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Idea Generation

Idea Generation Subcontractor Suggests Improvements Contractor Generates Idea Government Encourages VECPs go to Selling VECP


Subcontractor Suggests Improvements

 

  • While only the prime contractor can submit a VECP, many potential ideas can be developed by a subcontractor.
    • Prime and subs have a unique contractual relationship, in which the government customer has no involvement.
    • The government customer deals only with the prime contractor.

  • The entire supply chain can benefit from reducing system cost, increasing performance, and/or accelerating fielding.
    • It makes the prime more competitive.
    • It strengthens the business relationship between the prime and his subs.
    • Savings can be shared.

  • The prime should encourage subs/suppliers to participate.
    • Primes should have a business plan for encouraging subcontractor involvement in VE process.
      • This plan may be developed jointly with the government customer.
    • Incentives may be offered.
    • It could be a way in which suppliers are evaluated.
    • Many times Primes develop "roadshow briefs" on VECPs for subs or convene periodic meetings to address/resolve prime-sub issues. These meetings afford excellent venues to address VECP opportunities and rewards with subs. A joint government-prime-subcontractor VE workshop is an excellent mode of proving the benefits of VE to all parties.

  • The sub should propose a business plan to the prime to maximize VECP benefits for all parties, prime, sub-contractor and government customer. The proposed change could affect other contracts the prime has with the sub or other business the sub may have with other primes. If there is a large investment required, a way may be found to minimize the nonrecurring expenses to the instant VECP by spreading these costs over commercial programs or other programs. The prime may be willing to front a large NRE bill that cannot be offset on the current VECP for some consideration or he may offer greater returns if the sub provides the funding. Other business that they do between each other could affect their willingness to do the VE effort and might be considered.
  • The way in which savings are split is entirely dependent on the negotiations between prime and subs. The FAR VE clause (FAR 52.248-1(l)) requires the prime to insert "an appropriate VE clause" in all subcontracts of $100,000 or more and may include one in those of lesser value. "Appropriate" should be interpreted as being a clause that sufficiently motivates a subcontractor to prepare and submit VECPs to the prime for further submission to the government.
    • The Government recognizes the importance of subcontractors (where 75% - 85% of the actual work takes place) developing VECPs by allowing (per FAR 52.248-1(l)) the subcontractor to "take the first bite out of the apple" on Instant contract savings - even if that means that there are no Instant contract savings left for the prime contractor and the government to share! Remember, though, that there must be overall savings for the government and that the government is the primary beneficiary of all concurrent, future and collateral savings.

Contact Industry VECP Expert

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Government Encourages VECPs

 

  • At a general level VE advocates should brief program offices about the importance and benefits of VE.
  • At every opportunity industry should be told of the government's interest and receptiveness to VE.
  • The PM should use meetings with contractor to express interest in VECPs throughout acquisition process.
  • Teach DCMA representatives need for VE and have them give VE briefing to contractors. Try to promote VECP champions.
  • Encourage the contractor to think about additional ideas; recommend other areas where the government would be receptive to VECPs.

Contact Government VECP Expert

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