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(Revised November 9, 2005)

 

 



 252.242-7000 Reserved.
 252.242-7001 Notice of Earned Value Management System.
 252.242-7002 Earned Value Management System.

 252.242-7003 Application for U.S. Government Shipping Documentation/Instructions.
 252.242-7004 Material Management and Accounting System.
 252.242-7005 Cost/Schedule Status Report.
 252.242-7006 Cost/Schedule Status Report Plans.


252.242-7000  Reserved.

 

252.242-7001  Notice of Earned Value Management System.

As prescribed in 242.1107-70(a)(1), use the following provision:

 

NOTICE OF EARNED VALUE MANAGEMENT SYSTEM (MAR 2005)

 

      (a)  The offeror shall provide documentation that the cognizant Administrative Contracting Officer has recognized that the proposed earned value management system (EVMS) complies with the EVMS criteria of DoDI 5000.2, Operation of the Defense Acquisition System, or that the proposed cost/schedule control system has been accepted by the Department of Defense.

 

      (b)  If the offeror proposes to use a system that does not meet the requirements of paragraph (a) of this provision, the offeror shall submit a comprehensive plan for compliance with the EVMS criteria.

 

              (1)  The plan shall—

 

                    (i)  Describe the EVMS the offeror intends to use in performance of the contract;

 

                    (ii)  Distinguish between the offeror's existing management system and modifications proposed to meet the criteria;

 

                    (iii)  Describe the management system and its application in terms of the 32 EVMS criteria;

 

                    (iv)  Describe the proposed procedure for administration of the criteria as applied to subcontractors; and

 

                    (v)  Provide documentation describing the process and results of any third-party or self-evaluation of the system’s compliance with EVMS criteria.

 

              (2)  The offeror shall provide information and assistance as required by the Contracting Officer to support review of the plan.

 

              (3)  The Government will review the offeror’s plan for EVMS before contract award.

 

      (c)  Offerors shall identify the major subcontractors, or major subcontracted effort if major subcontractors have not been selected, planned for application of the criteria.  The prime contractor and the Government shall agree to subcontractors selected for application of the EVMS criteria.

 

(End of provision)

 

252.242-7002  Earned Value Management System.

As prescribed in 242.1107-70(a)(2), use the following clause:

 

EARNED VALUE MANAGEMENT SYSTEM (MAR 2005)

 

      (a)  In the performance of this contract, the Contractor shall use an earned value management system (EVMS) that has been recognized by the cognizant Administrative Contracting Officer (ACO) as complying with the criteria provided in DoDI 5000.2, Operation of the Defense Acquisition System.

 

      (b)  If, at the time of award, the Contractor’s EVMS has not been recognized by the cognizant ACO as complying with EVMS criteria (or the Contractor does not have an existing cost/schedule control system that has been accepted by the Department of Defense), the Contractor shall apply the system to the contract and shall be prepared to demonstrate to the ACO that the EVMS complies with the EVMS criteria referenced in paragraph (a) of this clause.

 

      (c)  The Government may require integrated baseline reviews.  Such reviews shall be scheduled as early as practicable and should be conducted within 180 calendar days after (1) contract award, (2) the exercise of significant contract options, or (3) the incorporation of major modifications.  The objective of the integrated baseline review is for the Government and the Contractor to jointly assess areas, such as the Contractor’s planning, to ensure complete coverage of the statement of work, logical scheduling of the work activities, adequate resourcing, and identification of inherent risks.

 

      (d)  Unless a waiver is granted by the ACO, Contractor-proposed EVMS changes require approval of the ACO prior to implementation.  The ACO shall advise the Contractor of the acceptability of such changes within 30 calendar days after receipt of the notice of proposed changes from the Contractor.  If the advance approval requirements are waived by the ACO, the Contractor shall disclose EVMS changes to the ACO at least 14 calendar days prior to the effective date of implementation.

 

      (e)  The Contractor agrees to provide access to all pertinent records and data requested by the ACO or duly authorized representative.  Access is to permit Government surveillance to ensure that the EVMS complies, and continues to comply, with the criteria referenced in paragraph (a) of this clause.

