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Program Management Systems Committee (PMSC)

Program Management Systems Committee (PMSC). Contract / Subcontract Issues Working Group 29 January 2009 . Team . Members Mike Martin - P&W Rocketdyne (Lead) Gay Infanti - Northrop Grumman Eleanor Haupt - Consultant to the Institute for Defense Analyses

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Program Management Systems Committee (PMSC)

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  1. Program Management Systems Committee (PMSC) Contract / Subcontract Issues Working Group 29 January 2009

  2. Team • Members Mike Martin - P&W Rocketdyne (Lead) Gay Infanti - Northrop Grumman Eleanor Haupt - Consultant to the Institute for Defense Analyses Dave Muzio - MCR Peter Schwarz - MDA Jeff Poulson - Raytheon Mike Pelkey – OSD Randy Steeno – Boeing Debbie Tomsic – OSD Larry Axtell – OSD Fred Meyer – DCMA EV Center John Pakiz – Boeing (Retired) Dan Feeney – Lockheed Martin Kathryn Flannigan – General Dynamics

  3. Issues List • The following issues have been addressed by the Contracts Working Group and consensus has been reached, on all but the last, among industry and government participants concerning next steps: • Contract vs. EVM system order of precedence. • Subcontractor compliance, validation and surveillance • Knowledge gap between EVM and contracting communities • Integrated and virtual team (badgeless) subcontracting teaming arrangements • DCMA EV Standard Surveillance Operating Manual (SSOM) • Under what circumstances can a supplier apply an existing validation from one site to another? New • DCMA EV Center is preparing a position paper on each of these issues. After a review by other DOD segments, the position paper, which will represent a consolidated DOD position, will be published. • The actions contained herein will be executed through a collaborative industry / government effort • OSD has requested that these issues be worked and closed out.

  4. Order of Precedence • In addition to including FAR or DFARS EVMS clauses on contracts, contracting officers frequently include other provisions that often require suppliers to modify or depart from their standard, validated EVM Systems to manage their contracts and meet the requirements of their contracts. These provisions may be found in sections of the contract that take precedence over Section I, where the EVMS clauses are contained, e.g., • Section H – Special Provisions • Section C – Statement of Work requirements • DCMA’s stated policy is to issue Corrective Action Request (s) against the contractor for following contract direction. Issue Team Position • Contractors are obligated to follow the contracts. • In the sprit of cooperation the Contractor and the cognizant CMO should notify the PCO of the conflicting requirements • The DCMA CMO and the PCO should reach a solution with the government PM which precludes noncompliance with either the ANSI or the contractor’s validated EVMS • Previous DCMA Director has instructed the EV Center not to initiate CARs when an inconsistency exists • DCMA must issue a communication regarding this position to all CMOs and EV Center personnel. Action: DCMA EV Center Director will readdress this issue with new DCMA Director. .

  5. Subcontractor Compliance, Validation and Surveillance Issue Team Position • Previously a subcontractor had the ability to request one of three options when required to have a validated EVMS; the EVMIG and other guidance documents vested primary responsibility in the prime contractor. • Prime Contractor Review Only • DCMA Review Only (at sub’s request) • DCMA and Prime Contractor Review • October 2006, DCMA revised the EVMIG to assign DCMA sole responsibility for subcontractor validation. • The EVMIG may conflict with NDIA EVMS System Acceptance Guide since it appears to categorically eliminate the consideration of other agencies’ acceptance. • Inconsistencies will result in dual industry processes for subcontractor validation and the potential for the same at a single contractor facility. • Validation / Compliance Reviews: DCMA has taken over responsibility for subcontractor validation and surveillance, however prime contractors will beencouraged to participate in subcontractor validation and/or compliance reviews since they retain responsibility for • Subcontractor performance • Accuracy and fidelity of CPRs, including reported subcontractor data • Suppliers with DoD contracts must review their system descriptions to ensure they comply with recent change. • Who is responsible for notifying the government of the need for a subcontractor validation review? • Surveillance: • Program- Prime’sDCMA prime will issue a LOD to the Subcontractor’s DCMA for program surveillance • System – DCMA will conduct joint surveillance of sub’s EVMS; Prime will participate • General :EVMIG update is necessary for clarification

