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<td colspan="6"><p><strong>Office of the Chief Information
Officer</strong></p>
<p><strong>Office of the Assistant Secretary for Resources and
Technology</strong></p>
<p><strong>Department of Health and Human Services</strong></p></td>
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<td colspan="6"><p>HHS OCIO Policy for</p>
<p>Information Technology (IT)</p>
<p>Earned Value Management (EVM)</p></td>
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<td colspan="7"><strong>June 11, 2007</strong></td>
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<td colspan="2"><strong>Project:</strong></td>
<td colspan="5">HHS-OCIO IT EVM Policy</td>
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<td colspan="2"><strong>Document Number:</strong></td>
<td colspan="5">HHS-OCIO-2007-0001.001</td>
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Table of Contents

[**Nature of Changes ii**](#nature-of-changes)

[1. Purpose 1](#purpose)

[2. Background 1](#background)

[3. Scope 2](#scope)

[4. Policy 2](#policy)

[4.1 General 2](#general)

[4.2 Processes 3](#processes)

[4.3 Governance 4](#governance)

[4.4 Contracts 5](#contracts)

[4.5 Reviews 7](#reviews)

[5. Responsibilities 7](#responsibilities)

[5.1 HHS CIO 7](#hhs-cio)

[5.2 HHS ITIRB 8](#hhs-itirb)

[5.3 HHS CIO Council 8](#hhs-cio-council)

[5.4 The HHS Capital Planning and Investment Control Officer
8](#the-hhs-capital-planning-and-investment-control-officer)

[5.5 OPDIV CIO 8](#opdiv-cio)

[5.6 Head of Contracting Activity 8](#head-of-contracting-activity)

[5.7 The OPDIV CPIC Manager 9](#the-opdiv-cpic-manager)

[5.8 IT Investment Contracting Officer
9](#it-investment-contracting-officer)

[5.9 Contract Officer Technical Representative (COTR)
9](#contract-officer-technical-representative-cotr)

[5.10 IT Investment Manager 9](#it-investment-manager)

[6. Applicable Policies and Guidance
10](#applicable-policies-and-guidance)

[6.1 Standards 10](#standards)

[6.2 Guidance 11](#guidance)

[7. Information and Assistance 11](#information-and-assistance)

[8. Effective Date/Implementation 12](#effective-dateimplementation)

[9. Approved 12](#approved)

[Attachment 1: ANSI/EIA 748-A Guidelines
13](#attachment-1-ansieia-748-a-guidelines)

[Attachment 2: Tailored ANSI/EIA 748-A Guidelines
17](#attachment-2-tailored-ansieia-748-a-guidelines)

[Attachment 3: Glossary 19](#__RefHeading___Toc168719220)

[Attachment 4: List of Acronyms 21](#__RefHeading___Toc168719221)

#   {#section .unnumbered}

# Nature of Changes 

This is a revision of the December 30, 2005, HHS OCIO Policy for
Investment Technology (IT) Earned Value Management (EVM). The following
changes have been made to modify incorrect information as well as to
reflect changes in HHS operations as they are related to the application
of EVM data and analysis of HHS IT investments. Many of the changes
contained in this revision were discussed at the March 14, 2006 ITIRB
and follow-up by email on March 15, 2006, and have been operational
since that time. This policy revision serves as a codification of those
modifications and changes and can be found in the following sections:

1.  Section 1, Purpose, cites the nature of the changes herein and that
    this policy revision supercedes the December 30, 2005, issuance.

2.  Section 4, sub-section 4.1, General, includes consideration of
    future life-cycle Development, Enhancement and Modernization (DME)
    funding in the EVM reporting requirements. The definition of Tiers
    has been modified to reflect the change.

3.  Section 4, Table 1, corrects Contract Performance Report (CPR)
    requirements.

4.  Section 6, Applicable Policies and Guidance, has been updated to
    reflect the most current URL to access the HHS OCIO Web site.

# Purpose

This revision to the Policy for Earned Value Management (EVM) within the
Department of Health and Human Services (HHS) supercedes HHS OCIO Policy
for Information Technology (IT) Earned Value Management, dated December
30, 2005. This policy does not supersede any other applicable law or
higher level agency directive, policy guidance, or existing labor
management agreement in affect as of the effective date of this policy.
This Policy serves as the authority for performing EVM requirements,
objectives, responsibilities, and standards for managing information
technology (IT) investments using EVM.

Specifically, the policy establishes EVM as an IT Investment Management
requirement at HHS and incorporates EVM as a fundamental element of HHS
CPIC and investment portfolio management oversight.

# Background

As required by the Office of Management and Budget (OMB) Circular A-11
Part 7. Section 300, HHS will use EVM to monitor its investments' cost,
schedule, and performance goals. The HHS Office of the Chief Information
Officer (OCIO) is ensuring that all investments use an appropriate level
of EVM as a management tool. This policy will apply to IT investments
which include DME funding and will not apply to Steady State
investments.

EVM provides government Investment Managers and contractors with
reliable data from which to make responsible management decisions. EVM
minimizes risk by effectively integrating the investment scope of work
with cost, schedule, and performance elements for optimum project
planning and control. Earned Value Management provides a quantitative
measure of project management progress as measured against a performance
baseline established from a project's work breakdown structure and
project plan. DOD originally utilized EVM methodology to manage large
developmental projects. Further information regarding the DOD
implementation of EVM is referenced in Section 6.3.

