DoD Seal

OFFICE OF THE SECRETARY OF DEFENSE


3000 DEFENSE PENTAGON
WASHINGTON, DC 20301-1000

March 5, 1997
DoD 50 Year Seal

 
ACQUISITION AND
 TECHNOLOGY

     DP(DAR)

                                                     In reply refer to
                                                     DFARS Case: 96-D024
                                                     D. L. 97-011



     MEMORANDUM FOR DIRECTORS OF DEFENSE AGENCIES
                    DEPUTY FOR ACQUISITION AND BUSINESS MANAGEMENT,
                      ASN(RD&A)/ABM
                    DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE
                      (CONTRACTING), SAF/AQC
                    DIRECTOR, PROCUREMENT POLICY, ASA(RD&A)/SARD-PP
                    DEPUTY DIRECTOR (ACQUISITION), DEFENSE LOGISTICS
                      AGENCY



     SUBJECT:   Earned Value Management Systems
     
     
          We have amended the Defense Federal Acquisition Regulation 
     Supplement (DFARS) to recognize industry-standard "Guidelines 
     for Earned Value Management Systems (EVMS)" as an alternative to 
     Department of Defense (DoD)-unique cost/schedule control systems.  
     On December 14, 1996, the Under Secretary of Defense for Acquisition 
     and Technology directed that these guidelines be adopted for use as 
     the criteria by which the acceptability of DoD contractors' 
     management control systems will be evaluated.  Since DoD's 
     cost/schedule control systems criteria are considered equivalent 
     to EVMS, contractors' previously approved cost/schedule control 
     systems are considered acceptable under the EVMS criteria.
     
     
          The attached interim DFARS rule is effective immediately and 
     will be included in a future Defense Acquisition Circular.
  


                                              /s/

                                    Eleanor R. Spector
                                    Director, Defense Procurement

     Attachment

     cc: DSMC, Ft. Belvoir


DFARS Case 96-D024 - Earned Value Management Systems
Interim Rule
Additions are [bold and bracketed.]


234.005-70 [Earned value management systems.
When an offeror provides an earned value management system (EVMS) plan as part of its proposal in accordance with the provision at 252.234-7000, the contracting officer shall forward a copy of the plan to the cognizant administrative contracting officer (ACO). The procuring contracting officer shall obtain the assistance of the ACO in determining the adequacy of the proposed EVMS plan.

234.005-71] Solicitation provision and contract clause.
When the Government requires contractor compliance with [DoD earned value management system criteria-

(a) U]se the provision at 252.234-7000, [Notice of Earned Value Management System], in solicitations[;] and

[(b) Use] the clause at 252.234-7001, [Earned Value Management System,] in solicitations and contracts.

* * * * *

242.302 Contract administration functions.
(a) * * *

(41) [The Defense Contract Management Command (DCMC) has responsibility for reviewing earned value management system (EVMS) plans and verifying initial and continuing contractor compliance with DoD EVMS criteria.]

(67) * * *

242.1107-70 [Solicitation provision and contract clause.]

[(a) Use the clause at 252.242-7005, Cost/Schedule Status Report, in solicitations and contracts for other than major systems that require cost/schedule status reporting (i.e., the Contract Data Requirements List includes DI-MGMT-81467).

(b) Use the provision at 252.242-7006, Cost/Schedule Status Report Plans, in solicitations for other than major systems that require cost/schedule status reporting. ]

* * * * *

252.234-7000 [Notice of Earned Value Management System].
As prescribed by 234.005-[71], use the following provision:

[NOTICE OF EARNED VALUE MANAGEMENT SYSTEM (MAR 1997)]

(a) [The offeror shall provide documentation that the cognizant Administrative Contracting Officer (ACO) has recognized that the proposed earned value management system (EVMS) complies with the EVMS criteria of DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems, or that the proposed cost/schedule control system has been accepted by the Government.

(b)] [If the offeror proposes to use a system that does not meet the requirements of paragraph (a) of this provision, t]he [o]fferor shall submit a comprehensive plan for compliance with the [EVMS criteria].

[(1)] The plan shall--

(A) Describe the [EVMS] the [o]fferor intends to use in performance of the contract[;].

(B) Distinguish between the [o]fferor's existing management system and modifications proposed to meet the criteria[;].

(C) Describe the management system and [its] application in [terms of the 32 EVMS criteria;]

[(D)] Describe the proposed procedure for administration of the criteria as applied to subcontractors[; and].

[(E) Provide documentation describing the process and results of any third-party or self-evaluation of the system's compliance with EVMS criteria.]

(2) The offeror shall provide information and assistance as required by the Contracting Officer to support review of the plan.

(3) The Government will review the offeror's plan for EVMS before contract award].

[(c) Offerors shall identify the major subcontractors, or major subcontracted effort if major subcontractors have not been selected, planned for application of the criteria.] The prime contractor and the Government shall agree to subcontractors selected for application of the [EVMS] criteria.

(End of provision)

252.234-7001 [Earned Value Management System].
As prescribed in 234.005-[71], use the following clause:

[EARNED VALUE MANAGEMENT SYSTEM (MAR 1997)]

(a) [In the performance of this contract, t]he Contractor shall [use an earned value management system (EVMS) meeting the criteria provided in DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems].

