Earned Value Management Implementation Guide

Department of Defense
Earned Value Management

Implementation Guide
Signed
___________________________________________
KEITH D. ERNST
Director,
Defense Contract Management Agency
Department of Defense Earned Va!e Management Impementation "!ide
October 2006
Purpose: This guide provides the uniform procedures which have been approved by the Director,
Defense Contract Management Agency (DCMA) under assigned authority as the Department of
Defenses !"ecutive Agent for !arned #a$ue Management %ystems (!#M%)& This document
has been coordinated by %A'(A), %A'('M, A%A (A*T), A%+ (,D-A), MDA(P., +%A(C%%, and
DCAA& This document provides guidance to be used during the imp$ementation and survei$$ance
of !#M% estab$ished in comp$iance with DoD /uide$ines& 0sers of this guide are encouraged to
submit recommendations for refined procedures to DCMA for consideration&
111111111111111111111111111111111111111111111111111111111111111111111111111111
.P,: DCMA(P2D
.C,: %A'('MC %A'(A)3 +%A(+45
A%A (A*T)(%AA*67, A%+ (,D-A) AP- P
DCAA(PPD MDA(D.
EVMI" IM#R$VEMENT D$C%MENT
%ubmitters +ame:
Te$ephone +o&:
e6mai$:
Address:
Prob$em Area:
a& %ection +umber and(or 'igures:
b& ,ecommended Changes:
2f in the review or use of this document, a potentia$ change is made evident, p$ease fi$$ in the appropriate
information be$ow and mai$ or 'A3 to:
Defense Contract Management Agency
895: ;a$<er *ane, %uite 9::
A$e"andria, #A 449=:694>=
'A3: (?:9) >4@6=@A?
c& ,eason(,ationa$e for ,ecommendation
Additiona$ ,emar<s:
%ignature: Date:
TB2% PA/! 2+T!+T2.+A**C *!'T D*A+E
TA&'E $( C$NTENTS
FOREWORD.................................................................................................................................. v
PART I: EARNED VALUE MANAGEMENT CONCEPTS & GUIDELINES...........................2
PART 1 SECTION 1 -
EARNED VALUE MANAGEMENT...................................................................................2
PART 1 SECTION 2
EARNED VALUE MANAGEMENT SYSTEM GUIDELINES........................................3
PART 2 - PROCEDURES FOR GOVERNMENT USE OF EARNED VALUE..........................8
PART 2 SECTION 1
APPLYING EARNED VALUE MANAGEMENT
................................................................................................................................................. 8
PART 2 SECTION 2
PRE-CONTRACT ACTIVITIES.......................................................................................11
2.2.5.6 Tail!i"# G$i%a"&' (! )*' C")!a&) P'!(!+a"&' R',!) -CPR..........................2/
2.2.5.6.0./ DD /120-/2 3l&45 /62 /22 a"% /0.................................................................22
2.2.5.7 Tail!i"# G$i%a"&' (! )*' I")'#!a)'% Ma5)'! S&*'%$l' -IMS. ...........................27
2.2.5.7.0 DD /120-/2 3l&45 /62 /2 a"% /0.....................................................................27
............................................................................................................................................. 33
Part 2 Secti! 3
P"t-a#ar$ Acti%itie" & S'"te( Va)i$ati! a!$ Mai!te!a!ce.............................................3*
2.0.2.0 Gv'!"+'") C"%$&)'% Vali%a)i".......................................................................07
2.0.0 EVM S85)'+ S$!v'illa"&' a"% Mai")'"a"&'...........................................................16
PART 2 SECTION +
OT,ER POST A-ARD ACTIVITIES.............................................................................+.
2.5.2.5 Ov'! Ta!#') 3a5'li"'5 -OT3. a"% Ov'! Ta!#') S&*'%$l'5 -OTS.........................66
($RE)$RD
Part 2 of this guide provides guidance for understanding !#M% concepts, describes obFective
guide$ines for !#M systems, and provides guidance in interpreting those guide$ines for use on
/overnment contracts and programs& Part 4 contains a description of procedures and processes
for /overnment personne$ for specifying, eva$uating, and imp$ementing !#M systems& Part 4
a$so contains instructions and tai$oring guidance for app$ying !#M reGuirements to contracts, an
introduction to ana$yHing performance, base$ine review and maintenance, and other post award
activities& Additiona$ reference materia$ is contained in the appendices&
2t shou$d be noted that Department of Defense (DoD) !#M po$icy not on$y app$ies to contracts
with industry, but to intra6government activities as we$$& Throughout this document, the term
IcontractJ refers to both contracts with private industry as we$$ as agreements with intra6
governmenta$ activities that meet the DoD reporting thresho$ds& %imi$ar$y, the term IcontractorJ
refers to entities within both private industry and /overnment&
This document was deve$oped to serve as the centra$ !#M% guidance document for DoD
personne$& Throughout the !arned #a$ue Management 2mp$ementation /uide (!#M2/),
additiona$ references are made to additiona$ sources of information, such as !#M% standards,
handboo<s, guideboo<s, and websites& These additiona$ sources shou$d be consu$ted as
appropriate& 'igure :6= portrays the re$ationship of these documents and their content&
!$ectronic copies or $in<s to these documents may be found on the website 999.5%.a&:.+il;,+&
Re*isions and Additions. Persons using this guide are encouraged to submit suggestions for
improvements to DCMA, DCMA6P2D, 895: ;a$<er *ane, %uite 9::, A$e"andria, #A 449=:694>=&
+ote to ,eaders of the !$ectronic #ersion:
+umerous hyper$in<s and boo<mar<s are inc$uded in the document to ma<e it easy for the reader
to Fump to a reference& 2n order to easi$y move bac< to the origina$ point in the document, c$ic<
the bac< arrow button on the ;eb too$bar& To see the ;eb too$bar, c$ic< on #iew, then
Too$bars, then ;eb&
EVM "%IDANCE R$ADMA#
/overnment 2ndustry
/uideboo<s /uidecards /uideboo<s
2mp$ementation 6!#M2/ 6DA0 /o$d Card
6+D2A App$ication
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Comp$iance
!va$uation 6DCMA Agency 2nstruction
6+D2A %ystems
Acceptance /uide6
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2ntegrated Dase$ine
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%urvei$$ance 6DCMA Agency 2nstruction
6+D2A %urvei$$ance
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#ART I+ EARNED VA'%E MANA"EMENT C$NCE#TS , "%IDE'INES
#ART - SECTI$N - .
EARNED VA'%E MANA"EMENT
-.- Concepts of Earned Va!e Management. Ea!"'% Val$' Ma"a#'+'") (!#M) is a
program management too$ that integrates the technica$, cost, and schedu$e parameters of a
contract& During the p$anning phase, an integrated base$ine is deve$oped by time phasing
budget resources for defined wor<& As wor< is performed and measured against the base$ine,
the corresponding budget va$ue is IearnedJ& 'rom this 'a!"'% val$' metric, cost and schedu$e
variances can be determined and ana$yHed& 'rom these basic variance measurements, the
program manager (PM) can identify significant drivers, forecast future cost and schedu$e
performance, and construct corrective action p$ans to get the program bac< on trac<& !#M
therefore encompasses both performance measurement (i&e&, what is the program status) and
performance management (i&e&, what we can do about it)& !#M is program management that
provides significant benefits to both the /overnment and the contractor&
-./ EVM and Management Needs. A fundamenta$ reGuirement for managing any maFor
acGuisition system is insight into the contractorsL performance specifica$$y the program
management and contro$& Proper !#M imp$ementation ensures that the PM is provided
contractor performance data that:
re$ates time6phased budgets to specific contract tas<s and(or statements of wor< (%.;)
obFective$y measures wor< progress
proper$y re$ates cost, schedu$e, and technica$ accomp$ishment
a$$ows for informed decision ma<ing and corrective action
is va$id, time$y, and ab$e to be audited
a$$ows for statistica$ estimation of future costs
supp$ies managers at a$$ $eve$s with status information at the appropriate $eve$, and
is derived from the same !#M system used by the contractor to manage the contract&
-.0 %niform "!idance. This document provides uniform guidance for DoD PMs responsib$e
for imp$ementing !#M& 2t a$so provides a consistent approach to tai$oring !#M based on the
particu$ar needs of the program that is both cost effective and sufficient for integrated program
management& Consistent app$ication of this guide across a$$ DoD acGuisition commands shou$d
resu$t in improved program performance and resu$t in greater consistency in program
management practices throughout the contractor community& .ther federa$ agencies are
encouraged to adopt this guide and adapt it as necessary to each agencys !#M po$icy&
4
#ART - SECTI$N /
EARNED VA'%E MANA"EMENT S1STEM "%IDE'INES
/.- Earned Va!e Management System 2EVMS3. Private companies use some form of
business p$anning and contro$ systems for management purposes& These p$anning and contro$
systems have been tai$ored, adapted or deve$oped for the uniGue needs of the company, and
re$y on a variety of software pac<ages and information techno$ogy so$utions& Many companies
have adopted program management as a best business practice& Most of the basic princip$es of
an !#M% are a$ready inherent in good business practices and program managementM however,
there are some uniGue !#M guide$ines which reGuire a more intensive approach to the
integration of management systems&
An EVMS can be defined as an integrated management system and its re$ated sub6systems,
which a$$ow for:
p$anning a$$ wor< scope for the program to comp$etion
assignment of authority and responsibi$ity at the wor< performance $eve$
integration of the cost, schedu$e, and technica$ aspects of the wor< into a detai$ed
base$ine p$an
obFective measurement of progress (earned va$ue) at the wor< performance $eve$
accumu$ation and assignment of actua$ costs
ana$ysis of variances from p$ans
summariHation and reporting of performance data to higher $eve$s of management for
action
forecast of achievement of mi$estones and comp$etion of contract events
forecast of fina$ contract costs and
discip$ined base$ine maintenance and incorporation of base$ine revisions in a time$y
manner&
/./ EVMS "!ideines Concept. 'rom its deve$opment in the =A8:s to the present, !#M has
been based on the premise that the /overnment cannot impose a sing$e so$ution for an
integrated management system for a$$ contractors& As a resu$t, the guide$ines approach was
deve$oped& This approach recogniHes that no sing$e !#M% can meet every management need
for a$$ companies& Due to variations in organiHations, products, and wor<ing re$ationships, it is
not feasib$e to prescribe a universa$ system& The guide$ines approach, on the other hand,
estab$ishes a framewor< within which an adeGuate integrated cost(schedu$e(technica$
management system fits& The !#M% guide$ines are not prescriptive in nature, but simp$y
describe the desired outcomes of integrated performance management across five broad
categories of activity& These five categories are: organiHationM p$anning, schedu$ing, and
budgetingM accountingM ana$ysis and management reportsM and revisions and data maintenance&
The management processes organiHing, schedu$ing, wor<(budget authoriHation, etc& cut across
the five sections& A matri" showing the processes and guide$ines interp$ay is provided in 'igure
96=&
T4e EVMS g!ideines do not descri5e or prescri5e a specific system6 The guide$ines are
broad enough to a$$ow for common sense app$ication, but are specific enough to assure the
buying activity of re$iab$e performance data& +either do they purport to address a$$ of a
contractorLs needs for day6to6day or wee<6to6wee< interna$ contro$, such as informa$
communications, interna$ status reports, reviews, and simi$ar management too$s& These
management too$s are important and shou$d augment the !#M% as an effective e$ement of
program management& Data from the !#M% shou$d be the source for these management too$s&
/.0 EVMS Standard. The !#M% guide$ines have been pub$ished as an American +ationa$
%tandards 2nstitute(!$ectronic 2ndustries A$$iance standard A+%2(!2A6?>@, !arned #a$ue
Management %ystems& The DoD forma$$y adopted A+%2(!2A6?>@ in August =AA@ for app$ication
to maFor defense acGuisition programs& 2ndustry periodica$$y reviews the standard, and ,evision
9
A was pub$ished in 4::4 without change to the basic guide$ines& 2f the A+%2(!2A6?>@ standard
is changed or updated, DoD wi$$ review and determine if the document sti$$ meets the
/overnments needs&

>

#R$CESS "R$%#IN"
ANSI7EIA.89: "!ideines $
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ANSI7EIA.89: "!ideines
$R"ANI;ATI$N
/.-a Define a!t4ori<ed =or> ?
/.-5 Identify #rogram $rgani<ation Str!ct!re ?
/.-c Company integration of EVMS s!5systems =it4 )&S and $&S ?
/.-d Identify organi<ation7f!nction for o*er4ead 2DCAA3 ?
/.-e Integrate )&S , $&S, create contro acco!nts ?
#'ANNIN", SCHED%'IN" , &%D"ETIN"
/./a Se@!entia sc4ed!ing of =or> ?
/./5 Identify interim meas!res of progress, i.e. miestones, prod!cts, etc. ?
/./c Esta5is4 time.p4ased 5!dget 2DCAA3 ? ?
/./d Identify significant cost eements =it4in a!t4ori<ed 5!dgets ?
/./e Identify discrete =or> pac>ages ?
/./f A =or> pac>age 5!dgets , panning pac>ages s!m to contro acct ?
/./g Identify and contro '$E5!dgets ?
/./4 Esta5is4 o*er4ead 5!dgets 5y organi<ation eement 2DCAA3 ?
/./i Identify management reser*e and !ndistri5!ted 5!dget ?
/./A Reconcie program target cost goa =it4 s!m of a interna 5!dgets ?
ACC$%NTIN" C$NSIDERATI$NS
/.0a Record direct costs from acco!nting system 2DCAA3 ?
/.05 S!mmari<e direct costs into )&S =it4o!t aocation 2DCAA3 ?
/.0c S!mmari<e direct costs into $&S =it4o!t aocation 2DCAA3 ?
/.0d Record indirect costs 2DCAA3 ?
/.0e Identify !nit costs, e@!i*aent !nits costs or ot costs 2DCAA3 ?
/.0f
Acc!rate materia cost acc!m!ation 5y contro acco!ntsB EV meas!rement at
rig4t timeB f! acco!nta5iity of materia 2DCAA3 ?
ANA'1SIS AND MANA"EMENT RE#$RTS
/.9a Contro acco!nt mont4y s!mmary, identification of CV and SV 2DCAA3 ? ?
/.95 ECpain significant *ariances ?
/.9c Identify and eCpain indirect cost *ariances 2DCAA3 ?
/.9d S!mmari<e data eements and *ariances t4r! )&S7$&S for mgmt ?
/.9e Impement management actions as res!t of EVM anaysis ?
/.9f Re*ise EAC 5ased on performance dataB cac!ate VAC 2DCAA3 ? ?
REVISI$NS AND DATA MAINTENANCE
/.Da Incorporate a!t4ori<ed c4anges in timey manner ?
/.D5 Reconcie 5!dgets =it4 prior 5!dgets ?
/.Dc Contro retroacti*e c4anges 2DCAA3 ? ?
/.Dd #re*ent a 5!t a!t4ori<ed 5!dget c4anges ?
/.De Doc!ment c4anges to #M& ?
'egend
? Key #rocess Cross #rocess Area

'2/0,! 46= /02D!*2+!%66P,.C!%% MAT,23
5
The 94 guide$ines described in A+%2(!2A6?>@ provide a consistent basis to assist the
/overnment and the contractor in imp$ementing and maintaining acceptab$e !#M systems& 2t
shou$d be noted that the A+%2(!2A6?>@ contains a section on procedures for eva$uating !#M%
comp$ianceM however, DoD personne$ shou$d fo$$ow the va$idation procedures described in Part
4, %ection 9 of this document&
2nstructions for obtaining A+%2(!2A6?>@ can be found through the fo$$owing website:
*)),:;;999.a55i5)%&5.&+, using !2A?>@ as the document identification number& The A%%2%T
site provides a shopping wiHard too$ to assist /overnment emp$oyees in obtaining a free copy of
the standard& The standard is avai$ab$e for a fee to private individua$s and companies through
the A+%2 website: *)),:;;9'<5)!'.a"5i.!#;&
The guide$ines approach continues to provide contractors the f$e"ibi$ity to deve$op and
imp$ement effective management systems whi$e ensuring performance information is provided
to management in a consistent manner&
/.9 System Design and De*eopment. 2n designing, imp$ementing and improving the
!#M%, the obFective shou$d be to do what ma<es sense& The !#M system that meets the I$etter
of the $awJ (guide$ines) but not their intent does not support managementLs needs&

Contractors have f$e"ibi$ity under the guide$ines approach to deve$op a system most suited to
management needs& This approach a$$ows contractors to use !#M systems of their choice,
provided they meet the intent of the guide$ines& Contractors are encouraged to estab$ish and
maintain innovative, cost effective processes, and to improve them continuous$y&
The responsibi$ity for deve$oping and app$ying the specific procedures for comp$ying with the
guide$ines is vested in the contractor& Current DoD po$icy (DoD2 5:::&4 Tab$e !9&T4),
,egu$atory 2nformation ,eGuirements, reGuires that contracts that meet certain thresho$ds use
an EVMS that comp$ies with the A+%2(!2A6?>@ standard& +.T!: The March ?, 4::5, DoD
memorandum, ,evision to DoD !arned #a$ue Management Po$icy, serves as the interim po$icy
unti$ the DoD2 5:::&4 is updated& 2n addition, the proposed !#M% may be subFect to vali%a)i"&
(%ee Part 4, %ection 4 for information on thresho$ds for comp$iance and %ection 9 for system
va$idation&) 2n instances where the contractors system does not meet the intent of the
guide$ines, the contractor ma<es adFustments necessary to achieve va$idation&

;hen the /overnments so$icitation pac<age specifies &+,lia"&' with A+%2(!2A6?>@ and
vali%a)i", an e$ement in the eva$uation of proposa$s is the prospective contractorLs proposed
!#M%& The prospective contractor shou$d describe the !#M% to be used in sufficient detai$ to
permit eva$uation for va$idation with the guide$ines& A discussion of both /overnment and
contractor activities during the period prior to contract award is contained in Part 4, %ection 4,
Pre6contract Activities& ,efer to the app$icab$e Defense 'edera$ AcGuisition ,egu$ation
%upp$ement (D'A,%) c$auses for specific !#M% va$idation and comp$iance reGuirements for the
contract&
/.D System Doc!mentation. Documentation of the !#M% shou$d be estab$ished according
to the standards of the company& 2t is good business practice to provide adeGuate po$icies and
procedures to assure consistent app$ication across the enterprise& Additiona$ guidance for
companies is contained in A+%2(!2A6?>@, %ection >& Documentation guidance for contracts that
reGuire !#M% comp$iance on$y is discussed in Part 4, %ection 4, ,a!a#!a,* 2.6.2.2&
0pon award of the contract, the !#M system description and documentation is used by the
contractor in p$anning and contro$$ing the contract wor<& The /overnment re$ies on the
contractors system and shou$d not impose dup$icative p$anning and contro$ systems&
Contractors are encouraged to maintain and improve the essentia$ e$ements and discip$ines of
the systems and shou$d coordinate system changes with the customer& 'or contracts that meet
the thresho$d for A+%2(!2A6?>@ guide$ines comp$iance and va$idation, these system changes are
8
approved by the Administrative Contracting .fficer (AC.) in advance& ,efer to the appropriate
D'A,% c$ause and Part 4, %ection 4, paragraph 9&> for more information on this reGuirement&
The /overnment PM and earned va$ue ana$ysts are encouraged to obtain copies of the
contractors system documentation and become fami$iar with the companys !#M%& Companies
usua$$y provide training on their system upon reGuest& This enab$es the ana$yst to better
understand how company processes generate !#M% data, impact of earned va$ue measurement
methodo$ogy, and reGuirements for customer approva$ of changes& DCMA !#M% %pecia$ists
assigned to a specific region or to a p$ant shou$d have copies of the $atest system documentation
and be very fami$iar with the companys !#M% before beginning survei$$ance activities&
/.E Cost Impacts. %ince A+%2(!2A6?>@ has been pub$ished, the cost of imp$ementing !#M% is
considered part of the norma$ management costs that wou$d have been incurred in any case&
Bowever, improper imp$ementation and maintenance may create an unnecessary financia$
burden on the contractor and the /overnment& Typica$ areas where cost cou$d be mitigated
inc$ude se$ection of the proper $eve$s for management and reporting, the reGuirements for
variance ana$ysis, and the imp$ementation of effective survei$$ance activities& (%ee Part 4 for
guidance on tai$oring data items and constructing an effective survei$$ance p$an&)
Differences arising from divergent needs of the /overnment and the contractor, such as the
$eve$ of reporting detai$, shou$d be discussed during contract negotiations& ;hi$e the guide$ines
are not subFect to negotiation, many prob$ems concerning timing of !#M% imp$ementation and
re$ated reporting reGuirements can be avoided or minimiHed through negotiation& The
/overnment customer and contractor shou$d a$so periodica$$y review processes and data
reporting to ensure that the tai$ored !#M% approach continues to provide the appropriate $eve$ of
performance information to management&
/.8 Conc!sion& !#M and reporting have proven their va$ue over many years& App$ication of
the !#M% guide$ines he$ps to ensure that contractors have and continue to app$y adeGuate
management systems that integrate cost, schedu$e, and technica$ performance& This approach
a$so provides better overa$$ p$anning, contro$, and discip$ined management of /overnment
contracts& %ubstantia$ improvements in management can be achieved by senior management
and the PM if they underta<e accountabi$ity for system effectiveness and use& An !#M%
comp$iant with the guide$ines, and proper$y used, he$ps to ensure that va$id cost, schedu$e, and
technica$ performance information continues to provide the PM with an effective too$ for
decision6ma<ing&
?
#ART / . #R$CED%RES ($R "$VERNMENT %SE $( EARNED VA'%E
PA,T 4 provides procedures for /overnment personne$ app$ying !#M to /overnment contracts&
2t shou$d be remembered that throughout this document, the term IcontractJ refers to both
contracts with private industry as we$$ as to agreements with intra6governmenta$ activities that
meet the DoD reporting thresho$ds& %imi$ar$y, the term IcontractorJ refers to entities within both
private industry and /overnment&
#ART / SECTI$N -
A##'1IN" EARNED VA'%E MANA"EMENT
/.-.- $*er*ie=. !#M has been used to manage DoD acGuisitions since the =A8:s&
2ndependent studies over the years have confirmed the va$idity of earned va$ue as a program
management too$M however, !#M has not a$ways been consistent$y app$ied or used to manage
programs& The intent of this guide is to improve the consistency of !#M app$ication across DoD
and within industry& ;hen PMs begin to use !#M in its proper conte"t as a too$ to integrate and
contro$ program performance, the under$ying !#M system and processes become se$f6regu$ating
and se$f6correcting& PMs shou$d $ead this effort& The success or fai$ure of !#M and u$timate$y,
the success of the program itse$f, depends heavi$y on whether the PM fu$$y embraces !#M and
uses it on a dai$y basis&
/overnment PMs recogniHe the importance of assigning responsibi$ity for integrated
performance to the I")'#!a)'% P!%$&) T'a+5 (2PT)& The earned va$ue ana$yst shou$d assist the
PM in coordinating and integrating ana$ysisM however, the u$timate responsibi$ity for managing
program performance rests with the PM and the 2PTs&
%enior DoD acGuisition officia$s a$so recogniHe the importance of industry ownership of !#M& 2n
the mid =AA:s DoD adopted the industry version of the !#M guide$ines, and is continuing to
wor< with industria$ associations for continua$ improvement of the entire !#M process&
%uccessfu$ imp$ementation rests on cooperation, teamwor<, and $eadership by the PM& There are
different support organiHations that assist the program team in tai$oring and imp$ementing
effective !#M on a program& This section of the guide defines the ro$es and responsibi$ities of
the various organiHations, offices, and agencies within the DoD&
/.-./ Component Reations4ips. A DoD component is defined as a service, organiHation or
agency with acGuisition authority& The Defense Contract Audit Agency (DCAA) and the DCMA
are considered components of DoD& There are many organiHations which depend on contractor6
prepared and submitted earned va$ue information, and it is important that the needs of each
organiHation are ac<now$edged and recogniHed& These needs are ba$anced to ensure the wants
of one do not encroach on the basic needs of another&
/.-.0 Roes and Responsi5iities.
/.-.0.- DoD Ac@!isition, Tec4noogy and 'ogistics 2$%SD7AT,' 2ARA7AM33. The
office of the 0ndersecretary of Defense for AcGuisition, Techno$ogy, and *ogistics, AcGuisition
,esources and Ana$ysis, AcGuisition Management (.0%D(AT-* (A,A(AM)) oversees a$$ !#M
po$icy deve$opment within DoD&
/.-.0./ DoD ECec!ti*e Agent. DCMA is designated as the DoD !"ecutive Agent for !#M%&
The DCMA is responsib$e for ensuring the integrity and app$ication effectiveness of contractor
!#M%& To this point, the DCMA wor<s with various /overnment and 2ndustry teams to deve$op
practica$ !#M% guidance to ensure initia$ and ongoing comp$iance with !#M% guide$ines in
@
A+%2(!2A6?>@& As !"ecutive Agent, the DCMA has forma$ cogniHance of the maintenance of
this guide and provisions inc$uded herein&
/.-.0./.- EVMS Re*ie= Director and Team. The !"ecutive Agent designates a ,eview
Director for a$$ !#M% comp$iance reviews, inc$uding initia$ va$idation reviews, post award system
reviews, and reviews for cause& The ,eview Director is responsib$e for preparing and e"ecuting
a review p$an that inc$udes:
,eview DirectorLs name, organiHation, and phone numberM
Contractors name, division, $ocation, and point of contactM
Contract numberM
Dasis, cause, purpose, and scope of the reviewM and
!stimated starting date and duration of the review&
/.-.0././ Roe of ECec!ti*e Agent in Appea #rocess. Differences in interpretation of
earned va$ue imp$ementation between interested parties within the /overnment and the
contractor sometimes arise& These differences may inc$ude issues on guide$ine app$ication and
system review reGuirements& Attempts shou$d be made to reso$ve these issues at the $owest
$eve$s& Those differences which cannot be reso$ved at the $owest $eve$ may be appea$ed to the
!"ecutive Agent for reso$ution& !ither /overnment or contractor representatives may initiate an
appea$& Participants in the appea$ have the opportunity to provide appropriate rationa$e, e"hibits,
and discussion, as reGuired, to support their positions& Pending reso$ution, the invo$ved parties
shou$d continue to operate in accordance with the contractor procedures as imp$emented&
/.-.0.0 Component EVM (oca #oints. !ach component shou$d estab$ish a foca$ point to
serve as a point of contact for coordination and e"change of information on !#M& The !#M
foca$ point is responsib$e for effective po$icy imp$ementation within their component, ensuring
consistency with DoD po$icy and the provisions of this guide& The !#M foca$ point is usua$$y
assisted by an EVMSS& These staff personne$ are responsib$e for: disseminating current po$icy
and providing advice, ensuring effective !#M imp$ementation on new contracts, ana$ysis of
contractor performance reports, faci$itating 2ntegrated Dase$ine ,eviews (2D,s), ris<
assessments, supporting survei$$ance activities to assess the !#M% management processes and
the reports the system produces& *ists of appropriate contacts for Component and other Agency
foca$ points are avai$ab$e at the .%D !arned #a$ue website (*)),:;;999.a&:.5%.+il;,+)&
/.-.0.9 #roc!ring Acti*ity. The responsibi$ity for imp$ementing !#M on a contract is assigned
to the organiHation tas<ed with e"ecuting the procurement& This organiHation is norma$$y referred
to as the Procuring Activity& 'or purposes of this guide, the Procuring Activity is composed of
the Program Management .ffice (PMO), the contracting organiHation, and the integrated
Component activities that support the PM.& The PM and the PM. have the responsibi$ity to
he$p ensure that a$$ so$icitations and contracts contain the correct !#M% and 2ntegrated Master
%chedu$e (2M%) reGuirements, tai$ored as appropriate for the specific nature of the program in
accordance with DoD po$icy& The PM and PM. a$so have the responsibi$ity to conduct the
I")'#!a)'% 3a5'li"' R'vi'9, perform integrated performance ana$ysis, use this performance data
to proactive$y manage the program, and accurate$y report performance to decision ma<ers&
/.-.0.D Contract Management $ffice 2CMO3. The CM. is the office that is assigned to
administer contractua$ activities at a specific contractor faci$ity or regiona$ area in support of the
PM.& The cogniHant CM. is a part of DCMA, and the CM. may designate an EVMS S,'&iali5)&
;here contract administration responsibi$ities are retained by the Procuring Activity that
organiHation functions as the CM.& Additiona$ guidance regarding CM. functions is provided in
this /uide, 'A, Part >4, and the DCMA 2nstruction(/uideboo<& The A%+i"i5)!a)iv' C")!a&)i"#
O((i&'! (AC.) is authoriHed to e"ecute the A%va"&' A#!''+'") (AA) or *etter of Acceptance
(*.A) with the contractor that recogniHes the contractors !#M% va$idation& The AC. is a$so
authoriHed to withdraw this va$idation after certain procedures have been fo$$owed, as specified
A
in paragraph 4&9&5 of this /uide& %ome DoD agencies vest this responsibi$ity in the procuring
contracting officer (PC.) if an AC. has not been assigned to administer the contract&
/.-.0.E Contract A!ditor. The D'('"5' C")!a&) A$%i) A#'"&8 (DCAA) is responsib$e for
conducting audits of the contractorLs accounting and financia$ management system po$icies,
procedures, and acceptabi$ity of contractors incurred costs and estimates of costs to be incurred,
inc$uding indirect costs and rates& The contract auditor assigned by DCAA a$so participates in
survei$$ance and !#M% reviews&
=:
#ART / SECTI$N /
#RE.C$NTRACT ACTIVITIES
/./.- $*er*ie=. This section provides !#M po$icy and genera$ guidance for pre6contract activities,
inc$uding preparation of the so$icitation and contract, conduct of source se$ection activities, and
tai$oring of reporting reGuirements& The information provided in this section supports the po$icy
contained in DoD2 5:::&4 and guidance contained in the Defense AcGuisition /uideboo<& DoD2 5:::&4
po$icy ta<es precedence over any guidance contained in this guide or any other .%D or subordinate
guideboo<&
/././ "enera "!idance for #rogram Managers.
/././.- )or> &rea>do=n Str!ct!re 2)&S3. The program ;D% is a <ey document that is
deve$oped by the PM and systems engineering staff very ear$y in the program p$anning phase& The
;D% forms the basis for the statement of wor< (%.;), systems engineering p$ans 2M%, !#M%, and
other status reporting& (%ee M2*6BDDE6@@=, ;or< Drea<down %tructure Bandboo<, for further
guidance&)
/./././ #rogram Manager Responsi5iities. The PM has the responsibi$ity to fo$$ow current DoD
po$icy in app$ying !#M and 2M% reGuirements to the proposed contract& !#M system reGuirements are
defined in the contract S)a)'+'") ( W!4 (%.;) and in the app$icab$e so$icitation(contract c$auses&
(%ee paragraphs 4&2.5.2 and 4&2.5.0 for additiona$ guidance&)
!#M reporting reGuirements are defined in the C")!a&) Da)a R':$i!'+'")5 Li5) (CD,*)& The PM
shou$d tai$or reporting reGuirements based on a rea$istic assessment of management information
needs for effective program contro$& The PM has the f$e"ibi$ity to tai$or reGuirements that optimiHe
contract visibi$ity whi$e minimiHing intrusion into the contractors operations& /overnment reporting
reGuirements are to be specified separate$y in the contract through the use of a CD,* (DD 'orm =>496
=, or eGuiva$ent)& These reGuirements shou$d be contained in both the so$icitation document and in the
contract& The PM is a$so engaged in the eva$uation of the proposed !#M% during source se$ection&
%ee Appendi" ! award fee e"amp$es that can be used as a summary chec<$ist of imp$ementation
actions&
/./.0 Department of Defense Re@!irements.
/./.0.- #oicy. DoD po$icy mandates !#M for maFor acGuisition contracts that meet the thresho$ds
and criteria contained in DoD2 5:::&4& +.T!: The March ?, 4::5, DoD memorandum, subFect
,evision to DoD !arned #a$ue Management Po$icy, serves as the interim po$icy unti$ the DoD2 5:::&4
is updated& (The thresho$ds are described be$ow in paragraphs 4&4&9&=, &4, and &9 and 'igures 46= and
464&) This is mandatory, un$ess waived by the Mi$estone Decision Authority (MDA)& This po$icy a$so
app$ies to high$y sensitive c$assified programs, maFor construction programs, and automated
information systems& 2n addition, it app$ies to contracts wherein the fo$$owing circumstances e"ist: (=)
the prime contractor or one or more subcontractors is a non60% sourceM (4) contract wor< is to be
performed in /overnment faci$itiesM or (9) the contract is awarded to a specia$iHed organiHation such as
the Defense Advanced ,esearch ProFects Agency& DoD po$icy a$so mandates that the !#M
reGuirements be f$owed down to subcontracts that meet the thresho$ds and criteria prescribed in DoD2
5:::&4&
/./.0./ "o*ernment Component T4res4ods. Thresho$ds are in then year or esca$ated do$$ars&
;hen determining the contract va$ue for the purpose of app$ying the thresho$ds, the tota$ contract
va$ue, inc$uding p$anned options p$aced on contract at the time of award, shou$d be used& The term
Icontracts and agreementsJ in the fo$$owing paragraphs refers to contracts, subcontracts, intra6
government wor< agreements, and other agreements&
/./.0.0 EVMS Compiance& As prescribed in DoD2 5:::&4, &+,lia"&' with A+%2(!2A6?>@ is
reGuired for DoD cost or incentive contracts and agreements va$ued at or greater than N4:M&
==
Comp$iance with A+%2(!2A6?>@ and and an !#M% va$idation are reGuired for DoD cost or incentive
contracts and agreements va$ued at or greater than N5:M& 2f the contract va$ue is $ess than N5:M,
then forma$ vali%a)i" of the contractors !#M% is not reGuiredM however, the contractor needs to
maintain comp$iance with the standard& Contract reporting inc$udes the Contract Performance ,eport
(CPR) and the IMS&
/./.0.9 EVMS $ptions&
/./.0.9.- Contracts 'ess t4an F/GM& The app$ication of !#M is not reGuired on cost or incentive
contracts or agreements va$ued at $ess than N4:M& The decision to imp$ement !#M on these contracts
and agreements is a ris<6based decision, at the discretion of the PM, based on a cost6benefit ana$ysis
that compares the program ris<s vs& the cost of !#M imp$ementation& The purpose of the cost6benefit
is to substantiate that the benefits to the /overnment outweigh the associated costs& 2t does not
reGuire approva$ above the PMM however, if desired, it may be inc$uded in the program acGuisition
strategy& 'actors to consider when ma<ing a ris<6based decision to app$y !#M on cost or incentive
contracts or agreements va$ued at $ess than N4:M are as fo$$ows:
The tota$ contract va$ue inc$uding p$anned options& 2f the va$ue of a contract is e"pected to
grow to reach or e"ceed N4:M, the PM shou$d consider imposing an !#M reGuirement on the
contract&
!arned va$ue imp$ementation costs with respect to the tota$ contract va$ue& 2mp$ementation
shou$d not be seen as a cost driver&
Type of wor< and $eve$ of reporting avai$ab$e& Deve$opmenta$ or integration wor< is inherent$y
more ris<y to the /overnment and reporting shou$d ref$ect how programs are managing that
ris< basis&
%chedu$e critica$ity of the contracted effort to a programs mission& 2tems reGuired to support
another program or schedu$e event may warrant !#M reGuirements&
/./.0.9./ Contracts 'ess t4an -/ Mont4s in D!ration& !#M is a$so optiona$ for contracts or
agreements of $ess than =4 months in duration inc$uding options, since the cost and time needed for
!#M imp$ementation may outweigh any benefits received&
/./.0.9.0 Non.Sc4ed!e.&ased Contracts& The app$ication of !#M to contracts that may be
categoriHed as Inon6schedu$e6basedJ, i&e&, those that do not ordinari$y contain wor< efforts which are
discrete in nature, shou$d be considered on a case6by6case basis& I+on6schedu$e6basedJ contracts
inc$ude:
those compensated on the basis of Itime and materia$sJ (T-M) used, such as in time and
materia$ contracts,
IservicesJ contracts,
any contracts composed primari$y of *eve$ of !ffort (*.!) activity, such as program
management support contracts&
2ndefinite De$ivery(2ndefinite )uantity (2D(2)) or tas< order type contracts, within which wor< is
awarded on the basis of de$ivery orders that may or may not be schedu$e6based&
I+on6schedu$e6basedJ contracts might not permit obFective wor< measurement due to the nature of the
wor< most of which cannot be divided into segments that produce tangib$e, measurab$e product(s)&
The nature of the wor< associated with the contract is the <ey factor in determining whether there wi$$
be any appreciab$e va$ue in obtaining !#M information& 2n cases where the nature of the wor< does
not $end itse$f to meaningfu$ !#M information, it may be appropriate to waive the !#M reGuirement&
;hen appropriate, waiver reGuests shou$d be inc$uded in the program acGuisition strategy& 2f the !#M
reGuirement is waived for a contract due to the nature of the wor<, the PM shou$d imp$ement an
a$ternative method of management contro$ to provide advanced warning of potentia$ performance
prob$ems&
!very effort shou$d be made to identify, separate, and measure any discrete wor< from any wor< that is
typica$$y identified as *.! in nature& %ince the earned va$ue metric, Dudgeted Cost for ;or<
Performed (DC;P), is automatica$$y earned for *.! activities, i&e&, DC;P K Dudget Cost for ;or<
=4
%chedu$ed (DC;%), there can be no schedu$e variances for *.! activities& A$so, since DC;P is not
based on obFective wor< measurement, the resu$ting cost variances are $i<e$y to be mis$eading&
=9
'2/0,! 46= D!C2%2.+ P,.C!%% '., !#M APP*2CAT2.+
=>
H N5:M ,!)02,!D
2nc$udes: Contracts for high$y c$assified, foreign,
and in6house programs&
o Must use A+%2(!2A6?>@ comp$iant and
va$idated management system&
o CP, (a$$ formats) is reGuired&
o 2ntegrated Master %chedu$e is reGuired&
o %chedu$e ,is< Assessment (%,A) is reGuired
+ot reGuired for: 'irm6fi"ed price contracts&
(Dusiness case ana$ysis and MDA approva$
reGuired&)
+ot recommended for: Contracts $ess than =4
months in duration&
May not be appropriate for: +on6schedu$e based
contract efforts, e&g&, $eve$ of effort&
H N4:M but I N5:M ,!)02,!D
2nc$udes: Contracts for high$y c$assified, foreign,
and in6house programs&
o Must use A+%2(!2A6?>@ comp$iant
management system& +o va$idation&
o CP, 'ormats = and 5 are reGuired&
o 2ntegrated Master %chedu$e is reGuired&
+ot reGuired for: 'irm6fi"ed price contracts&
(,eGuires business case ana$ysis and MDA
approva$&)
months in duration&
.PT2.+A*
o CP, 'ormats 4, 9, and > are optiona$&
o %chedu$e ,is< Assessment is optiona$&
I N4:M .PT2.+A* 6 0%! O0D/M!+T
!va$uate management needs carefu$$y to ensure
on$y minimum information needed for effective
management contro$ is reGuested& o A+%2(!2A6?>@ comp$iance is discretionary and
shou$d be based on ris<&
o CP, 'ormats = and 5 are recommended&
o 2ntegrated Master %chedu$e is optiona$&
,eGuires cost6benefit ana$ysis and PM approva$&
months in duration&
Contracts designated as ImaFor capita$ acGuisitionsJ shou$d be treated as contracts P N5:M&
'2/0,! 464 !#M% TB,!%B.*D% (2+ TB!+ C!A, N)
2t is appropriate to waive the !#M reGuirement in cases where the nature of the wor< wou$d not $end
itse$f to meaningfu$ !#M information& !"emptions from the !#M po$icy shou$d be the e"ception, not
the ru$e, because they are necessary on$y in cases where a cost or incentive contract is being used for
non6schedu$e6based wor<& This type of wor< is typica$$y accomp$ished using a 'irm 'i"ed Price (''P)
contract&
/./.0.9.9 Monitoring Cost ECpendit!res in 'ie! of EVM. 2f desired, cost e"penditures for any
of the contract efforts discussed above in paragraphs 4&4&9&>&= through 4&4&9&>&9 may be monitored
and trac<ed with the app$ication of the C")!a&) F$"%5 S)a)$5 R',!) (C'%,) (D26M/MT6@=>8@)&
/./.0.D Contract "ro=t4 and T4res4ods. Determination of the app$icabi$ity of !#M and 2M% is
based on the estimated contract price and the e"pected va$ue of p$anned options at the time of
contract award& Most contracts are modified as time progresses, and a significant number of contract
modifications usua$$y increases the contract va$ue& 2n some cases, a contract that was awarded at $ess
than N4: mi$$ion may $ater cross the thresho$d for !#M comp$iance or a contract awarded for $ess than
N5: mi$$ion may $ater cross the thresho$d for va$idation& Therefore, it is recommended that the
=5
increased tota$ contract va$ue be re6eva$uated against the !#M thresho$ds for a new app$ication of
!#M& 2n no case shou$d there be an attempt to de$iberate$y circumvent !#M po$icy by e"c$uding
<nown wor< from the basic contract award and inc$uding it $ater as a contract modification& The PM
shou$d eva$uate the tota$ contract va$ue inc$uding p$anned options and impose the appropriate !#M
reGuirement based on that tota$ va$ue&
/./.0.E MaAor Capita Ac@!isition. ,egard$ess of the contract va$ue and thresho$ds, !#M may be
mandated if the product or service being acGuired is designated as a ImaFor capita$ acGuisitionJ in
accordance with OM3 Ci!&$la! A-//2 Pa!) 72 =Pla""i"#2 3$%#')i"#2 A&:$i5i)i"2 a"% Ma"a#'+'") (
Ca,i)al A55')5>.

