Lessons Learned (LL)
The PARCA EVM Interpretation and Issue Resolution (IIR) Process is the mechanism for requests to PARCA regarding existing DoD EVM policy and guidance. This process has lead to a group of best practices and common themes which are shared here.
Frequently Asked Questions (FAQ)
List of important information regarding Earned Value Management (EVM), EVM Policy, EVM Systems (EVMS), EVM Application, the Integrated Program Management Report (IPMR), and other related items.
Lessons Learned (LL)
LL001 - Earned Value Management on IDIQ Contracts.
- Example contract/program – Program to be awarded as an indefinite delivery/indefinite quantity (IDIQ) contract type with Task Orders (TO) to be released over the lifespan of the contract. IDIQs are a type of contract that provide for an indefinite quantity of supplies or services during a fixed period of time.
- Contract Type: TO’s will be released individually as Cost Plus Fixed Fee.
- Contract Value: Individual TOs generally will be less than $20M individually, but possibly some over $20M; IDIQ will be valued greater than $20M in total.
- Scope: These efforts will have a mix of development and service activities.
- Duration: Contract is expected to run for 7 years.
- EVM Applicability & Reporting.
- Per the DoDI 5000.02, “For Indefinite Delivery/Indefinite Quantity contracts, EVM will be applied to the individual task orders or group of related task orders.”
- A single TO or group of related TO’s that meet the thresholds for EVM, have scope that warrants the use of EVM, and have discrete, measurable, and schedulable activities, should have EVM applied.
- EVM is not applied to the IDIQ in total but the DFARS clauses and EVM CDRLs must be on the total IDIQ with a note stating they are applied at the TO or group of related TO level.
LL002 - Earned Value Management on FPIF Contracts.
- Example contract/program – Program originally planned for Firm Fixed Price (FFP) but planned now as a Fixed Price Incentive Firm (FPIF) contract due to acquisition decisions. EVM was not planned to be included and no EVM DFARS clauses were to be invoked.
- Contract Type: FPIF (but originally planned as FFP).
- Contract Value: Contract will be valued greater than $50M.
- Scope: Work efforts are as-needed refurbishment and production in nature.
- Duration: Contract is expected to run for 12 years.
- EVM Applicability & Reporting.
- Per the DoDI 5000.02, “EVM is required for Fixed-Price Incentive Fee development and integration contracts with measurable and discrete work scope. In cases where the work scope is not measurable and discrete, program offices should follow the process to obtain a DFARS deviation.”
- In this case, the work scope does not lend itself to the full rigors of EVM and EVMS so a deviation should be sought; other measures must be in place on contract to ensure the Government receives cost and schedule status, and that Program Management principles are followed
- If a deviation was not warranted, DFARS and IPMR CDRLs would be placed on contract.
Frequesntly Asked Questions(FAQ)
Q&As Regarding EVM Policy
- Earned Value Management (EVM) & EVM System (EVMS)
- What is Earned Value Management?
- EVM terms and acronyms.
- What are the EVM System (EVMS) guidelines?
- EVM for industry users.
- What are the EVM and EVMS requirements in DoD?
- Application of FAR EVM/EVMS clauses.
- When EVMS Defense Federal Acquisition Regulation Supplement (DFARS) clauses are updated and published, what are their effective dates for use on DoD contract?
- EVM Central Repository (CR) reporting requirements.
- Does the DoD EVM policy require pre-award IBRs? What is the IBR requirement?
- If a contract is rebaselined using an Over Target Baseline (OTB) or a single point adjustment, does that change the EVM requirements for the contract?
- What is the history of the EVM/EVMS thresholds?
- When deciding whether a DoD contract requires the use of EVM, how do I determine the contract value against which to apply the application thresholds?
- Reasons for DoD EVM application thresholds to be in then-year dollars rather than base-year dollars.
- What is the policy on the retroactivity of the requirement for EVMS validations for contractors performing work for DoD?
- If an existing contract, valued at less than $20 million, has a known contract modification that will increase the total value of the contract over the $20 million EVM application threshold, does the contract need to be modified to place the new EVM requirements on the contract?
