[Federal Register: April 8, 2005 (Volume 70, Number 67)]
[Proposed Rules]
[Page 17945-17949]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08ap05-14]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 7, 34, 42, and 52
[FAR Case 2004-019]
RIN 9000-AJ99
Federal Acquisition Regulation; Earned Value Management System
(EVMS)
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
[[Page 17946]]
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to implement earned value
management system (EVMS) policy. FAR coverage is essential to help
standardize the use of EVMS across the Government. The proposed rule
specifically impacts contracting officers, program managers, and
contractors with earned value management systems.
DATES: Interested parties should submit comments in writing on or
before June 7, 2005 to be considered in the formulation of a final
rule.
ADDRESSES: Submit comments identified by FAR case 2004-019 by any of
the following methods:
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.
Follow the instructions for submitting comments.
Agency Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov/far/ProposedRules/proposed.htm.
Click on the FAR case number to submit comments. E-mail: farcase.2004-019@gsa.gov. Include FAR case 2004-
019 in the subject line of the message.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (VIR), 1800 F Street, NW., Room 4035, ATTN: Laurieann
Duarte, Washington, DC 20405.
Instructions: Please submit comments only and cite FAR case 2004-
019 in all correspondence related to this case.
All comments received will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov/far/ProposedRules/proposed.htm
, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755
for information pertaining to status or publication schedules. For
clarification of content, contact Ms. Jeritta Parnell, Procurement
Analyst, at (202) 501-4082. Please cite FAR case 2004-019.
SUPPLEMENTARY INFORMATION:
A. Background
The proposed FAR changes are necessary to implement EVMS
requirements in OMB Circular A-11, Part 7, Planning, Budgeting,
Acquisition, and Management of Capital Assets, and the supplement to
Part 7, the Capital Programming Guide. Title V of the Federal
Acquisition Streamlining Act of 1994 (FASA) requires agency heads to
approve or define the cost, performance, and schedule goals for major
acquisitions and achieve, on average, 90 percent of the cost,
performance and schedule goals established. The Clinger-Cohen Act of
1996 requires the Director of OMB to develop, as part of the budget
process, a process for analyzing, tracking, and evaluating the risks
and results of all major capital investments for information systems
for the life of the system. OMB Circular A-11, Part 7, Planning,
Budgeting, Acquisition, and Management of Capital Assets and its
supplement, Capital Programming Guide, were written to meet the
requirements of FASA and the Clinger-Cohen Act. OMB Circular A-11, Part
7, sets forth the policy, budget justification, and reporting
requirements that apply to all agencies of the executive branch of the
Government that are subject to executive branch review, for major
capital acquisitions.
This rule establishes standard EVMS provisions, a standard clause
and a set of guidelines for Governmentwide use. The guidelines include
the requirement and timing of an Integrated Baseline Review (IBR),
whether prior to or post award. Due to the time and cost of performing
IBRs, when IBRs are conducted prior to award, consideration should be
given to limiting the competitive range. The concept of conducting the
IBR before the contract is awarded is a change from the traditional
approach of conducting IBRs only after contract award. We specifically
request comments on the feasibility of conducting IBRs before award.
Should all contracts require IBRs before award? If not, on what type of
contracts should IBRs be conducted before award? Would a modified IBR
be a better choice before award? What should be the down-select policy
to limit the number of offerors subject to an IBR before award?
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The proposed changes to FAR Parts 2, 7, 34, 42, and 52 may 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 rule requires contractors, and subcontractors
identified by the contracting officer, to implement earned value
management and set up earned value management systems within their
organizations to plan and manage the work under major acquisitions.
Thus, small businesses will be required to set up such systems if
awarded a major acquisition contract or a large subcontract under a
major acquisition. However, an analysis of data in the Federal
Procurement Data System (FPDS) on actions and dollars on contracts
above $20 million for supplies and equipments, IT services and
construction, areas where EVMS is likely to be applied, indicated that
small business only received 3.8 percent of the $36.8 billion and 5.8
percent of the 345 actions. Because FPDS does not collect data on EVMS
use, the data above is only an approximation of the effect on small
business. The Councils are seeking comments on the potential impact of
having to implement a program management system that meets the EVMS
guidelines in ANSI/EIA Standard 748-A.
An Initial Regulatory Flexibility Analysis (IRFA) has been prepared
and will be provided to the Chief Counsel for Advocacy for the Small
Business Administration. The analysis is summarized as follows:
The proposed FAR changes are necessary to implement earned value
management systems (EVMS) requirements in OMB Circular A-11, Part 7,
Planning, Budgeting, Acquisition, and Management of Capital Assets,
and the supplement to Part 7, the Capital Programming Guide.
