A Department of Defense final rule (DFARS Case 2005-D006) amends the Defense Federal Acquisition Regulation Supplement to update requirements for DoD contractors to establish and maintain earned value management systems. This rule supplements the final Federal Acquisition Regulation rule published with Federal Acquisition Circular 2005-11 and establishes DoD-specific earned value management requirements, as permitted by the FAR. The changes made to the DFARS by this rule include the following:

l For cost or incentive contracts and subcontracts valued at $20,000,000 or more, the rule requires an earned value management system that complies with the guidelines in the American National Standards Institute/Electronic Industries Alliance Standard 748, Earned Value Management Systems (ANSI/EIA-748) (DFARS 234.201(1)(i)).

l For cost or incentive contracts and subcontracts valued at $50,000,000 or more, the rule requires an earned value management system that has been determined by the cognizant federal agency (as defined in FAR 2.101) to be in compliance with the guidelines in ANSI/ EIA-748 (DFARS 234.201(1)(ii)).

l For cost or incentive contracts and subcontracts valued at less than $20,000,000, the rule provides that application of earned value management is optional and is a risk-based decision (DFARS 234.201(1)(iii)).

l For firm-fixed-price contracts and subcontracts of any dollar value, the rule discourages the application of earned value management (DFARS 234.201(1)(iv)).

l The Defense Contract Management Agency is assigned responsibility for determining earned value management compliance when DoD is the cognizant federal agency (DFARS 234.201(2)).

l Requirements for contractor cost/schedule status reports are eliminated.

Accordingly, this final rule removes DFARS 234.005, adds a new DFARS Subpart 234.2, amends DFARS 242.1106, removes DFARS 242.1107-70, creates two new contract clauses at DFARS 252.234-7001 and DFARS 252.234-7002, and removes the clauses at DFARS 252.242-7001, DFARS 252.242-7002, DFARS 252.242-7005, and DFARS 252.242-7006. In addition, corresponding changes are made to the DFARS companion resource Procedures, Guidance and Information at PGI 234.201 and PGI 242.1106, which is removed. This DFARS rule is consistent with the policy in the memorandum issued by the Under Secretary of Defense (Acquisition, Technology, and Logistics) on March 7, 2005, Subject: Revision to DoD Earned Value Management Policy (available at http://www.acq.osd.mil/dpap/ops/ policy_vault.html). For the text of the proposed rule, see ¶70,020.222. For the text of this final rule, which is effective April 23, 2008, see ¶70,016.477.

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )