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| Section 887 of the FY 2009 National Defense Authorization Act and the Weapons System Acquisition Reform Act (WSARA) required DoD to submit the following report to Congress on DoD implementation of EVM. DoD Report to Congress: DoD Earned Value Management: Performance, Oversight, and Governance (Report) Link: DAU web site: DoD Report to Congress Excerpts from the DoD Report to Congress, required by WSARA, follow: "Utility of EVM has declined to a level where it does not serve its intended purpose." "EVM practices are intended to: Apply methodical discipline and objective measurement and analysis to cost, schedule and technical processes. Early mitigation of cost, schedule, and technical problems improves the probability of achieving program budget and completion goals.
Other Excerpts from DoD EVM Report to Congress | | Significant Deficiency: Use of management reserve to alter internal and subcontract performance levels and overruns | 1. Change in...culture is necessary · Encourage Program Managers to identify and quantify the impacts of schedule slips and cost overruns · Contractors often worry that poor performance may result in o Program cancellation o Reduced profits o Damaging performance evaluations
· Contractors may circumvent proper EVM practices to keep EVM metrics favorable and problems hidden · Engineering community should establish technical performance measures (TPM) that enable objective confirmation that tasks are complete
| 2. Accuracy of EVM data provided by vendors---in conveying the true status of the project · Various subsystems that make up many contractors' EVMS are not integrated, resulting in inconsistent portrayals of status · Schedules often cannot show downstream impacts of problems or cannot determine the critical path driving contract completion · When assessing cost and schedule variances, contractors cannot effectively identify the root cause, impact, and appropriate corrective actions · Contractors do not have a process for developing reliable estimates at completion · Contractor change control processes do not maintain the integrity of the PMB · Contractors treat EVM as a reporting requirement rather than the management process it is intended to be · Many instances of inappropriate changes o Arbitrarily changing past variances o Moving budgets to mask overruns o Making changes that were not properly authorized
"End result: Many Defense contractors cannot accurately predict outcomes that affect program costs or deliveries"
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3. Technical Performance Measures (TPM) · EV process is reliable and accurate only if o TPMs are identified and associated with completion of appropriate work packages o Quality of work must be verified o Criteria must be defined clearly and unambiguously · If good TPMs are not used: o Programs could report 100 percent of earned value..even though behind schedule § Validating requirements § Completing the preliminary design § Meeting weight targets § Delivering software releases that meet the requirements · Program Manager should ensure that the EVM process measures the quality and technical maturity of technical work products instead of just the quantity of work performed. |
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4. Systems Engineering (SE) EV process is reliable and accurate only if
o Augmented with a rigorous SE process o SE products are costed and included in EVM tracking o SE life-cycle management method is integrated with the planning of the PMB "SE and EVM should be integrated, not stove-piped" |
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Assessment of Report: The DoD EVM Report includes many valid assessments and recommendations for corrective actions. However, it also contains incorrect and insufficient information. Most importantly, the Report does not provide a needed recommendation for legislative action to link earned value with technical performance, or Quality. Consequently, the foIlowing letters were sent to the House and Senate Armed Services Committees and to Mr. J. Zients, Dep. Director for Management and Chief Performance Officer, Office of Managesment and Budget (OMB). Industry input to DoD: DoD received industry views from the Council of Defense and Space Industry Associations (CODSIA). CODSIA’s responded to Mr. Shay Assad, DoD Director, Defense Procurement & Acquisition Policy CODSIA . Assessment of CODSIA report: The CODSIA response does not sufficiently address the deficiencies in the quality of EVMS reporting and the contributing factors. CODSIA also did not identify the correct root causes of deficient EVM implementation. Finally, the CODSIA letter has limited guidance regarding Integrated Baseline Reviews (IBR). Consequently, I sent two letters to Mr. Assad that covered two topics: Deficiency in FAR, Defense Federal Acquisition Regulation Supplement (DFARS) and the EVMS Standard: | Contractor has no requirement to: Link EV to technical performance or Quality Integrate the EV Performance Measurement Baseline with the technical baseline (Functional Baseline, Allocated Baseline, or Product Baseline)
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House Armed Services Committee Panel on Defense Acquisition Reform Panel Findings and Recommendations DCMA: Lockheed Martin EVMS Compliance Report The DCMA EVMS Compliance Report, Executive Summary, dated 11/19/2007, stated that Lockheed Martin Aeronautics Company (LM-Aero)
• Is not following, nor consistently applying, the EVMS guidelines during the execution of Department Programs
• Utility of the EVMS has declined • Large percentage of Control Account Managers (CAM) Are disconnected from basic LM-Aero EVMS functions Cannot satisfactorily demonstrate that they understand and use documented EVM processes, procedures and tools to manage their work
• LM-Aero was non-compliant in 19 0f 32 industry guidelines • Significant findings include: Using management reserve to alter internal and subcontractor performance levels and overruns Cost and schedule integration problems that undermine the validity of data Inappropriate EV techniques used for assessment of material, subcontracts, and rework Inability of CAMs to demonstrate working level understanding of key EVMS processes including Definition and use of critical path Situational awareness of cost and schedule variances for course correction Substantiation of completion cost estimates
The DCMA report is available at POGO, the Project on Government Oversight, in its report, "Pentagon: Lockheed Cannot Properly Manage Billion-Dollar Programs, Many Defense Contractors Have Not Adequately Tracked Costs" http://pogoarchives.org/m/ns/jsf/dcma-report-20071119.pdf
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