- What types of contracts does the DoD EVM policy apply to? Does it apply to fixed price incentive contracts?
- Does the DoD EVM policy apply to programs or contracts that are not governed by the acquisition policy in the DoD 5000 series documents?
- DoD policy on applying EVM to Firm-Fixed Price (FFP) contracts.
- Is DoD policy on applying EVM to FFP contracts in conflict with OMBs direction?
- Can contractors use their internal EVMS to manage a DoD contract to which EVM is not being applied, e.g., a FFP contract?
- EVM application on mixed contracts (e.g., contract includes FFP CLINS and cost and/or incentive CLINS.
- EVM application where scope of work is “level of effort.”
- Deviations to DoD EVM policy.
- DoD EVM requirements flow-down for subcontractors.
- If I place funds transferred from a DoD organization on a non-DoD contract, does the DoD EVM policy apply?
- DoD EVM policy application to foreign suppliers.
- Where can I find the Integrated Program Management Report (IPMR)?
- On the IPMR Format 1, Section 8 (f) Management Reserve, column (15) is shaded. Does this mean that I cannot put management reserve in this cell?
- Is the Integrated Master Plan (IMP) required?
- If the requirement for an IMS is implemented on a contract option, must the existing contract be modified to require an IMS?
- Is there a DoD requirement for a resource-loaded schedule?
- Who determines how the IPMR will be tailored?
- How can the CPR and the IMS be integrated if the information is maintained in different software applications?
What is Earned Value Management?
Earned Value Management (EVM) is a widely accepted industry best practice for program management that is used across the Department of Defense (DoD), the Federal government, and the commercial sector. Government and industry program managers use EVM as a program management tool to provide joint situational awareness of program status and to assess the cost, schedule, and technical performance of programs for proactive course correction
The DAU EVM training site contains training modules to familiarize users with the EVM process and its application to DoD programs/contracts. The EVM Community of Practice website also provides users with a variety of resources applicable to EVM including tools, published articles, training material, a research library, and an EVM discussion forum.Back to Top
EVM terms and acronyms.Back to Top
What are the EVM System guidelines?
An EVM System (EVMS) is the management control system that integrates a program’s work scope, schedule, and cost parameters for optimum program planning and control. To be useful as a program management tool, program managers must incorporate EVM into their acquisition decision-making processes; the EVM performance data generated by the EVMS must be timely, accurate, reliable, and auditable; and the EVMS must be implemented in a disciplined manner consistent with the 32 EVMS Guidelines prescribed in Section 2 of the Electronic Industries Alliance Standard-748 EVMS (EIA-748)
The 32 Guidelines form the basis for what constitutes a reliable EVM System. The Guidelines are broken into 5 categories:
2. Planning, Scheduling and Budgeting
3. Accounting Considerations
4. Analysis and Management Reports
5. Revisions and Data Maintenance
To understand how DoD interprets the 32 Guidelines, see the EVMSIG here .Back to Top
EVM for industry users.
The National Defense Industrial Associations Program Management Systems Committee is the recognized body for subject matter expertise on EIA-748. The Committees web site hosts several guides that represent best practices in EVM application and implementation. The guides can be accessed from their website here . In addition, the College of Performance Management (CPM) website also contains a set of articles and presentations regarding EVM.Back to Top
What are the EVM and EVMS requirements in DoD?
EVM and EVMS requirements are listed below:
- Current DFARS Clauses – EVM/EVMS policy
- 234.201 – Policy
- 252.234-7001 – Notice of EVMS
- 252.234.7002 – EVMS
- 252.234.7005 – Contractor Business Systems
- PGI 234.201 – Policy Guidance
- DoDI 5000.02 (See Table 8)
- Integrated Program Management Report (IPMR) DID
- EVM Central Repository
- Contract Funds Status Report DID
Application of FAR EVM/EVMS Clauses.
