FAR 48.202—Clause for construction contracts.
Plain-English Summary
FAR 48.202 tells contracting officers when to include the Value Engineering-Construction clause at 52.248-3 in construction solicitations and contracts. It covers four main topics: the default requirement to use the clause when the estimated contract amount exceeds the simplified acquisition threshold, the discretionary use of the clause in smaller construction contracts when meaningful savings are possible, the prohibition on using the clause in incentive-type construction contracts, and the special use of Alternate I when the head of the contracting activity decides that tracking collateral savings would cost more than the expected benefit. In practice, this section is about deciding whether a construction contract should include a mechanism that encourages contractors to propose cost-saving changes after award. It matters because the clause can generate savings for the Government, but it also creates administrative work to evaluate proposals and track savings. The rule helps contracting officers balance potential value engineering benefits against contract type, contract size, and the burden of administering the program.
Key Rules
Use clause above threshold
The contracting officer shall insert 52.248-3, Value Engineering-Construction, in construction solicitations and contracts when the estimated contract amount exceeds the simplified acquisition threshold. This is the default rule for covered construction acquisitions.
Discretion for smaller contracts
For construction contracts at or below the simplified acquisition threshold, the contracting officer may still include the clause if there is a potential for significant savings. This is a judgment call based on the facts of the acquisition.
No clause in incentive contracts
The contracting officer shall not include the clause in incentive-type construction contracts. The FAR treats incentive contracts as incompatible with this value engineering clause for construction.
Use Alternate I when tracking costs outweighs benefits
If the head of the contracting activity determines that computing and tracking collateral savings would cost more than the expected benefit, the contracting officer shall use the clause with its Alternate I. This alternate is intended to reduce administrative burden.
Apply to solicitations and contracts
The requirement applies both at the solicitation stage and in the resulting contract. Contracting officers should ensure the correct version of the clause is included before award.
Responsibilities
Contracting Officer
Determine whether the estimated construction contract amount exceeds the simplified acquisition threshold, decide whether a smaller contract presents significant savings potential, avoid using the clause in incentive-type construction contracts, and include Alternate I when directed by the head of the contracting activity.
Head of the Contracting Activity
Make the determination whether the cost of computing and tracking collateral savings will exceed the benefits to be derived, which triggers use of 52.248-3 with Alternate I.
Agency/Contracting Activity
Support the contracting officer’s clause selection by providing policy, oversight, and any required procedures for evaluating value engineering opportunities and administering collateral savings tracking.
Contractor
If the clause is included, understand that the contract may allow value engineering proposals and associated savings-sharing or administrative requirements under the clause.
Practical Implications
For construction acquisitions above the simplified acquisition threshold, the clause is generally mandatory, so omission can create a solicitation or contract defect.
Contracting officers should check contract type carefully; incentive-type construction contracts are excluded, so using the clause there would be improper.
For smaller construction buys, the decision is discretionary, but the officer should document why significant savings are or are not expected.
Alternate I is an administrative relief tool, not a separate policy choice; it should be used only when the required determination about collateral savings has been made.
A common pitfall is treating value engineering as automatic in every construction contract; this section requires a threshold-based and contract-type-based analysis before inclusion.
Official Regulatory Text
The contracting officer shall insert the clause at 52.248-3 , Value Engineering-Construction, in construction solicitations and contracts when the contract amount is estimated to exceed the simplified acquisition threshold, unless an incentive contract is contemplated. The contracting officer may include the clause in contracts of lesser value if the contracting officer sees a potential for significant savings. The contracting officer shall not include the clause in incentive-type construction contracts. If the head of the contracting activity determines that the cost of computing and tracking collateral savings for a contract will exceed the benefits to be derived, the contracting officer shall use the clause with its AlternateI.