Conversion by jizhen1947

VIEWS: 20 PAGES: 71

									 Version 3.0 reflects the following changes:

 1. Accomodates situations in which the contractor received progress payments or other financing prior to
conversion to PBPs. See the Instructions - Basic tab and the Instructions - Conversion tab for more information.

 2 Accomodates contract lengths up to 25 years in length.

 3. Automatically formats column widths to ensure all values are visible.
DOD Performance Based Payments Analysis Tool (Version 3.0 - Demo) - Conversion




   Important Notes:
   Macros nust be enabled in order for the model to work.




   1. On the Tools menu, click Add-Ins.

   2. In the Add-Ins available box, select the check box next to Analysis Toolpak, and then click OK.

   Tip   If Analysis Toolpak is not listed, click Browse to locate it.
DOD Performance Based Payments Analysis Tool (Version 3.0 - Demo) - Conversion
   This a demonstration version of the DOD PBP Tool for a conversion to PBPs from some other financing
   method. In Version 3.0 users can select the contract situation that applies : "New Awards" where no
   financing has been provided yet or "Conversion" where the contract is already underway and the
   contractor has been provided some financing to date. This demo version already has data in the Contract
   Summary and Data Input sheets. For PBP actions, users should use the actual DOD PBP Tool (Version
   3.0) to enter the applicable data for their specific contract action. The DOD PBP Tool can be found under
   the Cost, Price and Finance section of the DPAP website. This demonstration version operates exactly

   On the actual DOD PBP Tool, this sheet will contain the steps required to enter the necessary data and use

   Users should read the information on "Using the Model" and "Assumption Explanations" sheets in order
   to understand the purpose of the model and how it operates.

   Important Notes:
   Macros nust be enabled in order for the model to work.


   This tool uses the XIRR and XNPV functions which are standard functions in Excel 2007 and later verisons.
   If you are using an earlier version of Excel, Microsoft's Analysis Toolpak must be installed as follows:


   Do not 'Cut and Paste' cells on the "Data Input" sheet as this will cause errors in protected cells which
   cannot be reversed by the 'Undo' feature. 'Copy' and 'Paste' is allowed but the 'Right-Click' method for
   doing so is disabled. Copy and Paste can be accomplished by using the menu toolbar or Ctrl-C and Ctrl-V

   1. On the Tools menu, click Add-Ins.

   2. In the Add-Ins available box, select the check box next to Analysis Toolpak, and then click OK.

   Tip   If Analysis Toolpak is not listed, click Browse to locate it.

    3. If you see a message that tells you the Analysis Toolpak is not currently installed on your computer,
   click Yes to install it.

   4. Click Tools on the menu bar. When you load the Analysis Toolpak, the Data Analysis command is added to the
Conversion
                       Conversion to PBPs - Special Instructions




Keep in mind that the awarding of the definitized contract cannot be a PBP event.
                        Conversion to PBPs - Special Instructions

If this action involves converting from progress payments or any other type of financing to PBPs there are
several important issues to consider:

Per FAR, PBPs cannot exceed 90% of the contract price. When the contract converts to PBPs, prior
financing payments must be added to the amounts that will be paid using PBPs to ensure that total
financing payments do not exceed 90% of the contract price. Whenever total financing would exceed the
90% limit, the model will adjust PBP values downward to ensure compliance with the 90% limit. When
that happens, you must make sure the contract reflects the adjusted event values. The Data Input sheet
contains the adjusted PBP values in Column N. The model will remind you when this situation occurs.

The most common conversion situation is likely to be the definitiizatuion of an Undefinitized Contract
Action (UCA). There will also be contracts awarded with customary progress payments where the
contractor requests to convert to PBPs. In both cases the contractor will probably have been receiving
progress payments prior to the conversion to PBPs.


In establishing PBP values in those situations, the most common approach is for the initial PBP event to
be valued at the forecasted total cost (using the evaluated expenditure profile) at the time the event is
scheduled for completion. When this approach is used, the contract must make it clear that the amount
to be paid upon completion of the initial event will be the event value less financing already provided
(usually progress payments) through that date.

For example: assume that a UCA has been in place for six months and the contractor has incurred $20
million in cost and been paid $16 million in customary progress payments to date. The definitization price
has just been negotiated, including the PBP schedule. Based on contract clearance reviews, the contract
is expected to be issued 45 days from now and the first PBP event is scheduled to be completed 60 days
from now. The contractor will continue to recieve progress payments under the UCA until the definitized
contract is issued. The contractor expects to incur $10 million over the next two months, therefore the
initial PBP event is valued at $30 million ($20 million incurred to date plus the $10 million forecasted).
Although the event will have a value of $30 million, the contract will state that upon completion of the

Keep in mind that the awarding of the definitized contract cannot be a PBP event.


The model is also capable of handling those situations where the contractor has not received progress
payments against all allowable costs incurred or has been paid some other form of financing prior to
conversion to PBPs. The model will reflect the default progress payment rate in Column L on the Win-Win
Analysis sheet for each month prior to conversion. These cells will be yellow-shaded like all other user-
changeable cells. Users can modify the percentages in those cells to reflect the actual financing provided
to date.
                                                             Program Name / Contract Action Description



                                            Position                                                           Position
                                    Using Progress Payments                                                   Using PBP



Profit Bearing Cost                $                64,000,000                                            $        64,000,000

Cost of Money(1)                   $                   250,000                                            $          250,000

Total Cost                         $                64,250,000                                            $        64,250,000

                                                                                      (2)
Profit                             $                 7,680,000     12.00% Profit Rate                     $         6,909,518     10.80% Profit Rate
                                                                 0.119533                                                       0.107541
Total Price                        $                71,930,000                                            $        71,159,518


(1)
      Facilities Capital Cost of Money plus any other non profit-bearing costs such as interdivisional transfers at price.