FAR clauses should not be put on DoD contracts. The FAR allows for Federal departments and agencies to use clauses that are substantially the same as the FAR clauses. The EVMS DFARS clauses are written to provide the amplifying policy and guidance for DoD contracts. In fact, Section 234.203, DFARS specifically states that the DFARS will be used instead of the FAR. For EVM, it should be noted that the FAR contains a clause for pre-award IBRs but the DFARS do not. Therefore, if a program manager elects to conduct a pre-award IBR on a DoD contract, he or she should include that requirement in the statement of work.Back to Top
When EVMS Defense Federal Acquisition Regulation Supplement (DFARS) clauses are updated and published, what are their effective dates for use on DoD contract?
The application of updated DFARS clauses is not retroactive on a contract. However, new solicitations released after the update of a given clause are expected to include the latest version of the DFARS. Program managers are not precluded from imposing new or different EVM requirements on existing contracts if the benefits outweigh the costs. Remaining contract duration and estimated costs, as well as other risk factors, should be taken into consideration when determining whether to modify the EVM requirements on existing contracts. In addition, the costs associated with the modifications will be borne by the government.Back to Top
EVM Central Repository (CR) reporting requirements.
The EVM information (CPR, IMS, and CFSR) for all ACAT I programs is required to be submitted directly to the EVM CR by the reporting contractor. The EVM CR should be the sole addressee on the contract data requirements lists (CDRLs) for these reports. The use of a standard electronic data exchange format is required for all reports. All data must be in a readable digital format (e.g., pdf files are not acceptable). The Extensible Markup Language standard (Project Schedule Cost Performance Management message) is the preferred format. The American National Standards Institute X12 standard (839 transaction set) is also acceptable. On-line access to the data may be provided to augment formal submission. See the EVM CR Manual for additional guidance on the CR requirements.Back to Top
Does the DoD EVM policy require pre-award IBRs? What is the IBR requirement?
No, the DoD EVM policy does not mandate pre-award IBRs. The policy requires that IBRs be initiated as early as practicable and that the timing of the IBRs take into consideration the contract period of performance. The IBR process should be conducted not later than 180 calendar days (6 months) after: (1) contract award, (2) the exercise of significant contract options, and (3) the incorporation of major modifications. However, the policy does not prohibit the use of pre-award IBRs in situations where they may be appropriate and beneficial. If a program manager elects to conduct a pre-award IBR on a DoD contract, he or she should include that requirement in the statement of work.
In situations where the entire work scope is not known, the IBR can be conducted in stages. A review of the known work scope should be conducted within the 180 day window with a follow-up IBR scheduled at a later time for the work not yet completed in the context of the entire performance measurement baseline. As a rule of thumb, the 180 day IBR should run through the first major milestone for the program. Any IBR event increment should not be driven by definitization, but should represent the best time to hold the IBR to assess the plan for the work. A contract letter from the PMO to the contractor will be needed to detail the requirements.Back to Top
If a contract is rebaselined using an Over Target Baseline (OTB) or a single point adjustment, does that change the EVM requirements for the contract?
EVM requirements do not change based on replanning, rebaselining, or any other formal reprogramming. EVM requirements can only be changed via a contract modification. The OTB/OTS guide details the implementation and reasoning for rebaselining and single point adjustments (SPA).Back to Top
What is the history of the EVM/EVMS thresholds?
The old DoD policy required EVM on development contracts over $73 million and procurement and operations and maintenance contracts over $315 million. It also required C/SSRs on contracts over $6.3 million. The March 2005 revisions to the policy raised the lower threshold from $6.3 million to $20 million and lowered the upper threshold from $73 million and $315 million to $50 million (it also eliminated the separate thresholds for development and procurement).
A comprehensive business case analysis conducted in November 2004, based on DoD contracts data supplied by DCMA and industry-representative contracts data provided by the National Defense Industrial Association, concluded that the new application thresholds would result in significant cost avoidance relative to the former thresholds. Specifically, the cost of eliminating C/SSRs on low dollar value contracts (those valued below $20 million) more than offsets the increased cost of additional CPRs and tailored CPRs, which replace C/SSRs, on the higher dollar value contracts (those valued at $20 million and above).
