[Federal Register Volume 76, Number 28 (Thursday, February 10, 2011)]
[Proposed Rules]
[Pages 7526-7527]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2756]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 1834

RIN 2700-AD29


Major System Acquisition; Earned Value Management

AGENCY: National Aeronautics and Space Administration.

ACTION: Proposed rule with request for comments.

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SUMMARY: NASA proposes to revise the requirements in the NASA FAR 
Supplement (NFS) for contractors to establish and maintain an Earned 
Value Management System (EVMS) for firm-fixed-price (FFP) contracts. 
The proposal recognizes the reduction in risk associated with FFP 
contracts and intends to relieve contractors of an unnecessary 
reporting burden.

DATES: Interested parties should submit comments on or before April 11, 
2011 to be considered in formulation of the final rule.

ADDRESSES: Interested parties may submit comments, identified by RIN 
number 2700-AD29, via the Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. 
Comments may also be submitted to Carl Weber (Mail stop 5K80), NASA 
Headquarters, Office of Procurement, Contract Management Division, 
Washington, DC 20546. Comments may also be submitted by e-mail to 
carl.c.weber@nasa.gov.

FOR FURTHER INFORMATION CONTACT: Carl Weber, NASA, Office of 
Procurement, Contract Management Division (Suite 5K80); (202) 358-1784; 
e-mail: carl.c.weber@nasa.gov.

SUPPLEMENTARY INFORMATION:

A. Background

    Earned Value Management (EVM) is a performance-based tool that 
gives agency managers an early warning of potential cost overruns and 
schedule delays during the execution of their investments. EVM requires 
agencies to integrate information about the scope of work with cost, 
schedule, and performance information so that they may compare planned 
spending with actual spending, isolate the source of performance 
problems, and take corrective actions in a timely manner.
    Federal Acquisition Regulation (FAR) Subpart 34.2 and Office of 
Management and Budget (OMB) Circular A-11 require agencies to measure 
the cost and schedule performance of major investments with development 
activity using EVM. These policies are implemented by NASA through NASA 
Procedural Requirement (NPR) 7120.5, which requires program managers to 
perform appropriate EVM analyses of their investments, and NASA FAR 
Supplement 1834.201, which requires contractors to have an Earned Value 
Management System (EVMS) for major acquisitions with development or 
production work, including development or production work for flight 
and ground support systems and components, prototypes, and 
institutional investments (facilities, IT infrastructure, etc.).

[[Page 7527]]

    Under the current NASA policy, contractors executing a firm-fixed-
price (FFP) contract meeting specified thresholds are required to have 
an EVMS that complies with the guidelines in ANSI/EIA Standard 748. 
However, since the cost incurred by the government is fixed the 
requirement for ANSI compliance for performance under FFP contracts 
creates an unnecessary burden on contractors that may increase their 
costs and those passed on to the government. Accordingly, this proposed 
rule provides an exception to the requirement for an EVMS for 
contractors who perform under a FFP contract. However, the proposed 
rule does not change the requirements in the NASA NPR to apply EVM 
principles at the program/project level; nor is it intended or expected 
to materially alter NASA's ability to obtain the data the agency needs 
from a contractor performing under an FFP contract for an effective 
program/project level EVM analysis--including the program/project level 
generation of the Integrated Master Schedule (IMS), the Work Breakdown 
Structure (WBS) and the time-phased budget, with cost variance and 
schedule variance calculated using the performance measurement 
baseline--that is required for sound program, project, and contract 
management.
    Finally, for cost or fixed-price incentive contracts and 
subcontracts valued at less than $20 Million, the proposed rule makes 
application of EVM an optional, risk-based decision at the discretion 
of the program/project manager.
    This is not a significant regulatory action and, therefore, is not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This proposed 
rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    NASA certifies that this proposed rule will not 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 it relaxes previous requirements in the NASA FAR Supplement and 
does not impose a significant economic impact beyond that previously 
required. Therefore, an Initial Regulatory Flexibility Analysis has not 
been performed. NASA will consider comments from small entities 
concerning the affected NFS Parts 1834 and 1852, in accordance with 5 
U.S.C. 610. Interested parties should submit such comments separately 
and should cite 5 U.S.C. 601 in the correspondence.