(2)
  Enter the objective profit dollars produced by the weighted guidelines analysis assuming progress payments, not performance based
payments for this contract action. The profit rate will be calculated using this profit amount.
                                                                                   Discounted Cash Flow /
                                                        Internal Rate of Return (IRR) Analysis
                                                                   Assumptions :
          Progress Payment Rate                                      80%        Progress Payment Lag Days                30
          Govt Cost of Money Rate (%)                               3.13%       PBP / DD 250 Lag Days                    30
          Contractor Hurdle Rate (%)                                8.27%       PBP Cost Limitation




                                                    With Progress Payments                                                                With PBP


          Total Price                                                               $71,930,000                   Total Price
          Profit Rate                                                                   12.00%                    Profit Rate
          IRR (Internal Rate of Return)                                                  30.98%                   IRR (Internal Rate of Return)
          Final Cost to Govt                                                        $73,984,969                   Final Cost to Govt
          KTR NPV @ Hurdle Rate                                                       $4,715,803                  KTR NPV @ Hurdle Rate
                                                                                                                  PBP % of Price

                                                                                   Prog Pay        Prog Pay
                         KTR Cash                                                    Cash          Cum Cash
                        Expenditure                   Prog Pay      DD 250           Flow            Flow               PBP
May-11                                (1,000,000)           -              -         (1,000,000)    (1,000,000)                 -
Jun-11                                (1,215,000)       800,000            -           (415,000)    (1,415,000)           800,000
 Jul-11                               (1,400,000)       972,000            -           (428,000)    (1,843,000)           972,000
Aug-11                                (1,600,000)     1,120,000            -           (480,000)    (2,323,000)         1,120,000
Sep-11                                (1,752,000)     1,280,000            -           (472,000)    (2,795,000)         1,280,000
Oct-11                                (1,957,800)     1,401,600            -           (556,200)    (3,351,200)         1,401,600
Nov-11                                (2,000,100)     1,566,240            -           (433,860)    (3,785,060)         2,961,749
Dec-11                                (2,100,000)     1,600,080            -           (499,920)    (4,284,980)                 -
Jan-12                                (2,200,000)     1,680,000            -           (520,000)    (4,804,980)         3,948,999
Feb-12                                (2,550,000)     1,760,000            -           (790,000)    (5,594,980)                 -
Mar-12                                (2,600,000)     2,040,000            -           (560,000)    (6,154,980)         4,689,436
Apr-12                                (2,750,000)     2,080,000            -           (670,000)    (6,824,980)                 -
May-12                                (2,800,000)     2,200,000            -           (600,000)    (7,424,980)         5,281,786
Jun-12                                (2,900,000)     2,240,000            -           (660,000)    (8,084,980)                 -
 Jul-12                               (3,000,000)     2,320,000            -           (680,000)    (8,764,980)         5,627,324
Aug-12                                (2,900,000)     2,400,000            -           (500,000)    (9,264,980)         2,961,749
Sep-12                                (2,700,000)     2,320,000            -           (380,000)    (9,644,980)         2,863,024
Oct-12                                (2,600,000)     2,160,000            -           (440,000)   (10,084,980)         2,665,574
Nov-12                                (2,500,000)     2,080,000            -           (420,000)   (10,504,980)                 -
Dec-12                                (2,425,000)     2,000,000            -           (425,000)   (10,929,980)         5,034,974
Jan-13                                (2,175,000)     1,940,000            -           (235,000)   (11,164,980)                 -
Feb-13                                (2,000,100)     1,740,000            -           (260,100)   (11,425,080)         5,528,599
Mar-13                                (1,900,000)     1,600,080            -           (299,920)   (11,725,000)         1,974,598
Apr-13                                (1,800,000)     1,520,000            -           (280,000)   (12,005,000)         1,875,775
May-13                                (1,700,000)     1,440,000            -           (260,000)   (12,265,000)         1,777,050
Jun-13                                (1,500,000)     1,360,000            -           (140,000)   (12,405,000)                 -
 Jul-13                               (1,300,000)     1,200,000            -           (100,000)   (12,505,000)         3,159,199
Aug-13                                (1,250,000)     1,040,000     2,053,000         1,843,000    (10,662,000)                 -
Sep-13                                (1,100,000)     1,000,000     2,053,000         1,953,000     (8,709,000)         2,517,487
Oct-13      (900,000)      880,000     2,053,000   2,033,000   (6,676,000)          -
Nov-13      (875,000)      720,000     2,053,000   1,898,000   (4,778,000)    1,974,500
Dec-13      (850,000)      700,000     2,053,000   1,903,000   (2,875,000)          -
Jan-14      (650,000)      680,000     2,053,000   2,083,000    (792,000)     1,703,006
Feb-14      (500,000)      520,000     2,053,000   2,073,000   1,281,000            -
Mar-14      (500,000)      400,000     2,053,000   1,953,000   3,234,000      1,135,337
Apr-14      (300,000)      400,000     2,053,000   2,153,000   5,387,000       493,625
May-14            -        240,000     2,053,000   2,293,000   7,680,000       296,175
Jun-14            -             -            -           -     7,680,000            -
 Jul-14           -             -            -           -     7,680,000            -
Aug-14            -             -            -           -     7,680,000            -
Sep-14            -             -            -           -     7,680,000            -
Total     (64,250,000)   51,400,000   20,530,000   7,680,000                 64,043,566
                   Govt Break Even

                   KTR Break Even

                    Approximate
                   Win/Win Solution

                     RESET PBPs


                      With PBP


                                               $71,159,518
                                                   10.80%
R (Internal Rate of Return)                        56.10%
nal Cost to Govt                               $73,636,787
TR NPV @ Hurdle Rate                            $5,013,131
                                                   90.00%