/./.0.8 ECc!sions for (irm (iCed #rice 2((#3 Contract Type. The app$ication of !#M on
''P contracts and agreements is discouraged, regard$ess of do$$ar va$ue& %ince cost e"posure is
minimiHed in a ''P environment, the /overnment may e$ect to receive on$y the 2M% in order to
manage schedu$e ris<& 2f <now$edge by both parties reGuires access to cost(schedu$e data due to
program ris<, the PM shou$d re6e"amine the contract type to see if an incentive contract is more
appropriate for the ris<& Bowever, in e"traordinary cases where cost(schedu$e visibi$ity is deemed
necessary and the contract type (''P) is determined to be correct, the /overnment PM is reGuired to
obtain a waiver for individua$ contracts from the MDA& 2n these cases the PM conducts a <$5i"'55 &a5'
a"al85i5 that inc$udes supporting rationa$e for why a cost or fi"ed price incentive contract was not an
appropriate contracting vehic$e and rationa$e for !#M% app$ication& (%ee A,,'"%i? G for guidance&)
;hen appropriate, the business case ana$ysis shou$d be inc$uded in the acGuisition approach section
of the program acGuisition strategy report& 2n cases where the contractor a$ready has an !#M% in
p$ace and p$ans to use it on the ''P contract as part of their regu$ar management process, !#M
reporting reGuirements shou$d be negotiated before app$ying an !#M reGuirement& Bowever, nothing
contained herein is meant to suggest that /overnment personne$ shou$d attempt to dissuade
/overnment contractors who, pursuant to their interna$ program management po$icies, use !#M% on
a$$ contracts, irrespective of contract type, from their use of earned va$ue techniGues to manage ''P
contracts&
/./.0.8.- (actors to Consider in Appying EVM to ((# Contracts+ %ome factors to consider
in app$ying !#M in a ''P environment are as fo$$ows:
effort is deve$opment in nature and invo$ves a high $eve$ of integration
comp$e"ity of the contracted effort (e&g&, state6of6the6art research versus commercia$ off the
she$f (C.T%) procurement of items a$ready bui$t in $arge numbers)
schedu$e critica$ity of the contracted effort to the overa$$ mission of the program& 2tems
reGuired to support another program or schedu$e event may warrant !#M reGuirements
since cost ris< e"posure is minimiHed in a ''P environment, the /overnment may e$ect to
receive on$y the 2M% in order to manage schedu$e ris<
nature of the effort, e&g&, software intensive effort, is inherent$y ris<y
contractor performance history as demonstrated by prior contracts with CP, data or
documented in Contractor Performance Assessment ,eports (CPA,s)
designation of the program as a QmaFor capita$ acGuisitionQ in accordance 9i)* OM3 Ci!&$la!
A-//2 Pa!) 7
/./.0.8./ Taioring Reporting on ((# Contracts. %ee paragraph 2.2.5.6.0.1 for guidance on
tai$oring !#M reporting on firm6fi"ed price contracts&
/./.0.: MiCed Contract Types& Additiona$ care is ta<en when app$ying !#M comp$iance and
performance reporting to a particu$ar contract that is a mi" of contract types& 'or e"amp$e, a contract
may be composed of cost p$us incentive fee (CP2'), ''P, and T-M e$ements& The fo$$owing genera$
guidance app$ies in this circumstance: $imit reporting to what can and shou$d be effective$y used& 2n
some cases, it may be advisab$e to e"empt portions of the contract from CP, or 2M% reporting, if they
do not meet the overa$$ thresho$d or contract type criteria& +orma$$y, different contracting types are
app$ied to different contract $ine item number (C*2+) items, and these can then be segregated within
=8
the ;D%& !ach portion of the contract that fa$$s under a different contract type shou$d be eva$uated
separate$y for !#M imp$ementation, inc$uding CP, or 2M% reporting&
.ne caution that shou$d be <ept in mind is the potentia$ impact to the C'%,, which can be app$ied to
a$$ contract types with the e"ception of ''P& 2t may be advisab$e to ca$$ for separate reporting by
contract type in the C'%,& The fo$$owing e"amp$es i$$ustrate these concepts&
ECampe -: The p$anned contract is a deve$opment contract with an e"pected award va$ue of N4::M&
At the time of award, the contract type is entire$y cost p$us award fee (CPA')& %ubseGuent to award,
some additiona$ wor< is added to the contract on a T-M C*2+&
So!tion: 'u$$ !#M (va$idation and comp$iance) and CP, reporting shou$d be app$ied at the time of
award to the entire contract, but the T-M efforts shou$d be e"empted from CP, reporting at the time
they are added to the contract& The T-M efforts are deemed $ow ris< and are e"c$uded from the 2M%&
Bowever, the T-M efforts e"tend over severa$ years and the PM wishes to have a separate forecast of
e"penditures and bi$$ings& The C'%, data item is therefore amended to ca$$ for separate reports for
the CPA' and T-M efforts&
ECampe /: The p$anned contract is a mi" of deve$opment and production efforts, with a p$anned
va$ue of NA:M& At the time of award, the deve$opment effort is estimated at N=:M under a CPA'
C*2+, and the production is priced as ''P for the remaining N@:M&
So!tion: The PM conducted a ris< assessment and conc$uded that the ris< did not Fustify !#M and
CP, reporting on the ''P production effort, nor was there sufficient schedu$e ris< to Fustify an 2M%&
The PM noted that the deve$opment effort fe$$ be$ow the mandatory N4:M thresho$d, and determined
that !#M was not app$icab$e, based on a ris< eva$uation& Bowever, a C'%, is determined to be
appropriate for the deve$opment portion of the contract to monitor e"penditures and bi$$ings& A C'%,
wou$d not be appropriate for production, as it is priced as ''P&
ECampe 0: A p$anned contract ca$$s for deve$opment and maintenance of software& The overa$$
va$ue of the deve$opment portion is N9:M, and the maintenance portion is N=?:M& Deve$opment is
p$aced on a CP2' C*2+, whi$e maintenance is spread over severa$ cost p$us fi"ed fee (CP'') C*2+s&
2t is anticipated that the maFority of the maintenance effort shou$d be *.!& The PM is concerned about
proper segregation of costs between the efforts, and has determined that there is significant schedu$e
ris< in deve$opment& The PM is a$so concerned about agreeing up front to e"c$ude the maintenance
portion from !#M reporting& %ince there is a specified re$iabi$ity thresho$d that is maintained during the
operationa$ phase, performance ris< has been designated as moderate& There are <ey maintenance
tas<s that can be measured against the re$iabi$ity thresho$d&
So!tion: !#M comp$iance and va$idation shou$d be p$aced on the contract at the time of contract
award& The CP, and 2M% reporting are app$ied to the deve$opment portion at the time of contract
award& %pecific thresho$ds are estab$ished at contract award for variance reporting for the
deve$opment effort& !#M and CP, reporting is a$so imposed on the maintenance portion of the
contract& 'ormat = reporting is estab$ished at a high $eve$ of the ;D%, with 'ormat 5 reporting
thresho$ds for maintenance to be re6eva$uated after review of the !#M methodo$ogy during the 2D,&
#ariance reporting then specifica$$y e"c$udes ;D% e$ements that are determined to be *.!& C'%,
reporting is a$so reGuired for the entire contract, with a reGuirement to prepare separate reports for the
deve$opment and maintenance portions, since they are funded from separate appropriations& The 2M%
is reGuired for the deve$opment effort, but not for the maintenance effort&
2n conc$usion, every contract is carefu$$y e"amined to determine the proper app$ication of reporting&
The preceding e"amp$es were shown to i$$ustrate the various factors that shou$d be eva$uated in
determining the appropriate $eve$ of reporting& !very contract is different, and the ana$yst is
encouraged to wor< with the PM and earned va$ue staff officers to determine the appropriate
reGuirements&
/./.0.J IMS ECc!sions. The 2M% is mandatory in a$$ cases where !#M is mandatoryM however, the
2M% may be reGuired when there is no !#M (CP,) reGuirement& The 2M% is optiona$ or not
recommended for those conditions described above where !#M is optiona$ or not recommended&
=?
Bowever, there is an additiona$ consideration for e"c$usion of the 2M%& %ince the 2M% is a networ<
based schedu$e, it is most appropriate for deve$opment and $ow rate initia$ production (*,2P) contracts&
The 2M% is not typica$$y app$ied to fu$$ rate production contracts& (%ee D26M/MT6@=85:) 'u$$ rate
production efforts are geared toward recurring activity and are not suitab$e for networ<ing& These
contracts are usua$$y p$anned and managed using production schedu$es such as $ine of ba$ance or
materia$ reGuirements p$anning (M,P) schedu$es& /enera$$y spea<ing, these fu$$ rate production
contracts are contracted on an ''P basis, which wou$d reGuire MDA approva$ for app$ication of !#M
and 2M%&
/./.0.-G ECc!sion )ai*ers. !"c$usion waivers of the mandatory reporting thresho$ds need to be
approved by the MDA& +orma$$y the se$ection of contract type shou$d adeGuate$y ref$ect program ris<,
and as a resu$t, waivers shou$d not be reGuired& Bowever, in some cases, the contract type may meet
the criteria for !#M and 2M% reporting, but the PM may determine that the contract shou$d be e"empt&
.ne e"amp$e might be the award of a Ifi"ed price incentive R successive targetJ contract in a mature,
fu$$ rate production environment which estab$ishes an overa$$ price cei$ing and gives the contractor
some degree of cost responsibi$ity in the interva$ before a firm arrangement can be negotiated& The
PM eva$uates the ris< in the contract effort and ma<es a recommendation to the MDA for waiver based
on the ris< assessment&
/./.0.-- S!pport and Ad*ice. 2n structuring a procurement to inc$ude !#M reGuirements, the
advice and guidance of the component !#M foca$ point shou$d be sought by those preparing the
so$icitation pac<age& Bowever, the !#M foca$ point shou$d not provide advice to program offices that
contradicts officia$ DoD po$icy& DoD components may estab$ish the reGuirement for coordination
among staff officers on so$icitation pac<ages to ensure consistency with DoD po$icy&
/./.9 Ac@!isition #an. A <ey document in the pre6contract phase is the AcGuisition P$an& The
AcGuisition P$an detai$s the process for procuring the reGuired hardware, software and(or services& The
procuring activity shou$d e"p$ain in the management section of this document the reason for se$ection
of contract type and the ris< assessment resu$ts $eading to p$ans for managing cost, schedu$e, and
technica$ performance& ,efer to the 'A,, subpart ?&=&
/./.D #reparation of t4e Soicitation.
/./.D.- MaAor Areas. The fo$$owing discussion describes the four maFor areas of the so$icitation
pac<age that need to contain !#M reGuirements& .f these areas, determine the $atest revision of the
document to app$y to the contract& !ach is described in more detai$ in the fo$$owing sections&
)&S Describes the under$ying product6oriented framewor< for program
p$anning and reporting
D(ARS ca!ses ,eGuires the contractor to use a comp$iant !#M%M May reGuire the contractor
to use a va$idated !#M%
Statement of )or> Describes the wor< to be done by the contractor, inc$uding data items
Contract Data Describes the /overnments tai$ored reGuirements for each data item
Re@!irements 'ist
/./.D./ )or> &rea>do=n Str!ct!re. As discussed previous$y in paragraph 4&4&4&=, the ;D%
shou$d be deve$oped by the PM and systems engineering staff very ear$y in the program p$anning
phase& The program ;D% contains a$$ ;D% e$ements needed to define the entire program, inc$uding
/overnment activities& The contract ;D% (C;D%) is the /overnment6approved ;D%, for reporting
purposes and its discretionary e"tension to $ower $eve$s by the contractor, in accordance with
/overnment direction and the %.;& 2t inc$udes a$$ the e$ements for the products (hardware, software,
data or services) which are the responsibi$ity of the contractor&
=@
The deve$opment of the C;D% is very important to the effectiveness of an !#M%& The ;D% is the
basic structure for !#M% data co$$ection and reporting, and shou$d be ref$ected in the detai$ed
activities in the 2M%& A too6detai$ed or poor$y6structured C;D% can increase the cost of imp$ementing
and maintaining an 2M% on a program&
A pre$iminary C;D% shou$d be inc$uded in the so$icitation and is usua$$y specified to *eve$ 9& The PM
shou$d e"ercise considerab$e care in its deve$opment, as providing too much detai$ to the contractor
may have the adverse impact of restricting design trade space& The C;D% and dictionary
reGuirements shou$d be described in the %.; and ca$$ed out on a CD,* using Data 2tem Description
(D2D) D26M/MT6@=99>D& Appendi" C, Fi#$!' C-5, contains a samp$e CD,* for the C;D%&
The pre$iminary C;D% is e"panded to $ower $eve$s after contract award by the contractor to ref$ect a$$
wor< to be accomp$ished on the contract and to faci$itate management, data co$$ection, and reporting&
There shou$d on$y be one ;D% that is used as the basis for a$$ contract reporting& That is, a common
;D% that fo$$ows M2*6BDDE6@@= (app$icabi$ity of revision is based on the revision of document at time
of contract award un$ess otherwise specified&) is reGuired for the CP,, the 2M%, and the Contractor
Cost Data ,eport (CCD,)& The contractor shou$d <eep the C;D% dictionary current at a$$ times and
provide updates to the PM, as specified in the CD,*&
('or contracts that reGuire contractor cost data reporting, the C;D% is a$so contained in the approved
Cost and %oftware Data ,eporting (C%D,) P$an that is inc$uded in the so$icitation& The C%D, P$an is
deve$oped, approved, and maintained in accordance with DoD 5:::&>6M6=, Cost and %oftware Data
,eporting Manua$, $in< to http:((dcarc&pae&osd&mi$( for further guidance&
/./.D.0 Defense (edera Ac@!isition Reg!ation S!ppement 2D(ARS3 Ca!ses. The
appropriate D'A,% c$auses shou$d be inc$uded in the so$icitation and the resu$ting contract& (%ee
'igure 469&) There is a sing$e set of c$auses for !#M% comp$iance and va$idation, and a different set
for !#M% comp$iance& The figure shows the app$ication for each c$ause and a summary of the
contents& %ee )*' OSD EVM 9'<5i)' for the $atest version of the c$auses&
'2/0,! 469 D'A,% C*A0%!%
N$TE+ 0nti$ there is a fina$ ru$e on the new D'A,% c$auses, the e"isting c$auses (454&4>46?::= for
so$icitations and 454&4>46?::4 for contracts) shou$d be used& 'or contracts va$ued at or greater than
N5: mi$$ion, these c$auses shou$d be app$ied direct$y& 'or contracts va$ued at or greater than N4:
mi$$ion but $ess than N5: mi$$ion, the fo$$owing paragraph shou$d be inc$uded in the %.;: I2n regards to
D'A,% 454&4>46?::= and 454&4>46?::4, the contractor is reGuired to have an EVMS that complies
with ANSI/EIA-748; however, the Government will not ormall! accept the contractor"s mana#ement
s!stem $no compliance review%&' ;hi$e not reGuired, if a ris<6based decision is made to reGuire !#M
=A
/D/./9/.8GG- Soicitation
s
,eGuires comp$iance with A+%2(!2A6?>@& Contractor sha$$
document that he has an accepted system or show a p$an to achieve
va$idation&
/D/./9/.8GG/
Soicitations,
Contract
s
Contractor sha$$ use the accepted system in contract performance or
sha$$ demonstrate comp$iance& ,eGuires 2D,s& Approva$ of system
changes and .TD(.T%& Access to data for survei$$ance& App$icab$e to
subs&
/D/./9/.8GG- Soicitation
s
Provide a written summary of management procedures or proof of
acceptance& ,'P states that /overnment va$idation is not reGuired&
/D/./9/.8GG/
Soicitations,
Contract
s
Contractor sha$$ comp$y with A+%2(!2A6?>@ in contract
performance but va$idation is not reGuired& ,eGuires 2D,s& Approva$ of
.TD(.T% and notification of system changes& Access to data for
survei$$ance& App$icab$e to subs&
EVMS Compiance
EVMS Compiance , Determination
on cost or incentive contracts va$ued at $ess than N4: mi$$ion or ''P contracts, the above paragraph
shou$d be inc$uded in the statement of wor<&
/./.D.9 Statement of )or> 2S$)3& The %.; shou$d contain the fo$$owing reGuirements& %ee
A,,'"%i? 3 for samp$e %.; paragraphs&
Contractor shou$d deve$op the C;D% to the $eve$ needed for adeGuate management and
contro$ of the contractua$ effort& A sing$e C;D% shou$d be used for p$anning, managing, and
reporting&
Contractor shou$d perform the contract technica$ effort using a guide$ines6comp$iant !#M% that
corre$ates cost and schedu$e performance with technica$ progress& The %.; shou$d ca$$ for
progress and prob$ems to be presented and discussed in periodic program management
reviews& Technica$ issues shou$d be covered in terms of performance goa$s, e"it criteria,
schedu$e progress, ris<, and cost impact&
Designation of critica$ subcontractors, by name, for !#M comp$iance and va$idation or f$ow
down of !#M% comp$iance to subcontractors&
2ntegrated Program Management reporting shou$d reGuire a CP,, an 2M%, a C'%,, and a
contract ;D% and dictionary& Data items are ca$$ed out by parenthetica$ references at the end
of the appropriate %.; paragraph& %pecify if subcontractor CP, or 2M% reports are to be
inc$uded as attachments to the prime contractor reports&
The %.; shou$d a$so contain and describe the reGuirement for the 2D, process& This
estab$ishes the reGuirement for the initia$ 2D, to be initiated within si" months after contract
award(authoriHation to proceed (ATP) and for incrementa$ 2D,s as needed throughout the $ife
of the contract for maFor contract changes invo$ving rep$anning or detai$ p$anning of the ne"t
phase of program&
/./.D.D Contract Data Re@!irements 'ist 2CDR'3. !"cessive cost and schedu$e reporting
reGuirements can be a source of increased contract costs& Carefu$ consideration is given when
preparing the CD,* to ensure that it identifies the appropriate data needs of the program and the
appropriate D2D& The CD,* provides contractua$ direction for preparation and submission of reports,
inc$uding reporting freGuency, distribution, and tai$oring instructions& DD 'orm =>496= is used to
specify the data item reGuirements and shou$d contain any necessary tai$oring&
2n estab$ishing the cost and schedu$e reporting reGuirements, the PM shou$d $imit the reporting to what
can and shou$d be effective$y used& Bow the PM. is or may be organiHed to manage the effort shou$d
be considered and the reporting shou$d be tai$ored to those needs&
/./.D.D.- Reporting Re@!irements. 'igure 464 above portrays the current reGuirements for !#M
and 2M% reporting& %ufficient $atitude e"ists within this framewor< to tai$or reporting to the needs of
most programs& Tai$oring guidance for the CP, in ''P contracts is discussed in paragraph
4&4&5&8&9&>&
/./.D.D./ Eectronic Data Interc4ange 2EDI3& The use of e$ectronic media is reGuired for a$$
reports un$ess disc$osure of this information wou$d compromise nationa$ security& A$$ data shou$d be in
a readab$e digita$ format (e&g&, pdf fi$es are not acceptab$e)& The A+%2 3=4 standard (@9A transaction
set), the 0nited +ations !$ectronic Data 2nterchange for Administration, Commerce and Transport
(0+(!D2'ACT) standard (P,.C%T message), or the 3M* eGuiva$ent are the accepted formats& .n6
$ine access to the data may be provided to augment forma$ submission& ,eGuirements to submit
reports by e$ectronic means are inc$uded in the CD,*& 2f techno$ogy is not avai$ab$e to support 3=4 or
3M* 2M% data submission, the 2M% shou$d be de$ivered e$ectronica$$y in the native digita$ format&
/./.D.D.0 "enera Taioring "!ideines. A$$ parts of D2Ds can be tai$ored as necessary per the
tai$oring guidance contained in this guide& Bowever, there are prohibitions against adding
reGuirements beyond the reGuirements in the standard D2D& Tai$oring is accomp$ished via the DD
=>496=, CD,* form& Any tai$oring instructions, such as freGuency, depth or formats reGuired, are
annotated on the CD,* forms&
4:
The program office shou$d have an interna$ process to review and approve a$$ CD,*s for the contract&
The !#M%% can provide assistance in tai$oring& 2t shou$d be stressed that the CP, and 2M% are
management reports and the CD,*s shou$d therefore be prepared by or thorough$y discussed with the
PM&
The CP, and the 2M% app$y to a$$ contracts that meet the !#M app$icabi$ity reGuirements& .n
contracts va$ued at or greater than N4:M but $ess than N5:M, it is recommended that CP, and 2M%
reporting be tai$ored& Tai$oring to the specific needs of the program is high$y encouraged and is
described in greater detai$ be$ow& %amp$e DD 'orms =>496= for both the CP, and the 2M% are
inc$uded in A,,'"%i? C&
/./.D.E Taioring "!idance for t4e Contract #erformance Report 2C#R3
/./.D.E.- Introd!ction. The CPR is the means to convey information about the performance of a
program or contract, and shou$d a$ways be carefu$$y tai$ored to meet the needs of the PM and the
program team& As such, the CP, is a usefu$ means of communicating program status from the
contractor to the customer& 2t shou$d ref$ect how the contractor is using !#M as a too$ to manage
contract performance&
The primary cha$$enge for the Foint team is to tai$or the report so that it meets these primary needs,
rather than a$$owing it to degenerate into a IcustomerJ report that can on$y be used to ana$yHe historica$
costs& Carefu$ attention is therefore reGuired during the proposa$ and contract definitiHation stages to
tai$or the CP, D2D (D26M/MT6@=>88A)& Discussions shou$d be he$d, as appropriate, between the
contractor and customer to discuss their Foint needs for the report& !"perience has shown that a Foint
approach he$ps assure that the reporting reGuirements of the customer are met, whi$e meeting the
needs of the contractors interna$ management cu$ture and processes& This Foint approach ensures
that the CP, is a vita$ and viab$e too$ for both contractor and customer&
/./.D.E./ Ris> (actors. The fo$$owing ris< factors shou$d be considered carefu$$y by the
/overnment PM when tai$oring the D2D&
/./.D.E./.- CompeCity. Comp$e"ity factors can usua$$y be attributed to technica$ ris<, schedu$e ris< or
cost ris<& An integrated ris< assessment (2,A) performed by the program team prior to contract award
can he$p identify these ris< factors and their interdependence& This ana$ysis can pinpoint specific ;D%
e$ements with the highest ris< which can be high$ighted for more detai$ed reporting, i&e& reporting at
$ower $eve$s of the C;D% on the CP, 'ormat = (C;D%) and on 'ormat 5 (+arrative Ana$ysis)&
%chedu$e ris< is often underappreciated for its contribution to driving contract performance and cost
overruns& The 2M% reGuirement supports schedu$e assessment and identification of critica$ path
impacts& Thorough schedu$e ris< assessment, with a focus on integration efforts (hardware(software,
subcontractor effort, materia$, etc&) shou$d identify those e$ements that reGuire management attention&
A forma$ schedu$e ris< assessment (%,A) shou$d be conducted by the PM. as ear$y as possib$e in the
p$anning phase to aid in refining the contract reporting reGuirements& (%ee paragraph 4&4&5&?&5 for
re$ated information on the reGuirement for the contractor to conduct %,A as part of the 2M%&)
/./.D.E././ #rogram #4ase. /enera$$y spea<ing, deve$opment contracts contain much more ris<
than production contracts& 2t is usua$$y more difficu$t to accurate$y forecast $abor hour reGuirements
and a rea$istic schedu$e for deve$opment efforts& As a resu$t, the CP, 'ormat 9 (Dase$ine) and 'ormat
> (%taffing) shou$d ta<e on more importance during deve$opment contracts to provide insight into the
contract base$ine and to he$p ana$yHe performance and its re$ation to future prob$ems& ;hi$e a$so
important for production or operations and maintenance contracts, the reporting freGuency of 'ormats
9 and > for these contracts may be tai$ored for $esser freGuency (e&g&, Guarter$y)&
The type and number of ris< e$ements a$so differ depending on program phase& Technica$ ris<, for
e"amp$e, is genera$$y much higher during deve$opment than during production& 2t is critica$ for the
PM. to identify any ris< areas for the contract to ensure adeGuate reporting visibi$ity& This shou$d be
4=
done prior to tai$oring the CD,*& Areas of ris< shou$d be specified in the CD,* for more detai$ed
reporting&
/./.D.E.0 Specific Taioring "!idance for t4e C#R. The comp$e"ity factors discussed in
paragraph 4&4&5&8&4&= shou$d be considered when determining the degree of tai$oring that is
appropriate for the CP, data item for a given contract& The ris< inherent to the program shou$d be the
prime consideration for tai$oring of the CP,& .ther factors to consider are the siHe of the contract,
comp$e"ity of integration with other contract efforts, re$iance on /overnment 'urnished
!Guipment(/overnment 'urnished Property (/'!(/'P), techno$ogy maturity, and type of contract&
/./.D.E.0.- DD -9/0.-, &oc>s -G, -/, and -0
&oc> -G ('reGuency): !nter freGuency& +orma$$y, the CP, shou$d be de$ivered month$y& (+.T!: 2f
the contractor is using wee<$y !#M, wee<$y performance data may be provided as an adFunct to the
submission of the fu$$ report& +orma$$y wee<$y earned va$ue data is for interna$ $abor on$y and may be
reported on 'ormat =& The contractor and /overnment shou$d discuss data avai$abi$ity and de$ivery
and tai$or the CD,* as appropriate&
&oc> -/ (Date of first submission): +orma$$y, the first submission is specified to be made no $ater
than 8: days after contract ATP&
&oc> -0 (Date of subseGuent submissions): !nter I%ee D$oc< =8J and describe further in D$oc< =8&
The CP, D2D specifies de$ivery of the CP, no $ater than =4 wor<ing days after the end of the
contractors accounting period& This reGuirement may be tai$ored through contract negotiations to
a$$ow submission as $ate as =? wor<ing days, provided that the contractor and /overnment agree that
the program comp$e"ity and integration of subcontractor and vendor performance data warrants
additiona$ time and wou$d yie$d more accurate performance data& Bigh$y comp$e" contracts that
reGuire a high degree of integration of performance reporting from contractor partners or
subcontractors may reGuire additiona$ time to adeGuate$y integrate performance data& Contractors
may a$so e$ect to attach subcontractor CP,s and(or reference this ana$ysis in the prime contractors
'ormat 5 reporting submitted to the /overnment to gain time efficiencies and meet submission dates&
'$ash Data: 2f desired by the /overnment and agreed to by the contractor, specify that 'ormat = (and
optiona$$y 'ormats 4, 9, and >) shou$d be de$ivered as f$ash data within ? wor<ing days and remaining
formats be de$ivered no $ater than =? wor<ing days&
'ina$ submission: 'ina$ submission shou$d be specified within D$oc< =8 as we$$, and typica$$y is
specified as Iwhen the $ast significant mi$estone(de$iverab$e as defined by the contract has been
achieved and remaining ris< areas have been mitigatedJ with program office
agreement(ac<now$edgement&
/./.D.E.0./ DD -9/0.-, &oc> -E+ This b$oc< is used to tai$or the reGuirements in the D2D&
Tai$oring can inc$ude: 'ormat = reporting $eve$s, reGuired formats, reporting freGuencies, designation of
time periods for 'ormats 9 and >, variance reporting thresho$ds, and de$ivery options& These are
described be$ow in more detai$&
/./.D.E.0./.- (ormat - Reporting 'e*es. The PM shou$d carefu$$y eva$uate the C;D% reporting
$eve$s se$ected for routine reporting to ensure that on$y the minimum data necessary for effective
management contro$ and cost ana$ysis reGuirements are obtained& The reporting $eve$ specified in the
CD,* is norma$$y at contract ;D% $eve$ 9& ,eporting may be specified at $ower $eve$s for
comp$icated, high cost or high ris< items& 2t is not necessary for reporting $eve$s in different $egs of the
;D% to be the same& 'or e"amp$e, reporting in the Prime Mission !Guipment $eg of the ;D% may be
at ;D% *eve$ four, whi$e reporting in the Training $eg may be at *eve$ three& Program management
personne$ shou$d determine the appropriate $eve$& (,efer to the guidance in paragraph 4&4&5&8&4, Ri54
Fa&)!5, for aid in se$ection of reporting $eve$s&)
44
The reporting $eve$ of ;D% e$ements shou$d be eva$uated periodica$$y and changed, as necessary, to
ensure that the CP, continues to satisfy the PMs needs&
2f CCD, has a$so been p$aced on the contract, there may be a difference between the CCD, and CP,
as to the a$$ocation and reporting of genera$ and administrative (/-A) indirect costs& CCD, reGuires
/-A to be co$$ected and reported separate$y as an IaddJ item on the CCD, reports& Bowever, the
CP, D2D a$$ows the contractor f$e"ibi$ity in assigning responsibi$ity and a$$ocating costs for a$$ indirect
costs (inc$uding /-A) across the ;D% e$ements& 2f the contractor does a$$ocate /-A to the ;D%
e$ements in the CP,, the program office may wish to as< for an additiona$ CP, 'ormat = coincident
with the CCD, report submission that mirrors the non6a$$ocation of /-A& The purpose of this
additiona$ 'ormat = wou$d be to reconci$e with the CCD, reports, but this shou$d not drive additiona$
variance reporting or any additiona$ format beyond 'ormat =&
/./.D.E.0././ Seection of (ormats. 'igure 46> shou$d be uti$iHed to he$p understand the content
and uses of each CP, format& 2t provides guidance on the se$ection of CP, formats, per .%D po$icy&
/./.D.E.0./.0 Reporting (re@!encies. The norma$ reporting freGuency for a$$ formats is month$y&
Bowever, this can be tai$ored as appropriate& %ome contractors may use wee<$y !#M data and offer
to provide it to the /overnment, and this can be negotiated and specified in D$oc< =8& Certain formats
may $end themse$ves to tai$oring to $ess freGuent reporting under certain circumstances& ,efer to
'igure 465 for guidance&
/./.D.E.0./.9 Designation of Time #eriods for C#R (ormats 0 , 9. The CP, D2D reGuires
the contractor to comp$ete CP, 'ormats 9 - >, co$umns =: through =>, by specified periods or
periodic increments, as negotiated with the procuring activity& The D2D states that additiona$ co$umns
may be added as necessary to 'ormat 9& Typica$$y, the CD,* specifies that the ne"t si" months are
separate$y identified, fo$$owed by either Guarter$y, si" month or annua$ increments to comp$ete& 2f
desired, specify that the base$ine and estimate to comp$ete (!TC) be bro<en out by month unti$ the end
of the contract& The fo$$owing paragraph provides an e"amp$e of how the report periods might be
specified in the CD,*& !3AMP*!: 'ormats 9 and > shou$d contain base$ine, !TC, and staffing
forecasts by month for co$umns > through A, then by three6month periods for co$umns =: 6 ==, then by
=4 month periods for the ne"t two subseGuent periods (co$s =4 and =9), and the remainder of the
contract for the $ast period (co$ =>)&
/./.D.E.0./.D Variance Reporting T4res4ods. 2t is high$y recommended that a$$ reGuirements for
'ormat 5 contained in the CP, D2D (D26M/MT6@=>88A) be retained& #ariance ana$ysis shou$d contain
the fo$$owing narrative e$ements:

%ummary Ana$ysis
%ummary of .vera$$ Contract #ariances
Differences Detween !ACs (D$oc<s 8&A, 8&D, 8&C, .r D$oc< @&=5)
Changes in 0ndistributed Dudget
Changes in Management ,eserve
%ignificant Time6phasing %hifts 2n Dase$ine (DC;%) ('ormat 9)
%ignificant Time6phasing %hifts or .vera$$ Changes 2n 'orecasted %taffing ('ormat >)
Discussion .f .ver Target Dase$ine and(or .ver Target %chedu$e 2ncorporation
Ana$ysis of %ignificant #ariancesM (2dentify And Describe !ach)
Type and Magnitude .f #ariance
!"p$anation of %ignificant ,easons
!ffect on 2mmediate Tas<
!ffect on Tota$ Contract
Correct Actions Ta<en or P$anned
49
'2/0,! 465 C.+T,ACT P!,'.,MA+C! ,!P.,T (CP,) '.,MAT%
4>

(ormat Tite (re@!ency Description %se of (ormat Seection
-. )or> &rea>do=n
Str!ct!re
Month$y or wee<$y basis
as provided in contract
,eports performance data (DC;%, DC;P and AC;P) by
reporting ;D% e$ements for the current reporting period as
we$$ as cumu$ative to date data& Cost and schedu$e
variances are ca$cu$ated and reported& 2dentifies any
reprogramming adFustment, budget at comp$etion, estimate
at comp$etion, and variance at comp$etion by e$ement& A$so
shows management reserve and undistributed budget&
2t can a$so show indirect costs if reGuested&
2so$ate <ey cost and schedu$e variances, Guantify the impact,
ana$yHe and proFect future performance& Performance
issues iso$ated at $owest $eve$ and ana$yHed for impact to
overa$$ cost and schedu$e variances&
N4:M contracts: Mandatory&
,ecommended for sma$$ contracts
SN4:M&
/. $rgani<ationa
Categories
Month$y or wee<$y basis
as provided in contract
,eports the same data as 'ormat = but identified by
contractor functiona$ $abor categories, maFor subcontractors,
and materia$&
%ame uses as 'ormat =, but provides for ana$ysis of
interna$ ($abor) variances or e"terna$ (subcontractor(materia$)
variances&
N4:M but SN5:M contracts:
.ptiona$, but recommended for
deve$opment contracts or contracts
with significant outsourcing efforts&
0. &aseine Month$y, Guarter$y or
semi6annua$$y& Month$y
recommended for
deve$opment or high ris<
contracts&
Dudgeted time6phased base$ine costs to end of program&
This format shows significant base$ine changes authoriHed
during the reporting period& Data inc$udes contract budget
base, tota$ a$$ocated base$ine, comp$etion dates, and
management reserve&
Data can be p$otted to determine if there has been a shift in
the base$ine curve since the previous report& Ana$ysis can
focus on the distribution of cost for authoriHed changes to the
base$ine during the period& 0sed to determine if .ver Target
Dase$ine or .ver Target %chedu$e has been incorporated into
the program&
deve$opment contracts&
+ot usefu$ for shorter duration
contracts ($ess than two years)&
9. Staffing Month$y, Guarter$y or
semi6annua$$y& Month$y
recommended for
deve$opment or high ris<
contracts&
%taffing forecasts in months by functiona$ category unti$ the
end of the contract&
%taffing data p$otted over time and corre$ated to maFor
mi$estones and activities on the contract schedu$e shows
accuracy of $abor estimates& ProFected staffing $eve$s
shou$d be ana$yHed for consistency with schedu$ed
activities& Corre$ate this ana$ysis with 'ormats 4 and 9&
deve$opment contracts&
+ot usefu$ for shorter duration
contracts ($ess than two years)&
D. ECpanation and
#ro5em Anayses
Month$y +arrative e"p$anation of <ey cost, schedu$e, and variance
at comp$etion variances& Contractor describes
under$ying reasons, program impacts, and corrective action p$ans for
significant drivers at the $owest specified $eve$ and at the
tota$ contract $eve$& 2nc$udes ana$ysis of M,, undistributed
budget, and overa$$ ris<&
Corre$ated with data from 'ormats = and 4 to understand
reasons for the variances& 0nderstanding the under$ying
reasons and the contractorLs get we$$ p$ans he$p the ana$yst
prepare an integrated assessment of past and future trends
and ana$yHe overa$$ e"ecutabi$ity& PM can then ma<e
informed decisions&
,ecommended for sma$$ contracts
SN4:M&
The /overnment shou$d reGuire the minimum amount of variance ana$ysis in 'ormat 5 which
satisfies its management information needs, but yet adeGuate$y addresses a$$ significant
variances& !"cessive variance ana$ysis is burdensome and cost$y, and detracts from the CP,Ls
usefu$ness, whi$e too $itt$e information is eGua$$y undesirab$e& The contractor shou$d be
encouraged to submit 'ormat 5 in contractor format& 'orma$ or informa$ feedbac< to the
contractor on a regu$ar basis $eads to continued improvement in the Gua$ity of the 'ormat 5&
D$oc< =8 shou$d inc$ude a statement that cost and schedu$e variance ana$ysis thresho$ds be
reviewed periodica$$y (norma$$y semiannua$$y) to determine if they continue to meet the
/overnmentLs information needs& 2f they do not, the thresho$ds shou$d be changed at no cost to
the /overnment& There is no prescribed basis for identification of significant cost and schedu$e
variances for 'ormat 5 reporting& The /overnment may specify any one of severa$ ways to
identify such variances, inc$uding, but not $imited to the fo$$owing:
'i"ed +umber of #ariances& %pecify the number of variances to be ana$yHed, e&g&, ten, twenty,
etc& The significance of these variances can be based on any of the fo$$owing: current month,
cumu$ative to date, at6comp$etion estimates or assessments of ris< areas as identified through
the /overnment(contractor management review process& Any number of significant variances
may be se$ected, but the /overnment shou$d be carefu$ to se$ect on$y the number needed for
effective program management&
Percentage or Do$$ar Thresho$ds& %e$ect variances to be ana$yHed based on percentage or do$$ar
thresho$ds, or a combination of both& 'or e"amp$e, a$$ current month, cumu$ative or at6
comp$etion variances T(6 =:U may be se$ected for ana$ysis& 2f se$ecting variances based on
do$$ar thresho$ds, specify the variances as p$us or minus some do$$ar amount, e&g&, T(6 N45E&
The do$$ar amount se$ected shou$d be appropriate for the va$ue of the effort invo$ved& A
variation of this method is to se$ect variances based on both percentage and do$$ar thresho$ds&
'or e"amp$e, a$$ current, cumu$ative or at6comp$etion variances
T(6 =:U and T(6 N5:E may be se$ected for ana$ysis& The thresho$ds shou$d be reviewed
periodica$$y to ensure they continue to provide a reasonab$e amount of usefu$ information&
%pecific #ariances& 2n this methodo$ogy, the PM. se$ects e$ements for variance ana$ysis on$y
after reviewing 'ormat = or 4& 0sing this method, the CP, is de$ivered prompt$y after the
contractorLs accounting period ends, with a$$ reGuired information in 'ormats = through >& .nce
the /overnment has reviewed this performance data, it se$ects specific variances for ana$ysis by
the contractor& This method may be the most efficient since the /overnment can pinpoint areas
to be ana$yHed& 2t is a$so the most f$e"ib$e because there may be some months when a review of
the performance data yie$ds few or insignificant variance ana$ysis candidates& Bowever, this
method shou$d on$y be used if the /overnment is certain it has sufficient resources to review
each month$y CP, prompt$y to se$ect the variances for which e"p$anations are needed&
Contractor Determined %ignificant #ariances& 0sing this methodo$ogy, there are no
predetermined variance thresho$ds, as the contractor se$ects the significant variances for
reporting each month& The /overnment reserves the right to modify the CD,* and to designate
specific variance thresho$ds shou$d the contractor continue to se$ect too few variances for
ana$ysis and reporting&
/./.D.E.0.0. C#R Taioring on Cost or Incenti*e Contracts Va!ed at 'ess T4an
F/GM. 2f an !#M reporting reGuirement is app$ied on cost or incentive contracts va$ued at $ess
than N4:M tai$oring may be $ess stringent than for contracts reGuired to comp$y with A+%2(!2A
?>@& CP, 'ormats = and 5 are recommended and variance ana$ysis can be sca$ed down to
inc$ude the top 5 or =: variances& #ariance ana$ysis for the current period is a$so an option& The
$eve$ of reporting is dependent on the contract ris< regard$ess of va$ue& The fo$$owing tai$oring
options are avai$ab$e depending on the $eve$ of ris<&

45
%ignificant variances can be identified and defined by the contractor&
CP,s may be submitted entire$y on $ine&
'orma$ variance ana$ysis may be rep$aced with interna$ reports or status meetings&
/./.D.E.0.9 C#R Taioring "!idance for (irm (iCed #rice Contracts. .n$y the MDA can grant
a waiver a$$owing app$ication of !#M to a ''P contract (see paragraph 4&4&9&=)& .nce granted,
on$y the minima$ !#M reGuirements necessary to provide the /overnment team with the desired
visibi$ity into program performance shou$d be app$ied& %ince cost e"posure is minimiHed in a
''P environment, the /overnment may e$ect to receive an 2M% in order to manage schedu$e
ris<& 2n addition to the tai$oring guidance described in the preceding paragraphs, the fo$$owing
guidance shou$d aid in tai$oring the CP, for ''P contracts&
/./.D.E.0.9.- (ormats - and /& The contractor may wish to preserve the companys
competitive edge for future contracts by not divu$ging the costs (and therefore profit margin) of a
''P contract& The /overnment may consider a$$owing the contractor to report 'ormat = and 4
interna$ costs by $abor hours (not do$$ars), and may further ro$$ up reporting to a high $eve$ of
;D% reporting& ,eporting of $abor hours wou$d prec$ude inc$usion of materia$ do$$ars on either
format& A$ternative$y, the /overnment may consider performance reporting at the price $eve$
(fees inc$uded) for 'ormats = and 4& 0nder this option, the contractor deve$ops a cost to price
factor and app$ies it even$y across a$$ data in a$$ reporting periods& The CD,* shou$d specify that
independent chec<s of the correct app$ication of this factor be conducted at various points
throughout the contract& The CD,* shou$d a$so specify that the cost to price factor be base$ined,
uniform$y app$ied, and not modified during e"ecution, in order to prevent front $oading or
restriction of actua$ costs to the capped price $eve$&
+.T!: These e"ceptions from standard CP, reporting on 'ormat = do not app$y to contracts
that have CCD, reGuirements& These contracts report costs by C;D% and the tota$ profit(fee as
a separate $ine item, in accordance with DoD 5:::&>6M6=, Cost and %oftware Data ,eporting
Manua$, and the C;D% D2D (D26M/MT6@=99>D)&
/./.D.E.0.9./ (ormat 0& This format is optiona$ for ''P contracts, but may be reGuired when
there is a high potentia$ for significant changes in reGuirements or seGuence of activities& 2t may
be important for the PM. to understand the changes to time phased resources in the base$ine&
/./.D.E.0.9.0 (ormat 9. +ot recommended for ''P contracts&
/./.D.E.0.9.9 (ormat D. 2n addition to the 5)a"%a!% !'&++'"%a)i"5 for se$ection of significant
e$ements, the /overnment shou$d consider the nature of the contract wor< and the rationa$e for
app$ying !#M to the ''P contract& Comp$etion of the business case ana$ysis shou$d he$p the
PM target the ris<y e$ements of the contract for variance reporting&
2f concerned more about schedu$e performance than cost performance, the /overnment may
$imit or e$iminate variance ana$ysis of the significant cost and #AC, focusing attention on
schedu$e variances&
Another a$ternative is to e$iminate the 'ormat 5 a$together, and to re$y on the written ana$ysis
provided as part of the 2M% data item&
'ormat 5 may even be considered optiona$ if the contractor and /overnment agree on a$ternate
methods of understanding performance, e&g&, wee<$y team status meetings, on $ine access to
contractor interna$ reports, statused assemb$y or $ine of ba$ance schedu$es&
/./.D.E.0.D (ormat of C#R Dei*ery.
/./.D.E.0.D.- Contractor (ormat. The CP, D2D contains a samp$e format for a$$ five CP,
formats, but a$so states that contractor format is acceptab$e& As $ong as a$$ reporting e$ements
are contained in the contractors format to the e"tent needed, this shou$d be accepted and even
encouraged by the customer as a cost saving measure&
48
/./.D.E.0.D./ Eectronic (ormat. The CP, D2D specifies that a$$ formats be in a readab$e
digita$ format (e&g&, pdf fi$es are not acceptab$e) or be made avai$ab$e on $ine for down$oading
through e$ectronic $in<s& The A+%2 3=4 standard (@9A transaction set), the 0+(!D2'ACT
standard (P,.C%T message), or the 3M* eGuiva$ent shou$d be used to submit data
e$ectronica$$y to the procuring activity& Contractor formats may be substituted whenever they
contain a$$ of the reGuired data e$ements at the specified reporting $eve$s and are comp$iant with
the 3=4 standard, 3M* schema or eGuiva$ent& (+.T!: 0nti$ the A+%2 3=4(3M* standards are
redefined to incorporate the changes to the forms, the new data e$ements are reported in 'ormat
5&) The !D2 reGuirement shou$d not be tai$ored out&
/./.D.E.0.D.0 #aper S!5missions. The CD,* may specify receipt of one paper copy of the
report for the officia$ program fi$es, in addition to !D2 transmitta$& (+.T!: that commercia$
ana$ysis too$s a$$ow the program office to print copies of the CP, for any month contained in the
database&)
/./.D.8 Taioring "!idance for t4e Integrated Master Sc4ed!e 2IMS3
/./.D.8.- Introd!ction. The CD,* for the 2M% (DI-MGMT-8/656) submission shou$d focus
on the reGuirements needed for schedu$e management& These schedu$es contain an integrated
networ< of tas<s, subtas<s, activities, and mi$estones with sufficient $ogic and durations to
perform the %.;& The 2M% is deve$oped by the contractor in conFunction with the contract ;D%
and if app$icab$e, the 2ntegrated Master P$an (2MP)&
The 2M% is intended to show IhowJ and IwhenJ the 2MP is accomp$ished& 2t shou$d be an
e"tension of the information contained within the 2MP or high6$eve$ program p$an, ref$ecting the
events, significant accomp$ishments, and criteria identified in the 2MP but a$so tas<s subordinate
to the criteria& 2M% Gua$ity shou$d be such that it provides a <ey too$ for ensuring consistency of
actions and unity of purpose among program team members& The 2M% shou$d describe a
rea$istic and supportab$e schedu$e consistent with the 2MP& The networ< shou$d determine the
f$ow of the 2M%&
The 2M% is an integrated, networ<ed schedu$e containing a$$ the detai$ed discrete wor< pac<ages
(;Ps) and p$anning pac<ages (PPs) (or $ower $eve$ tas<s(activities) necessary to support the
events, accomp$ishments, and criteria of the 2MP (if app$icab$e)& The 2MP events,
accomp$ishments, and criteria are dup$icated in the 2M%& Detai$ed tas<s are added to depict the
steps reGuired to satisfy each criterion& The 2M% shou$d be direct$y traceab$e to the 2MP and
shou$d inc$ude a$$ the e$ements associated with deve$opment, production, and(or modification
and de$ivery of the tota$ product and(or program high $eve$ p$an& Durations are entered for each
discrete ;P and PP (or $ower $eve$ tas<(activity), a$ong with predecessor(successor
re$ationships, and any constraints that contro$ the start or finish of each ;P and PP (or $ower
$eve$ tas<(activity)& The resu$t is a fu$$y networ<ed Ibottoms upJ schedu$e that supports critica$
path ana$ysis& 2t shou$d be noted that a$though durations are assigned at the wor< pac<age and
p$anning pac<age (or $ower $eve$ tas<(activity) $eve$, these durations ro$$ up to show the overa$$
duration of any event, accomp$ishment or criterion& ;hen *.! wor< pac<ages or tas<s(activities
are inc$uded in the 2M% they shou$d be c$ear$y identified as such& *.! shou$d never drive the
critica$ path(s)&
/./.D.8./ Specific Taioring "!idance for t4e IMS& The comp$e"ity factors discussed in
paragraph 4&2.5.5.2 a$so app$y to tai$oring of the 2M% data item& The ris< inherent to the program
shou$d be the prime consideration for tai$oring of the 2M%& .ther factors to consider are the siHe
of the contract, comp$e"ity of integration with other contract efforts, re$iance on /'!(/'P,
techno$ogy maturity, and type of contract&
/./.D.8.0 DD -9/0.-, &oc>s -G, -/ and -0
4?
&oc> -G ('reGuency): The 2M% shou$d be submitted no $ess freGuent$y than month$y& The 2M%
may ref$ect data as of the end of the ca$endar month or preferab$y as of the contractors
accounting period to ensure consistency and traceabi$ity to the CP,&
&oc> -/ (Date of first submission): The first submission may be tai$ored to ref$ect a higher $eve$
of p$anning or a detai$ed 2MP and subseGuent submission of the 2M% shou$d be detai$ed to the
D2D specifications&
&oc> -0 (Date of subseGuent submissions): !nter I%ee D$oc< =8J, and describe further in D$oc<
=8& 2n order to a$ign with the CP, submitta$s the 2M% shou$d be de$ivered no $ater than =4
wor<ing days after the end of the contractors accounting period& P$ease note that the most
current schedu$e shou$d be avai$ab$e as soon as the statusing process is comp$ete&
/./.D.8.9 DD -9/0.-, &oc> -E+ 2M% tai$oring can inc$ude: $eve$ of detai$, reporting freGuencies,
variance reporting, and %chedu$e ,is< Ana$ysis (%,A)& These are described be$ow in more
detai$&
/./.D.8.9.- IMS Taioring "!idance for Contracts Va!ed At or "reater T4an F/GM &!t 'ess
T4an FDGM. The /overnment monitors the progress of contracts va$ued at N4:M 6 N5:M with
the 2M%& As with the CP,, reGuirements for variance reporting and %,A can be tai$ored& ;hi$e
there is no IstandardJ siHe for an 2M%, the contractor shou$d strive to bui$d the 2M% of sufficient
detai$ to fu$$y describe the program for the /overnments eva$uation and to manage their own
day6to6day e"ecution and month$y contro$ of the program(proFect and the Performance
Measurement Dase$ine (PMD)& .f prime importance, and basic to a$$ networ< schedu$es, is the
identification of wor<f$ow interdependencies at the appropriate $eve$ to identify the critica$ path&
The ana$ysis shou$d inc$ude a critica$ path narrative describing the current critica$ path to the
program and(or the ne"t p$anning b$oc< mi$estone (e&g& Pre$iminary Design ,eview (PD,),
Critica$ Design ,eview (CD,), =st '$ight, etc&), changes to the critica$ path, and 2MP and(or
maFor program mi$estone impacts& The contractor may wish to e$iminate the reGuirement to
monitor and report near critica$ path progress& A$so, variance reporting inc$uding thresho$ds may
be adFusted to ref$ect the siHe and comp$e"ity of the contract& The contractor may wish to
perform the %,A on a $ess freGuent basis prior to the start of se$ected critica$ mi$estones $i<e
PD,, CD,, '$ight Test, etc&
/./.D.8.9./ Stat!sing t4e IMS.
The 2M% is statused at $east as often as the CP, is generated& 2t is time6synchroniHed in
accordance with a$$ sta<eho$der updates(status (e&g& vendors, subcontractors, and customer
activities)& The 2M% status cyc$e shou$d consider a$$ organiHationa$ ca$endars and a common
status date estab$ished for the integration of schedu$e data&
/./.D.8.9.0 Anay<ing and Reporting t4e IMS. The 2M% is ana$yHed and reported on a month$y
basis (as a minimum) in accordance with the D2D as tai$ored by the CD,*& Ana$ysis shou$d be
performed at the $owest $eve$M i&e& the $eve$ at which tas<s are $in<ed, constrained, and where
durations are estimated& The primary focus of the ana$ysis is on the critica$ path and near critica$
paths to identify schedu$e ris< and opportunity& A$$ progress and e"ceptions (missed base$ine
starts and finishes) to date shou$d be reported by ;D% to faci$itate traceabi$ity to the CP,& The
V$owest $eve$ must be defined and a reGuirement to $in< to the ;D% estab$ished&
The ana$ysis shou$d e"p$ain changes to critica$ path or near critica$ path ;Ps and PPs (or $ower
$eve$ tas<s(activities) from submission to submission as we$$ as any changes to the 2MP& The
impact of critica$ path changes on maFor program mi$estones or other maFor schedu$e ris< areas
shou$d a$so be discussed& ;or< around and(or recovery schedu$es(p$ans, and associated
impacts due to program changes shou$d a$so be provided& The schedu$e narrative shou$d
address progress to date and discuss any significant schedu$e changes such as added(de$eted
wor< pac<age(s), p$anning pac<age(s) or tas<(s)(activity(s), any significant $ogic revisions, and
any(a$$ changes in programmatic schedu$e assumptions&
4@
'ina$$y, the ana$ysis shou$d, if reGuired, be ab$e to forecast future potentia$ de$ays and(or
potentia$ prob$ems& This type of ana$ysis shou$d be done as needed and provided to the
customer and the program team to assist in the schedu$e ris< mitigation process&
/./.D.8.9.9 IMS Reporting 'e*es& The reporting $eve$ of the networ<ed schedu$e shou$d be
commensurate with the assessed $eve$ of ris< in the contract& Bigh6ris< efforts shou$d drive the
reGuirement for the most detai$ in the 2M% with documented mitigation(recovery p$ans, ground
ru$es, and assumptions& A$$ mitigation(recovery p$ans shou$d be p$aced within the 2M% upon
proper approva$& Bigh6ris< schedu$es, inc$uding deve$opment and *,2P efforts, shou$d be in the
form of a networ<ed schedu$e that a$$ows ca$cu$ation of a critica$ path& As the program
progresses through the acGuisition phases, ris< typica$$y dec$ines and the $eve$ of detai$ and
oversight may be decreased&
The program critica$ path is the seGuence of discrete tas<s(activities in the networ< that has the
$ongest tota$ duration through the contract& Discrete tas<s(activities a$ong the critica$ path have
the $east amount of f$oat(s$ac<& The standard for a networ<ed schedu$e means that a$$ discrete
contractua$ tas<s or activities are $ogica$$y networ<ed both horiHonta$$y and vertica$$y with
predecessor(successor $ogic, duration, and resources (when avai$ab$e) such that an accurate
critica$ path can be e$ectronica$$y ca$cu$ated by the schedu$ing software app$ication& (+.T!: 'ar
term activities may be he$d at a higher $eve$ of definition, but shou$d sti$$ be inc$uded in the
networ< ca$cu$ation&) The critica$ path a$so inc$udes the associated critica$ path program
mi$estones, <ey tas<s(activities and 2MP events& %chedu$e $ogic shou$d e"ist at the $owest $eve$
within the schedu$e, and the use of constraining dates shou$d be minimiHed& 'o$$owing these
genera$ princip$es shou$d resu$t in a va$id schedu$e networ< and critica$ path& A fu$$y networ<ed
schedu$e is a$ways advisab$e&
A detai$ed networ< schedu$e shou$d c$ear$y identify activities, product hand6offs and de$iverab$es
from interna$ and e"terna$ interfaces, from the $owest $eve$ of contract tas<s(activities up to the
summary $eve$ schedu$e activities and mi$estones& The determination of e"terna$ significant and
critica$ interfaces to be identified within the 2M% reGuires agreement between the contractor and
/overnment and is documented according$y&
LOE activities may be inc$uded or e"c$uded in the networ< as appropriate& This determination
shou$d be made based on contractor standard procedures& *.! activities shou$d not norma$$y
drive the critica$ pathM and this can be avoided by inc$uding *.! activities on the 2M% without
networ< $ogic& 2f *.! activities are inc$uded within the 2M%, they are c$ear$y identified as such&
As a best practice, understand that *.! wor< pac<age (or $ower $eve$ tas<(activity), by definition,
cannot inf$uence an event6driven schedu$e and are not reGuired to be inc$uded in the 2M%&
Bowever, if inc$usion is desired to maintain consistency with the cost system they shou$d be
inc$uded in such a way that they do not yie$d erroneous critica$ paths& *.! is reGuired to be in
the 2M% whenever a resource6driven schedu$e is constructed uti$iHing resource
$imitations(constraints& 2n these cases, *.! is reGuired to be inc$uded in the schedu$e a$ong with
the interdependencies with discrete wor<&
/./.D.8.9.D IMS 'e*e of Detai. There is no IstandardJ siHe for an 2MP(2M%& The contractor
shou$d strive to bui$d an 2MP and 2M% of sufficient detai$ to fu$$y describe the program for the
/overnments eva$uation and to manage their own day6to6day e"ecution of the program after
contract award& The contractor shou$d succinct$y describe the wor< reGuired to comp$ete the
contract in sufficient detai$ to fu$$y demonstrate an understanding of the scope and f$ow of the
wor<& The siHe of the resu$ting 2MP and 2M% is dependent on numerous factors such as the
$ength, content, and comp$e"ity of the contracted program, the amount of new deve$opment, the
technica$ ris< and associated ris< mitigation activities, and the scope of reGuired testing& An 2M%
summariHed at too high a $eve$ may often resu$t in mas<ing critica$ e$ements of the p$an to
e"ecute the program, and fai$ to show the ris< management approaches being used& 'urther, it
may often resu$t in $ong duration tas<s and artificia$ $in<ages, which mas< the true critica$ path&
Converse$y, too much detai$ can ma<e it more cha$$enging to status and assess the 2M% during
e"ecution&
.f prime importance, and basic to a$$ networ< schedu$es, is the identification of wor<f$ow
interdependencies at the appropriate $eve$& The 2M% shou$d consist of master and summary
4A
schedu$es and re$ated subordinate schedu$es that provide a $ogica$ seGuence, at a minimum,
from the master to the detai$ed wor< pac<age and p$anning pac<age $eve$s& 2n so doing, the
schedu$es can provide for the interdependent seGuencing of a$$ wor< authoriHed on the contract
in a manner compatib$e with 2MP events and(or <ey mi$estones& Detai$ed subordinate schedu$es
inc$ude, at a minimum, a$$ discrete ;Ps and PPs (or $ower $eve$ tas<s(activities) as determined
by the contactors interna$ processes& 2f difficu$ty is found with identifying $ogica$ ties to other
discrete wor<, the connection to the ne"t succeeding 2MP event and(or <ey mi$estone is
recommended& The 2M% shou$d be defined to the $eve$ of detai$ necessary for day6to6day
e"ecution and month$y contro$ of the program(proFect and the PMD&

/./.D.8.D Sc4ed!e Ris> Assessment 2SRA3. The 2M% D2D contains a tai$orab$e
reGuirement for the SRA, which is a proven ris< reduction schedu$ing practice& 2t is to be
comp$eted in accordance with the CD,* reGuirements (which can be used to tai$or D2D
reGuirements) and in conFunction with the 2ntegrated 3a5'li"' R'vi'9 (2D,)& The %,A shou$d be
comp$eted on a recurring basis and(or at <ey points in a deve$opment contract, for e"amp$e,
Guarter$y, semi6annua$$y, and(or prior to se$ected critica$ mi$estones $i<e PD,, CD,, '$ight Test,
etc& *,2P contracts may on$y need to have an %,A performed at the start of the contract&
/./.D.8.D.- #!rpose and Met4od. The purpose of a %,A is to provide the program
management team with an understanding of the potentia$ schedu$e impacts associated with
e"isting(emerging program ris<s& These assessments compute the probabi$ity of comp$eting <ey
mi$estones, events, ;Ps, PPs or tas<s(activities by specific dates&
The %,A emp$oys software that uses Monte Car$o simu$ations for each of the wor< pac<age and
p$anning pac<age (or tas<(activity) given the range of remaining duration, for the purpose of
determining a cumu$ative confidence curve& The software performs simu$ated IrunsJ of the
entire program schedu$e many times whi$e random$y varying the remaining durations according
to a probabi$ity distribution& The resu$ts indicate a I$eve$ of confidenceJ for comp$eting <ey
mi$estones, events, ;Ps, PPs (or tas<s(activities) by specific dates& The contractor uses their
own %,A software to conduct their assessmentM the /overnment %,A is performed with the %,A
software of their choosing&
/./.D.8.D./ SRA for Assessments& A %,A may be specified in the CD,* as either a submitta$ to
the customer or as a review by the customer or both& 2t a$so documents the e"pectations for a
%,A review by both the prime contractor and the /overnment&
;hen a %,A submitta$ is reGuested, the prime contractor performs the assessment and submits
to the customer at the reGuired CD,* interva$s& As part of their %,A reGuirement, the prime
contractor reports optimistic, pessimistic, and most $i<e$y remaining durations for each wor<
pac<age, p$anning pac<age and(or tas<(activity on the program critica$ path and critica$ path and
near critica$ paths to se$ected maFor mi$estone(s) with documentation of the assumption and
rationa$e of the three point estimates&
;hen a %,A is specified in the CD,* as part of the ris< management process, the /overnment
conducts periodic %,A with the participation of the prime contractor to provide the program
management team with an understanding of the potentia$ schedu$e impacts&
The prime contractor conducts a %,A and submits the assessment and three point duration
estimates and rationa$e to the /overnment& The three point remaining duration estimates,
supporting rationa$e, and assumptions shou$d be reviewed by /overnment technica$ (or other
Gua$ified) personne$& ;here there are Guestions or differences in opinion, the /overnment
technica$ e"pert contacts the Contro$ Account Manager (CAM) to discuss and try to reach an
understanding or agreement&
'or those CAMs with whom agreement on the three point duration estimates cannot be reached,
interviews may be conducted at the contractors faci$ity with pre6se$ected CAMs to try to reach an
understanding or agreement& 'or purposes of efficiency it is important that the interview be
9:
comp$eted in the shortest time possib$e& A %,A shou$d then be conducted& 2f there are
remaining differences in three point duration estimates or assumptions and rationa$e, then the
contractor and /overnment shou$d conduct separate %,As&
/./.D.8.D.0 SRA "!ideines. The fo$$owing guide$ines shou$d be used when performing a
%,A:
=) 'or the ris< assessment to be successfu$, the networ< schedu$e (or 2M%) is deve$oped and
maintained appropriate$y& Prior to performing the %,A, the networ< schedu$e shou$d be
reviewed to ensure that it is accurate&
4) At a minimum, any program ris< c$assified as IBigh ,is<J shou$d be represented in the 2M%
inc$uding any <ey mitigation steps that have been identified& The ,is< 2dentifier shou$d be coded
on each corresponding tas<(activity in the 2M% (,is< 2D 'ie$d) to provide traceabi$ity to the ,is<
Management Process and provide additiona$ visibi$ity within the 2M%&
9) The assessment shou$d be performed on the program critica$ path and critica$ path and near
critica$ paths to se$ected critica$ mi$estones&
a& Test Program Critica$ Path R $ongest path through entire program
b& Test Critica$ Path to ne"t maFor mi$estone(s)
c& Test near Critica$ Paths to ne"t maFor mi$estone(s)
>) 2n cases where the schedu$e ris< is <nown, i&e&, critica$ and near critica$ paths, three point
remaining duration estimates shou$d be estab$ished by the CAM based on the $i<e$ihood of the
ris< occurring and the conseGuences if the ris< is rea$iHed& The CAM estab$ishes the minimum,
most $i<e$y, and ma"imum remaining durations& The rationa$e used to estab$ish the remaining
durations shou$d be documented& /$oba$ ;eighting #a$ues shou$d be used to estab$ish min and
ma" remaining duration estimates for tas<s not identified as being on the critica$ and near critica$
paths& The IcurrentJ remaining duration recorded in the networ< schedu$e shou$d be used as the
most $i<e$y duration estimate&
5) The %,A is conducted in accordance with the CD,*& 2t may a$so be conducted when
necessary to incorporate significant changes in the data or assumptions&
8) The resu$ts of each assessment shou$d be trac<ed to demonstrate that the overa$$ schedu$e ris<
is decreasing over time&
/./.D.8.E IMS Taioring "!idance for Contracts Va!ed at 'ess t4an F/GM. The 2M%
tai$oring guidance for contracts va$ued at $ess than N4:M is simi$ar to those va$ued at or greater
than N4:M but $ess than N5:M& The $eve$ of comp$e"ity shou$d be considered when determining
reporting $eve$s and the $eve$ of detai$ and variance ana$ysis shou$d be considered for adeGuate
management insight&
/./.D.8.E.- IMS Taioring "!idance for (irm (iCed #rice Contracts. The /overnment
may wish to monitor the progress of the ''P contract with the 2M%& 2n these cases, the $eve$ of
detai$, reporting freGuencies, variance reporting, and %,A tai$oring shou$d be considered& ;hi$e
there is no IstandardJ siHe for an 2M%, the contractor shou$d strive to bui$d the 2M% of sufficient
detai$ to fu$$y describe the program for the /overnments eva$uation and to manage their own
day6to6day e"ecution of the program after contract award& .f prime importance, and basic to a$$
networ< schedu$es, is the identification of wor<f$ow interdependencies at the appropriate $eve$ to
identify the critica$ path& The contractor may wish to be more se$ective when deve$oping the
networ< by estab$ishing wor<f$ow interdependencies at a more summary $eve$& The statusing
and reporting of progress may be $ess freGuent than that of cost type contracts and variance
reporting inc$uding thresho$ds may be adFusted to ref$ect the siHe and comp$e"ity of the contract&
The contractor may wish to e$iminate the reGuirement to perform a %,A or perform them on a
$ess freGuent basis&
9=