EVM compliance is currently required on cost or incentive contracts, subcontracts, intra-government work agreements, and other agreements valued at or greater than $20 million. An EVMS that has been formally validated by DCMA and accepted by the cognizant contracting officer is required on cost or incentive contracts, subcontracts, intra-government work agreements, and other agreements valued at or greater than $50 million.Back to Top
When deciding whether a DoD contract requires the use of EVM, how do I determine the contract value against which to apply the application thresholds?
When determining the contract value for the purpose of applying the EVM thresholds, the total contract value in then-year dollars, including planned options placed on contract at the time of award, should be used.Back to Top
Reasons for DoD EVM application thresholds to be in then-year dollars rather than base-year dollars.
Then-year dollars are current dollars that reflect the impact of inflation over time, such as the dollars in your wallet. Base-year dollars are constant dollars that reflect the cost of the program as if inflation had not occurred (the cost to acquire a multi-year system if you paid for it in advance in one specific year). The EVM application thresholds were changed from base-year dollars to then-year dollars because then-year dollars represent a more accurate measure of the value of contracts. Contracts are awarded in then-year dollars, which represent what the government has to pay. Base-year dollars are used primarily for cost estimating purposes and are not good indicators of current contract value. The threshold dollar values will be reassessed periodically and revised as necessary to keep pace with future inflation.Back to Top
What is the policy on the retroactivity of the requirement for EVMS validations for contractors performing work for DoD?
Changes to the EVM policy are not retroactive to existing contracts. This includes EVMS validations that were not required under the old policies or contract requirements, but would be under the new policy. However, if a contractor (or subcontractor) without an EVMS validation is awarded a new cost or incentive contract that is valued at or greater than $50 million, validation is then required.Back to Top
If I have an existing contract valued at less than $20 million and intend to sign a contract modification that will increase the total value of the contract over the $20 million EVM application threshold, am I required to modify the contract to place the new EVM requirements on the contract?
As noted, when determining the contract value for EVM thresholds, the total contract value including known contract options at the time of award, should be used to determine EVM applicability. If the options/changes were not known, the program manager is strongly encouraged to add or change the EVM requirements when modifying an existing contract to proceed to a subsequent acquisition phase, or in cases where the duration of the contract exceeds 12 months, the value of the contract reaches $50 million or greater, and/or the nature of the work imposes risk to the government. Note that the costs associated with the modifications will be borne by the government and that performance data prior to the EVM requirement may be incomplete or estimated.Back to Top
What types of contracts does the DoD EVM policy apply to? Does it apply to fixed price incentive contracts?
The EVM policy applies to all cost or incentive type contracts, subcontracts, intra-government work agreements, and other agreements valued at or greater than $20 million.
Since a fixed price incentive contract is by definition an incentive contract, it requires the implementation of EVM if it is valued at or greater than $20 million.
Current DFARS Clauses:
- 234.201 – Policy
- 252.234-7001 – Notice of EVMS
- 252.234.7002 - 252.234.7002 – EVMS
- 252.234.7005 - Contractor Business Systems
- PGI 234.201 - Policy Guidance
Does the DoD EVM policy apply to programs or contracts that are not governed by the acquisition policy in the DoD 5000 series documents?
Any program not under the requirements of the DFARS or 5000.02 in DoD are not subject to various requirements, including EVM/EVMS. However, in accordance with the direction in Office of Management and Budget (OMB) Circular A–11, Part 7, and the corresponding Capital Programming Guide, all major acquisitions with development effort, regardless of whether they have been designated as DoD acquisition programs, are subject to the overarching FAR EVM policy.Back to Top
DoD policy on applying EVM to Firm-Fixed Price (FFP) contracts.
By default, FFP contracts are not subject to EVM and EVMS requirements. If the risk warrants the need for EVM to manage the work scope, FFP may not be the appropriate contract type. Therefore, the use of EVM on FFP contracts continues to be limited to cases where the program manager believes there is significant schedule risk and/or concern about the impact of cost pressures on product or service quality. In these cases, the program manager should ask for a deviation from the program decision authority to implement EVM on individual FFP contracts.
In addition, if a FFP contract is used for development or integration efforts valued at or greater than $20 million, the program manager should use EVM, per the guidance by OMB, and should request a deviation to do so. Such requests must include a business case analysis that provides the rationale for why a cost or incentive contract was not an appropriate contracting vehicle.