                                  PBP            PBP
                                  Cash         Cum Cash
                   DD 250         Flow           Flow        Progress Payment Rate
                        -      (1,000,000)     (1,000,000)            80%            May-11
                        -         (415,000)    (1,415,000)            80%            Jun-11
                        -         (428,000)    (1,843,000)            80%             Jul-11
                        -         (480,000)    (2,323,000)            80%            Aug-11
                        -         (472,000)    (2,795,000)            80%            Sep-11
                        -         (556,200)    (3,351,200)            80%            Oct-11
                        -         961,649      (2,389,551)            80%            Nov-11
                        -      (2,100,000)     (4,489,551)            80%            Dec-11
                        -       1,748,999      (2,740,552)            80%            Jan-12
                        -      (2,550,000)     (5,290,552)            80%            Feb-12
                        -       2,089,436      (3,201,115)            80%            Mar-12
                        -      (2,750,000)     (5,951,115)            80%            Apr-12
                        -       2,481,786      (3,469,329)            80%            May-12
                        -      (2,900,000)     (6,369,329)            80%            Jun-12
                        -       2,627,324      (3,742,005)            80%             Jul-12
                        -             61,749   (3,680,256)            80%            Aug-12
                        -         163,024      (3,517,232)            80%            Sep-12
                        -             65,574   (3,451,657)            80%            Oct-12
                        -      (2,500,000)     (5,951,657)            80%            Nov-12
                        -       2,609,974      (3,341,683)            80%            Dec-12
                        -      (2,175,000)     (5,516,683)            80%            Jan-13
                        -       3,528,499      (1,988,185)            80%            Feb-13
                        -             74,598   (1,913,586)            80%            Mar-13
                        -             75,775   (1,837,812)            80%            Apr-13
                        -             77,050   (1,760,762)            80%            May-13
                        -      (1,500,000)     (3,260,762)            80%            Jun-13
                        -       1,859,199      (1,401,563)            80%             Jul-13
                    711,595       (538,405)    (1,939,968)            80%            Aug-13
                    711,595     2,129,082         189,114             80%            Sep-13
 711,595     (188,405)        709    80%   Oct-13
 711,595    1,811,095    1,811,804   80%   Nov-13
 711,595     (138,405)   1,673,399   80%   Dec-13
 711,595    1,764,601    3,438,000   80%   Jan-14
 711,595     211,595     3,649,595   80%   Feb-14
 711,595    1,346,932    4,996,528   80%   Mar-14
 711,595     905,220     5,901,748   80%   Apr-14
 711,595    1,007,770    6,909,518   80%   May-14
      -           -      6,909,518   80%   Jun-14
      -           -      6,909,518   80%    Jul-14
      -           -      6,909,518   80%   Aug-14
      -           -      6,909,518   80%   Sep-14
7,115,952   6,909,518
Cum               Cum           Cum           Unliquidated       Liquidated
Cost          Progress Pay      PBP           Progress Pay      Progress Pay
  1,000,000               -             -                 -                 -
  2,215,000          800,000       800,000           800,000                -
  3,615,000         1,772,000     1,772,000         1,772,000               -
  5,215,000         2,892,000     2,892,000         2,892,000               -
  6,967,000         4,172,000     4,172,000         4,172,000               -
  8,924,800         5,573,600     5,573,600         5,573,600               -
 10,924,900         7,139,840     8,535,349         7,139,840               -
 13,024,900         8,739,920     8,535,349         8,739,920               -
 15,224,900        10,419,920    12,484,348        10,419,920               -
 17,774,900        12,179,920    12,484,348        12,179,920               -
 20,374,900        14,219,920    17,173,785        14,219,920               -
 23,124,900        16,299,920    17,173,785        16,299,920               -
 25,924,900        18,499,920    22,455,571        18,499,920               -
 28,824,900        20,739,920    22,455,571        20,739,920               -
 31,824,900        23,059,920    28,082,895        23,059,920               -
 34,724,900        25,459,920    31,044,644        25,459,920               -
 37,424,900        27,779,920    33,907,668        27,779,920               -
 40,024,900        29,939,920    36,573,243        29,939,920               -
 42,524,900        32,019,920    36,573,243        32,019,920               -
 44,949,900        34,019,920    41,608,217        34,019,920               -
 47,124,900        35,959,920    41,608,217        35,959,920               -
 49,125,000        37,699,920    47,136,815        37,699,920               -
 51,025,000        39,300,000    49,111,414        39,300,000               -
 52,825,000        40,820,000    50,987,188        40,820,000               -
 54,525,000        42,260,000    52,764,238        42,260,000               -
 56,025,000        43,620,000    52,764,238        43,620,000               -
 57,325,000        44,820,000    55,923,437        44,820,000               -
 58,575,000        45,860,000    55,923,437        40,720,000         5,140,000
 59,675,000        46,860,000    58,440,924        36,580,000         5,140,000
60,575,000   47,740,000   58,440,924   32,320,000        5,140,000
61,450,000   48,460,000   60,415,423   27,900,000        5,140,000
62,300,000   49,160,000   60,415,423   23,460,000        5,140,000
62,950,000   49,840,000   62,118,429   19,000,000        5,140,000
63,450,000   50,360,000   62,118,429   14,380,000        5,140,000
63,950,000   50,760,000   63,253,766    9,640,000        5,140,000
64,250,000   51,160,000   63,747,391    4,900,000        5,140,000
64,250,000   51,400,000   64,043,566              (0)    5,140,000
64,250,000   51,400,000   64,043,566          -                -
64,250,000   51,400,000   64,043,566          -                -
64,250,000   51,400,000   64,043,566          -                -
64,250,000   51,400,000   64,043,566          -                -
                                                        51,400,000
                                                                                              Ca



Unliquidated      Liquidated          Cost To Government
    PBP              PBP           Prog Pay          PBP                           Lag Time
            -                  -            -                 -     Prog Pay Lag
        800,000                -          2,083             2,083        0
      1,772,000                -          4,615             4,615        1
      2,892,000                -          7,531             7,531        0
      4,172,000                -         10,865            10,865
      5,573,600                -         14,515            14,515
      8,535,349                -         18,593            22,227
      8,535,349                -         22,760            22,227
     12,484,348                -         27,135            32,511
     12,484,348                -         31,719            32,511
     17,173,785                -         37,031            44,723
     17,173,785                -         42,448            44,723
     22,455,571                -         48,177            58,478
     22,455,571                -         54,010            58,478
     28,082,895                -         60,052            73,133
     31,044,644                -         66,302            80,845
     33,907,668                -         72,344            88,301
     36,573,243                -         77,969            95,243
     36,573,243                -         83,385            95,243
     41,608,217                -         88,594        108,355
     41,608,217                -         93,646        108,355
     47,136,815                -         98,177        122,752
     49,111,414                -        102,344        127,894
     50,987,188                -        106,302        132,779
     52,764,238                -        110,052        137,407
     52,764,238                -        113,594        137,407
     55,923,437                -        116,719        145,634
     49,519,080        6,404,357        106,042        128,956
     45,632,211        6,404,357         95,260        118,834
39,227,854    6,404,357     84,167     102,156
34,797,997    6,404,357     72,656      90,620
28,393,640    6,404,357     61,094      73,942
23,692,289    6,404,357     49,479      61,699
17,287,933    6,404,357     37,448      45,021
12,018,913    6,404,357     25,104      31,299
 6,108,182    6,404,357     12,760      15,907
       -      6,404,357         -           -
       -            -           -           -
       -            -           -           -
       -            -           -           -
       -            -           -           -
             64,043,566   2,054,969   2,477,269
           Calculations Used in Model




Lag Time                                                  Other Calculations used by Model
PBP Lag        DD250 Lag                Total Cost to Govt Difference                          (348,182)
   0               0                    KTR_NPV_Difference                                      297,328
   1               1                    Actual Effective Progress Payment Rate                   0.8000
   0               0                    Progress Payment DD250 Formula                          0.28542
                                        Cost_Limit (1 = Limit Active, 0 = No Limit)                 -
                                        PBP 90% Cap Adjustment Factor                            0.9872



