Defense Acquisition Regulations System; Defense Federal Acquisition Regulation Supplement; Earned Value Management Systems, 3449-3453 [E6-705]
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Federal Register / Vol. 71, No. 14 / Monday, January 23, 2006 / Proposed Rules
acquisition. This text will be relocated
to the new DFARS companion resource,
Procedures, Guidance, and Information
(PGI). The proposed rule is a result of
a transformation initiative undertaken
by DoD to dramatically change the
purpose and content of the DFARS.
DATES: Comments on the proposed rule
should be submitted in writing to the
address shown below on or before
March 24, 2006, to be considered in the
formation of the final rule.
ADDRESSES: You may submit comments,
identified by DFARS Case 2005–D012,
using any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: dfars@osd.mil. Include
DFARS Case 2005–D012 in the subject
line of the message.
• Fax: (703) 602–0350.
• Mail: Defense Acquisition
Regulations System, Attn: Ms. Amy
Williams, OUSD (AT&L) DPAP (DARS),
IMD 3C132, 3062 Defense Pentagon,
Washington, DC 20301–3062.
• Hand Delivery/Courier: Defense
Acquisition Regulations System, Crystal
Square 4, Suite 200A, 241 18th Street,
Arlington, VA 22202–3402.
Comments received will be posted
without change to https://
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms.
Amy Williams, (703) 602–0328.
SUPPLEMENTARY INFORMATION:
erjones on PROD1PC61 with PROPOSALS
A. Background
DFARS Transformation is a major
DoD initiative to dramatically change
the purpose and content of the DFARS.
The objective is to improve the
efficiency and effectiveness of the
acquisition process, while allowing the
acquisition workforce the flexibility to
innovate. The transformed DFARS will
contain only requirements of law, DoDwide policies, delegations of FAR
authorities, deviations from FAR
requirements, and policies/procedures
that have a significant effect beyond the
internal operating procedures of DoD or
a significant cost or administrative
impact on contractors or offerors.
Additional information on the DFARS
Transformation initiative is available at
https://www.acq.osd.mil/dpap/dars/
dfars/transformation/index.htm.
This proposed rule is a result of the
DFARS Transformation initiative. The
proposed rule deletes DFARS text
addressing internal DoD procedures in
the following areas:
DFARS 225.670–4—Processing of
requests for waiver of foreign source
restrictions.
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DFARS 225.871–4—Processing of
requests for waiver under North Atlantic
Treaty Organization cooperative
projects.
DFARS 225.7017–3—Preparation of
determinations regarding award of a
contract for ballistic missile defense
research, development, test, and
evaluation to a foreign source.
DFARS 225.7502—Application of the
Balance of Payments Program to an
acquisition.
This text will be relocated to the new
DFARS companion resource,
Procedures, Guidance, and Information
(PGI), available at https://
www.acq.osd.mil/dpap/dars/pgi.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
B. Regulatory Flexibility Act
DoD does not expect this rule to have
a significant economic impact on a
substantial number of small entities
within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq.,
because the proposed rule addresses
internal DoD procedural matters and
makes no significant change to DoD
contracting policy. Therefore, DoD has
not performed an initial regulatory
flexibility analysis. DoD invites
comments from small businesses and
other interested parties. DoD also will
consider comments from small entities
concerning the affected DFARS subparts
in accordance with 5 U.S.C. 610. Such
comments should be submitted
separately and should cite DFARS Case
2005–D012.
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply because the rule does not
impose any information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Part 225
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations
System.
Therefore, DoD proposes to amend 48
CFR part 225 as follows:
1. The authority citation for 48 CFR
part 225 continues to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR
Chapter 1.
PART 225—FOREIGN ACQUISITION
2. Section 225.670–4 is revised to read
as follows:
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225.670–4
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Waivers.
The Secretary of Defense may waive
this restriction on the basis of national
security interests. To request a waiver,
follow the procedures at PGI 225.670–4.
3. Section 225.871–4 is amended by
revising paragraph (c) to read as follows:
225.871–4
Statutory waivers.
*
*
*
*
*
(c) To request a waiver under a
cooperative project, follow the
procedures at PGI 225.871–4.
*
*
*
*
*
4. Section 225.7017–3 is amended by
revising paragraph (b) to read as follows:
225.7017–3
Exceptions.
*
*
*
*
*
(b) If the head of the contracting
activity certifies in writing, before
contract award, that a U.S. firm cannot
competently perform a contract for
RDT&E at a price equal to or less than
the price at which a foreign government
or firm would perform the RDT&E. The
contracting officer or source selection
authority, as applicable, shall make a
determination, in accordance with PGI
225.7017–3(b), that will be the basis for
the certification.
5. Section 225.7502 is revised to read
as follows:
225.7502
Procedures.
If the Balance of Payments Program
applies to the acquisition, follow the
procedures at PGI 225.7502.
[FR Doc. E6–706 Filed 1–20–06; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF DEFENSE
48 CFR Parts 242 and 252
[DFARS Case 2005–D006]
RIN 0750–AF19
Defense Acquisition Regulations
System; Defense Federal Acquisition
Regulation Supplement; Earned Value
Management Systems
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Proposed rule with request for
comments.
