“VE is an organized/systematic approach that analyzes the functions of systems, equipment, facilities, services, and supplies to ensure they achieve their essential functions at the lowest life-cycle cost consistent with required performance, reliability, quality, and safety. Typically the implementation of the VE process increases performance, reliability, quality, safety, durability, effectiveness, or other desirable characteristics. Because “costs” are measurable, “cost reduction” is often thought of as the sole criterion for a VE application, and indeed, cost reduction is primarily addressed in this document. It is important to recognize, however, that increased value is the real objective of VE, which may not result in an immediate cost reduction. In fundamental terms, VE is an organized way of thinking or looking at an item or a process through a functional approach. It involves an objective appraisal of functions performed by parts, components, products, equipment, procedures, services, and so on—anything that costs money. VE is performed to eliminate or modify any element that significantly contributes to the overall cost without adding commensurate value to the overall function." In addition, the SD-24 guidebook also provides excellent information about Value Engineering Change Proposals (VECP), which it defines as “a proposal submitted to the government by the contractor in accordance with the VE clause in the contract. A VECP proposes a change to the contract that, if accepted and implemented, provides an eventual, overall cost savings to the government and a substantial share in the savings accrued as a result of implementation of the change for the contractor. It provides a vehicle to reduce acquisition and operating costs while the increasing contractor’s rate of return.”
