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Value Engineering Change Proposals

You can continue to use the Value Method to optimize your project and save money beyond the design phase and throughout implementation by motivating the contractor to save money as well.

Contractors can submit proposals under the VE incentive clause. If these proposals reduce the cost and "get the job done" as well or better than the original contract does, and the Government agrees, the contractor gets to keep a portion of the savings. The proposal is sent to the Contracting Officer (CO) overseeing the contract as a Value Engineering Change Proposal (VECP). Print out this informative fact sheet (pdf) for all of your contractors to encourage further savings.

The VE incentive clause thus uses contractor-specific knowledge and unique equipment or staff capabilities to reduce contract costs and/or actual Government expenditures over the life of the project, program, or activity. To minimize risk and potential costs to the Government, the risk of developing an idea that is not accepted by the Government is placed completely on the contractor. However, to give the contractor an incentive to make the effort, the contractor shares in the savings of an adopted VECP and can recover the reasonable development costs to create the VECP.

What needs to be in a VECP?

The VECP needs to have:

What requirements must a VECP meet?

The VECP must:

What is the process for VECPs?

Use a VECP Submittal Form and submit the VECP under a cover letter to the CO through the person who is responsible for overseeing the activities done during the contract.

Pursuant to FAR 48.103(b), a 45 day limitation for processing completion is applied. If additional time is required, the CO or their authorized representative must notify the contractor promptly, in writing, giving the reasons for the delay and the anticipated decision date.

COs--Process these quickly!

Waiting for decisions may slow contract work. Delays for VECP review are not compensable to the contractor. VECP processing should always receive priority treatment, including priority emails, hand-carrying between same site offices and overnight mail or faxing between remote offices.

 

Last updated: 5/10/13