AGENCY:
SUMMARY: DoD is proposing to amend
the Defense Federal Acquisition
Regulation Supplement (DFARS) to
update requirements for DoD
contractors to establish and maintain
earned value management systems
(EVMS). The rule revises the dollar
thresholds at which EVMS requirements
are applied and eliminates requirements
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Federal Register / Vol. 71, No. 14 / Monday, January 23, 2006 / Proposed Rules
for contractors to submit cost/schedule
status reports under DoD contracts.
DATES: Comments on the proposed rule
should be submitted in writing to the
address shown below on or before
March 24, 2006, to be considered in the
formation of the final rule.
ADDRESSES: You may submit comments,
identified by DFARS Case 2005–D006,
using any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: dfars@osd.mil. Include
DFARS Case 2005–D006 in the subject
line of the message.
• Fax: (703) 602–0350.
• Mail: Defense Acquisition
Regulations System, Attn: Ms. Deborah
Tronic, OUSD (AT&L) DPAP (DARS),
IMD 3C132, 3062 Defense Pentagon,
Washington, DC 20301–3062.
• Hand Delivery/Courier: Defense
Acquisition Regulations System, Crystal
Square 4, Suite 200A, 241 18th Street,
Arlington, VA 22202–3402.
Comments received will be posted
without change to https://
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms.
Deborah Tronic, (703) 602–0289.
SUPPLEMENTARY INFORMATION:
erjones on PROD1PC61 with PROPOSALS
A. Background
This proposed rule revises DFARS
Subpart 242.11 and the corresponding
clauses in DFARS Part 252 to reflect
changes in DoD policy on the
application of EVMS compliance
requirements. The proposed changes—
• Require compliance with American
National Standards Institute/Electronic
Industries Alliance Standard 748,
Earned Value Management Systems, for
cost or incentive contracts and
subcontracts valued at $20,000,000 or
more;
• Require a formally validated and
accepted EVMS for cost or incentive
contracts and subcontracts valued at
$50,000,000 or more;
• Discourage the application of
earned value management to fixed-price
contracts and subcontracts; and
• Eliminate requirements for
contractors to submit cost/schedule
status reports.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
B. Regulatory Flexibility Act
DoD has prepared an initial regulatory
flexibility analysis consistent with 5
U.S.C. 603. The analysis is summarized
as follows:
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This proposed rule amends the
DFARS to update requirements for DoD
contractors to establish and maintain
earned value management systems
(EVMS). The rule revises the dollar
thresholds at which EVMS requirements
are applied and eliminates requirements
for contractors to submit cost/schedule
status reports under DoD contracts. The
objective of the proposed rule is to
streamline, improve, and increase
consistency in earned value
management implementation and
application.
The threshold at which a DoD
contractor previously was required to
have an EVMS that complied with
American National Standards Institute/
Electronic Industries Alliance Standard
748 (ANSI/EIA–748) was $73 million for
contracts and subcontracts funded with
research, development, test and
evaluation funding; and $315 million
for contracts and subcontracts funded
with operation and maintenance or
procurement funding. This proposed
rule would lower those thresholds to a
single $20 million threshold for all cost
or incentive contracts and subcontracts,
regardless of funding type, and would
establish a new threshold of $50 million
for an EVMS that has been formally
validated and accepted as complying
with the standard.
According to the Defense Contract
Action Data System, in Fiscal Year
2004, 7 small businesses received a cost
or incentive type award obligating funds
in excess of $20 million, and 46 small
businesses received a fixed-price type
award obligating funds in excess of $20
million. EVMS compliance
requirements would only be used in
fixed-price contracts in extremely rare
instances. The Dynamic Small Business
Search database hosted on the Central
Contractor Registration Web site
indicates there are 304,961 small
businesses registered in that database.
The proposed rule is consistent with
the proposed changes to the Federal
Acquisition Regulation (FAR) published
in the Federal Register on April 8, 2005
(70 FR 17945), that would extend
Governmentwide the requirement for a
contractor to have an EVMS that
complies with ANSI/EIA–748. The
initial regulatory flexibility analysis for
the proposed FAR rule anticipated that
agencies would establish a threshold of
$20 million for EVMS compliance.
A copy of the analysis may be
obtained from the point of contact
specified herein. DoD invites comments
from small businesses and other
interested parties. DoD also will
consider comments from small entities
concerning the affected DFARS subpart
in accordance with 5 U.S.C. 610. Such
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comments should be submitted
separately and should cite DFARS Case
2005–D006.
C. Paperwork Reduction Act
The proposed rule does not impose
any new information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq. The
contract performance reports required
by the rule are approved under Office of
Management and Budget Clearance
Number 0704–0188, Acquisition
Management Systems and Data
Requirements Control List, for use
through May 31, 2006.
List of Subjects in 48 CFR Parts 242 and
252
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations
System.
Therefore, DoD proposes to amend 48
CFR parts 242 and 252 as follows:
1. The authority citation for 48 CFR
parts 242 and 252 continues to read as
follows:
Authority: 41 U.S.C. 421 and 48 CFR
Chapter 1.
PART 242—CONTRACT
ADMINISTRATION AND AUDIT
SERVICES
2. Section 242.1106 is revised to read
as follows:
242.1106
Reporting requirements.
