be established to measure different aspects of performance, i.e.,

program execution, organizational and program management, risk management,

logistic support, strategic planning, quality of work/services, etc. Criteria to

evaluate these sub-areas should be structured in such a way to evaluate how well

the contractor identifies/addresses/mitigates problems and program risks. Some

areas to consider may be:

• Design of test models and prototypes

• Conception/execution of manufacturing processes, test plans and

techniques

• Effectiveness of proposed hardware changes

• Quality control, e.g., appearance, thoroughness and accuracy,

inspections, customer surveys

• Meeting technical requirements for design, performance and

processing, e.g., weight control, maintainability, reliability, design

reviews, test procedures, equipment, or performance

• Processing documentation timely and efficient preparation,

implementation and closeout

• Facilities/GFE/GFM/GFP, operation and maintenance of assigned

facilities and Government Furnished Equipment, Material, and/or

Property

• Anticipating and resolving problems

• Recovery from delays, reaction time and appropriateness of response

to changes

• Providing a safe work environment; timely reporting of mishaps

• Conducting annual inspections of all facilities

• Maintaining accident/incident files

• Management information systems ensures accurate, relevant and

timely information

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

• Efficient and effective processing of requisitions, with emphasis on

priority requisitions

For a sample of DOE criteria, please see attachment 2.

3.0 Qualitative Standards for Award Fee

Qualitative or subjective evaluation criteria need qualitative or subjective performance

standards and rely on evaluator's opinions and impressions of performance quality and

the conditions under which it was achieved. Qualitative assessments must be as

informed as possible and not rely on personal bias or a purely intuitive (gut) feeling.

There should be a cause and effect relationship among the criterion and its standards, the

evaluator’s observations, and a distinct reduction or improvement in quality. Some

examples are:

Staffing: Optimal allocation of resources; adequacy of staffing; qualified and

trained personnel; identification and effective handling of employee morale

problems, etc.

Planning: Adequate, quality, innovative, self-initiated and timely planning of

activities; effective utilization of personnel; quality of responses, etc.

Another example of a qualitative standard is a quality review, such as a questionnaire

requiring "yes" or "no" answers, with a high proportion of "yes" answers indicative of

high quality performance. Note that narrative support for questionnaire answers is

required.

When using award-fee incentives, COs must use the adjectival ratings, associated

descriptions, and award-fee earned percentages prescribed in Table 16.1 in FAR 16.401

(see attachment 3). Once evaluation criteria are developed, standards are developed

within each evaluation criterion for measuring contractor performance.

4.0 Weighting of Evaluation Criteria

In addition to identifying how performance will be evaluated, the PEMP will indicate the

relative priorities assigned to the various performance areas through its allocation of fee

to the areas and its evaluation criteria and sub-criteria. The Fee Determining Official

(FDO) is responsible for developing the appropriate criteria for the contract. Only the

criteria that apply to a specific period should be included. In an incentive contract using

predetermined, formula-type incentives, weighting is generally done by the dollars

assigned to each criterion. In an incentive contract using award fee, weighting is

generally done by percentages. The following is an example of weighting criteria in an

award fee contract (example is notional):

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

Each contract will have specific performance expectations that fall under one of the three

performance criteria listed in the paragraph below. Each performance criteria will be

assigned a weight to communicate its level of importance. The total weight of the

combined criteria must equal 100%.

Criteria

Weight

Technical

55%

Quality of Work Products

40%

Quality of Work Process

15%

Schedule

20%

Cost Control

25%

TOTAL

100%

5.0 Evaluation Periods

Evaluation periods for award fee contracts should be structured to balance the

contractors’ ability to have enough performance time yet allow the Government to have

adequate time to provide timely feedback, yet not be administratively burdensome.

Generally this period is no longer than one year, but should rarely be less than six

months. Too short of an evaluation period can prove administratively burdensome and

lead to hasty evaluations. Too long of an evaluation period can jeopardize valuable

feedback to the contractor regarding their performance. There should always be a

continuous on-going two-way conversation with the Contractor about its performance no

matter what the length of the evaluation period.

Evaluation periods for contracts with predetermined, formula-type incentives should be

structured to balance the timeframe, the targets and fee pool to provide the Contractor

with the appropriate focus. A one-year period is appropriate for many incentives,

especially when using near-term incentives in combination with contract length or

completion incentives.