Earned value management (EVM) data is a critical component of the
Control phase of the Capital Planning and Investment Control (CPIC)
process, because it provides investment managers with the cost,
schedule, and performance data necessary to ensure that HHS investments
are delivered on time and perform within budget and scope. The addition
of the variance and trend analysis aspect of EVM permits an evaluation
that monitors deviation from the baseline plan, which may indicate
potential impact of threats or opportunities. This increases the
reliance management has that investments are behaving in accordance with
both sound project management and alignment of Departmental goals and
objectives. OMB has increased its requirements for the use of EVM
through the issuance of Memorandum M-04-24 *Expanded Electronic
Government (E-Gov) Presidents Management Agenda (PMA) Scorecard Cost,
Schedule and Performance Standard for Success*, August 2004 and
Memorandum M-05-23 *Improving Information Technology (IT) Project
Planning and Execution*, August 2005.

As of February 2005, the CPIC process was augmented to incorporate
monthly EVM reporting for Development, Modernization, and Enhancement
(DME) IT investments.[^1] EVM data is used as part of the HHS CPIC
Select and Control Phases primarily. An OMB-approved three-tiered
approach for EVM was instituted by HHS to incorporate stronger EVM
application in project management processes. Also, in June 2005,
guidelines were introduced that called for an integrated project team
approach in which the Operating Division (OPDIV) Chief Information
Officer (CIO) and Head of Contracting Activity (HCA) would work in
partnership with cognizant project managers to address fully the EVM
requirements in applicable project and acquisition plans.[^2] In
addition, a requirement was put in place for HHS solicitations and
resulting contracts issued on or after October 1, 2005, in support of
Tier 1, Tier 2, or Tier 3 IT investments, to include all EVM
requirements appropriate to the specific Tier.

# Scope

This Policy applies to the Office of the Secretary of Health and Human
Services (OS), including all Staff Divisions (STAFFDIVs), the Office of
the Inspector General, and the Operating Divisions (OPDIVs). This Policy
applies to all HHS IT investments, whether owned and operated by HHS, or
operated on behalf of HHS.

This Policy applies to all HHS IT investments with the exception of
those that are funded by direct grants to states or other external
entities or associated with the basic claims processing costs incurred
by contractors in the course of performing Medicare operations.

Within this Policy, the term OPDIV shall be read to include the Office
of the Secretary, including all STAFFDIVs, and the Office of the
Inspector General unless otherwise noted.

All HHS OPDIVs shall use this Policy or may create a more restrictive
OPDIV-specific policy, but not one that is less restrictive or less
comprehensive. This Policy shall be applied in conjunction with the HHS
EVM Procedures document, the HHS CPIC Policy, the HHS CPIC Procedures,
and any Federal Acquisition Regulation (FAR) and HHS Acquisition
Regulation (HHSAR) rules that are promulgated on the subject.

# Policy

## General

In order to provide HHS Investment Managers with reliable data to
support responsible management decisions, it is HHS policy to apply
"varying levels of EVM rigor, depending on the size and complexity of
the IT investment,"[^3] as follows:

-   Tier 1: IT investments that have current-year DME funding equal to
    or greater than \$10 million or future life-cycle DME funding equal
    to or greater than \$10 million. Those investments must apply EVM in
    full compliance with American National Standards
    Institute-Electronic Industries Alliance (ANSI/EIA) Standard 748-A
    in any investments supporting the DME effort. Attachment 1 lists the
    Standard's 32 criteria.

-   Tier 2: IT investments that have current-year DME funding equal to
    or greater than \$1 million and less than \$10 million or future
    life-cycle DME funding equal to or greater than \$1 million and less
    than \$10 million. Those investments must apply EVM principles for
    tracking investment cost, schedule, and performance, but need only
    comply with a subset of ANSI-EIA Standard 748-A criteria in any
    investments supporting the DME effort. Attachment 2 lists this
    subset of ANSI/EIA Standard 748-A criteria.

-   Tier 3: IT investments that have current-year DME funding of less
    than \$1 million or future life-cycle DME funding less than \$1
    million. Those investments must apply EVM principles for tracking
    investment cost, schedule, and performance, but are not required to
    meet ANSI/EIA Standard 748-A criteria. The appropriate EVM approach
    for each Tier 3 investment will be determined by the dollar amount
    and complexity of the affected investment.

The IT Investment Manager shall ensure that EVM is integrated into
standard investment and project management operations.

## Processes

To ensure that investments are managed and monitored against their
approved performance measurement baselines, the IT Investment Manager
shall perform EVM as an integral part of standard investment management
operations. As directed by OMB[^4], and in accordance with the HHS CPIC
Policy, the IT Investment Manager shall:

1)  Establish and validate performance measurement baselines with clear
    cost, schedule, and performance goals.

2)  Use EVM to manage and measure investments to within ten percent of
    baseline goals.

3)  Use EVM performance measures and management processes to monitor
    actual versus expected results.

4)  Use EVM to measure progress against milestones on an independently
    verifiable basis.

5)  Use EVM to ensure that IT investments proceed in a timely fashion
    toward approved milestones and security requirements.

6)  Use EVM in conjunction with a risk management strategy that is
    adhered to.

