1 Program Management Systems Committee (PMSC) Contract / Subcontract Issues Working Group Industry Issues and Position Summary 13 August 2008

2 Issues List  The following issues have been addressed by the Contracts Working Group and consensus has been reached among industry and government participants concerning next steps: –Contract vs. EVM system order of precedence. –Subcontractor compliance, validation and surveillance –Knowledge gap between EVM and contracting communities –Integrated and virtual team (badgeless) subcontracting teaming arrangements –DCMA EV Standard Surveillance Operating Manual (SSOM)  DCMA EV Center is establishing a position paper on each of these issues. After a review by other DOD segments, the position paper, which will represent a consolidated DOD position, will be published. Position Paper Under Review  The actions contained herein will be executed through a collaborative industry / government effort  Dr. Finley has requested that these issues be worked and closed out.

3  In addition to including FAR or DFARS EVMS clauses on contracts, contracting officers frequently include other provisions that often require suppliers to modify or depart from their standard, validated EVM Systems to manage their contracts and meet the requirements of their contracts. These provisions may be found in sections of the contract that take precedence over Section I, where the EVMS clauses are contained, e.g., –Section H – Special Provisions –Section C – Statement of Work requirements  DCMA’s stated policy was to issue Corrective Action Request (s) against the contractor for following contract direction. Issue Order of Precedence  In the sprit of cooperation the Contractor and the cognizant CMO should notify the PCO of the conflicting requirements  The DCMA CMO and the PCO should reach a solution with the government PM which precludes noncompliance with either the ANSI or the contractor’s validated EVMS  DCMA Director has instructed the EV Center not to initiate CARs when an inconsistency exists  DCMA must issue a communication regarding this position to all CMOs and EV Center personnel.  Contractors are obligated to follow the contracts. Update: Due to recent developments DCMA will revisit the 1716 process and is reevaluating its position on this issue.. Team Position

4 Issue  Previously a subcontractor had the ability to request one of three options when required to have a validated EVMS; the EVMIG and other guidance documents vested primary responsibility in the prime contractor. 1)Prime Contractor Review Only 2)DCMA Review Only 3)DCMA and Prime Contractor Review  October 2006, DCMA revised the EVMIG to make option 2 the sole available option  The EVMIG may conflict with NDIA EVMS System Acceptance Guide since it appears to categorically eliminate alternative approaches, e.g., 3 rd party as well as reciprocity, i.e., recognition of acceptance by another agency Subcontractor Compliance, Validation and Surveillance  Validation / Compliance Reviews: DCMA has taken over responsibility for subcontractor validation and surveillance, however prime contractors will be encouraged to participate in subcontractor validation and/or compliance reviews since they retain responsibility for –Subcontractor performance –Accuracy and fidelity of CPRs, including reported subcontractor data  Suppliers with DoD contracts must review their system descriptions to ensure they comply with recent change in responsibility for subcontractor validation and surveillance.  Surveillance: Program- DCMA prime will issue a LOD to the Subcontractor DCMA for ongoing program surveillance. System - Normal joint system surveillance will take place. Prime may be part of the review. Team Agreement

5  Evidence that EVM and Contracting experts are not collaborating, via IPTs, on the contractual application and use of EVMS during acquisition planning  Evidence of this is as follows: – Incorrect flow down and/or omission of EVM contractual requirements. – Improper contract direction forcing the contractor or subcontractor to violate their approved system. – Over application of EVM requirements – Improper application of requirements for follow on options – Improper use of Management Reserve (MR) – Integrated Baseline Review (IBR) timing IssueTeam Position EVM Knowledge Gap  NDIA PMSC should establish an Industry / Government team to generate a training package which can be delivered to all federal agencies and contractor organizations. Update: D. Tomsic developed/delivered this training on 7/29/08 through NCMA audio seminar. Industry will review material to ensure it is acceptable to a broader audience.  Issue DOD “EVM Contract Requirements Checklist” under OUSD signature to all commands. Update: DPAP correspondence drafted “EVMS Requirements and Reporting.” Will reference checklist with link to web site to obtain current version.  DOD is considering the establishment of a common Procurement Initiation Document (PID) process to review contract requirements prior to solicitation. Update: Being actively worked within OSD.

6  The use of a single EVMS by all program participants to manage large programs involving major subcontractors is viewed as non-compliant to the DFARS EVMS clause by DCMA. – This approach also referred to as badgeless, virtual, or gray badge. – Characterized by adoption of a single validated system to manage the effort (typically the prime’s EVMS), use of a common tool set, integrated schedules and performance reporting. Issue  Team will review matrix and establish general guidance for various types of integrated solutions. Update:  Establish Matrix of Variable Implementations – Complete.  Update Matrix to Establish Validation, Compliance and System Surveillance Responsibilities.  Completed guidance will be communicated through NDIA PMSC and agreed to via letter correspondence.  Published in the EVMIG.  Schedule weekly meetings through September and October to achieve industry closure. Integrated Subcontract EVMS Implementations Industry Position

7 Issue Standard Surveillance Operating Manual (SSOM)  DCMA EV Standard Surveillance Plan (SSP) will be implemented throughout the agency without being distributed for comment.  Issues include but are not limited to: –Existing AA provisions allowing system description change after ACO notification. –Review and adjudication of all CARs by the EV Center. –Risk Based Surveillance approach appears to eliminate contractor input. –Level of detail and amount of data requests to support surveillance have increased. –Training and Implementation - Demonstrated DCMA response time for final reports and system description changes must be improved. –Relationship of NDIA Intent Guide to the surveillance  PMSC Clearinghouse has received input related to issues arising from surveillance experiences since SSOM took effect  NDIA PMSC will work with DCMA to achieve a timely review and closure on any areas of concern. Update : DCMA has agreed to break out separate small group of Industry and Government participants to review the process and make recommendations. Industry Representatives –Northrop Grumman: Gay Infanti –Raytheon: Jeff Poulson –Pratt & Whitney: Mike Martin –DCMA EV Center: Donna Holden, TBD, TBD Team wishes to start in advance of EV Center availability. Schedule weekly meetings through September and October to establish industry draft. Team Position