GROUND RULES AND PRICING INSTRUCTIONS:

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1 GROUND RULES AND PRICING INSTRUCTIONS: F-22 REPLENISHMENT SPARES PRICING CY2013 CY2017 REQUIREMENTS CONTRACT (MRC) WITH VARIABLE QUANTITIES I. GENERAL INSTRUCTIONS: The objective of this Spares Requirements Contract pricing effort is to establish a methodology for pricing various spares quantities in support of future F-22 sustainment efforts. In order to ensure the F-22 Program remains competitive and is successful, it is imperative the proposed pricing reflect continuous price improvement and additional program synergies should be identified and utilized in the proposed spares prices as deemed appropriate. The proposed spares pricing for CY2013, CY2014, CY2015, CY2016, and CY2017 assumes the same as Lot 10 or the most recent configuration. These instructions are to assist the offerer in developing and presenting the information required to support proposals for sustainment, delivery order, and modernization activity deliverables to LM Aero in support of the F-22 future sustainment efforts. Proper presentation and adequate supporting documentation shall ensure your proposal is fairly evaluated by LM Aero. Please provide, with your proposal, the name and phone number of an individual who is knowledgeable regarding the preparation of your cost/price proposals. The purpose of this point of contact will be to enable LM Aero Procurement personnel to obtain rapid and accurate responses relative to clarifications and/or questions regarding the preparation of your price/cost proposals. II. PROPOSAL GROUND RULES: The technical baseline for this proposal is the same as Lot 10 or the most recent part configuration. 1. Proposal Validity - Your (FFP) proposal associated with pricing should remain valid until 12/31/ Economics - It is requested that your proposals be submitted in real-then-year (RTY) period of performance dollars a. Proposal Preparation Cost - This solicitation shall not create a relationship, contractual or otherwise, between Buyer and Seller, and Buyer shall not be liable for any expenses incurred by the Seller in the preparation and submittal of its proposal in response hereto. Nor does this solicitation supersede or invalidate any current pricing agreement between our companies. Page 1

2 3. Cash Flow and Termination Liability Forecasts - You are required to provide monthly Expenditure (Cash Flow) and Termination Liability Forecasts. These forecasts will be incorporated into any subsequent contract and should be completed in accordance with the following guidelines: a. Segregate labor and material prices b. Show incrementally and cumulatively by Fiscal Year c. Express in then-year dollars d. Base forecast on existing lead times for production hardware e. Define the lead times for each part number 4. Unique Identification (UID) - Please refer to the SSOW for detailed UID Instructions. 5. Small Business / Small Disadvantaged Business - For the purposes of this section, "small business" shall mean "small businesses, small disadvantaged businesses, women-owned small businesses" and "HUBZone small businesses." The amount and quality of small business participation in the F-22 program is of critical performance to both the Government and LM Aero. If your proposal price is greater than or equal to $700,000, you must include with your proposal a detailed small business plan that fully meets the requirements of FAR Goals, expressed in percentages and dollars, must be provided for each fiscal year of the contract performance period. Discrete goals should be provided for each of the following types of concerns: Small Business Concerns; Small Disadvantaged Businesses; Women-Owned Small Businesses; HUBZone small businesses. 6. Royalties - In the event your proposal contains cost or charges for royalties totaling more than $250.00, the following information shall be furnished with the proposal on each separate item of royalty or license fee. a. Name and address of licenser. b. Date of license agreement. c. Patent number, parent application serial numbers, or other basis on which the royalty is payable. d. Brief description, including any part or model numbers on each contract item or component on which the royalty is payable. e. Percentage of dollar rate of royalty. f. Unit price of the contract item. g. Number of units. h. Total dollar amount of royalties. 7. Government Owned Facilities - Identify any government furnished facilities that you contemplate using in support of the effort being proposed specifying the Page 2

3 applicable facilities contract and its expiration date. Rental cost for the use of US Government-Owned facilities should be separately identified in the proposal. Such cost will not be applicable to USAF contracts. It will be the seller s responsibility to request and receive government approval to use these facilities on any contract issued as a result of this RFP. 8. Diminishing Manufacturing Sources (DMS) - Diminishing Manufacturing Sources (DMS) issues affecting deliveries under this contract shall be addressed in the SSOW. Please refer to the SSOW for any DMS questions or concerns. If a DMS task is required to support your specific spares activity then please bid this as a separate (stand-alone) task in accordance with the statement of work. 9. Utilization of Lockheed Martin Group Purchasing Agreements (GPA) - To assist in the preparation of your proposal, Lockheed Martin will make available existing pricing for components covered by Lockheed Martin Group Purchasing Agreements (GPA). In order to be eligible to gain access to this GPA pricing, please include an electronic indentured bill of material, in Excel format, for your product as part of your response to this RFP as it will aid in the evaluation of the applicability of Lockheed Martin GPAs. It is important to provide the OEM part number for items in your bill of material. 10. Exclusions/Exemptions/ Exceptions a. If the Offeror believes that exclusions, exemptions, or exceptions are warranted that would result in less than full compliance with this request, the Offeror shall provide specific written rationale for Offeror's position(s). III. GENERAL PRICING INFORMATION: Your proposal is to be returned by 12/01/11 and remain valid through 12/31/12. Please provide only one (1) paper copy of the proposal. In lieu of additional paper copies it is requested that the proposal be submitted electronically, via CD, in a format which will provide the same information normally submitted via paper copies. The electronic submittals should be in the current MS Office suite; MS Word, MS Excel etc. Support detail submitted with your proposal should be in accordance with Federal Acquisition Regulation (FAR) , Table Detailed Pricing Ground Rules a. This request contains the covered part numbers and quantities to be quoted. Pricing of these elements are to be included and should conform to your pricing and cost accounting standards and procedures (See Attachment (C) for part numbers and quantities). Page 3

