whatbindsCheck your order

Clauses · FAR · Administration and definitions

FAR 52.248-1 Value Engineering

Does the regulation require it to flow down?

Yes

(l): a subcontract >= SAT ($350k) gets an appropriate value engineering clause; below that it's optional. The prime may arrange the sub's payment however it likes, as long as it doesn't reduce the Government's share of the savings.

Form
substance — 'an appropriate value engineering clause' ((l)), not the literal clause
Reaches
first tier — propagation beyond that depends on which clause the prime chooses to insert

Checked against acquisition.gov on 2026-08-04 · edition JUN 2020 (Basic; Alt I APR 1984; Alt II JAN 2015; Alt III APR 1984) · base v0.9.3 Read the text ↗

What it makes you produce

2 items for your checklist, slowest first.

  1. Something you write2

    Days to weeks, and nobody outside your company has to agree to it.

    • A value engineering change proposal, carrying the difference from the existing requirement, the cost estimates on both sides, what the Government would spend to implement it, and any earlier submission of the same idea

      FAR 52.248-1(c)
    • An appropriate value engineering clause written into your own orders

      Owed for a lower-tier subcontract at or above the simplified acquisition threshold; below it the clause is permitted rather than required

      FAR 52.248-1(l)

When it is used

Prescribed by 48.201 for contracts above the SAT (voluntary program in the Basic version; Alt I/II make the program mandatory). Flows down via (l): the prime must include 'an appropriate value engineering clause' in any subcontract at or above the SAT ($350k), and may include it in smaller ones.

Read closely

(c) is voluntary — nothing requires a proposal, and it is the only route by which a cost-saving idea pays, so the same idea offered informally in a meeting pays nothing. (l) is not voluntary and is the one thing in this clause that is: it requires an appropriate value engineering clause in a lower-tier subcontract at or above the threshold. The cost of developing a proposal comes back through the share on one that is accepted.

Alternates

  • Alt I · APR 1984

    FAR 48.201 — the CO selects a mandatory VE program requirement.

    Alt I substitutes paragraph (a) and turns value engineering into a mandatory program requirement performed under the Schedule with progress reports, so it produces a running program and reporting the basic clause never asks for.

  • Alt II · JAN 2015

    FAR 48.201 — both incentive and mandatory program requirement selected.

    Alt II substitutes paragraph (a) with both regimes at once — the program requirement on the line items the Schedule designates, voluntary proposals everywhere else — so the program and its reports are owed on part of the work and the voluntary route survives on the rest.

  • Alt III · APR 1984

    FAR 48.201 — HCA collateral-savings determination.

    Alt III deletes paragraph (j), the collateral-savings share, where the head of the contracting activity decides tracking it costs more than it returns; it closes a payment route rather than changing a deliverable.

The 11 templates that name it, with the line
143CORPDOC 3A — FAR/DFARS Flowdown Provisions for Fixed Price Non-Commercial Items under a DoD Prime ContractLockheed Martinline 299155CORPDOC 4A — FAR/DFARS Flowdown Provisions for Cost-Reimbursement/T&M Subcontracts under a DoD Prime ContractLockheed Martinline 337233RTX Flowdown of U.S. Government Contract Clauses Under U.S. Government ContractsRTXline 949105Raytheon TC-002 — Supplement 1: Government Contract Provisions from the FARRTXline 181166Northrop Grumman CTM-P-ST-001 — U.S. Government Firm Fixed Price Order (Not for Commercial Products and Services)Northrop Grummanline 2372166Northrop Grumman CTM-P-ST-003 — U.S. Government T&M Order (Not for Commercial Products and Services)Northrop Grummanline 2312168Northrop Grumman CTM-P-ST-004 — U.S. Government Cost Reimbursement Order (Not for Commercial Products and Services)Northrop Grummanline 2404243GD Mission Systems SCM-TMP-048 — T&M Purchase Orders for Non-Commercial Items in Support of a U.S. Government ContractGeneral Dynamicsline 2129240L3Harris LGL-50.F1 — General T&C and Flowdown Clauses for Other Than Commercial Products/Services under a U.S. Government ContractL3Harrisline 2257273BAE Systems Inc. USGOVA — FAR/DFARS Flow Down Provisions for Subcontracts/Purchase Orders under a U.S. Government (DoD) Prime ContractBAE Systemsline 737178AAR Component Services NY — U.S. Government Contract FAR and DFARS Clauses Incorporated by ReferenceAAR Corpline 1780

Source: acquisition.gov, FAR 52.248-1 and 48.201 (verified 2026-08-04)

This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.