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  • Question

    Is there published guidance that prevents "de-bundling" or "un-bundling" of contracts of contracts as a means of avoiding EVM applicaiton?


    Answer

    For ID/IQ or task order types of contracts, the application of EVM based on dollar threshold is assessed at the computed total contract value amount and not by the value of each separate order. To determine EVM applicability, the anticipated cost or incentive orders should be summed to reach the computed total contract value. FFP orders are generally not included in that summation, unless the work involves development or integration effort.
     
    Also, note the following regarding level of effort task orders.  As a general rule, EVM is required on cost or incentive contracts valued at or greater than $20 million; however, it may be necessary to also consider the nature or type of work associated with the contract when determining EVM applicability. In the EVM context, there are two basic classifications of the nature of work:
    1) Discrete
    2) Level of effort (LOE).
    Discrete work is related to the completion of specific end products or services and can be directly planned, scheduled, and measured.
     
    LOE is effort of a more general or supportive nature that does not produce definite end products (time and materials and services contracts may contain LOE work). The application of EVM on work that is LOE in nature may be impractical, inefficient, and not value-added. Thus, if the work on a contract is exclusively LOE, it may be appropriate to request a waiver to the EVM policy from the program decision authority. When possible, waiver requests should be included in the program acquisition strategy. If EVM is waived for a contract due to the nature of the work, the program manager is required to implement an alternative method of management control to provide advanced warning of potential performance problems. Waivers to the EVM policy should be the exception not the rule because they are appropriate only in cases where a cost or incentive contract is being used for work that is exclusively LOE.
     

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