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The big picture: The National Defense Authorization Act includes ACEC-backed language that increases the longstanding six percent cap on design fees to ten percent for work performed for the Corps of Engineers and other DOD agencies.

  • The current six percent fee cap has been in place since 1939.

  • While it is intended to apply to cost-plus-fixed-fee contracts, defense agency clients continue to use the limitation in negotiations on lump-sum contracts.

  • Lifting the cap to ten percent will give design firms greater latitude to negotiate contract terms that better reflect the qualifications of the design team, as well as project goals, innovation, and the complexity and risk factors involved with the project.

โ€œThis reform is long overdue,โ€ said ACEC President and CEO Linda Bauer Darr. โ€œThe work that our industry performs for our federal clients delivers innovation and value to the taxpayer, and the contract terms should reflect that fact.โ€

In a letter to the leadership of the House and Senate Armed Services Committees, Darr emphasized the importance of qualifications-based selection (QBS) as the driving factor in the procurement of engineering services. Raising the fee cap is โ€œa positive step in the right direction.โ€

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January 11, 2024



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