OMB wants rule to support better vendor management

The Office of Management and Budget next week will propose a rule to the Federal Acquisition Regulations councils that would require agencies to include a clause in all new contracts asking vendors to use earned value management criteria to manage the project.

David Muzio, an OMB procurement policy analyst, today said the rule would affect all firm fixed-price and cost-plus contracts.

Earned value management criteria is a project management system used by the contractor that integrates the scope of the work with the cost and schedule milestones for planning purposes. It ties results to spending instead of just spending to resources consumed.

Muzio, who spoke at a conference on planning and managing IT investments sponsored by the Digital Government Institute in Washington, said the clause will require vendors to use software certified under Standard 748-A of the American National Standards Institute/Electronic Industries Alliance.

'In the business cases agencies submit to us, OMB will look at whether the contractor is certified by ANSI,' Muzio said. 'We will look at all parts of the projects, including in the development and testing phases of a project. Many of the larger contractors already have been certified by the Defense Department, NASA or the Energy Department.'

Muzio said the FAR councils will review the proposed rule and then publish it in the Federal Register, where agencies and vendors will be asked to comment.

In addition to the earned value management clause, Muzio said agencies should expect changes to the business case section under OMB Circular A-11.

OMB is considering creating separate criteria for business cases for steady-state IT systems and for new projects.

'We are not changing the concepts of where we are going, but trying to tweak the process to get better results,' he said. 'We are trying to make the procedures easier to use by clarifying some areas.'

Agencies had problems during the most recent budget process with identifying risk, performance goals and lifecycle costs of steady-state projects, and the new criteria will clarify the information OMB is looking for, he said.

The new guidance could be out in draft form for agencies to review in late March and finalized by late June or early July, Muzio said.

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