Outside of the use of full EVM, in some cases a form of EVM reporting, such as the Integrated Master Schedule, may be warranted for FFP work when full EVM implementation would not make sense. In these cases, the IPMR would be placed on contract (tailored to just the IMS in the example), and the DFARS clause would not be on contract.Back to Top
Is DoD's policy on applying EVM to FFP contracts in conflict with OMBs direction?
No, the DoD EVM policy only appears to differ from the OMB policy. If the DoD policies on selecting contract type and applying EVM are followed, the instances of noncompliance with the OMB policy will be the exception not the rule. While the OMB policy does not exempt FFP contracts from the EVM requirements, OMB's focus is on development efforts in both the planning and acquisition phases. DoD does not as a matter of course use FFP contracts for development and integration efforts, which are inherently more risky to the government. (OMB also discourages the use of FFP contracts for development efforts.)
Therefore, in DoD the use of FFP contracts is typically limited to mature, lower risk production work, which uses means other than earned value to manage contract performance. Higher risk development work is usually accomplished with cost type contracts, which require EVM. Low rate initial production and early production contracts tend to be of the fixed price incentive type, which also require EVM. In order to preclude any disconnects with regard to the applicability of EVM based on contract type, DoD program managers need to adhere to the Department's policies on selecting contract type and applying EVM. And, when a FFP contract is chosen for development work, the program manager needs to apply EVM to the contract and should request a waiver from the program decision authority to do so.Back to Top
Can contractors use their internal EVMS to manage a DoD contract to which EVM is not being applied, e.g., a FFP contract?
The contractor should not be prohibited from employing its EVMS if the use of EVM is an ingrained corporate process. DoD, however, would not typically require formal EVM requirements on contracts to which EVM is not being applied, such as FFP contracts. When the contractors EVMS is an ingrained corporate process and no reporting to DoD is required, DoD should incur little or no implementation costs associated with use of the contractors EVMS. But, in cases where there may be some minor costs, they should be negotiated up front with the contractor. Also, there are cases when the IPMR can be used to receive tailored cost and or schedule information without the formalized full EVM. In those scenarios, the tailored CDRL for the IPMR would be included in the contract package.Back to Top
EVM application on mixed contracts (e.g., contract includes FFP CLINS and cost and/or incentive CLINS.
If a contract type is mixed, the EVM policy should be applied separately to the different parts (contract types). In other words, the use of EVM on any cost or incentive parts that are valued at $20 million or greater would be required but EVM would not be required on any FFP parts, unless the work involves development or integration effort.Back to Top
EVM application where scope of work is “level of effort.”
As a rule, EVM is required on cost or incentive contracts valued at or greater than $20 million. However, the nature of the work associated with the contract is the main factor when determining EVM applicability. This means, efforts that are service oriented, sustainment, unplanned maintenance, or other “level of effort (LOE)” work generally should not have EVM applied. In the cases where the work scope doesn’t warrant EVM but the DFARS thresholds are met, a deviation is required per the guidance in the applicable Service’s DFARS supplements.Back to Top
Deviations from DoD EVM Policy.
The EVM/EVMS clauses in the DFARS are treated like any other DFARS requirement. And to remove a DFARS requirement the Government PMO must process a deviation. Per the DFARS section 201.403, Individual deviations are approved in accordance with the department/agency plan. That means, each Service has a DFARS supplement that says who the deviation goes to.
PARCA's role is to provide ACAT I Programs a memo of opinion on a given EVM deviation. We own EVM as a discipline in OSD and the EVM DFARS language but we don't have authority to remove or change requirements on a contract. The memo serves as backup for the deviation if the PMO chooses to process one.
The term "waiver" comes into play with the DoDI 5000.02. In there it states the CAE can waive EVM. However, the DFARS is for contract officers and the 5000.02 is written from a PM perspective. Hence, a "waiver" from the CAE does not remove the DFARS requirements. Currently, to cover all requirements, a deviation from the DFARS clauses and the CAE waiver approval for EVM are required.
