Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH
DATE: April 8, 2005
SUBJECT: Federal Acquisition Regulation (FAR); Earned Value Management System
SOURCE: Federal Register, April 8, 2005, Vol. 70, No. 67, page 17945
AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)
ACTION: Proposed Rule
SYNOPSIS: It is proposed that FAR Part 34, Major System Acquisition, and FAR Part 52, Solicitation Provisions and Contract Clauses, be amended to implement earned value management system (EVMS) policy.
DATES: Comments should be submitted on or before June 7, 2005.
ADDRESSES: Submit comments, identified by "FAR Case 2004-019," to: (1) http://www.regulations.gov; (2) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (3) e-mail: email@example.com; (4) fax: 202-501-4067; or (5) mail: General Services Administration, Regulatory Secretariat (MVA), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.
FOR FURTHER INFORMATION CONTACT: Jeritta Parnell, 202-501-4082.
SUPPLEMENTAL INFORMATION: The Federal Acquisition Streamlining Act of 1994 (FASA) requires agency heads to approve or define the cost, performance, and schedule goals for major acquisitions and achieve, on average, 90% of the cost, performance and schedule goals established by the agency. The Clinger-Cohen Act of 1996 requires the Office of Management and Budget (OMB) to develop, as part of the budget process, a process for analyzing, tracking, and evaluating the risks and results of all major capital investments for information systems for the life of the system. OMB Circular A-11, Preparation, Submission and Execution of the Budget, Part 7, Planning, Budgeting, Acquisition, and Management of Capital Assets, and the Capital Programming Guide (a supplement to A-11, Part 7), were written to meet the requirements of FASA and the Clinger-Cohen Act. OMB Circular A-11, Part 7, sets forth the policy, budget justification, and reporting requirements for major capital acquisitions that apply to all executive agencies.
EVMS has been adopted by OMB as the method for complying with the provisions of FASA and the Clinger-Cohen Act, and is mandated by A-11, Part 7. EVMS is described in American National Standards Institute (ANSI)/Electronics Industries Alliance (EIA) Standard-748, Earned Value Management Systems. (EDITOR’S NOTE: ANSI/EIA Standard-748 is available from Global Engineering Documents (1–800–854–7179). Information on earned value management systems is available at http://www.acq.osd.mil/pm.)
This proposed rule would standardize the use of EVMS across the government with a new FAR Subpart 34.X, Earned Value Management Systems, two provisions, and one clause. The following are the key provisions of these proposed changes:
- FAR 2.101, Definitions, would be amended to add the following definition of 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. The qualities and operating characteristics of earned value management systems are described in American National Standards Institute (ANSI)/Electronics Industries Alliance (EIA) Standard-748, Earned Value Management Systems. (See OMB Circular A-11, Part 7.)”
- Paragraph (b)(10) of FAR 7.105, Contents of Written Acquisition Plans, which requires that management information requirements be addressed in acquisition plans, would be amended with the addition of the following: “If an earned value management system is to be used, discuss the methodology the Government will employ to analyze and use the earned value data to assess and monitor contract performance. In addition, discuss how the offeror's/contractor's EVMS will be verified for compliance with the American National Standards Institute/Electronics Industries Alliance (ANSI/EIA) standard, and the timing and conduct of Integrated Baseline Reviews (whether prior to or post award). See [FAR] 34.X02.”
- FAR Subpart 34.X, Earned Value Management Systems, would be added, and it would consist of the following:
- FAR 34.X01, Policy, which would state that EVMS “is required in acquisitions designated, in accordance with agency procedures, as major acquisitions subject to OMB Circular A-11...When EVMS is required, the agency shall consider the use of an Integrated Baseline Review (IBR).”
- FAR 34.X02, Integrated Baseline Reviews, which would state that IBRs are meant to verify the technical content and the realism of the related performance budgets, resources, and schedules. It should provide a mutual understanding of the inherent risks in offerors'/contractors' performance plans and the underlying management control systems, and it should formulate a plan to handle these risks.” It would go on to state that the IBR “is a joint assessment by the offeror or contractor, and the government, of the (1) ability of the project's technical plan to achieve the objectives of the scope of work; (2) adequacy of the time allocated for performing the defined tasks to successfully achieve the project schedule objectives; (3) ability of the Performance Measurement Baseline (PMB) to successfully execute the project and attain cost objectives, recognizing the relationship between budget resources, funding, schedule, and scope of work; (4) availability of personnel, facilities, and equipment when required, to perform the defined tasks needed to execute the program successfully; and (5) the degree to which the management process provides effective and integrated technical/schedule/cost planning and baseline control.” IBRs are to be conducted in accordance with agency procedures.
