Magazine article National Defense

Pentagon Revises Program Performance Regulations

Magazine article National Defense

Pentagon Revises Program Performance Regulations

Article excerpt

The Defense Department is attempting to simplify the complex and conflicting rules that govern program performance management. Program performance, or earned value management, has been a requirement for major defense programs for more than 35 years. Contractors are required to provide the government with schedule status and cost performance information on a regular basis throughout the life of a project to assess how successfully the project is meeting its schedule and cost objectives. The data also is used to identify high-risk or problem areas and for planning future work.

Earned value management is a widely accepted industry best practice for project management that is used in the commercial sector, the Defense Department and the rest of the federal government.

The National Defense Industrial Association's Program Management Systems Committee was the catalyst for developing the American National Standards Institute/Electronic Industries Alliance Standard for Earned Value Management Systems. Consistent with industry practices, the Defense Department adopted the ANSI/EIA Standard for Earned Value Management Systems in 1998.

In March of this year, the acting undersecretary of defense for acquisition, technology and logistics approved revisions to the Department of Defense long-standing earned value management policy. The changes were intended to improve consistency in the application of earned value management across programs.

The previous rendition of the policy dated from the mid-1990s. "A number of factors led the Defense Department to re-examine its use of earned value management," said Debbie Tomsic, a senior acquisition analyst at the Defense Department. "Both industry and entities within the Defense Department had expressed concerns with the state of earned value management and program management, in general, in the defense acquisition process."

These concerns included the inconsistency in the application of earned value management, conflicting contractual requirements, duplicative management systems reviews and unique oversight activities. Other factors included process and technology advancements as well as recent Office of Management and Budget initiatives that revised the definition of major capital acquisitions and mandated the use of earned value management.

The revised policy was developed in consultation with the military services, the defense and intelligence agencies, the Defense Contract Management Agency and the Defense Acquisition University. NDIA's Program Management Systems Committee provided industry's input. Here are highlights of the new policy.

* Compliance with the industry standard is required. Whenever earned value management is applied, the contractor's management system must be compliant with the current version of the industry standard as interpreted by the NDIA PMSC ANSI/EIA Standard for Earned Value Management Intent Guide.

* New thresholds were set for applying earned value management. Various separate upper and lower thresholds based on the phase of the program were eliminated and replaced with streamlined guidelines. For example, separate thresholds for research, development, test, evaluation and procurement were eliminated. The lower threshold was raised from $6.3 million to $20 million. The upper threshold was lowered from $73 million and $315 million (the former RDT&E and procurement thresholds) to $50 million. …

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