  6. EVM Knowledge Gap • Evidence that EVM and Contracting experts are not collaborating, via IPTs, on the contractual application and use of EVMS during acquisition planning. • Evidence of this is as follows: • Incorrect flow down and/or omission of EVM contractual requirements. • Improper contract direction forcing the contractor or subcontractor to violate their approved system. • Over application of EVM requirements • Improper application of requirements for follow on options • Improper use of Management Reserve (MR) • Integrated Baseline Review (IBR) timing • Knowledge gap is perceived cause Issue Team Position • NDIA PMSC should establish an Industry / Government team to generate a training package which can be delivered to all federal agencies and contractor organizations. Action: D. Tomsic developed/delivered this training on 7/29/08 through NCMA audio seminar. Industry will review material to ensure it is acceptable to a broader audience. • Issue correspondence “EVM Contract Requirements Checklist” under OUSD signature to all commands. Action: DPAP correspondence “EVM Requirements and Reporting” issued 8/27/08 Memo addresses this item and references checklist with link to web site to obtain current version. • DOD is considering the establishment of a common Procurement Initiation Document (PID) process to review contract requirements prior to solicitation. Action: TBD

  7. Integrated Subcontract EVMS Implementations Issue • The use of a single EVMS by all program participants to manage large programs involving major subcontractors is viewed as non-compliant to the DFARS EVMS clause by DCMA. • This approach also referred to as badgeless, virtual, or gray badge. • Characterized by adoption of a single validated system to manage the effort (typically the prime’s EVMS), use of a common tool set, integrated schedules and performance reporting. Team Position • Team will review matrix and establish general guidance for various types of integrated solutions. • Establish Matrix of Variable Implementations – Complete. • Update Matrix to Establish Validation, Compliance and System Surveillance Responsibilities - Open. • Completed guidance will be communicated through NDIA PMSC and agreed to via letter correspondence -Open. • Published in the EVMIG - Open. Transfer Issue to Joint DoD / Industry Working Group

  8. Standard Surveillance Operating Manual Issue Team Position Issue to be Closed 3/31 • NDIA PMSC will work with DCMA to achieve a timely review and closure on any areas of concern. • DCMA has agreed to break out separate small group of Industry and Government participants to review the process and make recommendations. • Industry Representatives • Boeing : Randy Steeno • Lockheed Martin: Pete Wynne • Northrop Grumman: Gay Infanti • Raytheon: Jeff Poulson • Pratt & Whitney: Mike Martin • DCMA EV Center: Donna Holden, Kelli Coon • Schedule • Industry Comments to DCMA: 01/09 • Team Meeting: 1/30 • Additional Team Meeting: Feb • Adjudication of Issues: 2/16 – 3/27 • Final Industry Input : 3/31 • DCMA EV Standard Surveillance Plan (SSP) will be implemented throughout the agency without being distributed for comment. • Issues include but are not limited to: • Existing AA provisions allowing system description change after ACO notification. • Review and adjudication of all CARs by the EV Center. • Risk Based Surveillance approach appears to eliminate contractor input. • Level of detail and amount of data requests to support surveillance have increased. • Training and Implementation - Demonstrated DCMA response time for final reports and system description changes must be improved. • Relationship of NDIA Intent Guide to the surveillance.

  9. Application of Existing Validation to Another Company Site Issue Team Position • Under what circumstance is it can the validation (and system) from one company site apply to another ? • Not Discussed NEW

  10. Summary • The following issues are still working toward closure: • Contract vs. EVM system order of precedence. • Subcontractor compliance, validation and surveillance. • The following issue is still open: • Knowledge gap between EVM and contracting communities. • Training Delivered and Correspondence Issued • Open Item - PID Process • The team requests that the following issue be transferred to the Joint OSD/Industry Working Group: • Integrated and virtual team subcontracting teaming arrangements • The following issue is new: • Application of existing process and validation from one company site to another. • The following issue is being worked separately and is targeted for closure by 3/31/08: • DCMA EV Standard Surveillance Operating Manual (SSOM).

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