Federal Acquisition Regulation; Allowability of Value Engineering Costs; Withdrawal of Proposed Rule

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The Department of Defense, General Services Administration, and National Aeronautics and Space Administration have decided to withdraw a proposed rule, FAR case 89-88, Allowability of Value Engineering Costs. This rule was initially published in the Federal Register on January 4, 1990 (55 FR 416), and republished on December 14, 1992 (57 FR 59274). The case proposed a revision which specifies that under the incentive approach in value engineering, the contractor develops and submits value engineering change proposals (VECP's) and shares in the savings of any that are accepted. The contract provides for payment of implementation costs if a VECP is accepted. The development costs for accepted and unaccepted VECP's shall be accumulated by value engineering project and charged indirectly if otherwise allowable in accordance with Part 31. The republication resulted in the receipt of 30 responses. The substantive comments ranged from acceptance of the rule with modification to strong recommendations that the rule not be adopted. Primary concerns included--the source of funding for the payment of development costs of unaccepted VECP's, the documentation and justification required for such