Earned Value Management Implementation Guide

8/12/2019 Earned Value Management Implementation Guide

1/104

Department of Defense

Earned Value Management

Implementation Guide

Signed___________________________________________

KEITH D. ERNSTDirector,

Defense Contract Management AgencyDepartment of Defense Earned Va!e Management Impementation "!ide

October 2006


2/104

Purpose: This guide provides the uniform procedures which have been approved by the Director,Defense Contract Management Agency (DCMA) under assigned authority as the Department ofDefenses !"ecutive Agent for !arned #a$ue Management %ystems (!#M%)& This documenthas been coordinated by %A'A, %A''M, A%A (A*T), A%+ (D-A), MDAP., +%AC%%, andDCAA& This document provides guidance to be used during the imp$ementation and survei$$anceof !#M% estab$ished in comp$iance with DoD /uide$ines& 0sers of this guide are encouraged to

submit recommendations for refined procedures to DCMA for consideration&

111111111111111111111111111111111111111111111111111111111111111111111111111111

.P: DCMAP2D

.C: %A''MC %A'A3 +%A+45A%A (A*T)%AA*67 A%+ (D-A) AP- P

DCAAPPD MDAD.


3/104

EVMI" IM#R$VEMENT D$C%MENT

%ubmitters +ame:Te$ephone +o&:

e6mai$:

Address:

Prob$em Area:a& %ection +umber andor 'igures:

b& ecommended Changes:

2f in the review or use of this document, a potentia$ change is made evident, p$ease fi$$ in the appropriateinformation be$ow and mai$ or 'A3 to:

Defense Contract Management Agency895 ;a$


4/104

TB2% PA/! 2+T!+T2.+A** *!'T *A+E


5/104

TA&'E $( C$NTENTSFOREWORD..................................................................................................................................vPART I: EARNED VALUE MANAGEMENT CONCEPTS & GUIDELINES...........................2

PART 1 SECTION 1 -EARNED VALUE MANAGEMENT...................................................................................2PART 1 SECTION 2EARNED VALUE MANAGEMENT SYSTEM GUIDELINES........................................3

PART 2 - PROCEDURES FOR GOVERNMENT USE OF EARNED VALUE..........................8PART 2 SECTION 1APPLYING EARNED VALUE MANAGEMENT.......................................................................................................................................... .......8PART 2 SECTION 2PRE-CONTRACT ACTIVITIES....................................................................................... 11

2.2.5.6 Tail!i"# G$i%a"' (! )*' C")!a) P'!(!+a"' R',!) CPR.........................2/2.2.5.6.0./ DD /120-/ 3l4 / /2 a"% /0.................................................................222.2.5.7 Tail!i"# G$i%a"' (! )*' I")'#!a)'% Ma)'! S*'%$l' IMS ............ ...............272.2.5.7.0 DD /120-/ 3l4 / /2 a"% /0.....................................................................27

............................................................................................................................................. 33Part 2 Secti! 3

P"t-a#ar$ Acti%itie" & S'"te( Va)i$ati! a!$ Mai!te!a!ce.............................................3*2.0.2.0 Gv'!"+'") C"%$)'% Vali%a)i".......................................................................072.0.0 EVM S)'+ S$!v'illa"' a"% Mai")'"a"'...........................................................1

PART 2 SECTION +OT,ER POST AARD ACTIVITIES.............................................................................+

2.5.2.5 Ov'! Ta!#') 3a'li"' OT3 a"% Ov'! Ta!#') S*'%$l' OTS........................6

($RE)$RD

Part 2 of this guide provides guidance for understanding !#M% concepts, describes obFective

guide$ines for !#M systems, and provides guidance in interpreting those guide$ines for use on/overnment contracts and programs& Part 4 contains a description of procedures and processesfor /overnment personne$ for specifying, eva$uating, and imp$ementing !#M systems& Part 4a$so contains instructions and tai$oring guidance for app$ying !#M reGuirements to contracts, anintroduction to ana$yHing performance, base$ine review and maintenance, and other post awardactivities& Additiona$ reference materia$ is contained in the appendices&

2t shou$d be noted that Department of Defense (DoD) !#M po$icy not on$y app$ies to contractswith industry, but to intra6government activities as we$$& Throughout this document, the termIcontractJ refers to both contracts with private industry as we$$ as agreements with intra6governmenta$ activities that meet the DoD reporting thresho$ds& %imi$ar$y, the term IcontractorJrefers to entities within both private industry and /overnment&

This document was deve$oped to serve as the centra$ !#M% guidance document for DoDpersonne$& Throughout the !arned #a$ue Management 2mp$ementation /uide (!#M2/),additiona$ references are made to additiona$ sources of information, such as !#M% standards,handboo


6/104

+ote to eaders of the !$ectronic #ersion:

+umerous hyper$in


7/104

EVM "%IDANCE R$ADMA#/overnment 2ndustry

/uideboo


8/104

#ART I+ EARNED VA'%E MANA"EMENT C$NCE#TS "%IDE'INES

#ART - SECTI$N - EARNED VA'%E MANA"EMENT

-.- Concepts of Earned Va!e Management. Ea!"'% Val$' Ma"a#'+'") (!#M) is aprogram management too$ that integrates the technica$, cost, and schedu$e parameters of acontract& During the p$anning phase, an integrated base$ine is deve$oped by time phasingbudget resources for defined wor


9/104

#ART - SECTI$N /EARNED VA'%E MANA"EMENT S1STEM "%IDE'INES

/.- Earned Va!e Management System 2EVMS3. Private companies use some form ofbusiness p$anning and contro$ systems for management purposes& These p$anning and contro$systems have been tai$ored, adapted or deve$oped for the uniGue needs of the company, andre$y on a variety of software pac


10/104

A was pub$ished in 44 without change to the basic guide$ines& 2f the A+%2!2A6?>@ standardis changed or updated, DoD wi$$ review and determine if the document sti$$ meets the/overnments needs&

>


11/104

#R$CESS "R$%#IN"

ANSI7EIA89: "!ideines $R"A

NI;IN"

SCHE

D%'IN"

)$RK

7&%D

"ET

A%TH

$RI;AT

I$N

ACC$

%NTIN"

INDIRE

CT

MAN

A"EM

ENT

MAN

A"ER

IA'

ANA'1S

IS

CHAN

"E

INC$

R#$R

ATI$N

MAT

ERIA'

MAN

A"EM

ENT

S%&C

$NTRA

CT

MAN

A"EM

ENT

ANSI7EIA89: "!ideines$R"ANI;ATI$N/-a Define a!t4ori ?

/-5 Identify #rogram $rgani


12/104

The 94 guide$ines described in A+%2!2A6?>@ provide a consistent basis to assist the/overnment and the contractor in imp$ementing and maintaining acceptab$e !#M systems& 2tshou$d be noted that the A+%2!2A6?>@ contains a section on procedures for eva$uating !#M%comp$iance however, DoD personne$ shou$d fo$$ow the va$idation procedures described in Part4, %ection 9 of this document&

2nstructions for obtaining A+%2!2A6?>@ can be found through the fo$$owing website:

*)),:;;999.ai)%.+, using !2A?>@ as the document identification number& The A%%2%Tsite provides a shopping wiHard too$ to assist /overnment emp$oyees in obtaining a free copy ofthe standard& The standard is avai$ab$e for a fee to private individua$s and companies throughthe A+%2 website: *)),:;;9'@ andvali%a)i", an e$ement in the eva$uation of proposa$s is the prospective contractorLs proposed!#M%& The prospective contractor shou$d describe the !#M% to be used in sufficient detai$ topermit eva$uation for va$idation with the guide$ines& A discussion of both /overnment andcontractor activities during the period prior to contract award is contained in Part 4, %ection 4,Pre6contract Activities& efer to the app$icab$e Defense 'edera$ AcGuisition egu$ation%upp$ement (D'A%) c$auses for specific !#M% va$idation and comp$iance reGuirements for thecontract&

/. System Doc!mentation. Documentation of the !#M% shou$d be estab$ished accordingto the standards of the company& 2t is good business practice to provide adeGuate po$icies andprocedures to assure consistent app$ication across the enterprise& Additiona$ guidance for

companies is contained in A+%2!2A6?>@, %ection >& Documentation guidance for contracts thatreGuire !#M% comp$iance on$y is discussed in Part 4, %ection 4, ,a!a#!a,* 2.6.2.2&

0pon award of the contract, the !#M system description and documentation is used by thecontractor in p$anning and contro$$ing the contract wor


13/104

approved by the Administrative Contracting .fficer (AC.) in advance& efer to the appropriateD'A% c$ause and Part 4, %ection 4, paragraph 9&> for more information on this reGuirement&The /overnment PM and earned va$ue ana$ysts are encouraged to obtain copies of thecontractors system documentation and become fami$iar with the companys !#M%& Companiesusua$$y provide training on their system upon reGuest& This enab$es the ana$yst to betterunderstand how company processes generate !#M% data, impact of earned va$ue measurementmethodo$ogy, and reGuirements for customer approva$ of changes& DCMA !#M% %pecia$ists

assigned to a specific region or to a p$ant shou$d have copies of the $atest system documentationand be very fami$iar with the companys !#M% before beginning survei$$ance activities&