7)  Ensure accurate recognition of EV by applying EVM to established
    project Work Breakdown Structures (WBS) that permit independently
    verifiable measurement of progress in terms of cost, schedule, and
    performance goals.

8)  Prepare corrective action plans when variances exceed acceptable
    performance tolerances.

9)  Document the methodology the Government will employ to analyze and
    use the EVM data to assess and monitor contract performance.

10) Comply with Department requirements for reporting the EVM status of
    investments.

11) For steady-state investments, perform operational analyses (refer to
    HHS-CPIC Policy for operational analysis requirements).

The HHS or OPDIV CIO, as appropriate, shall:

1)  Ensure that qualified personnel[^5] are assigned to IT investments
    and that they properly implement EVM policies and processes.

## Governance

1)  IT Investment Managers shall submit all investment EVM performance
    measurement baselines (PMB) and changes to the PMB to the ITIRB for
    review and approval.

> For investments that meet the Department threshold for review, IT
> Investment Managers shall submit the EVM PMB and any changes to the
> PMB to the HHS ITIRB for review and approval. For investments that do
> not meet the Departmental threshold for review, IT Investment Managers
> shall submit the EVM PMB and any changes to the PMB to the OPDIV ITIRB
> for review and approval. Submissions shall address the rationale and
> driving factors leading to the new investment EVM PMB or any changed
> PMB.

2)  Any new investment EVM PMB, or PMB changes approved by the HHS
    ITIRB, will be forwarded to OMB for final approval. Any new
    investment EVM PMB, or PMB changes approved by the OPDIV ITIRB, will
    be forwarded to the Department, as part of the Capital Planning and
    Investment Control process, for final approval.

3)  Unless specific instruction is given to stop work on the investment,
    work may continue while any proposed changes to the PMB are under
    review.

4)  Any new investment EVM PMB, or PMB changes not approved by the HHS
    or OPDIV ITIRB, will be returned to the IT Investment Manager for
    appropriate action.

## Contracts

An IT investment's Tier designation will dictate the level of that
investment's required EVM compliance in solicitations and contracts.

To ensure that all OMB-mandated EVM requirements are reflected in the
investment's acquisition phase, the EVM requirements for contract
language relevant for EVM in solicitation provisions and contract
clauses listed in the EVM Procedures document shall be incorporated in
all IT contracts and solicitations for Tier 1 IT investments. Contract
language was originally established in the HHS Memorandum *Team-Based
Earned Value Management Guidelines*, June 16, 2005. These requirements
were derived from the proposed Federal Acquisition Regulations (FAR)
rule on EVMS[^6]. The HHS Acquisition Regulation (HHSAR) provides
additional acquisition requirements for HHS IT investments. The June 16,
2005 Memorandum, *Team-Based Earned Value Management Guidelines,* also
established that HHS solicitations and resulting contracts issued on or
after October 1, 2005, in support of Tier 1, Tier 2, or Tier 3 IT
investments, must include all EVM requirements appropriate to the
specific Tier.

This policy establishes that all HHS IT contracts and solicitations will
comply with the HHS EVM Policy requirements, as based on the IT
investment's Tier level. This policy also establishes that all HHS IT
contracts and solicitations will comply with EVM requirements in the FAR
rule and the HHSAR. When changes occur to the FAR, HHS will apply EVM
requirements in accordance with the most current FAR rule. When changes
occur to the HHSAR, HHS will apply EVM requirements in accordance with
the most current HHSAR rule.

To ensure that EVM requirements are reflected in supporting elements of
the contract, contract deliverable reports and associated Integrated
Baseline Reviews (IBR) must be included in the Contract Data
Requirements List (CDRL) with complete descriptions included in the Data
Item Description (DID). More information regarding the CDRL and DID is
provided in the EVM Procedures document.

An IT investment's Tier designation will dictate the level of that
investment's required EVM reporting. When EVM reporting is needed, the
requirement must be integrated into the investment's solicitation and
the resulting contract. Table 1, below, lists the contract EVM
requirements based on Tier.

**Table 1: EVM Requirements Based on Tier**

  -------------------------------------------------------------------------
  EVM Requirements                      Tier 1      Tier 2      Tier 3
  ------------------------------------- ----------- ----------- -----------
  Contract Performance Report (CPR)     R           T           O

  Integrated Master Schedule (IMS)      R           T           T

  Integrated Baseline Reviews (IBR)     R           O           O

  EVMS ANSI 748-A-1998 Standard         R           R           O
  Compliance\*                                                  

  EVM System Certification\*\*          R           O           O
  -------------------------------------------------------------------------

> R = Required, T = Tailored (requirement may be tailored by
> investment), O = Optional
>
> \* Refer to Section 4.1 for ANSI Standard requirements for each Tier.
>
> \*\* Refer to the Glossary for the definition of requirements listed
> in the table
>
> The minimum EVM reporting requirement is monthly reporting.
> Contracting Officers shall require contractors to submit the
> appropriate EVM monthly reports. Table 2 lists contractor EVM
> reporting requirements. Contracting Officers and Investment Managers
> may implement more frequent reporting requirements as appropriate to
> the size and complexity of the investment.
>
> When an EVMS is required, the Government will conduct an Integrated
> Baseline Review (IBR). The purpose of the IBR is to verify the
> technical content and realism of the related performance budgets,
> resources, and schedules. It should provide a mutual understanding of
> the inherent risks in the offerors'/contractors' performance plans and
> the underlying management control systems, and it should formulate a
> plan to handle these risks. The IBR requirements apply to both
> contracted IT development projects and IT development projects wholly
> staffed by Federal employees.
>
> The HHSAR and the HHS EVM Procedures document will provide further
> requirements and guidance as applicable for EVMS certification and
> IBRs.
>
> Further guidance and definitions regarding the Contract Performance
> Report (CPR) and the Integrated Master Schedule, including examples of
> CPR formats 1-5, will also be found in the EVM Procedures document.
> This policy establishes contractor reporting requirements as listed
> above and in the below table.