(a)(i) See DoDI 5000.2, Operation of
the Defense Acquisition System, for
reporting requirements for defense
technology projects and acquisition
programs. The earned value
management system requirement is
applied as follows:
(A) For cost or incentive contracts and
subcontracts valued at $20,000,000 or
more, the earned value management
system shall comply with American
National Standards Institute/Electronic
Industries Alliance Standard 748,
Earned Value Management Systems.
(B) For cost or incentive contracts and
subcontracts valued at $50,000,000 or
more, the contractor shall have an
earned value management system that
has been formally validated and
accepted by the contracting officer.
(C) For cost or incentive contracts and
subcontracts valued at less than
$20,000,000, earned value management
application is optional and is a riskbased decision that is at the discretion
of the program manager. See PGI
242.1106(a)(i)(C) for information on
conducting a cost-benefit analysis.
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(D) For firm-fixed-price contracts and
subcontracts of any dollar value, the
application of earned value management
is discouraged. See PGI
242.1106(a)(i)(D) for information on
obtaining a waiver before applying
earned value management to a firmfixed-price contract or subcontract.
(ii) When an offeror proposes a plan
for compliance with earned value
management system guidelines, follow
the review procedures at PGI
242.1106(a)(ii).
(iii) The Defense Contract
Management Agency is the DoD
executive agency for earned value
management system compliance
reviews.
(iv) Additional guidance on earned
value management can be found in the
Defense Acquisition Guidebook at
https://akss.dau.mil/dag and the DoD
Earned Value Management
Implementation Guide at https://
guidebook.dcma.mil/79/
guidebook_process.htm.
3. Section 242.1107–70 is revised to
read as follows:
242.1107–70 Solicitation provisions and
contract clauses.
(a) For cost or incentive contracts
valued at $50,000,000 or more—
(1) Use the provision at 252.242–7001,
Notice of Earned Value Management
System—Validation Requirement, in the
solicitations; and
(2) Use the clause at 252.242–7002,
Earned Value Management System—
Validation Requirement, in the
solicitation and contract.
(b) For cost or incentive contracts
valued at $20,000,000 or more but less
than $50,000,000—
(1) Use the provision at 252.242–7005,
Notice of Earned Value Management
System—Compliance Requirement, in
the solicitation; and
(2) Use the clause at 252.242–7006,
Earned Value Management System—
Compliance Requirement, in the
solicitation and contract.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
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4. Sections 252.242–7001 and
252.242–7002 are revised to read as
follows:
252.242–7001 Notice of Earned Value
Management System—Validation
Requirement.
As prescribed in 242.1107–70(a)(1),
use the following provision:
NOTICE OF EARNED VALUE
MANAGEMENT SYSTEM—
VALIDATION REQUIREMENT (XXX
2006)
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(a) The offeror shall provide
documentation that its proposed earned
value management system (EVMS)
complies with the EVMS guidelines in
American National Standards Institute/
Electronic Industries Alliance Standard
748, Earned Value Management Systems
(ANSI/EIA–748), or that the proposed
EVMS has been validated and accepted
by the Department of Defense.
(b) If the offeror proposes to use a
system that does not meet the
requirements of paragraph (a) of this
provision, the offeror shall submit its
comprehensive plan for compliance
with the EVMS guidelines to the
Government for approval.
(1) The plan shall—
(i) Describe the EVMS the offeror
intends to use in performance of the
contract;
(ii) Distinguish between the offeror’s
existing management system and
modifications proposed to meet the
EVMS guidelines;
(iii) Describe the management system
and its application in terms of the
EVMS guidelines;
(iv) Describe the proposed procedure
for administration of the EVMS
guidelines as applied to subcontractors;
(v) Provide documentation describing
the process, results, and any
Government participation in any thirdparty or self-evaluation of the system’s
compliance with EVMS guidelines; and
(vi) Include a schedule that provides
a timetable of events leading up to
Government validation and acceptance
of the Contractor’s EVMS. This schedule
should include a progress assistance
visit no later than 30 days after contract
award, and a compliance review as soon
as practicable. The Department of
Defense Earned Value Management
Implementation Guide outlines the
requirements for conducting a progress
assistance visit and compliance review.
(2) The Government will review the
offeror’s EVMS plan before contract
award.
(c) Offerors shall identify the
subcontractors, or subcontracted effort if
subcontractors have not been selected,
to whom the EVMS requirements will
apply. The offeror and the Government
shall agree to the subcontractors or
subcontracted effort selected.
(1) For proposed subcontracts with an
estimated dollar value of $50,000,000 or
more, the offeror shall be responsible for
ensuring that the selected
subcontractors comply with the
requirements of the Earned Value
Management System—Validation
Requirement clause of the contract.
(2) For proposed subcontracts with an
estimated dollar value of $20,000,000 or
more but less than $50,000,000, the
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offeror shall be responsible for ensuring
that the selected subcontractors comply
with ANSI/EIA–748. The terms for
compliance with ANSI/EIA–748 may be
subject to negotiation between the
offeror and the subcontractor. The
conduct of integrated baseline reviews
also may be subject to negotiation
between the offeror and the
subcontractor.
(d) The offeror shall incorporate its
compliance evaluation factors for
subcontractors into the plan required by
paragraph (b) of this provision. (End of
provision)
252.242–7002 Earned Value Management
System—Validation Requirement.