6.0 Fee Allocation

Most often, the available award fee is allocated equally over the evaluation periods if the

risks and types of work are similar throughout the various evaluation periods. Fee

allocations may be tied to accomplishment of milestones. Available predetermined,

formula-type incentive fee can also be allocated equally over the evaluation periods,

however additional consideration will be required as to whether the targets are equally

important in each evaluation period.

6.1 Unequal Allocation of Fee

If appropriate to the contract, the acquisition team may establish key performance events

(events on the critical path), and fee amounts should be allocated based upon the

criticality of the events. The preferred approach is to give greater weight to performance

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

events that occur toward the end of an evaluation period. If the contract has a short

initial evaluation period so the contractor can become familiar with the work, the initial

evaluation period may have a smaller allocation while the remaining available fee is

divided equally among the remaining evaluation periods. Conversely, if the contract

effort requires the contractor to become familiar with the work quickly, the initial

evaluation period may have a larger allocation.

EVALUATION PERIODS

Total

Allocation (%)

10%

26%

40%

24%

100%

Allocation ($)

$50,000

$130,000

$200,000

$120,000

$500,000

6.2 Reallocation for Incentive Contracts

Reallocation is the process by which the Government moves a portion of the available

fee from one evaluation period to another due to such things as Government-caused

delays, special emphasis areas, changes to the Performance Work Statement (PWS) or

Statement of Objectives (SOO), etc. Reallocation is not normally associated with the

contractor’s performance. Reallocation may be done unilaterally if projected before the

start of the affected fee evaluation period. Under award-fee contracts, unearned fee may

not be rolled over to any subsequent evaluation period.

7.0 Roles and Responsibilities for Incentive Contracts

It is especially important that all personnel involved in contract administration and

oversight understand the process for developing the PEMP as it will affect contractor’s

performance and evaluation of that performance. For the award-fee incentives, fee

evaluation team includes the performance monitors as well as the FDO and other award

fee board members. The FDO makes the final determination regarding amount of fee

earned during the evaluation period and ensures the performance evaluation fee process

integrity is maintained. The Award-Fee Board provides an objective, impartial view of

the contractor's performance to the overall process.

Early involvement in the development of the PEMP by the Field Assistance and

Oversight Division (MA-621) is highly recommended. Any plans selected for review by

MA-621 will be submitted for review 2 months (60 days) prior to commencement of the

review period.

A sample PEMP is included as attachment 4.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

ATTACHMENT 1, ACRONYMS AND DEFINITIONS

ACRONYMS AND DEFINITIONS

Award-Fee Board (AFB) - Means the team of individuals identified in the award-fee

plan who have been designated to assist the Fee-Determining Official in making award-

fee determinations. (FAR 16.001)

Award-fee amount - The amount of award fee earned shall be commensurate with the

contractor's overall cost, schedule, and technical performance as measured against

contract requirements in accordance with the criteria stated in the award-fee plan. (FAR

16.401(e)(2)

Award-Fee Plan - All contracts providing for award fees shall be supported by an award-

fee plan that establishes the procedures for evaluating award fee which identifies the

evaluation criteria and how they are linked to acquisition objectives which shall be

defined in terms of contract cost, schedule, and technical performance. The plan also

describes how the contractor's performance will be measured against the award-fee

evaluation criteria using the adjectival rating and associated description as well as the

award-fee pool earned percentages shown in Table 16-1 (FAR 16.401(e)(3))

Award-fee pool amount – For the contract, the amount of available award fee that can be

allocated across all of the contract’s evaluation periods; for an evaluation period, the

amount of the contract’s available award fee that is allocated to the period.

Cost-reimbursement of contracts - Provide for payment of allowable incurred costs, to

the extent prescribed in the contract. These contracts establish an estimate of total cost

for the purpose of obligating funds and establishing a ceiling that the contractor may not

exceed (except at its own risk) without the approval of the contracting officer. (FAR

16.301-1)

Cost-Plus-Incentive-Fee contract (CPIF) – Provides for an initially negotiated fee to be

adjusted later by a formula based on the relationship of total allowable costs to total

target costs (does not apply to Cost-Plus-Award-Fee contracts). (FAR 16.304)

Cost-Plus-Award-Fee contract (CPAF) - A cost-plus-award-fee contract is a cost-

reimbursement contract that provides for a fee consisting of a base amount (which may

be zero) fixed at inception of the contract and an award amount, based upon a

judgmental evaluation by the Government, sufficient to provide motivation for

excellence in contract performance. (FAR 16.305)

