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  • Question

    Is the Erned Value Management System applicalbe to a Small Business Se-Aside Contract for Maintenance of Government-Owned FAcilites and Equipment (Power House, dams, rivers, parks and recreational areas)? FAR PART 234.203 is applicalbe to Systems acquisition.


    Answer

    Three questions must be answered to determine if Earned Value Reporting is required on a contract:
     
    1)  Is the nature of the effort discrete or measurable?
    2)  Is the contract a cost reimbursement or incentive type?
    3)  Is the value of the contract over $20M?
     
    If the answer to all 3 of these questions is yes, then Earned Value reporting is required.  Note that the term “contract” applies to contracts, subcontracts, intra-government work agreements, and other agreements.
     
    Let’s start with the third question, “is the value of the contract over $20M?”  In your instance the contract value is $30M so the answer is yes.
     
    For the second question, “is the contract a cost reimbursement or incentive type?” the answer is also in the affirmative for your scenario.  The contract type of Cost Plus Award Fee (CPAF) is a cost reimbursement type contract.
     
    The first question is not as cut and dry.  Maintenance contracts may have portions of the contract that are discrete and other portions that are not discrete.  A discrete task example would be regularly scheduled maintenance or inspection of a dam.  Earned Value reporting would be useful in this instance to measure if the inspection was started on time, or ahead or behind schedule and also if it was completed on time.  An example of tasks on a maintenance contract that are not measureable would be ongoing efforts not tied to a specific event, such as personnel that are available at all times if a failure occurs.  These types of tasks are considered Level of Effort (LOA). 
     
    All contracts have some Level of Effort tasks, but if your contract is designed such that the majority of the work scope is non-measureable, then Earned Value Management would not be required.   In cases where the work scope is not measureable and discrete, the program office should follow the process to obtain a DFARS deviation.


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