52.248-1 — Value Engineering.

FAR 52.248-1 — Value Engineering.. This clause is part of the Federal Acquisition Regulation and may be included in government contracts as a solicitation provision or contract clause.

52.248-1 Value Engineering. As prescribed in 48.201, insert the following clause: Value Engineering (JUN 2020) (a) General. The Contractor is encouraged to develop, prepare, and submit value engineering change proposals (VECP's) voluntarily. The Contractor shall share in any net acquisition savings realized from accepted VECP's, in accordance with the incentive sharing rates in paragraph (f) below. (b) Definitions. Acquisition savings, as used in this clause, means savings resulting from the application of a VECP to contracts awarded by the same contracting office or its successor for essentially the same unit. Acquisition savings include— (1) Instant contract savings, which are the net cost reductions on this, the instant contract, and which are equal to the instant unit cost reduction multiplied by the number of instant contract units affected by the VECP, less the Contractor's allowable development and implementation costs; (2) Concurrent contract savings, which are net reductions in the prices of other contracts that are definitized and ongoing at the time the VECP is accepted; and (3) Future contract savings, which are the product of the future unit cost reduction multiplied by the number of future contract units in the sharing base. On an instant contract, future contract savings include savings on increases in quantities after VECP acceptance that are due to contract modifications, exercise of options, additional orders, and funding of subsequent year requirements on a multiyear contract. Collateral costs, as used in this clause, means agency cost of operation, maintenance, logistic support, or Government-furnished property. Collateral savings, as used in this clause, means those measurable net reductions resulting from a VECP in the agency's overall projected collateral costs, exclusive of acquisition savings, whether or not the acquisition cost changes. Contracting office includes any contracting office that the acquisition is transferred to, such as anothe

• The Contractor shall share in any net acquisition savings realized from accepted VECP's, in accordance with the incentive sharing rates in paragraph (f) below.
• Contractor's development and implementation costs, as used in this clause, means those costs the Contractor incurs on a VECP specifically in developing, testing, preparing, and submitting the VECP, as well as those costs the Contractor incurs to make the contractual changes required by Government acceptance of a VECP.
• Value engineering change proposal (VECP) means a proposal that— (1) Requires a change to this, the instant contract, to implement; and (2) Results in reducing the overall projected cost to the agency without impairing essential functions or characteristics; provided, that it does not involve a change— (i) In deliverable end item quantities only; (ii) In research and development (R&D) end items or R&D test quantities that is due solely to results of previous testing under this contract; or (iii) To the contract type only.
• As a minimum, the Contractor shall include in each VECP the information described in subparagraphs (1) through (8) below.
• If the proposed change is affected by contractually required configuration management or similar procedures, the instructions in those procedures relating to format, identification, and priority assignment shall govern VECP preparation.
• The VECP shall include the following: (1) A description of the difference between the existing contract requirement and the proposed requirement, the comparative advantages and disadvantages of each, a justification when an item's function or characteristics are being altered, the effect of the change on the end item's performance, and any pertinent objective test data.
• (2) A list and analysis of the contract requirements that must be changed if the VECP is accepted, including any suggested specification revisions.
• The cost reduction associated with the VECP shall take into account the Contractor's allowable development and implementation costs, including any amount attributable to subcontracts under the Subcontracts paragraph of this clause, below.
• (7) A statement of the time by which a contract modification accepting the VECP must be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule.
• The Contractor shall submit VECP's to the Contracting Officer, unless this contract states otherwise.
• If this contract is administered by other than the contracting office, the Contractor shall submit a copy of the VECP simultaneously to the Contracting Officer and to the Administrative Contracting Officer.
• If additional time is required, the Contracting Officer will notify the Contractor within the 45-day period and provide the reason for the delay and the expected date of the decision.
• The Contracting Officer may require that the Contractor provide written notification before undertaking significant expenditures for VECP effort.
• Until such a contract modification applies a VECP to this contract, the Contractor shall perform in accordance with the existing contract.
• If a VECP is accepted, the Contractor shall share in net acquisition savings according to the percentages shown in the table below.
• Net acquisition savings are first realized, and the Contractor shall be paid a share, when Government costs and any negative instant contract savings have been fully offset against acquisition savings.
• (2) Except in incentive contracts, Government costs and any price or cost increases resulting from negative instant contract savings shall be offset against acquisition savings each time such savings are realized until they are fully offset.
• Additional Contractor shares of net acquisition savings shall be paid to the Contractor at the time realized.
• (3) If this is an incentive contract, recovery of Government costs on the instant contract shall be deferred and offset against concurrent and future contract savings.
• The Contractor shall share through the contract incentive structure in savings on the instant contract items affected.