/./.D.8.E./ (ormat of IMS Dei*ery.
/./.D.8.E./.- Contractor (ormat. The 2M% D2D specifies that the 2M% be created using a
networ< capab$e Commercia$$y off the %he$f (C.T%) schedu$ing software app$ication& As $ong as
a$$ reporting e$ements are contained in the contractors format, this shou$d be accepted and even
encouraged by the customer as a cost saving measure&
/./.D.8.E././ Eectronic (ormat. The 2M% D2D specifies that the 2M% be de$ivered e$ectronica$$y
in the native digita$ format (i&e&, an e$ectronic fi$e produced by the contractors schedu$ing too$) or
be made avai$ab$e on $ine for down$oading through e$ectronic $in<s& (+.T!: ;hen the
techno$ogy is avai$ab$e, the CD,* may be tai$ored, upon agreement between the prime
contractor and the /overnment representative, to a$$ow the A+%2 3=4 standard (@:8 transaction
set), the 0+(!D2'ACT standard (P,.TAP message) or the 3M* eGuiva$ent to be used to submit
data e$ectronica$$y to the procuring activity&) The !D2 reGuirement shou$d not be tai$ored out&
/./.D.8.E./.0 #aper S!5missions. A paper copy of the 2M% is not recommended for
networ< and critica$ path ana$ysis& %pecific data points, i&e&, ear$y start dates, base$ine dates,
duration or constraint dates, shou$d be identified in the CD,* if a paper submitta$ is specified for
officia$ program fi$es, in addition to !D2 transmitta$&
/./.D.: Data Item Descriptions 2DIDs3. Copies of D2Ds may be obtained from the officia$
DoD repository for Defense %tandardiHation Program documents, the A%%2%T database
(999.a55i5)%&5.&+)&
/./.E So!rce Seection E*a!ation.
/./.E.- Acti*ities. This section describes the activities that are underta<en by the source
se$ection team to eva$uate each bidders response to the !#M% reGuirement in the so$icitation
pac<age&
/./.E./ #roposa S!5missions. !ach offerorLs proposa$ shou$d inc$ude a description of the
!#M% to be used in accordance with the appropriate D'A,% c$auses (%ee N$TE in paragraph
4&4&5&9) p$aced in the draft contract and so$icitation&
/./.E./.- Compiance =it4 Vaidation. An offeror that proposes to use an !#M% previous$y
accepted by the /overnment may satisfy this reGuirement by citing the AA or *.A and providing
a copy of the approved system description& (%ee Pa!) /2 S'&)i" 2.6) An offeror not having a
previous$y accepted system shou$d submit a p$an to obtain !#M va$idation (refer to D'A,%
c$ause 454&4>46?::= for a description of the p$an)&
/./.E././ Compiance $ny 2No Vaidation3. 2f the offeror proposes to use a non6va$idated
!#M system, the proposa$ inc$udes a written summary of the !#M%& The description of the
offerorLs !#M% is to be in sufficient detai$ to show how it comp$ies with the A+%2(!2A6?>@ and
address a$$ guide$ines& D'A,% c$ause 454&4>46?::= describes the reGuirements for this
documentation& This c$ause a$so reGuires a matri" that cross references provisions of the !#M
system description to the A+%2(!2A6?>@ guide$ines& An offeror may e$ect to <eep the system
description genera$ and re$y on cross6referencing to interna$ procedures or po$icy manua$s for a
discussion of the detai$s& 2n this case, the procedures and po$icy documents are to be referenced
in, and considered a part of, the !#M% summary description&
The offeror may e$ect to use and app$y a va$idated !#M system to meet this reGuirement and
can satisfy this reGuirement by citing the AA or *.A and providing a copy of the approved
system description&
94
/./.E.0 E*a!ation. !va$uation of the proposed !#M% is norma$$y underta<en as part of the
proposa$ eva$uation process& This eva$uation is an assessment to determine the probabi$ity of
the proposed !#M% meeting the guide$ines& The source se$ection team shou$d ensure that the
offeror has described provisions to f$ow down !#M reGuirements to the appropriate
subcontractors& !ach proposa$ shou$d a$so be reviewed for adeGuate ;D% deve$opment and
resource adeGuacy for !#M imp$ementation and support of the 2D,& The offerors proposed 2M%
is eva$uated for rea$ism and comp$eteness against the %.;& (,efer to $oca$ source se$ection
po$icy and procedures for further guidance&)
2f an offeror has proposed using a previous$y accepted system, the !#M system eva$uation may
consist of a confirmation that the referenced va$idation is accurate and current& The system
shou$d be current$y in use and survei$$ance shou$d not have identified significant, uncorrected
prob$ems&
2f an offeror is proposing the use of an !#M% (without va$idation), the written !#M system
description and matri" shou$d be eva$uated for comp$eteness against the guide$ines in A+%2(!2A6
?>@&
The DCMA representative shou$d be reGuested to provide insight regarding each offerors !#M%
capabi$ity, Gua$ity, and past performance&
/./.E.9 Carification. An on6site e"amination of an offerorLs proposed system shou$d not
norma$$y be reGuired during proposa$ eva$uation& ;hen any aspect of the system is not c$ear$y
understood, however, the offeror may be reGuested to provide c$arification& This may be done
by written communications or an on6site visit& Any such action shou$d be coordinated with other
re$evant competent authorities inc$uding the %ource %e$ection Doard and Procuring Activity&
Care is e"ercised during the entire review process to ensure that the offeror and the /overnment
have the same understanding of the system described in the proposa$& 2f it is necessary to
review p$ans and reports from other contracts e"ecuted by the offeror, concurrence of that
procuring activity is to be obtained&
/./.E.D #roprietary Information. Care shou$d be e"ercised to avoid improper disc$osure of
information obtained from the offerors proposa$s, especia$$y in competitive situations in which
the degree of comp$iance with the guide$ines is a factor in contract award&
/./.8 #reparation of t4e Contract. The fina$ stage of source se$ection shifts to se$ection of a
Gua$ified source and definitiHation of the contract, fo$$owed by the award of the contract& The
source se$ection team shou$d ensure that the correct D'A,% c$auses are inc$uded in the
contract& The %.; tas<s and the CD,* items from the so$icitation are negotiated and a$so
become part of the contract&
99
#art / Section 0
#ost.a=ard Acti*ities K System Vaidation and Maintenance
/.0.-. $*er*ie=& ('igure 96=) This section describes !#M system va$idation and maintenance
fo$$owing contract award for any contract reGuiring !#M% app$ication& 2t describes the system
va$idation process for app$icab$e contracts, the survei$$ance process, the approva$ process for
changes to the !#M system, and how to address deficiencies in the contractors !#M system&
;hen EVM vali%a)i" is reGuired, DoD po$icy is to ensure that:
no changes to contractors e"isting !#M% are reGuired e"cept those necessary to
conform to the guide$ines in A+%2(!2A6?>@
the contractor has proper$y imp$emented the !#M% on the contract under review and is
using it as a principa$ program management too$, and
the contractor is using the data from its own !#M% in reports to the /overnment&
These obFectives can be met through a rigorous system va$idation process for a,,li&a<l'
&")!a&)5, and consistent survei$$ance practices and a contro$$ed approach to system changes for
a$$ contracts& 2ndustry ownership of !#M as an integrated management too$ is fostered through
corporate commitment, partnering for Foint survei$$ance, and estab$ishing interna$ contro$ systems
to minimiHe system deficiencies& This partnering approach serves to meet the needs of DoD for
re$iab$e performance data and e"ecutab$e contracts, whi$e a$so meeting the needs of industry for
a consistent DoD approach to !#M imp$ementation&
2nstructions, samp$e documents, and temp$ates for conducting !#M system reviews and
survei$$ance are contained in the DCMA S85)'+ Ca,a<ili)8 A"al85i5 too$<it& This too$<it provides
a consistent approach for use by a$$ DoD teams&
/.0./ EVM System Vaidation.
/.0./.- Appications. S'&)i" 2.0.2 a,,li'5 "l8 ) )*5' &")!a&)5 )*a) !':$i!' <)* EVM
&+,lia"&' a"% vali%a)i" 5!t =4ere t4e contractor does not 4a*e a c!rrent EVMS
*aidation. 2t may a$so app$y to any contract be$ow the thresho$d wherein both the /overnment
and the contractor agree it is in their best interests to achieve a forma$ va$idation of the
contractors !#M%& ,efer to paragraphs 4&2.6.2./ and 2.2.6.2&4 for guidance on eva$uation of
previous$y accepted systems during source se$ection&
/.0././ EVM System Vaidation $ptions.
/.0././.- Contractor #an. D'A,% C$ause 454&4>46?::=, +otice of !arned #a$ue
Management %ystem, reGuires that the contractor be prepared to demonstrate that the
contractorLs !#M% meets the guide$ines& The contractor shou$d prepare a p$an to achieve
va$idation and submit the p$an as part of the proposa$& The p$an sha$$:
describe the !#M% the offeror intends to use in performance of the contract, and how
the proposed !#M% comp$ies with the !#M% guide$ines in A+%2(!2A6?>@
distinguish between the offerorLs e"isting management system and modifications
proposed to meet the !#M% guide$ines
describe the management system and its app$ication in terms of the !#M% guide$ines
describe the proposed procedure for administration of the !#M% guide$ines as
app$ied to subcontractors
describe the process the offeror wi$$ use to determine subcontractor comp$iance with
A+%2(!2A6?>@
the offeror sha$$ provide information and assistance as reGuired by the Contracting
.fficer to support review of the p$an
the /overnment wi$$ review and approve the offerors !#M% p$an before contract award
9>
the offerors !#M% p$an must provide mi$estones that indicate when the offeror
anticipates that the !#M% wi$$ be comp$iant with the guide$ines in A+%2(!2A6?>@
the offeror sha$$ identify the subcontractors, or maFor subcontracted effort if
subcontractors have not been se$ected, to whom the !#M% reGuirements wi$$ app$y&
a schedu$e that provides a timetab$e of events $eading up to /overnment va$idation of
the contractors !#M%& This schedu$e shou$d inc$ude a Progress Assistance #isit (PA#)&
The forma$ #a$idation ,eview (#,) is conducted as soon as practicab$e
95
'2/0,! 96= %C%T!M #A*2DAT2.+ A*T!,+AT2#!%
/.0././.-.- Ass!ring #rogress Against t4e Vaidation #an. The fo$$owing guidance is
contained in D'A,% 454&4>46?::4(b), which shou$d be incorporated into the contract to assure
adeGuate progress against the va$idation p$an& This guidance directs the contractor to show that
the system comp$ies with the !#M guide$ines& The p$an to become comp$iant becomes a part of
the !#M% that has been accepted by to government& This acceptance inc$udes not on$y the
actions to be ta<en, but a$so the time$ine to achieve those actions&
2f, at the time of award, the Contractors !#M% has not been recogniHed by the cogniHant AC.
as comp$ying with !#M% criteria (or the Contractor does not have an e"isting cost(schedu$e
98
contro$ system that has been accepted by the Department of Defense), the Contractor sha$$
app$y the system to the contract and sha$$ be prepared to demonstrate to the AC. that the
!#M% comp$ies with the !#M% criteria&
/.0./././ #rogress Assistance Visit 2#AV3. The PA# is an initia$ assessment of the
contractors readiness to demonstrate its !#M% comp$iance and is usua$$y conducted within 9:
days after contract award&
/.0./././.- #!rpose of #AV. The PA# is he$d by representatives of the review team with the
contractor before the #,& ;ithout invo$ving the time and e"pense of the fu$$ va$idation team, the
PA# provides an opportunity to review progress toward imp$ementing the guide$ines, to reso$ve
misunderstandings, and to assess the contractorLs readiness to demonstrate a fu$$y integrated
!#M system& 2t assists in the preparation for the #, by fami$iariHing <ey team members with the
fundamenta$s of the contractor !#M%&
/.0././././ #AV Team. The DCMA !#M Center wi$$ se$ect a ,eview Director& The ,eview
Director wi$$ se$ect the Team Chief and a few e"perienced individua$s from the p$anned
va$idation team roster to conduct the PA#&
/.0./././.0 #AV #rocess. The review is conducted by the /overnment as soon as possib$e
after contract award, preferab$y within 9: days representatives of the review team shou$d visit
the contractorLs faci$ity and review the contractorLs p$ans for imp$ementing a guide$ine6comp$iant
!#M%& The visit inc$udes an initia$ review of the system description& Areas of noncomp$iance
and potentia$ prob$ems are identified& This visit provides an ear$y dia$ogue between the review
team and the contractor on the va$idation review process& During this pre$iminary visit the
contractor usua$$y ma<es presentations on the systems design and operation and e"p$ains
app$icab$e reports& The team shou$d e"amine se$ected documents and procedures proposed by
the contractor and a schedu$e shou$d be deve$oped to accomp$ish the #, in accordance with the
p$an submitted by the contractor& !very attempt shou$d be made to fina$iHe the system
description during the PA#&
/.0./././.9 #AV Res!ts. The Team Chief shou$d prepare a report for the ,eview Director
describing the resu$ts of the PA#& Any discrepancies shou$d be identified for correction&
,ecommendations for system improvements shou$d be forwarded to the ,eview Director for
eva$uation and discussion with the contractor& ;here actua$ deficiencies have been identified,
the contractor is afforded an opportunity to correct them& The report shou$d inc$ude the Team
Chiefs assessment of the contractors readiness for the #,&
/.0./.0 "o*ernment Cond!cted Vaidation
/.0./.0.- Vaidation Re*ie= 2VR3. The purpose of the #, is to conduct a forma$ assessment
of the contractors proposed !#M% comp$iance with A+%2(!2A6?>@& %uccessfu$ demonstration of
the !#M% and comp$etion of the review resu$ts in the va$idation of the contractors !#M%& The
primary obFectives of the #, are to:
eva$uate management system capabi$ities against A+%2(!2A6?>@
assess the description of the management system to determine if it adeGuate$y describes
the management processes demonstrated during the review, and
eva$uate the app$ication of the management system on the contract being reviewed&
/.0./.0.-.- Determination of E*a!ation (oc!s& 2f a contractorLs !#M% used for deve$opment
efforts differs significant$y from that used during production, separate va$idation eva$uations may
be reGuired& %imu$taneous reviews of the systems used for deve$opment and those used for
production contracts may be performed or a contractor may imp$ement one system for both
types of contracts& This e$iminates the necessity for mu$tip$e reviews&
9?
'o$$owing the successfu$ demonstration of a deve$opment focused eva$uation, the /overnment
may e$ect to do fo$$ow6on reviews, focused on those e$ements of the !#M% that are uniGue to
production& 2n determining to focus a review on deve$opment or production the fo$$owing issues
shou$d be considered:
2f the manufacturing effort in the contract is not true repetitive manufacturing (e&g&,
mode$ shop wor<), and there is no maFor difference from the management system used
for the engineering effort and in the way the wor< is p$anned and contro$$ed and cost data
are co$$ected, then the review can be based on the app$ication of a deve$opment system&
2f the preponderance of discrete effort in the contract is identified as either engineering
or manufacturing, then the identification of the review as deve$opment or production
shou$d be se$f evident&
2f there is $itt$e or no manufacturing effort (e&g&, contracts for $ong6$ead items, engineering
services, or production p$anning), the contractor can app$y either an accepted
deve$opment or an accepted production system regard$ess of funding&
The type of funding shou$d be considered, but it shou$d not override other
considerations&
/.0./.0.-./ VR Team. The DCMA !#M Center se$ects a ,eview Director to coordinate review
activities between agencies& 'or /overnment conducted reviews, these activities wou$d inc$ude:
approva$ of type, scope, e"tent of the review, e"tent of contractor invo$vement, approva$ of team
recommendations, and approva$ of the report& The ,eview Director approves the assignment of
the Team Chief and team members& The areas of review to be emphasiHed are to be
estab$ished by the ,eview Director at the outset of the review&
The ,eview Director and team members are forma$$y assigned to the team& 2t is essentia$ that
the team inc$ude members from the PM.& A partnering approach shou$d be sought with
contributions from both contractor and /overnment members& Team members shou$d be
e"perienced and understand A+%2(!2A6?>@& Enow$edge of both the program and the contract is
desirab$e& 'orma$ training, such as that provided by the member schoo$s of the Defense
AcGuisition 0niversity (DA0), or other recogniHed educationa$ institutions, is recommended&
%<i$$s may a$so be obtained by training and e"perience in imp$ementing, maintaining, and
operating !#M%&
The ,eview Director shou$d ma<e a$$ necessary arrangements to ensure avai$abi$ity of team
members for the time reGuired for pre$iminary indoctrination, training, and each review for which
a team member is needed& Members are administrative$y responsib$e to the ,eview Director
during the period of the review&
/.0./.0.-.0 VR #rocess. The #, begins as soon as practicab$e fo$$owing the imp$ementation
of the !#M%& The review consists of system documentation reviews, data traces, and interviews
with contractor personne$& The contractors !#M% is assessed against each guide$ine contained
in A+%2(!2A6?>@& The review shou$d be organiHed to fo$$ow the system approach ta<en by the
contractor, i&e&, orientation by A+%2(!2A6?>@ grouping or a process approach& (%ee Part 2,
%ection 9&)
The contractor shou$d have a current, approved written system description avai$ab$e& App$icab$e
procedures a$so need to be avai$ab$e at the contractors operating $eve$s as necessary to
demonstrate a consistent approach& The review team e"amines the contractors wor<ing papers
and documents to ascertain comp$iance and to document its findings& The contractor shou$d
ma<e documents used in the contractors !#M% avai$ab$e to the team& The documentation
needs to be current and accurate& The contractor demonstrates to the team how the !#M% is
structured and used in actua$ operation&
The #, inc$udes, but is not $imited to, the fo$$owing activities:
9@
An overview briefing by the contractor to fami$iariHe the review team with the proposed
!#M%& The overview shou$d identify any changes which have occurred since the most
recent PA#&
A review, of the documentation that estab$ishes and records changes to the base$ine
p$an for the contract& This inc$udes wor< authoriHations, schedu$es, budgets, resource
p$ans, and change records inc$uding management reserve and undistributed budget
records& The purpose is to verify that the contractor has estab$ished and is maintaining a
va$id, comprehensive integrated base$ine p$an for the contract&
A review, on a samp$e basis, of the reporting of cost and schedu$e performance against
the base$ine p$an, a$ong with appropriate ana$yses of prob$ems and proFection of future
costs& A$so, a trace is conducted to summariHe the cost(schedu$e performance data
from the $owest $eve$ of forma$ reporting (norma$$y the contro$ account $eve$) to the
e"terna$ performance measurement report& The purpose of this activity is to verify the
adeGuacy of the contro$ aspects of the system and the accuracy of the resu$ting
management information&
2nterviews with a se$ected samp$e of CAMs, functiona$ and other wor< teams, and PMs
to verify that the contractorLs !#M% is fu$$y imp$emented and being used in the
management of the contract&
An e"it briefing covering the teamLs findings& During this briefing, any open system
discrepancies shou$d be discussed a$ong with the contractorLs corrective action p$an,
which estab$ishes responsibi$ity and a time6frame for corrective action&
+.T!: 2f, at the time of award, the contractors !#M% has not been determined by the AC. as
comp$ying with the !#M% guide$ines, the contractor app$ies its current system to the contract
and ta<es time$y action to imp$ement its p$an to obtain comp$iance& 2f the contractor does not
fo$$ow the imp$ementation schedu$e in the comp$iance p$an, or within a reasonab$e time correct
a$$ system deficiencies identified during the comp$iance review specified in that p$an, the
Contracting .fficer may ta<e remedia$ action&
/.0./.0.-.9 VR Res!ts. At the conc$usion of the #,, the ,eview Director is responsib$e for a
written report within 9: wor<ing days after the comp$etion of the review& The written report sha$$
be amended to ref$ect progress against the contractors corrective action p$an to reso$ve materia$
discrepancies identified during the #,& %ystem va$idation is granted to the contractor through
the issuance of either an Advance Agreement or a *etter of Acceptance& Contractua$ actions
may be initiated when #, resu$ts dictate (see paragraphs 4&9&8&=, 4&9&8&4, 4&9&8&9, and 4&9&8&>)&
/.0./.0.-.9.- Ad*ance Agreement 2AA3. The AA between the AC., and contractor specifies
that the contractor maintain and use the accepted !#M% as an integra$ management process on
current as we$$ as future contracts& The AA a$so documents the /overnments intent to minimiHe
system reviews& The AA a$so documents a contractorLs corporate commitment to continue to
use and maintain the !#M% guide$ines comp$iant system for current and future /overnment
contracts through an interna$ survei$$ance program&
A temp$ate for the AA is provided at Appendi" D& The CM. and contractor shou$d a$so estab$ish
a ,u$es of !ngagement (,.!) document to identify how Foint survei$$ance findings are
documented and the process for reso$ution of disagreements concerning !#M% va$idation
issues&
Pending approva$ and coordination with the DCMA !#M Center, an AA may be e"ecuted
fo$$owing the successfu$ comp$etion of an !#M% #, and remains in effect indefinite$y& .nce
e"ecuted, the AA shou$d be referenced and incorporated into each contract reGuiring a va$idated
!#M system& The AA is signed by the cogniHant Contracting .fficer and a contractor
representative at the commensurate $eve$& 'or e"amp$e, if the va$idation is for an !#M% used
throughout a corporations division, the appropriate contractor representative may be the division
manager&
9A
/overnment PMs shou$d be aware of the e"istence of AAs with their contractors in order to ta<e
ma"imum advantage of the agreements contained therein in estab$ishing Memorandum of
Agreement (M.A) reGuirements&
The use of the AA over the *.A option shou$d be considered whenever possib$e, as the AA
documents and codifies the contractors commitment to app$y and use !#M on a corporate
basis&
/.0./.0.-.9./ 'etter of Acceptance 2'$A3. A *.A is an a$ternative method to grant system
va$idation fo$$owing a successfu$ #a$idation ,eview& The *.A documents the va$idation of the
!#M system for use within the contractors faci$ity, but does not e"tend to a corporate $eve$
va$idation& 2n some cases, a company may on$y wish to agree to a faci$ity wide commitment to
!#M& The *.A a$so remains in effect indefinite$y& .nce e"ecuted, the *.A shou$d be
referenced and incorporated into each contract at the faci$ity reGuiring a va$idated !#M system&
/.0./.9 EVM System Vaidation 5y $t4er "o*ernments. The DoD has forma$$y entered
into a tri6$atera$ Memorandum of 0nderstanding with the /overnments of Canada and Austra$ia&
This M.0 a$$ows each country to accept the va$idation of contractor systems reviewed and
accepted by any of the other M.0 parties& 2n some cases, this may mean that the contractor
has been va$idated to a different standard than A+%2(!2A6?>@& 2n this situation a va$idation
shou$d be considered to be eGuiva$ent to norma$ va$idation by the DoD& The !"ecutive Agent
may be consu$ted by the PM. if there are any issues or doubts concerning the acceptabi$ity of
the contractors va$idation& #a$idations conducted by any /overnment other than Canada or
Austra$ia are not recogniHed at this time&
/.0./.D EVM System Vaidation of S!5contractors. 2f the prime contract contains the D'A,%
c$ause to f$ow down !#M% to subcontracts then the subcontractor is e"pected to meet the same
va$idation reGuirements as the prime contractor& The /overnment is responsib$e for conducting
the va$idation&
/.0./.E EVM System =it4 #rior "o*ernment Vaidation. Contractors with an accepted !#M%
app$ication on another contract of the same type (for e"amp$e, deve$opment or production) at the
same faci$ity are not reGuired to undergo a #, on a new contract& The !"ecutive Agent may be
consu$ted by the PM. if there are any issues or doubts concerning the status of the contractors
va$idation&
;hen a contractor has a previous$y accepted !#M%, additiona$ !#M% #,s are on$y conducted
to reinstate va$idation if the contractors va$idation was withdrawn fo$$owing a ,'C& The most
important e$ement to ensure continuing comp$iance with A+%2(!2A6?>@ is $ess about the Qone6
timeQ review $eading to the system va$idation but more on the continuous survei$$ance process&
2n the interest of fostering contractor ownership, the DoD encourages contractors to responsib$y
conduct continuous se$f eva$uation of their !#M% in partnership with the /overnment& The
contractor shou$d use A+%2(!2A6?>@ as the basis for assessing their system comp$iance& The
contractor is a$so encouraged to use the temp$ates and forms provided in the S85)'+ Ca,a<ili)8
A"al85i5 mode$ when eva$uating their !#M comp$iance&
/.0.0 EVM System S!r*eiance and Maintenance
/.0.0.- #!rpose of S!r*eiance. %urvei$$ance is a recurring process by the DCMA that
assesses the continuing comp$iance of the companys !#M% with A+%2(!2A6?>@ and the
companys written system documentation& %urvei$$ance ensures that the contractors !#M%:
provides time$y and re$iab$e cost, schedu$e, and technica$ performance measurement
information summariHed direct$y from the contractors interna$ management system
comp$ies with the guide$ines
provides time$y indications of actua$ or potentia$ prob$ems
maintains base$ine integrity
>:
provides information that depicts actua$ conditions and trends
provides comprehensive variance ana$ysis at the appropriate $eve$s inc$uding proposed
corrective action in regard to cost, schedu$e, technica$, and other prob$em areas
discusses actions ta<en to mitigate ris< and manage cost and schedu$e performance&
/.0.0./ S!r*eiance #oicy. %urvei$$ance of management contro$ systems is reGuired for a$$
contract efforts that reGuire !#M comp$iance with the A+%2(!2A6?>@, regardess of whether a
forma$ system va$idation is reGuired& !#M% survei$$ance begins at contract award, continues
through the #, and va$idation (when reGuired), and e"tends throughout the duration of the
contract& ;e do survei$$ance to ensure the contractor fo$$ows the terms and conditions that are
on the contract& 2f revisions are made changing those terms and conditions then a modification
to the contract is reGuired in order to ma<e them app$icab$e to the contract& %urvei$$ance is
imp$emented on the contract through the inc$usion of D'A,% c$ause 454&4>46?::4 (%ee figure 46
9) in the contract&
The CMO has the primary responsibi$ity for survei$$ance of the prime contractor and 5,'&i(i'%
5$<&")!a&)! !#M%& (%ee paragraph 4&9&9&5 for a discussion of survei$$ance of subcontractors
with f$ow down !#M% reGuirements&)
/.0.0.0 S!r*eiance Responsi5iities.
/.0.0.0.- "!idance. A number of organiHations are invo$ved in CM.s survei$$ance of the
contractors !#M%& These inc$ude the CM., !#M% %pecia$ist, DCAA 'ie$d Audit .ffice (DCAA
'A.), PM. and !#M%%& The contractor may choose to participate in the /overnment
survei$$ance process and is strong$y encouraged to do so& This grouping of organiHations is
referred to as the 2ntegrated %urvei$$ance Team (2%T)& !#M% survei$$ance reGuires participation
and fu$$ cooperation of both the /overnment and the contractor& The fo$$owing organiHations
have specific survei$$ance responsibi$ities:
/.0.0.0./ #rogram Management $ffice 2#M$3. The responsibi$ities of the PM. inc$ude:
negotiating and updating the M.A with the CM.M
<eeping the CM. informed of actions and matters which cou$d affect !#M%
survei$$anceM
assisting reso$ution of prob$ems cited in survei$$ance reports by providing reGuired
support to the CM.M
reviewing, eva$uating, and ana$yHing CP,s and bringing issues to the attention of the
CM.M
apprising the CM. of the adeGuacy and usefu$ness of the survei$$ance reports, and
whereM necessary, stating reGuired changes to reporting practicesM and
obtaining assistance from the DCMA !#M Center in reso$ving survei$$ance issues&
/.0.0.0.0 Earned Va!e Management S!pport Staff 2EVMSS3. The !#M%% are the
procuring activitys subFect matter e"perts responsib$e for providing technica$ support to PM.s&
The !#M%% can assist the PM. with input to the M.A, guidance in ana$yHing CP,s, faci$itating
2D,s, and conducting ris< assessments& The !#M%% may a$so participate as members of the
2%T&
/.0.0.0.9 Contract Management $ffice 2CM$3. The CM. is responsib$e for !#M%
survei$$ance in accordance with D'A,% 4>4&9:4 (>=) and DCMA 2nstruction(/uideboo<&
2ndividua$s within the CM. having !#M% survei$$ance responsibi$ities are:
The EVMS Speciaist is assigned the overa$$ responsibi$ity for survei$$ance of the
contractorLs !#M%& This inc$udes eva$uation of contractor proposed changes to the
system& (%ee paragraph 4&9&> be$ow&) The !#M% %pecia$ist shou$d be cogniHant of the
procuring activity !#M%%, who can provide assistance in reso$ving survei$$ance issues&
>=
The #rogram S!pport Team (P%T) members are assigned responsibi$ity for
accomp$ishing survei$$ance in their respective functiona$ or organiHationa$ area&
The #rogram Integrator 2#I37S!pport #rogram Integrator (%P2) serves as the CM.
foca$ point on maFor program contracts (or designated maFor(critica$ subcontracts)&
The Administrati*e Contracting $fficer (AC.) is designated as the agent of the
/overnment responsib$e for assuring that the contractor comp$ies with the contract& The
AC. is a member of the P%T&
The M.A is a negotiated agreement between the PM. and the CM. that identifies the <ey
individua$s, specific responsibi$ities, priorities, reporting reGuirements, and wor<ing re$ationships&
A M.A may a$so be negotiated between CM.s where mu$tip$e prime contractors are invo$ved&
The M.A describes the activities necessary to achieve and maintain effective program
survei$$ance& The M.A shou$d be e"ecuted prompt$y at the beginning of the contract and
reviewed on an annua$ basis& A samp$e M.A is inc$uded as A,,'"%i? A&
/.0.0.0.D DCAA (ied A!dit $ffice 2(A$3. DOD Di!'&)iv' 5/65.06 assigns the DCAA 'A.
to Jperform a$$ necessary contract audit for the Department of Defense and provide accounting
and financia$ advisory service regarding contracts and subcontracts W as appropriate&J These
inc$ude providing advice to the CM. and other /overnment $eve$s having authority and
responsibi$ity to ta<e action on the acceptabi$ity of incurred costs and estimates of costs to be
incurred& Additiona$ responsibi$ities inc$ude verifying the adeGuacy of the contractorsL
accounting, financia$ management, and estimating systems and procedures& DCAA 'A.
activities are accomp$ished in coordination with the cogniHant CM. through a review of the
contractorLs tota$ operation& DCAA 'A. in partnership with the DoD !"ecutive Agent for !#M%
has the fo$$owing responsibi$ities:
,eviewing the contractorLs accounting system for comp$iance with the !#M% and
contract provisions inc$uding verification that there is consistency with re$ated budgeting
and wor< authoriHation systemsM
Determining the accuracy and re$iabi$ity of the financia$ data contained in the contract
cost reports prepared from the contractorLs systemsM
,eporting any significant unreso$ved deficiencies to the !#M% %pecia$istM
Coordinating the appropriate !#M% survei$$ance reGuirements into routine DCAA audit
programs and procedures with the DCMA !#M CenterM and
Advising the !#M% %pecia$ist regarding DCAA surveys of contractor systems and other
audits which may bear on !#M% acceptabi$ity or survei$$ance&
/.0.0.0.E T4e Contractor. The contractor is encouraged to conduct its own interna$
survei$$ance program to ensure its !#M% continues to meet the guide$ines, is imp$emented on a
consistent basis, and is used correct$y on a$$ app$icab$e contracts& The contractors interna$
survei$$ance program shou$d not rep$ace the /overnment survei$$ance process&
The CM. shou$d coordinate /overnment survei$$ance efforts with the contractor& Ooint
survei$$ance between the 2%T and the contractor is encouraged and, if estab$ished, shou$d be
documented in a Ooint %urvei$$ance P$an& %ee Appendi" D for a samp$e Ooint %urvei$$ance
Program Charter&
/.0.0.9 T4e S!r*eiance #rocess& 'or the $ife of the contract, survei$$ance shou$d be based on
recurring eva$uation of interna$ management contro$ practices and samp$es of interna$$y and
e"terna$$y reported data to ensure the va$idity of the contractors performance data provided to
the /overnment& The survei$$ance process shou$d focus on maFor system activities and prob$em
identification to ensure the greatest return for resources e"pended& A ris< based approach, as
described in the DCMA /uideboo<, shou$d identify specific areas for increased focus and
survei$$ance& %urvei$$ance is conducted on specific contracts and throughout the contractors
faci$ity as appropriate&
>4
2f deficiencies are discovered in the contractorLs comp$iance with A+%2(!2A6?>@, the CM.
documents the prob$em and then notifies the contractor of the prob$em a$ong with any corrective
action reGuired& The CM. fo$$ows up to ensure the deficiency is reso$ved in a time$y manner&
!#M% prob$ems that cannot be reso$ved with the contractor through the !#M% %pecia$ist are
reported to the AC. for reso$ution&
The CM. reviews the CP, and re$ated interna$ data f$ow on a recurring basis or as agreed to in
the M.A& The !#M% %pecia$ist provides the PM with an independent and comp$ete assessment
of the accuracy and time$iness of CP, information as agreed to in the M.A& These reports
specifica$$y high$ight issues that cou$d affect contract mi$estones or areas of considerab$e cost,
schedu$e or technica$ ris<&
The !#M% %pecia$ist documents and maintains survei$$ance resu$ts as part of a chrono$ogica$
record of the contract& The CM. provides survei$$ance information to the PM as agreed to in the
M.A&
/.0.0.D S!r*eiance of S!5contractors and $t4er #rime Contractor 'ocations&
%ubcontracts and other $ocations or divisions of the prime contractor se$ected for app$ication of
the guide$ines may reGuire survei$$ance to be performed by another CM.& ;here appropriate,
the CM. having cogniHance of the prime contract de$egates survei$$ance responsibi$ity to the
responsib$e CM.& ;hen a subcontractor is reGuired to comp$y with the guide$ines, the prime
contractor is responsib$e for survei$$ance of the subcontractor&
The prime CM. function norma$$y is $imited to eva$uating the effectiveness of the prime
contractorLs management of the subcontract& Bowever, there may be occasions when the PM or
a prime contractor reGuests, through the AC., that the /overnment perform $imited or comp$ete
!#M% survei$$ance& %uch support administration is not to be construed as a discharge of the
prime contractorLs contractua$ ob$igations and responsibi$ities in subcontract management& %uch
assistance shou$d genera$$y be provided on$y when:
the prime contractor is unab$e to accomp$ish the reGuired survei$$ance because it wou$d
FeopardiHe the subcontractorLs competitive position or proprietary data is invo$vedM
a business re$ationship e"ists between the prime contractor and subcontractor not
conducive to independence and obFectivity, as in the case of a parent 6subsidiary or when
prime and subcontracting ro$es of the companies are freGuent$y reversedM or
the subcontractor is so$e source and the subcontract costs represent a substantia$ portion
of the prime contractors costs&
/.0.0.E S!r*eiance of Non.Vaidated Systems. %urvei$$ance on non6va$idated !#M
systems is conducted in the same manner as for va$idated systems, per the processes and
responsibi$ities noted in the previous sections& The primary reason for performing survei$$ance
on non6va$idated systems is to ensure that the contractor imp$ements a system that is &+,lia")
with A+%2(!2A6?>@ and that the resu$ting data is va$id& %urvei$$ance of non6va$idated systems
shou$d not be e"panded nor construed to imp$y /overnment va$idation& ,efer to paragraph 2.0.8
for a discussion on hand$ing deficiencies found during survei$$ance of non6va$idated systems&
/.0.9 System C4anges.
/.0.9.- Appro*a of C4anges to ContractorLs EVM System. The contractor is
contractua$$y ob$igated to maintain the companys !#M% in comp$iance with A+%2(!2A6?>@&
Continuing innovations to and improvement of the contractorLs system are encouragedM however,
such changes to the !#M% need to be approved by the DoD !"ecutive Agent for !arned #a$ue
Management %ystems (!#M%) as described in the fo$$owing paragraphs& 2n some cases, a
waiver to the change approva$ process may be granted&
/.0.9./ C4anges to Vaidated EVM System. A f$owchart of the system change process for
va$idated systems is provided at 'igure 964&
>9
/.0.9./.- C4ange #rocess. Changes to the contractors approved !#M% reGuire forma$
acceptance and approva$ prior to imp$ementation to ensure that the proposed changes do not
inva$idate the !#M% that was eva$uated in the contract award& These changes are forwarded by
the !#M% %pecia$ist to the DCMA !#M Center with a written assessment of the effects, if any of
the changes on the approved system& (This assessment of the effect of the proposed change(s)
on their contracts he$ps ensure that contractor system changes that resu$t in modifications to
reported information are not made without the invo$vement of the organiHations uti$iHing the data
for program management&)
0pon eva$uation and approva$ of the proposed changes by the DCMA !#M Center the AC.
shou$d advise the contractor of the acceptabi$ity of such changes within 9: ca$endar days after
receipt of the notice of proposed changes from the contractor& ;hen a proposed change wou$d
ma<e the contractors !#M% non6comp$iant, the contractor shou$d be prompt$y notified by the
AC.&
/.0.9././ )ai*ers to C4ange Appro*a. Per the provisions in D'A,% 454&4>46?::4, the
AC. may provide the contractor with a waiver to the change approva$ process& ;aivers to prior
approva$ of system changes shou$d norma$$y be granted when contractors demonstrate continua$
commitment to the use of !#M as an integra$ part of their business practices& 'orma$
documentation of this commitment may, for e"amp$e, be found in AAs or company interna$
e"ecutive directives c$ear$y indicating the contractors commitment to effective !#M& The AC.
shou$d a$so weigh the contractors discip$ined use of documented !#M% procedures as
demonstrated through survei$$ance&
;hen a waiver has been granted, contractors sti$$ need to notify the /overnment at $east
fourteen ca$endar days in advance of the effective date of the change(s)&
;aivers shou$d norma$$y be granted to app$y to a$$ contracts at a contractors faci$ity&
This waiver shou$d continue to app$y, provided the Contracting .fficer determines the
contractor continues its commitment to effective !#M business practices&
/.0.9./.0 ECc!sions to Appro*a Re@!irement. The software used to imp$ement the
!#M% may be modified or rep$aced without /overnment approva$, as $ong as the approved
processes are not modified and continue to be adeGuate$y supported by the new software& This
inc$udes, for e"amp$e, management subsystems inputs, outputs, fi$es, contro$ account
documents, earned va$ue techniGues, and interfaces among those subsystems& The name of the
software may be mentioned in the system description, when the intent is to c$arify and describe
the capabi$ities as mentioned above, and thereby reduce the amount of additiona$ content
needed in the system description&
/.0.9.0 C4anges to Compiance $ny EVM Systems& Contracts va$ued at or greater than
N4:M but $ess than N5:M are contractua$$y reGuired to be A+%2(!2A6?>@ comp$iant but do not
reGuire forma$ system va$idation by DCMA& D'A,% c$ause 454&4>46?::=(a) reGuires the
contractor to submit a written description of the !#M processes that are used to assure interna$,
continuing comp$iance with A+%2(!2A6?>@& Per D'A,% c$ause 454&4>46?::4(d), the contractor is
reGuired to notify the DCMA !#M% %pecia$ist of any substantive changes to the !#M processes
however, approva$ of these changes is not reGuired& The DCMA !#M% %pecia$ist shou$d
eva$uate any changes for continued comp$iance to A+%2(!2A6?>@ and notify the affected
/overnment PM and !#M%% providing an assessment of the effect of the proposed changes on
the contract&
>>
'2/0,! 964 %C%T!M CBA+/! P,.C!%% '., #A*2DAT!D %C%T!M%
>5
%hou$d the DCMA !#M% %pecia$ist determine that the changes wou$d cause non6comp$iance to
A+%2(!2A6?>@ the AC. shou$d forma$$y notify the contractor of this non6comp$iance and
therefore its non6fu$fi$$ment of the contract reGuirements& The $etter shou$d reGuest that the
contractor modify the proposed changes to maintain comp$iance& %hou$d the contractor not ta<e
the appropriate corrective actions in a time$y fashion, the AC. shou$d invo<e the appropriate
contractua$ remedies to address non6comp$iance with the terms of the contract& (,efer to 'igure
969&)
/.0.D Re*ie=s for Ca!se 2R(C3. The ,'C process is coordinated through the DCMA !#M
Center& After forma$ acceptance of a Contractors !#M%, no further system review is conducted
un$ess there is a serious need determined by the /overnment& The decision to conduct a review
may occur when conditions warrant, e&g&, so$ving a maFor system app$ication prob$em identified
by the PM or !#M% %pecia$ist on a specific contract& The <ey e$ement in the decision process
is whether the output of the processes meets the intent of the guide$ines and is useab$e for
decision ma<ing& 2nput from the survei$$ance organiHation shou$d be considered in determining
the need for and the scope of the review&
/.0.D.- #!rpose of t4e R(C& The primary obFectives of the ,'C are to:
eva$uate the contractors progress against the corrective action p$anM
identify remaining actions reGuired to reaffirm system acceptabi$ityM
ensure accuracy of performance data generated for /overnment contractsM and
determine if the system va$idation shou$d be suspended or withdrawn&
The scope of the review shou$d be estab$ished by the ,eview Director wor<ing c$ose$y with the
!#M% %pecia$ist, the PM., the !#M%%, and the contractor& ,egard$ess of cause, the scope
and conduct of the ,'C shou$d be $imited to on$y the system processes that are affected& Those
portions of the !#M% designated for review are to be identified at the start of the review& Any
previous review findings and survei$$ance reports shou$d be ana$yHed to identify areas of specia$
interest&
/.0.D./ R(C Team. The team composition and the duration of the review shou$d be the
minimum necessary to accomp$ish the tas<& The review is $ed by a ,eview Director assigned by
the DCMA !#M Center and usua$$y inc$udes participation by the PM., !#M% %pecia$ist,
!#M%%, DCAA 'A., and the cogniHant CM.&
/.0.D.0 R(C #rocess. The ,eview Director provides the contractor with a p$an for the review&
The ,'C is schedu$ed based on written /overnment notification& The basic review routine is
simi$ar to that of a #,& 2t is to be carefu$$y noted, however, that it is not intended to be pursued
to the e"tent that it wou$d resu$t in a fu$$ re6eva$uation of the contractorLs !#M%& Bowever, scope
may be e"panded when the information dictates the need for further eva$uation&
/.0.D.9 R(C Res!ts. A forma$ report is prepared by the ,eview Director within 9: wor<ing days
after comp$etion of the review& A recommendation may be made to the !"ecutive Agent to
either suspend or withdraw the system va$idation&
>8
'2/0,! 969 %C%T!M CBA+/! P,.C!%% '., +.+6#A*2DAT!D %C%T!M%
>?
/.0.E Deficiencies in Vaidated EVM Systems.
/.0.E.- Deficiencies. Deficiencies may be uncovered either in the !#M system processes or
in the consistency and discip$ine of the va$idated processes& These deficiencies may be
discovered during routine survei$$ance, during ana$ysis of performance data or during team
reviews& The information provided detai$s the specific area(s) of deviation& The procuring
activity and !#M%% shou$d be notified of maFor deficiencies and advice shou$d be obtained from
a$$ parties& The fo$$owing process shou$d be fo$$owed by the /overnment and contractor to
restore comp$iance and discip$ine& This process is designed to provide the contractor an
opportunity to correct deficiencies prior to forma$ withdrawa$ of the companys !#M% va$idation&
%ee 'igure 96>&
/.0.E./ Appication. The uniform and consistent app$ication of actions and remedies for !#M%
non6comp$iance is essentia$ for promoting contractor6initiated corrective action& This reGuires an
awareness and understanding of regu$atory po$icies, correct identification of the prob$em areas,
and se$ecting and imp$ementing appropriate actions and remedies& The appropriate use of
contractua$ actions and remedies is reGuired to protect the /overnments interest if non6
comp$iance occurs& These need to be commensurate with the impact to the /overnment
corre$ated to the va$ue to the /overnment of the non6comp$iance& !#M% va$ue to the
/overnment may be significant$y greater than its abso$ute cost& The $oss of va$id performance
measurement data may $imit the /overnments abi$ity to measure the contractors progress on a
contract which may increase the probabi$ity of unearned progress payments& ;hen D'A,%
454&4>46?::4, !arned #a$ue Management %ystem, is inc$uded in a contract, the contractors
performance measurement system becomes a materia$ reGuirement& The information be$ow is
for app$ication to !#M% non6comp$iance issues&
/.0.E.0 Actions. The fo$$owing actions and remedies are initiated after discussion with or
recommendations by the PM. (PC.) and CM. (AC.):
2ssue $etter of concern notifying the contractor of a specific prob$em and reGuesting
additiona$ information or a corrective action p$an with get we$$ dates&
,educe or suspend progress payments ('P2' contracts) when contract reGuirements are
not met ('A, 94&5:968 (b) (=))&
,educe contractor bi$$ings when !#M% de$iverab$e reports are unacceptab$e and
payments shou$d be recouped (cost6type and 'P2' contracts)&
,educe overhead bi$$ing rates when overhead payments to the contractor have not been
earned and shou$d be recouped (cost6type and 'P2' contracts)& Prior to imp$ementing,
coordinate with the DCAA&
'u$$ comp$iance with A+%2(!2A6?>@ may be used as a factor in award fee determination&
2nform the contracting officer that an !#M% non6comp$iance issue is endangering
contract performance and recommend a Cure +otice be issued&
2nform the contracting officer that a condition(s) endangering performance (described in
contracting officer cure notice) has not been corrected and recommend issuance of a
%how Cause +otice& (This is a $ast resort measure and a contract is rare$y terminated for
!#M% non6comp$iance)&
/.0.E.9 Remedies. The fo$$owing remedies may be initiated by the contracting officer after
discussion with, or recommendations by, the P., CM. or !#M%%:
negotiate a reduction in contract price
issue a Cure +otice
issue a %how Cause +otice
/.0.8 S!spension or )it4dra=a of Vaidation.
>@
/.0.8.- S!spension of Vaidation. The responsib$e PC. and(or AC. forma$$y provides a
contractua$ notification that the contractors !#M system has been suspended unti$ a$$ corrective
actions have been successfu$$y comp$eted and approved by the PC. and(or AC. in coordination
with the DCMA !#M Center& The contractor is prohibited from c$aiming an A+%2(!2A6?>@
comp$iant system in a$$ new proposa$s during the period of suspension&
The notification shou$d a$so inc$ude a statement that the contractors !#M% va$idation is in
Feopardy& The contractor is given a reasonab$e period of time to show cause why the !#M%
va$idation shou$d not be withdrawn and contractua$ remedies be invo<ed&
The PC. and(or AC. in coordination with the DCMA !#M Center measures the contractors
progress against the corrective action p$an and if the contractor successfu$$y demonstrates that
a$$ corrections have been made within the given time period, the suspension is $ifted& The PC.
and(or AC. coordinates a$$ proposed actions and status of the suspension with the Procuring
Activity and notifies DCMA !#M Center of the status on a recurring basis&
/.0.8./ )it4dra=a of Vaidation. 2f the contractor fai$s to demonstrate correction of a$$ system
deficiencies, the PC. and(or AC. in coordination with the DCMA !#M Center forma$$y
withdraws the va$idation of the contractors !#M%& This withdrawa$ inva$idates and terminates
the AA or *.A for !#M% app$ication on a$$ affected contracts& The contractor may not c$aim to
have an accepted !#M system in any new proposa$ unti$ re6va$idation of the !#M system has
been achieved& To obtain re6va$idation, the contractor is reGuired to demonstrate fu$$ comp$iance
with a$$ 94 guide$ines in a #,& 0pon successfu$ demonstration of fu$$ comp$iance, the PC.
and(or AC. forma$$y recogniHes the re6va$idated system and may issue a new AA or *.A&

