Subcontracts

Introduction to the Cost and Software Data Reporting (CSDR) Reporting Requirements

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A common client request is to assist them with sorting through the various DoD contractual reporting requirements and contract value reporting thresholds that apply. We frequently run into situations where a contractor needs clarification on why they have a Cost and Software Data Reporting (CSDR) requirement and whether they should seek to waive the requirement. Subcontractors to a prime often question the requirement to provide actual cost data directly to the DoD, especially for Firm Fixed Price (FFP) contracts.

Background

CSDRs are the primary means the DoD uses to collect data on the development, production, and sustainment costs incurred by contractors performing DoD acquisition contracts. It is a DoD system for collecting actual costs, software data, and related business data. The resulting data repository serves as the primary source for contract cost and software data for most DoD resource analysis efforts including cost database development, applied cost estimating, cost research, program reviews, analysis of alternatives (AoAs), and life cycle cost estimates.

CSDR reporting requirements are determined by the contract value regardless of the acquisition phase and contract type. In general, CSDR reporting is required for Acquisition Category I-II programs and Information System (IS) programs valued at more than $50M. They can also be required for Middle Tier Acquisition programs (greater than $20M) and other programs (greater than $100M). Risk can also be a determining factor regardless of the contract value.

DoD Instruction (DoDI) 5000.73, Cost Analysis Guidance and Procedures (March 2020), provides additional details about the cost data reporting. Table 1 in the 5000.73 lists the cost reporting requirements contract value thresholds. The DoD Manual 5000.04 Cost and Software Data Reporting (May 2021) is the primary requirements document for the development, implementation, and operation of the DoD CSDR system to ensure data reported is accurate and consistent.

About CADE

The Office of the Secretary of Defense Cost Assessment and Program Evaluation (OSD CAPE) established the Cost Assessment Data Enterprise (CADE), a secure web-based information system that hosts the controlled unclassified CSDR repository, the Defense Acquisition Cost Information Management System, and the forward pricing rate library. CADE also contains a selected acquisition report database, a contracts database, data analytics capabilities, and a library containing cost estimating content such as cost analysis requirement descriptions and cost estimates. CADE is access-controlled, and available through the public-facing CADE Portal website.

Similar to the cost estimating and proposal pricing functions within contractor’s organizations that rely on historical actual costs to assess the validity of a proposed cost estimate, independent and sound cost estimates are vital for effective DoD acquisition decision making and oversight. CADE plays a critical role in capturing the expenditure, technical, and programmatic data after contract execution in a consistent manner to enable independent cost estimating and analysis. This cost estimate data is essential to support efficient and effective resource allocation decisions throughout the planning, programming, budgeting, and execution process for the DoD.

CSDR Reporting Requirements

There are a series of Data Item Descriptions (DIDs) for this reporting requirement.  Some forms are submitted electronically using DoD defined XML schemas, Excel, or JSON encoded data in accordance with a File Format Specification (FFS) and Data Exchange Instruction (DEI). The list of DIDs are as follows. These DIDs can be downloaded from the CADE website.

  • Contract Work Breakdown Structure, DI-MGMT-81334D (May 2011).
  • Cost Data Summary Report, DI-FNCL-81565C (May 2011), DD Form 1921, XML Schema.
  • Functional Cost-Hour Report, DI-FNCL-81566C (September 2015), DD Form 1921-1, XML Schema.
  • Progress Curve Report, DI-FNCL-81567C (May 2011), DD Form 1921-2, XML Schema. 
  • Sustainment Functional Cost-Hour Report, DI-FNCL-81992 (May 2011), DD Form 1921-5, XML Schema.
  • Contractor Business Data Report, DI-FNCL-81765C (March 2021), DD Form 1921-3, Excel. 
  • Software Development Report, DI–MGMT-82035A (October 2022), DD Form 3026-1, XML Schema. 
  • Software Maintenance Report, DI–MGMT-82035A (October 2022), DD Form 3026-2, XML Schema.
  • Enterprise Resource Planning (ERP) Software Development Report, DI-MGMT-82035A (October 2022), DD Form 3026-3, XML Schema.
  • Cost and Hour Report (FlexFile), DI-FNCL-82162 (November 2017), JSON encoded data file following FFS and DEI.
  • Quantity Data Report, DI-MGMT-82164 (November 2017), JSON encoded data file following FFS and DEI.
  • Maintenance and Repair Parts Data Report, DI-MGMT-82163 (November 2017), Excel.
  • Technical Data Report, DI-MGMT-82165 (November 2017), Excel.

