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104TH CONGRESS

1ST SESSION H. R. 719

To require Federal agencies to apply value engineering, and for other

purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 27, 1995

Mrs. COLLINS of Illinois (for herself, Mr. MCHUGH, and Mrs. MALONEY) introduced the following bill; which was referred to the Committee on Government Reform and Oversight

A BILL

To require Federal agencies to apply value engineering, and

for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Systematic Application

5 of Value Engineering Act of 1995’’.

6 SEC. 2. VALUE ENGINEERING REQUIREMENTS FOR FED7 ERAL AGENCIES.

8 (a) IN GENERAL.—Federal agencies shall apply value

9 engineering consistent with subsection (b)(2) to, at a mini10 mum, identify and implement opportunities to reduce cap-
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1 ital and operation costs and improve and maintain opti2 mum quality of construction, administrative, program, ac3 quisition, and grant projects. The head of each Federal

4 agency shall require senior management personnel to es5 tablish and maintain value engineering procedures and

6 processes. Such procedures and processes shall, at a mini7 mum—

8 (1) utilize qualified value engineering personnel

9 consistent with paragraphs (1) and (4) of subsection

10 (b);

11 (2) provide for the aggressive and systematic

12 development and maintenance of the most effective,

13 efficient, and economical arrangement for conduct14 ing the work of the agency; and

15 (3) provide a sound basis for the reporting of

16 accomplishments to the Office of Management and

17 Budget, the President, the Congress, and the public.

18 (b) AGENCY RESPONSIBILITIES.—To ensure that

19 systemic value engineering improvements are achieved,

20 each Federal agency shall, at a minimum, carry out the

21 following:

22 (1) Designate a senior management official with

23 a significant, well-documented background in value

24 engineering as the value engineering manager within

25 the agency, to oversee and monitor value engineering
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1 efforts and to coordinate the development of criteria

2 and guidelines referred to in paragraph (2).

3 (2) Develop criteria and guidelines for both

4 agency employees and contractor employees to iden5 tify programs, projects, systems, and products with

6 the greatest potential to yield savings and benefits

7 from the application of value engineering methodol8 ogy. The criteria and guidelines should recognize

9 that the potential savings are greatest during the

10 planning, design, and other early phases of program,

11 project, system, and product development. The cri12 teria and guidelines shall include the following:

13 (A) Consideration of return on the Govern14 ment’s investment in value engineering, deter15 mined by dividing the Government’s cost of per16 forming the value engineering function by the

17 savings generated by the function.

18 (B) A dollar amount threshold for requir19 ing the application of value engineering. The

20 threshold shall be designed to ensure that value

21 engineering is applied to—

22 (i) each program, project, system, and

23 product of the agency that has a dollar

24 value greater than the threshold; and
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1 (ii) those programs, projects, systems,

2 and products that, in a ranking of all pro3 grams, projects, systems, and products of

4 the agency according to greatest dollar

5 value, are within the highest 20th percent6 ile.

7 For purposes of applying such a threshold, the

8 dollar values of various programs, projects, sys9 tems, and products of an agency that have indi10 vidual values below the threshold shall be aggre11 gated if they utilize equivalent planning or de12 sign elements, are jointly administered, or are

13 functionally equivalent.

14 (C) Criteria under which the value engi15 neering manager of the agency may, on a case16 by-case basis, waive the requirement of this Act

17 to conduct value engineering studies, and proce18 dures and requirements for documenting and

19 maintaining records of the justification for each

20 such waiver.

21 (3) Provide training (including practical experi22 ence) in established value engineering methodology

23 to agency staff responsible for coordinating and

24 monitoring value engineering efforts and to staff re25 sponsible for developing, reviewing, analyzing, carry-
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1 ing out, changing, and evaluating value engineering

2 proposals.

3 (4) Ensure that funds necessary for conducting

4 agency value engineering efforts are included in an5 nual budget requests to the Office of Management

6 and Budget.

7 (5) Document and maintain records of—

8 (A) programs, projects, systems, and prod9 ucts that meet agency criteria for requiring the

10 use of value engineering techniques; and

11 (B) determinations (including the reasons

12 therefor) that the recommendations resulting

13 from a value engineering review should not be

14 implemented.

15 (6) Except when inconsistent with this Act, ad16 here to the acquisition requirements of the Federal

17 Acquisition Regulation, including the use of value

18 engineering clauses in parts 48 and 52 for both

19 prime and subcontractors.