/.0.: Deficiencies in Non.Vaidated Systems& %ince a non6va$idated contractor does not
ho$d a va$idation that can be withdrawn, a different approach is ta<en if serious !#M%
deficiencies are uncovered& The CM. in coordination with the DCMA !#M Center shou$d
advise the contractor that the system is not comp$iant with the terms of the contract and that a
corrective action p$an is reGuired& The CM. in coordination with the DCMA !#M Center shou$d
monitor and independent$y va$idate the contractors progress in correcting system deficiencies
and continue to monitor consistent app$ication through spot chec<s, samp$e data traces, and
random interviews as appropriate& The CM. in coordination with the DCMA !#M Center shou$d
<eep a$$ parties (particu$ar$y the PM.) apprised of progress in imp$ementing the corrective action
p$an& %hou$d the contractor not ma<e adeGuate or time$y progress in the correction of
deficiencies, contractua$ remedies may be appropriate
>A
'2/0,! 96> %C%T!M D!'2C2!+C2!% R #A*2DAT!D %C%T!M%
5:
'2/0,! 965 %C%T!M D!'2C2!+C2!% R +.+6#A*2DAT!D %C%T!M%
5=
PA,T 4 %!CT2.+ >
P.%T6A;A,D ACT2#2T2!% R 2+T!/,AT!D DA%!*2+! ,!#2!;%
/.9.- $*er*ie=. This section defines the process and provides guidance for p$anning and
conducting 2D,s&
/.9./ #!rpose of t4e I&R. The 2D, concept was deve$oped in =AA9 due to
a growing recognition within DoD that unrea$istic base$ines were being
estab$ished for many contracts, $eading to significant cost and
schedu$e overruns& The 2D, was seen as a way to estab$ish more
rea$istic base$ines which wou$d $ead to improved program
management and better use of the !#M process by PMs&
An 2D, is a Foint assessment conducted by the /overnment PM and the contractor to verify the
rea$ism and accuracy of the PMD& This invo$ves verifying the technica$ content of the base$ine
and assessing the rea$ism and accuracy of the re$ated resources (performance budget and 2M%)&
The 2D, is un$i<e the #, that focuses on !#M% comp$iance with
A+%2(!2A6?>@& 2nstead the 2D, focuses on assessing the rea$ism of
the base$ine&
The 2D, is a too$ that shou$d be used as necessary throughout the $ife of
the contract& Eey benefits of the 2D, are:
Foint understanding of program ris<sM
management insight into the p$anning assumptions and the resource constraints of the
base$ineM
comparison of e"pectations so that any differences can be addressed ear$y in the
p$anning phaseM
correction of base$ine p$anning errors and omissionsM
in6depth understanding of deve$oping variances and improved ear$y warning of
significant variancesM
targeting of resources to address cha$$enges and mitigate ris<sM
mutua$ commitment by the Foint team to manage to the base$ineM and
more e"ecutab$e programs&
/.9.0 I&R #oicy and "!idance. DoD acGuisition po$icy >@ C', Part 4>4
and 454 as f$owed down to DoD2 5:::&4 reGuires the PM and the
technica$ staff to conduct an 2D, on any contract reGuiring !#M
comp$iance, whether or not there is a reGuirement for va$idation& The
2D, does not depend on whether a contractors !#M% has been forma$$y va$idated since the 2D,
focus is on the content of the base$ine and not on A+%2(!2A6?>@ comp$iance& An 2D, is
a$so conducted on any subcontract, intra6/overnment wor<
agreement or other agreement that meets or e"ceeds the PN4:M
thresho$d for !#M% imp$ementation&
The government wi$$ reGuire integrated base$ine reviews& %uch reviews
sha$$ be initiated as ear$y as practicab$e, and the review process
shou$d be initiated no $ater than =@: ca$endar days after contract
54
award(ATP, the e"ercise of significant contract options, the
incorporation of maFor modifications or as otherwise agreed upon&
The 2D, shou$d not be considered a one6time event or sing$e point review& 2D,s are a$so
performed at the discretion of the PM or when maFor events occur within the $ife of a program&
These events may be a significant shift in the content and(or time6phasing of the PMD or when a
maFor mi$estone such as the start of the production option of a deve$opment contract is reached&
An 2D, shou$d a$so be conducted whenever an Ov'! Ta!#') 3a5'li"' (.TD) or Ov'! Ta!#')
S&*'%$l' (.T%) is imp$emented&
2ncrementa$ 2D,s may be an a$ternative approach for $ong, comp$e" deve$opment efforts& 2n an
incrementa$ 2D,, the base$ine is reviewed for an increment of time that corresponds to the
contractors p$anning cyc$e(s)& 'or e"amp$e, the base$ine may be p$anned in detai$ from contract
award to CD,, and this becomes the basis for the first incrementa$ review& The first incrementa$
review shou$d a$so review the top $eve$ p$anning for the remaining effort& Conducting
incrementa$ 2D,s does not abrogate the contractors responsibi$ity to p$an the fu$$ base$ine in as
much detai$ as possib$e& .ther incrementa$ reviews occur over time as the remaining base$ine is
p$anned in detai$& 2ncrementa$ 2D,s are not suitab$e for contracts that are on$y a few years in
duration or for production contracts& Continuous assessment of the remaining PMD and
program ris<s aids the PM in identifying when a new 2D, shou$d be conducted&
Additiona$ guidance is contained in a guide prepared by a Foint .%D(+D2A team, The Program
Managers /uide to the 2ntegrated Dase$ine ,eview Process& ;hi$e this is not a detai$ed how6to
guide, the guide describes the <ey attributes of the 2D, and estab$ishes a framewor< for
improving consistency of the 2D, across DoD&
The /overnment and contractor shou$d begin discussing the coverage of the 2D, as soon as
possib$e after contract award& The 2D, focuses on assessing the base$ine rea$ism at the $owest
$eve$, and other base$ine re$ated ris< eva$uations as necessary& The fo$$owing guidance shou$d
he$p in estab$ishing the focus for the 2D,&
/.9.9 I&R (oc!s.
/.9.9.- Contro Acco!nt Co*erage. ;hi$e it may seem idea$ to review =::U of a$$ contro$
accounts, this is usua$$y not practica$& /enera$ guidance for se$ection of the appropriate contro$
accounts inc$udes the fo$$owing:
a$$ e$ements with high to moderate technica$ ris<M
a$$ contro$ accounts of high to moderate va$ueM
a$$ e$ements on the critica$ pathM
a$$ e$ements a$ready identified in the program ris< p$anM and
a$$ non ''P subcontracts or materia$ items&
%e$ection of these contro$ accounts shou$d resu$t in at $east @:U of the PMD va$ue being
se$ected for review& *ow do$$ar va$ue contro$ accounts or *.! accounts may be candidates for
e"c$usion&
The contractor can provide a matri" that $ists a$$ contro$ accounts, names of responsib$e CAMs,
approved budget amounts, and DC;P techniGue& This $isting is norma$$y ca$$ed a do$$ariHed
responsibi$ity assignment matri" (,AM), and represents a$$ performance budgets on the contract&
This $ist shou$d be Foint$y reviewed for se$ection of the contro$ accounts per the guidance
discussed above&
/.9.9./ System 'e*e Ris> Assessments. 2n addition to the detai$ed review at the contro$
account $eve$, the Foint team shou$d agree to system $eve$ ris< assessments as appropriate for
the contract& These may inc$ude, but are not $imited to, the fo$$owing:
59
comp$ete a$$ocation of a$$ wor< from the contract %.; to the detai$ed wor< p$anning
documents
impact of /overnment furnished eGuipment, data, and faci$ities
comp$eteness and rea$ism of the tota$ 2M%, inc$uding a critica$ path ana$ysis
comp$eteness and reasonab$eness of the budget a$$ocation
discussion of the p$anning assumptions and business vo$ume used as the basis for
indirect rates
overa$$ staffing issues
ongoing !#M system discip$ine issues and ris<s that may impact the base$ine
deve$opment and maintenance, and
assessment of the overa$$ ris<s versus the amount he$d in M,&
/.9.9.0 S!5contractor Assessment. Any subcontractor with a contractua$ f$ow down
reGuirement for !#M shou$d a$so be inc$uded in the 2D,& A separate 2D, may be conducted at
the subcontractors faci$ity, in which case the prime contractor shou$d ta<e the $ead in conducting
the 2D,, with active /overnment participation& A$ternative$y, the subcontractor may participate
as part of the prime contract 2D,&

/.9.D I&R Team. The 2D, is a function of program management, not a financia$ or cost
review& Therefore, .%D po$icy specifies that the PM p$an the 2D,, serve as the 2D, team chief,
and active$y manage the 2D, team& The primary team members are the 2PT members of the
PM. who have been given the integrated responsibi$ity for managing a ;D% e$ement(s)& The
se$ection of contro$ accounts for the 2D, drives the se$ection of these primary team members&
The PM shou$d se$ect individua$s for the 2D, team who are e"perienced with the technica$
discip$ines and programmatic issues under review&
Areas of discip$ine that shou$d be inc$uded on the team are program management, subcontract
management, and technica$ management (e&g&, systems engineering, software engineering,
manufacturing, integration and test engineering, and integrated $ogistics support)& 'unctiona$
support is provided by business managers, cost ana$ysts, schedu$e ana$ysts, !#M% %pecia$ists,
and contracting officers& The CM., and in particu$ar, the !#M% %pecia$ist, shou$d be an active
participant& The siHe and composition of the team shou$d ref$ect the PMs obFectives,
e"pectations, and ris< assumptions&
.nce an 2D, team is designated, Foint training is conducted for a$$ members of the 2D, team&
Dasic training in !#M base$ine concepts shou$d a$so be provided as necessary& %pecific training
for the 2D, shou$d be given one to two wee<s before the review& As part of the 2D, training, the
contractor shou$d provide a short overview of the specific base$ine documents to be reviewed,
using an e"amp$e of a sing$e thread trace through a contro$ account&
/.9.E I&R #rocess.
/.9.E.- I&R #rocess "!idance. A successfu$ 2D, depends on up front p$anning and
commitment by the /overnment and contractor PMs& The fo$$owing paragraphs address how to
assess readiness, conduct a base$ine scrub, deve$op an 2D, p$an, and conduct the 2D,&
/.9.E./ Assessing Readiness for t4e I&R. 2D,s shou$d be conducted as soon as possib$e
The fo$$owing maturity indicators shou$d be reviewed for technica$ comp$eteness, Gua$ity and
va$idity to he$p the PM prepare for a va$ue added assessment of the performance measurement
base$ine (PMD):
;or< definition
R ;D% deve$opment
R %pecifications and f$ow down to subcontractors
R 2nterna$ %.; or ;P definitions
2ntegrated schedu$e
R #ertica$ integration between $owest $eve$ and master $eve$
5>
R BoriHonta$ integration between functions or tas<s
R Product handoffs identified
R %ubcontractor schedu$es integrated into prime 2M%
,esources
R *abor and materia$ resources fu$$y p$anned and time phased for a$$ tas<s
R Constrained resources identified and e$evated or reschedu$ed
R Manpower resources $eve$ed
R %ubcontractor base$ines integrated into prime base$ine
2ntegration of schedu$e and budget base$ines
AdeGuate earned va$ue measures at the ;P $eve$
Dase$ine va$idated at $owest $eve$s and approved by management
/.9.E.0 &aseine Scr!5. 2t may be beneficia$ for a team of !#M% %pecia$ists
(contractor(DCMA(PM.) to conduct a scrub of the base$ine appro"imate$y one month prior to the
2D,& This team can conduct schedu$e and budget traces to determine the accuracy of the
p$anning, and a$so verify the integration of the schedu$e and budget base$ines& Any base$ine
p$anning errors can then be identified and corrected prior to the actua$ 2D,& The !#M%
%pecia$ist shou$d document any concerns with !#M system processes that may impact the
deve$opment or maintenance of the base$ine& This base$ine scrub serves to add to the
confidence in the base$ine, and a$$ows the 2D, technica$ team members to focus on ris<
eva$uations, rather than base$ine accuracy, during the 2D,&
/.9.E.9 #anning for t4e I&R. To faci$itate achieving 2D, obFectives, the PM shou$d
encourage the contractor to estab$ish a PMD immediate$y after contract award or after an
undefinitiHed contract award (0CA)& The contractor shou$d p$an a$$ wor< (tas<s(activities and
;Ps) in detai$ to the e"tent practicab$e and use PPs for wor< beyond the near6term&
Preparation inc$udes the deve$opment of an 2D, p$an by the Foint team& The
PM. may wish to ho$d an 2D, wor<shop with the contractor to deve$op
and agree to the e$ements of the 2D, p$an& This p$an shou$d inc$ude
the fo$$owing e$ements:
se$ection of contro$ accountsM
summary $eve$ ris< discussionsM
2D, team membershipM
training schedu$eM
further preparation or document review by the team prior to the
2D,M
p$anned dates and agenda for the reviewM
ris< eva$uation criteriaM and
documentation temp$ates&
/.9.E.D Cond!cting t4e I&R&
/.9.E.D.- $*er*ie=. The 2D, shou$d be conducted in sma$$ groups, as a
tab$etop review of the base$ine documentation& 2f the contractor has
done an adeGuate Fob deve$oping an integrated base$ine, $itt$e
additiona$ preparation shou$d be reGuired to support the review& The
CAMs and /overnment representatives shou$d fo$$ow the f$ow of how
the base$ine was deve$oped and review the e"isting base$ine
55
documentation& The 2D, shou$d never be he$d as a forma$ briefing,
nor shou$d additiona$ briefing materia$ be reGuired other than a short
introduction to the 2D, process&
/.9.E.D./ Contro Acco!nt Disc!ssions. %uccessfu$$y meeting the obFectives
of an 2D, invo$ves discussions at the contro$ account or wor< pac<age
$eve$& These base$ine discussions focus on <ey ris< areas and eva$uating the rea$ism of the
base$ine p$anning at the $owest $eve$& To be effective, the discussion group remains sma$$ and
focused, and be composed of <now$edgeab$e participants who have participated in the
preparation and training& These discussions shou$d address the adeGuacy,
rea$ism, and ris<s of the base$ine re$ative to the fo$$owing areas:
the technica$ scope of wor< is fu$$y inc$uded and consistent with
authoriHing documentsM
<ey schedu$e mi$estones are identified, tas< durations are
rea$istic, schedu$e networ< $ogic is adeGuate, and schedu$es
ref$ect a $ogica$ f$ow to accomp$ish the technica$ wor< scopeM
resources (budgets, faci$ities, personne$, s<i$$s, etc&) are
adeGuate and avai$ab$e for the assigned tas<sM
3CWP is measured as obFective$y as possib$e re$ative to technica$
progress, and *.! measurement is minimiHedM
a$$ rationa$e under$ying the PMD is reasonab$eM and
managers have appropriate$y imp$emented reGuired
management processes&
To he$p faci$itate and start the discussion, a base$ine discussion starter temp$ate is shown in
'igure >6=& This temp$ate may be tai$ored to ref$ect the contractors termino$ogy and provides a
framewor< to guide the discussion and review of the contro$ account&
/.9.E.D.0 Doc!menting Ris>s d!ring t4e I&R. ,is< identification and
assessment are a critica$ focus and resu$t of the 2D,& .nce identified,
ris<s genera$$y may be categoriHed into one of five areas: technica$,
schedu$e, cost, resource, and management processes& !ach ris<
area shou$d be eva$uated and documented using the eva$uation
criteria estab$ished in 2D, preparation& The teams assessment of the
DC;P measurement techniGue shou$d be documented and
eva$uated& Additiona$$y, the 2D, team shou$d assess the M, with
respect to program ris< that is unaccounted for in the PMD& To
comp$ete the 2D, in a reasonab$e time frame, anything that does not
support the intent of the 2D, shou$d be moved outside the review& Any
system deficiencies sha$$ be recorded on a Corrective Action ,eGuest
(CA,) and forwarded to the DCMA !#M Center via the !#M%
%pecia$ist&
58
/.9.8 I&R Res!ts. At the end of the 2D,, the PMs shou$d agree on a p$an
to trac< and c$ose a$$ action items, ensuring that an individua$ has
been assigned the responsibi$ity to reso$ve each action item& A$$ ris<
eva$uations shou$d be summariHed, ana$yHed, and briefed to senior
management within the company and to the PM. senior
management& Any new$y identified ris< that is significant enough for
ris< management and mitigation shou$d be added to the forma$ ris<
management p$an&
+o forma$ 2D, report is reGuired for e"terna$ distribution however the PM shou$d
write a memo for the record and attach a$$ documentation for the
officia$ program fi$es& There is no Ipass or fai$J to an 2D, however, the
measure of a successfu$ 2D, is when both PMs can answer this
Guestion with confidence and <now where and which ris<s $ay ahead:
Can =e eCec!te t4is contract 2tec4nica =or> scope3, gi*en t4e a*aia5e sc4ed!e and
5!dget reso!rcesM
After the c$ose of the 2D,, emphasis shifts to ongoing management processes, inc$uding
effective !#M and ris< management processes& Comp$etion of the 2D, a$$ows the PM. and
contractor to have a better understanding of ongoing performance re$ative to the base$ine& The
2D, a$so enab$es a continuous, mutua$ understanding of program ris<s& As a resu$t, the PMs can
more effective$y manage and mitigate ris<, and contro$ the cost and schedu$e performance of the
contract&
5?