The Cost and Hour Report (FlexFile) and Quantity Data Report play a critical role in collecting cost data from contractors for the DoD data repository because they use JSON data encoding to organize the content. They are intended to replace the legacy 1921 series of paper-based formats including the DD 1921, 1921-1, 1921-2, and 1921-5. It also requires contractors to provide significantly more historical cost data than the 1921 formats. As a result, the DoD cost estimating community has additional insight into historical costs. The goal is to establish a common framework and standard nomenclature to collect data from different contractors, all of them with unique cost accounting structures, that are mapped to the DID, FFS, and DEI requirements for use in the data repository.

Establishing a Consistent, Repeatable Process to Produce the CSDR Data Deliverables

For contractors new to the CSDR reporting requirements and in particular, the FlexFile JSON data encoding, can appear to be daunting. That’s where software tools such as those from Midnite Dynamics can help. Midnite Dynamics specializes in assisting contractors with producing the CSDR data deliverables. 

Their software tool, C*CERT+, streamlines, automates, validates, and produces the legacy 1921 family of Excel and XML reports as well as the FlexFile and Quantity Data Report JSON submittals. C*CERT+ eliminates what otherwise is a manually intensive, resource draining, tedious and costly effort subject to recurring rejections. It is one thing to create the required legacy reports or FlexFile JSON files for submittal, it is another to pass the submittal validation process. C*CERT+ provides numerous data validations and analysis reports to ensure the data is 100% compliant before it is submitted. For example, the software includes over 90 FlexFile validations to ensure data compliance as illustrated in Figure 1.

Figure 1: Example of FlexFile data validation results.
Figure 1: Example of FlexFile data validation results.

The software includes a Validation and Remarks utility to analyze the source data details that could result in a Validation Trip. Remarks can be entered directly into the validation module for anything that requires an explanation. This is illustrated in Figure 2. This narrative is included with the data submittal.

Figure 2: Example of providing remarks about the FlexFile data content.

C*CERT+ also interfaces with existing EVM cost tools and accounting systems to produce the existing legacy 1921 reports, the FlexFile, and other data submittals as well as to consolidate separate projects/CLINs/task orders into a single contract report.

Once the C*CERT+ Standard Category Mapping Rules are set up, they can be shared throughout the corporation or business unit to establish a standard and repeatable process for producing the data deliverables. This mapping process translates the contractor’s source data into an output that matches the CSDR data submittal format rules. This saves a tremendous amount of time and makes it much easier to consistently produce the CSDR data deliverables. An example of the Mapping Rules is illustrated in Figure 3.

Figure 3: Mapping Rules translate contractor unique cost data into a format that matches the CSDR data submittal requirements.

Do your process and procedures or training materials need an update to include specific guidance for project control teams to produce required DoD contractual reports or data submittals using your tool sets of choice? Give us a call today at (714) 685-1730 to get started. 

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Hiring the Right EVM Professional

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Submarine on top of ocean with sailors on deck

EVM Hiring, Not Selling

You are searching for the right person to fill that critical EVM program management or project controls position on one of your newer or one of your tough projects. So, what does the interview sound like? Probably like so many I have witnessed. But there is a much better way to conduct the interview and get the right person.

Many of the interviews I have participated in consisted largely of the interviewer telling the potential candidate about the position, about the company, and almost making the interview a selling situation. It sometimes seemed like the theme was “How can we convince this person to come on board?”

Always Clarify

Of course, some time in the interview must be spent explaining the situation to the candidate’s satisfaction. You would not want to make an offer to someone only to have them come back at you expressing confusion about the position or the project. That happened to me years ago. I was interviewing with a major computer firm for the position of “program manager.” Obviously, the ad I answered, and the screening process were flawed. I arrived at the interview and within a few minutes the interviewing manager was commenting on the fact I had no software programming experience. They were looking for a manager for a software development (programming) effort. They did not even understand the term program manager as it related to project management. We agreed to end the interview on good terms although I am sure we both realized we had wasted a lot of time.

Often an interviewer will focus on the certifications the interviewee has achieved. If the person is a PMP from the PMI, that is a good thing. But more than once I have met and worked with people who are certified and credentialed, but who really have no earned value training and cannot get the job done in the real world. Be careful and dig deeper. The right interview can help do that for you.

Can They Get the Job Done?

But the most frequent observation I have made about a defective interview process is the failure to verify that the candidate can do the job. The best illustration of this is from the book “Peopleware” by Tom DeMarco and Timothy Lister. The example is in Chapter 16 and is called “Hiring a Juggler.” It presents the story of the hiring manager, it was the circus manager, asking a lot of questions about other circuses the juggler has worked for, the things the juggler can juggle, how many things can he keep in the air at one time, and so on. At the end of the interview, the manager is satisfied he has found his new juggler and offers him the job. The surprised juggler asks one question only, “Don’t you want to see me juggle?”

