Earned Value Management System Compliance Review Threshold Increased

Last week the Department of Defense raised the Earned Value Management System (EVMS) compliance review threshold from $50 million to $100 million - good news for some contractors. This change affects only DoD contracts and does not affect other agencies such as NASA or the Department of Energy.

The new $100 million threshold applies to cost or incentive contracts and subcontracts for which the contractor is required to have an earned value management system that has been determined by the Government - typically by the Defense Contract Management Agency (DCMA) - to be compliant with EIA-748,

The new compliance review threshold does not increase the threshold for EVMS requirements. That threshold still sits at $20 million. It does mean that no compliance surveillance activities will be routinely conducted by DCMA on cost or incentive contracts and subcontracts valued between $20 million to $100 million.

In its announcement of the increased threshold, DoD warned that it reserves the right to review contractor EVM systems if the EVM reporting data quality "appears suspect" such as when a contracting officer, program office, or buying command asks for DCMA assistance due to concern about the quality of EVM data reported on a given contract, or when the EVM data is not in compliance with one or more of the 32 EIA-748 guidelines.

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