'2/0,! >6= 2D, Dase$ine Discussion %tarter /uide
5@

#ART / SECTI$N D
$THER #$ST A)ARD ACTIVITIES
/.D.- $*er*ie=. This section contains guidance for the PM. and CM. in performing the
additiona$ activities for effective !#M after contract award and the 2D,& These tas<s inc$ude
maintaining a hea$thy base$ine, approva$ of the .TD and(or .T%, assessing !#M for award fee
contracts, ana$ysis of performance data, and training&
/.D./ Maintaining t4e #erformance Meas!rement &aseine 2#M&3.
/.D./.- Attri5!tes. This section describes the attributes of a hea$thy performance base$ine,
incorporation of base$ine changes, and the .TD(.T% process&
/.D././ )4at is a #erformance &aseineM A base$ine is a <ey factor in ensuring the
success of the program& A base$ine has the fo$$owing characteristics: it accurate$y represents
on$y authoriHed wor< on the contract, it inc$udes a rea$istic networ< schedu$e base$ine, and it
inc$udes a rea$istic time phased spread of budget(resources to the base$ined schedu$e&
Additiona$$y, management ma<es a consistent commitment to enforce proper base$ine change
procedures and periodica$$y review the remaining base$ine to ensure that it remains e"ecutab$e&
/.D./.0 Incorporation of A!t4ori<ed C4anges. The contractors management system shou$d
inc$ude procedures for the discip$ined incorporation of authoriHed contract changes and interna$
rep$anning& These procedures shou$d ensure that budget is not transferred independent of wor<
scope, that budget and schedu$e changes are incorporated simu$taneous$y, and that retroactive
changes are strict$y contro$$ed& ;hi$e these processes shou$d resu$t in discip$ined management
of the base$ine, they shou$d not be so strict as to prec$ude any adFustment to the PMD& Changes
occur throughout the $ife of any contract, and the base$ine shou$d be adFusted to incorporate
authoriHed changes or rep$anning as necessary&

/.D./.9 Interna Contractor Repanning.
/.D./.9.- "!idance. To faci$itate accurate performance measurement, the contractor shou$d
maintain a PMD that ref$ects the actua$ p$an for performing the remaining wor<& 2nterna$
rep$anning may inc$ude ro$$ing wave p$anning or rep$anning of the remaining base$ine&
/.D./.9./ Roing )a*e #anning. The contractor may a$so e$ect to p$an the PMD in detai$
;Ps for near term activities and ho$d the future budget in higher $eve$ PPs& The contractor
shou$d periodica$$y p$an the ne"t increment of wor< into detai$ed ;Ps& This is <nown as ro$$ing
wave p$anning and typica$$y provides more f$e"ibi$ity than $aying out the comp$ete base$ine in
detai$ at the beginning of the contract& The contractor shou$d estab$ish procedures and a
timetab$e for ro$$ing wave p$anning& /overnment approva$ of or interference with the process of
ro$$ing wave p$anning is not appropriateM however, the CM. and PM. shou$d be aware of the
contractors schedu$e for ro$$ing wave p$anning&
/.D./.9.0 Repanning of t4e Remaining &aseine. Maintaining a rea$istic PMD may
occasiona$$y reGuire the rep$anning of some, or a$$, of the remaining base$ine& !"amp$es of when
interna$ rep$anning may be appropriate inc$ude:
when the origina$ p$an becomes unrea$istic due to cost, schedu$e or technica$ prob$ems
when a reorganiHation of wor< or peop$e to increase efficiency becomes necessary
when the decision is made to use a different engineering or manufacturing approach
when e"isting budgets for remaining wor< are deemed sufficient, but need to be re6
phased to a different wor< p$an or schedu$e&
5A
The contractors !#M% specifies the management procedures it uses to conduct and approve
interna$ rep$anning& The contractors system may reGuire customer (/overnment) approva$ for
certain rep$anning activities& 2n these cases, the /overnment shou$d prompt$y review and
approve the changes as appropriate& 2f the CM. has been given responsibi$ity to authoriHe
these changes, the CM. shou$d <eep the PM. informed of the approved changes& (%ee
,a!a#!a,* 0.1 and supporting paragraphs&) The CM. shou$d inc$ude a review of the contractors
change procedures and rep$anning activities in routine survei$$ance&
/.D./.D $*er Target &aseines 2$T&3 and $*er Target Sc4ed!es 2$TS3
/.D./.D.- $*er*ie=. During contract e"ecution, the contractor may conc$ude that the budget
and schedu$e, for performing the remaining wor<, is decided$y insufficient and no $onger
represents a rea$istic p$an& At this point the contractor shou$d prepare and submit a reGuest to
imp$ement an .TD and(or .T%&
An .TD is a PMD that has been forma$$y reprogrammed to inc$ude additiona$ performance
management budget in e"cess of the contracts negotiated cost& An .TD increases the
performance budget without modifying the wor< scope or other constraints of the contract& The
va$ue of the .TD therefore e"ceeds the Contract Dudget Dase (CDD), and the corresponding
va$ue of the contract target cost or estimated cost target (depending on contract type)& The sum
of a$$ resu$ting budgets (a$$ocated budget, 0D and M,) e"ceeding the CDD becomes <nown as
the Tota$ A$$ocated Dudget (TAD)& The difference between the TAD and the CDD is the amount
of the increase over the previous$y estab$ished budget& %ee 'igure 56=&
&efore o*err!n
Tota$ A$$ocated Dudget (TAD)
Contract Dudget Dase (CDD)
Performance Measurement Dase$ine (PMD) Management
,eserve
After o*err!n
Tota$ A$$ocated Dudget (TAD)
Contract Dudget Dase (CDD) .ver Target Dudget
Performance Measurement Dase$ine (PMD) Management
,eserve
'2/0,! 56= .ver Target Dase$ine
An .T% condition is created when the contractor rep$ans the schedu$e to a schedu$e that
e"ceeds the contract mi$estones or de$ivery dates& This new schedu$e a$so becomes the basis
for the performance budgets& ;hi$e it is possib$e to have an .T% without a corresponding
increase in cost, norma$$y an .T% is accompanied by increased costs and therefore by an .TD&
2mp$ementing an .TD or .T% is a maFor management decision for the contractor and reGuires
/overnment approva$ at the start of the process& ConseGuent$y, the PM shou$d fu$$y understand
the concepts and processes& The PM shou$d consider the factors discussed be$ow when
considering whether an .TD or .T% is appropriate for the contract and when eva$uating the
contractors reGuest&
8:
/.D./.D./ "o*ernment Re*ie= and Appro*a. .nce it receives written approva$ for an
.TD, the contractor can create a budget base$ine in e"cess of the CDD& 2f approva$ is received
for an .T%, the contractor can rep$an remaining wor< to a rea$istic schedu$e that e"tends beyond
the contract mi$estones& This a$$ows the contractor to provide its managers with rea$istic budgets
and schedu$es for accomp$ishing the remaining wor<&
The contractor initiates the process by submitting an .TD(.T% reGuest to the PM detai$ing its
imp$ementation p$an& (,efer to paragraph 4&5&4&>&9 for essentia$ e$ements of an .TD(.T%
reGuest&) To e"pedite the return to a rea$istic base$ine, the PM prompt$y reviews and negotiates
changes, if necessary, to the contractorLs reGuest, within 9: days& The contracts CP, Data
2tem Description (D2D) reGuires /overnment approva$ and specifies automatic approva$ if the
/overnment fai$s to respond within 9: days& 2f the reGuest is not approved within 9: days, the
PM shou$d provide specific reasons as to why it was denied and what is reGuired to obtain
approva$& 2f the reGuest is approved, the contracting officer prompt$y sends written approva$ to
the contractor to proceed& The contractor may not imp$ement an .TD(.T% without this written
approva$&
Decause .TD budgets represent performance budgets on$y and are imp$emented so$e$y for
p$anning, contro$$ing, and measuring performance on a$ready authoriHed wor<, a contract
modification is not needed& The .TD budget does not impact the negotiated va$ue of the
contract& 'or incentive type contracts with a cei$ing, the /overnments cost $iabi$ity is sti$$
capped at the cei$ing va$ue& 'or cost reimbursement contracts, however, the /overnment cost
$iabi$ity continues to increase as actua$ costs accrue on the contract&
%ince an .T% invo$ves rep$anning the schedu$e mi$estones that e"ceed the contractua$
mi$estones or de$ivery dates, the PC. shou$d forma$$y recogniHe the new schedu$e mi$estones in
the contract and see< consideration for the changes&

The PM shou$d see< support from the PM. technica$ and support staff in eva$uating an .TD
reGuest, ensuring that the .TD approva$ process is not inhibited by inappropriate or unre$ated
issues& The overriding goa$ shou$d be to a$$ow the contractor to imp$ement in a time$y manner a
base$ine that a$$ows it to regain proper management contro$ of the ongoing effort&
/.D./.D.0 )4en to %se an $T&7$TS. The contractor shou$d submit an .TD(.T% reGuest
when it determines that the current base$ine does not represent a rea$istic p$an for accomp$ishing
the remaining wor< and no $onger serves as a basis for rea$istic measurement& ;or<ing to an
unrea$istic base$ine inhibits effective management contro$, possib$y e"acerbating the present
over6cost or behind6schedu$e condition& To restore effective management contro$, the contractor
shou$d prepare an .TD(.T% reGuest that ref$ects the needed changes to its base$ine&
The primary reason for imp$ementing an .TD(.T% shou$d be to improve the contractorLs abi$ity
to manage and contro$ ongoing wor<& Therefore, the decision to reGuest an .TD(.T% shou$d
originate with the contractor& The PM shou$d not uni$atera$$y determine the specifics, such as the
amount of additiona$ budget or degree of schedu$e stretch& After first conc$uding that the
contractor needs an .TD(.T% to affect proper contro$ over the remaining wor<, the PM shou$d
consider the fo$$owing factors in deciding whether an .TD is appropriate on the contract:
Do the contractor and /overnment understand why the current wor< p$an is no $onger
va$idX The parties shou$d identify the prob$ems that rendered the current wor< p$an
unrea$istic and imp$ement measures to prevent these prob$ems in the future&
2s the e"isting p$an for accomp$ishing the remaining wor< va$idX The Qto6goQ p$an shou$d
ref$ect a rea$istic schedu$e of how the remaining wor< actua$$y is to be done and the new
budget shou$d be adeGuate and ref$ect a rea$istic estimate, remaining program ris<s, and
contain an appropriate amount of management reserve&
Bas contract wor< progressed sufficient$y to warrant an .TD(.T%X The use of an
.TD(.T% may be inappropriate in a contracts ear$y stages because insufficient wor<
has been accomp$ished to verify the need for an .TD(.T%& Bowever, nothing prec$udes
8=
the contractor from imp$ementing an .TD(.T% at the outset, provided the PM and PC.
concur&
Does sufficient time remain on the contract to warrant an .TD(.T%X 2f there is $itt$e
time remaining, an .TD(.T% may not be worthwhi$e and may be very disruptive&
Bas an .TD been imp$emented previous$yX 2f mu$tip$e .TDs are reGuested, it suggests
that the above factors, especia$$y the first two on the $ist, have not been adeGuate$y
considered& This may indicate significant under$ying management prob$ems that shou$d
be investigated&

/.D./.D.9 Impementing an $T&7$TS. The PM and the contractor agree to the .TD(.T%
before it can be fina$iHed and incorporated into the contractors base$ine& The PM is encouraged
to see< support from the !#M% %pecia$ist, the !#M%% office, and the CM. when eva$uating an
.TD(.T% reGuest& The contractorLs .TD(.T% reGuest shou$d contain the fo$$owing essentia$
e$ements:
&ottoms.!p estimate of remaining costs and sc4ed!e. The contractor shou$d
perform a detai$ed bottom6up estimate of remaining wor< during the .TD process based
on a rea$istic schedu$e&
Reaistic sc4ed!e for remaining =or>. The remaining wor< p$an shou$d be based on
a rea$istic schedu$e& The new wor< p$an sha$$ be time phased into the current schedu$e
to produce a new va$id e"ecutab$e schedu$e that va$idates the .TD(.T%&
Reporting t4e $T& in t4e C#R. The parties shou$d agree on how the .TD is to be
reported in the CP,& %pecifica$$y, how are the e"isting cost and schedu$e variances
hand$ed, and how is visibi$ity into the budget a$$ocations reportedX The variances can be
retained or e$iminated, or some combination thereof, depending on the specific
circumstances of the contract& +arrative Fustification for the .TD is described in this
report& Detai$ed instructions on how to report an .TD in the CP, is discussed in the
Ov'! Ta!#') 3a5'li"' ;Ov'! Ta!#') S&*'%$l' @a"%<4& The PM shou$d eva$uate
carefu$$y management information needs before deciding how these items shou$d be
hand$ed&
$T& impementation time frame. .ne to two fu$$ accounting periods after written
authoriHation to proceed is received shou$d provide the contractor with sufficient time to
fu$$y imp$ement an .TD(.T% in reGuired reports&
/.D.0 EVMS and A=ard (ee Contracts.
/.D.0.- "enera Concepts& The genera$ concept of award fee contracting is to recogniHe and
reward the contractor for performance that e"ceeds the performance targets estab$ished in the
contract, inc$uding technica$, schedu$e, and cost& Typica$ award fee eva$uations occur at si"
month interva$s& The PM. estab$ishes award fee criteria prior to the start of each award fee
period& 2t is typica$ that the maFority of the contractors fee may be tied to award fee, with on$y a
sma$$ percentage earned as a base fee& 2f significant rep$anning or forma$ reprogramming
occurs during the award fee period of performance, eGuitab$e adFustments to the award fee p$an
shou$d occur, as appropriate&
Award fee criteria shou$d be carefu$$y se$ected to proper$y motivate the contractors management
and performance during the award fee period& )ua$itative criteria are genera$$y recommended,
but c$ear distinctions shou$d be estab$ished between the performance $eve$s to guide the PM.
when eva$uating performance& The PM. shou$d estab$ish the criteria to motivate and encourage
improved management processes during the period, <eeping in mind that recogniHing
improvements in integrated program management resu$t in more $ong $asting improvement in
cost and schedu$e performance& 2f such Gua$itative criteria are difficu$t to support during the
eva$uation process, the PM. shou$d consider using subFective criteria for !#M% performance
resu$ts&
84
/.D.0./ A*oidance of EVMS N!antitati*e Metrics. ;hi$e it seems obvious that earned va$ue
metrics, such as variances or indices, seem tai$or made to provide incentives to the contractor in
an award fee environment, e"perience shows otherwise& 0sing metrics such as cost or schedu$e
variances, cost or schedu$e performance indices or #ACs to measure performance for award fee
purposes shou$d be avoided& 0se of such metrics may resu$t in overstating of performance or
other improper actions that cou$d undermine the !#M%& Metrics may $ead to freGuent base$ine
changes for short term profit gain and genera$$y have not resu$ted in better cost contro$& Cost
performance may be more direct$y incentiviHed through the use of a CP2' contract rather than an
award fee contract&
/.D.0.0 A*oidance of Contract Management Miestones 2s!c4 as I&R3 as Criteria. The 2D,
or other management, technica$ or program mi$estones shou$d not be used as a basis for award
fee& !stab$ishing award fee metrics based on hard dates for either the 2D, or other management
mi$estones may force the conduct of these reviews, even though the contractor is not ready for
the review& The technica$ comp$etion of wor< to an estab$ished base$ine eva$uation criteria is one
way of obFective$y eva$uating and rewarding the contractor based on success to a base$ine p$an&
/.D.0.9 Esta5is4ing N!aitati*e Criteria. The goa$ shou$d be to motivate effective performance
management with !#M%& Award fee criteria shou$d be based on the degree of effective
management with !#M% and can be a mi" of Gua$itative and subFective measures& The PM.
shou$d aim for ?5U of the criteria to focus on effective management with !#M and a 45U focus
on discip$ine(consistency& The goa$ shou$d be to reward proactive and innovative performance
management& This brea<out can be seen in the fo$$owing suggested categories:
Management
!#M is effective$y integrated and used for program management
Prime contractors management of maFor subcontractors
,ea$istic and current budgets, e"penditures, and schedu$e forecasts
AdeGuacy of cost proposa$s submitted during award fee period
Cost contro$
Meaningfu$ variance ana$ysis
Time$y incorporation of changes to the PMD
Discipine
Accuracy, time$iness, and consistency of bi$$ings and cumu$ative performance data and
integration of subcontractor data
Dase$ine discip$ine and system comp$iance
%amp$e criteria and varying $eve$s of performance are shown in A,,'"%i? E& These criteria
shou$d be se$ected and tai$ored as appropriate to the nature of the contract&
/.D.9 #erformance Data.
/.D.9.- Anaysis of #erformance Data. !#M provides detai$ed insight into program
performance at a$$ $eve$s& Proper management use of !#M data by the program team can be
the deciding factor in whether a program is de$ivered on time and on cost, or whether the
program fai$s& Proper management use depends on effective and tai$ored ana$ysis that is
responsive to management needs& Eey attributes of effective ana$ysis are:
management support that is consistent and visib$e to the entire team& This reinforces
the importance of !#M to the program team&
mu$ti6functiona$ team approach to ana$ysis
integration of ana$ysis of <ey programmatic data from a variety of sources
time$iness of ana$ysis
focus on significant variances and deve$oping trends
focus on understanding the past in order to program fina$ cost and schedu$e estimates
89
management emphasis on deve$oping credib$e corrective action p$ans
2t is not enough for the !#M% %pecia$ist to generate the ana$ysis in iso$ation and Itoss it over the
fenceJ to the PM& Ana$ysis is a team effort and is fu$$y integrated into the overa$$ program
management process& !ffective ana$ysis considers a$$ impacts, considers a$$ courses of action,
synthesiHes an integrated so$ution and action p$an, and a$$ows informed decisions& The rea$ test
for effective, forward $oo<ing ana$ysis is that it is used to manage program performance, not Fust
to report the status and prob$ems to date&
/.D.9./ "enera Concepts of Anaysis. ;hi$e ana$ysis too$s have considerab$y aided and
shortened certain routine ana$ytica$ tas<s, the best ana$ytica$ too$ is sti$$ an inGuisitive mind& The
ana$yst shou$d be ab$e to answer not on$y the basic Guestions (who, what, where, when, and
why), but shou$d a$so be ab$e to provide a thoughtfu$ synthesis and set of conc$usions, based on
varying sources of data and recommendations& The fo$$owing paragraphs describe the principa$
steps of ana$ysis, different categories of metrics, determination of significant variances, and how
to ana$yHe the data for va$idity&
/.D.9.0 #rincipa Steps of Anaysis. 'igure 564 shows the maFor steps genera$$y performed
in earned va$ue ana$ysis& These steps shou$d be fo$$owed in seGuentia$ order, as the <now$edge
gained in each step bui$ds on previous steps& .ne shou$d not attempt to perform one of the fina$
steps, for e"amp$e, deve$opment of the independent estimate at comp$etion without a thorough
understanding of past performance trends, remaining ris<, etc& 2t shou$d a$so be noted that
ana$ysis is comprised of two maFor steps, i&e&, ana$yHing past performance and then proFecting
future performance&
Princip$e steps of Ana$ysis:
Ana$yHe Performance
#a$idity of data
Ca$cu$ate variances at a$$ $eve$s
/raph and ana$yHe data
*oo< at comparative data
Ana$ysis of schedu$e trends, 2M%, and critica$ path
!"amine written ana$ysis by contractor
ProFect 'uture Performance
*oo< at wor< remaining versus ris< in proFect
2ntegrate ana$ysis from 2PTs
Assess rea$ism of contractor !AC
Ca$cu$ate range of independent !ACs, compare to funding
Ca$cu$ate independent comp$etion date, compare to 2M% data
'ormu$ate p$an of action
Provide team ana$ysis to proFect management team
/.D.9.9 (!rt4er "!idance& The DA0 /o$d Card, which contains basic !#M terms and
formu$as, can be found at *)),5:;;a&&.%a$.+il;'v+&
/.D.9.D %nderstanding t4e ContractorLs EVM System. .ne of the most important tas<s
for the !#M ana$yst to underta<e is to gain an in6depth understanding of the contractors !#M%&
The program ana$yst shou$d study the contractorLs !#M system description and then reGuest as
necessary, a briefing on the operation and use of the !#M system& The briefing shou$d inc$ude,
as a minimum, the contractorLs (and subcontractors, as necessary) method for estab$ishing and
maintaining their PMD, base$ine documentation, a$$owab$e methods for earning the DC;P,
procedures for updating the !AC, base$ine change incorporation, and overhead rate structure&
8>
This basic understanding a$$ows the ana$yst to fu$$y understand the nature of the performance
data as the contract progresses, and a$$ows determination of any data anoma$ies&
Decause the CP, is the primary report for communicating integrated contract cost and schedu$e
performance, the PM shou$d ensure that it presents accurate and usefu$ information& The PM
shou$d carefu$$y review each CP, submitta$, chec<ing for such things as errors, D2D comp$iance,
and data anoma$ies& The PM shou$d address any concerns or prob$ems and reGuire their prompt
correction by the contractor& 2f $eft uncorrected, data errors and anoma$ies may s<ew and distort
the !#M ana$ysis, /overnment !AC, and resu$ting program p$anning&
/.D.D Training.
/.D.D.- So!rces of Training. 2n order to effective$y uti$iHe the information generated by the
contractors !#M% and reported in the e"terna$ reports, the P., CM., DCAA 'A., !#M%%, and
contractor personne$ shou$d receive training in the ana$ysis of earned va$ue data& There are four
genera$ sources of training: forma$ training c$asses (DA0, professiona$ conferences), contractor
sponsored training, in house training, and training materia$s avai$ab$e on performance
management websites&
/.D.D./ (orma Training. Courses on the basics of earned va$ue and the ana$ysis of data shou$d
be provided for a$$ personne$ associated with the program and refresher training shou$d be
offered on a periodic basis& This training is avai$ab$e from the member organiHations of the DA0
as we$$ as other recogniHed educationa$ institutions and forma$ training programs at professiona$
association conferences&
D.D.0 Contractor Sponsored Training. The maFority of contractors with approved !#M%
conduct training c$asses in the operation of their !#M system& ;here the contractor provides
training in the contractors !#M system, the /overnment P., the CM., !#M%%, and DCAA
may see< to participate in these training opportunities&
/.D.D.9 In.4o!se training& !ach acGuisition component with an !#M%% norma$$y provides in6
house training& ;here this capabi$ity e"ists, a$$ organiHations invo$ved in an acGuisition shou$d
be invited to participate in this training& This training may consist of specia$iHed training, focused
on an individua$ contract or, it may be genera$iHed training addressing the concepts and
reGuirements of !#M and the ana$ysis of !#M information& ;hen in6house training is conducted
for an individua$ P., every effort shou$d be made to incorporate the specifics of the contractorLs
!#M% into the course&
/.D.D.D Training Materias A*aia5e on )e5sites& There is a wea$th of training materia$s
posted to severa$ performance management websites that may be used to understand basic
princip$es and for refresher training& The $imitations of this training inc$ude the possibi$ity of
receiving outdated materia$ and not being ab$e to get Guestions answered from an e"perienced
instructor&
85
APP!+D23 A
%AMP*! M!M.,A+D0M .' A/,!!M!+T
&ET)EEN CM$ AND THE C$M#$NENT #R$"RAM MANA"ER
)ITH RES#ECT T$
S%RVEI''ANCE $( INTE"RATED MANA"EMENT S1STEMS
(2MP.,TA+T +.T!: This Memorandum of Agreement (M.A) is for guidance purposes on$y& 2t
is intended to provide assistance in ascertaining that a$$ of the appropriate aspects of !arned
#a$ue Management %ystem (!#M%) survei$$ance are encompassed in the preparation of a
specific survei$$ance p$an& 2t is not intended that this M.A provide a mandatory, reGuired format
in any respect&)
=& Purpose&
The purpose of this M.A is to estab$ish the responsibi$ities of the (component PM) and the
(Contract Management .ffice) with respect to !#M survei$$ance under a$$ contracts issued by the
(component PM)& The agreement is based upon the po$icy and obFectives of Part 4 %ection 9 of
the !#M% 2mp$ementation /uide and the DCMA 2nstruction(DCMA /uideboo<&
4& %cope&
This agreement describes the responsibi$ities and wor<ing re$ationships between the CM. and
the PM, and the activities necessary to assure continuing effective contractor contro$, use, and
reporting of cost, schedu$e, and technica$ performance within the purview of the !#M%
reGuirements& This agreement is app$icab$e to a$$ (component PM) contracts performed at
(Company), $ocated in 111111111111, which incorporate !#M% reGuirements&
9& ,esponsibi$ities&
a& Program Manager:
(=) Provide overa$$ management of the acGuisition program, inc$uding support of
the survei$$ance team to assure continued contractor comp$iance with the
!#M%&
(4) Provide routine feedbac< to the CM. on Gua$ity and uti$ity of system
survei$$ance efforts&
(9) !nsure that the CM. is <ept fu$$y informed of pertinent program events, to
inc$ude appropriate communications between the PM and the contractor&
Program awareness is necessary so that the CM. may be fu$$y effective and
responsive in providing the reGuired support at a$$ times&
(>) ,eGuest any prob$em ana$ysis reGuired beyond the scope of this M.A& %uch
reGuests are addressed to the CM.&
(5) Provide reGuired specia$iHed technica$ support needed for effective
accomp$ishment of the !#M% survei$$ance program as reGuested&
b& CM.:
(=) Provide overa$$ assurance that the contractorLs integrated management
system continues to meet the reGuirements of the !#M% guide$ines&
88
(4) Deve$op and imp$ement a Foint survei$$ance p$an which provides the detai$s
for accomp$ishing system survei$$ance and maintenance consistent with this
M.A&
(9) !nsure the survei$$ance p$an is a $iving document and continues to provide a
framewor< for effective !#M% survei$$ance&
(>) Provide specia$iHed support or prob$em ana$ysis as agreed to in this M.A&
(5) Eeep the PM advised of the status of contractorLs integrated management
system and !#M% re$ated activities&
(8) Maintain records and submit reports as reGuired by this M.A&
(?) ,eview and eva$uate within 9: days of submitta$, a$$ proposed contractor
integrated management system changes to determine !#M% comp$iance& 2f an
AC. waiver to pre6approva$ of changes is granted, review changes and
estab$ish survei$$ance to ensure system integrity is maintained&
(@) Provide team member support, as avai$ab$e, for 2ntegrated Dase$ine ,eviews
when reGuested by the procuring activity&
(A) Perform periodic eva$uations of contract estimates at comp$etion& /enerate,
when appropriate, independent !ACs for submission to the program office and
higher headGuarters&
(=:) Deve$op I,u$es of !ngagementJ to effective$y reso$ve !#M issues with the
contractor and program office&
>& %urvei$$ance P$an 'ramewor<& Detai$s to be mutua$$y determined by the PM and CM. in
coordination with DCAA may inc$ude a$$ or part of the fo$$owing:
a& Assure continuity, consistency, Gua$ity, and usefu$ness of the system in
operation& This inc$udes the fo$$owing:
(=) Assuring contractor commitment to !#M as a business practice, inc$uding
effective survei$$ance&
(4) Assuring that the contractorLs accepted integrated management system is, in
fact, being used by the contractor to manage the program& (e&g& 6 Attendance at
routine contractor management program status meetings&)
(9) !va$uating contractor generated changes to the system to ensure continued
comp$iance with the guide$ines&
(>) Assuring that system discip$ine and integrity are maintained&
b& Monitor the contractorLs corrective actions resu$ting from survei$$ance findings
and concerns&
c& Perform continuous ana$ysis of the contractors !#M% to ensure system
integrity& 'reGuency and $eve$ of detai$ is to be consistent with contract ris<& (e&g&
6 Compare CP2 vs& TCP2 for ;D% e$ement !ACs, compare
schedu$e variance vs& time based schedu$es for schedu$e accuracy)
8?
d& 2nform the contractor and PM of any uncorrected deficiencies which affect
overa$$ integrity of the contractorLs system&
e& ,eceive, eva$uate, reconci$e, and process e"terna$ contractor performance and
financia$ reports, e&g&, Contract Performance ,eports, Contract 'unds
%tatus ,eports, 2ntegrated Master %chedu$e, Contractor Cost Data ,eporting,
etc& #erify that data is submitted in accordance with the reporting reGuirements&
5& ,ecords Maintenance&
The CM. estab$ishes and maintains a centra$ fi$e for a$$ pertinent data and
correspondence regarding the !#M% reGuirements& The CM. assures that the fi$e
contains updated regu$atory and guidance materia$ pertaining to the program& The
fi$e, as a minimum, contains copies of a$$ correspondence with the contractor and PM,
system description, changes to the system, memoranda of meetings, month$y
survei$$ance reports(activities, reconci$iation of appropriate reports from the Contract
Data ,eGuirements *ist, and deficiency situations reGuiring corrective actions&
%urvei$$ance records are maintained unti$ program comp$etion and then forwarded for
inc$usion in the officia$ contracts fi$e& !$ectronic fi$es are acceptab$e and encouraged&
8& %urvei$$ance ,eview Meetings Detween PM, CM., and DCAA&
This section provides for both schedu$ed and unschedu$ed Foint meetings pertaining to
the !#M% survei$$ance program&

?& Terms of Agreement&
This agreement is effective upon signature by a$$ parties& 2t is intended to remain in force
for the duration of the specified contract(s)& Bowever, the terms of this agreement are
subFect to change at any time by mutua$ consent of the parties hereto&
APP,.#!D: APP,.#!D:
11111111111111111111111111111 11111111111111111111111111111111111
CM. Director Date Component Program Manager Date
8@
APP!+D23 D
%amp$e %tatement of ;or< Paragraphs
3&: 2ntegrated Program Management (2PM)
3&= Contract ;or< Drea<down %tructure (C;D%)& The contractor deve$ops and maintains the
C;D% and C;D% dictionary in accordance with D26M/MT6@=99>D, using the ;D% structure
contained in the Cost and %oftware Data ,eporting (C%D,) p$an& The C;D% provides the basis
for further e"tension by the contractor to $ower $eve$s during the performance of the contract&
The contractor e"tends the C;D% down to the appropriate $eve$ reGuired to provide adeGuate
interna$ management, survei$$ance, and performance measurement, regard$ess of the reporting
$eve$ stipu$ated in the contract for /overnment visibi$ity& The contractor uses the C;D% as the
primary framewor< for contract p$anning, budgeting, and reporting of the cost, schedu$e, and
technica$ performance status to the /overnment& The contractor ana$yHes the system
reGuirements specified in the statement of wor< (%.;) and system specification and trans$ates
them into a structure representing the products and services that comprise the entire wor< effort
commensurate with the acGuisition phase and contract reGuirements& The contractorLs team or
organiHationa$ entity responsib$e for the systems engineering of the system prepares the
technica$ e$ements of the e"tended Contract ;D%& The contractor, if necessary, updates the
C;D% during the e"ecution of the contract& Changes to the C;D% or associated definitions, at
any reporting $eve$, reGuire approva$ of the /overnment (D26M/MT6@=99>A)&
App$icab$e Documents Tit$e and Tai$ored App$ication
M2*6BDDE6@@= ;or< Drea<down %tructure for Defense Materie$ 2tems
D26M/MT6@=99>D Contract ;or< Drea<down %tructure
3&4 Performance Management %ystem& The contractor uti$iHes its e"isting, interna$
performance management system to p$an, schedu$e, budget, monitor, manage, and report cost,
schedu$e, and technica$ status app$icab$e to the contract& The contractorLs interna$ performance
management system serves as the sing$e, forma$, integrated system that meets both the
contractorLs interna$ management reGuirements and the reGuirements of the /overnment for
time$y, re$iab$e, and auditab$e performance information& The app$ication of these concepts
provides for ear$y indication of contract cost, schedu$e, and technica$ cha$$enges& !arned va$ue
assessments corre$ate with technica$ achievement& The outputs of this system are used as the
basis to report detai$ed performance status during program management reviews and other
status meetings& The contractorLs system shou$d satisfy the 2ndustry /uide$ines de$ineated in the
A+%2(!2A6?>@, !#M%, the genera$ provisions of the contract, and this %.;& The contractor
need not estab$ish a separate or uniGue interna$ performance management system for purposes
of p$anning, schedu$ing, directing, statusing, recording or reporting progress under this contract&
3&4&= Contractor Performance Management %ystem& The contractorLs system sha$$ meet the
guide$ines and be maintained in accordance with the reGuirements of the !#M% guide$ines as
described in this contract, under D'A,% C$ause 454&4>46?::4, and the contractorLs own
documented %ystem Description& The Contract Performance ,eport (CP,) and 2ntegrated
Master %chedu$e (2M%) are deve$oped, maintained, updated(statused, and reported on a month$y
basis per CD,* reGuirements& An !#M% that has been forma$$y va$idated and accepted by the
cogniHant contracting officer is reGuired for cost or incentive contracts, subcontracts, and other
agreements va$ued at or greater than N5:M in then6year do$$ars& The app$ication of these
concepts provide for ear$y indications of contract cost and schedu$e prob$ems& !arned va$ue
assessments corre$ate with technica$ achievement& 'or contracts va$ued at or greater than N4:M
but $ess than N5:M then6year do$$ars, the above reGuirements app$y, however, in regards to
D'A,% 454&4>46?::= and 454&4>46?::4, the contractor is reGuired to have an !#M% that
comp$ies with A+%2(!2A6?>@M however, the /overnment wi$$ not forma$$y accept the contractors
management system (no comp$iance review)&
8A
3&4&4 2ntegrated Dase$ine ,eview (2D,)& An 2D, focusing on the rea$ism of the contractorLs
integrated Performance Measurement Dase$ine (PMD) and the appropriateness of the earned
va$ue methodo$ogy to be emp$oyed under the contract occurs as soon as possib$e after the
contract PMD is in p$ace, but, in no event without specific authoriHation of the Contracting
.fficer, is initiation of the 2D, process to be de$ayed past the si"th month after award of this
contract& 2ncrementa$ 2D,s wi$$ be conducted as needed throughout the $ife of the contract for
initiation of an undefinitiHed contract action, and subseGuent$y, when reGuired fo$$owing maFor
changes to the base$ine or rep$anning& The /overnment verifies during the 2D,, and fo$$ow6on
2D,s when reGuired, that the contractor has estab$ished and maintains a re$iab$e PMD& The
contractor ensures that the base$ine inc$udes the entire contract technica$ scope of wor<
consistent with contract schedu$e reGuirements and has adeGuate resources assigned& The
contractor assures the /overnment that effective earned va$ue methods are used to accurate$y
status contract cost, schedu$e, and technica$ performance& The 2D, is used to achieve a mutua$
understanding of the base$ine p$an, cost and schedu$e ris<, and the under$ying management
processes used for p$anning and contro$$ing the program& Participation in the 2D, is a Foint
responsibi$ity of both the /overnment PM and the contractor& The contractor f$ows6down the 2D,
reGuirement to those subcontractors that meet the app$icab$e thresho$ds for !#M reporting& The
contractor $eads the 2D, at subcontractors, with active participation from the /overnment&
3&4&9 App$ication To %ubcontractors& The contractor f$ows6down !#M reGuirements to
subcontractors meeting the app$icab$e thresho$ds and(or assigned critica$ tas<s& The
performance information reported by the subcontractors is incorporated and integrated into the
contractorLs management system& The Contractor is responsib$e for reviewing and assuring the
va$idity of a$$ subcontractors reporting through survei$$ance and other means&
App$icab$e Documents Tit$e and Tai$ored App$ication
D'A,% 454&4>46?::4 +otice of !arned #a$ue Management %ystem
3&9 2ntegrated Program Management ,eporting& The Contractor reports !#M data as app$icab$e
to this contract in accordance with the reGuirements stated herein and the CD,*& A$$ reporting
corresponds to app$icab$e Contract ;D% e$ements& The Contractor reconci$es reporting
e$ements in the Contract 'unds %tatus ,eport (C'%,) with the CP, when these documents are
submitted in the same month& The Contractor provides a reconci$iation of the C'%, with CP,
as an addendum to the CP,& (D26M/MT6@=>88A, D26M/MT6@=>8@)&
3&9&= App$ication To %ubcontractors& %ubcontracts e"ceeding N5:M in then year do$$ars have
app$ied to them the reGuirements of D'A,% 454&4>46?::=, D'A,% 454&4>46?::4, 2ntegrated
Master %chedu$e (D26M/MT6@=85:) and the CP, (D26M/MT6@=>88A)& 'or subcontracts va$ued
at or greater than N4:M but $ess than N5:M, the above reGuirements app$y, however, 2n regards
to D'A,% 454&4>46?::= and 454&4>46?::4, the contractor is reGuired to have an !#M% that
comp$ies with A+%2(!2A6?>@M however, the /overnment wi$$ not forma$$y accept the contractors
management system (no comp$iance review)& !#M% f$ow down to subcontracts of $ess than
N4:M in then year do$$ars or 'irm 'i"ed Price (''P) subcontracts that e"ceed =4 months
duration is a ris<6based decision and wi$$ be as mutua$$y agreed between the contractor and the
/overnment&
3&9&4 !$ectronic Transmission .f Data& The Contractor formats the de$iverab$e data for
e$ectronic data interchange (!D2) in accordance with the A+%2 3=4 %tandard or 3M* eGuiva$ent&
App$icab$e Document Tit$e and Tai$ored App$ication
A+%2 3=4 American +ationa$ %tandards
2nstitute, @9A ProFect Cost ,eporting
3&>&: 2ntegrated Master %chedu$e (2M%)& The 2M% wi$$ have the fo$$owing characteristics:
3&>&= 2t is consistent with the C;D%&
?:
3&>&4 2t is detai$ed sufficient$y that critica$ and high ris< efforts are identified and p$anned
rea$istica$$y to assure e"ecutabi$ity& The 2M% wi$$ be e"tended and e"panded as the contract or
agreement unfo$ds and additiona$ insight is needed (for e"amp$e, ro$$ing wave detai$ p$anning
or scope changes)&
3&>&9 2t inc$udes the efforts of a$$ activities, inc$uding subcontractors and supp$iers&
3&>&> 2t presents a current, integrated view of the contract or agreement that is consistent with
resource p$ans, CP,s and other approved documentation&
3&>&5 2t shou$d ref$ect those ris<s identified and documented in the contractors ris<
management p$an&
3&>&8 The Contractor formats the de$iverab$e 2M% for !D2& The 2M% is created using a networ<
capab$e Commercia$$y .ff the %he$f (C.T%) schedu$ing software app$ication& 0n$ess
otherwise provided in the CD,*, the 2M% is to be de$ivered e$ectronica$$y in the native digita$
format (i&e&, an e$ectronic fi$e produced by the contractors schedu$ing too$)& (D26M/MT6@=85:)&
3&5&: .ver Target Dase$ine (.TD)(,estructure: The contractor may conc$ude the base$ine no
$onger represents a rea$istic p$an in terms of budget(schedu$e e"ecution& 2n the event the
contractor determines an .TD(restructuring action is necessary, the contractor obtains
customer approva$ prior to imp$ementing an .TD(restructuring action& The reGuest shou$d a$so
inc$ude detai$ed imp$ementation procedures as we$$ as an imp$ementation timeframe& The
contractor wi$$ not imp$ement the .TD(restructuring prior to receiving written approva$ from the
Contracting .fficer&
?=
APP!+D23 C
%amp$e CD,* 'orms
'igure C6= %amp$e CD,* for 'u$$ CP, (PN5:M)
'igure C64 %amp$e CD,* for Modified CP, (SN5:M) ;ith Moderate ,is<
'igure C69 %amp$e CD,* for Modified CP, (SN5:M) ;ith *ow ,is<
'igure C6> %amp$e CD,* for 2M%
'igure C65 %amp$e CD,* for Contract ;D%
'igure C68 %amp$e CD,* for Contract ;D% ;hen CCD, 2s ,eGuired
?4
CONTRACT DATA RE/UIREMENTS LIST
(1 Data Item)
F!+ A,,!v'%
OM3 N. 6761-6/88
Pub$ic reporting burden for this co$$ection of information is estimated to average ==: hours per response, inc$uding the time for reviewing
instructions, searching e"isting data sources, gathering and maintaining the data needed and comp$eting and reviewing the co$$ection of
information& %end comments regarding this burden estimate or any other aspect of this co$$ection of information, inc$uding suggestions for
reducing this burden, to Department of Defense, ;ashington BeadGuarters %ervices, Directorate for 2nformation .perations and ,eports, =4=5
Oefferson Davis Bighway, %uite =4:>, Ar$ington, #A 444:46>9:4 and to the .ffice of Management and Dudget, Paperwor< ,eduction ProFect
(:?:>6:=@@), ;ashington, DC 4:5:9& P$ease D. +.T ,!T0,+ your form to either of these addresses& %end comp$eted form to the
/overnment 2ssuing Contracting .fficer for the Contract(P, +o& *isted in D$oc< !&
A. CONTRACT LINE ITEM NO. 3. EA@I3IT C. CATEGORB:
TDP TM OT@ER
D. SBSTEM;ITEM E. CONTRACT;PR NO. F. CONTRACTOR
Na+' ( ,!#!a+
=& DATA 2T!M +.& 4& T2T*! .' DATA 2T!M 9& %0DT2T*!
Contract Performance ,eport (CP,)
>& A0TB.,2TC $(ata Ac)*isition (oc*ment No&% 5& C.+T,ACT ,!'!,!+C! 8& ,!)02,2+/ .''2C!
D26M/MT6@=>88 A
?& DD 45: ,!) A&D2%T %TAT!M!+T
,!)02,!D
=:& ',!)0!+CC =4& DAT! .' '2,%T
%0DM2%%2.+
=>& D2%T,2D0T2.+
*T M.+TB*C %!! D*.CE =8
b& C.P2!%
@& APP C.D! ==& A% .' DAT! =9& DAT! .' %0D%!)0!+T
%0DM2%%2.+
a& ADD,!%%!!
Draft
'ina$
+. %!! D*.CE =8 %!! D*.CE =8
,eg ,epro
-E. Remar>s+
Tai$or D26M/MT @=>88 A as fo$$ows:
D$oc< >:
,eport data on 'ormat = at C;D% *eve$ 9 e"cept for the fo$$owing C;D% e$ements:
C;D% 333 R report at *eve$ 4
C;D% 333, 333, 333 R report at *eve$ >
C;D% 333 R report at *eve$ 5
'ormat 5 variance ana$ysis are reGuired for the fo$$owing variances in 'ormat =:
6 Current period cost or schedu$e variances e"ceeding T(6 N and(or (pic< one) T(6 U
6 Cumu$ative cost or schedu$e variances e"ceeding T(6 N and(or (pic< one) T(6 U
6 #ariances at comp$etion e"ceeding T(6 N and T(6 U
6 .ther significant variances that are causing or are $i<e$y to cause significant cost
or schedu$e overruns (contractor determined)
The /overnment reserves the right to review and modify (through negotiations) the
reporting $eve$s for 'ormats = and variance thresho$ds for 'ormat 5 during the performance
of the contract&
'ormats 9 - > sha$$ inc$ude identica$ forecast periods& These periods sha$$ be month$y for
at $east si" months, Guarter$y for at $east two Guarters, and then Guarter$y, semi6annua$$y, or
annua$$y to comp$etion&
D$oc< A: Distribution authoriHed to 0% /overnment agencies and their contractors& .ther
reGuests for this document sha$$ be referred to: (specify)
D$oc< ==: The CP, sha$$ be prepared on a month$y basis, as of the end of the contractors
month$y accounting period& 'ormats = R 5 are reGuired to be submitted month$y&
D$oc< =4: The first submission sha$$ be made +*T 8: days after authoriHation to proceed&
D$oc< =9: %ubseGuent submissions sha$$ be due +*T =? wor<ing days after the c$ose of the
contractors month$y accounting period& 'ina$ submission is due when the $ast
agreement(ac<now$edgement significant mi$estone(de$iverab$e as defined by the contract
has been achieved and remaining ris< areas have been mitigated with /overnment
concurrence&
D$oc< =>: The A+%2 3=4 comp$iant e$ectronic report sha$$ be de$ivered via !D2 to:
!+T!, .''2C! %CMD.*%
/5. T.TA*
/& P,!PA,!D DC B& DAT! 2& APP,.#!D DC O& DAT!
DD 'orm =>496=, 'eb 4::= P,!#2.0% !D2T2.+ MAC D! 0%!D& Page 11111 of 111111 Pages
'2/0,! C R = %AMP*! CD,* '., C.+T,ACT ;2TB B2/B ,2%E
?9
-/ Da)a I)'+.
F!+ A,,!v'%
OM3 N. 6761-6/88

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A. CONTRACT LINE ITEM NO.

