FAR 52.248-2—Value Engineering-Architect-Engineer.
Plain-English Summary
FAR 52.248-2, Value Engineering-Architect-Engineer, is the A-E contract version of the value engineering clause and is designed to capture cost-saving ideas during design without disrupting the project schedule. This clause covers when and how the contractor must perform value engineering services, submit progress reports, and provide value engineering proposals (VEPs); how value engineering is defined, including life cycle cost analysis; what must be submitted after award, such as a fee breakdown schedule, the VE team roster and qualifications, and the team leader’s responsibilities; the required contents of each VEP; and how approved proposals are accepted and implemented. It also addresses timing, requiring VE work to occur concurrently with the contract schedule and specifically during design review after the 35 percent design stage or as directed by the Contracting Officer. In practice, the clause gives the Government a structured way to obtain independent design review and cost-reduction ideas from the A-E contractor while preserving design quality, reliability, safety, and performance. It is important that contractors understand this clause does not provide the contractor a share of savings; instead, the contractor is paid only as the contract specifies for the VE effort. The clause is especially significant because it requires detailed technical justification and cost/schedule analysis before the Government can decide whether to accept and implement a proposal.
Key Rules
VE work is contract-required
The contractor must perform value engineering services and submit progress reports exactly as specified in the contract schedule. VE activities must be done concurrently with the design effort and cannot delay the overall contract schedule.
Design review timing matters
VE evaluation and review must occur immediately after completion of the 35 percent design stage, or at other stages the Contracting Officer directs. This ensures proposals are developed early enough to influence design decisions before costs are locked in.
No savings share for contractor
The contractor is paid only the amount specified in the contract for VE services and does not share in any savings resulting from accepted VEPs. This clause is about paid professional services, not a gainsharing arrangement.
Life cycle cost is the standard
VE analysis must focus on the lowest life cycle cost consistent with required performance, reliability, quality, and safety. Life cycle cost includes design, construction, acquisition, operation, maintenance, and salvage value, if any.
Post-award submissions are mandatory
After award, the contractor must provide a fee breakdown schedule for VE services and submit the VE team roster, resumes, and evidence of the team leader’s qualifications for Contracting Officer approval. Any later team changes or substitutions also require written approval.
Team leader controls the report
The team leader is responsible for pre-study work assembly and for editing, reproducing, and signing the final report and each VEP. All VEPs, even if submitted earlier separately, must be included in the final report.
Each VEP needs detailed support
Every VEP must explain the existing and proposed design, compare advantages and disadvantages, justify any functional change, describe effects on performance, and include objective test data when relevant. It must also identify required specification changes, estimate project cost impacts, estimate Government implementation costs, address life cycle cost effects, and discuss schedule impacts.
Acceptance requires bilateral modification
If the Government approves a VEP, it is implemented by bilateral modification to the contract. That means both parties must agree to the contract change before the proposal becomes part of the contract work.
Responsibilities
Contractor
Perform VE services and submit progress reports as scheduled; develop and submit VEPs; provide the fee breakdown schedule; propose qualified VE team members and obtain approval for changes; prepare complete, technically supported VEP documentation; and ensure all proposals are included in the final report.
Team Leader
Assemble pre-study materials; edit, reproduce, and sign the final report and each VEP; and ensure the final report contains all VEPs, including those previously submitted individually.
Contracting Officer
Direct the timing and scope of VE reviews as needed; approve the VE team roster, resumes, and team leader qualifications; review and decide on VEPs; and execute bilateral modifications for approved proposals.
Government/Agency
Evaluate VEPs based on performance, reliability, quality, safety, cost, and schedule impacts; determine whether proposed changes are acceptable; and implement approved proposals through contract modification.
Practical Implications
Contractors should treat VE as a required design support function, not an optional add-on, and plan staffing and schedule accordingly.
A common pitfall is submitting a proposal that saves money but fails to address performance, safety, or life cycle cost; the clause requires a balanced technical and economic analysis.
Another frequent issue is incomplete team documentation or unapproved substitutions, which can delay review or create compliance problems.
Because approved VEPs require bilateral modification, neither side should assume a proposal is effective until the contract is formally changed.
For contracting officers, the key day-to-day task is controlling the quality and timing of VE submissions so they are early enough to matter but detailed enough to support a sound decision.
Official Regulatory Text
As prescribed in 48.201 (f) , insert the following clause: Value Engineering-Architect-Engineer (Mar 1990) (a) General . The Contractor shall (1) perform value engineering (VE) services and submit progress reports as specified in the Schedule; and (2) submit to the Contracting Officer any resulting value engineering proposals (VEP’s). Value engineering activities shall be performed concurrently with, and without delay to, the schedule set forth in the contract. The services shall include VE evaluation and review and study of design documents immediately following completion of the 35 percent design state or at such stages as the Contracting Officer may direct. Each separately priced line item for VE services shall define specifically the scope of work to be accomplished and may include VE studies of items other than design documents. The Contractor shall be paid as the contract specifies for this effort, but shall not share in savings which may result from acceptance and use of VEP’s by the Government. (b) Definitions . "Life cycle cost," as used in this clause, is the sum of all costs over the useful life of a building, system or product. It includes the cost of design, construction, acquisition, operation, maintenance, and salvage (resale) value, if any. Value engineering , as used in this clause, means an organized effort to analyze the functions of systems, equipment, facilities, services, and supplies for the purpose of achieving the essential functions at the lowest life cycle cost consistent with required performance, reliability, quality, and safety. Value engineering proposal , as used in this clause, 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. (c) Submissions . After award of an architect-engineering contract the contractor shall- (1) Provide the Government with a fee breakdown schedule for the VE services (such as criteria review, task team review, and bid package review) included in the contract schedule; (2) Submit, for approval by the Contracting Officer, a list of team members and their respective resumes representing the engineering disciplines required to complete the study effort, and evidence of the team leader’s qualifications and engineering discipline. Subsequent changes or substitutions to the approved VE team shall be submitted in writing to the Contracting Officer for approval; and (3) The team leader shall be responsible for pre-study work assembly and shall edit, reproduce, and sign the final report and each VEP. All VEP’s, even if submitted earlier as an individual submission, shall be contained in the final report. (d) VEP preparation. As a minimum, the contractor shall include the following information in each VEP: (1) A description of the difference between the existing and proposed design, the comparative advantages and disadvantages of each, a justification when an item’s function is being altered, the effect of the change on system or facility performance, and any pertinent objective test data. (2) A list and analysis of design criteria or specifications that must be changed if the VEP is accepted. (3) A separate detailed estimate of the impact on project cost of each VEP, if accepted and implemented by the Government. (4) A description and estimate of costs the Government may incur in implementing the VEP, such as design change cost and test and evaluation cost. (5) A prediction of any effects the proposed change may have on life cycle cost. (6) The effect the VEP will have on design or construction schedules. (e) VEP acceptance . Approved VEP’s shall be implemented by bilateral modification to this contract. (End of clause)