EVM 202—Lesson 5 EVMS Surveillance September 2016 EVM 202—Lesson 5 EVMS Surveillance

Lesson 5 Learning Objectives Terminal Objective Describe the Earned Value Management System (EVMS) surveillance purpose and process Enabling Objectives Describe Department of Defense (DoD) policy related to EVMS surveillance Describe the Defense Contract Management Agency (DCMA) surveillance process Describe the DCMA Corrective Action Request (CAR) process Describe EVMS noncompliance remediation options Describe the working relationships of the Program Management Office (PMO) and contractor in the surveillance process

EVMS Surveillance Purpose Purpose of Surveillance—Surveillance is a recurring process conducted by DCMA, Supervisor of Shipbuilding, Conversion and Repair (SUPSHIP), or other cognizant Federal agency that assesses the continuing compliance of the contractor’s EVMS with Electronic Industries Alliance Standard-748 (EIA-748) and the contractor’s written system documentation Policy—DCMA surveillance of management control systems is required for all contract efforts ≥ 100M that require Earned Value Management (EVM) compliance with the EIA-748 Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.234-7002 establishes the contractual authority for EVMS surveillance; requirement cannot be eliminated by PMO

DoDI 5000.02 EVM Policy Guidance Enclosure 1 Table 8 EVM Application Requirements Enabling Learning Objective ELO 2.1: Demonstrate the EVM applicability to a contract ELO 2.5: Apply appropriate Integrated Program Management Report (IPMR) tailoring Instructor Guidance Walk students through the DoDI 5000.02 EVM policy shown on this slide. Briefly discuss EVM policy as it relates to other types of contracts (e.g., major modifications; LRIP, etc.) Notes This slide reflects the DoDI 5000.02 EVM requirements, including the Defense Procurement and Acquisition Policy (DPAP) Interim Deviation. This policy grew out of a March 2005 policy that requires an EVMS on cost or incentive contracts, subcontracts, and intra-government work agreements greater than or equal to $20 million then-year (TY). For efforts greater than or equal to $100 million TY, the EVMS must be formally approved by the contracting officer. Implementing EVM on contracts less than $20 million is a risk-based decision at the discretion of the program manager and requires a cost-benefit analysis. EVM policy also requires use of a common Work Breakdown Structure (WBS) in accordance with the DoD MIL-STD-881 (current version), which is now incorporated into the Data Item Description (DID). EVM is discouraged for DoD firm-fixed-price (FFP), level of effort (LOE), and time-and-materials (T&M) contracts, as well as contracts less than or equal to 12 months in duration. Note that: DFARS Clause 252.234-7002, Earned Value Management System (DEVIATION) (SEP 2015) raised the compliance review threshold from $50 million to $100 million. DI-MGMT-81861 (current version) supersedes the Contract Performance Report (CPR) and Integrated Master Schedule (IMS) DIDs for contracts awarded based on solicitations or RFPs issued on or after July 1, 2012 (See the next slide for details). The IPMR DID is required for contracts where DFARS 252.234-7002 applies.

Surveillance Verifies the EVMS A contractor’s processes and procedures continue to satisfy the EIA-748 EVMS guidelines A contractor’s processes and procedures are being followed appropriately The validity of the contractor’s performance data provided to the Government

EVMS Integrated Surveillance Team (IST) DCMA CMO EVM Specialist Program Support Team (PST) Program integrator/support program integrator Administrative Contracting Office (ACO) EVM Implementation Division (ID) PMO The contractor

DCMA EVM Surveillance Process When surveillance is required, all 32 guidelines evaluated within a three-year period Standard Surveillance Plan (SSP)—Developed by the EVM Specialist Minimum of four surveillance events per year Corrective Action Request (CAR)

EVMS Surveillance Plan Surveillance Selection Risk Matrix Formal DoD Program Office delegation is NOT required An SSP is required Begins at contract award and runs throughout the contract Uses a risk-based approach Requires quarterly surveillance covering all guidelines over a 36-month period Requires surveillance results be documented and communicated to stakeholders in a timely manner Annual EVMS Surveillance Schedule

DCMA Standard CAR Process CAR Severity Level I—Contractual non-compliance; no special management attention required to correct; directed at supplier working level Level II—Systemic and could affect EVMS; directed to supplier management level and copy sent to ACO Level III—Systemic and has affected EVMS and program performance; directed to supplier top management at site; contractual remedies possible Level IV—System has affected EVMS and multiple programs; directed to supplier corporate management; issued as part of contractual remedy notice

Remediation Flow Chart Financial Remediation Actions* Reduce or suspend progress payments Reduce contractor billings Reduce overhead billing rates Reduce award fee (must be factor) Negotiate a reduction in contract price Management System Remediation Actions* Review for cause/compliance review Withdraw management system approval Other* Issue Cure Notice Issue Show Cause Notice Create EVM Oversight Group Implement EVMS Senior Executive Review Board Submit Contractor Performance Assessment Report (CPAR) *Actions may be taken concurrently Withdrawal applies only to efforts ≥ $100M TY

Remedies Focused Surveillance Review (FSR) May result from routine surveillance or a PMO concern for IPMR data validity Purpose: To determine magnitude and systematic nature of concerns Review for Cause (RFC) Major Problem Identified Evaluates the contractor’s progress against the CAP Identifies remaining actions required to reaffirm system acceptability Ensure accuracy of performance data generated for Government contracts Determines if the system approval should be withdrawn

EVM Roles and Responsibilities Exercise Review the EVM Roles and Responsibilities reference on Blackboard: Team A—DCMA Team B—DCMA Earned Value Management Implementation Division (EVM ID) Team C—Program Management Office (PMO) Team D—Contractor Prepare a 5–10 minute briefing on your assigned role’s surveillance responsibilities (use easel paper)

Lesson 5 Summary Terminal Learning Objective (TLO) Describe the EVMS surveillance purpose and process Enabling Learning Objective (ELO) Describe DoD policy related to EVMS surveillance Describe the DCMA surveillance process Describe the DCMA CAR process Describe EVMS noncompliance remediation options Describe the working relationships of the PMO and contractor in the surveillance process