 

      (f)  The Contractor shall require the following subcontractors to comply with the requirements of this clause:

 

              (Contracting Officer to insert names of subcontractors selected for application of EVMS criteria in accordance with 252.242-7001(c).)

 

 

 

 

 

 

(End of clause)

 

252.242-7003  Application for U.S. Government Shipping Documentation/
Instructions.

As prescribed in 242.1404-2-70, use the following clause:

 

APPLICATION FOR U.S. GOVERNMENT SHIPPING DOCUMENTATION/INSTRUCTIONS (DEC 1991)

 

The Contractor shall request Government bills of lading by submitting a DD Form 1659, Application for U.S. Government Shipping Documentation/Instructions, to the—

 

      (a)  Transportation Officer, if named in the contract schedule; or

 

      (b)  Contract administration office.

 

(End of clause)

 

252.242-7004  Material Management and Accounting System.

As prescribed in 242.7204, use the following clause:

 

MATERIAL MANAGEMENT AND ACCOUNTING SYSTEM (NOV 2005)

 

      (a)  Definitions.  As used in this clause—

 

              (1)  “Material management and accounting system (MMAS)” means the Contractor's system or systems for planning, controlling, and accounting for the acquisition, use, issuing, and disposition of material.  Material management and accounting systems may be manual or automated.  They may be stand-alone systems or they may be integrated with planning, engineering, estimating, purchasing, inventory, accounting, or other systems.

 

              (2)  “Valid time-phased requirements” means material that is—

 

                    (i)  Needed to fulfill the production plan, including reasonable quantities for scrap, shrinkage, yield, etc.; and

 

                    (ii)  Charged/billed to contracts or other cost objectives in a manner consistent with the need to fulfill the production plan.

 

              (3)  “Contractor” means a business unit as defined in section 31.001 of the Federal Acquisition Regulation (FAR).

 

      (b)  General.  The Contractor shall—

 

              (1)  Maintain an MMAS that—

 

                    (i)  Reasonably forecasts material requirements;

 

                    (ii)  Ensures that costs of purchased and fabricated material charged or allocated to a contract are based on valid time-phased requirements; and

 

                    (iii)  Maintains a consistent, equitable, and unbiased logic for costing of material transactions; and

 

              (2)  Assess its MMAS and take reasonable action to comply with the MMAS standards in paragraph (e) of this clause.

 

      (c)  Disclosure and maintenance requirements.  The Contractor shall—

 

              (1)  Have policies, procedures, and operating instructions that adequately describe its MMAS;

 

              (2)  Provide to the Administrative Contracting Officer (ACO), upon request, the results of internal reviews that it has conducted to ensure compliance with established MMAS policies, procedures, and operating instructions; and

 

              (3)  Disclose significant changes in its MMAS to the ACO at least 30 days prior to implementation.

 

      (d)  Deficiencies.

 

              (1)  If the Contractor receives a report from the ACO that identifies any deficiencies in its MMAS, the Contractor shall respond as follows:

 

                    (i)  If the Contractor agrees with the report findings and recommendations, the Contractor shall—

 

                            (A)  Within 30 days (or such other date as may be mutually agreed to by the ACO and the Contractor), state its agreement in writing; and

 

                            (B)  Within 60 days (or such other date as may be mutually agreed to by the ACO and the Contractor), correct the deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies.

 

                    (ii)  If the Contractor disagrees with the report findings and recommendations, the Contractor shall, within 30 days (or such other date as may be mutually agreed to by the ACO and the Contractor), state its rationale for each area of disagreement.

 

              (2)  The ACO will evaluate the Contractor's response and will notify the Contractor in writing of the—

 

                    (i)  Determination concerning any remaining deficiencies;

 

                    (ii)  Adequacy of any proposed or completed corrective action plan; and

 

                    (iii)  Need for any new or revised corrective action plan.

 

              (3)  When the ACO determines the MMAS deficiencies have a material impact on Government contract costs, the ACO must reduce progress payments by an appropriate percentage based on affected costs (in accordance with FAR 32.503-6) and/or disallow costs on vouchers (in accordance with FAR 42.803) until the ACO determines that--

 

                    (i)  The deficiencies are corrected; or

 

                    (ii)  The amount of the impact is immaterial.