At H&A, when we are looking at new individuals for our scheduling practice, we actually give them a test. They are provided a written description of an interview with a CAM in which the CAM explains what is supposed to happen in his or her control account. From that written discussion, the interviewees are asked to get into the scheduling software with which they are proficient and build the plan described by the CAM. With that plan, they are asked to determine the end date, locate the critical path, and otherwise verify that the schedule is a high-quality schedule. In other words, we ask our interviewees to show us they can juggle.

EVM Expert Questions

So what kinds of things would you want to talk about in an interview for a project manager candidate, an EVMS candidate, or a scheduling candidate? What direction could you take in the interview that would be more oriented to seeing if the person can juggle? How about some of these questions? Or at least how about the general direction of these questions?

Question List

  1. In your opinion, who are the stakeholders for the project WBS?
  2. What are the pitfalls that you would encounter while building the right WBS? How can they impact your project?
  3. Tell me about the System Engineering Technical Review (SETR) process and how that would be part of your project?
  4. How would you assess whether the amount of Management Reserve withheld on your project was the right amount?
  5. What, from your experience, do you think is the single biggest project-killing issue, and how would you prevent or minimize it on your project?
  6. In addition to that issue, what are three more serious potential problems that can cause failure?
  7. What is total float (total slack) and how would you use that as a manager of a project?
  8. What is a “driving path” and why would that be important to you on your project?
  9. How would you evaluate a control account EAC on your project?
  10. When you issue ground rules for developing a new project plan, what confidence level do you set for duration estimates and cost estimates from your teams?
  11. What process would you recommend for developing the project-level best case, worst case, and most likely EACs?
  12. From your point of view, what are the main duties of a control account manager?
  13. What are some measures of cost and schedule performance-to-date in a control account and what do they mean to you as a manager?
  14. When a control account has a CPI (cumulative) of .75, and SPI (cumulative) of 1.1, and a VAC of -20%, what does it mean?
  15. What are some of the Generally Accepted Scheduling Principles (GASP)?
  16. What is TCPI and what do you use it for?
  17. Can you explain some of the key measures in a project schedule that you can use to assess its quality?
  18. Please explain how a Schedule Risk Assessment is conducted and how the results are used.
  19. What professional organizations do you belong to?
  20. What is the last book you read about project management?

Extend

Now that you have had a chance to think about those questions, undoubtedly others have come to mind. An interview with the give-and-take generated from discussing a list of questions like those would be very revealing. At the end of that interview you should know if the interviewee can juggle. You will know where they have good understanding and where they might not be ready.

Does the interviewee have to be exactly right on every topic? Not at all. But the answers and the discussion can help you assess how much development is still needed for this candidate to be able to shine in the open position you are trying to fill. Not everyone knows everything. Experience is a great teacher, but it comes from the situations where the interviewee has been directly exposed. Or perhaps from their leaning.

Take a moment and think about the interviewing practices at your company. Are they like the ones we just discussed? Can they be improved? Where are they weak? Where are they strong?

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EVM: The IPMR and Subcontract Flowdown

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EVM Contractors, EVM Subcontractors, IPMR & Flowdown

For decades government EVM project managers performed the task of integration of all prime and subcontractor performance and the associated data on a project. In the late 1960s things changed. The U.S. Federal Government mandated that the prime contractor become the integrator of the performance and the data. Many contractors undertook this responsibility nicely. However, for many contractors in this new role their subcontract management expertise and data accumulation capabilities were lacking on large R&D, SDD, and LRIP subcontract efforts in particular. The primes needed to include all of the data from their subcontractors that comprised as much as 80% of the contract effort. The timing of subcontractor reports became very important. However, software was “what it was” in the 1960s and ‘70s, and many EVM subcontractors were unable to meet the required delivery dates.

In the early 1980s the National Security Industrial Association [now the NDIA] conducted a survey and found that 40% of the subcontractor data was delayed by a month [additional reference, 2008 – NDIA.org source]. Consequently, January data from subcontractors would not be entered into the prime contractor’s performance reports [now IPMR or CPR] until the prime’s February report which may be delivered around 15 March. Today’s software has improved extensively and many EVM subcontractors recognize the importance of timeliness of data; they are also prime contractors on other EVM projects.