                                        Total PBPs                                           59,225,100
                                        Total Pre-PBP Progress Payments                       5,573,600
                                        Total PBPs plus Progress Payments                    64,798,700
                                        PBP Cap (90% of PBP Price)                           64,043,566
                                        Difference                                             (755,134)
                                        Adjusted PBP Total                                   58,469,966
        PBPs                     Cum PBPs
    Lag Adjustment             Lag Adjustment        Pre PBP Progress Payments
No PBP Cap Adjustment      No PBP Cap Adjustment           No Lag Adjustment
                     -                          -                          800,000
                     -                         -                           972,000
                     -                         -                         1,120,000
                     -                         -                         1,280,000
                     -                         -                         1,401,600
                     -                         -
               3,000,000                 3,000,000
                     -                   3,000,000
               4,000,000                 7,000,000
                     -                   7,000,000
               4,750,000                11,750,000
                     -                  11,750,000
               5,350,000                17,100,000
                     -                  17,100,000
               5,700,000                22,800,000
               3,000,000                25,800,000
               2,900,000                28,700,000
               2,700,000                31,400,000
                     -                  31,400,000
               5,100,000                36,500,000
                     -                  36,500,000
               5,600,000                42,100,000
               2,000,100                44,100,100
               1,900,000                46,000,100
               1,800,000                47,800,100
                     -                  47,800,100
               3,200,000                51,000,100
                     -                  51,000,100
               2,550,000                53,550,100
      -     53,550,100
2,000,000   55,550,100
      -     55,550,100
1,725,000   57,275,100
      -     57,275,100
1,150,000   58,425,100
 500,000    58,925,100
 300,000    59,225,100
      -     59,225,100
      -     59,225,100
      -     59,225,100
      -     59,225,100
                                                                            PBP Formu

          Cum
Pre PBP Progress Payments                          ( Combined Formulas needed when Prog
     No Lag Adjustment        PBP Formulas         Combined Formula
                    800,000                  -                     -
                  1,772,000                  -                 800,000
                  2,892,000                  -                 972,000
                  4,172,000                  -               1,120,000
                  5,573,600                  -               1,280,000
                  5,573,600                  -               1,401,600
                  5,573,600            2,961,749             4,527,989
                  5,573,600                  -               1,600,080
                  5,573,600            3,948,999             5,628,999
                  5,573,600                  -               1,760,000
                  5,573,600            4,689,436             6,729,436
                  5,573,600                  -               2,080,000
                  5,573,600            5,281,786             7,481,786
                  5,573,600                  -               2,240,000
                  5,573,600            5,627,324             7,947,324
                  5,573,600            2,961,749             5,361,749
                  5,573,600            2,863,024             5,183,024
                  5,573,600            2,665,574             4,825,574
                  5,573,600                  -               2,080,000
                  5,573,600            5,034,974             7,034,974
                  5,573,600                  -               1,940,000
                  5,573,600            5,528,599             7,268,599
                  5,573,600            1,974,598             3,574,678
                 5,573,600             1,875,775             3,395,775
                 5,573,600             1,777,050             3,217,050
                 5,573,600                   -               1,360,000
                 5,573,600             3,159,199             4,359,199
                 5,573,600                   -               1,040,000
                 5,573,600             2,517,487             3,517,487
5,573,600         -      880,000
5,573,600   1,974,500   2,694,500
5,573,600         -      700,000
5,573,600   1,703,006   2,383,006
5,573,600         -      520,000
5,573,600   1,135,337   1,535,337
5,573,600    493,625     893,625
5,573,600    296,175     536,175
5,573,600         -           -
5,573,600         -           -
5,573,600         -           -
5,573,600         -           -
                  PBP Formulas



ned Formulas needed when Progress Payments are made before start of PBPs)
             Combined Formula1    Combined Formula2     Combined Formula3
                              -
                          800,000              800,000
                          972,000                  -                972,000
                                                                        -
    Progress Payment Formulas



Pre-PBP Formulas    Post PBP Start
   PP Formulas       PP Formulas
          800,000        80%
          972,000        80%
        1,120,000        80%
        1,280,000        80%
        1,401,600        80%
        1,566,240        80%
        1,600,080        80%
        1,680,000        80%
        1,760,000        80%
        2,040,000        80%
        2,080,000        80%
        2,200,000        80%
        2,240,000        80%
        2,320,000        80%
        2,400,000        80%
        2,320,000        80%
        2,160,000        80%
        2,080,000        80%
        2,000,000        80%
        1,940,000        80%
        1,740,000        80%
        1,600,080        80%
        1,520,000        80%
       1,440,000         80%
       1,360,000         80%
       1,200,000         80%
       1,040,000         80%
       1,000,000         80%
         880,000         80%
720,000   80%
700,000   80%
680,000   80%
520,000   80%
400,000   80%
400,000   80%
240,000   80%
    -     80%
    -     80%
    -     80%
    -     80%
    -     80%
                              $10,000,000
                                            $20,000,000
                                                          $30,000,000
                                                                        $40,000,000
                                                                                                    $50,000,000
                                                                                                                              $60,000,000
                                                                                                                                                                   $70,000,000




                         $0
               May-11




                                                                                                            IRR
               Jun-11




                                                                                      NPV
                                                                                                                     Profit
                Jul-11
               Aug-11
               Sep-11
               Oct-11                                                                                       30.98%
                                                                                                                     12.00%
                                                                                                                                    Prog Pay




               Nov-11
               Dec-11                                                                 $ 4,715,803
               Jan-12




Cost
               Feb-12
               Mar-12
                                                                                                                                               Financial Returns




               Apr-12
                                                                                                                                    PBP



                                                                                                            54.19%




               May-12




Progress Pay
                                                                                      $ 5,004,613
                                                                                                                     10.84%




               Jun-12
                Jul-12




PBP
               Aug-12
               Sep-12
               Oct-12
               Nov-12
               Dec-12
               Jan-13
               Feb-13
               Mar-13
               Apr-13
                                                                                                                                                                                 Financing Cash Flow Comparison




               May-13
               Jun-13
                Jul-13
               Aug-13
               Sep-13
               Oct-13
               Nov-13
               Dec-13
               Jan-14
               Feb-14
               Mar-14
               Apr-14
               May-14
               Jun-14
                Jul-14
               Aug-14
               Sep-14
            Contractor Expenditure   CLIN Deliveries @     Performance Based
Month              @ Cost                  Price                Payments         What if PBPs


