36.609-1
Design within funding limitations
Architect-engineer contractors must design projects within negotiated funding limits and, if construction bids exceed these limits, are generally required to redesign at no additional cost unless exceptions apply.
Overview
FAR 36.609-1 outlines requirements for architect-engineer (A-E) contractors to design projects within specified funding limitations set by the Government. The regulation ensures that construction costs do not exceed a contractually agreed-upon dollar limit, and details the responsibilities of both the contractor and the Government if costs surpass this limit. It also provides guidance on establishing the funding limitation during contract negotiations and mandates the inclusion of a specific contract clause, except in certain circumstances.
Key Rules
- Design Within Funding Limitation
- A-E contractors must design projects so construction costs do not exceed the funding limitation specified in the contract. If bids exceed this limit, the contractor must redesign at no additional cost, unless the overage is due to factors beyond their control.
- Establishing the Funding Limitation
- The construction funding limitation is negotiated and excludes Government overhead, supervision, and contingency allowances. The Government must share relevant cost estimate information with the contractor.
- Clause Inclusion Requirements
- The clause at 52.236-22 must be included in fixed-price A-E contracts, with exceptions for projects where cost is secondary, standard structures, or minimal design effort.
Responsibilities
- Contracting Officers: Must negotiate and document the funding limitation, provide cost estimate information, and ensure proper clause inclusion or document exceptions.
- Contractors: Must design within the funding limit and, if necessary, redesign at no extra cost unless exceptions apply.
- Agencies: Must document reasons if redesign is not required and oversee compliance with funding limitations.
Practical Implications
- This section ensures fiscal discipline in A-E contracts and protects the Government from cost overruns. Contractors must be diligent in cost estimation and design, while contracting officers must clearly communicate funding limits and exceptions. Common pitfalls include failing to account for all cost drivers or not documenting exceptions properly.