The Office of Federal Procurement Policy has published final revisions to OMB Circular A-131 to incentivize agencies to make more use of value engineering, which promotes “share-in-savings” in which contractors are encouraged to find ways to reduce the cost of performance on existing contracts and share savings with the government.
According to a notice in the December 26 Federal Register, VE has generated billions of dollars in savings and cost avoidance but its use among federal agencies has waned in recent years due to insufficient management attention and questions about its applicability to performance-based contracting and other buying practices.
Changes and refinements to the Circular largely address matters relating to scope, agency responsibilities, and application, and include:
Clarifying that VE is a process generally performed in a workshop environment by a multidisciplinary team of contractor and/or in-house agency personnel, and facilitated by agency or contractor staff that is experienced, trained and/or certified in leading VE teams through a series of specific phases;
Directing CFO Act agencies to identify a senior accountable official responsible for ensuring the appropriate consideration and use of VE;
For new projects and programs, increasing the threshold for considering VE from $1 million to $5 million;
For existing projects and programs, granting to agencies the discretion to determine the extent to which VE shall be applied, but requiring agencies to establish criteria to help agency managers determine when VE may be suitable; and,
Emphasizing that VE can also be used with acquisition and commodity management techniques, such as strategic sourcing and modular contracting.
Final revised OMB Circular A-131 is here: http://www.whitehouse.gov/omb/circulars_a131/
