[Federal Register Volume 63, Number 220 (Monday, November 16, 1998)]
[Proposed Rules]
[Pages 63654-63657]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30554]
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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 1842 and 1852
Application of Earned Value Management (EVM)
AGENCY: National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would effect a change to the NASA FAR
Supplement relative to the application of Earned Value Management (EVM)
at NASA. The proposed change would establish NASA-wide clauses and
provisions compatible with those used by DoD. Specifically, the change
would clarify the role of the Defense Contract Management Command
(DCMC) with
[[Page 63655]]
respect to its responsibility for reviewing earned value management
system (EVMS) plans and verifying initial and continuing contractor
compliance with NASA and DoD EVMS criteria, and with NASA Policy
Directive 9501.3, Earned Value Performance Management, and DoD 5000.2-
R.
DATES: Comments should be submitted on or before January 15, 1999.
ADDRESSES: Interested parties should submit written comments to Kenneth
A. Sateriale, NASA Headquarters, Office of Procurement, Contract
Management Division (Code HK), Washington, DC 20546. Comments may also
be submitted by e-mail to [email protected].
FOR FURTHER INFORMATION CONTACT: Kenneth A. Sateriale, (202) 358-0491.
SUPPLEMENTARY INFORMATION:
Background
EVM is a commonly used performance (i.e. cost, schedule, and
technical) measurement tool for program managers in the aerospace
industry. NASA and DoD are major customers in the Government sector of
the aerospace industry, and cooperate to align their business practices
wherever practicable in order to realize cost and resource
efficiencies. Therefore, they have collaborated closely over the last
several years to align their approaches to the use of EVM. This change
completes that alignment process.
Impact
NASA certifies that this regulation will not have a significant
economic impact on a substantial number of small business entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) since the
changes do no more than align NASA practices with those already in
place at DoD, which shares essentially the same industry sector. This
proposed rule does not impose any reporting or recordkeeping
requirements subject to the Paperwork Reduction Act.
List of Subjects in 48 CFR Parts 1842 and 1852
Government procurement.
Tom Luedtke,
Acting Associate Administrator for Procurement.
Accordingly, 48 CFR Parts 1842 and 1852 are proposed to be amended
as follows:
1. The authority citation for 48 CFR Parts 1842 and 1852 continues
to read as follows:
Authority: 42 U.S.C. 2473(c)(1)
PART 1842--CONTRACT ADMINISTRATION AND AUDIT SERVICES
2. Subpart 1842.3 is added to read as follows:
Subpart 1842.3--Contract Administration Office Functions
Sec. 1842.302 Contract administration functions. (NASA supplements
paragraph (a))
(a) In addition to the responsibilities listed in FAR 42.302(a),
responsibility for reviewing earned value management system (EVMS)
plans and verifying initial and continuing contractor compliance with
NASA and DoD EVMS criteria is normally delegated to DCMC.
3. Section 1842.7003 is added to read as follows:
1842.7003 Modified cost performance report.
(a) Modified cost performance reporting is required for RDT&E
contracts with values between $25 million and $60 million, and
production contracts with values less than $250 million. Modified cost
performance reporting for RDT&E contracts with values of $25 million or
less may be required at the discretion of the contracting officer.
(b) The contracting officer shall insert the clause at 1852.242-76,
Modified Cost Performance Report, in solicitations and contracts, other
than for firm-fixed-price, time-and-materials, or labor-hour, when
modified cost performance reporting is required.
(c) The contracting officer shall insert the provision at 1852.242-
77, Modified Cost Performance Report Plans, in solicitations for
contracts, other than firm-fixed-price, time-and-materials, or labor-
hour, when modified cost performance reporting is required.
4. Subpart 1842.74 is added to read as follows:
Subpart 1842.74--Earned Value Management
1842.7401 Earned Value Management Systems (EVMS).
1842.7402 Solicitation provision and contract clause.
Subpart 1842.74--Earned Value Management
1842.74 Earned Value Management Systems (EVMS).
(a) Earned value is a management technique that relates resource
planning to schedules and to technical cost and schedule requirements.