**Table 2. Contractor EVM Reporting Requirements**

  -------------------------------------------------------------------------
  EVM Reporting Requirements                  Tier 1    Tier 2    Tier 3
  ------------------------------------------- --------- --------- ---------
  CPR Format 1 -- WBS                         R         R         T

  CPR Format 2 -- Organizational Categories   R         O         O

  CPR Format 3 -- Baseline                    R         O         O

  CPR Format 4 -- Staffing                    R         O         O

  CPR Format 5 -- Explanation and Problem     R         R         T
  Analyses                                                        

  Contract Funds Status Report                R         R         O
  -------------------------------------------------------------------------

> R = Required, T = Tailored (requirement may be tailored by
> investment), O = Optional

For internal HHS investments with no contractor involvement, the IT
Investment Manager shall ensure all Tier-appropriate EVM requirements,
as defined in each section of this policy, are met by the performing
organization. The IT Investment Manager would therefore ensure that
those requirements that would be met by the contractor, such as those
listed in Tables 1 and 2 of this section (4.4), are met for those
internal HHS investments with no contractor involvement.

## Reviews

The Contracting Officer shall establish contract requirements for IBRs
for Tier 1 investments and, if deemed necessary by the Contracting
Officer in conjunction with the Investment Manager, Tier 2 and Tier 3
investments. The IT Investment Managers shall be responsible for
performing an IBR for each investment. An IBR provides HHS and the
contractor an opportunity to review the PMB and come to an agreement
that the PMB accurately reflects the scope of the work to be performed,
the appropriateness of its schedule, the appropriateness of the assigned
EV recognition methods, and the investment's key milestones. The HHSAR
and the HHS EVM procedures document will provide further requirements
and additional guidance on the process for performing IBRs.

To provide a timely mutual understanding of risks inherent in the
investment's performance plans and underlying management control
systems, IBRs shall be documented in the project plan and shall be
conducted as early as possible, but no later than 180 days after
contract award.

# Responsibilities

## HHS CIO

The HHS CIO chairs the HHS ITIRB and the HHS CIO Council and is
responsible for establishing HHS Information Technology-related EVM
policies, processes, and procedures. The HHS CIO is responsible for
oversight of the development, implementation and management of the HHS
EVM policy and all EVM-related processes and guidance.

## HHS ITIRB

The HHS ITIRB is responsible for approving new and revised IT investment
PMBs from a financial management perspective and in relation to the HHS
IT investment portfolio. Upon HHS ITIRB approval, the HHS ITIRB shall
forward new or revised PMBs to OMB for approval.

## HHS CIO Council

The HHS CIO Council is responsible for reviewing the technical and
managerial soundness of IT investments and providing technical
recommendations to the ITIRB, as they relate to the application of EVM.

## The HHS Capital Planning and Investment Control Officer 

The HHS Capital Planning and Investment Control Officer ensures that the
appropriate rigor for EVM is fully integrated into the CPIC process, and
that the underlying investments accurately capture the necessary EVM
data. The HHS Capital Planning and Investment Control Officer ensures
that HHS and OPDIV EVM policies meet OMB and any other legal or
regulatory requirements on behalf of the HHS CIO. The HHS Capital
Planning and Investment Control Officer works in conjunction with the
HHS CIO, HHS Chief Enterprise Architect, OPDIV CIOs and OPDIV CPIC
Managers to ensure that required EVM processes are implemented for IT
development projects and programs, that the EVM information is used
effectively in HHS and OPDIV CPIC processes, and that EVM results and
reports are provided to OMB in an appropriate and timely manner.

## OPDIV CIO

The OPDIV CIO oversees the development, implementation and management of
OPDIV EVM policy, procedures, and processes in accordance with HHS CPIC
Policy, HHS CPIC Procedures, HHS EVM Policy, HHS EVM Procedures, and
other Policies and Guidance. The OPDIV CIO serves as a member of the HHS
CIO Council.

For IT investments supporting Tier 1 DME efforts, each OPDIV CIO and
Head of Contracting Activity (HCA) are jointly responsible for
participating in the conduct of IBRs[^7].

## Head of Contracting Activity

The Head of Contracting Activity, in coordination with the CIO is
responsible for defining requirements for inclusion of EVM in all IT
development contracts.

For IT investments supporting Tier 1 DME efforts, each OPDIV CIO and HCA
is jointly responsible for participating in the conduct of IBRs.[^8]

## The OPDIV CPIC Manager

The OPDIV CPIC Manager works with the OPDIV IT Investment Managers, the
OPDIV CIO and the HHS Capital Planning and Investment Control Officer to
ensure that the required EVM processes are developed, implemented and
executed for IT development investments at the OPDIV; that the EVM
information is used effectively in the OPDIV CPIC process; and that the
EVM results and reports are provided to HHS to forward to OMB in an
appropriate and timely manner.