As prescribed in 242.1107–70(a)(2),
use the following clause:
EARNED VALUE MANAGEMENT
SYSTEM—VALIDATION
REQUIREMENT (XXX 2006)
(a) In the performance of this contract,
the Contractor shall use—
(1) An earned value management
system (EVMS) that has been accepted
by the Administrative Contracting
Officer (ACO) as complying with the
EVMS guidelines in American National
Standards Institute/Electronic Industries
Alliance Standard 748, Earned Value
Management Systems (ANSI/EIA–748);
and
(2) Management procedures that
provide for generation of timely and
reliable information for the contract
performance report (CPR) required by
the CPR data item of this contract.
(b) If, at the time of award, the
Contractor’s EVMS has not been
accepted by the ACO as complying with
the EVMS guidelines, the Contractor
shall apply the system to the contract
and shall take timely action to
implement its plan to obtain
compliance. If the Contractor does not
follow the implementation schedule in
the compliance plan or, within a
reasonable time, correct all system
deficiencies identified during the
compliance review specified in that
plan, the Contracting Officer may take
remedial action.
(c) The Government will require
integrated baseline reviews. Such
reviews shall be scheduled as early as
practicable, and the review process
should be initiated no later than 180
calendar days after (1) contract award,
(2) the exercise of significant contract
options, and (3) the incorporation of
major modifications. The objective of
the integrated baseline review is for the
Government and the Contractor to
jointly assess the Contractor’s baseline
to be used for performance
measurement, to ensure complete
coverage of the statement of work,
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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 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 the ACO’s
authorized representative. Access is to
permit Government surveillance to
ensure that the EVMS complies, and
continues to comply, with the EVMS
guidelines referenced in paragraph (a) of
this clause and to demonstrate—
(1) Proper implementation of the
procedures generating the cost and
schedule information being used to
satisfy the contract data requirements;
(2) Continuing application of the
accepted company procedures in
satisfying the CPR data item through
recurring program/project and contract
surveillance; and
(3) Implementation of any corrective
actions identified during the
surveillance process.
(f) The Contractor shall require its
subcontractors to comply with EVMS
requirements as follows:
(1) For subcontracts with an estimated
dollar value of $50,000,000 or more, the
following subcontractors shall comply
with the requirement of this clause.
(Contracting Officer to insert names of
subcontractors selected for compliance
with the EVMS validation requirement
in accordance with 252.242–7001(c)(1).)
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(2) For subcontracts with an estimated
dollar value of $20,000,000 or more but
less than $50,000,000, the following
subcontractors shall comply with ANSI/
EIA–748.
(Contracting Officer to insert names of
subcontractors selected for compliance
with ANSI/EIA–748 in accordance with
252.242–7001(c)(2).)
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(g) If indicated by the CPR, the
Contractor shall submit a request for
approval to begin implementation of an
over-target baseline or over-target
schedule to the Contracting Officer. This
request shall include a top-level
projection of cost and/or schedule
growth, a determination of whether or
not performance variances will be
retained, and a schedule of
implementation for the rebaselining.
The Government will have 30 calendar
days to respond after receipt of the
request. Failure of the Government to
respond within the 30-day period will
constitute automatic approval. For costreimbursement contracts, the contract
budget base should include authorized
changes to the contract scope but should
exclude changes for cost growth. (End of
clause)
5. Sections 252.242–7005 and
252.242–7006 are revised to read as
follows:
252.242–7005 Notice of Earned Value
Management System—Compliance
Requirement.
NOTICE OF EARNED VALUE
MANAGEMENT SYSTEM—
COMPLIANCE REQUIREMENT (XXX
2006)
As prescribed in 242.1107–70(b)(1),
use the following provision:
(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 Earned Value
Management System—Compliance
Requirement clause of this contract.
This description shall include a matrix
that correlates each guideline in
American National Standards Institute/
Electronic Industries Alliance Standard
748, Earned Value Management Systems
(ANSI/EIA–748), to the corresponding
process in the Contractor’s written
summary.
(b) If the offeror proposes to use an
earned value management system
(EVMS) that has been previously
accepted by the Administrative
Contracting Officer as complying with
the EVMS guidelines in ANSI/EIA–748,
the offeror may submit a copy of the
documentation of such acceptance
instead of the written summary required
by paragraph (a) of this provision.
(c) The offeror shall identify the
subcontractors, or subcontracted effort if
subcontractors have not been selected,
to whom the EVMS requirements will
apply. The offeror and the Government
shall agree to the subcontractors or the
subcontracted effort selected for
application of the EVMS compliance
requirement. The offeror shall be
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responsible for ensuring that the
selected subcontractors comply with
ANSI/EIA–748. The offeror shall
incorporate its compliance evaluation
factors for the subcontractors into the
plan required by paragraph (a) of this
provision. (End of provision)
252.242–7006 Earned Value Management
System—Compliance Requirement.
As prescribed in 242.1107–70(b)(2),
use the following clause:
EARNED VALUE MANAGEMENT
SYSTEM—COMPLIANCE
REQUIREMENT (XXX 2006)
(a) The Contractor shall use
management procedures in the
performance of this contract that
provide for—
(1) Planning and control of cost and
schedule performance;
(2) Measurement of performance
(value for completed tasks); and
(3) Generation of timely and reliable
information for the contract
performance report (CPR) required by
the CPR data item of this contract.