If EVM is not included on contract due to the nature of the work, the program manager is required to implement an alternative method of program management control to provide advanced warning of potential performance problems.Back to Top
DoD EVM requirements flow-down to subcontractors.
Yes, the EVM requirements flow down to the subcontractor if the subcontract is valued at or greater than $20 million. Subcontractors with contracts valued at or greater than $50 million are subject to the EVMS validation requirement. In accordance with the DFARS clauses, the prime contractor identifies the major subcontractors in its proposal. The government then determines, and specifies by name in the prime contract, which of those major subcontracts must comply with the EVM requirements.Back to Top
If I place funds transferred from a DoD organization on a non-DoD contract, does the DoD EVM policy apply?
No, the contract will be awarded in accordance with the rules of the organization receiving the transferred funds, and in accordance with the FAR as applicable.Back to Top
DoD EVM policy application to foreign suppliers.
The EVM thresholds and requirements apply to both domestic and foreign contractors and subcontractors. In fact, many foreign suppliers operate in countries that have EVM policies very similar to those of the United States, such as Canada, Australia, and the United Kingdom.Back to Top
Where can I find the Integrated Program Management Report (IPMR)?
The IPMR Data Item Description can be found here [link ]
The associated IPMR Guide can be found here [link ]
The legacy Contract Performance Report (CPR) DID and the legacy Integrated Master Schedule (IMS) DID can be found on the Assist website.Back to Top
On the IPMR Format 1, Section 8 (f) Management Reserve, column (15) is shaded. Does this mean that I cannot put management reserve in this cell?
Yes, shaded areas on the Formats indicate no data should be placed in those cells. For management reserve (MR), data should be included in Section 6 (a), (b), and (c) Estimated Cost at Completion under the Management Estimate at Completion (1). As per the DID, the estimate at completion in column (15) would only be for work included in the Performance Measurement Baseline (PMB). Any impacts due to additional risk, management reserve, or higher level management knowledge would be included in Section 6 (1).Back to Top
Is the Integrated Master Plan (IMP) required?
The requirement for an IMP has not changed. Both the IMP and the IMS continue to be important tools that provide significant assistance in the planning and scheduling of work efforts. The IMP is a contractual event-based plan consisting of a hierarchy of program events, with each event being supported by specific accomplishments and completion criteria. The IMS is a time-based schedule that flows directly from the IMP and provides the level of detail necessary for day-to-day program/contract execution. The IMS is typically requested through a CDRL based on Format 6 of the IPMR. A formal IMP requirement is not found in the IPMR but is deemed a good business practice per the DoDI 5000.02 information.Back to Top
If the requirement for an IMS is implemented on a contract option, must the existing contract be modified to require an IMS?
The decision to impose any EVM requirement, including the IPMR Format 6 IMS requirement, on an existing contract must be made by formal contract modification. The modification should be made based on negotiations between the government and contractor, and should be based on all relevant factors to include the dollar value and duration of the contract, the degree of risk, and the nature of the work. If a decision is made to modify the contract, keep in mind that the IMS can be tailored as appropriate within the bounds of the policy. Detailed guidance on tailoring the IMS can be found in the IPMR Guide .Back to Top
Is there a DoD requirement for a resource-loaded schedule?
No, the Format 6 of the IPMR does not prescribe a resource-loaded schedule, nor does it prohibit resource loading in those situations where it is appropriate and beneficial to do so. The XML requirement included with the IPMR DID does support the information if it is included in the XML submission of the Format 6.Back to Top
Who determines how the IPMR will be tailored?
The program manager is ultimately responsible for determining how EVM reporting will be tailored, but the degree of tailoring must be appropriate and allowable within the bounds of the EVM policy. The IPMR is highly tailorable and the IPMR Guide has information on tailoring aspects. For example, reporting frequency, submission dates, and level of detail can be negotiated. All relevant risk factors should be considered when determining the degree of tailoring that is appropriate.Back to Top
How can the cost and schedule information in the IPMR be integrated if the information is maintained in different software applications?
The policy aims to link the cost and schedule reporting by requiring the submission of both reports any time EVM is required and mandating that a common work breakdown structure be used for both reports. The policy does not prescribe specific software applications.Back to Top