[(b) If the Contractor has an EVMS that has been recognized by the cognizant Administrative Contracting Officer (ACO) as complying with the EVMS criteria (or an existing cost/schedule control system (C/SCS) that has been accepted by the Government), the Contractor shall apply the system to this contract within 60 calendar days after contract award or as otherwise agreed to by the parties.

(c) If the Contractor does not have an EVMS that has been recognized by the cognizant ACO as complying with EVMS criteria (or does not have an existing C/SCS that has been accepted by the Government), the Contractor shall be prepared to demonstrate to the ACO that the EVMS complies with the EVMS criteria referenced in paragraph (a) of this clause.

(d) The Government may require an integrated baseline review within 180 calendar days after (1) contract award, (2) the exercise of significant contract options, or (3) the incorporation of major modifications. The purpose of the integrated baseline review is for the Government and the Contractor to jointly assess areas, such as the Contractor's planning, to ensure complete coverage of the statement of work, logical scheduling of the work activities, adequate resourcing, and identification of inherent risks.

(e) Unless a waiver is granted by the ACO, Contractor proposed EVMS changes require approval of the ACO prior to implementation. The ACO shall advise the Contractor of the acceptability of such changes within 30 calendar days after receipt of the notice of proposed changes from the Contractor. If the advance approval requirements are waived by the ACO, the Contractor shall disclose EVMS changes to the ACO at least 14 calendar days prior to the effective date of implementation.]

(f) The Contractor agrees to provide access to all pertinent records and data requested by the [ACO] or duly authorized representative. Access is to permit Government surveillance to ensure [that the EVMS complies, and continues to comply, with the criteria referenced in paragraph (a) of this clause.

[(g)] The Contractor shall require [those] subcontractor[s specified in the contract for application of the EVMS criteria to comply with the requirements of this clause.]

(End of clause)

* * * * *

252.242-7005 Cost/Schedule Status Report.
As prescribed in 242.1107-70[(a)], use the following clause:

COST/SCHEDULE STATUS REPORT ([MAR 1997])

(a) The [Contractor] shall [use] management procedures in the performance of [this] contract that provide for--

(1) Planning and control of costs;

(2) Measurement of performance (value for completed tasks); and

(3) Generation of timely and reliable information for the cost/schedule status report (C/SSR).

(b) As a minimum, [these] procedures must provide for--

(1) Establishing the time-phased budgeted cost of work scheduled (including work authorization, budgeting, and scheduling), the budgeted cost for work performed, the actual cost of work performed, the budget at completion, the estimate at completion, and provisions for subcontractor performance measurement and reporting;

(2) Applying all direct and indirect costs and provisions for use and control of management reserve and undistributed budget;

(3) Incorporating changes to the contract budget base for both Government directed changes and internal replanning;

(4) Establishing constraints to preclude subjective adjustment of data to ensure performance measurement remains realistic. Unless the Contacting Officer provides prior written approval, in no case shall the total allocated budget exceed the contract budget base. For cost[-]reimbursement contracts, the contract budget base shall exclude changes for cost growth increases, other than for authorized changes to the contract scope; and

(5) Establishing the capability to accurately identify and explain significant cost and schedule variances, both on a cumulative basis and projected at completion basis.

(c) The Contractor may use a cost/schedule control system that has been [recognized by the cognizant Administrative Contracting Officer (ACO)] as complying with [the earned value management system criteria provided in DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems].

(d) [The Government may require an integrated baseline review within 180 calendar days after (1) contract award, (2) the exercise of significant contract options, or (3) the incorporation of major modifications. The purpose of the integrated baseline review is for the Government and the Contractor to jointly assess areas, such as the Contractor's planning, to ensure complete coverage of the statement of work, logical scheduling of the work activities, adequate resourcing, and identification of inherent risks.] The Contractor shall provide necessary documents and data which describe the methods of planning, control and data generation in actual operation and satisfy the requirements of paragraph (a) of this clause.

(e) The Contractor shall provide access to all pertinent records, company procedures, and data requested by the [ACO], or authorized representative, to--

(1) Show proper implementation of the procedures generating the cost [and] schedule information being used to satisfy the C/SSR contractual data requirements to the Government; and

(2) Ensure continuing application of the accepted company procedures in satisfying the C/SSR data item.

(f) The Contractor shall submit any substantive changes to the procedures and their impact to the [ACO] for review.

(g) The Contractor shall require a subcontractor to furnish C/SSR in each case where the subcontract is other than firm[-] fixed-price, is 12 months or more in duration, and has critical or significant tasks related to the prime contract. Critical or significant tasks shall be defined by mutual agreement between the Government and Contractor. Each subcontractor's reported cost and schedule information shall be incorporated into the Contractor's C/SSR.

(End of clause)

[252.242-7006 Cost/Schedule Status Report Plans.
As prescribed in 242.1107-70(b), use the following provision:

COST/SCHEDULE STATUS REPORT PLANS (MAR 1997)

(a) The offeror shall submit a written summary of the management procedures it will establish, maintain, and use in the performance of any resultant contract to comply with the requirements of the clause at 252.242-7005, Cost/Schedule Status Report.

(b) If the offeror proposes to use a cost/schedule control system that has been recognized by the cognizant Administrative Contracting Officer as complying with the earned value management system criteria of DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems, the offeror may submit a copy of the documentation of such recognition instead of the written summary required by paragraph (a) of this provision.

(End of provision)]