 

              (4)  If the Contractor fails to make adequate progress, the ACO must take further action.  The ACO may—

 

                    (i)  Elevate the issue to higher level management;

 

                    (ii)  Further reduce progress payments and/or disallow costs on vouchers;

 

                    (iii)  Notify the Contractor of the inadequacy of the Contractor’s cost estimating system and/or cost accounting system; and

 

                    (iv)  Issue cautions to contracting activities regarding the award of future contracts.

 

      (e)  MMAS standards.  The MMAS shall have adequate internal controls to ensure system and data integrity, and shall--

 

              (1)  Have an adequate system description including policies, procedures, and operating instructions that comply with the FAR and Defense FAR Supplement;

 

              (2)  Ensure that costs of purchased and fabricated material charged or allocated to a contract are based on valid time-phased requirements as impacted by minimum/economic order quantity restrictions.

 

                    (i)  A 98 percent bill of material accuracy and a 95 percent master production schedule accuracy are desirable as a goal in order to ensure that requirements are both valid and appropriately time-phased.

 

                    (ii)  If systems have accuracy levels below these, the Contractor shall provide adequate evidence that—

 

                            (A)  There is no material harm to the Government due to lower accuracy levels; and

 

                            (B)  The cost to meet the accuracy goals is excessive in relation to the impact on the Government;

 

              (3)  Provide a mechanism to identify, report, and resolve system control weaknesses and manual override.  Systems should identify operational exceptions such as excess/residual inventory as soon as known;

 

              (4)  Provide audit trails and maintain records (manual and those in machine readable form) necessary to evaluate system logic and to verify through transaction testing that the system is operating as desired;

 

              (5)  Establish and maintain adequate levels of record accuracy, and include reconciliation of recorded inventory quantities to physical inventory by part number on a periodic basis.  A 95 percent accuracy level is desirable.  If systems have an accuracy level below 95 percent, the Contractor shall provide adequate evidence that—

 

                    (i)  There is no material harm to the Government due to lower accuracy levels; and

 

                    (ii)  The cost to meet the accuracy goal is excessive in relation to the impact on the Government;

 

              (6)  Provide detailed descriptions of circumstances that will result in manual or system generated transfers of parts;

 

              (7)  Maintain a consistent, equitable, and unbiased logic for costing of material transactions as follows:

 

                    (i)  The Contractor shall maintain and disclose written policies describing the transfer methodology and the loan/pay-back technique.

 

                    (ii)  The costing methodology may be standard or actual cost, or any of the inventory costing methods in 48 CFR 9904.411-50(b).  The Contractor shall maintain consistency across all contract and customer types, and from accounting period to accounting period for initial charging and transfer charging.

 

                    (iii)  The system should transfer parts and associated costs within the same billing period.  In the few instances where this may not be appropriate, the Contractor may accomplish the material transaction using a loan/pay-back technique.  The “loan/
pay-back technique” means that the physical part is moved temporarily from the contract, but the cost of the part remains on the contract.  The procedures for the loan/pay-back technique must be approved by the ACO.  When the technique is used, the Contractor shall have controls to ensure—

 

                            (A)  Parts are paid back expeditiously;

 

                            (B)  Procedures and controls are in place to correct any overbilling that might occur;

 

                            (C)  Monthly, at a minimum, identification of the borrowing contract and the date the part was borrowed; and

 

                            (D)  The cost of the replacement part is charged to the borrowing contract;

 

              (8)  Where allocations from common inventory accounts are used, have controls (in addition to those in paragraphs (e)(2) and (7) of this clause) to ensure that—

 

                    (i)  Reallocations and any credit due are processed no less frequently than the routine billing cycle;

 

                    (ii)  Inventories retained for requirements that are not under contract are not allocated to contracts; and

 

                    (iii)  Algorithms are maintained based on valid and current data;

 

              (9)  Regardless of the provisions of FAR 45.505-3(f)(1)(ii), have adequate controls to ensure that physically commingled inventories that may include material for which costs are charged or allocated to fixed-price, cost-reimbursement, and commercial contracts do not compromise requirements of any of the standards in paragraphs (e)(1) through (8) of this clause.  Government-furnished material shall not be—

 

                    (i)  Physically commingled with other material; or

 

                    (ii)  Used on commercial work; and

 

              (10)  Be subjected to periodic internal reviews to ensure compliance with established policies and procedures.

