There has been a lot of talk recently about the decision by DCMA to raise the threshold for contracts requiring compliance reviews from $50 Million to $100 Million. On face value this might seem like the government is taking its foot off of the EVM pedal and loosening up requirements for contractors. I’ve even heard folks theorize that this is the first shot across the bow to Earned Value eventually going away to be replaced by something else. But when you dig a little deeper this couldn’t be further from the truth.
First, the threshold being raised applies to what contracts will show up on DCMA’s list of contractors to perform a surveillance visit on. It does not change the thresholds for when Earned Value should be applied to contracts that need to comply with all 32 EIA Guidelines. That remains at anything over $20 Million as verified by sources at NDIA.
So, if you think that because your contract is below the new $100 Million threshold you don’t need to worry about doing Earned Value, you’re going to be surprised. The biggest impact of the threshold increase will be to shorten the list of contractors DCMA needs to visit. Given their backlog in recent years it’s likely that the reality of increased thresholds i.e. no DCMA visit for lower dollar contracts, has already been in place.
The second thing to remember is the pending roll out of additional metrics for project execution that will be required in the near future. There are over 100 metrics that are going to be required for submittal. These were discussed at a recent NDIA meeting. This is the continuation of the move to more data driven analysis that started with the roll out of the DCMA 14 Point Analysis and expanded IPRM reporting requirements.
There has been a focused effort in organizations like DCMA and PARCA, to look at how data can be used for assessing a contractor’s performance. From the government’s standpoint it makes perfect sense, data analysis can be automated and is a lot more objective than Subject Matter Expert opinion driven assessments.
With the technology for backend systems for contractor’s becoming more and more integrated within organizations, there is a lot of data that is readily available for analysis, so it makes sense for the government to leverage that data. This move towards data driven analysis allows the government to be able to conduct data driven surveillances across more contracts, not fewer going forward.
The difference will be the ability of the cognizant agencies to focus their limited people resources for the biggest, most complex programs (think of an F35 type program with a huge supply chain and disparate data sources). They can also apply “manage by exception” to the under $50M group (remember that even in the letter announcing the threshold changes, the government reserved the right to ignore the threshold and review a contractor if they think the data is suspect).
Earned Value Is Here To Stay…New And Improved!
So far from Earned Value going away, the change in thresholds is more of an output of the move towards data driven analysis versus subjective assessment. If anything, there will be more rigor applied to your Project Controls systems because you will be required to provide more data, quicker than ever before once the new metrics are officially rolled out.
What you will see going forward is a tighter integration of data produced from an Earned Value system with other project controls functions producing a more holistic view of project performance than ever before. Those relationships have always existed, its just now going to be reported in the same dataset making it easier to see the connections in the data.