Industry, agencies critique method of measuring performance
Earned-value management is called costly and harmful to small business participation.
Industry groups advocated limiting the use of a certain method of measuring contractor performance in comments submitted to the councils responsible for the Federal Acquisition Regulation.
The method, known as earned-value management, relies on principles from calculus to measure contractors' performance. It compares expected cost, actual cost and work completed, and involves extra data collection both before and after an award is made.
The Office of Management and Budget requires agencies to use the technique in large contracts for development projects. The proposed rule standardizes how it should be done.
The Information Technology Association of America and Professional Services Council, which represent contractors, said the rule, if left unchanged, would impose costs on small businesses that would prevent them from competing, and make sensitive information available to competitors.
"Right now, these small companies do not have the funds or the capital to put up the money or personnel to do these reviews in advance of the award," said Trey Hodgkins, director of defense programs at ITAA.
He said the rule should be changed to require agencies to reimburse contractors for their extra efforts related to EVM. "Without that, small businesses can't compete," he said. "We're asking agencies to absorb the costs for the data they're asking for," he said.
Hodgkins also said he was concerned that auditing rights in the proposed rule were too expansive. "The concern is that information that is proprietary could unfortunately be deemed to be less than proprietary by someone who is auditing, and inadvertently disclose it to competitors," he said.
Agency comments generally supported the new rule while acknowledging the cost issue. Dave Platts, a manager for earned-value management at the Defense Contract Management Agency, said standardizing the use of the technique was a "great" idea. He said the pre-award data collection may be costly, but said it "may provide a good return on investment."
Charles Hurley, an earned-value management advocate at DCMA, said agencies should not be allowed to conduct certain intensive reviews prior to award. "I believe it is unreasonable to require [contractors] to prepare for and support a [review] prior to contract award because it places an additional cost burden on offerers and also on the government agency program managers," he said.
He also said that performing reviews for large weapon programs, for example, could delay the award of contracts for much-needed supplies.
The Contract Services Association, another industry group, urged the FAR councils to hold a public hearing or issue a second proposed rule after considering the public comments. "It would be counterproductive to use [earned-valued management] in a 'gotcha' mentality," the group said.
The group also said the performance measurement technique "raises the bar in terms of providing visibility into whether a program is on target with respect to cost, schedule and technical performance."