/. Cost Impacts. %ince A+%2!2A6?>@ has been pub$ished, the cost of imp$ementing !#M% isconsidered part of the norma$ management costs that wou$d have been incurred in any case&Bowever, improper imp$ementation and maintenance may create an unnecessary financia$burden on the contractor and the /overnment& Typica$ areas where cost cou$d be mitigatedinc$ude se$ection of the proper $eve$s for management and reporting, the reGuirements forvariance ana$ysis, and the imp$ementation of effective survei$$ance activities& (%ee Part 4 forguidance on tai$oring data items and constructing an effective survei$$ance p$an&)

Differences arising from divergent needs of the /overnment and the contractor, such as the$eve$ of reporting detai$, shou$d be discussed during contract negotiations& ;hi$e the guide$ines

are not subFect to negotiation, many prob$ems concerning timing of !#M% imp$ementation andre$ated reporting reGuirements can be avoided or minimiHed through negotiation& The/overnment customer and contractor shou$d a$so periodica$$y review processes and datareporting to ensure that the tai$ored !#M% approach continues to provide the appropriate $eve$ ofperformance information to management&

/.8 Conc!sion& !#M and reporting have proven their va$ue over many years& App$ication ofthe !#M% guide$ines he$ps to ensure that contractors have and continue to app$y adeGuatemanagement systems that integrate cost, schedu$e, and technica$ performance& This approacha$so provides better overa$$ p$anning, contro$, and discip$ined management of /overnmentcontracts& %ubstantia$ improvements in management can be achieved by senior managementand the PM if they underta


14/104

#ART / #R$CED%RES ($R "$VERNMENT %SE $( EARNED VA'%E

PAT 4 provides procedures for /overnment personne$ app$ying !#M to /overnment contracts&2t shou$d be remembered that throughout this document, the term IcontractJ refers to bothcontracts with private industry as we$$ as to agreements with intra6governmenta$ activities thatmeet the DoD reporting thresho$ds& %imi$ar$y, the term IcontractorJ refers to entities within bothprivate industry and /overnment&

#ART / SECTI$N -A##'1IN" EARNED VA'%E MANA"EMENT

/.-.- $*er*ie=. !#M has been used to manage DoD acGuisitions since the =8s&2ndependent studies over the years have confirmed the va$idity of earned va$ue as a programmanagement too$ however, !#M has not a$ways been consistent$y app$ied or used to manageprograms& The intent of this guide is to improve the consistency of !#M app$ication across DoDand within industry& ;hen PMs begin to use !#M in its proper conte"t as a too$ to integrate andcontro$ program performance, the under$ying !#M system and processes become se$f6regu$ating

and se$f6correcting& PMs shou$d $ead this effort& The success or fai$ure of !#M and u$timate$y,the success of the program itse$f, depends heavi$y on whether the PM fu$$y embraces !#M anduses it on a dai$y basis&

/overnment PMs recogniHe the importance of assigning responsibi$ity for integratedperformance to the I")'#!a)'% P!%$) T'a+(2PT)& The earned va$ue ana$yst shou$d assist thePM in coordinating and integrating ana$ysis however, the u$timate responsibi$ity for managingprogram performance rests with the PM and the 2PTs&

%enior DoD acGuisition officia$s a$so recogniHe the importance of industry ownership of !#M& 2nthe mid =s DoD adopted the industry version of the !#M guide$ines, and is continuing towor< with industria$ associations for continua$ improvement of the entire !#M process&

%uccessfu$ imp$ementation rests on cooperation, teamwor


15/104

A+%2!2A6?>@& As !"ecutive Agent, the DCMA has forma$ cogniHance of the maintenance ofthis guide and provisions inc$uded herein&

/.-.0./.- EVMS Re*ie= Director and Team. The !"ecutive Agent designates a eviewDirector for a$$ !#M% comp$iance reviews, inc$uding initia$ va$idation reviews, post award systemreviews, and reviews for cause& The eview Director is responsib$e for preparing and e"ecuting

a review p$an that inc$udes:

eview DirectorLs name, organiHation, and phone number Contractors name, division, $ocation, and point of contact Contract number asis, cause, purpose, and scope of the review and !stimated starting date and duration of the review&

/.-.0././ Roe of Eec!ti*e Agent in Appea #rocess . Differences in interpretation ofearned va$ue imp$ementation between interested parties within the /overnment and thecontractor sometimes arise& These differences may inc$ude issues on guide$ine app$ication andsystem review reGuirements& Attempts shou$d be made to reso$ve these issues at the $owest$eve$s& Those differences which cannot be reso$ved at the $owest $eve$ may be appea$ed to the

!"ecutive Agent for reso$ution& !ither /overnment or contractor representatives may initiate anappea$& Participants in the appea$ have the opportunity to provide appropriate rationa$e, e"hibits,and discussion, as reGuired, to support their positions& Pending reso$ution, the invo$ved partiesshou$d continue to operate in accordance with the contractor procedures as imp$emented&

/.-.0.0 Component EVM (oca #oints. !ach component shou$d estab$ish a foca$ point toserve as a point of contact for coordination and e"change of information on !#M& The !#Mfoca$ point is responsib$e for effective po$icy imp$ementation within their component, ensuringconsistency with DoD po$icy and the provisions of this guide& The !#M foca$ point is usua$$yassisted by an EVMSS& These staff personne$ are responsib$e for: disseminating current po$icyand providing advice, ensuring effective !#M imp$ementation on new contracts, ana$ysis ofcontractor performance reports, faci$itating 2ntegrated ase$ine eviews (2s), ris


21/104

N5M !02!D2nc$udes: Contracts for high$y c$assified, foreign,and in6house programs&

o Must use A+%2!2A6?>@ comp$iant andva$idated management system&

o CP (a$$ formats) is reGuired&o 2ntegrated Master %chedu$e is reGuired&o

%chedu$e is< Assessment (%A) is reGuired

+ot reGuired for: 'irm6fi"ed price contracts&(usiness case ana$ysis and MDA approva$reGuired&)+ot recommended for: Contracts $ess than =4

months in duration&May not be appropriate for: +on6schedu$e basedcontract efforts, e&g&, $eve$ of effort&

N4M but N5M !02!D

2nc$udes: Contracts for high$y c$assified, foreign,and in6house programs&

o Must use A+%2!2A6?>@ comp$iantmanagement system& +o va$idation&

o CP 'ormats = and 5 are reGuired&o 2ntegrated Master %chedu$e is reGuired&

+ot reGuired for: 'irm6fi"ed price contracts&(eGuires business case ana$ysis and MDAapprova$&)

+ot recommended for: Contracts $ess than =4months in duration&

.PT2.+A*

May not be appropriate for: +on6schedu$e basedcontract efforts, e&g&, $eve$ of effort&

o CP 'ormats 4, 9, and > are optiona$&o %chedu$e is< Assessment is optiona$&

N4M .PT2.+A* 6 0%! O0D/M!+T

!va$uate management needs carefu$$y to ensureon$y minimum information needed for effectivemanagement contro$ is reGuested& o A+%2!2A6?>@ comp$iance is discretionary and

shou$d be based on ris&= through 4&4&9&>&9 may be monitoredand trac8@)&

/./.0. Contract "ro=t4 and T4res4ods. Determination of the app$icabi$ity of !#M and 2M% isbased on the estimated contract price and the e"pected va$ue of p$anned options at the time ofcontract award& Most contracts are modified as time progresses, and a significant number of contractmodifications usua$$y increases the contract va$ue& 2n some cases, a contract that was awarded at $essthan N4 mi$$ion may $ater cross the thresho$d for !#M comp$iance or a contract awarded for $ess thanN5 mi$$ion may $ater cross the thresho$d for va$idation& Therefore, it is recommended that the

=5
http://www.acq.osd.mil/pm/currentpolicy/cpr_cfsr/cfsr_fnl.dochttp://www.acq.osd.mil/pm/currentpolicy/cpr_cfsr/cfsr_fnl.dochttp://www.acq.osd.mil/pm/currentpolicy/cpr_cfsr/cfsr_fnl.doc


22/104

increased tota$ contract va$ue be re6eva$uated against the !#M thresho$ds for a new app$ication of!#M& 2n no case shou$d there be an attempt to de$iberate$y circumvent !#M po$icy by e"c$uding


23/104

the ;%& !ach portion of the contract that fa$$s under a different contract type shou$d be eva$uatedseparate$y for !#M imp$ementation, inc$uding CP or 2M% reporting&.ne caution that shou$d be


24/104

Bowever, there is an additiona$ consideration for e"c$usion of the 2M%& %ince the 2M% is a networ@ in contractperformance but va$idation is not reGuired& eGuires 2s& Approva$ of.T.T% and notification of system changes& Access to data forsurvei$$ance& App$icab$e to subs&

EVMS Compiance

EVMS Compiance Determination
http://dcarc.pae.osd.mil/http://www.acq.osd.mil/pm/currentpolicy/currentpolicy.htmlhttp://www.acq.osd.mil/pm/currentpolicy/currentpolicy.htmlhttp://dcarc.pae.osd.mil/http://www.acq.osd.mil/pm/currentpolicy/currentpolicy.html


26/104

on cost or incentive contracts va$ued at $ess than N4 mi$$ion or ''P contracts, the above paragraphshou$d be inc$uded in the statement of wor 2S$)3& The %.; shou$d contain the fo$$owing reGuirements& %eeA,,'"%i? 3for samp$e %.; paragraphs&

Contractor shou$d deve$op the C;% to the $eve$ needed for adeGuate management and

contro$ of the contractua$ effort& A sing$e C;% shou$d be used for p$anning, managing, andreporting&