(b) The Contractor shall use and
maintain an earned value management
system (EVMS) that complies with
American National Standards Institute/
Electronic Industries Alliance Standard
748, Earned Value Management Systems
(ANSI/EIA–748), throughout the life of
the contract. However, the terms for
compliance with ANSI/EIA–748 may be
subject to negotiation between the
Contractor and the Contracting Officer.
The Government will not formally
accept the Contractor’s EVMS with
respect to this contract. The use of the
Contractor’s EVMS for this contract does
not imply Government acceptance of the
Contractor’s EVMS for application to
future contracts.
(c) The Contractor may elect to use an
EVMS that has been formally reviewed
and accepted by the Administrative
Contracting Officer (ACO) as complying
with the EVMS guidelines in ANSI/
EIA–748.
(d) The Government will require
integrated baseline reviews. Such
reviews shall be scheduled as early as
practicable, and the review process
should be initiated not later than 180
calendar days after (1) contract award,
(2) the exercise of significant contract
options, and (3) the incorporation of
major modifications. The objective of
the integrated baseline review is for the
Government and the Contractor to
jointly assess the Contractor’s baseline
to be used for performance
measurement, to ensure complete
coverage of the statement of work,
logical scheduling of the work activities,
adequate resourcing, and identification
of inherent risks.
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(e) The Contractor shall provide
access to all pertinent records, company
procedures, and data requested by the
ACO, or the ACO’s authorized
representative, to demonstrate—
(1) Proper implementation of the
procedures generating the cost and
schedule information being used to
satisfy the contract data requirements;
(2) Continuing application of the
company procedures in satisfying the
CPR data item through recurring
program/project and contract
surveillance; and
(3) Implementation of any corrective
actions identified during the
surveillance process.
(f) The Contractor shall submit
notification of any substantive changes
to the EVMS procedures and the impact
VerDate Aug<31>2005
13:00 Jan 20, 2006
Jkt 208001
of those changes to the ACO or the
ACO’s authorized representative.
(g) The Contractor shall require the
following subcontractors to comply with
the requirements of this clause:
(Contracting Officer to insert names of
subcontractors selected for application
of the EVMS compliance requirement in
accordance with 252.242–7005(c).)
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(h) If indicated by the CPR, the
Contractor shall submit a request for
approval to begin implementation of an
over-target baseline or over-target
schedule to the Contracting Officer. This
PO 00000
Frm 00019
Fmt 4702
Sfmt 4702
3453
request shall include a top-level
projection of cost and/or schedule
growth, a determination of whether or
not performance variances will be
retained, and a schedule of
implementation for the rebaselining.
The Government will have 30 calendar
days to respond after receipt of the
request. Failure of the Government to
respond within this 30-day period will
constitute automatic approval. For costreimbursement contracts, the contract
budget base should include authorized
changes to the contract scope but should
exclude changes for cost growth. (End of
clause)
[FR Doc. E6–705 Filed 1–20–06; 8:45 am]
BILLING CODE 5001–08–P
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]]>Agencies
[Federal Register Volume 71, Number 14 (Monday, January 23, 2006)]
[Proposed Rules]
[Pages 3449-3453]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-705]
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DEPARTMENT OF DEFENSE
48 CFR Parts 242 and 252
[DFARS Case 2005-D006]
RIN 0750-AF19
Defense Acquisition Regulations System; Defense Federal
Acquisition Regulation Supplement; Earned Value Management Systems
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule with request for comments.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to update requirements for DoD
contractors to establish and maintain earned value management systems
(EVMS). The rule revises the dollar thresholds at which EVMS
requirements are applied and eliminates requirements
[[Page 3450]]
for contractors to submit cost/schedule status reports under DoD
contracts.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before March 24, 2006, to be considered
in the formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2005-D006,
using any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: dfars@osd.mil. Include DFARS Case 2005-D006 in the
subject line of the message.
Fax: (703) 602-0350.
Mail: Defense Acquisition Regulations System, Attn: Ms.
Deborah Tronic, OUSD (AT&L) DPAP (DARS), IMD 3C132, 3062 Defense
Pentagon, Washington, DC 20301-3062.
Hand Delivery/Courier: Defense Acquisition Regulations
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA
22202-3402.
Comments received will be posted without change to https://
www.regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms. Deborah Tronic, (703) 602-0289.
SUPPLEMENTARY INFORMATION:
A. Background
This proposed rule revises DFARS Subpart 242.11 and the
corresponding clauses in DFARS Part 252 to reflect changes in DoD
policy on the application of EVMS compliance requirements. The proposed
changes--
Require compliance with American National Standards
Institute/Electronic Industries Alliance Standard 748, Earned Value
Management Systems, for cost or incentive contracts and subcontracts
valued at $20,000,000 or more;
Require a formally validated and accepted EVMS for cost or
incentive contracts and subcontracts valued at $50,000,000 or more;
Discourage the application of earned value management to
fixed-price contracts and subcontracts; and
Eliminate requirements for contractors to submit cost/
schedule status reports.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
DoD has prepared an initial regulatory flexibility analysis
consistent with 5 U.S.C. 603. The analysis is summarized as follows:
This proposed rule amends the DFARS to update requirements for DoD
contractors to establish and maintain earned value management systems
(EVMS). The rule revises the dollar thresholds at which EVMS
requirements are applied and eliminates requirements for contractors to
submit cost/schedule status reports under DoD contracts. The objective
of the proposed rule is to streamline, improve, and increase
consistency in earned value management implementation and application.
