1. Presented to: NDIA By: Keith Kratzert Date: May 3, 2006 Federal Aviation Administration Improving Program Performance at FAA

2. 2 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 2 EVM at FAA Background –FAA has used DoD approach (EVM for contractors only) on some programs and decided it’s not sufficient –Will manage entire program using EVMS in accordance with ANSI/EIA 748 Manage/measure all resources Requires changes in behavior by all parties

3. 3 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 3 FAST Home Page: http://fast.faa.gov

4. 4 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 4 EVM Transformation at FAA Holistic Approach Goals –Adopting FAA and industry Program Management "Best Practices" –Strengthening and integrating technical, schedule, and cost performance management of programs by implementing earned value management techniques –Positioning programs to be better able to anticipate, forecast, and communicate future performance based on objective performance metrics and risk assessments as well as proven engineering judgments

5. 5 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 5 EVM Transformation Overview “Flag”

6. 6 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 6 Assessment Themes - Issues PM Commitment Cross Cutting Themes –Multiple Baselines –Gov’t FTE’s & Effort –Program Support LOE –Choosing the Correct Contract Type –Including Sufficient EVM Language in Contracts –Comprehensive Program-Level WBS FAA Best Practices –Performance-based Payments –Mature Estimating Techniques –Alignment of Program WBS with Contract CLINS and OMB 300 Useful Segments –GCAMS & CCAMS –Program Level EVM Tools Application –Risk Adjusted Schedule & Cost Applications

7. 7 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 7 EVM Transformation Overview FAA Major Programs - Cost & Schedule Variance Program Name Color Code - EVMS Quality: Green: Meets Yellow: Partially Meets Red: Does Not Meet Cost Variance % Schedule Variance % -5% -10% 5% 10% DDD AAA MMM Over Spent Ahead of Schedule Under Spent Ahead of Schedule Over Spent Behind Schedule Under Spent Behind Schedule -5%-10%5%10% TTT SSS >-15% >15% EEE PPP QQQ RRR NNN BBB LLL GGG FFF HHH III JJJ KKK OOO

8. 8 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 8 EVM Council Formed as a continuation of the management processes effort Co-Chaired by ATO-A and AIO Membership includes: –ATO Service Unit representatives –Other Lines of Business implementing EVM –AIO representatives –CFO representatives

9. 9 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 9 EVM Transformation – Goals for 2006 EVM Council tracking POA&M status – most targets due in 2006 – if achieved, flag will turn to mostly yellow and green. FAA to assess its financial processes against the ANSI standard & update its flag FAA to issue a Layperson’s guide to EVM FAA to issue a manager’s guide to using EVM Technical Training to continue and be supplemented by awareness training EVM toolkit to be selected. Our goal is that 50% of our “EVM” scores on our exhibit 300s be “4” or “5” and the rest “3”.

10. 10 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 10 EVM Transformation – Goals for 2007 Full EVM implementation by end of FY 07. EVM part of Program Managers toolkit. Full EVM reporting for all major investments. EVM scores on Exhibit 300s are all “4” or “5”. Use of EVM makes a major difference in ability of FAA programs to stay on track and within budget. Use of EVM contributes to FAA “NAS Modernization Program” being removed from the GAO High Risk List.

11. 11 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 11 FAA Contractor Meeting Feb 6, 2006 Participants –Lockheed Martin –Raytheon –Harris –Parsons Infrastructure and Technology Group –Northrop Grumman –Mitre –Computer Sciences Corporation –Advanced Management Technology Inc. –BAE Systems

12. 12 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 12 Follow-up Meeting Guidelines Attendees requested to return for individual meetings over next three months with EVM team and selected Program Managers and Contracting Officers –Present Management Overview Company response to FAA initiative EVM System acceptance applicability to FAA or Plan to achieve acceptance (ref. NDIA Systems Acceptance Guide) How EVM is used on current FAA contracts Best practices (e.g., subcontract management) Improvement opportunities

13. 13 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 13 FAA Contractor Meeting Follow-up Participants –Lockheed Martin* –Raytheon* –Harris –Parsons Infrastructure and Technology Group* –Northrop Grumman* –Mitre –Computer Sciences Corporation* –Advanced Management Technology Inc. –BAE Systems * Follow-up meeting already held

14. 14 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 14 FAA Procurement Comments Top contractors – suppliers, support contractors, FFRDC –Purpose – cooperation with industry to achieve mutual success in performing FAA mission –FAA EVM differs from legacy approach Program level, not just contractors Will not change existing contracts

15. 15 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 15 Expectations from Contractors Manage using ANSI/EIA 748 –Existing contracts will not be modified to require EVM –For new contracts, contractors are responsible for Contract performance (scope, schedule, delivery) Excellent management –Contractors may leverage existing EVM acceptance from other agencies or work with FAA to develop new plan

16. 16 Federal Aviation Administration Improving Program Performance at FAA May 3, 2006 16 Summary-FAA EVM Approach Overview FAA programs are implementing EVM at the program level and requiring contractor EVM reporting in an effective and efficient manner Prime ContractorsSupport Contractors Program Effort Cost ReimbursableFixed PriceCost Reimbursable Fixed Price Measurable EVM reporting and certification Performance based payments, or Status reporting and invoices EVM reporting and certification, or Status reporting and invoices (1) (2) Performance based payments (1), or Status reporting and invoices (1) (2) LOE (1) Status reporting and invoices 1) EVM implemented by the FAA PO 2) Includes production and sustaining support, such as, engineering and program management