Many companies have not yet begun delivering performance data using the new Integrated Program Management Report (IPMR). Companies that are using the IPMR appear to be adapting well to the new requirements, specifically in regards to the submission date and successful retrieval of subcontractor data. The new IPMR Data Item Description, DI-MGMT-81861, specifically requires that “Formats 1-6 shall be submitted to the procuring activity no later than 12 working days following the contractor’s accounting period cutoff date. This requirement may be tailored through contract negotiations to allow submission as late as 17 working days, provided the contractor and Government agree that contract complexity and/or integration of subcontractor and vendor performance data warrant additional time and will yield more accurate performance.”

The table below illustrates the results of a survey H&A conducted of fifteen major contractors. While the sample size is small, the survey found that five prime contractors had an IPMR requirement flowdown to a subcontractor with NTE 12 working days submission CDRL requirement. In all five cases, the prime contractors were able to successfully incorporate subcontract data in time to meet the submission requirement.

EVM IPMR chart

While it has taken over 40 years, it is now recognized by both the government and contractors that timely incorporation of subcontractor performance data in the prime’s performance report helps validate the project data–the purpose of early visibility and prompt decision making.

Our survey found that those contractors submitting the IPMR are successfully incorporating subcontractors’ performance data in their IPMRs as the DID Instructions stipulate. It is hoped that the era of the “one-month lag” with subcontractor performance data has ended; and the government will be receiving accurate, timely IPMR performance data from its prime contractors.

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Factoring Subcontractor Data

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Factoring Subcontractor Data by Humphrey's & AssociatesIf you are a prime contractor Control Account Manager (CAM), how do you plan Budgeted Cost for Work Scheduled (BCWS) and claim Budgeted Cost for Work Performed (BCWP) when the negotiated subcontract value you are assigned to manage differs from your control account budget?

First, let’s understand the facts. You are assigned to manage a deliverable hardware subsystem reporting element in the contract work breakdown structure that will also be reported in the Integrated Program Management Report (IPMR).  The history of your subcontract is:

  • The subcontractor proposed a total price of $110M (Cost $102M and Fixed Fee $8M).
  • For various reasons, your program manager believed that the final subcontract could be negotiated for 18% less than the proposed price, so your authorized budget is $90M (including fee).
  • You placed the authorized budget in a planning package until the completion of subcontract negotiations.
  • The subcontractor will report its IPMR data at the total price level (including fee).
  • The subcontract was negotiated for a total price of $100M (Cost $95M and Fixed Fee $5M).
  • You requested that the program manager make up the budget difference from Management Reserve (MR), but the program manager declined.

Factoring the subcontractor’s data is the best approach in this situation.  Factoring the subcontractor’s data simply means applying a consistent multiplier to the subcontractor’s budget values: Budgeted Cost for Work Scheduled (BCWS) and Budget at Completion (BAC).  The multiplier is developed by dividing the available control account budget by the subcontract price.  In the example, the multiplier is .9 and was derived by dividing the CAM’s budget of $90M by the total subcontract value for the hardware system of $100M.  This multiplier is applied to the time-phased budget provided by the subcontractor as shown in the table below.  This factored budget becomes the prime contractor’s control account budget.

Factoring Subcontractor Data Budget (Example)

The calculation of the prime contractor’s earned value, also known as the Budgeted Cost for Work Performed (BCWP), simply requires applying the same factor to the subcontractor’s cumulative BCWP each month as shown in the table below.  In the example, for the month of March, cumulative subcontractor BCWP of 32 multiplied by the factor of 0.9 yields the prime contractor’s factored BCWP of 29. When calculating the BCWP, the value in the prime contractor’s Earned Value Management System must reflect the same percent complete (BCWP/BAC x 100) as the subcontractor’s reported data; this is illustrated by the highlighted cells in the data example.

Factoring Subcontractor Data - BCWP

Note that factoring does not apply to Actual Cost of Work Performed (ACWP), the Estimate to Complete (ETC) or the Estimate at Completion (EAC) because those values represent actual costs rather than budgeted amounts that must reconcile with the subcontract Target Cost.

Factoring can occur whether the prime contractor’s budgeted amount for the subcontract effort is either greater or less than the subcontract negotiated price.  Another instance where factoring is appropriate is when the subcontractor provides IPMR data without fee.  The subcontractor’s fee is a cost to the prime contractor and should be included in the prime contractor’s Performance Measurement Baseline (PMB), so factoring is an appropriate technique in this situation.

In summary, remember the following when factoring subcontractor data:

  • Factoring ensures that the subcontract factored BCWS equals the prime contractor’s budget.
  • The prime contractor’s factored BCWP must yield a percent complete consistent with the subcontractor’s percent complete.
  • Factoring does not apply to the ACWP, ETC or the EAC.

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