[Federal Register Volume 70, Number 55 (Wednesday, March 23, 2005)]
[Rules and Regulations]
[Pages 14574-14576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-5626]


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DEPARTMENT OF DEFENSE

48 CFR Parts 234, 242, and 252

[DFARS Case 2003-D030]


Defense Federal Acquisition Regulation Supplement; Major Systems 
Acquisition

AGENCY: Department of Defense (DoD).

ACTION: Final rule.

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SUMMARY: DoD has issued a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to update text pertaining to 
major systems acquisition, earned value management systems, and cost/
schedule status reporting. This rule is a result of a transformation 
initiative undertaken by DoD to dramatically change the purpose and 
content of the DFARS.

DATES: Effective Date: March 23, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Michele Peterson, Defense 
Acquisition Regulations Council, OUSD (AT&L) DPAP (DAR), IMD 3C132, 
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-
0311; facsimile (703) 602-0350. Please cite DFARS Case 2003-D030.

SUPPLEMENTARY INFORMATION:

A. Background

    DFARS Transformation is a major DoD initiative to dramatically 
change the purpose and content of the DFARS. The objective is to 
improve the efficiency and effectiveness of the acquisition process, 
while allowing the acquisition workforce the flexibility to innovate. 
The transformed DFARS will contain only requirements of law, DoD-wide 
policies, delegations of FAR authorities, deviations from FAR 
requirements, and policies/procedures that have a significant effect 
beyond the internal operating procedures of DoD or a significant cost 
or administrative impact on contractors or offerors. Additional 
information on the DFARS Transformation initiative is available at 
http://www.acq.osd.mil/dpap/dfars/transf.htm.
    This final rule is a result of the DFARS Transformation initiative. 
The DFARS changes include--
     Deletion of the definitions of ``systems'' and ``systems 
acquisition'' at DFARS 234.001, since these terms are not used within 
DFARS part 234.
     Relocation of text on earned value management systems from 
DFARS part 234 to part 242, since earned value management system 
requirements are not limited to major systems acquisition. The earned 
value management system thresholds

[[Page 14575]]

specified in DoDI 5000.2, Operation of the Defense Acquisition System, 
do not cleanly equate to major or other than major systems. The 
prescriptions for the Cost/Schedule Status Report clause and provision 
at DFARS 252.242-7005 and 252.242-7006, respectively, also are amended 
to remove text that limits their use to other than major systems.
     Deletion of text at DFARS 234.005-70 regarding a 
requirement for the procuring contracting officer to obtain assistance 
from the administrative contracting officer when determining the 
adequacy of a proposed earned value management system plan. Text on 
this subject has been relocated to the new DFARS companion resource, 
Procedures, Guidance, and Information (PGI), available at http://www.acq.osd.mil/dpap/dars/pgi.
     Updating of references to OMB Circulars and the DoD 5000 
series documents.
    DoD published a proposed rule at 69 FR 8155 on February 23, 2004. 
DoD received no comments on the proposed rule. Therefore, DoD has 
adopted the proposed rule as a final rule without change.
    This rule was not subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD certifies that this final 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 the rule updates and relocates existing DFARS text, with no 
significant change in policy.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the rule does 
not impose any 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 234, 242, and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 234, 242, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 234, 242, and 252 continues 
to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 234--MAJOR SYSTEM ACQUISITION


234.001  [Removed]

0
2. Section 234.001 is removed.

0
3. Section 234.003 is revised to read as follows:


234.003  Responsibilities.

    DoDD 5000.1, The Defense Acquisition System, and DoDI 5000.2, 
Operation of the Defense Acquisition System, contain the DoD 
implementation of OMB Circular A-109 and OMB Circular A-11.
0
4. Section 234.005 is revised to read as follows:


234.005  General requirements.

    See 242.1106(a) for information on the use of earned value 
management systems and the use of cost/schedule status reports.


234.005-70 and 234.005-71  [Removed]

0
5. Sections 234.005-70 and 234.005-71 are removed.

PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
6. Section 242.1106 is amended by revising paragraph (a) to read as 
follows:


242.1106  Reporting requirements.

    (a) See DoDI 5000.2, Operation of the Defense Acquisition System, 
for reporting requirements for defense technology projects and 
acquisition programs. Table E3.T2. of DoDI 5000.2 specifies the earned 
value management system (EVMS) thresholds. When an offeror proposes an 
EVMS plan, follow the review procedures at PGI 242.1106(a). The Defense 
Acquisition Guidebook provides additional guidance on earned value 
management and identifies when cost/schedule status reports are 
applicable.
* * * * *

0
7. Section 242.1107-70 is revised to read as follows:


242.1107-70  Solicitation provisions and contract clauses.

    (a) When the Government requires contractor compliance with DoD 
earned value management system criteria--
    (1) Use the provision at 252.242-7001, Notice of Earned Value 
Management System, in solicitations; and
    (2) Use the clause at 252.242-7002, Earned Value Management System, 
in solicitations and contracts.
    (b) Use the clause at 252.242-7005, Cost/Schedule Status Report, in 
solicitations and contracts that require cost/schedule status reports 
(i.e., when the Contract Data Requirements List includes DI-MGMT-
81467).
    (c) Use the provision at 252.242-7006, Cost/Schedule Status Report 
Plans, in solicitations that require cost/schedule status reports.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.234-7000 and 252.234-7001  [Removed]

0
8. Sections 252.234-7000 and 252.234-7001 are removed.

0
9. Sections 252.242-7001 and 252.242-7002 are added to read as follows:


252.242-7001  Notice of Earned Value Management System.

    As prescribed in 242.1107-70(a)(1), use the following provision:

    NOTICE OF EARNED VALUE MANAGEMENT SYSTEM (MAR 2005)
    (a) The offeror shall provide documentation that the cognizant 
Administrative Contracting Officer has recognized that the proposed 
earned value management system (EVMS) complies with the EVMS 
criteria of DoDI 5000.2, Operation of the Defense Acquisition 
System, or that the proposed cost/schedule control system has been 
accepted by the Department of Defense.
    (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 
criteria.
    (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 32 EVMS 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 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 criteria. The prime contractor and 
the Government shall agree to subcontractors selected for 
application of the EVMS criteria.
    (End of provision)


[[Page 14576]]




252.242-7002  Earned Value Management System.

    As prescribed in 242.1107-70(a)(2), use the following clause:

    EARNED VALUE MANAGEMENT SYSTEM (MAR 2005)
    (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 DoDI 5000.2, Operation of 
the Defense Acquisition System.
    (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 that has been accepted by the Department of Defense), 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 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 (1) contract award, (2) the 
exercise of significant contract options, or (3) the 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.
    (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 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 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 following subcontractors to 
comply with the requirements of this clause:
    (Contracting Officer to insert names of subcontractors selected 
for application of EVMS criteria in accordance with 252.242-
7001(c).)
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    (End of clause)

0
10. Section 252.242-7005 is amended by revising the introductory text, 
the clause date, and paragraph (c) to read as follows:


252.242-7005  Cost/Schedule Status Report.

    As prescribed in 242.1107-70(b), use the following clause:

    COST/SCHEDULE STATUS REPORT (MAR 2005)
* * * * *
    (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 DoDI 5000.2, Operation of the Defense 
Acquisition System.

* * * * *

0
11. Section 252.242-7006 is amended by revising the introductory text, 
the clause date, and paragraph (b) to read as follows:


252.242-7006  Cost/Schedule Status Report Plans.

    As prescribed in 242.1107-70(c), use the following provision:
    COST/SCHEDULE STATUS REPORT PLANS (MAR 2005)
* * * * *
    (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 DoDI 5000.2, Operation of the Defense Acquisition 
System, 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. 05-5626 Filed 3-22-05; 8:45 am]
BILLING CODE 5001-08-P