52.248-3
Value Engineering-Construction
FAR 52.248-3 enables contractors to propose and share in cost-saving changes on construction contracts, but requires detailed submissions and strict compliance with process and documentation requirements.
Overview
FAR 52.248-3, Value Engineering-Construction, encourages contractors to voluntarily submit value engineering change proposals (VECPs) that can reduce contract costs without impairing essential functions or characteristics. The clause outlines the process for preparing, submitting, and evaluating VECPs, and establishes how cost savings are shared between the contractor and the Government. It also addresses the treatment of collateral savings, subcontractor involvement, and data rights related to VECPs.
Key Rules
- VECP Submission and Content
- Contractors are encouraged to submit VECPs and must include detailed information such as cost estimates, impact analyses, and implementation timelines.
- Government Review and Decision
- The Contracting Officer must respond to VECPs within 45 days, may accept or reject proposals, and acceptance is formalized through contract modification.
- Savings Sharing
- Contractors share in instant contract savings (45% for fixed-price, 75% for cost-reimbursement contracts) and may receive a portion of collateral savings, subject to limits.
- Subcontractor Requirements
- Value engineering clauses must be included in subcontracts of $90,000 or more, and subcontractor costs may be included in savings calculations.
- Data Rights
- Contractors may restrict use of VECP data, but the Government obtains unlimited rights upon acceptance, except for limited rights technical data.
Responsibilities
- Contracting Officers: Review and decide on VECPs, process modifications, determine savings, and ensure compliance with data rights and subcontractor provisions.
- Contractors: Prepare and submit detailed VECPs, include required information, comply with subcontractor clause requirements, and properly mark data.
- Agencies: Oversee implementation, savings calculations, and ensure proper application of the clause.
Practical Implications
- This clause incentivizes contractors to propose cost-saving innovations in construction contracts, with a clear process for sharing savings. Contractors must be diligent in preparing VECPs and documenting costs, while agencies must act promptly and transparently. Common pitfalls include incomplete proposals, missed deadlines, and improper handling of data rights or subcontractor arrangements.