Delivery incentives - Should be considered when improvement from a required delivery

schedule is a significant Government objective. It is important to determine the

Government’s primary objectives in a given contract (e.g., earliest possible delivery or

earliest quantity production). Incentive arrangements on delivery should specify the

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

application of the reward-penalty structure in the event of Government-caused delays or

other delays beyond the control, and without the fault or negligence, of the contractor or

subcontractor. (FAR 16.402-3(a))

Earned value management system (EVMS) – A project management tool that effectively

integrates the project scope of work with cost, schedule and performance elements for

optimum project planning and control. (FAR 2.101(b)(2))

Evaluation period(s) - Stated intervals during the contract period of performance so that

the contractor will periodically be informed of the quality of its performance and the

areas in which improvement is expected (e.g. six months, nine months, twelve months,

or at specific milestones).

Fee-Determining Official (FDO) - The designated Agency official(s) who reviews the

recommendations of the Award-Fee Board in determining the amount of award fee to be

earned by the contractor for each evaluation period. (FAR 16.001)

Performance Evaluation and Management Plan (PEMP) - Department of Energy’s

Performance Evaluation Plan. (See Performance Evaluation Plan)

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

ATTACHMENT 2, DOE SAMPLE CRITERIA

Contract

Requirement

Milestone

Completion Criteria

Due Date

Mileston

e Point

Value

Dollar

Amount

Available

Government

Furnished Services

and Infrastructure

EM.PO.01.03.06

Contract Due Date:

[insert date]

Complete the

20XX Biennial

Emergency

Management

Exercise. [Ref:

specification

section, PWS

section, etc.]

The contractor shall successfully complete the

XX Biennial Emergency Management

Exercise including successful demonstration of

requirements of DOE Order 151.1C,

Comprehensive Emergency Management

System.

Verification of completion shall be

accomplished by DOE through the review of

contractor submitted documentation verifying

that all identified exercise objectives had been

successfully completed. This includes

resolution of comments and completion of all

corrective actions associated with Nuclear

Regulatory Commission (NRC) Emergency

Management Requirements. In addition, the

COR shall submit documentation stating that

all work is acceptable to the Contracting

Officer.

In addition, the COR(s) shall subm

documentation to the Contracting Officer stating

that all the requirements have been fulfilled.

The Contracting Officer shall submit a letter to

the Contractor accepting the requirement.

15 Aug 12

15-21

$75,827.00

Manage Protective

Force

scheduling for

base mission support

in accordance with

DOE and NNSA

directives

Contract Due Date:

[Insert

date]

Maximize

efficiency and

cost savings.

[Ref.

specification

section, PWS

section, etc.]

Metric will be averaged per work week, via

the Security Policy Officer for base mission

utilizing available officers.

Reviews include, but are not limited to

violations, contractor response time(s), work

hours, etc. Several CORs will submit

documentation directly to the Contracting

Officer in regards to contractor response,

etc.

28 Aug 12

3-5

$23,000.00

Project Management

EM.PO.01.03.

Contract Due Date:

[insert date]

Submit FY-XX

AWP (Annual

Work Plan).

[Ref.

specification

section, PWS

section, etc.]

The contractor shall submit a FY-XX AWP.

Verification of completion shall be

accomplished by an internal review by DOE

personnel. Acceptance of the plan shall be

made by the Contracting Officer.

12 Jun 12

5% - 9%

$12,000.00

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

Quality and

Effectiveness

Contract Due Date:

[insert date]

Quality Control.

[Ref. specification,

PWS section, etc.]

Operate in a

manner conducive

to excellence and

quality

Demonstrate

operational

excellence in

business and

financial

management.

Contractor shall be evaluated on their ability to

perform the DOE D&D mission with little or no

Government intervention and maximum

effective communication with DOE and

interested parties.

Delivery of services across th

e DOE Site:

Coordinating and integrating resources,

activities, and interfaces; maintaining

relationship with DOE, customers, and

Stakeholders based on effective

communication.

Internal DOE Questionnaires will be forwarded

to the respective customers a

nd stakeholders

for input in the contractor’s services. The

Lead DOE COR shall review all

questionnaires along with submitting their

evaluation to the Contracting Officer.

Perform obligations in a fiscally responsible

manner to include, but not

limited to; the use

of a certified Earned Value Management

System (EVMS), and an approved accounting

system.

The designated DOE personnel shall provide

input in regards to the contractor’s EVMS

status and approval of the accounting system

with their cogni

zant COR(s). The Lead COR

obtains all

of the evaluations and combines

them into one overall evaluation. All

evaluations and all of the acquired evaluations

shall be submitted

directly to the Contracting

Officer.

