Acquisition councils finalize EVM rule

Federal acquisition officials finalized a rule, effective today, that details how agencies should implement an earned-value management system for managing major acquisitions.

In a notice, the Civilian Agency Acquisition and the Defense Acquisition Regulations councils said the rule was not altered significantly from its April 2005 draft and there will not be public meetings on the new standards.

The rule is now incorporated in the Federal Acquisition Regulation.

An earned-value management system is a project management tool that, in theory, lets project managers track money spent on a project almost in real time and measures that expense against milestones and deadlines.

The Office of Management and Budget, in Circular A-11, required the use of an EVMS on developmental, high-risk acquisitions.

In the final rule, the councils did not set a governmentwide contract threshold for when an EVMS should be used as requested by several commenters, and instead will let agencies set their own dollar benchmarks and applicability criteria. The rule estimates that most contracts that need an EVMS will be for projects that cost more than $20 million.

The councils did, however, alter the rule to make clear that agencies should use an EVMS only for developmental projects. An agency can, though, use EVM for other types of projects if it wants.

Also, the councils revised the rule to ensure that small businesses that may struggle to implement a workable EVMS are not excluded from bidding on contracts that require earned-value management. The rule recognizes that some businesses may not have an operational EVMS when they make a bid, and states that those companies will not be excluded from a competition as long as they submit an EVMS implementation plan with their proposal.

'Small businesses may avoid all EVMS costs by choosing not to participate in EVMS solicitations, or may offset such costs to implement a compliant EVM system through cost reimbursement on resulting government contracts,' the rule said.

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