  May-11                 1,000,000
  Jun-11                 1,215,000
   Jul-11                1,400,000
  Aug-11                 1,600,000
  Sep-11                 1,752,000
   Oct-11                1,957,800                                   3,000,000          3,000,000
  Nov-11                 2,000,100
  Dec-11                 2,100,000                                   4,000,000          4,000,000
  Jan-12                 2,200,000
  Feb-12                 2,550,000                                   4,750,000          4,750,000
  Mar-12                 2,600,000
   Apr-12                2,750,000                                   5,350,000          5,350,000
  May-12                 2,800,000
  Jun-12                 2,900,000                                   5,700,000          5,700,000
   Jul-12                3,000,000                                   3,000,000          3,000,000
  Aug-12                 2,900,000                                   2,900,000          2,900,000
  Sep-12                 2,700,000                                   2,700,000          2,700,000
   Oct-12                2,600,000
  Nov-12                 2,500,000                                   5,100,000          5,100,000
  Dec-12                 2,425,000
  Jan-13                 2,175,000                                   5,600,000          5,600,000
  Feb-13                 2,000,100                                   2,000,100          2,000,100
  Mar-13                 1,900,000                                   1,900,000          1,900,000
   Apr-13                1,800,000                                   1,800,000          1,800,000
  May-13                 1,700,000
  Jun-13                 1,500,000                                   3,200,000          3,200,000
   Jul-13                1,300,000             7,193,000
  Aug-13                 1,250,000             7,193,000             2,550,000          2,550,000
  Sep-13                 1,100,000             7,193,000
   Oct-13                  900,000             7,193,000             2,000,000          2,000,000
  Nov-13                   875,000             7,193,000
  Dec-13                   850,000             7,193,000             1,725,000          1,725,000
  Jan-14                   650,000             7,193,000
  Feb-14                   500,000             7,193,000             1,150,000          1,150,000
  Mar-14                   500,000             7,193,000               500,000            500,000
   Apr-14                  300,000             7,193,000               300,000            300,000
  May-14
  Jun-14
   Jul-14
  Aug-14
  Sep-14
  Total                64,250,000             71,930,000            59,225,100         59,225,100
    Enter number of months contractor will receive
    financing prior to first PBP event:                                 5

                          Cumulative
                           Contractor           Cumulative
                          Expenditure       Performance Based     Cumulative PBP
PBP CLIN Price              @ Cost               Payments           Cash Flow


                 -              1,000,000                   -               (200,000)
                 -              2,215,000                   -               (443,000)
                 -              3,615,000                   -               (723,000)
                 -              5,215,000                   -            (1,043,000)
                 -              6,967,000                   -            (1,393,400)
                 -              8,924,800             3,000,000             (351,200)
                 -             10,924,900                   -            (2,351,300)
                 -             13,024,900             7,000,000             (451,300)
                 -             15,224,900                   -            (2,651,300)
                 -             17,774,900            11,750,000             (451,300)
                 -             20,374,900                   -            (3,051,300)
                 -             23,124,900            17,100,000             (451,300)
                 -             25,924,900                   -            (3,251,300)
                 -             28,824,900            22,800,000             (451,300)
                 -             31,824,900            25,800,000             (451,300)
                 -             34,724,900            28,700,000             (451,300)
                 -             37,424,900            31,400,000             (451,300)
                 -             40,024,900                   -            (3,051,300)
                 -             42,524,900            36,500,000             (451,300)
                 -             44,949,900                   -            (2,876,300)
                 -             47,124,900            42,100,000             548,700
                 -             49,125,000            44,100,100             548,700
                 -             51,025,000            46,000,100             548,700
                 -             52,825,000            47,800,100             548,700
                 -             54,525,000                   -            (1,151,300)
                 -             56,025,000            51,000,100             548,700
        7,115,952              57,325,000                   -               (751,300)
        7,115,952              58,575,000            53,550,100             548,700
        7,115,952              59,675,000                   -               (551,300)
        7,115,952              60,575,000            55,550,100             548,700
        7,115,952              61,450,000                   -               (326,300)
        7,115,952              62,300,000            57,275,100             548,700
        7,115,952              62,950,000                   -               (101,300)
        7,115,952              63,450,000            58,425,100             548,700
        7,115,952              63,950,000            58,925,100             548,700
        7,115,952              64,250,000            59,225,100             548,700
                 -                      -                   -                    -
                 -                      -                   -                    -
                 -                      -                   -                    -
                 -                      -                   -                    -
                 -                      -                   -                    -
       71,159,518
What If CLIN             Adjusted PBP
 Deliveries                 Values
               0   0 $              20   36   20




                     $      2,961,749

                     $      3,948,999

                     $      4,689,436

                     $      5,281,786

                     $      5,627,324
                     $      2,961,749
                     $      2,863,024
                     $      2,665,574

                     $      5,034,974

                     $      5,528,599
                     $      1,974,598
                     $      1,875,775
                     $      1,777,050

                     $      3,159,199
       7,193,000
       7,193,000     $      2,517,487
       7,193,000
       7,193,000     $      1,974,500
       7,193,000
       7,193,000     $      1,703,006
       7,193,000
       7,193,000     $      1,135,337
       7,193,000     $        493,625
       7,193,000     $        296,175
-
-   -   -
Using The Model

Introduction




Performance Based Payments
and the FAR




Purpose of the Model
                      Win

                      Tie

                      Lose




How the Model Works
Performance Based Payment Buttons


                       Gov
                       Govt Break Even




                       Ktr Break Even
                       KTRBreak Even




                       Win/Win Solution
                        Approximate
                       Win/Win Solution




                          RESET
                        RESET PBPs




Important Note:




PBP Event "What-ifs"
 Event Completed Late




Event Completed Early
Comparison Graph
   Performance Based Payments offer a unique opportunity for a real "Win-
Win" financial arrangement for the Government and the contractor. This
opportunity presents itself due to the Government and the contractor
having differing views of the time-value of money. The "Win" for the
contractor is better cash flow resulting in a better Internal Rate of Return
(IRR) and Net Present Value (NPV) of the cash flows even at a reduced
contract price. The "Win" for the Government is a lower contract price that
more than offsets the additional financing costs of providing a better cash
flow to the contractor. This tool employs a discounted cash flow analysis to
determine the "Win-Win" financial solution.


    Performance Based Payments (PBPs), like progress payments, are a
customary type of contract financing. In fact, per FAR 32.1001(a) PBPs
are the "preferred Government contracting method when the
contracting officer finds them practical and the contractor agrees to
their use ." Government financing is provided to assist contractors in
paying the costs they incur in the performance of a contract. PBPs are
financing payments, not incentive payments.