20 (7) In the case of discretionary grants awarded

21 by the agency, establish value engineering require22 ments, such as requiring grant applications to in23 clude a clause requiring the use of value engineering

24 methodology by qualified value engineering personnel

25 in the performance of the grant.
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1 (8) Develop annual plans for using value engi2 neering in the agency, which, at a minimum, iden3 tify—

4 (A) the agency and contractor projects,

5 programs, systems, and products to which value

6 engineering techniques will be applied in the

7 next fiscal year; and

8 (B) the estimated costs of such projects,

9 programs, systems, and products.

10 (9) Report annually to the Office of Manage11 ment and Budget on value engineering activities in

12 accordance with subsection (c).

13 (c) REPORTS TO OFFICE OF MANAGEMENT AND

14 BUDGET.—

15 (1) IN GENERAL.—The head of each Federal

16 agency shall submit to the Office of Management

17 and Budget an annual report on the results of using

18 value engineering in the agency. The report shall be

19 submitted by February 15 of each year.

20 (2) CONTENTS.—The report required by this

21 subsection shall include the following:

22 (A) The name, job title, address, telephone

23 number, and any additional job titles of the

24 agency’s current value engineering manager.
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1 (B) The Government’s return on invest2 ment in value engineering achieved through ac3 tual implementation by the agency of rec4 ommendations adopted as a result of value en5 gineering, calculated by dividing the amount of

6 savings achieved through such implementation

7 by the cost of performing value engineering re8 views.

9 (C) The Government’s potential return on

10 investment achievable through value engineer11 ing, calculated by dividing the amount of sav12 ings achievable through the adoption of rec13 ommendations as a result of value engineering

14 by the cost of performing value engineering re15 views to produce those recommendations.

16 (D) A description of the application of

17 value engineering to the agency’s programs,

18 projects, systems, and products, including the

19 net savings and quality improvements achieved

20 through use of value engineering in those pro21 grams, projects, systems, and products.

22 (E) A listing of the criteria adopted by the

23 agency pursuant to subsection (b)(2)(C) for

24 waiving the application of the value engineering
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1 requirements of this Act, and documentation of

2 any waivers granted under the criteria.

3 (d) INSPECTOR GENERAL AUDITS.—The Inspector

4 General of each Federal agency shall audit the savings re5 ported by the agency in the second annual report submit6 ted under subsection (c). Thereafter, the Inspector Gen7 eral of each Federal agency shall audit the reported sav8 ings every second year.

9 (e) USE OF SAVINGS.—Of amounts available to a

10 Federal agency for a fiscal year for a program, project,

11 or system or development of a product that are unobli12 gated at the end of the fiscal year as a result of the appli13 cation of value engineering in accordance with this Act—

14 (1) 50 percent shall be available to the agency

15 for—

16 (A) use in the next fiscal year for that pro17 gram, project, system, or development; and

18 (B) use for programs in effect on the date

19 of the enactment of this Act under which incen20 tives are provided to employees of the agency to

21 identify and implement methods for achieving

22 savings in programs, projects, systems, and

23 product development of the agency; and
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1 (2) 50 percent shall be deposited in the general

2 fund of the Treasury and used to reduce the Federal

3 debt.

4 (f) REVIEW.—The Director of Management and

5 Budget shall review the policies contained in this Act 5

6 years after the date of the enactment of this Act and shall

7 report the results of such review to Congress.

8 (g) DEFINITIONS.—For purposes of this Act, the fol9 lowing definitions apply:

10 (1) The term ‘‘Federal agency’’ has the mean11 ing the term ‘‘agency’’ has under section 551(1) of

12 title 5, United States Code.

13 (2) The term ‘‘savings’’ means a reduction in,

14 or avoidance of, expenditures that would be incurred

15 if programs, projects, systems, and products were

16 not evaluated using value engineering techniques.

17 (3) The term ‘‘value engineering’’ means a

18 team effort, performed by qualified agency or con19 tractor personnel, directed at analyzing the functions

20 of a program, project, system, product, item of

21 equipment, building, facility, service, or supply for

22 the purpose of achieving the essential functions at

23 the lowest life-cycle cost that is consistent with re24 quired or improved performance, reliability, quality,

25 and safety.
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1 (4) The term ‘‘life-cycle cost’’ means the total

2 cost of a program, project, system, product, item of

3 equipment, building, facility, service, or supply, com4 puted over its useful life. The term includes all rel5 evant costs involved in acquiring, owning, operating,

6 maintaining, and disposing of the program, project,

7 system, product, item of equipment, building, facil8 ity, service, or supply over a specified period of time.

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