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Defense Logistics AgencyThe Nation's Combat Logistics Support Agency

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### Contact Value Engineering

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                        - ** 804-279-2345
                        - DSN: 312-695-2345

# Value Engineering

The Value Management Engineering support service provides cost analysis to buyers to be used for negotiations and determining price reasonableness, and responds to price challenges and pricing issues from our customers.

## Should Costs

**Should Costs** are independent government estimates to determine the cost for manufacturing a part. Through the "Should Cost" process, various scientific, engineering, and other technical disciplines determine the estimated reasonable price of an item. This determination considers, among other factors, the materials used in the item, the processes used to manufacture, assemble, inspect and preserve it, and the labor resources (types of skills and numbers) needed to produce the item.

The program seeks to ensure contracting officers will initiate all procurement actions with sufficient price data to assess the reasonableness of any offers. Intrinsic Value Analysis done in a should cost produces a lot of information. What is in a typical should cost report:
                            - A detailed description of the item;
                            - A list of references used in the analysis;
                            - A break down of cost and labor burden rates;
                            - Estimated unit prices for specified quantities;
                            - Contact information; and,
                            - A break down of the material and associated cost and minimum economic buys.

## Price Challenge

**Price Challenge **program raises the overall awareness of potential material overpricing/overcharging. The program puts the customer first through a process that allows individuals to submit suggestions, questions, or recommendations on issues of procurement actions or pricing. Price challenges allow the Defense Logistics Agency (DLA) customers to alert the Inventory Control Points about possible overpricing and thereby, enable continuous improvement of DLA processes by acting upon this customer feedback. In addition, the program improves customer satisfaction by assisting our customers in meeting their readiness and weapon system acquisition support requirements at the lowest possible cost.The Value Methodology (also called value engineering, value analysis or value management) originated in the industry community, but its use has rapidly spread to all levels of government - in the United States as well as overseas - due its potential for yielding a large return on investment. This is also synonymous with SAVE-I.

## Our Value Engineering Programs Include:

**Organic Manufacturing** which refers to the production of military parts by arsenals, military repair depots, and other Department of Defense (DoD)-operated factories.

The **Replenishment Parts Purchase Or Borrow Program (RPPOB),**allows a domestic business to purchase or borrow a reparable part or consumable item from the Government, reverse engineer the part or consumable item and become an alternate source of supply. The RPPOB program works in tandem with the Part Catalog duly noted below.**Parts Catalog**— The items in the Parts Catalog that have a minimum of $40,000 annual demand are on display here and are open to the public. The contractor arrives at the display site and locates the item they want to purchase or reverse engineer and hopefully provide the item for less thus encouraging competition. All items are sole source.

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