[Insert last

day of

evaluation

period]

[Insert last

day of

evaluation

period]

[Insert last

day of

evaluation

period]

100%

(as

broken

out

below)

40%-

50%

35%-

50%

$38,000.00

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

ATTACHMENT 3, AWARD-FEE ADJECTIVAL RATINGS POOL AVAILABLE

DESCRIPTIONS

Award-Fee may be earned in accordance with the following guidance (see FAR 16.401).

When using award-fee incentives, COs must use the adjectival ratings, associated

descriptions, and award-fee earned percentages prescribed in Table 16.1.

Award-Fee

djectival

Rating

Award-Fee Pool

vailable to be

Earned

Description

Excellent

91% – 100%

Contractor has exceeded almost all of the significant award

ee criteria and has met overall cost, schedule, and techni

cal

rformance requirements of the contract in the aggregate

defined and measured against the criteria in the award-

ee plan for the award-fee evaluation period

Very Good

76% – 90%

Contractor has exceeded many of the significant award fee

riteria and has met overall cost, schedule, and technical

rformance requirements of the contract in the aggregate

defined and measured against the criteria in the award-

ee plan for the award-fee evaluation period

Good

51% – 75%

Contractor has exceeded some of the significant award fee

riteria and has met overall cost, schedule, and technical

rformance requirements of the contract in the aggregate

defined and measured against the criteria in the award-

ee plan for the award-fee evaluation period

Satisfactory

No Greater Than

50%

Contractor has met overall cost, schedule, and technical

rformance requirements of the contract in the aggregate

defined and measured against the criteria in the award-

ee plan for the award-fee evaluation period

Unsatisfactory

Contractor has failed to meet overall cost, schedule, and

echnical performance requirements of the contract as

efined and measured against the criteria in the award- fee

lan for the award-fee evaluation period

NOTE: Ratings need to be identified in the fee plan. These mandatory regulatory

definitions are to be used in establishing evaluation criteria. The description of what

constitutes each level of performance with each award-fee adjectival rating must be

included in the award-fee plan. In addition, the contractor is prohibited from earning

any award fee when the contractor’s overall cost, schedule, and technical performance

fails to meet contract requirements.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

ATTACHMENT 4, PEMP

(Fill-in information shown in bold italics.)

PERFORMANCE EVALUATION MEASUREMENT PLAN

FOR

(TITLE OF CONTRACT)

(CONTRACT NUMBER)

(DATE OF APPROVAL)

(Contractor's Name)

APPROVED:

_______________________

Fee Determining Official

(Title)

(Remember, this plan should be tailored to your particular acquisition.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

This template only provides an outline of what must be contained within an award-fee

plan.)

Table of Contents

Section Title Page

1.0 Introduction XX

2.0 Organization XX

3.0 Responsibilities XX

4.0 Fee Processes XX

5.0 Fee Plan Change Procedure XX

6.0 Contract Termination XX

Appendix Title Page

1 PEMP Fee Organization XX

2 Fee Allocation by Evaluation Periods XX

3 Fee Evaluation XX

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

1.0 INTRODUCTION

This (state type of fee(s)) plan is the basis for the (title of the contract) evaluation of the

contractor's performance and for presenting an assessment of that performance to the Fee

Determining Official (FDO). It describes specific criteria and procedures used to assess

the contractor’s performance and to determine the amount of fee earned. Actual award

fee determinations and the methodology for determining fee are unilateral decisions

made solely at the discretion of the Government.

The fee will be provided to the contractor through contract modifications and is in

addition to the (type contract) provisions of the contract. The fee earned and payable

will be determined by the FDO based upon review of the contractor's performance

against the criteria set forth in this plan. The FDO may unilaterally change this plan

prior to the beginning of an evaluation period. The contractor will be notified of

changes to the plan by the Contracting Officer, in writing, before the start of the affected

evaluation period. Changes to this plan that are applicable to a current evaluation period

will be incorporated by mutual consent of both parties.

2.0 ORGANIZATION

The award fee organization consists of: the Fee Determining Official (FDO); a Fee

Review Board (FRB) which consists of a chairperson, the contracting officer, a recorder,

other functional area participants, and advisor members; and the COR. The FDO, FRB

members, and COR are listed in Annex 1.