All work is planned, budgeted, and scheduled in time-phased ``planned
value'' increments constituting a cost and schedule measurement
baseline. There are two major objectives of an earned value system: to
encourage contractors to use effective internal cost and schedule
management control systems; and to permit the customer to be able to
rely on timely data produced by those systems for determining product-
oriented contract status. Any system used by the contractor in planning
and controlling the performance of significant contracts shall be
certified as meeting the NASA EVM Criteria (the Criteria), unless
waived by the NASA Chief Financial Officer (CFO).
(b) Criteria-based EVMS is required in RDT&E contracts with a total
estimated final value of $60 million or more, with a period of
performance in excess of one year, and production contracts with a
total value of $250 million or more. On RDT&E contracts with a total
anticipated value greater than $25 million but less than $60 million,
or production contracts less than $250 million, the Criteria normally
is not applied. However, noncriteria-based EVM is required on these
contracts, and is optional on contracts valued at $25 million or less
at the discretion of the contracting officer. NASA Center CFO's have
been delegated the authority to waive this requirement for contracts
meeting the thresholds established for noncriteria contracts.
(c) When an offeror or contractor is required to provide an EVMS
plan to the Government, the contracting officer shall forward a copy of
the plan to the cognizant administrative contracting officer (ACO) to
obtain the assistance of the ACO in determining the adequacy of the
proposed EVMS plan.
1842.7402 Solicitation provision and contract clause.
When the Government requires Earned Value Management, the
contracting officer shall insert:
(a) The provision at 1852.242-74, Notice of Earned Value Management
System, in solicitations; and
(b) The clause at 1852.242-75, Earned Value Management System, in
solicitations and contracts.
PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
5. Sections 1852.242-74, 1852.242-75, 1852.242-76, and 1852.242-77
are added to read as follows:
1852.242-74 Notice of Earned Value Management System.
As prescribed in 1842.7402(a), insert the following provision:
[[Page 63656]]
Notice of Earned Value Management System
(XXX)
(a) The offeror shall provide documentation that the cognizant
Administrative Contracting Officer (ACO) has recognized that the
proposed earned value management system (EVMS) complies with the
EVMS criteria of NASA Policy Directive (NPD) 9501.3, Earned Value
Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information Systems
Acquisition Programs.
(b) If the offeror proposes to use a system that does not meet
the requirements of paragraph (a) of this provision, the successful
offeror shall submit a plan for compliance with the NASA EVM
criteria as described in NPD 9501.3.
(1) The plan shall--
(A) Describe the EVMS the offeror intends to use in performance
of the contract;
(B) Distinguish between the offeror's existing management system
and modifications proposed to meet the criteria;
(C) Describe the management system and its application in terms
of the criteria;
(D) Describe the proposed procedure for administration of the
criteria as applied to subcontractors; and
(E) Provide documentation describing the process and results of
any third-party or self-evaluation of the system's compliance with
EVMS criteria.
(2) The offeror shall provide information and assistance as
required by the Contracting Officer to support review of the plan.
(3) The Government will review and evaluate the successful
offeror's plan for EVMS, including the selection of subcontracted
effort to which EVMS would be applied, within sixty days following
contract award.
(c) Offerors shall identify in their proposals the major
subcontractors, or major subcontracted effort if major
subcontractors have not been selected, planned for application of
EVMS.
(End of Provision)
1852.242-75 Earned Value Management Systems.
As prescribed at 1842.7402(b), insert the following clause:
Earned Value Management System
(XXX)
(a) In the performance of this contract, the Contractor shall
use an earned value management system (EVMS) that has been
recognized by the cognizant Administrative Contracting Officer (ACO)
as complying with the criteria provided in NASA Policy Directive
9501.3, Earned Value Management, or DoD 5000.2-R, Mandatory
Procedures for Major Defense Acquisition Programs and Major
Automated Information Systems Acquisition Programs.
(b) If, at the time of award, the Contractor's EVMS has not been
recognized by the cognizant ACO as complying with EVMS criteria or
the Contractor does not have an existing cost schedule control
system (C/SCS) that has been accepted by the Government, the
Contractor shall apply that system to the contract and be prepared
to demonstrate to the ACO that its EVMS complies with the EVMS
criteria referenced in paragraph (a) of this clause.