     FAR 32.1004(b)(2) states that "Total performance-based payments
must : (i) reflect prudent contract financing provided only to the
extent needed for contract performance and (ii) not exceed 90
percent of the contract price if on a whole contract basis, or 90
percent of the delivery item price if on a delivery item basis." It is
important to note that the 90% of price is the upper limit, not a mandated
financing level. The proper total and timing of financing payments should
be determined in light of FAR 32. 1004(b)(3)(ii) which states that the
contracting officer must ensure that PBPs "are not expected to result in
an unreasonably low or negative level of contractor investment in the
contract." A link to FAR Part 32 is provided below.
                                FAR Part 32



   The amount and timing of contract financing has a direct impact on the
cost to the Govt and the financial rate of return or Internal Rate of Return
(IRR) achieved by the contractor. The purpose of this model is to
demonstrate the financial impact to both the Govt and the Contractor of
using Performance Based Payments versus Progress Payments.

   Using the Govt and Contractor perspectives of the time-value of money
as represented by the "Govt Cost of Money Rate" and the "KTR Hurdle
Rate" respectively, the model will calculate the "Final Cost to Govt" and
"KTR NPV @ Hurdle Rate" values. "KTR NPV @ Hurdle Rate" reflects
the Net Present Value (NPV) of the cash flows to the contractor when
discounted at the contractor's Hurdle Rate.
    Clearly it is in the Govt's interest to minimize the "Final Cost to Govt" and
it is in the Contractor's interest to maximize its return in terms of the IRR
and the "KTR NPV @ Hurdle Rate". If the only variable is profit, these two
financial interests are directly and unalterably opposed to one another.
However, by introducing the variable of contract financing into the equation,
it is possible to achieve a true Win-Win financial deal because of the
differing perspectives of the time-value of money between the Govt and the
Contractor.

   The Progress Payment scenario is used as the benchmark for
determining a Win/Win arrangement for several reasons. First, it is the
financing method most likely to be used if a Performance Based Payment
arrangement cannot be agreed to or is determined to be impractical.
Second, it is the financing method most commonly utilized between the
Government and Industry. And third, it is considered by industry to be a
low-risk form of financing. For these reasons, the Progress Payment
scenario is the right financial benchmark for a risk/reward analysis. The
objective profit rate utilized for the Progress Payment scenario should be
the profit rate that the Government would expect to negotiate if Progress
Payments are the financing method.


   Since Win-Win should always be the goal of any business deal, the
model is set up to visually indicate when the PBP arrangement is a
financial "Win" for both parties. The PBP cells for "IRR (Internal Rate of
Return)", "Final Cost to Govt” and "KTR NPV @ Hurdle Rate" will change
color to reflect a Win, Tie or Lose status. If the cell is Red it means that
the PBP financial outcome is worse than what would be experienced using
Progress payments. If the cell is Yellow it means that PBP and Progress
Payments financial scenarios are the same. If the cell is Green it means
that the PBP financial outcome is better than the outcome under Progress
Payments. The goal should be to construct a win-win deal where all three
cells are Green.

   The "Win-Win Analysis" worksheet uses a Discounted Cash Flow
analysis technique to measure the financial impact of various contract
financing scenarios. The model uses a customary progress payment rate
scenario as the baseline against which to measure the financial
cost/benefits of a PBP financing arrangement.



   The "Final Cost to Govt" is the sole measure of financial impact from the
Govt point of view. The model displays two ways that Contractors look at
financial opportunities. The first is the "IRR (Internal Rate of Return)"
which represents the annual, pre-tax rate of return represented by the
contract cash flows. The second is the "KTR NPV @ Hurdle Rate" which
represents the present value of the cash flows when discounted at the
Contractor's hurdle rate. (See the "Assumption Explanations" worksheet
tab below for more discussion of the hurdle rate)
nt Buttons

               Clicking the "Gov Break Even" button will cause the model to search for
             the PBP Profit Rate that results in the "Final Cost to Govt" to be equal
             under both Progress Payments and PBPs.

               Clicking the "Ktr Break Even" button will cause the model to search for
             the PBP Profit Rate that results in the "KTR NPV @ Hurdle Rate" to be
             equal under both Progress Payments and PBPs.

               Clicking the "Approximate Win/Win Solution" button will cause the model
             to find the suggested Win/Win solution which will be the midpoint between
             the two break-even values. However, this suggested Win-Win solution
             might not be the optimal solution. The timing and amount of the PBP
             events will determine if the optimal Win/Win solution lies closer to one of
             the break-even values than the other. (See the "What if" discussion below
             to see how to test the risk/benefit aspects of the Win/Win solution.)




               Clicking the "RESET" button will restore the PBP event timing to the
             profile as it existed before running "what ifs" on the slipping or accelerating
             of PBP events. This button should be clicked after running "what-ifs"
             pertaining to event slippage or acceleration.


               The model checks to make sure that total PBP amounts do not exceed
             90% of the contract price per the FAR. As the model searches for a PBP
             profit rate solution and the PBP Price is reduced, downward adjustments, if
             necessary, are made to the PBP amounts on the Win-Win Analysis
             worksheet in order to remain at or below the 90% limit. It does this by
             reducing the PBP event amounts proportionally. Therefore, in order to be
             consistent with the final Win-Win solution, the contract values for the
             events should reflect the reduced values.



               A Win-Win deal should result in a better financial outcome for the
             contractor with PBPs versus progress payments, when the contractor
             performs well . It should not be structured so that the contractor is
             financially better off regardless of how the contractor performs.
  Contractors may consider PBPs to be inherently more risky than
progress payments. In PBPs, an event payment is made only upon
successful completion of that event. If an event is not completed by the
date anticipated, the payment is delayed accordingly. Conversely, if an
event is completed earlier than anticipated, the payment is accelerated
accordingly. This model will calculate the financial impact of delays and
acceleration in event completion and payment. This allows for an objective
versus notional discussion of risk.

  The model allows for "what if" exercises regarding the early or late
completion of PBP events.

   Double-clicking on a PBP event payment in the "PBP" column on the
"Win-Win Analysis" worksheet, will move that payment out one month
(down one row) and the financial impact of that slip will be displayed in the
"IRR (Internal Rate of Return)", "Final Cost to Govt" and "KTR NPV @
Hurdle Rate" values. The PBP cell will turn red to indicate that this is a
slipped event. This will allow both sides to determine how delays in event
completion financially impact the contractor and at what point event
slippages would yield a less rewarding financial outcome to the contractor
than progress payments. The outcome under PBPs is less advantageous
to the contractor when the "KTR NPV @ Hurdle Rate" block for PBPs
becomes red. The user should try several event slippage scenarios
involving later events as well as early events to gauge the true risk
sensitivity of the PBP arrangement.



   Right-clicking on a PBP event payment in the "PBP" column on the "Win-
Win Analysis" worksheet will move the payment in one month (up one row).
The cell will turn green to indicate that the event is completed ahead of
schedule. This will have a positive financial impact on the contractor IRR
and "KTR NPV @ Hurdle Rate". You must select the cell before right-
clicking in order for this feature to work.



