Acquisition regulations: Earned value management system; application,
[Federal Register: November 16, 1998 (Volume 63, Number 220)]
[Proposed Rules]
[Page 63654-63657]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16no98-30]
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1842 and 1852
Application of Earned Value Management (EVM)
AGENCY: National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
SUMMARY: This proposed rule would effect a change to the NASA FAR Supplement relative to the application of Earned Value Management (EVM) at NASA. The proposed change would establish NASA-wide clauses and provisions compatible with those used by DoD. Specifically, the change would clarify the role of the Defense Contract Management Command (DCMC) with
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respect to its responsibility for reviewing earned value management system (EVMS) plans and verifying initial and continuing contractor compliance with NASA and DoD EVMS criteria, and with NASA Policy Directive 9501.3, Earned Value Performance Management, and DoD 5000.2- R.
DATES: Comments should be submitted on or before January 15, 1999.
ADDRESSES: Interested parties should submit written comments to Kenneth A. Sateriale, NASA Headquarters, Office of Procurement, Contract Management Division (Code HK), Washington, DC 20546. Comments may also be submitted by e-mail to kenneth.sateriale@hq.nasa.gov.
FOR FURTHER INFORMATION CONTACT: Kenneth A. Sateriale, (202) 358-0491.
SUPPLEMENTARY INFORMATION:
Background
EVM is a commonly used performance (i.e. cost, schedule, and technical) measurement tool for program managers in the aerospace industry. NASA and DoD are major customers in the Government sector of the aerospace industry, and cooperate to align their business practices wherever practicable in order to realize cost and resource efficiencies. Therefore, they have collaborated closely over the last several years to align their approaches to the use of EVM. This change completes that alignment process.
Impact
NASA certifies that this regulation will not have a significant economic impact on a substantial number of small business entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) since the changes do no more than align NASA practices with those already in place at DoD, which shares essentially the same industry sector. This proposed rule does not impose any reporting or recordkeeping requirements subject to the Paperwork Reduction Act.
List of Subjects in 48 CFR Parts 1842 and 1852
Government procurement. Tom Luedtke, Acting Associate Administrator for Procurement.
Accordingly, 48 CFR Parts 1842 and 1852 are proposed to be amended as follows:
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The authority citation for 48 CFR Parts 1842 and 1852 continues to read as follows:
Authority: 42 U.S.C. 2473(c)(1)
PART 1842--CONTRACT ADMINISTRATION AND AUDIT SERVICES
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Subpart 1842.3 is added to read as follows:
Subpart 1842.3--Contract Administration Office Functions
Sec. 1842.302 Contract administration functions. (NASA supplements paragraph (a))
(a) In addition to the responsibilities listed in FAR 42.302(a), responsibility for reviewing earned value management system (EVMS) plans and verifying initial and continuing contractor compliance with NASA and DoD EVMS criteria is normally delegated to DCMC.
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Section 1842.7003 is added to read as follows:
1842.7003 Modified cost performance report.
(a) Modified cost performance reporting is required for RDT&E contracts with values between $25 million and $60 million, and production contracts with values less than $250 million. Modified cost performance reporting for RDT&E contracts with values of $25 million or less may be required at the discretion of the contracting officer.
(b) The contracting officer shall insert the clause at 1852.242-76, Modified Cost Performance Report, in solicitations and contracts, other than for firm-fixed-price, time-and-materials, or labor-hour, when modified cost performance reporting is required.
(c) The contracting officer shall insert the provision at 1852.242- 77, Modified Cost Performance Report Plans, in solicitations for contracts, other than firm-fixed-price, time-and-materials, or labor- hour, when modified cost performance reporting is required.
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Subpart 1842.74 is added to read as follows:
Subpart 1842.74--Earned Value Management
1842.7401 Earned Value Management Systems (EVMS). 1842.7402 Solicitation provision and contract clause.
Subpart 1842.74--Earned Value Management
1842.74 Earned Value Management Systems (EVMS).
(a) Earned value is a management technique that relates resource planning to schedules and to technical cost and schedule requirements. All work is planned, budgeted, and scheduled in time-phased ``planned value'' increments constituting a cost and schedule measurement baseline. There are two major objectives of an earned value system: to encourage contractors to use effective internal cost and schedule management control systems; and to permit the customer to be able to rely on timely data produced by those systems for determining product- oriented contract status. Any system used by the contractor in planning and controlling the performance of significant contracts shall be certified as meeting the NASA EVM Criteria (the Criteria), unless waived by the NASA Chief Financial Officer (CFO).
(b) Criteria-based EVMS is required in RDT&E contracts with a total estimated final value of $60 million or more, with a period of performance in excess of one year, and production contracts with a total value of $250 million or more. On RDT&E contracts with a total anticipated value greater than $25 million but less than $60 million, or production contracts less than $250 million, the Criteria normally is not applied. However, noncriteria-based EVM is required on these contracts, and is optional on contracts valued at $25 million or less at the discretion of the contracting officer. NASA Center CFO's have been delegated the authority to waive this requirement for contracts meeting the thresholds established for noncriteria contracts.