## IT Investment Contracting Officer

The IT Investment Contracting Officer (CO) shall ensure that the
investment's contract includes all the deliverables necessary for EV
reporting.

The CO is responsible for ensuring that all FAR and HHSAR references
that apply to EVM reporting are included in the investment's
solicitation and contract, as well as FAR and HHSAR references that
directly affect the technical content of the work program. The CO, in
partnership with the IT Investment Manager and as part of the Integrated
Project Team, is responsible for ensuring that all contract deliverables
(e.g., Integrated Master Schedule, CPRs) have been delivered by the
contractor on time and are in compliance with the contract's
requirements.

## Contract Officer Technical Representative (COTR)

The COTR is responsible for ensuring that EVM requirements are met for
the contract. The COTR and the IT Investment Manager may be the same
person for some investments.

## IT Investment Manager

The IT Investment Manager is responsible for the overall success of the
investment and all funding and scheduling issues, and acts as the
Government's point of contact with the contractor's project management
team. The IT Investment Manager is responsible for ensuring that project
management principles, including the appropriate use of EVM, are applied
to their investment(s). The IT Investment Manager has the primary
responsibility for ensuring that the data used to support EVM is
accurate, the analysis of EVM data is timely, the reporting of EVM
information is current, and the investment's EVM results are reported to
the appropriate persons responsible for oversight, and to the governance
bodies responsible for CPIC at HHS and the OPDIVs.

To fulfill these responsibilities, the IT Investment Manager will, in
conjunction with the cognizant Contracting Officer, work directly with
the contractor's project management team to ensure that the contractor
incorporates EVM into its management practices. The IT Investment
Manager establishes appropriate cost, schedule, and performance
baselines; collects and analyzes EVM data regarding performance against
those baselines; prepares corrective action plans or re-baseline
proposals, as necessary, when cost, schedule, or performance exceeds
acceptable tolerances; and provides required EVM reports as established
by the OPDIV, the Department, or OMB.

# Applicable Policies and Guidance

> Links to the regulations and guidance listed below are located on the
> HHS OCIO Capital Planning Web site,
> <http://www.hhs.gov/ocio/>[.]{.underline}

1)  Government Performance and Results Act of 1993.

2)  Federal Acquisition Streamlining Act of 1994.

3)  FAR 7.105.

4)  FAR Case 2004-019, *Federal Acquisition Regulation Earned Value
    Management System (EVMS)*, Federal Register, Volume 70, Number 67,
    April 8, 2005.

5)  Clinger Cohen Act of 1996.

> 6\) OMB Circular A-11 *(Part 7, Planning Budgeting, Acquisition &
> Management of Capital Assets)*.

7\) OMB Memorandum M-04-24 *Expanded Electronic Government (E-Gov)
Presidents Management Agenda (PMA) Scorecard Cost, Schedule and
Performance Standard for Success*, August 2004.

> 8\) OMB Memorandum M-05-23 *Improving Information Technology (IT)
> Project Planning and Execution*, August 2005.

## Standards

1)  American National Standards Institute/Electronic Industries Alliance
    (ANSI/EIA) Standard 748-A, *Earned Value Management Standards*, May
    1998.

2)  Defense Contract Audit Agency, *Earned Value Implementation Guide*
    (DCAA Pamphlet 7641.47), Ft. Belvoir, VA, 1996.

3)  Department of Defense *Earned Value Management Implementation
    Guide*: <http://www.acq.osd.mil/pm>.

4)  National Defense Industrial Association (NDIA) Program Management
    Systems Committee Intent Guide for Earned Value Management Systems:
    [http://www.ndia.org](http://www.ndia.org/) or
    [http://www.acc.dau.mil](http://www.acc.dau.mil/).

## Guidance

1)  HHS Deputy Assistant Secretary for Grants and Acquisition Management
    Memorandum, *OMB's New Capital Asset Requirements*, May 30, 2002.

2)  HHS Chief Information Officer and Director, Office of Acquisition
    Management & Policy Memorandum, *Team Based Earned Value Approach*,
    January 24, 2005.

3)  HHS Memorandum *Monthly Reporting of Earned Value Cost and Schedule
    Variances*, January 31, 2005.

4)  HHS Memorandum *Team-Based Earned Value Management Guidelines*, June
    16, 2005.

5)  HHS Acquisition Regulation (HHSAR)

> 6 ) Defense Contract Audit Agency, *Earned Value Implementation Guide*
> (DCAA Pamphlet 7641.47), Ft. Belvoir, VA, 1996.
>
> 7\) Department of Defense *Earned Value Management Implementation
> Guide*: <http://www.acq.osd.mil/pm>.
>
> 8\) National Defense Industrial Association (NDIA) Program Management
> Systems Committee Intent Guide for Earned Value Management Systems:
> [http://www.ndia.org](http://www.ndia.org/) or
> [http://www.acc.dau.mil](http://www.acc.dau.mil/).

# Information and Assistance

Direct questions, comments, suggestions, or requests for further
information to the Office of the Chief Information Officer, (202)
690-6162.

# Effective Date/Implementation

The effective date of this policy is the date the policy is approved.

This policy will not be implemented in any recognized bargaining unit
until the union has been provided notice of the proposed changes and
given an opportunity to fully exercise its representational rights.