 

(End of clause)

 

252.242-7005  Cost/Schedule Status Report.

As prescribed in 242.1107-70(b), use the following clause:

 

COST/SCHEDULE STATUS REPORT (MAR 2005)

 

      (a)  The Contractor shall use management procedures in the performance of this contract that provide for—

 

              (1)  Planning and control of costs;

 

              (2)  Measurement of performance (value for completed tasks); and

 

              (3)  Generation of timely and reliable information for the cost/schedule status report (C/SSR).

 

      (b)  As a minimum, these procedures must provide for—

 

              (1)  Establishing the time-phased budgeted cost of work scheduled (including work authorization, budgeting, and scheduling), the budgeted cost for work performed, the actual cost of work performed, the budget at completion, the estimate at completion, and provisions for subcontractor performance measurement and reporting;

 

              (2)  Applying all direct and indirect costs and provisions for use and control of management reserve and undistributed budget;

 

              (3)  Incorporating changes to the contract budget base for both Government directed changes and internal replanning;

 

              (4)  Establishing constraints to preclude subjective adjustment of data to ensure that performance measurement remains realistic.  The total allocated budget may exceed the contract budget base only after consultation with the Contracting Officer.  For cost-reimbursement contracts, the contract budget base shall exclude changes for cost growth increases, other than for authorized changes to the contract scope; and

 

              (5)  Establishing the capability to accurately identify and explain significant cost and schedule variances, both on a cumulative basis and projected at completion basis.

 

      (c)  The Contractor may use a cost/schedule control system that has been recognized by the cognizant Administrative Contracting Officer (ACO) as complying with the earned value management system criteria provided in DoDI 5000.2, Operation of the Defense Acquisition System.

 

      (d)  The Government may require integrated baseline reviews.  Such reviews shall be scheduled as early as practicable and should be conducted within 180 calendar days after (1) contract award, (2) the exercise of significant contract options, or (3) the incorporation of major modifications.  The objective of the integrated baseline review is for the Government and the Contractor to jointly assess areas, such as the Contractor’s planning, to ensure complete coverage of the statement of work, logical scheduling of the work activities, adequate resourcing, and identification of inherent risks.

 

      (e)  The Contractor shall provide access to all pertinent records, company procedures, and data requested by the ACO, or authorized representative, to—

 

              (1)  Show proper implementation of the procedures generating the cost and schedule information being used to satisfy the C/SSR contractual data requirements to the Government; and

 

              (2)  Ensure continuing application of the accepted company procedures in satisfying the C/SSR data item.

 

      (f)  The Contractor shall submit any substantive changes to the procedures and their impact to the ACO for review.

 

      (g)  The Contractor shall require a subcontractor to furnish C/SSR in each case where the subcontract is other than firm-fixed-price, is 12 months or more in duration, and has critical or significant tasks related to the prime contract.  Critical or significant tasks shall be defined by mutual agreement between the Government and Contractor.  Each subcontractor's reported cost and schedule information shall be incorporated into the Contractor's C/SSR.

 

(End of clause)

 

252.242-7006  Cost/Schedule Status Report Plans.

As prescribed in 242.1107-70(c), use the following provision:

 

COST/SCHEDULE STATUS REPORT PLANS (MAR 2005)

 

      (a)  The offeror shall submit a written summary of the management procedures it will establish, maintain, and use in the performance of any resultant contract to comply with the requirements of the clause at 252.242-7005, Cost/Schedule Status Report.

 

      (b)  If the offeror proposes to use a cost/schedule control system that has been recognized by the cognizant Administrative Contracting Officer as complying with the earned value management system criteria of DoDI 5000.2, Operation of the Defense Acquisition System, the offeror may submit a copy of the documentation of such recognition instead of the written summary required by paragraph (a) of this provision.

 

(End of provision)

 


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