The threshold at which a DoD contractor previously was required to
have an EVMS that complied with American National Standards Institute/
Electronic Industries Alliance Standard 748 (ANSI/EIA-748) was $73
million for contracts and subcontracts funded with research,
development, test and evaluation funding; and $315 million for
contracts and subcontracts funded with operation and maintenance or
procurement funding. This proposed rule would lower those thresholds to
a single $20 million threshold for all cost or incentive contracts and
subcontracts, regardless of funding type, and would establish a new
threshold of $50 million for an EVMS that has been formally validated
and accepted as complying with the standard.
According to the Defense Contract Action Data System, in Fiscal
Year 2004, 7 small businesses received a cost or incentive type award
obligating funds in excess of $20 million, and 46 small businesses
received a fixed-price type award obligating funds in excess of $20
million. EVMS compliance requirements would only be used in fixed-price
contracts in extremely rare instances. The Dynamic Small Business
Search database hosted on the Central Contractor Registration Web site
indicates there are 304,961 small businesses registered in that
database.
The proposed rule is consistent with the proposed changes to the
Federal Acquisition Regulation (FAR) published in the Federal Register
on April 8, 2005 (70 FR 17945), that would extend Governmentwide the
requirement for a contractor to have an EVMS that complies with ANSI/
EIA-748. The initial regulatory flexibility analysis for the proposed
FAR rule anticipated that agencies would establish a threshold of $20
million for EVMS compliance.
A copy of the analysis may be obtained from the point of contact
specified herein. DoD invites comments from small businesses and other
interested parties. DoD also will consider comments from small entities
concerning the affected DFARS subpart in accordance with 5 U.S.C. 610.
Such comments should be submitted separately and should cite DFARS Case
2005-D006.
C. Paperwork Reduction Act
The proposed rule does not impose any new information collection
requirements that require the approval of the Office of Management and
Budget under 44 U.S.C. 3501, et seq. The contract performance reports
required by the rule are approved under Office of Management and Budget
Clearance Number 0704-0188, Acquisition Management Systems and Data
Requirements Control List, for use through May 31, 2006.
List of Subjects in 48 CFR Parts 242 and 252
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
Therefore, DoD proposes to amend 48 CFR parts 242 and 252 as
follows:
1. The authority citation for 48 CFR parts 242 and 252 continues to
read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES
2. Section 242.1106 is revised to read as follows:
242.1106 Reporting requirements.
(a)(i) See DoDI 5000.2, Operation of the Defense Acquisition
System, for reporting requirements for defense technology projects and
acquisition programs. The earned value management system requirement is
applied as follows:
(A) For cost or incentive contracts and subcontracts valued at
$20,000,000 or more, the earned value management system shall comply
with American National Standards Institute/Electronic Industries
Alliance Standard 748, Earned Value Management Systems.
(B) For cost or incentive contracts and subcontracts valued at
$50,000,000 or more, the contractor shall have an earned value
management system that has been formally validated and accepted by the
contracting officer.
(C) For cost or incentive contracts and subcontracts valued at less
than $20,000,000, earned value management application is optional and
is a risk-based decision that is at the discretion of the program
manager. See PGI 242.1106(a)(i)(C) for information on conducting a
cost-benefit analysis.
[[Page 3451]]
(D) For firm-fixed-price contracts and subcontracts of any dollar
value, the application of earned value management is discouraged. See
PGI 242.1106(a)(i)(D) for information on obtaining a waiver before
applying earned value management to a firm-fixed-price contract or
subcontract.
(ii) When an offeror proposes a plan for compliance with earned
value management system guidelines, follow the review procedures at PGI
242.1106(a)(ii).
(iii) The Defense Contract Management Agency is the DoD executive
agency for earned value management system compliance reviews.
(iv) Additional guidance on earned value management can be found in
the Defense Acquisition Guidebook at https://akss.dau.mil/dag and the
DoD Earned Value Management Implementation Guide at https://
guidebook.dcma.mil/79/guidebook_process.htm.
3. Section 242.1107-70 is revised to read as follows:
242.1107-70 Solicitation provisions and contract clauses.
(a) For cost or incentive contracts valued at $50,000,000 or more--
(1) Use the provision at 252.242-7001, Notice of Earned Value
Management System--Validation Requirement, in the solicitations; and
(2) Use the clause at 252.242-7002, Earned Value Management
System--Validation Requirement, in the solicitation and contract.
(b) For cost or incentive contracts valued at $20,000,000 or more
but less than $50,000,000--
(1) Use the provision at 252.242-7005, Notice of Earned Value
Management System--Compliance Requirement, in the solicitation; and
(2) Use the clause at 252.242-7006, Earned Value Management
System--Compliance Requirement, in the solicitation and contract.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
4. Sections 252.242-7001 and 252.242-7002 are revised to read as
follows:
252.242-7001 Notice of Earned Value Management System--Validation
Requirement.
