How is the Government Managing for Value?

1. How is the Government Managing for Value? Program Management Systems Committee March 11, 2007 The Voice of the Industrial Base

2. EVM Environment Changes • DoD EVM Policy (March 2005) • FAR EVM Requirement (July 2006) • Capital Programming Guide Update (June 2006) • DCMA EVM Center Reorganization and new Concept of Operations for EVM Systems • EVM Contracting Issues and Recommendations • Backup – New DCMA Trip Wires

3. DoD EVM Policy March 2005 • ANSI/EIA 748 EVMS compliance requirements • EVMS requirement threshold now $20M; eliminated C/SSR report • Requires common WBS for Contract Performance Report, Integrated Master Schedule, and Contractor Cost Data Report • Validation requirement now $50M • Clarified requirement for Integrated Baseline Reviews with EVMS application

4. FAR EVM Requirement July 2006 • Required EVM for all Major System Acquisitions in all federal agencies • Required Federal agencies to apply EVM internally; including DoD • EVM applied to ALL contractual types • Requires Pre-Award or Post Award IBR Implemented without adequate resolution of industry concerns

5. Capital Programming Guide (Update) • Recommendation to use the NDIA PSMC guides for Intent, System Acceptance, Application, Surveillance, and IBRs

6. DCMA EVM Center Reorganization and new direction August 2006 Foreword • Concerns raised by Naval Audit Service Audit Report (24 October 2006) regarding DCMA performance as executive agent as recognized by DFAR. • Responded in hiring 6 senior NAVAIR people, increasing staffing of the EVM center from 9 to 30.

7. The following slides were taken from a presentation by Mr. David Kester, Director, Program Integration Division, February 21, 2007 to the DoD-Industry EVM Working Group.

11. EVM Contracting Issues and Recommendations • Problems with policy implementation • Retroactive application of 2005 policy and related CDRL • Lack of recommended report tailoring • Duplication of reporting between subcontractor and Prime • Unrealistic realistic baselines Issue/Concern Recommendation • Increase program management and contracting communities understanding of policy • SME review of RFP and contract requirements. • Starting point is an achievable contract schedule and proposal estimate • Emphasis on cost realism • Integrate cost estimating and EVM efforts

12. EVM Contracting Issues and Recommendations • Award fee • Inappropriate criteria selected • Confusion regarding application of EVM requirements to IDIQ contracts Issue Recommendation • Avoid use of CPI and SPI as award fee criteria • Consult DoD EVMIG for appropriate EVM award fee incentives and how to rate them • Evaluate EVM requirements by task order, CLIN, or technical direction letter Do what makes sense in terms of reporting • Do what makes sense in terms of reporting

13. EVM Contracting Issues and Recommendations • Weekly Earned Value Issue Recommendation If asked to put on contract: • Do what makes sense • Key is visibility and good program management • Consider cost - Contracting and EVM communities work together - Incorporate authorized unpriced work; detail plan near-term effort - Initiate process as early as practicable; refer to IBR Guide • SOW and PMB not consistent • Lag in incorporating changes • Undefinitized Contract Actions • Deferring baseline planning • Timing of Integrated Baseline Reviews

14. EVM Contracting Issues and Recommendations • EVM on FFP contracts • Not sure if contractor has system validation • More of an issue with subcontractors than with major primes • If validation required, important to complete in timely manner Issue Recommendation • Per DoD policy, EVM not required/ recommended on FFP • Should not direct deletion of EVM • Contact DCMA for help • DCMA has listing on web site of validated contractors • Customer reps and primes need to help ensure that subcontractors support process

15. Recent Activities and Accomplishments • NDIA Guides formally referenced in OMB’s Capital Programming Guide • Civilian agency participation in NDIA PMSC • EVMS Acceptance Guide published • EVMS Application Guide pending publication • ANSI/EIA 748 revised for reaffirmation • Guidance for RM/EVM integration incorporated into EVMS Application Guide • XML standards nearing completion • Formal recognition of ANSI Intent Guide by OSD • On-going participation in OSD Joint EVM Working Group

16. New PMSC Initiatives • IBR Guide Update • Formation of Civilian Agencies working group • New working groups • Contracting issues • Scheduling issues • EVM for services contracts

17. Summary • PMSC environment is dynamic and challenging • Many current trends could reverse industry gains achieved in the last 10 years • Expanded scope/interests resulting in a significant increase in participation with the addition of civilian agencies, their suppliers, small businesses and consultants • Opportunity to achieve EVM process maturity and consistency for broad federal and commercial use • Opportunity to continue expansion beyond EVMS into new PM process areas

18. Backup The Voice of the Industrial Base

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