[Federal Register Volume 64, Number 43 (Friday, March 5, 1999)]
[Rules and Regulations]
[Pages 10573-10575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5481]


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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: Final rule.

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[[Page 10574]]

SUMMARY: This final rule changes the NASA FAR Supplement to apply 
Earned Value Management (EVM) at NASA by establishing NASA-wide clauses 
and provisions compatible with those used by DoD. Specifically, the 
change clarifies the role of the Defense Contract Management Command 
(DCMC) with 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.

EFFECTIVE DATE: March 5, 1999.

FOR FURTHER INFORMATION CONTACT: Kenneth A. Sateriale, (202) 358-0491, 
[email protected].

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.
    A proposed rule was published in the Federal Register at 63 FR 
63654, November 16, 1998. The revisions in the final rule are based on 
an analysis of the public comments.

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 
final 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 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


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 and conformity with ANSI/EIA Standard 748, 
Industry Guidelines for EVMS, is normally delegated to DCMC.
    3. 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 provisions and contract clauses.

Subpart 1842.74--Earned Value Management


1842.7401  Earned Value Management Systems (EVMS).

    When an offeror or contractor is required to provide an EVMS plan 
to the Government in accordance with NASA Policy Directive (NPD) 
9501.3, Earned Value Management, 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 provisions and contract clauses.

    (a) When the Government requires Earned Value Management, the 
contracting officer shall insert:
    (1) The provision at 1852.242-74, Notice of Earned Value Management 
System, in solicitations; and
    (2) The clause at 1852.242-75, Earned Value Management System, in 
solicitations and contracts.
    (b) The contracting officer shall insert the clause at 1852.242-76, 
Modified Cost Performance Report, in solicitations and contracts 
requiring modified cost performance reporting (see NPD 9501.3, Earned 
Value Management).
    (c) The contracting officer shall insert the provision at 1852.242-
77, Modified Cost Performance Report Plans, in solicitations for 
contracts requiring modified cost performance reporting (see NPD 
9501.3).

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    4. 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)(1), insert the following provision:

Notice of Earned Value Management System (March 1999)

    (a) The offeror shall provide documentation that the 
cognizantAdministrative Contracting Officer (ACO) has recognized 
that:
    (1) 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; or
    (2) The company EVM system conforms with the full intentions of 
the guidelines presented in ANSI/EIA Standard 748, Industry 
Guidelines for Earned Value Management Systems.
    (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--
    (i) Describe the EVMS the offeror intends to use in performance 
of the contract;
    (ii) Distinguish between the offeror's existing management 
system and modifications proposed to meet the criteria;
    (iii) Describe the management system and its application in 
terms of the criteria;
    (iv) Describe the proposed procedure for administration of the 
criteria 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 
EVMS criteria.
    (2) The Government will review the offeror's plan for EVMS 
before contract award. The offeror shall provide information and 
assistance as required by the Contracting Officer to support review 
of the plan.
    (c) Offerors shall identify in their proposals the major 
subcontractors, or major subcontracted efforts if major 
subcontractors have not been selected, planned for application of 
EVMS. The prime contractor and the Government shall agree to 
subcontractors selected for application of EVMS.


[[Page 10575]]


(End of Provision)


1852.242-75  Earned Value Management Systems.

    As prescribed at 1842.7402(a)(2), insert the following clause:

Earned Value Management System (March 1999)

    (a) In the performance of this contract, the Contractor shall 
use:
    (1) 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; or
    (2) A company EVMS that the ACO has recognized as conforming 
with the full intentions of the guidelines presented in ANSI/EIA 
Standard 748, Industry Guidelines for Earned Value Management 
Systems.
    (b) If, at the time of award, the Contractor's EVMS has not been 
recognized by the cognizant ACO per paragraph (a) of this clause 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 the Contractor's EVMS to the contract and be 
prepared to demonstrate to the ACO that its system 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, exercise of 
significant contract options, or incorporation of major contract 
modifications. The objective of the integrated baseline review is 
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 provide an information copy to the NASA 
Contracting Officer 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 1842.7402(b), insert the following clause:

Modified Cost Performance Report (March 1999)

    (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 consultation with the 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:
    (1) 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; or
    (2) Conforming with the full intentions of the guidelines 
presented in ANSI/EIA Standard 748, Industry Guidelines for Earned 
Value Management Systems.
    (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, exercise of 
significant contract options, or incorporation of major 
modifications. The objective of the integrated baseline review is 
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 defined by mutual 
agreement between the Government and 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 1842.7402(c), insert the following provision;

Modified Cost Performance Plans (March 1999)

    (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 1852.242-76, Modified Cost Performance 
Report.
    (b) The offeror may propose to use a cost/schedule control 
system that has been recognized by the cognizant Administrative 
Contracting Officer as:
    (1) 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; or
    (2) Conforming with the full intentions of the guidelines 
presented in ANSI/EIA Standard 748, Industry Guidelines for Earned 
Value Management Systems. In such cases, 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. 99-5481 Filed 3-4-99; 8:45 am]
BILLING CODE 7510-01-P