As prescribed in 242.1107-70(a)(1), use the following provision:
NOTICE OF EARNED VALUE MANAGEMENT SYSTEM--VALIDATION REQUIREMENT (XXX
2006)
(a) The offeror shall provide documentation that its proposed
earned value management system (EVMS) complies with the EVMS guidelines
in American National Standards Institute/Electronic Industries Alliance
Standard 748, Earned Value Management Systems (ANSI/EIA-748), or that
the proposed EVMS has been validated and accepted by the Department of
Defense.
(b) If the offeror proposes to use a system that does not meet the
requirements of paragraph (a) of this provision, the offeror shall
submit its comprehensive plan for compliance with the EVMS guidelines
to the Government for approval.
(1) The plan shall--
(i) Describe the EVMS the offeror intends to use in performance of
the contract;
(ii) Distinguish between the offeror's existing management system
and modifications proposed to meet the EVMS guidelines;
(iii) Describe the management system and its application in terms
of the EVMS guidelines;
(iv) Describe the proposed procedure for administration of the EVMS
guidelines as applied to subcontractors;
(v) Provide documentation describing the process, results, and any
Government participation in any third-party or self-evaluation of the
system's compliance with EVMS guidelines; and
(vi) Include a schedule that provides a timetable of events leading
up to Government validation and acceptance of the Contractor's EVMS.
This schedule should include a progress assistance visit no later than
30 days after contract award, and a compliance review as soon as
practicable. The Department of Defense Earned Value Management
Implementation Guide outlines the requirements for conducting a
progress assistance visit and compliance review.
(2) The Government will review the offeror's EVMS plan before
contract award.
(c) Offerors shall identify the subcontractors, or subcontracted
effort if subcontractors have not been selected, to whom the EVMS
requirements will apply. The offeror and the Government shall agree to
the subcontractors or subcontracted effort selected.
(1) For proposed subcontracts with an estimated dollar value of
$50,000,000 or more, the offeror shall be responsible for ensuring that
the selected subcontractors comply with the requirements of the Earned
Value Management System--Validation Requirement clause of the contract.
(2) For proposed subcontracts with an estimated dollar value of
$20,000,000 or more but less than $50,000,000, the offeror shall be
responsible for ensuring that the selected subcontractors comply with
ANSI/EIA-748. The terms for compliance with ANSI/EIA-748 may be subject
to negotiation between the offeror and the subcontractor. The conduct
of integrated baseline reviews also may be subject to negotiation
between the offeror and the subcontractor.
(d) The offeror shall incorporate its compliance evaluation factors
for subcontractors into the plan required by paragraph (b) of this
provision. (End of provision)
252.242-7002 Earned Value Management System--Validation Requirement.
As prescribed in 242.1107-70(a)(2), use the following clause:
EARNED VALUE MANAGEMENT SYSTEM--VALIDATION REQUIREMENT (XXX 2006)
(a) In the performance of this contract, the Contractor shall use--
(1) An earned value management system (EVMS) that has been accepted
by the Administrative Contracting Officer (ACO) as complying with the
EVMS guidelines in American National Standards Institute/Electronic
Industries Alliance Standard 748, Earned Value Management Systems
(ANSI/EIA-748); and
(2) Management procedures that provide for generation of timely and
reliable information for the contract performance report (CPR) required
by the CPR data item of this contract.
(b) If, at the time of award, the Contractor's EVMS has not been
accepted by the ACO as complying with the EVMS guidelines, the
Contractor shall apply the system to the contract and shall take timely
action to implement its plan to obtain compliance. If the Contractor
does not follow the implementation schedule in the compliance plan or,
within a reasonable time, correct all system deficiencies identified
during the compliance review specified in that plan, the Contracting
Officer may take remedial action.
(c) The Government will require integrated baseline reviews. Such
reviews shall be scheduled as early as practicable, and the review
process should be initiated no later than 180 calendar days after (1)
contract award, (2) the exercise of significant contract options, and
(3) the incorporation of major modifications. The objective of the
integrated baseline review is for the Government and the Contractor to
jointly assess the Contractor's baseline to be used for performance
measurement, to ensure complete coverage of the statement of work,
[[Page 3452]]
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 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 the ACO's authorized
representative. Access is to permit Government surveillance to ensure
that the EVMS complies, and continues to comply, with the EVMS
guidelines referenced in paragraph (a) of this clause and to
demonstrate--
(1) Proper implementation of the procedures generating the cost and
schedule information being used to satisfy the contract data
requirements;
(2) Continuing application of the accepted company procedures in
satisfying the CPR data item through recurring program/project and
contract surveillance; and
(3) Implementation of any corrective actions identified during the
surveillance process.
(f) The Contractor shall require its subcontractors to comply with
EVMS requirements as follows:
(1) For subcontracts with an estimated dollar value of $50,000,000
or more, the following subcontractors shall comply with the requirement
of this clause.
(Contracting Officer to insert names of subcontractors selected for
compliance with the EVMS validation requirement in accordance with
252.242-7001(c)(1).)
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(2) For subcontracts with an estimated dollar value of $20,000,000
or more but less than $50,000,000, the following subcontractors shall
comply with ANSI/EIA-748.
(Contracting Officer to insert names of subcontractors selected for
compliance with ANSI/EIA-748 in accordance with 252.242-7001(c)(2).)