C. Paperwork Reduction Act

    This proposed rule does not impose any new information collection 
requirements that require the approval of the Office of Management and 
Budget (OMB) under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 1834

    Government procurement.

William P. McNally,
Assistant Administrator for Procurement.
    Accordingly, 48 CFR part 1834 is proposed to be amended as follows:

PART 1834--MAJOR SYSTEM ACQUISITION

    1. The authority citation for 48 CFR part 1834 continues to read as 
follows:

    Authority:  42 U.S.C. 2455(a), 2473(c)(1).

    2. Section 1834.003 is added to read as follows:


1834.003  Responsibilities.

    (a) NASA's implementation of OMB Circular No. A-109, Major Systems 
Acquisition, and FAR Part 34 is contained in this Part and in NASA 
Procedures and Guidelines (NPR) 7120.5, ``NASA Space Flight Program and 
Project Management Requirements.''
    3. Section 1834.201 is revised to read as follows:


1834.201  Policy.

    (a)(1) NASA requires use of an Earned Value Management System 
(EVMS) on acquisitions for development or production work, including 
development or production work for flight and ground support systems 
and components, prototypes, and institutional investments (facilities, 
IT infrastructure, etc.) as specified in paragraphs (a)(1)(i) through 
(iii) of this section:
    (i) For cost or fixed-price incentive contracts and subcontracts 
valued at $50 Million or more the contractor shall have an EVMS that 
has been determined by the cognizant Federal agency to be in compliance 
with the guidelines in the American National Standards Institute/
Electronic Industries Alliance Standard 748, Earned Value Management 
Systems (ANSI/EIA-748).
    (ii) For cost or fixed-price incentive contracts and subcontracts 
valued at $20 Million or more but less than $50 Million, the contractor 
shall have an EVMS that complies with the guidelines in ANSI/EIA-748, 
as determined by the cognizant Contracting Officer.
    (iii) For cost or fixed-price incentive contracts and subcontracts 
valued at less than $20 Million the application of EVM is optional and 
is a risk-based decision at the discretion of the program/project 
manager.
    (2) Requiring earned value management for firm-fixed-price (FFP) 
contracts and subcontracts of any dollar value is discouraged; however, 
a schedule management system and adequate reporting shall be required 
to plan and track schedule performance for development or production 
contracts valued at $20 Million or more. In addition, for FFP contracts 
that are part of a program/project of $50 Million or more, the 
contracting officer shall collaborate with the government's program/
project manager to ensure the appropriate data can be obtained or 
generated to fulfill program management needs and comply with the 
Agency program management requirements of NPR 7120.5.
    (3) An EVMS is not required on non-developmental contracts for 
engineering support services, steady state operations, basic and 
applied research, and routine services such as janitorial services or 
grounds maintenance services.
    (4) Contracting officers shall request the assistance of the 
cognizant Defense Contract Management Agency (DCMA) office in 
determining the adequacy of proposed EVMS plans and procedures and 
system compliance.
    (b) Notwithstanding the EVMS requirements above, if an offeror 
proposes to use a system that has not been determined to be in 
compliance with the American National Standards Institute/Electronics 
Industries Alliance (ANSI/EIA) Standard-748, Earned Value Management 
Systems, the offeror shall submit a comprehensive plan for compliance 
with these EVMS standards, as specified in 1852.234-1, Notice of Earned 
Value Management System. Offerors shall not be eliminated from 
consideration for contract award because they do not have an EVMS that 
complies with these standards.
    4. In section 1834.203-70 revise the introductory text to read as 
follows:


1834.203-70  NASA solicitation provision and contract clause.

    Except for firm-fixed price contracts and the contracts identified 
in 1834.201(a)(iii), the contracting officer shall insert--
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[FR Doc. 2011-2756 Filed 2-9-11; 8:45 am]
BILLING CODE 7510-01-P