4 b. Estimate recurring costs and identify any non-recurring costs separately, if applicable 2. Required Support Information a. Cost Support Information - The pricing FFP proposal exceeds $700,000 the proposal shall be prepared and submitted in accordance with FAR Cost or pricing data must be submitted. Your proposal should include the following information: i. Elemental cost breakdowns for all proposed items ii. If your proposal is predicated on cost history, this should be identified within the supporting schedules as appropriate. The rationale for each estimate category (experience from specific previous programs, judgmental factors, etc.) should be clearly identified in supporting schedules as appropriate. iii. iv. All data submitted or not, must be identified by specific reference. Note simply making data available does not constitute submission. A Certificate of Current Cost or Pricing Data will be required on those procurements exceeding $700,000 upon completion of negotiation. v. Identification of escalation factors / methodology to convert current dollars to then-year dollars by calendar year / cost element. vi. Identification of the profit percentage and the method used to determine it. vii. viii. Identification of direct and indirect rates utilized; the derivation and appropriate explanation. Data that is too bulky for submission must be summarized and identified and the identification attached to your proposal. All data submitted or not, must be identified by specific reference. Please be very clear that making data available does not constitute submission. Page 4

5 ix. Separate cost detail line item for Warranty and basis of estimate. b. Additionally, the FAR requires you to provide appropriate traceability between your proposal pricing and the attendant supporting information. 3. Material Cost It is requested that you provide an electronic priced bill of material (BOM) with your proposal. Part numbers in the BOM should include not only your part number but also OEM part numbers to allow matching on GPAs. For part numbers contained in the top 80% of the proposed BOM, it is requested that you provide copies of supporting vendor quotations and/or purchase orders utilized as the pricing source in the BOM,. It is further requested that the last two years of purchase order history be provided for all parts contained in the top 80% of the BOM. 4. Labor Cost It is requested that you provide an explanation of the methodology you utilized as well as a detailed basis of estimate used to calculate all proposed labor hours. Proper presentation and adequate supporting documentation shall ensure your proposal is fairly evaluated by Lockheed Martin Aeronautics. The burden of proof for cost credibility rests with the offeror; therefore, you are cautioned to submit cost/pricing information, which is fully responsive to Federal Acquisition Regulation (FAR) requirements, and which will provide sufficient detail for adequate evaluation of your proposal. Furthermore, the first page of the proposal submittal must comply with the directives of FAR Subpart , Table Access to Records Your proposal must include an affirmative statement that you grant to LM Aero and the Government or an authorized representative of either the right to examine, at any time before award, books, records, documents, or other directly pertinent records to verify the reasonableness of prices contained in your proposal. Note: Elemental breakdowns for all cost elements. At a minimum this should include: Labor hours Labor costs (both direct and indirect) Material costs (both direct and indirect) Other direct costs (ODC) Page 5

6 C. Proper presentation and adequate supporting documentation shall ensure that your proposal is fairly evaluated by Lockheed Martin Aeronautics. The burden of proof for cost credibility rests with the offeror; therefore, you are cautioned to submit cost/pricing information, which is fully responsive to FAR requirements, and which will provide sufficient detail for adequate evaluation of your proposal. Furthermore, the first page of the proposal submittal must comply with the directives of FAR Subpart , Table IV. Spares Pricing Based on BEQ and Variable Quantities: 1. Spares BEQ - Lockheed will also provide a spares BEQ for calendar year 2013, 2014, 2015, 2016 and Lockheed expects to purchase the BEQ quantity of spares in ; however, this is just a BEQ and not a firm quantity. 3. Variable Quantity Pricing for Spares Lockheed Martin would like to establish pricing for other part numbers that are routinely spared but are not listed in attachment C. To accomplish this Lockheed would like the suppliers to quote variable quantity pricing tables in addition to the BEQ part numbers. These variable quantity pricing tables give Lockheed a faster way to purchase spare requirements for other part numbers that were not forecasted in Lockheed s model. This proposal will allow for the calculation of a recurring spares pricing, resulting from a program authorization. The subcontractor will provide pricing for quantity breaks. Quantity breaks are for guidance and the Supplier may vary quantity breaks based on optimization. However, quantity breaks must be provided for a quantity of 1 as the minimum. It is anticipated that pricing would not be required for quantities greater than 20, unless there are multiple quantities of the same part number per aircraft. 4. General Provide variable pricing per template provided in Attachment (A) A. All assumptions that are required in providing the above requirements must be well documented and provided with the prices. B. Lockheed Martin s intention is to make every effort to aggregate requirements; however, LM requests the ability to add requirements up to 90 days after the initial release at the same price. C. All non recurring costs must be separately identified. Page 6

7 D. For reference only, a template and examples of the variable pricing table are included as Attachment (A). This attachment is just an example. Please change the quantity breaks to reach maximum optimization for your specific part numbers. E. The standard payment that should be quoted is payment on delivery net 30 days. Alternate payment plans may be proposed with identification of the corresponding price reductions, however, a proposal must be provided based on standard payment terms identified above (net 30 days) in order for your proposal to be considered compliant. F. Please reference 478 AESW-H002 (authorization to use other than new material) from the FASTeR contract. G. For parts list of BEQ spares requirements for please reference attachment C. H. If supplier recommends additional part numbers not listed in attachment C please identify these part numbers and quote them according to the variable quantity table provided. Page 7

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