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(g) If indicated by the CPR, the Contractor shall submit a request
for approval to begin implementation of an over-target baseline or
over-target schedule to the Contracting Officer. This request shall
include a top-level projection of cost and/or schedule growth, a
determination of whether or not performance variances will be retained,
and a schedule of implementation for the rebaselining. The Government
will have 30 calendar days to respond after receipt of the request.
Failure of the Government to respond within the 30-day period will
constitute automatic approval. For cost-reimbursement contracts, the
contract budget base should include authorized changes to the contract
scope but should exclude changes for cost growth. (End of clause)
5. Sections 252.242-7005 and 252.242-7006 are revised to read as
follows:
252.242-7005 Notice of Earned Value Management System--Compliance
Requirement.
NOTICE OF EARNED VALUE MANAGEMENT SYSTEM--COMPLIANCE REQUIREMENT (XXX
2006)
As prescribed in 242.1107-70(b)(1), use the following provision:
(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 Earned
Value Management System--Compliance Requirement clause of this
contract. This description shall include a matrix that correlates each
guideline in American National Standards Institute/Electronic
Industries Alliance Standard 748, Earned Value Management Systems
(ANSI/EIA-748), to the corresponding process in the Contractor's
written summary.
(b) If the offeror proposes to use an earned value management
system (EVMS) that has been previously accepted by the Administrative
Contracting Officer as complying with the EVMS guidelines in ANSI/EIA-
748, the offeror may submit a copy of the documentation of such
acceptance instead of the written summary required by paragraph (a) of
this provision.
(c) The offeror shall identify the subcontractors, or subcontracted
effort if subcontractors have not been selected, to whom the EVMS
requirements will apply. The offeror and the Government shall agree to
the subcontractors or the subcontracted effort selected for application
of the EVMS compliance requirement. The offeror shall be responsible
for ensuring that the selected subcontractors comply with ANSI/EIA-748.
The offeror shall incorporate its compliance evaluation factors for the
subcontractors into the plan required by paragraph (a) of this
provision. (End of provision)
252.242-7006 Earned Value Management System--Compliance Requirement.
As prescribed in 242.1107-70(b)(2), use the following clause:
EARNED VALUE MANAGEMENT SYSTEM--COMPLIANCE REQUIREMENT (XXX 2006)
(a) The Contractor shall use management procedures in the
performance of this contract that provide for--
(1) Planning and control of cost and schedule performance;
(2) Measurement of performance (value for completed tasks); and
(3) Generation of timely and reliable information for the contract
performance report (CPR) required by the CPR data item of this
contract.
(b) The Contractor shall use and maintain an earned value
management system (EVMS) that complies with American National Standards
Institute/Electronic Industries Alliance Standard 748, Earned Value
Management Systems (ANSI/EIA-748), throughout the life of the contract.
However, the terms for compliance with ANSI/EIA-748 may be subject to
negotiation between the Contractor and the Contracting Officer. The
Government will not formally accept the Contractor's EVMS with respect
to this contract. The use of the Contractor's EVMS for this contract
does not imply Government acceptance of the Contractor's EVMS for
application to future contracts.
(c) The Contractor may elect to use an EVMS that has been formally
reviewed and accepted by the Administrative Contracting Officer (ACO)
as complying with the EVMS guidelines in ANSI/EIA-748.
(d) The Government will require integrated baseline reviews. Such
reviews shall be scheduled as early as practicable, and the review
process should be initiated not later than 180 calendar days after (1)
contract award, (2) the exercise of significant contract options, and
(3) the incorporation of major modifications. The objective of the
integrated baseline review is for the Government and the Contractor to
jointly assess the Contractor's baseline to be used for performance
measurement, to ensure complete coverage of the statement of work,
logical scheduling of the work activities, adequate resourcing, and
identification of inherent risks.
[[Page 3453]]
(e) The Contractor shall provide access to all pertinent records,
company procedures, and data requested by the ACO, or the ACO's
authorized representative, to demonstrate--
(1) Proper implementation of the procedures generating the cost and
schedule information being used to satisfy the contract data
requirements;
(2) Continuing application of the company procedures in satisfying
the CPR data item through recurring program/project and contract
surveillance; and
(3) Implementation of any corrective actions identified during the
surveillance process.
(f) The Contractor shall submit notification of any substantive
changes to the EVMS procedures and the impact of those changes to the
ACO or the ACO's authorized representative.
(g) The Contractor shall require the following subcontractors to
comply with the requirements of this clause:
(Contracting Officer to insert names of subcontractors selected for
application of the EVMS compliance requirement in accordance with
252.242-7005(c).)
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(h) If indicated by the CPR, the Contractor shall submit a request
for approval to begin implementation of an over-target baseline or
over-target schedule to the Contracting Officer. This request shall
include a top-level projection of cost and/or schedule growth, a
determination of whether or not performance variances will be retained,
and a schedule of implementation for the rebaselining. The Government
will have 30 calendar days to respond after receipt of the request.
Failure of the Government to respond within this 30-day period will
constitute automatic approval. For cost-reimbursement contracts, the
contract budget base should include authorized changes to the contract
scope but should exclude changes for cost growth. (End of clause)
[FR Doc. E6-705 Filed 1-20-06; 8:45 am]
BILLING CODE 5001-08-P