Currently, only DoD, NASA, and a few other agencies have developed
EVMS clauses and policy. The Civilian Agency Acquisition Council and
the Defense Acquisition Regulations Council (Councils) are therefore
proposing revising FAR Parts 2, 7, 34, 42, and 52 to include
guidance for EVMS. This rule establishes standard EVMS provisions, a
standard clause and a set of guidelines for Governmentwide use.
Title V of the Federal Acquisition Streamlining Act of 1994
(FASA) requires agency heads to approve or define the cost,
performance, and schedule goals for major acquisitions and achieve,
on average, 90 percent of the cost, performance and schedule goals
established. The Clinger-Cohen Act of 1996 requires the Director of
OMB to develop, as part of the budget process, a process for
analyzing, tracking, and evaluating the risks and results of all
major capital investments for information systems for the life of
the system. OMB Circular A-11, Part 7, Planning, Budgeting,
Acquisition, and Management of Capital Assets and its supplement,
Capital Programming Guide, were written to meet the requirements of
FASA and the Clinger-Cohen Act. OMB Circular A-11, Part 7, sets
forth the policy, budget justification, and reporting requirements
that apply to all agencies of the executive branch of the Government
that are subject to executive branch review, for major capital
acquisitions. The proposed FAR changes are necessary to implement
EVMS requirements in OMB Circular A-11, Part 7, Planning, Budgeting,
Acquisition, and Management of Capital Assets, and the
[[Page 17947]]
supplement to Part 7, the Capital Programming Guide.
The impact to small businesses by this rule will be dependent
upon the thresholds established by the agencies or identified by OMB
as the agencies' major acquisitions/investments. OMB does not expect
EVMS on acquisitions at or below $20 million total cost. However,
OMB or the agency may identify a lower dollar acquisition as a major
acquisition for application of EVMS. Therefore the impact for this
rule has not been ascertained across all agencies. Small businesses
may be impacted by their lack of certification of an EVM System at
time of award or the cost of the requirement for an IBR prior to
award where an agency does not absorb the cost of the IBR. Likewise,
agencies will be affected by the possible cost of IBRs for which
they absorb the costs. Therefore, the number of small businesses
with EVM Systems is uncertain, based on current information.
This proposed FAR rule will not impose any additional reporting
or recordkeeping requirements on offerors, contractors, or members
of the public which require the approval of the Office of Management
and Budget under 44 U.S.C. 3501, et seq. The rule provides for the
standardization of EVMS across the Government. Contractors are
required to maintain EVMS, where applicable. These systems are
unique to the contractor. The reporting is specific to the
contractor's system and is not the reporting of identical
information collected for a public collection. There is no set of
identical questions for 10 or more contractors. The rule allows
contractors to use a standardized EVMS across Government. The
requirements for these systems are usually imposed on high dollar
acquisitions. Therefore, only a few small entities would be required
to comply with the cost/schedule/performance requirements for these
systems.
There are no Federal rules that duplicate, overlap, or conflict
with the proposed rule.
The FAR Secretariat has submitted a copy of the IRFA to the Chief
Counsel for Advocacy of the Small Business Administration. A copy of
the IRFA may be obtained from the FAR Secretariat. The Councils will
consider comments from small entities concerning the affected FAR Parts
2, 7, 34, 42, and 52 in accordance with 5 U.S.C. 610. Comments must be
submitted separately and should cite 5 U.S.C. 601, et seq. (FAR case
2004-019), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
changes to the FAR do not impose 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 Parts 2, 7, 34, 42, and 52
Government procurement.
Dated: April 1, 2005.
Rodney Lantier,
Director, Contract Policy Division, General Services Administration.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 7,
34, 42, and 52 as set forth below:
1. The authority citation for 48 CFR parts 2, 7, 34, 42, and 52 are
revised to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
2. Amend section 2.101 in paragraph (b) by adding, in alphabetical
order, the definition ``Earned value management system'' to read as
follows:
2.101 Definitions.
* * * * *
(b) * * *
Earned value management system means a project management tool that
effectively integrates the project scope of work with cost, schedule
and performance elements for optimum project planning and control. The
qualities and operating characteristics of earned value management
systems are described in American National Standards Institute (ANSI)/
Electronics Industries Alliance (EIA) Standard-748, Earned Value
Management systems. (See OMB Circular A-11, Part 7.)