(c) The Government may require integrated baseline reviews. Such
reviews shall be scheduled as early as practicable and should be
conducted within 180 calendar days after contract award, the
exercise of significant contract options, or the incorporation of
major contract modifications. The objectives of the integrated
baseline review are for the Government and the Contractor to jointly
assess areas, such as the Contractor's planning, to ensure complete
coverage of the statement of work, 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 and the NASA CO 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 a duly authorized
representative. Access is to permit Government surveillance to
ensure that the EVMS complies, and continues to comply, with the
criteria referenced in paragraph (a) of this clause.
(f) The Contractor shall require the subcontractors specified
below to comply with the requirements of this clause: (Insert list
of applicable subcontractors)
(End of clause)
1852.242-76 Modified Cost Performance Report.
As prescribed in 1842.7003(b), insert the following clause:
Modified Cost Performance Report
(XXX)
(a) The Contractor shall use management procedures in the
performance of this contract that provide for:
(1) Planning and control of costs;
(2) Measurement of performance (value for completed tasks); and
(3) Generation of timely and reliable information for the
Modified Cost Performance Report (M/CPR).
(b) As a minimum, these procedures must provide for--
(1) Establishing the time-phase budgeted cost of work scheduled
(including work authorization, budgeting, and scheduling), the
budgeted cost for work performed, the actual cost of work performed,
the budget at completion, the estimate at completion, and provisions
for subcontractor performance measurement and reporting;
(2) Applying all direct and indirect costs and provisions for
use and control of management reserve and undistributed budget;
(3) Incorporating changes to the contract budget base for both
Government directed changes and internal replanning;
(4) Establishing constraints to preclude subjective adjustment
of data to ensure performance measurement remains realistic. The
total allocated budget may exceed the contract budget base only
after obtaining prior written approval of the NASA Contracting
Officer. For cost-reimbursement contracts, the contract budget base
shall exclude changes for cost growth increases, other than for
authorized changes to the contract scope; and
(5) Establishing the capability to accurately identify and
explain significant cost and schedule variances, both on a
cumulative basis and a projected-at-completion basis.
(c) The Contractor may use a cost/schedule control system that
has been recognized by the cognizant Administrative Contracting
Officer (ACO) as complying with the earned value management system
criteria provided in NASA Policy Directive 9501.3, Earned Value
Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information Systems
Acquisition Programs.
(d) The Government may require integrated baseline reviews. Such
reviews shall be scheduled as early as practicable and should be
conducted within 180 calendar days after contract award, the
exercise of significant contract options, or the incorporation of
major modifications. The objectives of the integrated baseline
review are for the Government and the Contractor to jointly assess
areas, such as the Contractor's planning, to ensure complete
coverage of the statement of work, logical scheduling of the work
activities, adequate resourcing, and identification of inherent
risks.
(e) The Contractor shall provide access to all pertinent
records, company procedures, and data requested by the ACO, or
authorized representative, to--
(1) Show proper implementation of the procedures generating the
cost and schedule information being used to satisfy the M/CPR
contractual data requirements to the Government; and
(2) Ensure continuing application of the accepted company
procedures in satisfying the M/CPR data item.
(f) The Contractor shall submit any substantive changes to the
procedures and their impact to the ACO for review.
(g) The Contractor shall require a subcontractor to furnish M/
CPR in each case where the subcontract is other than firm-fixed-
price, time-and-materials, or labor-hour, is 12 months or more in
duration, and has critical or significant tasks related to the prime
contract. Critical or significant tasks shall be identified by
either the Government or the Contractor. Each subcontractor's
reported cost and schedule information shall be incorporated into
the Contractor's M/CPR.
(End of clause)
1852.242-77 Modified Cost Performance Report Plans.
As prescribed in 1842.7003(c), insert the following provision;
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Modified Cost Performance Plans
(XXX)
(a) The offeror shall submit in its proposal 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 clause at 1852.242-74 Modified CostPerformance
Report.
(b) If the offeror proposes to use a cost/schedule control
system that has been recognized by the cognizant Administrative
Contracting Officer as complying with the earned value management
system criteria of NASA Policy Directive 9501.3, Earned Value
Management, or DoD 5000.2-R, Mandatory Procedures for Major Defense
Acquisition Programs and Major Automated Information Systems
Acquisition Programs, the offeror may submit a copy of the
documentation of such recognition instead of the written summary
required by paragraph (a) of this provision.
(End of provision)
[FR Doc. 98-30554 Filed 11-13-98; 8:45 am]
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