FAR 52.236-22—Design Within Funding Limitations.
Plain-English Summary
FAR 52.236-22, Design Within Funding Limitations, is a clause used in architect-engineer and design contracts to keep the project’s design aligned with the Government’s available construction funding. It addresses the contractor’s duty to design a facility so the resulting construction contract can be awarded at or below the estimated construction contract price stated in the clause, and it requires the contractor to perform redesign and related services without extra compensation if bids or proposals come in too high. The clause also covers the contractor’s duty to promptly notify the Contracting Officer when the project appears likely to exceed the funding limitation or cannot be designed as a usable facility within that limit. It gives the Government options to review the contractor’s revised estimate, authorize changes in scope or materials, or adjust the estimated construction contract price. It also explains how compliance is measured when bids or proposals are not solicited or are unreasonably delayed, by allowing the Government to prepare its own construction estimate and use that estimate instead. In practice, this clause is a cost-control and risk-allocation tool: it pushes the design professional to stay within budget, but it also recognizes that some cost overruns may result from conditions beyond the contractor’s reasonable control.
Key Rules
Design to the funding limit
The contractor must perform the design services so the resulting construction contract can be awarded using standard FAR procedures at a price not exceeding the estimated construction contract price stated in the clause. The design is expected to be budget-conscious from the start, not adjusted only after bids are received.
Redesign at no added cost
If construction bids or proposals exceed the estimated price, the contractor must provide redesign and other necessary services to bring the project back within the funding limitation. Those additional services are included in the contract price and do not justify an increase in compensation.
Exception for uncontrollable conditions
The contractor is not required to perform the extra redesign work at no cost if the unfavorable bids or proposals result from conditions beyond the contractor’s reasonable control. This protects the contractor where the overrun is not attributable to poor design judgment or avoidable error.
Prompt notice of likely overrun
If the contractor determines the project will exceed, or is likely to exceed, the funding limitation and cannot be designed as a usable facility within that limit, it must promptly advise the Contracting Officer. Early notice is required so the Government can decide whether to revise the project or funding assumptions.
Government review and corrective options
After receiving notice, the Contracting Officer reviews the contractor’s revised construction cost estimate. If the original estimated construction contract price is too low for award to be likely, the Government may authorize changes in scope or materials to reduce cost, or it may adjust the estimated construction contract price.
Government estimate when bids are unavailable
If bids or proposals are not solicited, or are unreasonably delayed, the Government prepares an estimate of the cost to construct the submitted design. That Government estimate is then used instead of bids or proposals to determine whether the design complies with the funding limitation.
Fixed project estimate in the clause
Paragraph (c) requires insertion of the estimated construction contract price for the project. This number is the benchmark used to judge whether the design stays within funding limitations and whether redesign or other corrective action is needed.
Responsibilities
Contractor
Design the project so the construction contract can be awarded within the stated estimated construction contract price. Promptly notify the Contracting Officer if the project is likely to exceed the funding limitation or cannot be designed as a usable facility within that limit. Perform necessary redesign and related services if bids exceed the estimate, unless the overrun is due to conditions beyond the contractor’s reasonable control.
Contracting Officer
Insert the correct estimated construction contract price in the clause and monitor whether the design remains within that limit. Review any revised cost estimate submitted by the contractor, decide whether to authorize scope or material changes, and determine whether to adjust the estimated construction contract price. If bids are not solicited or are delayed, obtain or prepare a Government estimate for compliance purposes.
Government/Agency
Establish the funding limitation for the project and use it as the benchmark for design acceptance and award planning. Decide whether to change project scope, materials, or the estimated construction contract price when the design cannot realistically be built within the original estimate.
Practical Implications
This clause makes the design contractor financially responsible for redesign needed to stay within the funding limit, so contractors should manage cost estimates continuously, not just at final design.
A common pitfall is waiting until bids are opened to discover the design is over budget; the clause expects early warning and proactive communication with the Contracting Officer.
Contractors should document the basis for any claim that unfavorable bids were caused by conditions beyond their reasonable control, because that is the main path to avoid no-cost redesign.
Contracting Officers should ensure the estimated construction contract price is realistic at award; if it is set too low, the project may require scope reductions, redesign, or a funding adjustment later.
When bids are not available, the Government’s own estimate becomes the benchmark, so both sides should understand that the absence or delay of bids does not eliminate the funding limitation test.
Official Regulatory Text
As prescribed in 36.609-1 (c) , insert the following clause: Design Within Funding Limitations (Apr 1984) (a) The Contractor shall accomplish the design services required under this contract so as to permit the award of a contract, using standard Federal Acquisition Regulation procedures for the construction of the facilities designed at a price that does not exceed the estimated construction contract price as set forth in paragraph (c) of this clause. When bids or proposals for the construction contract are received that exceed the estimated price, the contractor shall perform such redesign and other services as are necessary to permit contract award within the funding limitation. These additional services shall be performed at no increase in the price of this contract. However, the Contractor shall not be required to perform such additional services at no cost to the Government if the unfavorable bids or proposals are the result of conditions beyond its reasonable control. (b) The Contractor will promptly advise the Contracting Officer if it finds that the project being designed will exceed or is likely to exceed the funding limitations and it is unable to design a usable facility within these limitations. Upon receipt of such information, the Contracting Officer will review the Contractor’s revised estimate of construction cost. The Government may, if it determines that the estimated construction contract price set forth in this contract is so low that award of a construction contract not in excess of such estimate is improbable, authorize a change in scope or materials as required to reduce the estimated construction cost to an amount within the estimated construction contract price set forth in paragraph (c) of this clause, or the Government may adjust such estimated construction contract price. When bids or proposals are not solicited or are unreasonably delayed, the Government shall prepare an estimate of constructing the design submitted and such estimate shall be used in lieu of bids or proposals to determine compliance with the funding limitation. (c) The estimated construction contract price for the project described in this contract is $ ______ . (End of clause)