3.0 RESPONSIBILITIES

a. Fee Determining Official. The FDO approves the award fee plan and any

significant changes. The FDO reviews the recommendation(s) of the FRB, considers all

pertinent data, and determines the earned award fee amount for each evaluation period.

b. Fee Review Board. FRB members review COR(s) evaluation(s) of the

contractor's performance, consider all information from pertinent sources, prepare

interim performance reports, and arrive at an earned fee recommendation to be presented

to the FDO. The FRB may also recommend changes to this plan.

c. FRB Recorder. The FRB recorder is responsible for coordinating the

administrative actions required by the COR, the FRB and the FDO, including:

1. receipt, processing and distribution of evaluation reports from all required

sources;

2. scheduling and assisting with internal evaluation milestones, such as briefings;

and

3. accomplishing other actions required to ensure the smooth operation of the

award fee.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

d. CO. The CO is the liaison between contractor and Government

personnel and shall ensure the incentive process is properly administered in accordance

with agency regulations. The CO shall also modify the contract in regards to any

contractual issues that may arise during the term of the contract.

e. COR. COR maintain written records of the contractor's performance in

their assigned evaluation area(s) so that a fair and accurate evaluation is obtained.

Prepare interim and end-of-period evaluation reports as directed by the FRB.

4.0 FEE PROCESSES

(Detail the process used for your acquisition; e.g., interim evaluation periods may or

may not be in your acquisition; you have some flexibility in establishing the timetable for

certain events; contractor’s self-assessments may or may not be used, etc. When using

award-fee incentives, COs must use the adjectival ratings, associated descriptions, and

award-fee earned percentages prescribed in Table 16.1 in FAR 16.401.)

a. Available Fee Amount. The available fee for each evaluation period is

shown in (insert location). The fee earned will be paid based on the contractor’s

performance during each evaluation period.

b. Evaluation Criteria. If the CO does not give specific notice in writing to

the contractor of any change to the evaluation criteria prior to the start of a new

evaluation period, then the same criteria listed for the preceding period will be used in

the subsequent award fee evaluation period. Any changes to evaluation criteria will be

made by revising Annex 3

and notifying the contractor.

c. Interim Evaluation Process. The FRB Recorder notifies each FRB

member and Performance Monitor (insert number of days) calendar days before the

midpoint of the evaluation period. COR submit their evaluation reports to the FRB

(insert number of days) calendar days after this notification. The FRB determines the

interim evaluation results and notifies the contractor of the strength and weaknesses for

the current evaluation period. The CO may also issue letters at any other time when it is

deemed necessary to highlight areas of Government concern.

d. End-of-Period Evaluations. The FRB Recorder notifies each FRB

member and performance monitor (insert number of days) calendar days before the end

of the evaluation period. COR submit their evaluation reports to the FRB (insert number

of days) calendar days after the end of the evaluation period. The FRB prepares its

evaluation report and recommendation of earned fee. The FRB briefs the evaluation

report and recommendation to the FDO. At this time, the FRB may also recommend any

significant changes to the fee plan for FDO approval. The FDO determines the overall

grade and earned fee amount for the evaluation period within (insert number of days)

calendar days after each evaluation period. The FDO letter informs the contractor of the

earned fee amount. The CO issues a contract modification within (insert number of

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

days) calendar days after the FDO’s decision is made authorizing payment of the earned-

award fee amount.

e. Contractor’s Self-Assessment. When the contractor chooses to submit a self-

evaluation, it must be submitted to the CO within five working days prior to the ending

of the current evaluation period being reviewed. This written assessment of the

contractor’s performance throughout the evaluation period may also contain any

information that may be reasonably expected to assist the FRB in evaluating the

contractor’s performance. The contractor’s self-assessment may not exceed (insert

number of pages) pages.

5.0 FEE PLAN CHANGE PROCEDURE

All significant changes are approved by the FDO; the FRB Chairperson approves other

changes. Examples of significant changes include changing evaluation criteria,

adjusting weights to redirect contractor’s emphasis to areas needing improvement, and

revising the distribution of the fee dollars. The contractor may recommend changes to

the CO no later than (insert number of days) days prior to the beginning of the new

evaluation period. After approval, the CO shall notify the contractor in writing of any

change(s). Unilateral changes may be made to the fee plan if the contractor is provided

written notification by the CO before the start of the upcoming evaluation period.

Changes effecting the current evaluation period must be by mutual agreement of both

parties.