The HHS policy contained in this issuance shall be exercised in
accordance with Public Law 93-638, the Indian Self-Determination and
Education Assistance Act, as amended, and the Secretary's policy
statement dated August 7, 1997, as amended, titled *"*Department Policy
on Consultation with American Indian/Alaska Native Tribes and Indian
Organizations." It is HHS policy to consult with Indian people to the
greatest practicable extent and to the extent permitted by law before
taking actions that affect these governments and people; to assess the
impact of the Department's plans, projects, programs and activities on
tribal and other available resources; and to remove any procedural
impediments to working directly with tribal governments or Indian
people.

# Approved

[\_\_\_
\_\_\_\_\_\_\_\_\_/s/\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_]{.underline}
[\_June 11, 2007]{.underline}

Charles Havekost

HHS Chief Information Officer DATE

#  {#section-1 .Style-Heading-1-+-Left:--0\"-First-line:--0\"}

# Attachment 1: ANSI/EIA 748-A Guidelines {#attachment-1-ansieia-748-a-guidelines .Style-Heading-1-+-Left:--0\"-First-line:--0\"}

The following data is extracted directly from the *American National
Standards Institute/Electronic Industries Alliance Standard 748-98,
Earned Value Management Standards,* May 1998.

**[Organization\
]{.underline}**

1\. Define the authorized work elements for the program. A work
breakdown structure (WBS), tailored for effective internal management
control, is commonly used in this process.

2\. Identify the program organizational structure including the major
subcontractors responsible for accomplishing the authorized work, and
define the organizational elements in which work will be planned and
controlled.

3\. Provide for the integration of the company\'s planning, scheduling,
budgeting, work authorization and cost accumulation processes with each
other, and as appropriate, the program work breakdown structure and the
program organizational structure.

4\. Identify the company organization or function responsible for
controlling overhead (indirect costs).

5\. Provide for integration of the program work breakdown structure and
the program organizational structure in a manner that permits cost and
schedule performance measurement by elements of either or both
structures as needed.

**[Planning, Scheduling and Budgeting\
]{.underline}**

6\. Schedule the authorized work in a manner which describes the
sequence of work and identifies significant task interdependencies
required to meet the requirements of the program.

7\. Identify physical products, milestones, technical performance goals,
or other indicators that will be used to measure progress.

8\. Establish and maintain a time-phased budget baseline, at the control
account level, against which program performance can be measured.
Initial budgets established for performance measurement will be based on
either internal management goals or the external customer negotiated
target cost including estimates for authorized but undefinitized work.
Budget for far-term efforts may be held in higher level accounts until
an appropriate time for allocation at the control account level. On
government contracts, if an over target baseline is used for performance
measurement reporting purposes; prior notification must be provided to
the customer.

9\. Establish budgets for authorized work with identification of
significant cost elements (labor, material, etc.) as needed for internal
management and for control of subcontractors.

10\. To the extent it is practicable to identify the authorized work in
discrete work packages, establish budgets for this work in terms of
dollars, hours, or other measurable units. Where the entire control
account is not subdivided into work packages, identify the far term
effort in larger planning packages for budget and scheduling purposes.

11\. Provide that the sum of all work package budgets plus planning
package budgets within a control account equals the control account
budget.

12\. Identify and control level of effort activity by time-phased
budgets established for this purpose. Only that effort which is
unmeasurable or for which measurement is impractical may be classified
as level of effort.

13\. Establish overhead budgets for each significant organizational
component of the company for expenses which will become indirect costs.
Reflect in the program budgets, at the appropriate level, the amounts in
overhead pools that are planned to be allocated to the program as
indirect costs.

14\. Identify management reserves and undistributed budget.

15\. Provide that the program target cost goal is reconciled with the
sum of all internal program budgets and management reserves.

**[Accounting Considerations\
]{.underline}**

16\. Record direct costs in a manner consistent with the budgets in a
formal system controlled by the general books of account.

17\. When a work breakdown structure is used, summarize direct costs
from control accounts into the work breakdown structure without
allocation of a single control account to two or more work breakdown
structure elements.

18\. Summarize direct costs from the control accounts into the
contractor\'s organizational elements without allocation of a single
control account to two or more organizational elements.

19\. Record all indirect costs which will be allocated to the contract.

20\. Identify unit costs, equivalent units costs, or lot costs when
needed.

21\. For EVMS, the material accounting system will provide for:

-   Accurate cost accumulation and assignment of costs to control
    accounts in a manner consistent with the budgets using recognized,
    acceptable, costing techniques.

-   Cost performance measurement at the point in time most suitable for
    the category of material involved, but no earlier than the time of
    progress payments or actual receipt of material.

-   Full accountability of all material purchased for the program
    including the residual inventory.

**[Analysis and Management Reports\
]{.underline}**

22\. At least on a monthly basis, generate the following information at
the control account and other levels as necessary for management control
using actual cost data from, or reconcilable with, the accounting
system:

-   Comparison of the amount of planned budget and the amount of budget
    earned for work accomplished. This comparison provides the schedule
    variance.

-   Comparison of the amount of the budget earned the actual (applied
    where appropriate) direct costs for the same work. This comparison
    provides the cost variance.

23\. Identify, at least monthly, the significant differences between
both planned and actual schedule performance and planned and actual cost
performance, and provide the reasons for the variances in the detail
needed by program management.

