FAR and DFARS › FAR Part 48: Value Engineering › Subpart 48.1
FAR 48.104-4 Sharing alternative—no-cost settlement method.
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 describes the no-cost settlement method for handling a Value Engineering Change Proposal (VECP). Under this method, the contractor keeps savings on the instant contract and its concurrent contracts, while the Government keeps savings from concurrent contracts with other sources, future contracts, and collateral savings. The contracting officer must analyze which VECP approach is in the Government's best interest, and use of this method requires mutual agreement.
Applies to: Contracting officers and contractors involved in VECP settlements
What it requires
- The contracting officer shall analyze the different approaches available to determine which one would be in the Government's best interest.
- Use of this method must be by mutual agreement of both parties for individual VECPs.
Key terms: VECP · no-cost settlement · instant contract · concurrent contracts · collateral savings
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
In selecting an appropriate mechanism for incorporating a VECP into a contract, the contracting officer shall analyze the different approaches available to determine which one would be in the Government's best interest. Contracting officers should balance the administrative costs of negotiating a settlement against the anticipated savings. A no-cost settlement may be used if, in the contracting officer's judgment, reliance on other VECP approaches likely would not be more cost-effective, and the no-cost settlement would provide adequate consideration to the Government. Under this method of settlement, the contractor would keep all of the savings on the instant contract, and all savings on its concurrent contracts only. The Government would keep all savings resulting from concurrent contracts placed with other sources, savings from all future contracts, and all collateral savings. Use of this method must be by mutual agreement of both parties for individual VECPs.
Sections that refer to it
- 52.248-1 Value Engineering.
← 48.104-3 Sharing collateral savings. · 48.105 Relationship to other incentives. →
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.