Contractor shou$d perform the contract technica$ effort using a guide$ines6comp$iant !#M% thatcorre$ates cost and schedu$e performance with technica$ progress& The %.; shou$d ca$$ forprogress and prob$ems to be presented and discussed in periodic program managementreviews& Technica$ issues shou$d be covered in terms of performance goa$s, e"it criteria,schedu$e progress, ris496= is used tospecify the data item reGuirements and shou$d contain any necessary tai$oring&

2n estab$ishing the cost and schedu$e reporting reGuirements, the PM shou$d $imit the reporting to what

can and shou$d be effective$y used& Bow the PM. is or may be organiHed to manage the effort shou$dbe considered and the reporting shou$d be tai$ored to those needs&

/./...- Reporting Re@!irements.'igure 464 above portrays the current reGuirements for !#Mand 2M% reporting& %ufficient $atitude e"ists within this framewor< to tai$or reporting to the needs ofmost programs& Tai$oring guidance for the CP in ''P contracts is discussed in paragraph4&4&5&8&9&>&

/./.../ Eectronic Data Interc4ange 2EDI3& The use of e$ectronic media is reGuired for a$$reports un$ess disc$osure of this information wou$d compromise nationa$ security& A$$ data shou$d be ina readab$e digita$ format (e&g&, pdf fi$es are not acceptab$e)& The A+%2 3=4 standard (@9 transactionset), the 0nited +ations !$ectronic Data 2nterchange for Administration, Commerce and Transport(0+!D2'ACT) standard (P.C%T message), or the 3M* eGuiva$ent are the accepted formats& .n6

$ine access to the data may be provided to augment forma$ submission& eGuirements to submitreports by e$ectronic means are inc$uded in the CD*& 2f techno$ogy is not avai$ab$e to support 3=4 or3M* 2M% data submission, the 2M% shou$d be de$ivered e$ectronica$$y in the native digita$ format&

/./...0 "enera Taioring "!ideines. A$$ parts of D2Ds can be tai$ored as necessary per thetai$oring guidance contained in this guide& Bowever, there are prohibitions against addingreGuirements beyond the reGuirements in the standard D2D& Tai$oring is accomp$ished via the DD=>496=, CD* form& Any tai$oring instructions, such as freGuency, depth or formats reGuired, areannotated on the CD* forms&

4


27/104

The program office shou$d have an interna$ process to review and approve a$$ CD*s for the contract&The !#M%% can provide assistance in tai$oring& 2t shou$d be stressed that the CP and 2M% aremanagement reports and the CD*s shou$d therefore be prepared by or thorough$y discussed with thePM&

The CP and the 2M% app$y to a$$ contracts that meet the !#M app$icabi$ity reGuirements& .ncontracts va$ued at or greater than N4M but $ess than N5M, it is recommended that CP and 2M%

reporting be tai$ored& Tai$oring to the specific needs of the program is high$y encouraged and isdescribed in greater detai$ be$ow& %amp$e DD 'orms =>496= for both the CP and the 2M% areinc$uded in A,,'"%i? C&

/./.. Taioring "!idance for t4e Contract #erformance Report 2C#R3

/./...- Introd!ction. TheCPRis the means to convey information about the performance of aprogram or contract, and shou$d a$ways be carefu$$y tai$ored to meet the needs of the PM and theprogram team& As such, the CP is a usefu$ means of communicating program status from thecontractor to the customer& 2t shou$d ref$ect how the contractor is using !#M as a too$ to managecontract performance&

The primary cha$$enge for the Foint team is to tai$or the report so that it meets these primary needs,

rather than a$$owing it to degenerate into a IcustomerJ report that can on$y be used to ana$yHe historica$costs& Carefu$ attention is therefore reGuired during the proposa$ and contract definitiHation stages totai$or the CP D2D (D26M/MT6@=>88A)& Discussions shou$d be he$d, as appropriate, between thecontractor and customer to discuss their Foint needs for the report& !"perience has shown that a Fointapproach he$ps assure that the reporting reGuirements of the customer are met, whi$e meeting theneeds of the contractors interna$ management cu$ture and processes& This Foint approach ensuresthat the CP is a vita$ and viab$e too$ for both contractor and customer&

/./.../ Ris> (actors. The fo$$owing ris< factors shou$d be considered carefu$$y by the/overnment PM when tai$oring the D2D&

/./.../.- Compeity. Comp$e"ity factors can usua$$y be attributed to technica$ ris


28/104

done prior to tai$oring the CD*& Areas of ris< shou$d be specified in the CD* for more detai$edreporting&

/./...0 Specific Taioring "!idance for t4e C#R. The comp$e"ity factors discussed inparagraph 4&4&5&8&4&= shou$d be considered when determining the degree of tai$oring that isappropriate for the CP data item for a given contract& The ris< inherent to the program shou$d be theprime consideration for tai$oring of the CP& .ther factors to consider are the siHe of the contract,

comp$e"ity of integration with other contract efforts, re$iance on /overnment 'urnished!Guipment/overnment 'urnished Property (/'!/'P), techno$ogy maturity, and type of contract&

/./...0.- DD -9/0-, &oc>s -G, -/, and -0

&oc> -G('reGuency): !nter freGuency& +orma$$y, the CP shou$d be de$ivered month$y& (+.T!: 2fthe contractor is using wee


29/104

The reporting $eve$ of ;% e$ements shou$d be eva$uated periodica$$y and changed, as necessary, toensure that the CP continues to satisfy the PMs needs&

2f CCD has a$so been p$aced on the contract, there may be a difference between the CCD and CPas to the a$$ocation and reporting of genera$ and administrative(/-A) indirect costs& CCD reGuires/-A to be co$$ected and reported separate$y as an IaddJ item on the CCD reports& Bowever, theCP D2D a$$ows the contractor f$e"ibi$ity in assigning responsibi$ity and a$$ocating costs for a$$ indirect

costs (inc$uding /-A) across the ;% e$ements& 2f the contractor does a$$ocate /-A to the ;%e$ements in the CP, the program office may wish to as< for an additiona$ CP 'ormat = coincidentwith the CCD report submission that mirrors the non6a$$ocation of /-A& The purpose of thisadditiona$ 'ormat = wou$d be to reconci$e with the CCD reports, but this shou$d not drive additiona$variance reporting or any additiona$ format beyond 'ormat =&

/./...0././ Seection of (ormats. 'igure 46> shou$d be uti$iHed to he$p understand the contentand uses of each CP format& 2t provides guidance on the se$ection of CP formats, per .%D po$icy&

/./...0./.0 Reporting (re@!encies. The norma$ reporting freGuency for a$$ formats is month$y&Bowever, this can be tai$ored as appropriate& %ome contractors may use wee, co$umns = through =>, by specified periods orperiodic increments, as negotiated with the procuring activity& The D2D states that additiona$ co$umnsmay be added as necessary to 'ormat 9& Typica$$y, the CD* specifies that the ne"t si" months areseparate$y identified, fo$$owed by either Guarter$y, si" month or annua$ increments to comp$ete& 2fdesired, specify that the base$ine and estimate to comp$ete (!TC) be bro)&

/./...0./. Variance Reporting T4res4ods. 2t is high$y recommended that a$$ reGuirements for'ormat 5 contained in the CP D2D (D26M/MT6@=>88A) be retained& #ariance ana$ysis shou$d containthe fo$$owing narrative e$ements:

%ummary Ana$ysis %ummary of .vera$$ Contract #ariances Differences etween !ACs ($oc


30/104

'2/0! 465 C.+TACT P!'.MA+C! !P.T (CP) '.MAT%

4>

(ormat Tite (re@!ency Description %se of (ormat Seection-. )or> &rea>do=n

Str!ct!re

Month$y or wee


31/104

The /overnment shou$d reGuire the minimum amount of variance ana$ysis in 'ormat 5 whichsatisfies its management information needs, but yet adeGuate$y addresses a$$ significantvariances& !"cessive variance ana$ysis is burdensome and cost$y, and detracts from the CPLsusefu$ness, whi$e too $itt$e information is eGua$$y undesirab$e& The contractor shou$d beencouraged to submit 'ormat 5 in contractor format& 'orma$ or informa$ feedbac< to thecontractor on a regu$ar basis $eads to continued improvement in the Gua$ity of the 'ormat 5&

$oc< =8 shou$d inc$ude a statement that cost and schedu$e variance ana$ysis thresho$ds bereviewed periodica$$y (norma$$y semiannua$$y) to determine if they continue to meet the/overnmentLs information needs& 2f they do not, the thresho$ds shou$d be changed at no cost tothe /overnment& There is no prescribed basis for identification of significant cost and schedu$evariances for 'ormat 5 reporting& The /overnment may specify any one of severa$ ways toidentify such variances, inc$uding, but not $imited to the fo$$owing:

'i"ed +umber of #ariances& %pecify the number of variances to be ana$yHed, e&g&, ten, twenty,etc& The significance of these variances can be based on any of the fo$$owing: current month,cumu$ative to date, at6comp$etion estimates or assessments of ris< areas as identified throughthe /overnmentcontractor management review process& Any number of significant variancesmay be se$ected, but the /overnment shou$d be carefu$ to se$ect on$y the number needed for

effective program management&

Percentage or Do$$ar Thresho$ds& %e$ect variances to be ana$yHed based on percentage or do$$arthresho$ds, or a combination of both& 'or e"amp$e, a$$ current month, cumu$ative or at6comp$etion variances 6 =U may be se$ected for ana$ysis& 2f se$ecting variances based ondo$$ar thresho$ds, specify the variances as p$us or minus some do$$ar amount, e&g&, 6 N45E&The do$$ar amount se$ected shou$d be appropriate for the va$ue of the effort invo$ved& Avariation of this method is to se$ect variances based on both percentage and do$$ar thresho$ds&'or e"amp$e, a$$ current, cumu$ative or at6comp$etion variances6 =U and 6 N5E may be se$ected for ana$ysis& The thresho$ds shou$d be reviewedperiodica$$y to ensure they continue to provide a reasonab$e amount of usefu$ information&

%pecific #ariances& 2n this methodo$ogy, the PM. se$ects e$ements for variance ana$ysis on$yafter reviewing 'ormat = or 4& 0sing this method, the CP is de$ivered prompt$y after thecontractorLs accounting period ends, with a$$ reGuired information in 'ormats = through >& .ncethe /overnment has reviewed this performance data, it se$ects specific variances for ana$ysis bythe contractor& This method may be the most efficient since the /overnment can pinpoint areasto be ana$yHed& 2t is a$so the most f$e"ib$e because there may be some months when a review ofthe performance data yie$ds few or insignificant variance ana$ysis candidates& Bowever, thismethod shou$d on$y be used if the /overnment is certain it has sufficient resources to revieweach month$y CP prompt$y to se$ect the variances for which e"p$anations are needed&

Contractor Determined %ignificant #ariances& 0sing this methodo$ogy, there are nopredetermined variance thresho$ds, as the contractor se$ects the significant variances forreporting each month& The /overnment reserves the right to modify the CD* and to designatespecific variance thresho$ds shou$d the contractor continue to se$ect too few variances forana$ysis and reporting&

/./...0.0. C#R Taioring on Cost or Incenti*e Contracts Va!ed at 'ess T4anF/GM. 2f an!#M reporting reGuirement is app$ied on cost or incentive contracts va$ued at $essthan N4M tai$oring may be $ess stringent than for contracts reGuired to comp$y with A+%2!2A?>@& CP 'ormats = and 5 are recommended and variance ana$ysis can be sca$ed down toinc$ude the top 5 or = variances& #ariance ana$ysis for the current period is a$so an option& The$eve$ of reporting is dependent on the contract ris< regard$ess of va$ue& The fo$$owing tai$oringoptions are avai$ab$e depending on the $eve$ of ris


32/104

%ignificant variances can be identified and defined by the contractor& CPs may be submitted entire$y on $ine& 'orma$ variance ana$ysis may be rep$aced with interna$ reports or status meetings&

/./...0.9 C#R Taioring "!idance for (irm (ied #rice Contracts. .n$y the MDA can granta waiver a$$owing app$ication of !#M to a ''P contract (see paragraph 4&4&9&=)& .nce granted,on$y the minima$ !#M reGuirements necessary to provide the /overnment team with the desired

visibi$ity into program performance shou$d be app$ied& %ince cost e"posure is minimiHed in a''P environment, the /overnment may e$ect to receive an 2M% in order to manage schedu$eris


33/104

/./...0../ Eectronic (ormat. The CP D2D specifies that a$$ formats be in a readab$edigita$ format (e&g&, pdf fi$es are not acceptab$e) or be made avai$ab$e on $ine for down$oadingthrough e$ectronic $in


34/104

&oc> -G ('reGuency): The 2M% shou$d be submitted no $ess freGuent$y than month$y& The 2M%may ref$ect data as of the end of the ca$endar month or preferab$y as of the contractorsaccounting period to ensure consistency and traceabi$ity to the CP&

&oc> -/(Date of first submission): The first submission may be tai$ored to ref$ect a higher $eve$of p$anning or a detai$ed 2MP and subseGuent submission of the 2M% shou$d be detai$ed to theD2D specifications&

&oc> -0(Date of subseGuent submissions): !nter I%ee $oc< =8J, and describe further in $oc@ andaddress a$$ guide$ines& D'A% c$ause 454&4>46?= describes the reGuirements for thisdocumentation& This c$ause a$so reGuires a matri" that cross references provisions of the !#Msystem description to the A+%2!2A6?>@ guide$ines& An offeror may e$ect to


39/104

/./..0 E*a!ation. !va$uation of the proposed !#M% is norma$$y underta


40/104

#art / Section 0#osta=ard Acti*ities System Vaidation and Maintenance

/.0.-. $*er*ie=& ('igure 96=) This section describes !#M system va$idation and maintenancefo$$owing contract award for any contract reGuiring !#M% app$ication& 2t describes the systemva$idation process for app$icab$e contracts, the survei$$ance process, the approva$ process forchanges to the !#M system, and how to address deficiencies in the contractors !#M system&;henEVM vali%a)i"is reGuired, DoD po$icy is to ensure that:

no changes to contractors e"isting !#M% are reGuired e"cept those necessary toconform to the guide$ines in A+%2!2A6?>@

the contractor has proper$y imp$emented the !#M% on the contract under review and isusing it as a principa$ program management too$, and

the contractor is using the data from its own !#M% in reports to the /overnment&

These obFectives can be met through a rigorous system va$idation process for a,,lia46?=, +otice of !arned #a$ueManagement %ystem, reGuires that the contractor be prepared to demonstrate that thecontractorLs !#M% meets the guide$ines& The contractor shou$d prepare a p$an to achieveva$idation and submit the p$an as part of the proposa$& The p$an sha$$:

describe the !#M% the offeror intends to use in performance of the contract, and howthe proposed !#M% comp$ies with the !#M% guide$ines in A+%2!2A6?>@

distinguish between the offerorLs e"isting management system and modificationsproposed to meet the !#M% guide$ines describe the management system and its app$ication in terms of the !#M% guide$ines describe the proposed procedure for administration of the !#M% guide$ines as

app$ied to subcontractors describe the process the offeror wi$$ use to determine subcontractor comp$iance with

A+%2!2A6?>@ the offeror sha$$ provide information and assistance as reGuired by the Contracting

.fficer to support review of the p$an the /overnment wi$$ review and approve the offerors !#M% p$an before contract award

9>
http://guidebook.dcma.mil/39/system.htmhttp://guidebook.dcma.mil/39/system.htm


41/104

the offerors !#M% p$an must provide mi$estones that indicate when the offeroranticipates that the !#M% wi$$ be comp$iant with the guide$ines in A+%2!2A6?>@

the offeror sha$$ identify the subcontractors, or maFor subcontracted effort ifsubcontractors have not been se$ected, to whom the !#M% reGuirements wi$$ app$y&

a schedu$e that provides a timetab$e of events $eading up to /overnment va$idation ofthe contractors !#M%& This schedu$e shou$d inc$ude a Progress Assistance #isit (PA#)&The forma$ #a$idation eview (#) is conducted as soon as practicab$e

95


42/104

'2/0! 96= %%T!M #A*2DAT2.+ A*T!+AT2#!%

/.0././.-.- Ass!ring #rogress Against t4e Vaidation #an. The fo$$owing guidance iscontained in D'A% 454&4>46?4(b), which shou$d be incorporated into the contract to assureadeGuate progress against the va$idation p$an& This guidance directs the contractor to show thatthe system comp$ies with the !#M guide$ines& The p$an to become comp$iant becomes a part ofthe !#M% that has been accepted by to government& This acceptance inc$udes not on$y theactions to be ta


43/104

contro$ system that has been accepted by the Department of Defense), the Contractor sha$$app$y the system to the contract and sha$$ be prepared to demonstrate to the AC. that the!#M% comp$ies with the !#M% criteria&

/.0./././ #rogress Assistance Visit 2#AV3. The PA# is an initia$ assessment of thecontractors readiness to demonstrate its !#M% comp$iance and is usua$$y conducted within 9days after contract award&

/.0./././.- #!rpose of #AV. The PA# is he$d by representatives of the review team with thecontractor before the #& ;ithout invo$ving the time and e"pense of the fu$$ va$idation team, thePA# provides an opportunity to review progress toward imp$ementing the guide$ines, to reso$vemisunderstandings, and to assess the contractorLs readiness to demonstrate a fu$$y integrated!#M system& 2t assists in the preparation for the # by fami$iariHing @& %uccessfu$ demonstration ofthe !#M% and comp$etion of the review resu$ts in the va$idation of the contractors !#M%& Theprimary obFectives of the # are to:

eva$uate management system capabi$ities against A+%2!2A6?>@ assess the description of the management system to determine if it adeGuate$y describes

the management processes demonstrated during the review, and eva$uate the app$ication of the management system on the contract being reviewed&

/.0./.0.-.- Determination of E*a!ation (oc!s& 2f a contractorLs !#M% used for deve$opmentefforts differs significant$y from that used during production, separate va$idation eva$uations maybe reGuired& %imu$taneous reviews of the systems used for deve$opment and those used forproduction contracts may be performed or a contractor may imp$ement one system for bothtypes of contracts& This e$iminates the necessity for mu$tip$e reviews&

9?