24\. Identify budgeted and applied (or actual) indirect costs at the
level and frequency needed by management for effective control, along
with the reasons for any significant variances.

25\. Summarize the data elements and associated variances through the
program organization and/or work breakdown structure to support
management needs and any customer reporting specified in the contract.

26\. Implement managerial actions taken as the result of earned value
information.

27\. Develop revised estimates of cost at completion based on
performance to date, commitment values for material, and estimates of
future conditions. Compare this information with the performance
measurement baseline to identify variances at completion important to
company management and any applicable customer reporting requirements
including statements of funding requirements.

**[Revisions and Data Maintenance\
]{.underline}**

28\. Incorporate authorized changes in a timely manner, recording the
effects of such changes in budgets and schedules. In the directed effort
prior to negotiation of a change, base such revisions on the amount
estimated and budgeted to the program organizations.

29\. Reconcile current budgets to prior budgets in terms of changes to
the authorized work and internal replanning in the detail needed by
management for effective control.

30\. Control retroactive changes to records pertaining to work performed
that would change previously reported amounts for actual costs, earned
value, or budgets. Adjustments should be made only for correction of
errors, routine accounting adjustments, effects of customer or
management directed changes, or to improve the baseline integrity and
accuracy of performance measurement data.

31\. Prevent revisions to the program budget except for authorized
changes.

32\. Document changes to the performance measurement baseline.

# Attachment 2: Tailored ANSI/EIA 748-A Guidelines {#attachment-2-tailored-ansieia-748-a-guidelines .Style-Heading-1-+-Left:--0\"-First-line:--0\"}

An abridged EV system for Tier 2 investments essentially employs 10 of
the ANSI/EIA Standard's 32 criteria to the program's management.

10 Criteria for Tier 2:

[EVM Criterion 1:]{.underline}

***Define authorized work elements for the program. A work breakdown
structure (WBS), tailored for effective internal management control, is
commonly used in this process.***

[EVM Criterion 2:]{.underline}

***Identify the program organizational structure, including the major
subcontractors responsible for accomplishing the authorized work, and
define the organizational elements in which work will be planned and
controlled.***

[EVM Criterion 3:]{.underline}

***Provide for integration of the company's planning, scheduling,
budgeting, work authorization and cost accumulation processes and, as
appropriate, the program WBS and organizational structure.***

[EVM Criterion 6:]{.underline}

***Schedule the authorized work in a manner that describes the sequence
of work and identifies the significant task interdependencies required
to meet the requirements of the program.***

[EVM Criterion 7]{.underline}:

***Identify physical products, milestones, technical performance goals
or other indicators used to measure progress.***

[EVM Criterion 8:]{.underline}

***Establish and maintain a time-phased budget baseline at the control
account level against which program performance can be measured. Initial
budgets established for performance measurement will be based on either
internal management goals or the external customer-negotiated target
cost, including estimates for authorized (but incomplete) work. Budget
for long-term efforts may be held in higher level accounts until it is
appropriate for allocation at the control account level. On government
contracts, if an over-target baseline is used for performance
measurement reporting purposes; prior notification must be provided to
the customer.***

[EVM Criterion 16:]{.underline}

***Record direct costs consistently with the budgets in a formal system
controlled by the general books of account.***

[EVM Criterion 22:]{.underline}

***At least monthly, generate the following information at the control
account and other levels as necessary for management control using
actual cost data from, or reconcilable with, the accounting system: The
amount of planned budget versus the budget earned for work accomplished.
This comparison provides the schedule variance. The amount of the budget
earned versus the actual (applied where appropriate) direct costs for
the same work. This comparison provides the cost variance.***

[EVM Criterion 27:]{.underline}

***Develop revised cost estimates at completion based on performance to
date, commitment values for material and estimates of future conditions.
Compare this information with the performance measurement baseline to
identify variances at completion important to company management and any
applicable customer reporting requirements, including statements of
funding requirements.***

[EVM Criterion 28:]{.underline}

***Incorporate authorized changes in a timely manner, recording the
effects in budgets and schedules. Base changes on the amount estimated
and budgeted to the program organizations.***