* * * * *
PART 7--ACQUISITION PLANS
3. Amend section 7.105 by adding a sentence to the end of paragraph
(b)(10) to read as follows:
7.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(10) * * * If an earned value management system is to be used,
discuss the methodology the Government will employ to analyze and use
the earned value data to assess and monitor contract performance. In
addition, discuss how the offeror's/contractor's EVMS will be verified
for compliance with the American National Standards Institute/
Electronics Industries Alliance (ANSI/EIA) standard, and the timing and
conduct of Integrated Baseline Reviews (whether prior to or post
award). See 34.202.
* * * * *
PART 34--MAJOR SYSTEM ACQUISITION
4. Revise section 34.000 to read as follows:
34.000 Scope of part.
This part describes acquisition policies and procedures for use in
acquiring major systems consistent with OMB Circular No. A-109; and the
use of earned value management systems in acquisitions designated as
major acquisitions consistent with OMB Circular A-11.
5. Amend section 34.005-2 by adding paragraph (b)(6) to read as
follows:
34.005-2 Mission-oriented solicitation.
* * * * *
(b) * * *
(6) Require the use of an earned value management system that meets
the guidelines of ANSI/EIA Standard-748 (current version at time of
solicitation) (see 42.1106) for earned value management systems and
reporting requirements).
* * * * *
6. Add subpart 34.X to read as follows:
Subpart 34.X--Earned Value Management Systems
Sec.
34.X01 Policy.
34.X02 Integrated Baseline Reviews.
34.X03 Solicitation provisions and contract clause.
34.X01 Policy.
(a) Earned value management system (EVMS) is required in
acquisitions designated, in accordance with agency procedures, as major
acquisitions subject to OMB Circular A-11.
(b) When EVMS is required, the agency shall consider the use of an
Integrated Baseline Review (IBR).
34.X02 Integrated Baseline Reviews.
(a) The Integrated Baseline Review (IBR) is meant to verify the
technical content and the realism of the related performance budgets,
resources, and schedules. It should provide a mutual understanding of
the inherent risks in offerors'/contractors' performance plans and the
underlying management control systems, and it should formulate a plan
to handle these risks.
(b) The IBR is a joint assessment by the offeror or contractor, and
the Government, of the--
(1) Ability of the project's technical plan to achieve the
objectives of the scope of work;
(2) Adequacy of the time allocated for performing the defined tasks
to successfully achieve the project schedule objectives;
(3) Ability of the Performance Measurement Baseline (PMB) to
successfully execute the project and attain cost objectives,
recognizing the relationship between budget resources, funding,
schedule, and scope of work;
[[Page 17948]]
(4) Availability of personnel, facilities, and equipment when
required, to perform the defined tasks needed to execute the program
successfully; and
(5) The degree to which the management process provides effective
and integrated technical/schedule/cost planning and baseline control.
(c) Conduct the IBR in accordance with agency procedures.
34.X03 Solicitation provisions and contract clause.
(a) The contracting officer shall insert a provision that is
substantially the same as the provision at 52.234-X1, Notice of Earned
Value Management System, in solicitations for contracts that require
the contractor to use an earned value management system (EVMS) and for
which the Government may require an Integrated Baseline Review (IBR)
after contract award. When an offeror is required to provide an EVMS
plan as part of its proposal, the contracting officer shall forward a
copy of the plan to the cognizant Administrative Contracting Officer
(ACO) or responsible Federal department or agency and obtain their
assistance in determining the adequacy of the proposed EVMS plan.
(b) The contracting officer shall insert a provision that is
substantially the same as the provision at 52.234-X2, Notice of Earned
Value Management System-Pre-Award IBR, in solicitations for contracts
that require the contractor to use an EVMS and for which the Government
will require an IBR prior to contract award. When an offeror is
required to provide an EVMS plan as part of its proposal, the
contracting officer shall forward a copy of the plan to the cognizant
ACO or responsible Federal department or agency and obtain their
assistance in determining the adequacy of the proposed EVMS plan.
(c) The contracting officer shall insert a clause that is
substantially the same as the clause at 52.234-X3, Earned Value
Management System, in solicitations and contracts that require a
contractor to use an earned value management system (EVMS).
PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES
7. Amend section 42.1106 by adding paragraph (d) to read as
follows:
42.1106 Reporting requirements.
* * * * *
(d) For major acquisitions contracting officers shall require
contractors to submit earned value management system monthly reports
(see subpart 34.2 and OMB Circular A-11, part 7, section 1H4, Exhibit
300).
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
8. Add sections 52.234-X1, 52.234-X2, and 52.234-X3 to read as
follows:
52.234-X1 Notice of Earned Value Management System.
As prescribed in 34.X03(a) use the following provision:
Notice of Earned Value Management System (Date)
(a) The offeror shall provide documentation that the cognizant
Administrative Contracting Officer (ACO) or a Federal department or
agency has recognized that the proposed earned value management
system (EVMS) complies with the EVMS guidelines in ANSI/EIA
Standard-748 (current version at time of solicitation).