3. EA@I3IT

C. CATEGORB
TDP EEEEEEEE TM EEEEEEEE OT@ER EEEEEEEE

D. SBSTEM ; ITEM
Na+' ( ,!#!a+

E. CONTRACT ; PR NO.

F. CONTRACTOR

/. DATA ITEM NO.

2. TITLE OF DATA ITEM
C")!a&) P'!(!+a"&' R',!) -CPR.
0. SU3TITLE

1. AUT@ORITB -Da)a I)'+ D'5&!i,)i" N..
DI-MGMT-8/166A
5. CONTRACT REFERENCE

6. REFUIRING OFFICE

7. DD 256
REF
G. DIST STATEMENT
REFUIRED
/6. FREFUENCB /2. DATE OF FIRST
SU3MISSION

/1. DISTRI3UTION

LT
C MONT@LB S'' 3l&4 /6
<. COPIES

8. APP
CODE

//. AS OF DATE /0. DATE OF SU3SEFUENT
SU3MISSION
a. ADDRESSEE

FINAL

NO S'' 3l&4 /6 S'' 3l&4 /6

DRAFT R'# R',!

/6. REMARHS E")'! ((i&' 58+<l5

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/5. TOTAL

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@. DATE

I. APPROVED 3B

C. DATE

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-/ Da)a I)'+.
F!+ A,,!v'%
OM3 N. 6761-6/88

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3. EA@I3IT

C. CATEGORB

D. SBSTEM ; ITEM
Na+' ( ,!#!a+


F. CONTRACTOR

/. DATA ITEM NO.

C")!a&) P'!(!+a"&' R',!) -CPR.
0. SU3TITLE

DI-MGMT-8/166A

6. REFUIRING OFFICE

7. DD 256
REF
G. DIST STATEMENT
REFUIRED
/6. FREFUENCB /2. DATE OF FIRST
SU3MISSION

/1. DISTRI3UTION

LT
C MONT@LB S'' 3l&4 /6
<. COPIES

8. APP
CODE

SU3MISSION
a. ADDRESSEE

FINAL

NO S'' 3l&4 /6 S'' 3l&4 /6

DRAFT R'# R',!

/6. REMARHS E")'! ((i&' 58+<l5

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T*' #v'!"+'") !'5'!v'5 )*' !i#*) ) !'vi'9 a"% +%i(8 -)*!$#* "'#)ia)i"5. )*' !',!)i"# l'v'l5

(! F!+a)5 / a"% va!ia"&' )*!'5*l%5 (! F!+a) 5 %$!i"# )*' ,'!(!+a"&' ( )*' &")!a&).

3LOCH G: Di5)!i<$)i" a$)*!iJ'% ) US Gv'!"+'") a#'"&i'5 a"% )*'i! &")!a&)!5. O)*'!

!':$'5)5 (! )*i5 %&$+'") 5*all <' !'('!!'% ): -5,'&i(8.

3LOCH //: T*' CPR 5*all <' ,!',a!'% " a +")*l8 <a5i52 a5 ( )*' '"% ( )*' &")!a&)!K5
+")*l8

a&&$")i"# ,'!i%. F!+a)5 / a"% 5 a!' !':$i!'% ) <' 5$<+i))'% +")*l8.

3LOCH /2: T*' (i!5) 5$<+i55i" 5*all <' +a%' NLT 66 %a85 a()'! a$)*!iJa)i" ) ,!&''%.

3LOCH /0: S$<5':$'") 5$<+i55i"5 5*all <' %$' NLT /7 9!4i"# %a85 a()'! )*' &l5' ( )*'

C")!a&)!K5 +")*l8 a&&$")i"# ,'!i%. Fi"al 5$<+i55i" i5 %$' 9*'" )*' la5)
a#!''+'");a&4"9l'%#'+'")

5i#"i(i&a") +il'5)"';%'liv'!a<l' a5 %'(i"'% <8 )*' &")!a&) *a5 <''" a&*i'v'% a"%

!'+ai"i"# !i54 a!'a5 *av' <''" +i)i#a)'%2 9i)* #v'!"+'") &"&$!!'"&'.

3LOCH /1: T*' ANSI A/2 &+,lia") 'l'&)!"i& !',!) 5*all <' %'liv'!'% via EDI ):

/5. TOTAL

G. PREPARED 3B

@. DATE

I. APPROVED 3B

C. DATE


'2/0,! C R 9 %AMP*! CP, CD,* '., C.+T,ACT ;2TB *.; ,2%E
?5
C.+T,ACT DATA ,!)02,!M!+T% *2%T
(= Data 2tem)
'orm Approved
.MD +o& :?:>6:=@@
Pub$ic reporting burden for this co$$ection of information is estimated to average ==: hours per response,
inc$uding the time for reviewing instructions, searching e"isting data sources, gathering and maintaining the
data needed and comp$eting and reviewing the co$$ection of information& %end comments regarding this
burden estimate or any other aspect of this co$$ection of information, inc$uding suggestions for reducing this
burden, to Department of Defense, ;ashington BeadGuarters %ervices, Directorate for 2nformation
.perations and ,eports, =4=5 Oefferson Davis Bighway, %uite =4:>, Ar$ington, #A 444:46>9:4 and to the
.ffice of Management and Dudget, Paperwor< ,eduction ProFect (:?:>6:=@@), ;ashington, DC 4:5:9&
P$ease D. +.T ,!T0,+ your form to either of these addresses& %end comp$eted form to the /overnment
2ssuing Contracting .fficer for the Contract(P, +o& *isted in D$oc< !&
A& C.+T,ACT *2+! 2T!M
+.&
D& !3B2D2T C& CAT!/.,C:
A TDP TM .TB!,: 3
D& %C%T!M(2T!M !& C.+T,ACT(P, +.& '& C.+T,ACT.,
=& DATA 2T!M
+.&
4& T2T*! .' DATA 2T!M 9& %0DT2T*!
3333 INTE"RATED MASTER SCHED%'E 2IMS3 Page = of =
>& A0TB.,2TC (Data AcGuisition
Document +o&)
5& C.+T,ACT ,!'!,!+C! 8& ,!)02,2+/ .''2C!
DI.M"MT.:-EDG %.; PA,A 3&3&3 PMA6333
?& DD
45:
,!)
A& D2%T
%TAT!M!+T
=:& ',!)0!+CC =4& DAT! .' '2,%T %0DM2%%2.+ =>& D2%T,2D0T2.+
,!)02,!D !*!CT,.+2CA**C
*T Month$y %ee D*E =8 b& C.P2!%
@& APP
C.D!
==& A% .' DAT! =9& DAT! .' %0D%!)0!+T
%0DM2%%2.+
a&
ADD,!%
%!!
'ina$
+(A D +(A %ee D*E =8 Draft ,eg& ,epro
=8& ,!MA,E% PMA6333 =
The contractor sha$$ provide the 2M% per D2D DI.M"MT.:-EDG e"cept or as modified
by the fo$$owing:
&oc> 9: Modify paragraph 4&>&=&49 to read IThe contractor sha$$ submit %chedu$e
,is< Assessments (%,A) and be prepared to active$y participate in Guarter$y %,As to
identify and Guantify mi$estone(event and tas<(activity $eve$ schedu$e ris<& The
contractor sha$$ report optimistic, pessimistic, and most $i<e$y remaining durations for
each Critica #at4 and Near Critica #at4 tas<(activity& The %,A wi$$ be performed
on the #rogram Critica #at4 and the Critica #at4 and Near Critica #at4s to
se$ected critica$ mi$estones& The rationa$e used to estab$ish the remaining durations
shou$d be documented&
a& Test #rogram Critica #at4 R $ongest path through entire program
b& Test Critica #at4 to ne"t maFor mi$estone(s)
c& Test Near Critica #at4s to ne"t maFor mi$estone(s)J
Modify paragraph 4&5 with IThe first narrative submission is to provide the Dasis and
Assumptions (D-A) of the 2M%& The D-A wi$$ out$ine a$$ maFor program mi$estones
and(or 2MP events and document a$$ associated programmatic schedu$e assumptions
that were uti$iHed in the deve$opment of the base$ine p$an& At a minimum, a$$
month$y submissions wi$$ inc$ude a written schedu$e ana$ysis to identify, document,
and communicate changes of five (5) wor<ing days or greater to #rogram Critica
#at4 and Near Critica #at4 tas<(activity actua$ start and(or actua$ finish date
A2,6>&4&9 =

?8
variances from submission to submission as we$$ as 2MP and(or maFor program
mi$estone impacts or other maFor schedu$e ris< areas& ;or< around and(or recovery
schedu$es(p$ans, and associated impacts due to program changes sha$$ a$so be
provided& The schedu$e narrative sha$$ address progress to date and discuss any
significant schedu$e changes (i&e&, added(de$eted tas<s, any significant $ogic
revisions, and any(a$$ programmatic schedu$e assumption change etc&)&J
&oc> -/: The first submission is due within =? wor<ing days after the end of the first
fu$$ accounting period fo$$owing authoriHation to proceed& 'irst submission sha$$
inc$ude reporting to the 2ntermediate $eve$ schedu$e, at a minimum&
&oc> -0: %ubseGuent submitta$s are due within =? wor<ing days after the c$ose of
the contractors accounting period, a$$ schedu$e $eve$s&
&oc> -9: Data wi$$ be provided in contractors approved schedu$ing system in its
origina$ format (e&g&, Primavera, .pen P$an Pro, Microsoft ProFect)&
MaFor critica$ non6'irm 'i"ed Price subcontracts with a do$$ar va$ue greater than
N4:M wi$$ have app$ied to them the reGuirements of DI.M"MT.:-EDG, 2ntegrated
Master %chedu$e& 2M% reGuired from subcontractors wi$$ be integrated with the prime
contractors schedu$ing system& 2M% reGuired from subcontractors wi$$ be provided
in subcontractors approved schedu$ing system in its origina$ format&
=5&
T.TA*
4
DD 'orm =>496= O0+ A: Previous editions are obso$ete&
Page 1 of 1 Pages
'2/0,! C6> %AMP*! CD,* '., 2M%
??
-/ Da)a I)'+.
F!+ A,,!v'%
OM3 N. 6761-6/88

'?i5)i"# %a)a 5$!&'52 #a)*'!i"# a"% +ai")ai"i"# )*' %a)a "''%'%2 a"% &+,l')i"# a"% !'vi'9i"# )*' &ll'&)i" ( i"(!+a)i". S'"% &++'")5 !'#a!%i"# )*i5 <$!%'"
'5)i+a)' ! a"8 )*'! a5,'&) ( )*i5 &ll'&)i" ( i"(!+a)i"2 i"&l$%i"# 5$##'5)i"5 (! !'%$&i"# )*i5 <$!%'"2 ): D',a!)+'") ( D'('"5'2 Wa5*i"#)" @'a%:$a!)'!5
S'!vi&'52 Di!'&)!a)' (! I"(!+a)i" O,'!a)i"5 a"% R',!)52 /2/5 C'(('!5" Davi5 @i#*9a82 S$i)' /2612 A!li"#)"2 VA 22262-10622 a"% ) )*' O((i&' (
Ma"a#'+'") a"% 3$%#')2 Pa,'!9!4 R'%$&i"# P!D'&)2 -6761-6/88.2 Wa5*i"#)"2 D.C.2 26560. Pl'a5' DO NOT RETURN 8$! (!+ ) 'i)*'! ( )*'5' a%%!'55'52
5'"% &+,l')'% (!+ ) )*' Gv'!"+'")-I55$i"# C")!a&)i"# O((i&'! (! )*' C")!a&);PR N. li5)'% i" 3l&4 E.


3. EA@I3IT

C. CATEGORB

D. SBSTEM ; ITEM


F. CONTRACTOR

/. DATA ITEM NO.

C")!a&) W!4 3!'a4%9" S)!$&)$!' -CW3S.
0. SU3TITLE

DI-MGMT-8/0013

6. REFUIRING OFFICE

7. DD 256 REF G. DIST STATEMENT
REFUIRED
/6. FREFUENCB /2. DATE OF FIRST SU3MISSION
/1. DISTRI3UTION

LT
C ONE;R S'' 3l&4 /6
<. COPIES

8. APP CODE

SU3MISSION
a. ADDRESSEE

FINAL

N;A S'' 3l&4 /6

DRAFT R'# R',!

/6. REMARHS P!#!a+ M#) O((i&'

3l4 1: DCARC

T*' C")!a&)! 5*all ,!',a!' )*' CW3S i" a&&!%a"&' 9i)* MIL-@D3H 88/ -W!4 3!'a4%9" S)!$&)$!'.

a"% DI-MGMT-8/0013. T*' &")!a&)! 5*all '?)'"% )*' W3S 5)!$&)$!' ) )*' l9'5) l'v'l "'&'55a!8 ) +a"a#'

)*' 9!4. T*' +i"i+$+ !',!)i"# l'v'l 5*all <' a&&!%i"# ) )*' a,,!v'% C5) a"% S()9a!' Da)a R',!)i"# Pla".

T*' C")!a&)! 5*all +ai")ai" a"% $,%a)' )*' W3S a"% %i&)i"a!8 )*!$#*$) )*' li(' ( )*' &")!a&) a"% $5' a
&++"

CW3S 5)!$&)$!' (! all &")!a&) !',!)i"#. P!i! a,,!val ( )*' Gv'!"+'") i5 !':$i!'% (! a"8 &*a"#'5 ) )*' W3S

5)!$&)$!' a) )*' !',!)i"# l'v'l.

3l45 /62 /2 a"% /0:

T*' (i!5) 5$<+i55i" 5*all <' +a%' " la)'! )*a" 66 &al'"%a! %a85 a()'! a9a!%. S$<5':$'") %a)'5 ( 5$<+i55i" 5*all
<'

+a%' a5 !':$i!'%2 ! $," +aD! !'vi5i".

3l&4 /1: T*' CW3S 5*all <' 5$<+i))'% i" 'l'&)!"i& (!+a).

/5. TOTAL

G. PREPARED 3B

@. DATE

I. APPROVED 3B

C. DATE


'2/0,! C65 %AMP*! CD,* '., C;D%
?@
C$NTRACT DATA REN%IREMENTS 'IST
2- Data Item3
'orm Approved
.MD +o& :?:>6:=(M)
Pub$ic reporting burden for this co$$ection of information is estimated to average ==: hours per
response, inc$uding the time for reviewing instructions, searching e"isting data sources, gathering
and maintaining the data needed and comp$eting and reviewing the co$$ection of information& %end
comments regarding this burden estimate or any other aspect of this co$$ection of information,
inc$uding suggestions for reducing this burden, to Department of Defense, ;ashington
BeadGuarters %ervices, Directorate for 2nformation .perations and ,eports, =4=5 Oefferson Davis
Bighway, %uite =4:>, Ar$ington, #A 444:46>9:4 and to the .ffice of Management and Dudget,
Paperwor< ,eduction ProFect (:?:>6:=@@), ;ashington, DC 4:5:9& P$ease D. +.T ,!T0,+ your
form to either of these addresses& %end comp$eted form to the /overnment 2ssuing Contracting
.fficer for the Contract(P, +o& *isted in D$oc< !&
A& C.+T,ACT *2+! 2T!M
+.&
D& !3B2D2T C& CAT!/.,C:
TDP TM .TB!,
D& %C%T!M(2T!M !& C.+T,ACT(P, +.& '& C.+T,ACT.,
=& DATA 2T!M
+.&
4& T2T*! .' DATA 2T!M 9& %0DT2T*! =?& P,2C!
/,.0P
Contract ;or< Drea<down %tructure (C;D%)
>& A0TB.,2TC (Data AcGuisition
Document +o&)
5& C.+T,ACT
,!'!,!+C!
8& ,!)02,2+/ .''2C! =@&
!%T2MAT
!D
T.TA*
P,2C!
D26M/MT6@=99>
?& DD 45:
,!)
A&D2%T
%TAT!M!+T
,!)02,!D
=:&
',!)0!+CC
=4& DAT! .'
'2,%T
%0DM2%%2.+
=>& D2%T,2D0T2.+
%!! D*.CE
=8
%!! D*.CE =8 b& C.P2!%
@& APP
C.D!
==& A% .'
DAT!
=9& DAT! .'
%0D%!)0!+T
%0DM2%%2.+
a& ADD,!%%!!
Draft
'ina$
%!! D*.CE =8
,eg ,ep
ro
?A
-E. Remar>s+
D$oc<s =:, =4, and =9 R D26M/MT6=@99> reGuires the first
submissions to be made no $ater than 8: days after contract
award& The contractor is responsib$e for maintaining the
C;D% Dictionary during the $ife of the contract& %ubseGuent
dates of submission sha$$ be made as reGuired or upon maFor
revisions& C;D% Dictionary submissions sha$$ not be more
freGuent than report submission&
Prepare the C;D% is accordance with M2*6BDDE6@@=, I;or<
Drea<down %tructures for Materia$ 2temsJ and D26M/MT @=99>
(most recent$y approved version)& 'or Cost and %oftware Data
,eporting (C%D,) purposes, the C;D% must be prepared in
accordance with the C%D, Manua$ (DoD 5::&>6M6=) and the
contract C%D, P$an approved by the Cost Ana$ysis
2mprovement /roup (CA2/) Chair& The C%D, Manua$ is
avai$ab$e from the Defense cost and ,esource Center
(DCA,C) ;ebsite at http:((dcarc&pae&osd&mi$&
The C;D% and Dictionary must be e$ectronica$$y forwarded to
the DCA,C ;ebsite at http:((dcarc&pae&osd&mi$& Prime
contractors are responsib$e for f$owing down C%D,
reGuirements contained in their prime contracts to a$$ their
subcontractors who meet the reporting thresho$ds& This
inc$udes reGuiring subcontractors to e$ectronica$$y report
direct$y to the DCA,C&
DCA,C
%!! D*.CE =8
=5& T.TA*
DD 'orm =>496=, 'eb 4::= P,!#2.0% !D2T2.+ MAC D! 0%!D& Page
11111 of 111111 Pages
'2/0,! C 6 8 %AMP*! CD,* '., C;D% ;B!+ CCD, is ,!)02,!D
@:
APP!+D23 D
AD#A+C! A/,!!M!+T
=& The Advance Agreement (AA) between the /overnment and a contractor shou$d specify that
the contractor uses an effective !arned #a$ue Management %ystem (!#M%) which comp$ies with
A+%2(!2A6?>@ !#M% /uide$ines on the current as we$$ as future contracts of a simi$ar type& The
AA shou$d document the /overnments intent to minimiHe system reviews& The AA a$so shou$d
document a contractorLs corporate commitment to continue to use and maintain the !#M% for
current and future /overnment contracts&
4& The AA shou$d be e"ecuted based on prior system va$idation or fo$$owing the successfu$
comp$etion of a #a$idation ,eview and shou$d usua$$y remain in effect indefinite$y& The AA
shou$d a$so be used by DoD to provide continued recognition of a contractors system as
comp$ying with the !#M %ystem /uide$ines& 'ina$$y, an AA shou$d be used to provide a
contractor with DoD recognition of a successfu$ !#M% #a$idation ,eview& .nce e"ecuted, the
AA may be used by the contractor to demonstrate that they fu$fi$$ the reGuirements for an !#M%
as reGuired by D'A,% 454&4>46?::=&
9& The AA shou$d be signed by the cogniHant Contracting .fficer (C.) and a contractor
representative at a commensurate $eve$& 'or e"amp$e, if the contractor uses a common !#M%
throughout a Division, the appropriate contractor representative may be the Division Manager&
The corresponding /overnment officia$ wou$d be the C.& Any amendments or changes to the
AA, once e"ecuted, are to be made through the cogniHant C.&
>& A samp$e AA and a Ooint %urvei$$ance Program out$ine are provided be$ow as g!ides& 2n
addition, to the guidance, the fo$$owing areas shou$d be considered for inc$usion in the AA:
(a) app$icab$e contractor and /overnment po$icy and directive referencesM
(b) reference to contractor and /overnment survei$$ance p$ans and guidanceM
(c) the process to fo$$ow for system changesM
(d) interna$ coordination reGuirements for conducting continuing survei$$anceM
(e) documentation and reporting reGuirementsM and
(f) documenting Iru$es of engagementJ for reso$ution of areas of concern that are found
through !#M% survei$$ance&
Neit4er of t4e foo=ing sampe doc!ments is intended to 5e appied eCacty as s4o=n
5!t s4o!d 5e modified to fit t4e contractor, program, and CM$7DCAA re@!irements and
capa5iities.
@=
Ad*ance Agreement
5et=een
2Cogni<ant CM$Ls name, ser*ice, component, etc.3
and
2ContractorLs name, di*ision, ocation, etc.3
for
Impementation and Maintenance
of t4e
Earned Va!e Management System
This document estab$ishes an Advance Agreement between the Yname of the cogniHant CM.Z
and Ycontractor name, division, $ocationZ regarding the imp$ementation and maintenance of an
!arned #a$ue Management %ystem& This agreement specifica$$y addresses Ycontractor name,
division, $ocationZ use of the Yname of the contractors !#M%Z to meet the !#M% /uide$ines
estab$ished by the A+%2(!2A6?>@&
;hereas, the contractor has demonstrated certain management systems and subsystems as
identified in YContractor Document that identifies the contractors !#M% commitment dated
(date)Z, and
The Y/overnment componentZ, by $etter dated YdateZ, did recogniHe the comp$iance of such
systems and subsystems with the !#M% /uide$ines, then
TB! Y+AM! .' TB! C./+27A+T CM.Z A+D YC.+T,ACT., +AM!, D2#2%2.+, *.CAT2.+Z
A/,!! TBAT:
(=) %uch systems and subsystems which have been recogniHed as indicated above,
together with approved changes thereto, app$y to future Yspecify type of contractM for
e"amp$e, ,DT-!, production or bothZ contracts, which reGuire comp$iance with !#M%
/uide$ines, entered into between the contractor and the /overnment&
(4) As a resu$t of this agreement Ycontractor name, division, $ocationZ agrees to maintain
the Yname of the contractors !#M%Z, as a DoD comp$iant integrated management
system, through an interna$ survei$$ance program Yother meansM e&g&, Foint survei$$ance
between the CM., PM, and the contractor, are acceptab$e but shou$d be specifica$$y
identifiedZ&
2N$TE+ THE ($''$)IN" $#TI$NA' 'AN"%A"E IS ($R CM$s %SIN" THE
#RI$R.A##R$VA' )AIVER ($R EVM S1STEM CHAN"ES3
(9) The YCogniHant C.Z, under the authority of D'A,% c$ause 454&4>46?::4 YMarch
4::5Z, agrees to waive the pre6approva$ reGuirements for system changes as provided in
paragraph Y Z of D'A,% c$ause 454&4>46?::4 YMarch 4::5Z& Pursuant to D'A,% c$ause
454&4>46?::4 YMarch 4::5Z Ycontractor name, division, $ocationZ is reGuired to disc$ose
changes to the Yname of the contractors !#M%Z, to YCogniHant C.Z, at $east two wee<s
prior to imp$ementation& This waiver app$ies to a$$ contracts, both current and future,
which contain D'A,% c$ause 454&4>46?::4 YdateZ&
This Advance Agreement remains in force indefinite$y, subFect to modification by mutua$
agreement or termination by either party&
1111111111111111111111111111111111111111111
Contracting .fficer (C.)
1111111111111111111111111111111111111111111
Contractor #ice President and /enera$ Manager
(or eGuiva$ent)
@4
O$INT S%RVEI''ANCE #R$"RAM
AS IM#'EMENTED AT
PContractorLs Name, Di*ision, 'ocationQ
References+ 2a3 R!es of Engagement
I. CHARTER AND $&OECTIVES+
The Ooint 2%T and Ycontractor name, division, $ocationZ %urvei$$ance Team is estab$ished to:
A& !nsure that Ycontractor name, division, $ocationZ imp$ementation of Yname of the contractors
!#M%Z continues to:
=& De used by the contractor for program management and is integrated into the
contractors scheme of ris< identification and abatement&
4& Comp$y with the !#M% /uide$ines by:
a& Training designated program personne$ in the use of the Yname of the contractors
!#M%Z&
b& Accomp$ishing ear$y, comprehensive p$anning to provide a Gua$ity base$ine ready
for e"amination in the 2ntegrated Dase$ine ,eview (2D,) process&
c& 2ntegrating cost, schedu$e, and technica$ p$anning into a sing$e, we$$ contro$$ed
performance measurement base$ine&
d& !stab$ishing c$ear $ines of authority and responsibi$ity for accomp$ishment of wor<
e$ements&
e& 0sing prob$em identification information ear$y, and continuous$y, to formu$ate
corrective action(wor< around p$ans to mitigate significant variances from the
base$ine p$an&
f& Providing va$id and time$y management information&
&. !ncourage continuous improvement and innovation of the !#M%&
C& !nsure that Ycontractor name, division, $ocationZs e"terna$ cost and schedu$e reports contain:
=& 2nformation that depicts actua$ conditions&
4& 2nformation derived from the same database as that used by Ycontractor name,
division, $ocationZ for management of the business&
9& #ariance ana$yses that inc$ude corrective action ta<en or to be ta<en in regard to
cost, schedu$e, technica$, other prob$em areas, as we$$ as proposed date(s) for cost and
schedu$e recovery&
D& Maintain a discip$ined management process using !#M%, inc$uding effective teamwor<
between Ycontractor name, division, $ocationZ and the /overnment&
E& !ffective$y communicate survei$$ance findings(resu$ts to appropriate Ycontractor name,
division, $ocationZ and /overnment individua$s and fo$$ow up on the findings(resu$ts to assure
ear$y correction of system prob$ems&
(. Maintain metrics to determine the effectiveness of the performance measurement system and
to distinguish between systemic and non6systemic prob$ems&
". ,educe the cost of survei$$ance by combining resources to achieve common goa$s&
II. O$INT S%RVEI''ANCE #R$CESS+
@9
A. Earned Va!e Management System. %urvei$$ance emphasis of the YContractors name,
division, $ocationZs accepted system occurs in five principa$ areas:
Demonstrated use of !#M% data as an integra$ part of program management&
Demonstrated commitment to continuous !#M% improvement&
!ar$y identification of systemic prob$ems&
Time$y maintenance of the Yname of the contractors !#M%Z&
!ffective and responsive corrective action&

&. S!r*eiance is not an a!dit f!nction. 2t is a cooperative effort between the survei$$ance
personne$ and the Contro$ Account Managers (CAMs), Dusiness Managers, %chedu$ers and PMs
toward the shared goa$ of time$y identification and correction of prob$ems&
C. Ooint S!r*eiance Team. The team consists of individua$s from Ycontractors name,
division, $ocationZ, CM., PM., and DCAA (where appropriate)&
D. Comm!nications. Ycontractors name, division, $ocationZ, and CM. management recogniHe
the Ooint %urvei$$ance Team as an integra$ part of the !#M% system and communicate open$y
with this team& Ooint survei$$ance resu$ts are a topic of discussion at periodic management
meetings& Ycontractors name, division, $ocationZ provides access to data generated from the
performance measurement system and <eeps the Ooint %urvei$$ance Team advised, via the
CM. !#M% %pecia$ist, of p$anned or actua$ changes that wou$d impact the Yname of the
contractors !#M%Z, changes in software too$s, <ey personne$ changes, organiHation structures,
and procedures& Changes are norma$$y discussed at the periodic program reviews& Changes of
under$ying systems are specifica$$y identified when p$anned&
E. S!r*eiance Sc4ed!e. The Ooint %urvei$$ance Team estab$ishes a survei$$ance schedu$e
with periodic meetings for the review of !#M% metrics, resu$ts from program survei$$ance
activities, resu$ts from CP, ana$ysis, resu$ts from 2D,s, and concerns of the /overnment
Program .ffice& The I,u$es of !ngagementJ document (ref& (a)) out$ines how findings from
survei$$ance are documented and conf$icts reso$ved&
(. Re*ie=s+ Data co$$ected through survei$$ance and open areas of concern from 2D,s and
/overnment Program .ffices are used as inputs to the survei$$ance review process& Targeted
reviews are conducted by team members (contractor(/overnment mi") when survei$$ance
activities revea$ areas where !#M% comp$iance is no $onger within acceptab$e $imits and when
other inputs point to areas of concern& The I,u$es of !ngagementJ document (ref& (a)) out$ines
how findings from reviews are documented and conf$icts reso$ved&
This Ooint %urvei$$ance Program remains in p$ace indefinite$y, subFect to modification by mutua$
agreement or termination by either party&
1111111111111111111111111111111111111111111
!#M% %pecia$ist Date
1111111111111111111111111111111111111111111
Contractor !#M% Manager Date
@>
APP!+D23 !
%AMP*! A;A,D '!! C,2T!,2A
MANA"EMENT R- !#M is effective$y integrated and used for program management&
%NSATIS(ACT$R1 . Contractor fai$s to meet criteria for satisfactory performance&
SATIS(ACT$R1 Contractor team uses earned va$ue performance data to ma<e program
decisions as appropriate&
"$$D Meets a t4e SATIS(ACT$R1 re@!irements p!s+
!arned va$ue performance is effective$y integrated into program management
reviews and is a primary too$ for program contro$ and decision6ma<ing&
VER1 "$$D Meets a of t4e "$$D re@!irements p!s+
Contractor team deve$ops and sustains effective communication of
performance status on a continua$ basis with the /overnment&
E?CE''ENT Meets a t4e VER1 "$$D re@!irements p!s+
Proactive, innovative use of !#M by entire contractor team& P$ans and
imp$ements continua$ process improvement in using !#M&
MANA"EMENT R/ Management of maFor subcontractors&
SATIS(ACT$R1 Contractor routine$y reviews the subcontractorLs performance measurement and
base$ine&
"$$D Meets a t4e SATIS(ACT$R1 re@!irements p!s+
ContractorLs management system is structured for oversight of subcontractor
performance&
Contractor active$y reviews and manages subcontractor progress& C$ear and
accurate status reporting to the /overnment&
E?CE''ENT Meets a t4e VER1 "$$D re@!irements p!s+
!ffective, time$y communication of subcontractor cost and schedu$e status to
the /overnment& 2ssues are proactive$y managed&
@5
MANA"EMENT R0 ,ea$istic and current cost, e"penditure, and schedu$e forecasts&
SATIS(ACT$R1 Provides procedures for de$ivering rea$istic and up6to6date cost, and schedu$e
forecasts as presented in Contract Performance ,eport, forma$ estimate at
comp$etion, Contract 'unds %tatus ,eport, 2ntegrated Master %chedu$e, etc&
The forecasts are comp$ete and consistent with program reGuirements and are
reasonab$y documented&
"$$D Meets a of t4e SATIS(ACT$R1 re@!irements p!s+
A$$ reGuirements for additiona$ funding and schedu$e changes are thorough$y
documented and Fustified& !"penditure forecasts are consistent and $ogica$ and
based on program reGuirements& Contractor ac<now$edges cost growth (if any)
in the current reporting period and provides we$$ documented forecasts&
!"penditure forecasts ref$ect constant scrutiny to ensure accuracy and
currency& Contractor prepares and deve$ops program cost and schedu$e data
that provides c$ear /overnment visibi$ity into current and forecast program
costs and schedu$e& %chedu$e mi$estone trac<ing and proFections are very
accurate and ref$ect true program status& Eeeps c$ose and time$y
communications with the /overnment&
E?CE''ENT Meets a of t4e VER1 "$$D re@!irements p!s+
Contractor consistent$y submits a high Gua$ity estimate at comp$etion that is
current and rea$istic& ,eported e"penditure profi$es are accurate& Deve$ops
comprehensive, c$ear schedu$e data that provides e"ce$$ent corre$ation with
technica$ performance measures and cost performance reports and permits
ear$y identification of prob$em areas& %chedu$e mi$estone trac<ing and
proFections are accurate and recogniHe potentia$ program impact&
MANA"EMENT R9 AdeGuacy of cost proposa$s submitted during award fee period&
SATIS(ACT$R1 Proposa$ data, inc$uding subcontractor data, is $ogica$$y organiHed and provides
adeGuate visibi$ity to the /overnment to support technica$ review and cost
ana$ysis& A basis of estimate is documented for each e$ement& ;hen
insufficient detai$ is provided, the contractor provides it to the /overnment on
reGuest& Proposa$ is submitted by mutua$$y agreed to due date&
Detai$ed ana$ysis is provided for subcontractor and materia$ costs&
Proposa$ data is traceab$e and provides visibi$ity to the /overnment to support
a detai$ed technica$ review and thorough cost ana$ysis& .n$y minor c$arification
is reGuired& Potentia$ cost savings are considered and reported in the proposa$&
Change proposa$s are stand6a$one and reGuire no iteration for /overnment
understanding& Contractor communicates during the proposa$ preparation
phase and effective$y reso$ves issues before submission&
@8
MANA"EMENT RD Cost contro$&
SATIS(ACT$R1 Contro$s se$f and subcontractor cost performance to meet program obFectives&
!stab$ishes means to stay within target cost& Provides good contro$ of a$$ costs
during contract performance&
Provides measures for contro$$ing contract cost at or s$ight$y be$ow target cost&
Provides suggestions to the program office and imp$ements them when
appropriate& 2mp$ements some ideas for cost reduction&
Provides suggestions and when appropriate, proposa$s to the program office for
initiatives that can reduce future costs& 2mp$ements cost reduction ideas across
the program and at the subcontract $eve$& 2dentifies (and when appropriate
imp$ements) new techno$ogies, commercia$ components, and manufacturing
processes that can reduce costs&
MANA"EMENT RE #ariance ana$ysis in performance reports&
SATIS(ACT$R1 #ariance ana$ysis is sufficient& Contractor usua$$y <eeps the /overnment
informed of prob$em areas, the causes, and corrective action& ;hen
insufficient detai$ e"ists, the contractor provides it to the /overnment prompt$y
upon reGuest&
Contractor routine$y <eeps the /overnment informed of prob$em areas, the
causes, and corrective action& !"p$anations are updated on a month$y basis&
Action ta<en to ana$yHe potentia$ ris<s for cost and schedu$e impacts&
Contractor a$ways <eeps the /overnment informed of prob$em areas, the
causes, and corrective action& #ariance ana$ysis is thorough and is used for
interna$ management to contro$ cost and schedu$e& Detai$ed e"p$anations and
insight are provided for schedu$e s$ips or technica$ performance that cou$d
resu$t in cost growth& The /overnment rare$y reGuires further c$arification of the
ana$ysis&
#ariance ana$ysis is e"treme$y thorough& Contractor proactive$y <eeps the
/overnment informed of a$$ prob$em areas, the causes, emerging variances,
impacts, and corrective action& Contractor <eeps the /overnment informed on
progress made in imp$ementing the corrective action p$ans& Ana$ysis is fu$$y
integrated with ris< management p$ans and processes&
@?
DISCI#'INE R-
Accuracy, time$iness, and consistency of bi$$ing and cumu$ative performance
dataM and integration of subcontractor data&
SATIS(ACT$R1
Di$$ings to the /overnment may have s$ight de$ays and(or minor errors& CP,,
C'%,, and 2M% reports are comp$ete and consistent with on$y minor errors&
Data can be traced to the ;D% with minimum effort& %ubcontractor cost and
schedu$e data are integrated into the appropriate reports with some c$arification
reGuired& ,eports are occasiona$$y submitted $ate& !$ectronic data is submitted
correct$y per the A+%2 3=4 format&