  This ability to analyze the financial impact of various "what if" scenarios
will allow the user to objectively structure a PBP arrangement that
appropriately balances the risk and benefits of PBPs.

NOTE: When running a "what-if" on a PBP event, the cell color will change
to green or red based on whether the user has right-clicked or double-
clicked the cell. If an event is double-clicked the value will move down one
row and the cell will turn red. If that red cell is then right-clicked, the event
value will move up one row and the cell color will become green even
though the event has been restored to its original position. To reset the
PBP events to the original position and colors, click the "Reset" button.
   This worksheet contains a graphic comparison of the financing cash
flows resulting from PBPs versus Progress Payments. Within the graph is
also a summary of the financial returns acheived under each scenario.
The chart will reflect the latest data contained on the Win-Win Analysis
sheet. Therefore, if you go to the Comparsion Chart sheet after running a
"what-if" on the slipping of an event or changing the lag times for instance,
the chart will reflect the changed data.
Assumptions




Progress Payment Rate




Government Cost of Money Rate (%)




Contractor Hurdle Rate (%)




Progress Payment Lag Days
PBP / DD250 Lag Days




PBP Cost Limitation
Changes to any assumption will result in an automatic recalculation
of the approximate Win-Win PBP profit solution.

Enter the progress payment rate: The rate to enter will be based on the
contractor's business status:
Large Business 80%                                               Small
Business 90%                                                 Small
Disadvantaged Business 95%



  This value represents the "Time-Value" of money to the Government.
The value entered should be the applicable Nominal Treasury Rate
contained in the OMB Circular A-94, Appendix C based on the period of
performance for the action. This percentage rate is used to calculate the
"Final Cost To The Govt". The model will only accept values between 2%
and 10%. The link below will take you to the OMB A-94, Appendix C.

     http://www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html


   This value represents the "Time-Value" of money to the contractor.
Corporations establish a threshold, expressed as an annualized
percentage rate, that all financial projects must achieve in order to be
considered economically viable. This is often called the "Hurdle Rate" and
is based on the corporation's Weighted Average Cost of Capital (WACC).
The WACC is a complicated formula that takes into account the two ways
corporations raise money: Debt (borrowing) and Equity (selling stock)
based on the Capital Asset Pricing Model (CAPM). The WACC or Hurdle
Rate for each corporation will be different. The contractor's corporate
WACC is the rate that should be entered here. If the contractor cannot
provide its WACC calculation, the link below will take you to a website that
will calculate a WACC for most publicly traded corporations. You will need
to enter the corporation's stock symbol. The website identifies the CAPM
formula and the corporation's financial data relied upon to populate the
CAPM. However, there are two variables within the CAPM that are not
based on a corporation's financial statements: Market Return and Risk
Free Rate both of which affect the Return on Equity portion of the WACC.
The website identifies the values used for both variables but does not cite
the basis for these values.



                           http://thatswacc.com/


  The purpose of this entry is to recognize the period of time from when the
contractor spends cash to pay its contract costs and when it recovers
some or all of that cash via progress payments.
  The value entered should be the average number of days between
expenditure of cash and receipt of a progress payment from the
Government. This value should take into consideration the difference
between "costs" and "cash expenditures". Specifically, under the "paid
cost rule" for subcontract costs, prime contractors no longer need to have
paid their subcontractors in order to include the subcontract "costs" in their
progress payment vouchers. Therefore, prime contractors should
experience little or no lag time for subcontract costs which, in turn, should
reduce the average overall lag time.


  The model accounts for the approximate impact of lag times by
assuming a 30 day month. For example, a 30 day lag time will push
payments out one month (down 1 row on the spreadsheet). A 15 day lag
time would move 50% of the payment into the next month. A 10 day lag
time would move 33% of the payment into the next month.

The model will only accept values between 0 and 60 days.


  The purpose of this entry is to recognize the period of time from when a
contractor submits a PBP or DD250 payment request and when it actually
recevies payment from the Government. This lag time has nothing to do
with cost incurred.

  This entry will affect the timing of the DD250 payments for both the
Progress Payment and PBP scenarios as well as PBP event payments.



The model will only accept values between 0 and 45 days.



  The purpose of contract financing is to assist the contractor in the
payment of costs incurred on the contract. FAR 32.104 states that
contracting officers must "provide Government financing only to the extent
actually needed to ensure prompt and efficient performance". At any point
in the contract, the contractor can never "need" financing that exceeds total
cost incurred at that time. FAR 32.1004(b)(3)(ii) further states that
Performance Based Payments should not be expected to result in an
unreasonably low or negative level of contractor investment in the contract.
In situations where the Government does not have a high degree of
confidence in the expenditure profile, the Government has used a cost
limitation provision in Performance Based Payment contracts in order to
eliminate the possibility of a negative level of contractor investment from
occurring.
     In the absence of a consistent expenditure history for the item being
procured, determining a reliable expenditure profile can be extremely
difficult. Therefore, both sides, while agreeing on the total cost of the
contract action, may have significant differences on how that cost will be
incurred over time. In fact, it is significantly more difficult to predict the
monthly expenditures than it is to predict the total cost of a contract.
When using progress payments, this difficulty is irrelevant since the
Government will pay a percentage of the actual cost incurred each month,
not the forecasted costs. However, when using PBPs, the accuracy of that
expenditure profile can have a significant effect on the financial outcome to
both parties.



    Including PBP Cost Limitation language in the contract may be the
simplest and most equitable solution to this problem. If a PBP cost
limitation is used, cumulative payments to the contractor will never be
allowed to exceed cumulative cost incurred. This can allow the
Government to be more flexible relative to the expenditure profile and the
resulting PBP event values since the possibility of a "negative contractor
investment" is eliminated. While this will preclude an "advance payment"
or windfall cash flow scenario to the contractor, it does not relieve the
Government from analyzing the expenditure profile and event values for
reasonableness. It does however provide the Government considerably
more flexibility in this area.

   While the use of a PBP cost limitation eliminates the possibility of a
"negative contractor investment", or "advance payments", it is important for
the user to understand how such a situation can arise when a PBP cost
limitation is not included in the contract. The following scenarios are likely
to result in cumulative PBPs exceeding cumulative cost incurred:


   1. The PBP payment schedule was based on a projected expenditure
profile that was not accurate. Specifically, if the expenditure profile
assumed significant costs would be incurred in the early phase of the
contract (front loaded) but actual cost turned out to be more evenly spread
or back loaded, PBP event payments in the early phase of the contract
could significantly exceed actual cost.

