[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR48]



[Page 912-914]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

PART 48_VALUE ENGINEERING--Table of Contents

 

48.001  Definitions.



    As used in this subpart--

    Acquisition savings means savings resulting from the application of 

a value engineering change proposal (VECP) to



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contracts awarded by the same contracting office of its successor for 

essentially the same unit. Acquisition savings include--

    (1) Instant contract savings, that are the net cost reductions on 

the contract under which the VECP is submitted and accepted, and that 

are equal to the instant unit cost reduction multiplied by the number of 

instant contract units affected by the VECP, less the contractor's 

allowable development and implementation costs;

    (2) Concurrent contract savings, that are net reductions in the 

prices of other contracts that are definitized and ongoing at the time 

the VECP is accepted; and

    (3) Future contract savings, that are the product of the future unit 

cost reduction multiplied by the number of future contract units in the 

sharing base. On an instant contract, future contract savings include 

savings on increases in quantities after VECP acceptance that are due to 

contract modifications, exercise of options, additional orders, and 

funding of subsequent year requirements on a multiyear contract.

    Collateral costs means agency costs of operation, maintenance 

logistic support, or Government-furnished property.

    Collateral savings means those measurable net reductions resulting 

from a VECP in the agency's overall projected collateral costs, 

exclusive of acquisition savings, whether or not the acquisition cost 

changes.

    Contracting office includes any contracting office that the 

acquisition is transferred to, such as another branch of the agency or 

another agency's office that is performing a joint acquisition action.

    Contractor's development and implementation costs means those costs 

the contractor incurs on a VECP specifically in developing, testing, 

preparing, and submitting the VECP, as well as those costs the 

contractor incurs to make the contractual changes required by Government 

acceptance of a VECP.

    Future unit cost reduction means the instant unit cost reduction 

adjusted as the contracting officer considers necessary for projected 

learning or changes in quantity during the sharing period. It is 

calculated at the time the VECP is accepted and applies either (1) 

throughout the sharing period, unless the contracting officer decides 

that recalculation is necessary because conditions are significantly 

different from those previously anticipated or (2) to the calculation of 

a lump-sum payment, that cannot later be revised.

    Government costs means those agency costs that result directly from 

developing and implementing the VECP, such as any net increases in the 

cost of testing, operations, maintenance, and logistics support. The 

term does not include the normal administrative costs of processing the 

VECP or any increase in instant contract cost or price resulting from 

negative instant contract savings, except that for use in 52.248-3, see 

the definition at 52.248-3(b).

    Instant contract means the contract under which the VECP is 

submitted. It does not include increases in quantities after acceptance 

of the VECP that are due to contract modifications, exercise of options, 

or additional orders. If the contract is a multiyear contract, the term 

does not include quantities funded after VECP acceptance. In a fixed-

price contract with prospective price redetermination, the term refers 

to the period for which firm prices have been established.

    Instant unit cost reduction means the amount of the decrease in unit 

cost of performance (without deducting any contractor's development or 

implementation costs) resulting from using the VECP on the instant 

contract. In service contracts, the instant unit cost reduction is 

normally equal to the number of hours per line-item task saved by using 

the VECP on the instant contract, multiplied by the appropriate contract 

labor rate.

    Negative instant contract savings means the increase in the instant 

contract cost or price when the acceptance of a VECP results in an 

excess of the contractor's allowable development and implementation 

costs over the product of the instant unit cost reduction multiplied by 

the number of instant contract units affected.

    Net acquisition savings means total acquisition savings, including 

instant, concurrent, and future contract savings, less Government costs.



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    Sharing base means the number of affected end items on contracts of 

the contracting office accepting the VECP.

    Sharing period means the period beginning with acceptance of the 

first unit incorporating the VECP and ending at a calendar date or event 

determined by the contracting officer for each VECP.

    Unit means the item or task to which the contracting officer and the 

contractor agree the VECP applies.

    Value engineering proposal means, in connection with an A-E 

contract, a change proposal developed by employees of the Federal 

Government or contractor value engineering personnel under contract to 

an agency to provide value engineering services for the contract or 

program.



[48 FR 42443, Sept. 19, 1983, as amended at 54 FR 5057, Jan. 31, 1989; 

55 FR 3887, Feb. 5, 1990; 61 FR 39220, July 26, 1996; 64 FR 51847, Sept. 

24, 1999; 66 FR 2134, Jan. 10, 2001]