Di$$ings to the /overnment are accurate though there are s$ight de$ays& Data is
comp$ete, accurate, consistent, and shows traceabi$ity to the ;D%, with some
c$arification reGuired& %ubcontractor performance data is fu$$y integrated into
the appropriate reports with no c$arification reGuired and reports are submitted
on time&

Data is comp$ete, accurate, and consistent, with $itt$e or no c$arification
reGuired&
E?CE''ENT Meets a of VER1 "$$D re@!irements p!s+

Di$$ings are submitted to the /overnment on time& Data is comp$ete, accurate,
and consistent, with c$ear traceabi$ity to the ;D%& Data e$ements are fu$$y
reconci$ab$e between the CP, and the C'%,& %ubcontractor schedu$e
performance is vertica$$y and horiHonta$$y integrated with the contractor
schedu$e&
@@
DISCI#'INE R/ Dase$ine discip$ine and system comp$iance&
SATIS(ACT$R1
The contractor deve$ops a re$iab$e performance measurement base$ine that
inc$udes wor< scope, schedu$e, and cost& The contractor or /overnment may
discover system deficiencies or base$ine p$anning errors through either routine
survei$$ance or data inaccuracies in the CP,s& Contract changes and 0D are
norma$$y incorporated into the base$ine in a time$y manner& M, is trac<ed and
used in proper manner& !$imination of performance variances is $imited to
correction of errors&

,eGuirements are addressed up front to minimiHe changes and future cost and
schedu$e growth& Contract changes and 0D are a$ways incorporated into the
base$ine in a time$y manner& %ystem deficiencies or base$ine p$anning errors
are Guic<$y assessed and corrected, resu$ting in minor impact to data accuracy&
Provides for the continuous review of the base$ine to assure that it is current
and accurate thereby maintaining its usefu$ness to management& Cost and
schedu$e base$ines are fu$$y integrated&

Dui$ds proper base$ine in a time$y manner& Provides rea$istic performance
base$ine& !nsures wor< pac<ages are detai$ed and consistent with scope of
contract and p$anned consistent with schedu$e& Contractor conducts routine
survei$$ance that revea$s minor system deficiencies or minor base$ine p$anning
errors, which are Guic<$y assessed and corrected, resu$ting in $itt$e or no impact
to data accuracy& Contractor !#M% is effective$y integrated with other
management processes&

Proactive$y manages base$ine& Maintains time$y detai$ p$anning as far in
advance as practica$ and imp$ements proper base$ine contro$s& Contro$s and
minimiHes changes to the base$ine particu$ar$y in the near term& %ystem
deficiencies or p$anning errors are few and infreGuent& Contractor ta<es
initiative to stream$ine interna$ processes and maintains high $eve$ of !#M%
competency and training across organiHation&
@A
APP!+D23 '
%0MMA,C .' !#M 2MP*!M!+TAT2.+ ACT2.+%
A:

Determine .ptions for
!#M% #a$idation and
,eporting ,eGuirements
Determine .ptions for
!#M% #a$idation and
,eporting ,eGuirements
Prepare ,eGuest
'or Proposa$
Prepare ,eGuest
'or Proposa$
!va$uate .fferor
Proposa$s
!va$uate .fferor
Proposa$s
%e$ect .fferor and
+egotiate Contract
%e$ect .fferor and
+egotiate Contract
Award Contract
Award Contract
!"ecute Contract
!"ecute Contract
Determine #a$idation(+o #a$idation
based on thresho$ds
App$y tai$oring guidance to CP,
and 2M%
Determine #a$idation(+o #a$idation
based on thresho$ds
App$y tai$oring guidance to CP,
and 2M%
,'P must inc$ude:
[CD,* DD 'orms =>496=
[%tatement of ;or< tas<s
[C;D%
[D'A,% c$ause
,'P must inc$ude:
[CD,* DD 'orms =>496=
[C;D%
[D'A,% c$ause
!va$uate these areas:
[Contractors proposed !#M%
[Contractors p$an to obtain
va$idation (as app$icab$e)
[Proposed Contract ;D% changes
!va$uate these areas:
[Contractors proposed !#M%
[Contractors p$an to obtain
va$idation (as app$icab$e)
[Proposed Contract ;D% changes
+egotiate, as necessary:
[CD,* tai$oring
[Proposed C;D% changes
+egotiate, as necessary:
[CD,* tai$oring
[Proposed C;D% changes
Awarded contract must inc$ude:
[CD,* DD 'orms =>496=
[C;D%
[D'A,% c$ause
[%ubcontractor f$owdown agreement
Awarded contract must inc$ude:
[CD,* DD 'orms =>496=
[C;D%
[D'A,% c$ause
[%ubcontractor f$owdown agreement
Perform the fo$$owing:
[Ana$yHe and use CP, and 2M% data
[Conduct Comp$iance !va$uations
[Conduct 2D,
[!"ecute M.A with CM.
[Conduct regu$ar survei$$ance
Perform the fo$$owing:
[Ana$yHe and use CP, and 2M% data
[Conduct Comp$iance !va$uations
[Conduct 2D,
[!"ecute M.A with CM.
[Conduct regu$ar survei$$ance
APP!+D23 /
!%%!+T2A* !*!M!+T% .' A D0%2+!%% CA%! A+A*C%2%
-.G &!siness Case Anaysis 2&CA3 $*er*ie=& A business case is a persuasive and compe$$ing
argument advocating a course of action to achieve one or more business obFectives& A we$$
constructed business case presents a definite point of view and shou$d prove to the decision
ma<er that the recommended action is the best option& 2n this particu$ar case, the imp$ied course
of action under consideration is the app$ication of !#M in a situation norma$$y e"c$uded from
app$ication& A DCA is conducted to ana$yHe the app$ication of !#M to a contract that wou$d
norma$$y be e"c$uded from !#M app$ication per DoD po$icy, primari$y firm fi"ed price contracts or
cost reimbursab$e contracts SN4:M in va$ue& Current DoD po$icy reGuires that the Mi$estone
Decision Authority (MDA) approve DCAs&
/.G &CA Contents& The fo$$owing description contains a genera$$y accepted out$ine of the
contents of a business case and the DCA report& This is provided as guidance on$y, and the
program office is encouraged to conduct and tai$or the business case in a way that best meets the
need of the individua$ program& %pecific !#M guidance is inc$uded as appropriate in the fo$$owing
description&
/.- Common Eements. DCAs contain a common set of e$ements that can be tai$ored according
to the degree of app$ication reGuired for a particu$ar contract& These common e$ements are:
#ro5em definition, which inc$udes estab$ishing an obFective for the ana$ysisM stating the
assumptions which frame the ana$ysisM and, as appropriate, $aying out a$ternative
so$utions to the prob$em being ana$yHed& T4is s4o!d inc!de rationae for 2-3
seection of t4e ((# contract type *ers!s seection of a cost type or incenti*e type
contract or 2/3 appication of an EVM re@!irement to a contract IF/GM.
Data coection p4ase which identifies and obtains the data needed to meet the
obFective of the ana$ysis (cost, benefits, etc&)&
E*a!ation p4ase ana$yHing the data to address the obFective of the business case and
to deve$op findings which specifica$$y re$ate the data to the obFective& Doth Guantitative
and Gua$itative benefits for the proposed so$ution shou$d be eva$uated&
A report or 5riefing which presents the conc$usions and recommendations of the DCA&
/./ &CA Report& A report shou$d be written to document the e$ements described in paragraph
4&=& The top $eve$ decision briefing shou$d contain the fo$$owing:
Charter (obFectives of the DCA)
%cope (boundaries of the DCA)
Assumptions
Methodo$ogy (description of data and ana$ysis process)
%tatus Guo (description of status Guo, i&e&, no !#M imp$ementation, and base$ine costs)
Proposed so$ution (description of !#M imp$ementation, tai$oring approach, and costs)
%ummary (comparison of costs, benefits, and potentia$ drawbac<s)
,ecommendation
A=
APP!+D23 B
/*.%%A,C .' T!,M%
Act!a Cost of )or> #erformed 2AC)#3. (or Actua$ Cost) The costs actua$$y incurred and
recorded in accomp$ishing the wor< performed within a given time period& AC;P ref$ects
the app$ied costs& May be e"pressed as a va$ue for over a specific period or cumu$ative to
date&
Act!a Direct Costs 2ADC3. Those costs identified specifica$$y with a contract, based upon the
contractorLs cost identification and accumu$ation system as accepted by the cogniHant
Defense Contract Audit Agency (DCAA) representatives (see Direct Costs)&
Administrati*e Contracting $fficer 2AC$3. The individua$ within the Contract Management
.ffice (CM.) responsib$e for ensuring that the functions described in D'A,% 4>4&9:4 are
comp$eted by the contractor in accordance with the terms and conditions of the contract&
Ad*ance Agreement 2AA3. An agreement between the contractor and the CM. that recogniHes
the app$ication of a va$idated !#M% to contracts within the corporation, division or faci$ity&
Aocated &!dget. (see Tota$ A$$ocated Dudget)
Appied Direct Costs 2ADC3. The actua$ direct costs recogniHed in the time period associated
with the consumption of $abor, materia$, and other direct resources, without regard to the
date of commitment or the date of payment& These amounts are to be charged to wor<6in6
process when any of the fo$$owing ta<es p$ace: $abor, materia$ or other direct resources
are actua$$y consumedM materia$ resources are withdrawn from inventory for useM materia$
resources are received that are uniGue$y identified to the contract and schedu$ed for use
within 8: daysM maFor components or assemb$ies that are specifica$$y and uniGue$y identified
to a sing$e seria$$y numbered end item are received on a $ine f$ow basis&
Apportioned Effort 2AE3. A method of p$anning and measuring the earned va$ue for effort that
is both (a) re$ated in direct proportion to measured effort and (b) by itse$f is not readi$y
measurab$e or bro<en into discrete wor< pac<ages& The budget for A! is time6phased to the
base accounts and the earned va$ue is direct$y proportiona$ to performance on the base
account& The norma$ method for p$anning and statusing is to app$y a percentage against the
base account&
A!t4ori<ation to #roceed 2AT#3. .fficia$ authority for the contractor to begin wor<& 0sua$$y
issued by the procuring contracting officer&
A!t4ori<ed )or>. The sum of the effort which has been definitiHed and is on contract, p$us that
effort for which definitiHed contract costs have not been agreed to but for which written
authoriHation has been received&
&aseine. (%ee Performance Measurement Dase$ine)
&i of Materia 2&$M3. A $isting of materia$ items reGuired to comp$ete the production of a
sing$e unit& ;hen actua$ or e"pected prices are app$ied, it becomes the Priced Di$$ of
Materia$ (PD.M)&
&!dget at Competion 2&AC3. The sum of a$$ performance budgets estab$ished for the
contract& DAC is a term that may a$so be app$ied to $ower $eve$s, such as the PMD or at the
contro$ account $eve$& (see Tota$ A$$ocated Dudget)&
&!dgeted Cost for )or> #erformed 2&C)# or Earned Va!e3. The va$ue of comp$eted wor<
e"pressed as the va$ue of the performance budget assigned to that wor<& This is eGua$ to
the sum of the budgets for comp$eted wor< pac<ages, comp$eted portions of open wor<
pac<ages, A! earned on the base accounts, and the va$ue of *.! activities& May be
e"pressed as a va$ue for a specific period, or cumu$ative to date&
&!dgeted Cost for )or> Sc4ed!ed 2&C)S or #anned Va!e3. The sum of the performance
budgets for a$$ wor< schedu$ed to be accomp$ished with a given time period& This inc$udes
detai$ed wor< pac<ages, p$anning pac<ages, A!, p$us *.! pac<ages& May be e"pressed as
a va$ue for a specific period, or cumu$ative to date&
Compiance. The continuing operation of the companys !#M% in accordance with the 94
!#M% guide$ines in A+%2(!2A6?>@&
Contract &!dget &ase 2C&&3. The sum of the negotiated contract cost p$us the estimated cost
of authoriHed unpriced wor<&
A4
Contract Management $ffice 2CM$3. The /overnment organiHation assigned responsibi$ity for
ensuring that the contractor comp$ies with the terms and conditions of the contract& This is
norma$$y assigned to DCMA&
Contract Data Re@!irements 'ist 2CDR'3. A compi$ation of a$$ data reGuirements, made part
of the contract, and which the contractor is ob$igated to de$iver to the /overnment&
Contract #erformance Report 2C#R3. A contractua$$y reGuired report, prepared by the
contractor, containing performance information derived from the interna$ !#M%& Provides
status of progress on the contract& (D26M/MT6@=>88A)
Contract )or> &rea>do=n Str!ct!re 2C)&S3. The comp$ete ;D% for a contract& 2t inc$udes
the DoD approved ;D% for reporting purposes and its discretionary e"tension to the $ower
$eve$s by the contractor, in accordance with M2*6BDDE @@= (current version) and the
contract statement of wor<& 2t inc$udes a$$ the e$ements for the hardware, software, data or
services which are the responsibi$ity of the contractor&
Contract )or> &rea>do=n Str!ct!re Dictionary. A contractua$$y reGuired document,
prepared by the contractor that describes and defines the e$ements in the C;D% structure&
(D26M/MT6@=99>D)
Contractor. An entity in private industry which enters into contracts with the /overnment& 2n this
guide, the word a$so app$ies to /overnment6owned, /overnment6operated activities which
perform wor< on maFor defense programs&
Contro Acco!nt 2CA3. (former$y ca$$ed Cost Account) A management contro$ point at which
budgets (resource p$ans) and actua$ costs are accumu$ated and compared to earned va$ue
for management contro$ purposes& A contro$ account is a natura$ management point for
p$anning and contro$ since it represents the wor< assigned to one responsib$e organiHationa$
e$ement (or integrated wor< team) for a sing$e program ;D% e$ement&
Contro Acco!nt Manager 2CAM3. A sing$e manager within the contractors organiHationa$
structure that has been given the authority and responsibi$ity to manage one or more contro$
accounts&
Cost Acco!nting Standards 2CAS3. ,eGuirements estab$ished by the Cost Accounting
%tandards Doard (CA%D) to ensure consistent and proper accounting for direct and indirect
costs app$ied to /overnment contracts&
Cost Variance& A metric for showing cost performance derived from earned va$ue data& 2t is the
a$gebraic difference between earned va$ue and actua$ cost (cost variance K earned va$ue 6
actua$ cost&) A positive va$ue indicates a favorab$e condition and a negative va$ue indicates
an unfavorab$e condition& 2t may be e"pressed as a va$ue for a specific period of time or
cumu$ative to date&
Critica #at4. A seGuence of discrete wor< pac<ages and p$anning pac<ages (or $ower $eve$
tas<s(activities) in the networ< that has the $ongest tota$ duration through an end point that is
ca$cu$ated by the schedu$e software app$ication& Discrete wor< pac<ages and p$anning
pac<ages (or $ower $eve$ tas<s(activities) a$ong the critica$ path have the $east amount of
f$oat(s$ac< (schedu$ing f$e"ibi$ity) and cannot be de$ayed without de$aying the finish time of
the end point effort& !ssentia$$y VCritica$ Path has the same definition as VProgram Critica$
Path with the e"ception that the end point can be a mi$estone or other point of interest in the
schedu$e& !"amp$e: a critica$ path cou$d be run to PD,, CD,, and(or 'irst '$ight, etc& within
a %ystem Deve$opment Demonstration contract&
Critica #at4 Anaysis& A method for identification and assessment of schedu$e priorities and
impacts, focusing on the networ< critica$ path& %ee +etwor< %chedu$e&
Defense Contract A!dit Agency 2DCAA3. The Defense Department organiHation tas<ed with
monitoring a contractors design and imp$ementation of an acceptab$e accounting system&
Direct Costs. Any costs that may be identified specifica$$y with a particu$ar cost obFective& This
term is e"p$ained in the 'edera$ AcGuisition ,egu$ation&
Discrete Effort. ;or< pac<ages and p$anning pac<ages (or $ower $eve$ tas<s(activities) that are
re$ated to the comp$etion of specific end products or services and can be direct$y p$anned
and measured&
Earned Va!e. The va$ue of comp$eted wor<& %ee Dudget Cost for ;or< Performed&
Earned Va!e Management 2EVM3. A program management too$ that integrates the wor<
scope, schedu$e, and cost parameters of a program, in a manner providing obFective
A9
performance measurement and management& As wor< is performed, the corresponding
budget va$ue is IearnedJ&
Earned Va!e Management System Speciaist. That person within the CM. assigned
responsibi$ity for ensuring the proper and continuing imp$ementation of the approved !#M
system on contracts through survei$$ance and ana$ysis&
Earned Va!e Management System 2EVMS3. A companys management system and re$ated
sub6systems that estab$ishes the re$ationship between the cost, schedu$e, and technica$
aspects of the wor<M measures progress obFective$y with earned va$ue metricsM accumu$ates
actua$ costsM a$$ows for ana$ysis of deviations from p$ansM a$$ows for forecasting achievement
of mi$estones and contract eventsM a$$ows for forecasting of estimated costsM and provides
discip$ine in incorporating changes to the base$ine in a time$y manner&
Earned Va!e Management System "!ideines. The set of 94 guide$ines, estab$ished by
A+%2(!2A6?>@, that define the reGuirements the contractorLs !#M system shou$d meet&
Earned Va!e Management S!pport Staff 2EVMSS3. The procuring activitys subFect matter
e"pert responsib$e for providing !#M technica$ support to program management offices&
Estimate at Competion 2EAC3. The estimated tota$ cost for a$$ authoriHed wor<& !Gua$ to the
sum of actua$ costs to date (inc$uding a$$ a$$ocab$e indirect costs), p$us the estimated costs to
comp$etion (estimate to comp$ete)&
Estimate to Compete 2ETC3. !stimate of costs to comp$ete a$$ wor< from a given point in time
to the end of the contract&
Hori<onta Integration. Demonstrates that wor< is p$anned in a $ogica$ seGuence considering
the interdependencies among wor< pac<ages and p$anning pac<ages (or $ower $eve$
tas<s(activities), ensuring that the overa$$ schedu$e is rationa$, and provides methodo$ogy to
eva$uate the impact of current schedu$e status on subseGuent wor< pac<ages and p$anning
pac<ages (or $ower $eve$ tas<s(activities) and mi$estones& BoriHonta$ integration depicts
schedu$e dependencies and constraints, focusing on re$ationships within the same
schedu$ing $eve$ inc$uding between different program e$ements such as Ihand6offsJ of
products between 2PTs&
"enera , Administrati*e 2",A3. An indirect rate estab$ished by the company that a$$ocates
the cost of corporate home office e"penses to a$$ contracts&
Indirect Costs. Costs which because of their incurrence for common or Foint obFectives, are not
readi$y subFect to treatment as direct costs& This term is further defined in 'A, 9=&4:9&
Integrated &aseine Re*ie= 2I&R3. A Foint /overnment(contractor review to assess the rea$ism
and accuracy of the integrated performance measurement base$ine (wor<, schedu$e, and
budget)&
Integrated Management System. A type of integrated management system (%ee !#M%
definition above) which may or may not Imeasure progress obFective$y with earned va$ue
metricsJ&
Integrated Master Sc4ed!e 2IMS3. An integrated schedu$e containing the networ<ed, detai$ed
tas<s necessary to ensure successfu$ program e"ecution& (D26M/MT6@=85:)
Integrated #rocess and #rod!ct De*eopment 2I##D3. The DoD management techniGue that
simu$taneous$y integrates a$$ essentia$ acGuisition activities through the use of
mu$tidiscip$inary teams to optimiHe design, manufacturing, and supportabi$ity processes& .ne
of the <ey 2PPD tenets is mu$tidiscip$inary teamwor< through 2ntegrated Product Teams
(2PTs)&
Integrated #rod!ct Team 2I#T3. A mu$tidiscip$inary team assigned management responsibi$ity
for one or more e$ements of an acGuisition program&
Integrated Ris> Assessment 2IRA3. Ana$ysis and assessment of overa$$ program ris<&
%eparate ris< assessments are performed on a programs technica$, schedu$e, and cost
base$ine estimates, which are then combined into a sing$e probabi$istic distribution of
estimated program cost&
'etter of Acceptance 2'$A3. A $etter issued by the AC. that recogniHes the successfu$
va$idation of the contractors !#M% and its app$ication within a specific faci$ity&
'etter of Deegation 2'$D3. A document assigning contract administration functions from one
CM. to another, usua$$y in a prime6subcontractor re$ationship&
A>
'e*e of Effort 2'$E3. !ffort of a genera$ or supportive nature which does not produce definite
end products and cannot be practica$$y measured by discrete earned va$ue techniGues&
!arned va$ue is measured by the passage of time&
Management Reser*e 2MR3. An amount of the tota$ budget withhe$d for management contro$
purposes, rather than designated for the accomp$ishment of a specific tas< or set of tas<s& 2t
is he$d and app$ied through a discip$ined process to any additiona$ wor< that is to be
accomp$ished within the authoriHed wor< scope of the contract or app$ied to accommodate
rate changes for future wor<& 2t may not be used to offset or minimiHe e"isting cost
variances&
Miestone. A specific definab$e accomp$ishment in the contract networ<, recogniHab$e at a
particu$ar point in time& Mi$estones have Hero duration, do not consume resources and have
defined entry and e"it criteria& A mi$estone may mar< the start and(or finish, of an interim
step, event and(or program phase&
Near Critica #at4. The $owest f$oat(s$ac< paths of discrete wor< pac<ages and p$anning
pac<ages (or $ower $eve$ tas<s(activities) in the networ< that has the $ongest tota$ duration
nearest to the critica$ path& 0sing nearest paths, vice a set va$ue, a$$ows the near critica$ path
to have the possibi$ity of a$ways ranging in different f$oat va$ues based on the $atest status of
the schedu$e R i&e&, the f$oat(s$ac< va$ues associated with the near critica$ paths may differ
from schedu$e update to schedu$e update depending on the status of the schedu$e&
Negotiated Contract Cost 2NCC3. The estimated cost negotiated in a cost6p$us6fi"ed6fee
contract or the negotiated contract target cost in either a fi"ed6price6incentive contract or a
cost6p$us6incentive6fee contract&
Net=or> Sc4ed!e. A schedu$e format in which the activities and mi$estones are represented
a$ong with the interdependencies between wor< pac<ages and p$anning pac<ages (or $ower
$eve$ tas<s(activities)& 2t e"presses the $ogic (i&e&, predecessors and successors) of how the
program is to be accomp$ished& +etwor< schedu$es are the basis for critica$ path ana$ysis, a
method for identification and assessment of schedu$e priorities and impacts& At a minimum,
a$$ discrete wor< is inc$uded in the networ<&
$rgani<ationa &rea>do=n Str!ct!re 2$&S3. A functiona$$y6oriented brea<down of the
contractors organiHation estab$ished to perform the wor< on a specific contract&
$*er Target &aseine 2$T&3. An estab$ished performance budget that e"ceeds the va$ue of the
negotiated contract&
$*er Target Sc4ed!e 2$TS3. An estab$ished schedu$e that e"tends beyond the contract
mi$estones or de$ivery dates&
$*er4ead. (see 2ndirect Cost definition&)
#erformance Meas!rement &aseine 2#M&3. The time6phased budget p$an for accomp$ishing
wor<, against which contract performance is measured& 2t inc$udes the budgets assigned to
schedu$ed contro$ accounts and the app$icab$e indirect budgets& 'or future effort, not
p$anned to the contro$ account $eve$, the PMD a$so inc$udes budgets assigned to higher $eve$
C;D% e$ements, and to undistributed budgets& 2t does not inc$ude management reserve&
#erforming $rgani<ation. A defined unit within the contractorLs organiHation structure, which
app$ies the resources to perform the wor<&
#anned Va!e. (see Dudgeted Cost for ;or< %chedu$ed&)
#anning #ac>age. A ho$ding account (within a contro$ account) for budget for future wor< that
is not yet practicab$e to p$an at the wor< pac<age $eve$& The p$anning pac<age budget is
time6phased in accordance with <nown schedu$e reGuirements (due dates) for resource
p$anning and the p$ans are refined as detai$ reGuirements become c$earer and the time to
begin wor< draws nearer& A company may e$ect to brea< the wor< assigned to a contro$
account into sma$$er groupings of tas<s(activities, i&e&, mu$tip$e p$anning pac<ages, for
interna$ p$anning and contro$ reasons&
#rogram Critica #at4. A seGuence of discrete wor< pac<ages and p$anning pac<ages (or $ower
$eve$ tas<s(activities) in the networ< that has the $ongest tota$ duration through the contract or
program that is ca$cu$ated by the schedu$e software app$ication& Discrete wor< pac<ages
and p$anning pac<ages (or $ower $eve$ tas<s(activities) a$ong the critica$ path have the $east
amount of f$oat(s$ac< (schedu$ing f$e"ibi$ity) and cannot be de$ayed without de$aying the
finish time of the entire wor< effort&
A5
#rogram Management $ffice 2#M$3. The /overnment office that has the assigned authority
and responsibi$ity to direct$y manage a program&
#roc!ring Acti*ity. The subordinate command to which the Procuring Contracting .fficer
(PC.) is assigned& 2t may inc$ude the program office, re$ated functiona$ support offices, and
procurement offices&
#rogram )or> &rea>do=n Str!ct!re 2#)&S3. The ;D% that covers the acGuisition of a
specific defense materie$ item and inc$udes a$$ contractua$ and /overnmenta$ wor< activities&
#rogress Assistance Visit 2#AV3. An initia$ assessment of the contractors readiness to
demonstrate their !#M% comp$iance, usua$$y conducted within 9: days after contract award&
Repanning. The redistribution of e"isting budget for future wor<&
Responsi5iity Assignment MatriC 2RAM3. A chart showing the re$ationship between the
C;D% e$ements and the organiHations assigned responsibi$ity for ensuring their
accomp$ishment& The ,AM norma$$y depicts the assignment of each contro$ account to a
sing$e manager, a$ong with the assigned budget&
Responsi5e $rgani<ation. A defined unit within the contractorLs organiHation structure which
is assigned responsibi$ity for accomp$ishing specific tas<s&
Re*ie= for Ca!se 2R(C3. A /overnment review of specific e$ements of the contractors !#M%
that have disp$ayed a $ac< of discip$ine in app$ication or no $onger meet the reGuirements of
the !#M% guide$ines& 0sed to determine whether the companys !#M% va$idation shou$d be
withdrawn&
Ris> Assessment. The prob$em definition stage of ris< management that identifies and
ana$yHes potentia$ program ris< events in terms of probabi$ity and their
conseGuences(impacts&
Sc4ed!e. A p$an which shows when specified wor< is to be done to accomp$ish program
obFectives on time&
Sc4ed!e Ris> Assessment 2SRA3. A process which uses statistica$ techniGues to identify
technica$, programmatic, and schedu$e ris<s in a program and Guantifies the impact of those
ris<s on the programs schedu$e&
Sc4ed!e Variance 2SV3. A metric for the schedu$e performance derived from earned va$ue
metrics& 2t is the a$gebraic difference between earned va$ue and the budget (schedu$e
variance K earned va$ue R p$anned va$ue)& A positive va$ue is a favorab$e condition whi$e a
negative va$ue is unfavorab$e& 2t may be e"pressed as a va$ue for a specific period of time
or for cumu$ative to date&
Significant Variances. Any variances (C#, %# or #AC) that reGuire further review, ana$ysis or
action&
S!mmary 'e*e #anning #ac>age 2S'##3. An aggregation of wor< for far6term efforts, not
ab$e to be identified at the contro$ account $eve$, which can be assigned to reporting $eve$
;D% e$ements (and is therefore not Iundistributed budgetJ)&
Statement $f )or> 2S$)3. The document that defines the wor< scope reGuirements for a
contract&
S!r*eiance. A recurring process by an independent party, norma$$y DCMA, assessing the
continuing comp$iance of the companys !#M% with A+%2(!2A6?>@ and the companys
written system documentation&
Tas>7Acti*ity. An e$ement of wor< performed during the course of a program& An activity has an
e"pected duration, e"pected cost and e"pected resource reGuirements& %ome systems may
define tas<(activity at a $eve$ be$ow the wor< pac<age whi$e other systems do not
differentiate between the two&
Tota Aocated &!dget 2TA&3. The sum of a$$ budgets a$$ocated to the contract& TAD consists
of the PMD and a$$ management reserve& The TAD reconci$es direct$y to the contract budget
base& 2f the TAD is greater than the CDD, the difference is attributab$e to an over target
base$ine&
%ndistri5!ted &!dget 2%&3. A temporary ho$ding account for budget for authoriHed wor< that
has not yet been p$anned in detai$ at the contro$ account or summary $eve$ p$anning pac<age
$eve$&
Vaidation. A forma$ recognition of certification by an independent party that a companys
!#M% meets the guide$ines in A+%2(!2A6?>@&
A8
Vaidation Re*ie= 2VR3. A forma$ /overnment review conducted at a contractors faci$ity to
assess the contractors proposed !#M% comp$iance with A+%2(!2A6?>@&
Variance at Competion 2VAC3. The difference between the budget at comp$etion and the
estimate at comp$etion is #AC K DAC 6 !AC& 2t may be ca$cu$ated at any $eve$ from the
contro$ account up to the tota$ contract& 2t represents the amount of e"pected overrun
(negative #AC) or underrun (positive #AC)&
Vertica Integration. Demonstrates the consistency of data between the various $eve$s of
schedu$es and consistency of data between various ;D% e$ements and(or 2MP(2M%
e$ements (if app$icab$e) within the schedu$es& %ince upper6tiered schedu$es set the
parameters for $ower $eve$ schedu$es, it is imperative that $ower $eve$ schedu$es are
traceab$e to upper6tiered mi$estones to ensure program schedu$e integrity& This ensures that
a$$ 2ntegrated Product Teams are wor<ing to the same schedu$e information and a$$ $eve$s of
schedu$es are supportive of the program schedu$e reGuirements&
)or> &rea>do=n Str!ct!re 2)&S3. A product6oriented fami$y tree division of hardware,
software, services, and other wor< tas<s which organiHes, disp$ays, and defines the product
to be deve$oped and(or produced& The ;D% re$ates the e$ements of the wor< to be
accomp$ished to each other and to the end product(s)& M2*6BDDE @@= (current version)
provides a standard ;D% approach&
)or> #ac>age. +atura$ subdivision of contro$ accounts& A wor< pac<age is simp$y a tas<(activity
or grouping of wor<& A wor< pac<age is the point at which wor< is p$anned, progress is
measured, and earned va$ue is computed& 2t can be trans$ated into different terms in
different companies and functions& 2t can be a design Fob, a too$ design pac<age, a bui$d6to6
pac<age, a shop order, a part number, a purchase order or any other definab$e tas<(activity
at whatever $eve$ contro$ is norma$ for program management with in the company&
)or> #ac>age &!dgets& ,esources which are forma$$y assigned by the contractor to
accomp$ish a wor< pac<age, e"pressed in do$$ars, hours, standards or other definitive units&
A?
APP!+D23 2
2n 'ebruary 4::?, the Department of Defense recogniHed for use the +D2A PM%C !#M%
2+T!+T /02D! Dated +ovember 4::8 when interpreting the intent of the 94 guide$ines in
A+%2(!2A6?>@ standard& ;here DoD be$ieves there is a need for a more robust interpretation
of the guide$ines, reGuirements shou$d be addressed using appropriate contractua$ means&
DCMA retains fina$ decision authority on Guestions concerning guide$ine intent and app$ication&
A@

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