  2. The assumed completion dates for PBP events were not accurate.
Specifically, if in generating the PBP schedule, PBP event completion
dates are assumed to happen later in the contract performance than is
warranted based on the master program schedule, simply performing the
events "on time" could result in cumulative payments that significantly
exceed actual cost.
  3. The contractor may underrun the cost of performing the contract.
Depending on the size of the underrun and the level of PBPs provided (%
of total price), this is likely to result in payments that exceed actual cost at
some point in contract performance. The contractor's view of this situation
is that payments in excess of cost represents the payment of the additional
profit that the contractor's is "earning" via the underrun. The contractor
may describe this as an added incentive to underrun the contract.
However, PBPs are financing, not incentive payments. Additional profit
earned through cost underruns are properly paid to the contractor at the
time of DD 250, just as it is under a contract that uses progress payment
financing.
              Contractor
            Expenditure @    CLIN Deliveries    Performance
Month           Cost            @ Price        Based Payments    What if PBPs         PBP CLIN Price


   Jul-09        1,000,000                                                                       -
  Aug-09         1,215,000                           2,215,000            2,215,000              -
  Sep-09         1,400,000                                                                       -
  Oct-09         1,600,000                           3,000,000            3,000,000              -
  Nov-09         1,752,000                                                                       -
  Dec-09         1,957,800                                                                       -
  Jan-10         2,000,100                           5,300,000            5,300,000              -
  Feb-10         2,100,000                                                                       -
  Mar-10         2,200,000                           4,300,000            4,300,000              -
  Apr-10         2,550,000                                                                       -
  May-10         2,600,000                           5,150,000            5,150,000              -
  Jun-10         2,750,000                                                                       -
   Jul-10        2,800,000                                                                       -
  Aug-10         2,900,000                           8,400,000            8,400,000              -
  Sep-10         3,000,000                                                                       -
  Oct-10         2,900,000                                                                       -
  Nov-10         2,700,000                           8,600,000            8,600,000              -
  Dec-10         2,600,000                                                                       -
  Jan-11         2,500,000                                                                       -
  Feb-11         2,425,000                           7,525,000            7,525,000              -
  Mar-11         2,175,000                                                                       -
  Apr-11         2,000,100                                                                       -
  May-11         1,900,000                           6,075,000            6,075,000              -
  Jun-11         1,800,000                           1,800,000            1,800,000              -
   Jul-11        1,700,000                                                                       -
  Aug-11         1,500,000                           3,200,000            3,200,000              -
  Sep-11         1,300,000                                                                       -
  Oct-11         1,250,000                           2,550,000            2,550,000              -
  Nov-11         1,100,000                                                                       -
  Dec-11           900,000                                                                       -
  Jan-12           875,000                           2,875,000            2,875,000              -
  Feb-12           850,000                                                                       -
  Mar-12           650,000        17,668,750                                              17,478,830
  Apr-12           500,000        17,668,750         2,000,000            2,000,000       17,478,830
  May-12           500,000        17,668,750                                              17,478,830
  Jun-12           300,000        17,668,750                                              17,478,830
   Jul-12                                                                                        -
  Aug-12                                                                                         -
  Sep-12                                                                                         -
  Oct-12                                                                                         -
  Nov-12                                                                                         -
  Dec-12                                                                                         -
  Jan-13                                                                                         -
  Feb-13                                                                                         -
  Mar-13                                                                                         -
Apr-13    -
May-13    -
Jun-13    -
 Jul-13   -
Aug-13    -
Sep-13    -
Oct-13    -
Nov-13    -
Dec-13    -
Jan-14    -
Feb-14    -
Mar-14    -
Apr-14    -
May-14    -
Jun-14    -
 Jul-14   -
Aug-14    -
Sep-14    -
Oct-14    -
Nov-14    -
Dec-14    -
Jan-15    -
Feb-15    -
Mar-15    -
Apr-15    -
May-15    -
Jun-15    -
 Jul-15   -
Aug-15    -
Sep-15    -
Oct-15    -
Nov-15    -
Dec-15    -
Jan-16    -
Feb-16    -
Mar-16    -
Apr-16    -
May-16    -
Jun-16    -
 Jul-16   -
Aug-16    -
Sep-16    -
Oct-16    -
Nov-16    -
Dec-16    -
Jan-17    -
Feb-17    -
Mar-17    -
Apr-17    -
May-17    -
Jun-17    -
 Jul-17   -
Aug-17                                                  -
Sep-17                                                  -
Oct-17                                                  -
Nov-17                                                  -
Dec-17                                                  -
Jan-18                                                  -
Feb-18                                                  -
Mar-18                                                  -
Apr-18                                                  -
May-18                                                  -
Jun-18                                                  -
 Jul-18                                                 -
Aug-18                                                  -
Sep-18                                                  -
Oct-18                                                  -
Nov-18                                                  -
Dec-18                                                  -
Jan-19                                                  -
Feb-19                                                  -
Mar-19                                                  -
Apr-19                                                  -
May-19                                                  -
Jun-19                                                  -
          64,250,000   70,675,000   62,990,000   69,915,321
  Cumulative
  Contractor    Cumulative
Expenditure @  Performance      Cumulative PBP
     Cost     Based Payments      Cash Flow


     1,000,000            -          (1,000,000)
     2,215,000      2,215,000               -
     3,615,000            -          (1,400,000)
     5,215,000      5,215,000               -
     6,967,000            -          (1,752,000)
     8,924,800            -          (3,709,800)
    10,924,900     10,515,000          (409,900)
    13,024,900            -          (2,509,900)
    15,224,900     14,815,000          (409,900)
    17,774,900            -          (2,959,900)
    20,374,900     19,965,000          (409,900)
    23,124,900            -          (3,159,900)
    25,924,900            -          (5,959,900)
    28,824,900     28,365,000          (459,900)
    31,824,900            -          (3,459,900)
    34,724,900            -          (6,359,900)
    37,424,900     36,965,000          (459,900)
    40,024,900            -          (3,059,900)
    42,524,900            -          (5,559,900)
    44,949,900     44,490,000          (459,900)
    47,124,900            -          (2,634,900)
    49,125,000            -          (4,635,000)
    51,025,000     50,565,000          (460,000)
    52,825,000     52,365,000          (460,000)
    54,525,000            -          (2,160,000)
    56,025,000     55,565,000          (460,000)
    57,325,000            -          (1,760,000)
    58,575,000     58,115,000          (460,000)
    59,675,000            -          (1,560,000)
    60,575,000            -          (2,460,000)
    61,450,000     60,990,000          (460,000)
    62,300,000            -          (1,310,000)
    62,950,000            -          15,708,750
    63,450,000     62,990,000        34,877,500
    63,950,000            -          52,046,250
    64,250,000            -          69,415,000
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