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I have some questions about the Requests for Equitable Adjustment (REA).
Question #A: The question I have is how (Best way) to apply the REA to the program EVM and track the REA money?
Question #B: Should this REA be fenced off once added to the budget and apply it at the end of the contract? This would retain the Cost Variance and Schedule Variance to keep it clean..?
From: COST ASSESSMENT GUIDE: Best Practices for Estimating and Managing Program Costs "July 2007"
Page 257: Table 43: Options for Treating Variances in Performing a Single Point Adjustment
Retain All variances: A contractor may have been performing fairly well to the baseline plan with no significant variances, but additional budget is necessary to complete the work. Or the contractor has large variances warranting an OTB, but management wants to retain them. In both situations, cost and schedule variances are left alone but budget is added to cover future work in the OTB process.
Question #C: Is contractor answer question 1 below the best path going forward with an REA? If not what is?
Below are some of my question to the contractor trying to figure out how to proceed.
1) I would like to know how you are applying REA to the EV data?
The contractor answer as follows: The program is planning on declaring a Single Point Adjustment. The contract value was not adjusted as part of COVID-19 target cost relief mod, thereby requiring a SPA as the only method that the program team is aware of to update the EVM Data.
2) Would this REA for the schedule relief or the cost relief for the 2020 impact?
The contractor answer as follows: We was awarded schedule relief for the COVID-19 202 impact under modification P00001. Mod P00002 provided target cost relief for 2020.
3) Would this fall under section 8.9 Over-Target Baseline (OTB) - (Reprogramming) in your contractor System Description Sept 2016?
The contractor answer as follows: The Government approved an OTB in Sept 2020 for target cost overruns inclusive of impacts related to the COVID-19 pandemic. The team would like to discuss applying a Single Point Adjustment and how that would influence the previously approved OTB.
4) Have you created a separate cost pool, accounting code, or some system to separately identify, track, and calculate the costs related to COVID-19 impacts?
The contractor answer as follows: No, a separate mechanism to capture costs related to COVID-19s impact to the program was not created.
5) Will your company receive, has your company received, or is your company eligible to receive any reimbursement for COVID-19 related costs by other means, to include any assistance from the federal, state, or local government (e.g., SBA's Paycheck Protection Program)? If so, explain and calculate how you have deducted this other assistance from your REA. Provide self-certification by a corporate official that this information is current and accurate and that all other reimbursements from federal, state or local government have been reported to Army?
The contractor answer as follows: The contractor is not currently requesting any other means of federal assistance and has not received any other assistance from the federal, state, or local government. In addition, The Contractor is not eligible for COVID relief funds under section 3610 of the CARES Act.
6) Under what authority are you requesting this REA (e.g., 3610 CARES Act, existing contract clause, OMB direction)?
The contractor answer as follows: COVID-19 substantiation package and relief request for the ITEP EMD cost type contract was submitted in accordance with FAR 52.216-10(e)(4)(i).
Any guidance would be helpful
Thank you for your time
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