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The Impact of Required Contract Clauses on System Acquisition Policies: The Case of Value Engineering,
RAND CORP SANTA MONICA CALIF
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Not long before the introduction of DTC policy, revision was begun on a section of the Armed Services Procurement Regulations ASPR that deals with value engineering VE, a particular contractual technique for encouraging defense contractors to cut costs by permitting them to share in savings resulting from their accepted Value Engineering Change Proposals VECPs. From the time that value engineering was listed as a related policy subject in an addendum to DoD Directive 5000.1, there has been much discussion about its role in a DTC strategy, and much of the ASPR revision process was aimed at making the clauses, their financial incentives, etc., complementary to anticipated DTC contract formats. This report examines the role that VE clauses may be expected to play in DTC contracting. Based on an analysis of how VE clauses have worked in the past and of what changes we may reasonably expect as a result of their revision and the new DTC policy, the central conclusion of this study is that while the cost saving intent of value engineering should be an essential ingredient to DTC strategy, the contractual clauses themselves will at best be marginally effective and may even be impediments to successful implementation of DTC programs.
APPROVED FOR PUBLIC RELEASE