6.0 CONTRACT TERMINATION

If the contract is terminated for the convenience of the Government after the start of a

fee evaluation period, the fee deemed earned for that period shall be determined by the

FDO using the normal fee evaluation process. After termination for convenience, the

remaining fee amounts allocated to all subsequent fee evaluation periods cannot be

earned by the contractor and, therefore, shall not be paid.

3 Appendices

Appendix 1, PEMP Organization

Appendix 2, Fee Allocation by Evaluation Periods

Appendix 3, Fee Evaluation

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

APPENDIX 1, PEMP ORGANIZATION

PEMP ORGANIZATION

Members

Fee Determining Official: (Position Title)

(Name)

Award Fee Review Board Chairperson: (Position Title)

(Name)

Award Fee Review Board Members:

(Name)

Deputy Program Director

(Name)

Program Manager

(Name)

Contracting Officer

(Name)

Recorder

(Name)

Contracting Staff Member

(Name)

Attorney Staff Member

(Name)

Financial Management Staff Member

(Name)

Director of Engineering

(Name)

Director of Contracting

(Name)

Performance Monitors

(Select your monitors based on the needs of your acquisition)

Area of Evaluation

Performance Monitor(s)

Contracting Officer Representative

(Name)

Subcontract Management

(Name)

Quality Assurance*

(Name)

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

APPENDIX 2, FEE ALLOCATION

FEE ALLOCATION BY EVALUATION PERIODS

The fee earned by the contractor will be determined at the completion of evaluation

periods shown below. The percentage and dollars shown corresponding to each period

is the maximum available fee amount that can be earned during that particular period.

Evaluation

Period *

From

Available Fee**

Total

100%

(If you use milestones, include expected milestone completion dates. Use a table similar

to the one below.)

Evaluation

Period *

Milestone

Available Fee**

First

through

Last period

Total

100%

* The Government may unilaterally revise the distribution of the remaining fee dollars

among subsequent periods. The contractor will be notified of such changes, if any, in

writing by the CO before the relevant period is started and the fee plan will be modified

accordingly. Subsequent to the commencement of a period, changes may only be made

by mutual agreement of the parties.

** Will be computed in and expressed in dollars at conclusion of negotiations (for sole

source) or in proposal and Final Price Revision (for competition) using percentage

shown.

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

APPENDIX 3, SAMPLE FEE EVALUATION

FEE EVALUATION

STRUCTURE OF FEE EVALUATION CRITERIA: The plan must describe how the

contractor’s performance will be measured against the acquisition objectives which must

be defined in terms of contract cost, schedule and performance. The plan must define

each level of performance (e.g., unsatisfactory, satisfactory, good, very good and

excellent) and include a prohibition on earning any fee if the contactor’s overall

performance is unsatisfactory. When using award-fee incentives, COs must use the

adjectival ratings, associated descriptions, and award-fee earned percentages prescribed

in Table 16.1 in FAR 16.401.

Areas of evaluation are: Cost, Schedule, and Technical Performance. Several sub- areas

should be added to each area to identify in more detail specific criteria that the contractor

must meet in order to achieve desired outcomes. Weights assigned to areas and sub-

areas should reflect the importance/criticality for the successful program execution,

delivery of a product or service.

a. Cost: When determining the amount of fee to be paid a contractor, some

questions you may consider:

• How well did the contractor control, meet or exceed established cost goals?

• What caused the over/under-run (is it solely contractor caused or did the

Government contribute to the situation)?

• How well does the contractor address cost control by timely development of

baseline, undistributed management reserve?

• What is the contractor’s performance in using cost control systems to

effectively monitor and report cost status in a timely fashion?

• Are variances clearly explained in accordance with contractual reporting

requirements?

b. Schedule: When determining the amount of fee to be paid a contractor, some

of the questions you may consider:

• Was there a Government-caused delivery slip moving work originally

scheduled for this fee period to another period, resulting in a cost under-run?

• How well does the contractor project, report, and mitigate schedule impacts?

• Was there a delay in delivery of a government furnished item that caused the

delay and forced overtime to meet the schedule resulting in a cost overrun?

c. Technical performance (Quality of Work): When determining the amount of

fee to be paid a contractor, some questions you may consider:

DOE Acquisition Guide —————————— Chapter 16.2 (July 2012)

• Were the design concepts and analysis, detailed execution and low

cost design?

• Was the quality control plan adhered to?

• Did the contractor exceed the technical requirements for design,

performance, test procedures, etc.?

• Was re-work required? If so, was it accomplished timely and in

accordance with the contract specifications?

• Processing documentation timely and efficient preparation,

implementation and closeout