- FAR 34.X03, Solicitation Provisions and Contract Clause, which would require: (1) the inclusion of FAR 52.234-X1, Notice of Earned Value Management System, in solicitations for contracts that will require the contractor to use an EVMS and for which the government may require an IBR after contract award; or (2) the inclusion of FAR 52.234-X2, Notice of Earned Value Management System -- Pre-Award IBR, in solicitations for contracts that will require the contractor to use an EVMS and for which the government will require an IBR before contract award; and (3) the inclusion of FAR 52.234-X3, Earned Value Management System, in solicitations and contracts that require a contractor to use an EVMS.
- FAR 52.234-X1, Notice of Earned Value Management System, which would be required in solicitations when an IBR may be conducted after contract award, would require the offeror to “provide documentation that the cognizant administrative contracting officer (ACO) or a federal department or agency has recognized that the proposed earned value management system (EVMS) complies with the EVMS guidelines in ANSI/EIA Standard-748 (current version at time of solicitation)...If the offeror proposes to use a system that does not meet the [EVMS] requirements...the offeror shall submit a comprehensive plan for compliance with the EVMS guidelines.”
- FAR 52.234-X2, Notice of Earned Value Management System -- Pre-Award IBR, which would be required in solicitations when an IBR will be conducted before contract award, would impose the same requirements on the offeror as FAR 52.234-X1. In addition, it would state that “the government will conduct an Integrated Baseline Review (IBR), as designated by the agency, prior to contract award. The objective of the IBR is for the government and the contractor to jointly assess technical areas, such as the contractor's planning, to ensure complete coverage of the contract requirements, logical scheduling of the work activities, adequate resources, methodologies for earned value (budgeted cost for work performed (BCWP)), and identification of inherent risks.”
EDITOR’S NOTE: The introduction to the proposed rule includes the following request: “The guidelines include the requirement and timing of an Integrated Baseline Review (IBR), whether prior to or post award. Due to the time and cost of performing IBRs, when IBRs are conducted prior to award, consideration should be given to limiting the competitive range. The concept of conducting the IBR before the contract is awarded is a change from the traditional approach of conducting IBRs only after contract award. We specifically request comments on the feasibility of conducting IBRs before award. Should all contracts require IBRs before award? If not, on what type of contracts should IBRs be conducted before award? Would a modified IBR be a better choice before award? What should be the down-select policy to limit the number of offerors subject to an IBR before award?”
- FAR 52.234-X3, Earned Value Management System, which would be required in all solicitations and contracts that require a contractor to use an EVMS, would require the contractor to manage the contract with an EVMS or, if the contractor’s EVMS has not been recognized as complying with EVMS guidelines, to apply EVMS to the contract and be prepared to demonstrate that the EVMS complies with ANSI/EIA Standard-748.
The clause would go on to state, “If a pre-award IBR has not been conducted, such a review shall be scheduled as early as practicable after contract award, but not later than 180 days after award. The contracting officer may also require an IBR at (1) exercise of significant options or (2) incorporation of major modifications. Such reviews will normally be scheduled before award of the contract action.”
EVMS changes proposed by the contractor would require approval by the ACO or federal department or agency prior to implementation. Also, the contractor would be required to “provide access to all pertinent records and data requested by the contracting officer or a duly authorized representative. Access is to permit government surveillance to ensure that the EVMS conforms, and continues to conform” with ANSI/EIA Standard-748.
EDITOR’S NOTE: While there is no threshold for the application of EVMS specified in the proposed rule, the introduction to the proposed rule includes the following statement: “OMB does not expect EVMS on acquisitions at or below $20 million total cost. However, OMB or the agency may identify a lower dollar acquisition as a major acquisition for application of EVMS.”
FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.
Copyright 2005 by Panoptic Enterprises. All Rights Reserved.
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