EVM to go farther

Proposed Rule: Federal Acquisition Regulation; Earned Value Management System

Office of Management and Budget officials are becoming increasingly persistent in urging agencies to adopt earned value management (EVM) oversight of major capital projects.

A proposed rule change to the Federal Acquisition Regulation would standardize EVM execution and use for all major federal government acquisitions, including information technology services. Other likely candidates for EVM oversight include supplies and equipment and construction, a Federal Register notice states. Comments are due by June 7.

Earned value management systems collect near-real-time data on a project's current status measured against its original cost and timeline projections. Only the Defense Department, NASA and a few other agencies have developed EVM policies, according to the notice. Use of the management technique in major IT projects is already a prerequisite for a green score in the e-government column of the quarterly President's Management Agenda score card.

Defining the progress baseline for contractors will require substantial collaboration between the government and commercial sectors, said Alan Chvotkin, senior vice president and counsel of the Professional Services Council, an industry association. That may be especially true for IT services, where neither the outcome nor the baseline are immediately tangible, so "the reporting might be a little less definitive than something like a manufacturing process," Chvotkin said.

Blanket application of an EVM requirement may not be the best oversight method, he added.

"We're nervous when government decides it ought to be applied like peanut butter," Chvotkin said. "Whether or not procurements require it or not should be part of a wider procurement strategy. In some cases, there's no reason for the government to have to pay for it."

The proposed rule change could have a significant economic impact on a substantial number of small businesses because contractors would be required to set up EVM systems, the Register notices states.

Although the Register notice uses a $20 million threshold to conduct an analysis of the possible affects on small businesses, individual agencies can classify for themselves the dollar amount that defines a major acquisition, OMB officials responded in an e-mail to Federal Computer Week. The notice does state that OMB does not expect EVM oversight "on acquisitions at or below $20 million total cost."

Using any dollar threshold as key variable for when EVM should be applied would be a mistake, Chvotkin said. "The fact that a procurement is larger than that threshold doesn't mean that it's a right candidate for EVM reporting, and the fact that something is below that doesn’t mean it might not be appropriate," he said.

EVM is "scalable and therefore applicable to any size and type of investment," OMB officials told Federal Computer Week.

The notice specifically asks for comment on whether the baseline review against which contractors will be held responsible should be conducted before or after the contract award. Traditionally, baseline reviews have been conducted post-award because of the cost and time involved, OMB officials said.

About the Author

David Perera is a special contributor to Defense Systems.

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