44/104

'o$$owing the successfu$ demonstration of a deve$opment focused eva$uation, the /overnmentmay e$ect to do fo$$ow6on reviews, focused on those e$ements of the !#M% that are uniGue toproduction& 2n determining to focus a review on deve$opment or production the fo$$owing issuesshou$d be considered:

2f the manufacturing effort in the contract is not true repetitive manufacturing (e&g&,mode$ shop wor


45/104

An overview briefing by the contractor to fami$iariHe the review team with the proposed!#M%& The overview shou$d identify any changes which have occurred since the mostrecent PA#&

A review, of the documentation that estab$ishes and records changes to the base$inep$an for the contract& This inc$udes wor< authoriHations, schedu$es, budgets, resourcep$ans, and change records inc$uding management reserve and undistributed budgetrecords& The purpose is to verify that the contractor has estab$ished and is maintaining ava$id, comprehensive integrated base$ine p$an for the contract&

A review, on a samp$e basis, of the reporting of cost and schedu$e performance againstthe base$ine p$an, a$ong with appropriate ana$yses of prob$ems and proFection of futurecosts& A$so, a trace is conducted to summariHe the costschedu$e performance datafrom the $owest $eve$ of forma$ reporting (norma$$y the contro$ account $eve$) to thee"terna$ performance measurement report& The purpose of this activity is to verify theadeGuacy of the contro$ aspects of the system and the accuracy of the resu$tingmanagement information&

2nterviews with a se$ected samp$e of CAMs, functiona$ and other wor< teams, and PMsto verify that the contractorLs !#M% is fu$$y imp$emented and being used in themanagement of the contract&

An e"it briefing covering the teamLs findings& During this briefing, any open systemdiscrepancies shou$d be discussed a$ong with the contractorLs corrective action p$an,which estab$ishes responsibi$ity and a time6frame for corrective action&

+.T!: 2f, at the time of award, the contractors !#M% has not been determined by the AC. ascomp$ying with the !#M% guide$ines, the contractor app$ies its current system to the contractand ta


46/104

/overnment PMs shou$d be aware of the e"istence of AAs with their contractors in order to ta@& 2n this situation a va$idationshou$d be considered to be eGuiva$ent to norma$ va$idation by the DoD& The !"ecutive Agent

may be consu$ted by the PM. if there are any issues or doubts concerning the acceptabi$ity ofthe contractors va$idation& #a$idations conducted by any /overnment other than Canada orAustra$ia are not recogniHed at this time&

/.0./. EVM System Vaidation of S!5contractors. 2f the prime contract contains the D'A%c$ause to f$ow down !#M% to subcontracts then the subcontractor is e"pected to meet the sameva$idation reGuirements as the prime contractor& The /overnment is responsib$e for conductingthe va$idation&

/.0./. EVM System =it4 #rior "o*ernment Vaidation. Contractors with an accepted !#M%app$ication on another contract of the same type (for e"amp$e, deve$opment or production) at thesame faci$ity are not reGuired to undergo a # on a new contract& The !"ecutive Agent may beconsu$ted by the PM. if there are any issues or doubts concerning the status of the contractorsva$idation&

;hen a contractor has a previous$y accepted !#M%, additiona$ !#M% #s are on$y conductedto reinstate va$idation if the contractors va$idation was withdrawn fo$$owing a 'C& The mostimportant e$ement to ensure continuing comp$iance with A+%2!2A6?>@ is $ess about the Qone6timeQ review $eading to the system va$idation but more on the continuous survei$$ance process&

2n the interest of fostering contractor ownership, the DoD encourages contractors to responsib$yconduct continuous se$f eva$uation of their !#M% in partnership with the /overnment& Thecontractor shou$d use A+%2!2A6?>@ as the basis for assessing their system comp$iance& Thecontractor is a$so encouraged to use the temp$ates and forms provided in the S)'+ Ca,a


47/104

provides information that depicts actua$ conditions and trends provides comprehensive variance ana$ysis at the appropriate $eve$s inc$uding proposed

corrective action in regard to cost, schedu$e, technica$, and other prob$em areas discusses actions ta@, regardessof whether a

forma$ system va$idation is reGuired& !#M% survei$$ance begins at contract award, continuesthrough the # and va$idation (when reGuired), and e"tends throughout the duration of thecontract& ;e do survei$$ance to ensure the contractor fo$$ows the terms and conditions that areon the contract& 2f revisions are made changing those terms and conditions then a modificationto the contract is reGuired in order to ma4&94 (>=) and DCMA 2nstruction/uideboo be$ow&) The !#M% %pecia$ist shou$d be cogniHant of theprocuring activity !#M%%, who can provide assistance in reso$ving survei$$ance issues&

>=


48/104

The #rogram S!pport Team (P%T) members are assigned responsibi$ity foraccomp$ishing survei$$ance in their respective functiona$ or organiHationa$ area&

The #rogram Integrator 2#I37S!pport #rogram Integrator(%P2) serves as the CM.foca$ point on maFor program contracts (or designated maForcritica$ subcontracts)&

The Administrati*e Contracting $fficer (AC.) is designated as the agent of the

/overnment responsib$e for assuring that the contractor comp$ies with the contract& TheAC. is a member of the P%T&

The M.A is a negotiated agreement between the PM. and the CM. that identifies the


49/104

2f deficiencies are discovered in the contractorLs comp$iance with A+%2!2A6?>@, the CM.documents the prob$em and then notifies the contractor of the prob$em a$ong with any correctiveaction reGuired& The CM. fo$$ows up to ensure the deficiency is reso$ved in a time$y manner&!#M% prob$ems that cannot be reso$ved with the contractor through the !#M% %pecia$ist arereported to the AC. for reso$ution&The CM. reviews the CP and re$ated interna$ data f$ow on a recurring basis or as agreed to in

the M.A& The !#M% %pecia$ist provides the PM with an independent and comp$ete assessmentof the accuracy and time$iness of CP information as agreed to in the M.A& These reportsspecifica$$y high$ight issues that cou$d affect contract mi$estones or areas of considerab$e cost,schedu$e or technica$ ris9


50/104

/.0.9./.- C4ange #rocess. Changes to the contractors approved !#M% reGuire forma$acceptance and approva$ prior to imp$ementation to ensure that the proposed changes do notinva$idate the !#M% that was eva$uated in the contract award& These changes are forwarded bythe !#M% %pecia$ist to the DCMA !#M Center with a written assessment of the effects, if any ofthe changes on the approved system& (This assessment of the effect of the proposed change(s)on their contracts he$ps ensure that contractor system changes that resu$t in modifications to

reported information are not made without the invo$vement of the organiHations uti$iHing the datafor program management&)

0pon eva$uation and approva$ of the proposed changes by the DCMA !#M Center the AC.shou$d advise the contractor of the acceptabi$ity of such changes within 9 ca$endar days afterreceipt of the notice of proposed changes from the contractor& ;hen a proposed change wou$dma


51/104

'2/0! 964 %%T!M CBA+/! P.C!%% '. #A*2DAT!D %%T!M%

>5


52/104

%hou$d the DCMA !#M% %pecia$ist determine that the changes wou$d cause non6comp$iance toA+%2!2A6?>@ the AC. shou$d forma$$y notify the contractor of this non6comp$iance andtherefore its non6fu$fi$$ment of the contract reGuirements& The $etter shou$d reGuest that thecontractor modify the proposed changes to maintain comp$iance& %hou$d the contractor not ta


53/104

'2/0! 969 %%T!M CBA+/! P.C!%% '. +.+6#A*2DAT!D %%T!M%

>?


54/104

/.0. Deficiencies in Vaidated EVM Systems.

/.0..- Deficiencies. Deficiencies may be uncovered either in the !#M system processes orin the consistency and discip$ine of the va$idated processes& These deficiencies may bediscovered during routine survei$$ance, during ana$ysis of performance data or during team

reviews& The information provided detai$s the specific area(s) of deviation& The procuringactivity and !#M%% shou$d be notified of maFor deficiencies and advice shou$d be obtained froma$$ parties& The fo$$owing process shou$d be fo$$owed by the /overnment and contractor torestore comp$iance and discip$ine& This process is designed to provide the contractor anopportunity to correct deficiencies prior to forma$ withdrawa$ of the companys !#M% va$idation&%ee 'igure 96>&

/.0../ Appication. The uniform and consistent app$ication of actions and remedies for !#M%non6comp$iance is essentia$ for promoting contractor6initiated corrective action& This reGuires anawareness and understanding of regu$atory po$icies, correct identification of the prob$em areas,and se$ecting and imp$ementing appropriate actions and remedies& The appropriate use ofcontractua$ actions and remedies is reGuired to protect the /overnments interest if non6comp$iance occurs& These need to be commensurate with the impact to the /overnment

corre$ated to the va$ue to the /overnment of the non6comp$iance& !#M% va$ue to the/overnment may be significant$y greater than its abso$ute cost& The $oss of va$id performancemeasurement data may $imit the /overnments abi$ity to measure the contractors progress on acontract which may increase the probabi$ity of unearned progress payments& ;hen D'A%454&4>46?4, !arned #a$ue Management %ystem, is inc$uded in a contract, the contractorsperformance measurement system becomes a materia$ reGuirement& The information be$ow isfor app$ication to !#M% non6comp$iance issues&

/.0..0 Actions. The fo$$owing actions and remedies are initiated after discussion with orrecommendations by the PM. (PC.) and CM. (AC.):

2ssue $etter of concern notifying the contractor of a specific prob$em and reGuestingadditiona$ information or a corrective action p$an with get we$$ dates&

educe or suspend progress payments ('P2' contracts) when contract reGuirements are

not met ('A 94&5968 (b) (=))& educe contractor bi$$ings when !#M% de$iverab$e reports are unacceptab$e and

payments shou$d be recouped (cost6type and 'P2' contracts)& educe overhead bi$$ing rates when overhead payments to the contractor have not been

earned and shou$d be recouped (cost6type and 'P2' contracts)& Prior to imp$ementing,coordinate with the DCAA&

'u$$ comp$iance with A+%2!2A6?>@ may be used as a factor in award fee determination& 2nform the contracting officer that an !#M% non6comp$iance issue is endangering

contract performance and recommend a Cure +otice be issued& 2nform the contracting officer that a condition(s) endangering performance (described in

contracting officer cure notice) has not been corrected and recommend issuance of a%how Cause +otice& (This is a $ast resort measure and a contract is rare$y terminated for!#M% non6comp$iance)&

/.0..9 Remedies. The fo$$owing remedies may be initiated by the contracting officer afterdiscussion with, or recommendations by, the P., CM. or !#M%%:

negotiate a reduction in contract price issue a Cure +otice issue a %how Cause +otice

/.0.8 S!spension or )it4dra=a of Vaidation.

