FAR and DFARS › FAR Part 48: Value Engineering › Subpart 48.1
FAR 48.104-3 Sharing collateral savings.
The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.
In plain English
This section explains how the Government shares collateral savings with a contractor under a Value Engineering Change Proposal (VECP). The contractor's share can range from 20 to 100 percent of estimated annual savings, but is capped by the greater of the contract's price/cost at acceptance or $100,000. The contracting officer sets the sharing rate for each VECP and must consider any degradation in performance, service life, or capability.
Applies to: Contractors submitting a VECP that produces collateral savings
What it requires
- The contracting officer must determine the sharing rate for each VECP.
- In determining collateral savings, the contracting officer must consider any degradation of performance, service life, or capability.
Key terms: collateral savings · VECP · sharing rate · firm-fixed-price · target cost
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) The Government shares collateral savings with the contractor, unless the head of the contracting activity has determined that the cost of calculating and tracking collateral savings will exceed the benefits to be derived (see 48.201(e)).
(b) The contractor's share of collateral savings may range from 20 to 100 percent of the estimated savings to be realized during a typical year of use but must not exceed the greater of—
(1) The contract's firm-fixed-price, target price, target cost, or estimated cost, at the time the VECP is accepted; or
(2) $100,000.
(c) The contracting officer must determine the sharing rate for each VECP.
(d) In determining collateral savings, the contracting officer must consider any degradation of performance, service life, or capability.
Sections it refers to
- 48.201 Clauses for supply or service contracts.
← 48.104-2 Sharing acquisition savings. · 48.104-4 Sharing alternative—no-cost settlement method. →
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.