(c) When an offeror or contractor is required to provide an EVMS plan to the Government, the contracting officer shall forward a copy of the plan to the cognizant administrative contracting officer (ACO) to obtain the assistance of the ACO in determining the adequacy of the proposed EVMS plan.
1842.7402 Solicitation provision and contract clause.
When the Government requires Earned Value Management, the contracting officer shall insert:
(a) The provision at 1852.242-74, Notice of Earned Value Management System, in solicitations; and
(b) The clause at 1852.242-75, Earned Value Management System, in solicitations and contracts.
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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Sections 1852.242-74, 1852.242-75, 1852.242-76, and 1852.242-77 are added to read as follows:
1852.242-74 Notice of Earned Value Management System.
As prescribed in 1842.7402(a), insert the following provision:
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Notice of Earned Value Management System
(XXX)
(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 NASA Policy Directive (NPD) 9501.3, Earned Value Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems Acquisition Programs.
(b) If the offeror proposes to use a system that does not meet the requirements of paragraph (a) of this provision, the successful offeror shall submit a plan for compliance with the NASA EVM criteria as described in NPD 9501.3.
(1) The plan shall--
(A) Describe the EVMS the offeror intends to use in performance of the contract;
(B) Distinguish between the offeror's existing management system and modifications proposed to meet the criteria;
(C) Describe the management system and its application in terms of the 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 and evaluate the successful offeror's plan for EVMS, including the selection of subcontracted effort to which EVMS would be applied, within sixty days following contract award.
(c) Offerors shall identify in their proposals the major subcontractors, or major subcontracted effort if major subcontractors have not been selected, planned for application of EVMS.
(End of Provision)
1852.242-75 Earned Value Management Systems.
As prescribed at 1842.7402(b), insert the following clause:
Earned Value Management System
(XXX)
(a) In the performance of this contract, the Contractor shall use an earned value management system (EVMS) that has been recognized by the cognizant Administrative Contracting Officer (ACO) as complying with the criteria provided in NASA Policy Directive 9501.3, Earned Value Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems Acquisition Programs.
(b) If, at the time of award, the Contractor's EVMS has not been recognized by the cognizant ACO as complying with EVMS criteria or the Contractor does not have an existing cost schedule control system (C/SCS) that has been accepted by the Government, the Contractor shall apply that system to the contract and be prepared to demonstrate to the ACO that its EVMS complies with the EVMS criteria referenced in paragraph (a) of this clause.
(c) The Government may require integrated baseline reviews. Such reviews shall be scheduled as early as practicable and should be conducted within 180 calendar days after contract award, the exercise of significant contract options, or the incorporation of major contract modifications. The objectives of the integrated baseline review are 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.
(d) 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 and the NASA CO at least 14 calendar days prior to the effective date of implementation.
(e) The Contractor agrees to provide access to all pertinent records and data requested by the ACO or a 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.
(f) The Contractor shall require the subcontractors specified below to comply with the requirements of this clause: (Insert list of applicable subcontractors)
(End of clause)
1852.242-76 Modified Cost Performance Report.
As prescribed in 1842.7003(b), insert the following clause:
Modified Cost Performance Report
(XXX)
(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 Modified Cost Performance Report (M/CPR).
(b) As a minimum, these procedures must provide for--
(1) Establishing the time-phase 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. The total allocated budget may exceed the contract budget base only after obtaining prior written approval of the NASA Contracting Officer. 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 a 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 NASA Policy Directive 9501.3, Earned Value Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems Acquisition Programs.
(d) The Government may require integrated baseline reviews. Such reviews shall be scheduled as early as practicable and should be conducted within 180 calendar days after contract award, the exercise of significant contract options, or the incorporation of major modifications. The objectives of the integrated baseline review are 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) 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 M/CPR contractual data requirements to the Government; and
(2) Ensure continuing application of the accepted company procedures in satisfying the M/CPR 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 M/ CPR in each case where the subcontract is other than firm-fixed- price, time-and-materials, or labor-hour, is 12 months or more in duration, and has critical or significant tasks related to the prime contract. Critical or significant tasks shall be identified by either the Government or the Contractor. Each subcontractor's reported cost and schedule information shall be incorporated into the Contractor's M/CPR.
(End of clause)
1852.242-77 Modified Cost Performance Report Plans.
As prescribed in 1842.7003(c), insert the following provision;
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Modified Cost Performance Plans
(XXX)
(a) The offeror shall submit in its proposal 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 1852.242-74 Modified CostPerformance 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 NASA Policy Directive 9501.3, Earned Value Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense Acquisition Programs and Major Automated Information Systems Acquisition Programs, 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)
[FR Doc. 98-30554Filed11-13-98; 8:45 am]
BILLING CODE 7510-01-P