>@


55/104

/.0.8.- S!spension of Vaidation. The responsib$e PC. andor AC. forma$$y provides acontractua$ notification that the contractors !#M system has been suspended unti$ a$$ correctiveactions have been successfu$$y comp$eted and approved by the PC. andor AC. in coordinationwith the DCMA !#M Center& The contractor is prohibited from c$aiming an A+%2!2A6?>@comp$iant system in a$$ new proposa$s during the period of suspension&

The notification shou$d a$so inc$ude a statement that the contractors !#M% va$idation is inFeopardy& The contractor is given a reasonab$e period of time to show cause why the !#M%va$idation shou$d not be withdrawn and contractua$ remedies be invo


56/104

'2/0! 96> %%T!M D!'2C2!+C2!% R #A*2DAT!D %%T!M%

5


57/104


58/104

PAT 4 %!CT2.+ >P.%T6A;AD ACT2#2T2!% R 2+T!/AT!D A%!*2+! !#2!;%

/.9.- $*er*ie=. This section defines the process and provides guidance for p$anning andconducting 2s&

/.9./ #!rpose of t4e I&R. The 2 concept was deve$oped in =9 due toa growing recognition within DoD that unrea$istic base$ines were beingestab$ished for many contracts, $eading to significant cost andschedu$e overruns& The 2 was seen as a way to estab$ish morerea$istic base$ines which wou$d $ead to improved programmanagement and better use of the !#M process by PMs&

An 2 is a Foint assessment conducted by the /overnment PM and the contractor to verify therea$ism and accuracy of the PM& This invo$ves verifying the technica$ content of the base$ine

and assessing the rea$ism and accuracy of the re$ated resources (performance budget and 2M%) &The 2 is un$i@& 2nstead the 2 focuses on assessing the rea$ism ofthe base$ine&

The 2 isa too$ that shou$d be used as necessary throughout the $ife ofthe contract& Eey benefits of the 2 are:

Foint understanding of program ris


59/104

awardATP, the e"ercise of significant contract options, theincorporation of maFor modifications or as otherwise agreed upon&

The 2 shou$d not be considered a one6time event or sing$e point review& 2s are a$soperformed at the discretion of the PM or when maFor events occur within the $ife of a program&These events may be a significant shift in the content andor time6phasing of the PM or when a

maFor mi$estone such as the start of the production option of a deve$opment contract is reached&An 2 shou$d a$so be conducted whenever an Ov'! Ta!#') 3a'li"' (.T) orOv'! Ta!#')S*'%$l'(.T%) is imp$emented&

2ncrementa$ 2s may be an a$ternative approach for $ong, comp$e" deve$opment efforts& 2n anincrementa$ 2, the base$ine is reviewed for an increment of time that corresponds to thecontractors p$anning cyc$e(s)& 'or e"amp$e, the base$ine may be p$anned in detai$ from contractaward to CD, and this becomes the basis for the first incrementa$ review& The first incrementa$review shou$d a$so review the top $eve$ p$anning for the remaining effort& Conductingincrementa$ 2s does not abrogate the contractors responsibi$ity to p$an the fu$$ base$ine in asmuch detai$ as possib$e& .ther incrementa$ reviews occur over time as the remaining base$ine isp$anned in detai$& 2ncrementa$ 2s are not suitab$e for contracts that are on$y a few years induration or for production contracts& Continuous assessment of the remaining PM andprogram ris


60/104

comp$ete a$$ocation of a$$ wor< from the contract %.; to the detai$ed wor< p$anningdocuments

impact of /overnment furnished eGuipment, data, and faci$ities comp$eteness and rea$ism of the tota$ 2M%, inc$uding a critica$ path ana$ysis comp$eteness and reasonab$eness of the budget a$$ocation discussion of the p$anning assumptions and business vo$ume used as the basis for

indirect rates overa$$ staffing issues ongoing !#M system discip$ine issues and ris


61/104

R BoriHonta$ integration between functions or tas


62/104

documentation& The 2 shou$d never be he$d as a forma$ briefing,nor shou$d additiona$ briefing materia$ be reGuired other than a shortintroduction to the 2 process&

/.9.../ Contro Acco!nt Disc!ssions. %uccessfu$$y meeting the obFectives

of an 2 invo$ves discussions at the contro$ account or wor< pac


63/104

/.9.8 I&R Res!ts. At the end of the 2, the PMs shou$d agree on a p$anto trac< and c$ose a$$ action items, ensuring that an individua$ hasbeen assigned the responsibi$ity to reso$ve each action item& A$$ ris46?=, D'A% 454&4>46?4, 2ntegratedMaster %chedu$e (D26M/MT6@=85) and the CP (D26M/MT6@=>88A)& 'or subcontracts va$uedat or greater than N4M but $ess than N5M, the above reGuirements app$y, however, 2n regardsto D'A% 454&4>46?= and 454&4>46?4, the contractor is reGuired to have an !#M% thatcomp$ies with A+%2!2A6?>@ however, the /overnment wi$$ not forma$$y accept the contractorsmanagement system (no comp$iance review)& !#M% f$ow down to subcontracts of $ess thanN4M in then year do$$ars or 'irm 'i"ed Price (''P) subcontracts that e"ceed =4 monthsduration is a ris& 2ntegrated Master %chedu$e (2M%)& The 2M% wi$$ have the fo$$owing characteristics:

3&>&= 2t is consistent with the C;%&

?


77/104

3&>&4 2t is detai$ed sufficient$y that critica$ and high ris< efforts are identified and p$annedrea$istica$$y to assure e"ecutabi$ity& The 2M% wi$$ be e"tended and e"panded as the contract oragreement unfo$ds and additiona$ insight is needed (for e"amp$e, ro$$ing wave detai$ p$anningor scope changes)&

3&>&9 2t inc$udes the efforts of a$$ activities, inc$uding subcontractors and supp$iers&

3&>&> 2t presents a current, integrated view of the contract or agreement that is consistent withresource p$ans, CPs and other approved documentation&

3&>&5 2t shou$d ref$ect those ris&8 The Contractor formats the de$iverab$e 2M% for !D2& The 2M% is created using a networ, Ar$ington, #A 44446>94 and to the .ffice of Management and udget, Paperwor< eduction ProFect(?>6=@@), ;ashington, DC 459& P$ease D. +.T !T0+ your form to either of these addresses& %end comp$eted form to the/overnment 2ssuing Contracting .fficer for the ContractP +o& *isted in $oc< !&

A. CONTRACT LINE ITEM NO. 3. E@I3IT C. CATEGORB: TDP TM OT@ER

D. SBSTEM;ITEM E. CONTRACT;PR NO. F. CONTRACTOR

Na+' ( ,!#!a+

=& DATA 2T!M +.& 4& T2T*! .' DATA 2T!M 9& %0T2T*!

Contract Performance eport (CP)

>& A0TB.2T $(ata Ac)*isition (oc*ment No&% 5& C.+TACT !'!!+C! 8& !022+/ .''2C!

