[Congressional Record Volume 141, Number 17 (Friday, January 27, 1995)]
[Extensions of Remarks]
[Page E206]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


THE INTRODUCTION OF THE SYSTEMATIC APPLICATION OF VALUE ENGINEERING ACT

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                          HON. CARDISS COLLINS

                              of illinois

                    in the house of representatives

                        Friday, January 27, 1995
  Mrs. COLLINS of Illinois. Mr. Speaker, today I am introducing a bill 
that could significantly improve the way our Government does business. 
From all the discussion and speeches I've heard around the Capitol 
during the past couple of months, it is clear to me that this is a goal 
that we all share. It is certainly something that all of our 
constituents would like to see as well.
  My bill would require Federal agencies to use value engineering [VE] 
which would enable the Government to save money while improving quality 
at the same time. This is a rare case where the taxpayers, the 
Government, and the American economy benefit--it's a win-win situation 
for everyone.
  VE is a specialized, multifaceted, creative, team-conducted technique 
that defines the objective of a product, service, process, or 
construction project and questions every step toward reaching it. It 
does so with an eye to reducing all costs and completion time while 
improving quality, reliability, and aesthetics. Analysis covers the 
equipment, maintenance, repair, replacement, procedures, and supplies 
involved. Life-cycle cost analysis is one of its many aspects and it 
differs from other cost-cutting techniques in that it is far more 
comprehensive, scientific, and creative.
  It is widely accepted that VE saves no less than 3 percent of a 
contract's expense, and commonly that figure is 5 percent. At the same 
time, the cost of doing a VE review ranges from one-tenth to three-
tenths of a percent. Thus, on a $2 million construction contract, the 
very minimum that would be saved would be $54,000 while savings of 
$98,000 is very likely. On a major military procurement contract for $1 
billion over a life-cycle, that translates to a range of savings from 
$27 million to $49 million. Based on VE usage in recent years, the 
ratio of the cost of a VE review to savings yielded from using VE has 
ranged from 1:10 to 1:100, with 1:18 being the most frequent result.
  Whenever value engineering has been examined, it is clear that it 
should be used more often and that its untapped potential is too great 
to estimate. The General Accounting Office has conducted various 
studies on VE over the years and each one has acknowledged its 
achievements and potential. Currently, several Federal agencies and 
departments reap significant benefits from VE but its use has been far 
too sporadic to achieve widespread savings.
  Mr. Speaker, we have a responsibility to take advantage of VE. 
Ironically, although it was developed in the United States during World 
War II to maximize resources and improve our capabilities, it has been 
used most effectively by the Japanese electronics and automobile 
industries since that time. Isn't it time to bring this brainchild back 
home?
  My bill, the Save Act, would provide significant savings and results 
by requiring all Federal agencies to use VE. To ensure that taxpayers 
get the greatest bang for the buck, my bill requires agencies to use VE 
for their most expensive projects. In order to see that VE is used to 
its greatest potential, each agency is required to designate a senior 
official to oversee and monitor VE efforts. Also, annual reports to the 
Office of Management and Budget would be required to ensure full 
compliance.
  Plainly and simply, VE could make the Government run better and cost 
less. We've all heard America's cry for change, shouldn't we respond? I 
urge my colleagues to join me and cosponsor the Save Act.


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