FAR gives agencies EVM wiggle room

Federal agencies have a lot of flexibility in how they use earned value management systems to track the health of their programs, under a new rule issued July 5.

EVM is a rigorous project management discipline that puts a dollar value on work as organizations complete it. In June 2002, the Office of Management and Budget mandated EVM systems for all major information technology service and acquisition contracts.

Still, the final rule, issued by the Federal Acquisition Regulation Council, gives federal agencies broad individual discretion over EVM implementation and oversight.

For example, EVM systems are required for major acquisitions for development regardless of contract type. But, “agencies have significant discretion in determining the size and complexity of projects that meet the criteria for a major acquisition set by the agency,” the FAR Council said.

Each agency will be able to set dollar thresholds for implementing EVM, under the new rule. Also, the final rule does not exempt certain types of contracts, such as fixed-price or time, material and labor-hour contracts, as many in industry had hoped.

Individual agencies will also be responsible for certifying a company’s EVM system as compliant with standards, the FAR Council said. They rejected a one-stop shop approach in which all agencies would accept one agreed upon certification.

The FAR Council, composed of the Defense Department, General Services Administration, and NASA, published a proposed rule for implementing EVM systems in April 2005. Public comments submitted totaled 109. The FAR Council responded to those comments when it issued the final rule.

The Defense Federal Acquisition Regulations Supplement has its own proposed rule on EVM. That rule was published Jan. 23, 2006 and was open for public comment until late March. The DFARS proposed rule, which would be subservient to the FAR rule, is now under review.