(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 a comprehensive plan for compliance with the EVMS
guidelines.
(1) The plan shall--
(i) Describe the EVMS the offeror intends to use in performance
of the contracts;
(ii) Distinguish between the offeror's existing management
system and modifications proposed to meet the guidelines;
(iii) Describe the management system and its application in
terms of the EVMS guidelines;
(iv) Describe the proposed procedure for administration of the
guidelines, as applied to subcontractors; and
(v) Provide documentation describing the process and results of
any third-party or self-evaluation of the system's compliance with
the EVMS guidelines.
(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 the offeror's plan for EVMS
before contract award.
(c) Offerors shall identify the major subcontractors, or major
subcontracted effort if major subcontractors have not been selected,
planned for application of the guidelines. The prime Contractor and
the Government shall agree to subcontractors selected for
application of the EVMS guidelines.
(End of provision)
52.234-X2 Notice of Earned Value Management System--Pre-Award IBR.
As prescribed in 34.X03(b), use the following provision:
Notice of Earned Value Management System, Pre-Award IBR (Date)
(a) The offeror shall provide documentation that the cognizant
Administrative Contracting Officer (ACO) or a Federal department or
agency has recognized that the proposed earned value management
system (EVMS) complies with the EVMS guidelines in ANSI/EIA
Standard-748 (current version at time of solicitation).
(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 a comprehensive plan for compliance with the EVMS
guidelines.
(1) The plan shall--
(i) Describe the EVMS the offeror intends to use in performance
of the contracts;
(ii) Distinguish between the offeror's existing management
system and modifications proposed to meet the guidelines;
(iii) Describe the management system and its application in
terms of the EVMS guidelines;
(iv) Describe the proposed procedure for administration of the
guidelines, as applied to subcontractors; and
(v) Provide documentation describing the process and results of
any third-party or self-evaluation of the system's compliance with
the EVMS guidelines.
(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 approve the offeror's plan
for EVMS before contract award.
(c) Offerors shall identify the major subcontractors, or major
subcontracted effort if major subcontractors have not been selected
subject to the guidelines. The prime Contractor and the Government
shall agree to subcontractors selected for application of the EVMS
guidelines.
(d) The Government will conduct an Integrated Baseline Review
(IBR), as designated by the agency, prior to contract award. The
objective of the IBR is for the Government and the Contractor to
jointly assess technical areas, such as the Contractor's planning,
to ensure complete coverage of the contract requirements, logical
scheduling of the work activities, adequate resources, methodologies
for earned value (budgeted cost for work performed (BCWP)), and
identification of inherent risks.
(End of provision)
52.234-X3 Earned Value Management System.
As prescribed in 34.X03(c), insert the following clause:
Earned Value Management System (Date)
(a) In the performance of this contract the Contractor shall use
an earned value management system (EVMS) to manage the contract that
at the time of contract award has been recognized by the cognizant
Administrative Contracting Officer (ACO) or a Federal department or
agency as compliant with the guidelines in ANSI/EIA Standard-748
(current version at time of award) and the Contractor will submit
reports in accordance with the requirements of this contract.
(b) If, at the time of award, the Contractor's EVMS has not been
recognized by the cognizant ACO or a Federal department or agency as
complying with EVMS guidelines (or the Contractor does not have an
existing cost/schedule control system that is
[[Page 17949]]
compliant with the guidelines in ANSI/EIA Standard-748 (current
version at time of award)), the Contractor shall apply the system to
the contract and shall be prepared to demonstrate to the ACO that
the EVMS complies with the EVMS guidelines referenced in paragraph
(a) of this clause.
(c) Agencies may conduct Integrated Baseline Reviews (IBR). If a
pre-award IBR has not been conducted, such a review shall be
scheduled as early as practicable after contract award, but not
later than 180 days after award. The Contracting Officer may also
require an IBR at (1) exercise of significant options or (2)
incorporation of major modifications. Such reviews will normally be
scheduled before award of the contract action.
(d) Unless a waiver is granted by the ACO or Federal department
or agency, Contractor proposed EVMS changes require approval of the
ACO or Federal department or agency, prior to implementation. The
ACO or Federal department or agency, 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 or Federal
department or agency, the Contractor shall disclose EVMS changes to
the ACO or Federal department or agency 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 Contracting Officer or a duly
authorized representative. Access is to permit Government
surveillance to ensure that the EVMS conforms, and continues to
conform, with the performance 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.]
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(End of clause)
[FR Doc. 05-6864 Filed 4-7-05; 8:45 am]