[]{#__RefHeading___Toc168719220 .anchor}**Attachment 3: Glossary**

+------------+---------------------------------------------------------+
| Term       | Definition                                              |
+============+=========================================================+
| Contract   | An element of the contract that specifies the data      |
| Data       | submittal requirements.                                 |
| Re         |                                                         |
| quirements |                                                         |
| List       |                                                         |
| (CDRL)     |                                                         |
+------------+---------------------------------------------------------+
| Contract   | The Contract Performance Report (CPR) presents the cost |
| P          | and schedule data for the current period as well as in  |
| erformance | a cumulative format. Formats 1 and 5 provide the HHS IT |
| Report     | Investment Manager the insight needed to manage the     |
| (CPR)      | investment. Format 1 is a WBS-oriented contract report. |
|            | Costs are organized by WBS element at a level           |
|            | pre-determined by the HHS IT Investment team. Format 5, |
|            | Variance Narrative, is a problem analysis and           |
|            | variance-oriented report. It provides explanations for  |
|            | cost and schedule variances that have exceeded          |
|            | thresholds. It provides a written explanation as to why |
|            | the variance occurred, as well as written descriptions  |
|            | on how the contractor plans to resolve the cause of the |
|            | variance. Examples of the CPR Forms 1-5 are provided in |
|            | the CPIC guide.                                         |
+------------+---------------------------------------------------------+
| Data Item  | Data Item Description contains the format and content   |
| D          | preparation instructions for the data product generated |
| escription | by the specific and discrete task requirements as       |
| (DID)      | delineated in the contract.                             |
+------------+---------------------------------------------------------+
| Earned     | EV quantifies the amount or volume of work completed to |
| Value (EV) | date, and is commonly known as the Budgeted Cost of     |
|            | Work Performed (BCWP). When compared to the planned     |
|            | value (Budgeted Cost of Work Scheduled) and its actual  |
|            | cost (Actual Cost of Work Performed), EV provides an    |
|            | objective measure of schedule and cost performance.     |
+------------+---------------------------------------------------------+
| Earned     | EVM is a methodology that integrates a program's work   |
| Value      | scope, schedule, and resources to enable government and |
| Management | contractor management to objectively track program      |
| (EVM)      | progress throughout the project's life cycle. Please    |
|            | refer to the ANSI/EIA Standard 748-A for additional     |
|            | information.                                            |
+------------+---------------------------------------------------------+
| Earned     | EVMS is the integrated set of processes, applications,  |
| Value      | and practices that follow the guidelines in the         |
| Management | ANSI/EIA Standard 748-98. The guidelines describe the   |
| System     | attributes of an effectively integrated cost, schedule, |
| (EVMS)     | and technical performance management system.            |
+------------+---------------------------------------------------------+
| EVM System | EVM System Certification is the process to determine    |
| Cer        | that the proposed EVM System being used for a specific  |
| tification | investment fully complies with the ANSI 748-A-1998      |
|            | Standard.                                               |
+------------+---------------------------------------------------------+
| Integrated | An IBR is intended to verify the technical content and  |
| Baseline   | realism of the related performance budgets, resources,  |
| Review     | and schedules. It should provide a mutual understanding |
| (IBR)      | of the inherent risks in the offerors'/contractors'     |
|            | performance plans and the underlying management control |
|            | systems, and it should formulate a plan to handle these |
|            | risks.                                                  |
+------------+---------------------------------------------------------+
| Integrated | The IMS is developed for the HHS IT Investment so that  |
| Master     | tasks and mile­stones are clearly defined. It is updated |
| Schedule   | regularly to identify IT investment elements that are   |
| (IMS)      | behind as well as those ahead of schedule. The IMS maps |
|            | directly to the CWBS enabling the investment management |
|            | team a single point of reference for all activities.    |
+------------+---------------------------------------------------------+
| P          | The PMB is the time-phased budget plan against which    |
| erformance | contract performance is measured. It is formed by the   |
| M          | budgets assigned to scheduled cost accounts and the     |
| easurement | applicable indirect budgets. It equals the total budget |
| Baseline   | less management reserve and undistributed budget.       |
| (PMB)      |                                                         |
|            | Once the PMB is frozen or established, cost and         |
|            | schedule changes must be processed through formal       |
|            | change control procedures. Authorized changes must then |
|            | be incorporated into the PMB in a timely manner and     |
|            | reflected in both budgets and schedules.                |
+------------+---------------------------------------------------------+

[]{#__RefHeading___Toc168719221 .anchor}**Attachment 4: List of
Acronyms**

  ------------ ----------------------------------------------------------
  Acronym      Definition

  ANSI/EIA     American National Standards Institute-Electronic
               Industries Alliance

  CDRL         Contract Data Requirements List

  CO           Contracting Officer

  COTR         Contracting Officer's Technical Representative

  CPIC         Capital Planning and Investment Control

  CPR          Contract Performance Report

  DID          Data Item Description

  DME          Development Modernization and Enhancement

  EVM          Earned Value Management

  EVMS         Earned Value Management System

  FAR          Federal Acquisition Regulation

  HCA          Head of Contract Activity

  HHSAR        HHS Acquisition Regulation

  IBR          Integrated Baseline Reviews

  IMS          Integrated Master Schedule

  NDIA         National Defense Industrial Association

  PMB          Performance Measurement Baselines

  WBS          Work Breakdown Structures
  ------------ ----------------------------------------------------------

[^1]: HHS Memorandum *Monthly Reporting of Earned Value Cost and
    Schedule Variances*, January 31, 2005.

[^2]: HHS Memorandum *Team-Based Earned Value Management Guidelines*,
    June 16, 2005.

[^3]: HHS, Charles Havekost, CIO Memorandum *Team-Based Earned Value
    Management Guidelines*, June 16, 2005.

[^4]: OMB Memorandum M-05-23 *Improving Information Technology (IT)
    Project Planning and Execution*, August 2005.

[^5]: HHS Memoranda dated August 18, 2005, entitled: FY 2007 Project
    Management Qualification Status Instructions; and July 20, 2006,
    entitled: FY 2008 Update to Project Management Qualification Status,
    Project Level and High-Priority Designations, and Submission of IT
    Exhibits to OMB, and all attachments.

[^6]: FAR Case 2004-019, *Federal Acquisition Regulation Earned Value
    Management System (EVMS)*, Federal Register, Volume 70, Number 67,
    April 8, 2005.

[^7]: HHS Memorandum *Team-Based Earned Value Management Guidelines*,
    June 16, 2005.

[^8]: Ibid.