Overview
This section establishes the policy that while contractors should be highly motivated to improve value, they cannot receive "double" rewards for the same improvement under both Value Engineering Change Proposals (VECPs) and other contract incentives.
Key Rules
- Prohibition of Duplicative Rewards: Benefits from an accepted VECP cannot be rewarded as both value engineering shares and under other incentive structures, such as performance-based or design-to-cost incentives.
- Stability of Incentive Targets: When a VECP affects existing performance or design-to-cost targets, those specific targets must not be adjusted to account for the VECP acceptance.
- Residual Application: The value engineering clause is only used to reward benefits that are not already eligible for rewards under other specific contract incentive clauses.
Practical Implications
- Contracting Officers must carefully audit VECPs to ensure the government does not pay twice for the same efficiency—once through an incentive fee and again through a VE share.
- If a contractor's innovation triggers a performance bonus, they typically cannot claim a separate VE share for that same performance increase; the specific performance incentive takes precedence.