Overview
This section prescribes the requirements for including Value Engineering (VE) clauses in solicitations and contracts for supplies and services, outlining when the clauses are mandatory, which alternates apply to specific scenarios, and which contract types are exempt.
Key Rules
- Threshold for Use: The contracting officer (CO) must include a VE clause in solicitations and contracts exceeding the simplified acquisition threshold, unless a specific exemption applies.
- Exemptions: VE clauses are generally prohibited for research and development (except full-scale development), personal services, engineering services from non-profits, and commercial products without special requirements.
- Clause Selection:
- Standard Incentive: Use FAR 52.248-1 for basic value engineering incentives.
- Mandatory Program Requirement: Use Alternate I if a sustained VE effort is required; this must be a separately priced line item in the contract Schedule.
- Combined Approach: Use Alternate II for a mix of mandatory efforts in specific areas and incentives for others.
- Collateral Savings: Use Alternate III if the cost of tracking collateral savings exceeds the potential benefits.
- Architect-Engineer (A-E) Services: COs must use FAR 52.248-2 for A-E contracts when VE is paid for by the government; FAR 52.248-1 is strictly prohibited for these services.
- Production Modifications: For engineering development or extended production (e.g., shipbuilding), the CO must modify the clause to adjust how the "sharing period" and "acquisition savings" are calculated (typically covering 36 to 60 months of production).
Practical Implications
- Contractors should carefully review the contract Schedule to identify if VE is a voluntary incentive or a mandatory, separately priced "program requirement" (Alternate I), as the latter carries specific performance obligations.
- During the solicitation phase, contracting officers must ensure that commercial product acquisitions are only exempted if they lack specialized packaging or technical specifications that could benefit from value engineering.