D26M/MT6@=>88 A

?& DD 45 ! &D2%T %TAT!M!+T!02!D

=& '!0!+C =4& DAT! .' '2%T%0M2%%2.+

=>& D2%T20T2.+

*T M.+TB* %!! *.CE =8 b& C.P2!%

@& APP C.D! ==& A% .' DAT! =9& DAT! .' %0%!0!+T%0M2%%2.+

a& ADD!%%!!Draft

'ina$

+. %!! *.CE =8 %!! *.CE =8eg epro

-. Remar>s+Tai$or D26M/MT @=>88 A as fo$$ows:

$oc< >:eport data on 'ormat = at C;% *eve$ 9 e"cept for the fo$$owing C;% e$ements: C;% 333 R report at *eve$ 4 C;% 333, 333, 333 R report at *eve$ > C;% 333 R report at *eve$ 5

'ormat 5 variance ana$ysis are reGuired for the fo$$owing variances in 'ormat =:6 Current period cost or schedu$e variances e"ceeding 6 N andor (pic< one) 6 U6 Cumu$ative cost or schedu$e variances e"ceeding 6 N andor (pic< one) 6 U6 #ariances at comp$etion e"ceeding 6 N and 6 U6 .ther significant variances that are causing or are $i496=, 'eb 4= P!#2.0% !D2T2.+ MA ! 0%!D& Page 11111 of 111111 Pages

'2/0! C R = %AMP*! CD* '. C.+TACT ;2TB B2/B 2%E

?9


80/104

CONTRACT DATA RE/UIREMENTS LIST/ Da)a I)'+

F!+ A,,!v'%OM3 N. 71-/88

P$


81/104


F!+ A,,!v'%

OM3 N. 71-/88

P$


82/104

C.+TACT DATA !02!M!+T% *2%T(= Data 2tem)

'orm Approved .M +o& ?>6=@@

Pub$ic reporting burden for this co$$ection of information is estimated to average == hours per responsinc$uding the time for reviewing instructions, searching e"isting data sources, gathering and maintaining thdata needed and comp$eting and reviewing the co$$ection of information& %end comments regarding thburden estimate or any other aspect of this co$$ection of information, inc$uding suggestions for reducing thburden, to Department of Defense, ;ashington BeadGuarters %ervices, Directorate for 2nformatio.perations and eports, =4=5 Oefferson Davis Bighway, %uite =4>, Ar$ington, #A 44446>94 and to th.ffice of Management and udget, Paperwor< eduction ProFect (?>6=@@), ;ashington, DC 45P$ease D. +.T !T0+ your form to either of these addresses& %end comp$eted form to the /overnme2ssuing Contracting .fficer for the ContractP +o& *isted in $oc< !&

A& C.+TACT *2+! 2T!M+.&

& !3B22T C& CAT!/.:

A TDP TM .TB!: 3D& %%T!M2T!M !& C.+TACTP +.& '& C.+TACT.

=& DATA 2T!M+.&

4& T2T*! .' DATA 2T!M 9& %0T2T*!

3333 INTE"RATED MASTER SCHED%'E 2IMS3 Page = of =>& A0TB.2T (Data AcGuisitionDocument +o&)

5& C.+TACT !'!!+C! 8& !022+/ .''2C

DIM"MT:-G %.; PAA 3&3&3 PMA6333?& DD45!

& D2%T%TAT!M!+T

=& '!0!+C =4& DAT! .' '2%T %0M2%%2.+ =>& D2%T20T2.+

!02!D !*!CT.+2CA***T Month$y %ee *E =8 b& C.P2!

@& APPC.D!

==& A% .' DAT! =9& DAT! .' %0%!0!+T%0M2%%2.+

a&ADD!%

%!!

'in

+A D +A %ee *E =8 Draft eg&=8& !MAE% PMA6333 =The contractor sha$$ provide the 2M% per D2D DIM"MT:-Ge"cept or as modifiedby the fo$$owing:

&oc> 9: Modify paragraph 4&>&=&49 to read IThe contractor sha$$ submit %chedu$eis< Assessments (%A) and be prepared to active$y participate in Guarter$y %As toidentify and Guantify mi$estoneevent and tas


83/104

variances from submission to submission as we$$ as 2MP andor maFor programmi$estone impacts or other maFor schedu$e ris< areas& ;or< around andor recoveryschedu$esp$ans, and associated impacts due to program changes sha$$ a$so beprovided& The schedu$e narrative sha$$ address progress to date and discuss anysignificant schedu$e changes (i&e&, addedde$eted tas -/: The first submission is due within =? wor496= O0+ Previous editions are obso$ete&Page 1 of 1 Pages

'2/0! C6> %AMP*! CD* '. 2M%

??


84/104


F!+ A,,!v'%OM3 N. 71-/88

P$


85/104

C$NTRACT DATA RE%IREMENTS 'IST2- Data Item3

'orm Approved.M +o& ?>6=(M)

Pub$ic reporting burden for this co$$ection of information is estimated to average == hours perresponse, inc$uding the time for reviewing instructions, searching e"isting data sources, gatheringand maintaining the data needed and comp$eting and reviewing the co$$ection of information& %endcomments regarding this burden estimate or any other aspect of this co$$ection of information,

inc$uding suggestions for reducing this burden, to Department of Defense, ;ashingtonBeadGuarters %ervices, Directorate for 2nformation .perations and eports, =4=5 Oefferson DavisBighway, %uite =4>, Ar$ington, #A 44446>94 and to the .ffice of Management and udget,Paperwor< eduction ProFect (?>6=@@), ;ashington, DC 459& P$ease D. +.T !T0+ yourform to either of these addresses& %end comp$eted form to the /overnment 2ssuing Contracting.fficer for the ContractP +o& *isted in $oc< !&

A& C.+TACT *2+! 2T!M+.&

& !3B22T C& CAT!/.:

TDP TM .TB!

D& %%T!M2T!M !& C.+TACTP +.& '& C.+TACT.

=& DATA 2T!M+.&

4& T2T*! .' DATA 2T!M 9& %0T2T*! =?&/.

Contract ;or< rea& A0TB.2T (Data AcGuisitionDocument +o&)

5& C.+TACT!'!!+C!

8& !022+/ .''2C! =@&!%T!DT.TP2

D26M/MT6@=99>?& DD 45!

&D2%T%TAT!M!+T!02!D

=&'!0!+C

=4& DAT! .''2%T%0M2%%2.+

=>& D2%T20T2.+

%!! *.CE=8

%!! *.CE =8 b& C.P2!%

@& APPC.D!

==& A% .'DAT!

=9& DAT! .'%0%!0!+T%0M2%%2.+

a& ADD!%%!!Draft

'ina$

%!! *.CE =8eg ep

ro

?


86/104

-. Remar>s+$oc reGuires the firstsubmissions to be made no $ater than 8 days after contractaward& The contractor is responsib$e for maintaining theC;% Dictionary during the $ife of the contract& %ubseGuentdates of submission sha$$ be made as reGuired or upon maForrevisions& C;% Dictionary submissions sha$$ not be more

freGuent than report submission&

Prepare the C;% is accordance with M2*6BDE6@@=, I;or496=, 'eb 4= P!#2.0% !D2T2.+ MA ! 0%!D& Page11111 of 111111 Pages

'2/0! C 6 8 %AMP*! CD* '. C;% ;B!+ CCD is !02!D

@
http://dcarc.pae.osd.mil/http://dcarc.pae.osd.mil/http://dcarc.pae.osd.mil/http://dcarc.pae.osd.mil/http://dcarc.pae.osd.mil/


87/104

APP!+D23 D

AD#A+C! A/!!M!+T

=& The Advance Agreement (AA) between the /overnment and a contractor shou$d specify thatthe contractor uses an effective !arned #a$ue Management %ystem (!#M%) which comp$ies with

A+%2!2A6?>@ !#M% /uide$ines on the current as we$$ as future contracts of a simi$ar type& TheAA shou$d document the /overnments intent to minimiHe system reviews& The AA a$so shou$ddocument a contractorLs corporate commitment to continue to use and maintain the !#M% forcurrent and future /overnment contracts&

4& The AA shou$d be e"ecuted based on prior system va$idation or fo$$owing the successfu$comp$etion of a #a$idation eview and shou$d usua$$y remain in effect indefinite$y& The AAshou$d a$so be used by DoD to provide continued recognition of a contractors system ascomp$ying with the !#M %ystem /uide$ines& 'ina$$y, an AA shou$d be used to provide acontractor with DoD recognition of a successfu$ !#M% #a$idation eview& .nce e"ecuted, the

AA may be used by the contractor to demonstrate that they fu$fi$$ the reGuirements for an !#M%as reGuired by D'A% 454&4>46?=&

9& The AA shou$d be signed by the cogniHant Contracting .fficer (C.) and a contractor

representative at a commensurate $eve$& 'or e"amp$e, if the contractor uses a common !#M%throughout a Division, the appropriate contractor representative may be the Division Manager&The corresponding /overnment officia$ wou$d be the C.& Any amendments or changes to the

AA, once e"ecuted, are to be made through the cogniHant C.&

>& A samp$e AA and a Ooint %urvei$$ance Program out$ine are provided be$ow as g!ides& 2naddition, to the guidance, the fo$$owing areas shou$d be considered for inc$usion in the AA:

(a) app$icab$e contractor and /overnment po$icy and directive references(b) reference to contractor and /overnment survei$$ance p$ans and guidance(c) the process to fo$$ow for system changes(d) interna$ coordination reGuirements for conducting continuing survei$$ance(e) documentation and reporting reGuirements and

(f) documenting Iru$es of engagementJ for reso$ution of areas of concern that are foundthrough !#M% survei$$ance&

Neit4er of t4e foo=ing sampe doc!ments is intended to 5e appied eacty as s4o=n5!t s4o!d 5e modified to fit t4e contractor, program, and CM$7DCAA re@!irements andcapa5iities.

