(ii) those programs, projects, systems,
and products that, in a ranking of all pro-
grams, projects, systems, and products of
the agency according to greatest dollar
value, are within the highest 20th percent-
ile.
For purposes of applying such a threshold, the
dollar values of various programs, projects, sys-
tems, and products of an agency that have indi-
vidual values below the threshold shall be aggre-
gated if they utilize equivalent planning or de-
sign elements, are jointly administered, or are
functionally equivalent.
(C) Criteria under which the value engi-
neering manager of the agency may, on a case-
by-case basis, waive the requirement of this Act
to conduct value engineering studies, and proce-
dures and requirements for documenting and
maintaining records of the justification for each
such waiver.
(3) Provide training (including practical experi-
ence) in established value engineering methodology
to agency staff responsible for coordinating and
monitoring value engineering efforts and to staff re-
sponsible for developing, reviewing, analyzing, carry-
ing out, changing, and evaluating value engineering
proposals.
(4) Ensure that funds necessary for conducting
agency value engineering efforts are included in an-
nual budget requests to the Office of Management
and Budget.
(5) Document and maintain records of—
(A) programs, projects, systems, and prod-
ucts that meet agency criteria for requiring the
use of value engineering techniques; and
(B) determinations (including the reasons
therefor) that the recommendations resulting
from a value engineering review should not be
implemented.
(6) Except when inconsistent with this Act, ad-
here to the acquisition requirements of the Federal
Acquisition Regulation, including the use of value
engineering clauses in parts 48 and 52 for both
prime and subcontractors.
(7) In the case of discretionary grants awarded
by the agency, establish value engineering require-
ments, such as requiring grant applications to in-
clude a clause requiring the use of value engineering
methodology by qualified value engineering personnel
in the performance of the grant.
(8) Develop annual plans for using value engi-
neering in the agency, which, at a minimum, iden-
tify—
(A) the agency and contractor projects,
programs, systems, and products to which value
engineering techniques will be applied in the
next fiscal year; and
(B) the estimated costs of such projects,
programs, systems, and products.
(9) Report annually to the Office of Manage-
ment and Budget on value engineering activities in
accordance with subsection (c).
(c) REPORTS
TO OFFICE
OF MANAGEMENT
AND
BUDGET.—
(1) IN GENERAL.—The head of each Federal
agency shall submit to the Office of Management
and Budget an annual report on the results of using
value engineering in the agency. The report shall be
submitted by February 15 of each year.
(2) CONTENTS.—The report required by this
subsection shall include the following:
(A) The name, job title, address, telephone
number, and any additional job titles of the
agency’s current value engineering manager.
(B) The Government’s return on invest-
ment in value engineering achieved through ac-
tual implementation by the agency of rec-
ommendations adopted as a result of value en-
gineering, calculated by dividing the amount of
savings achieved through such implementation
by the cost of performing value engineering re-
views.
(C) The Government’s potential return on
investment achievable through value engineer-
ing, calculated by dividing the amount of sav-
ings achievable through the adoption of rec-
ommendations as a result of value engineering
by the cost of performing value engineering re-
views to produce those recommendations.
(D) A description of the application of
value engineering to the agency’s programs,
projects, systems, and products, including the
net savings and quality improvements achieved
through use of value engineering in those pro-
grams, projects, systems, and products.
(E) A listing of the criteria adopted by the
agency pursuant to subsection (b)(2)(C) for
waiving the application of the value engineering
requirements of this Act, and documentation of
any waivers granted under the criteria.
(d) INSPECTOR GENERAL AUDITS.—The Inspector
General of each Federal agency shall audit the savings re-
ported by the agency in the second annual report submit-
ted under subsection (c). Thereafter, the Inspector Gen-
eral of each Federal agency shall audit the reported sav-
ings every second year.
(e) USE OF SAVINGS.—Of amounts available to a
Federal agency for a fiscal year for a program, project,
or system or development of a product that are unobli-
gated at the end of the fiscal year as a result of the appli-
cation of value engineering in accordance with this Act—
(1) 50 percent shall be available to the agency
for—
(A) use in the next fiscal year for that pro-
gram, project, system, or development; and
(B) use for programs in effect on the date
of the enactment of this Act under which incen-
tives are provided to employees of the agency to
identify and implement methods for achieving
savings in programs, projects, systems, and
product development of the agency; and
(2) 50 percent shall be deposited in the general
fund of the Treasury and used to reduce the Federal
debt.
(f) REVIEW.—The Director of Management and
Budget shall review the policies contained in this Act 5
years after the date of the enactment of this Act and shall
report the results of such review to Congress.
(g) DEFINITIONS.—For purposes of this Act, the fol-
lowing definitions apply:
(1) The term ‘‘Federal agency’’ has the mean-
ing the term ‘‘agency’’ has under section 551(1) of
title 5, United States Code.
(2) The term ‘‘savings’’ means a reduction in,
or avoidance of, expenditures that would be incurred
if programs, projects, systems, and products were
not evaluated using value engineering techniques.
(3) The term ‘‘value engineering’’ means a
team effort, performed by qualified agency or con-
tractor personnel, directed at analyzing the functions
of a program, project, system, product, item of
equipment, building, facility, service, or supply for
the purpose of achieving the essential functions at
the lowest life-cycle cost that is consistent with re-
quired or improved performance, reliability, quality,
and safety.
(4) The term ‘‘life-cycle cost’’ means the total
cost of a program, project, system, product, item of
equipment, building, facility, service, or supply, com-
puted over its useful life. The term includes all rel-
evant costs involved in acquiring, owning, operating,
maintaining, and disposing of the program, project,
system, product, item of equipment, building, facil-
ity, service, or supply over a specified period of time.
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