Earned Value Management

Deficiencies in Validated EVMS

Deficiencies may be uncovered either in the Earned Value Management (EVM) system processes or in the consistency and discipline of the validated processes. These deficiencies may be discovered during routine surveillance, during analysis of performance data or during team reviews. The information provided details the specific area(s) of deviation. The procuring activity and EVM Support Staff should be notified of major deficiencies and advice should be obtained from all parties. The following process should be followed by the Government and contractor to restore compliance and discipline. This process is designed to provide the contractor an opportunity to correct deficiencies prior to formal withdrawal of the company’s EVMS validation. [1]

Application
The uniform and consistent application of actions and remedies for EVMS non-compliance is essential for promoting contractor-initiated corrective action. This requires an awareness and understanding of regulatory policies, correct identification of the problem areas, and selecting and implementing appropriate actions and remedies. The appropriate use of contractual actions and remedies is required to protect the Government’s interest if non-compliance occurs. These need to be commensurate with the impact to the Government correlated to the value to the Government of the non-compliance. EVMS value to the Government may be significantly greater than its absolute cost. The loss of valid performance measurement data may limit the Government’s ability to measure the contractor’s progress on a contract which may increase the probability of unearned progress payments. When DFARS Subpart 252.234-7002 EVMS, is included in a contract, the contractor’s performance measurement system becomes a material requirement. The information below is for application to EVMS non-compliance issues. [1]

Actions
The following actions and remedies are initiated after discussion with or recommendations by the Program Management Office (PMO), Program Contracting Officer (PCO), Contract Management Office (CMO) and Administrative Contracting Officer (ACO): [1]

  • Issue letter of concern notifying the contractor of a specific problem and requesting additional information or a corrective action plan with get well dates.
  • Reduce or suspend progress payments (Fixed-Price Incentive Fee (FPIF) contracts) when contract requirements are not met (FAR 32.503-6).
  • Reduce contractor billings when EVMS deliverable reports are unacceptable and payments should be recouped (cost-type and FPIF contracts).
  • Reduce overhead billing rates when overhead payments to the contractor have not been earned and should be recouped (cost-type and FPIF contracts). Prior to implementing, coordinate with the Defense Contract Audit Agency (DCAA).
  • Full compliance with ANSI/EIA-748 may be used as a factor in award fee determination.
  • Inform the contracting officer that an EVMS non-compliance issue is endangering contract performance and recommend a Cure Notice be issued.
  • Inform the contracting officer that a condition(s) endangering performance (described in contracting officer cure notice) has not been corrected and recommend issuance of a Show Cause Notice. (This is a last resort measure and a contract is rarely terminated for EVMS non-compliance).

Remedies
The following remedies may be initiated by the contracting officer after discussion with, or recommendations by, the PMO or CMO: [1]

  • negotiate a reduction in contract price
  • issue a Cure Notice
  • issue a Show Cause Notice

AcqTips:

  • The DoD has accepted the ANSI/EIA-748 – American National Standards Institute/Electronic Industries Alliance Standard 748, Earned Value Management Systems as the DoD standard

AcqLinks and References:

Updated: 6/15/2018

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