@=


88/104

Ad*ance Agreement5et=een

2Cogni@&

;hereas, the contractor has demonstrated certain management systems and subsystems asidentified in YContractor Document that identifies the contractors !#M% commitment dated(date)Z, and

The Y/overnment componentZ, by $etter dated YdateZ, did recogniHe the comp$iance of suchsystems and subsystems with the !#M% /uide$ines, then

TB! Y+AM! .' TB! C./+27A+T CM.Z A+D YC.+TACT. +AM!, D2#2%2.+, *.CAT2.+ZA/!! TBAT:

(=) %uch systems and subsystems which have been recogniHed as indicated above,together with approved changes thereto, app$y to future Yspecify type of contract fore"amp$e, DT-!, production or bothZ contracts, which reGuire comp$iance with !#M%/uide$ines, entered into between the contractor and the /overnment&(4) As a resu$t of this agreement Ycontractor name, division, $ocationZ agrees to maintainthe Yname of the contractors !#M%Z, as a DoD comp$iant integrated management

system, through an interna$ survei$$ance program Yother means e&g&, Foint survei$$ancebetween the CM., PM, and the contractor, are acceptab$e but shou$d be specifica$$yidentifiedZ&

2N$TE+ THE ($''$)IN" $#TI$NA' 'AN"%A"E IS ($R CM$s %SIN" THE#RI$RA##R$VA' )AIVER ($R EVM S1STEM CHAN"ES3

(9) The YCogniHant C.Z, under the authority of D'A% c$ause 454&4>46?4 YMarch45Z, agrees to waive the pre6approva$ reGuirements for system changes as provided inparagraph Y Z of D'A% c$ause 454&4>46?4 YMarch 45Z& Pursuant to D'A% c$ause454&4>46?4 YMarch 45Z Ycontractor name, division, $ocationZ is reGuired to disc$osechanges to the Yname of the contractors !#M%Z, to YCogniHant C.Z, at $east two wee


89/104

O$INT S%RVEI''ANCE #R$"RAMAS IM#'EMENTED AT

PContractorLs Name, Di*ision, 'ocationQ

References+ 2a3 R!es of Engagement

I. CHARTER AND $&OECTIVES+

The Ooint 2%T and Ycontractor name, division, $ocationZ %urvei$$ance Team is estab$ished to:

A& !nsure that Ycontractor name, division, $ocationZ imp$ementation of Yname of the contractors!#M%Z continues to:

=& e used by the contractor for program management and is integrated into thecontractors scheme of ris< identification and abatement&

4& Comp$y with the !#M% /uide$ines by:a& Training designated program personne$ in the use of the Yname of the contractors!#M%Z&b& Accomp$ishing ear$y, comprehensive p$anning to provide a Gua$ity base$ine readyfor e"amination in the 2ntegrated ase$ine eview (2) process&c& 2ntegrating cost, schedu$e, and technica$ p$anning into a sing$e, we$$ contro$$edperformance measurement base$ine&d& !stab$ishing c$ear $ines of authority and responsibi$ity for accomp$ishment of wor4&94 arecomp$eted by the contractor in accordance with the terms and conditions of the contract&

Ad*ance Agreement 2AA3. An agreement between the contractor and the CM. that recogniHesthe app$ication of a va$idated !#M% to contracts within the corporation, division or faci$ity&

Aocated &!dget. (see Tota$ A$$ocated udget)Appied Direct Costs 2ADC3. The actua$ direct costs recogniHed in the time period associated

with the consumption of $abor, materia$, and other direct resources, without regard to the

date of commitment or the date of payment& These amounts are to be charged to wor@&

Contract &!dget &ase 2C&&3. The sum of the negotiated contract cost p$us the estimated costof authoriHed unpriced wor


99/104

Contract Management $ffice 2CM$3. The /overnment organiHation assigned responsibi$ity forensuring that the contractor comp$ies with the terms and conditions of the contract& This isnorma$$y assigned to DCMA&

Contract Data Re@!irements 'ist 2CDR'3. A compi$ation of a$$ data reGuirements, made partof the contract, and which the contractor is ob$igated to de$iver to the /overnment&

Contract #erformance Report 2C#R3. A contractua$$y reGuired report, prepared by thecontractor, containing performance information derived from the interna$ !#M%& Provides

status of progress on the contract& (D26M/MT6@=>88A)Contract )or> &rea>do=n Str!ct!re 2C)&S3. The comp$ete ;% for a contract& 2t inc$udes

the DoD approved ;% for reporting purposes and its discretionary e"tension to the $ower$eve$s by the contractor, in accordance with M2*6BDE @@= (current version) and thecontract statement of wor &rea>do=n Str!ct!re Dictionary. A contractua$$y reGuired document,prepared by the contractor that describes and defines the e$ements in the C;% structure&(D26M/MT6@=99>)

Contractor.An entity in private industry which enters into contracts with the /overnment& 2n thisguide, the word a$so app$ies to /overnment6owned, /overnment6operated activities whichperform wor< on maFor defense programs&

Contro Acco!nt 2CA3. (former$y ca$$ed Cost Account) A management contro$ point at whichbudgets (resource p$ans) and actua$ costs are accumu$ated and compared to earned va$uefor management contro$ purposes& A contro$ account is a natura$ management point forp$anning and contro$ since it represents the wor< assigned to one responsib$e organiHationa$e$ement (or integrated wor< team) for a sing$e program ;% e$ement&

Contro Acco!nt Manager 2CAM3. A sing$e manager within the contractors organiHationa$structure that has been given the authority and responsibi$ity to manage one or more contro$accounts&

Cost Acco!nting Standards 2CAS3. eGuirements estab$ished by the Cost Accounting%tandards oard (CA%) to ensure consistent and proper accounting for direct and indirectcosts app$ied to /overnment contracts&

Cost Variance& A metric for showing cost performance derived from earned va$ue data& 2t is thea$gebraic difference between earned va$ue and actua$ cost (cost variance K earned va$ue 6actua$ cost&) A positive va$ue indicates a favorab$e condition and a negative va$ue indicatesan unfavorab$e condition& 2t may be e"pressed as a va$ue for a specific period of time or

cumu$ative to date&Critica #at4. A seGuence of discrete wor< pac


100/104

performance measurement and management& As wor< is performed, the correspondingbudget va$ue is IearnedJ&

Earned Va!e Management System Speciaist. That person within the CM. assignedresponsibi$ity for ensuring the proper and continuing imp$ementation of the approved !#Msystem on contracts through survei$$ance and ana$ysis&

Earned Va!e Management System 2EVMS3. A companys management system and re$atedsub6systems that estab$ishes the re$ationship between the cost, schedu$e, and technica$

aspects of the wor


101/104

'e*e of Effort 2'$E3. !ffort of a genera$ or supportive nature which does not produce definiteend products and cannot be practica$$y measured by discrete earned va$ue techniGues&!arned va$ue is measured by the passage of time&

Management Reser*e 2MR3. An amount of the tota$ budget withhe$d for management contro$purposes, rather than designated for the accomp$ishment of a specific tas< or set of tas


102/104

#rogram Management $ffice 2#M$3. The /overnment office that has the assigned authorityand responsibi$ity to direct$y manage a program&

#roc!ring Acti*ity. The subordinate command to which the Procuring Contracting .fficer(PC.) is assigned& 2t may inc$ude the program office, re$ated functiona$ support offices, andprocurement offices&

#rogram )or> &rea>do=n Str!ct!re 2#)&S3. The ;% that covers the acGuisition of aspecific defense materie$ item and inc$udes a$$ contractua$ and /overnmenta$ wor< activities&

#rogress Assistance Visit 2#AV3. An initia$ assessment of the contractors readiness todemonstrate their !#M% comp$iance, usua$$y conducted within 9 days after contract award&

Repanning. The redistribution of e"isting budget for future wor


103/104

Vaidation Re*ie= 2VR3. A forma$ /overnment review conducted at a contractors faci$ity toassess the contractors proposed !#M% comp$iance with A+%2!2A6?>@&

Variance at Competion 2VAC3. The difference between the budget at comp$etion and theestimate at comp$etion is #AC K AC 6 !AC& 2t may be ca$cu$ated at any $eve$ from thecontro$ account up to the tota$ contract& 2t represents the amount of e"pected overrun(negative #AC) or underrun (positive #AC)&

Vertica Integration. Demonstrates the consistency of data between the various $eve$s of

schedu$es and consistency of data between various ;% e$ements andor 2MP2M%e$ements (if app$icab$e) within the schedu$es& %ince upper6tiered schedu$es set theparameters for $ower $eve$ schedu$es, it is imperative that $ower $eve$ schedu$es aretraceab$e to upper6tiered mi$estones to ensure program schedu$e integrity& This ensures thata$$ 2ntegrated Product Teams are wor &rea>do=n Str!ct!re 2)&S3. A product6oriented fami$y tree division of hardware,software, services, and other wor< tas #ac>age. +atura$ subdivision of contro$ accounts& A wor< pac


104/104

APP!+D23 2

2n 'ebruary 4?, the Department of Defense recogniHed for use the +D2A PM%C !#M%2+T!+T /02D! Dated +ovember 48 when interpreting the intent of the 94 guide$ines in

A+%2!2A6?>@ standard& ;here DoD be$ieves there is a need for a more robust interpretationof the guide$ines, reGuirements shou$d be addressed using appropriate contractua$ means&DCMA retains fina$ decision authority on Guestions concerning guide$ine intent and app$ication&
http://www.ndia.org/Content/ContentGroups/Divisions1/Procurement/EVMS_IntentGuide_Nov06.pdfhttp://www.ndia.org/Content/ContentGroups/Divisions1/Procurement/EVMS_IntentGuide_Nov06.pdfhttp://www.ndia.org/Content/ContentGroups/Divisions1/Procurement/EVMS_IntentGuide_Nov06.pdfhttp://www.ndia.org/Content/ContentGroups/Divisions1/Procurement/EVMS_IntentGuide_Nov06.pdfhttp://www.ndia.org/Content/ContentGroups/Divisions1/Procurement/EVMS_IntentGuide_Nov06.pdf

Earned Value Management Implementation Guide

Documents