DoD Contracts and EVM Requirements: Worth a Second Look for Program Managers

14 Dec

I’ve written somewhat frequently on the benefits of quantitative management of IT programs, and specifically on some of the problems faced by defense contractors in aligning industry best-practice to ANSI-748 EVM control requirements.  I’m certainly not the only voice that’s advocated for reform on the acquisitions side of the house, and there are more than a few good perspectives in: alignment with Agile practices, Earned Value for Business Value, CMMI support for EVM, and the various tools and processes to make it all work together.  I’d therefore be remiss, if I didn’t open this post up by giving credit where it’s due. My perspective in this domain has been heavily influenced by Dale G., Glen B. Alleman, Paul J. Solomon, all the contributors on the StackExchange network, and a significant number of papers in both the academic and practitioner literature.  For anyone interested, I’ll post my reference library as a BibTex entry at a later date, or feel free to contact me on any site I frequent and I’ll package up the pertinent parts to send you.

The issue of compliance has been particularly troublesome for those projects that are effectively fixed in terms of cost (i.e. the contract award value) and resources (i.e. the bid LoE supporting the effort), while the scope of any particular work package tends to be flexible (e.g. sustainment, maintenance, or Agile development). Though I’ve argued that the DMCA guidance and intent statement in conjunction with the ANSI specification itself both allow for the use of Technical Performance Measures (TPMs) as a method of tracking progress-to-plan; the assignment of value to technical tasks, construction of the Integrated Master Schedule (IMS), and development of the Work Breakdown Structure (WBS) is often constrained by the Statement of Work (SoW)/Performance Work Statement (PWS), or acquisition (AQ) process.

Thankfully, a footnote and minor change to the November 26, 2013 reissuance of DoD 5000.02, streamlines a lot of this effort, particularly for those programs under the $50M threshold. Though this particular language gives 180 days to redevelop the guidance, the interim instruction appears specifically intended to better facilitate the acquisitions process, and very well could be read to open the TPM method of metric utilization by aligning more to the Systems Engineering sub-processes.

DoD 5000.2 EVM Requirement - November 26, 2013

This change reinvigorates my original argument, and while the DCMA has allowed this type of cost-allocation to technical measures for some time; acquisitions (AQ) have been constrained in the application.  Realizing that many smaller programs bore an undue level of overhead generating financial metrics that didn’t necessarily trace back to the value being derived, and that numerous projects using EVM in a strict application to comply with AQ policy have failed provide effective measures for program managers, it seems that we’re finally getting there.  The option for AQ to define EV on technical measures can be used to tightly align industry best-practices (e.g. Agile, Kanbam, CMMI, ITIL, or ISO processes) back to the EVM standard, and enable us to price contracts more competitively.  Without the additional overhead and financial wizardry necessary to get a non-EVM program to report as if it were; and with the ability to “manage by the numbers” it opens an avenue for much more productive programs, and reduction in taxpayer funded waste.

The biggest surprise, however, lies in what’s missing.  A close look at the EVM requirements themselves, as outlined below shows that task orders above $20M but below $50M must use a system that’s compliant with the EVM guidelines (and there for the optional use of TPM), but not a formally validated EVMS.

For the near-future, it would certainly appear that smaller projects, and particularly those supporting more fluid requirements that are realistically best-described as Level of Effort and/or Time and Materials (T&M) types of contracts, have had the noose loosened a notch.  I’d certainly advise any PM in the industry that’s under this requirement to take a closer look … you might find that you’ve got the opportunity to improve not only your reporting, but the processes themselves to gain efficiency and analytic intelligence for continuous improvement.

As with everything else on this site, I hope to hear your thoughts. Contact me, or leave your comments below & I’ll do my best to get back to you.


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Posted by on December 14, 2013 in Business


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