T he recent statutory fee increase for DoD archi- tect-engineer (A-E) contracts with the military services addresses longstanding industry chal- lenges and aims to improve infrastructure design qual- ity and project outcomes across the defense enterprise. However, justifcation must be provided for the A-E fee (as a percentage).
In 1939, Congress enacted three separate statutes (10 U.S.C. 4540, 7212, and 9540) establishing a 6 per- cent fee ceiling for A-E services. This limitation specifcally applied to the Army, Navy, and War Departments respectively, with the War Depart- ment statute later becoming applica- ble to the Air Force when it was estab- lished as a separate military branch. The fee ceiling restricted com- pensation solely for producing and delivering designs, plans, drawings, and specifcations needed for public works, utilities, or construction proj- ects. The 6 percent maximum fee was calculated based on the estimated total cost of the construction project being designed. For more than eight decades, this 6 percent fee limitation remained un- changed despite numerous amend- ments and comprehensive laws af- fecting A-E contracts for DoD. The longstanding cap was fnally revised when Congress passed Section 2881 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024 (Public Law 118-31). This landmark legislation increased the maximum fee from 6 percent to 10 percent of estimated construction costs for A-E contractors providing design services to the Army, Navy, and Air Force. The change is now codifed in 10 U.S.C. 7540, 8612, and 9540. The higher fee ceiling took ef- fect on Sept. 16, 2024. This statutory fee limitation in- crease, the most signifcant adjust- ment to A-E compensation policy in more than eight decades, will sub- stantially impact defense acquisition professionals’ work. These profes- sionals must now learn to navigate how this change afects military A-E
and construction projects across mul- tiple dimensions: fnancial planning, contractor relationships, procurement strategies, policy implementation, and long-term project outcomes. While this revision provides an important new tool for securing high- quality design services, it also requires thoughtful application to transform military construction efectively. This article examines the background of the A-E fee limitation, factors driving the change, implementation of the new fee limitation, expected benefts, and challenges the acquisition work- force will endure. Background on A-E Fee Limitation Before officially entering World War II in 1941, the United States began military preparation in the late 1930s as global conficts escalated. The Fair Labor Standards Act (1938), Strategic and Critical Materials Stock Piling Act (1939), and Neutrality Act (1939) strengthened America’s in- dustrial capacity while maintaining formal neutrality. This period marked a shift toward greater reliance on ex- ternal contractors rather than inter- nal production of goods and services. Acquisition processes were also re- formed through new congressional acts and executive orders, including the 1939 statutes that established a 6 percent maximum fee for A-E services acquired by the military. The 6 percent statutory fee limita- tion on A-E contracts applies only to costs directly related to the prepara- tion of designs, plans, drawings, and specifcations. This limitation does not include other allowable costs such as travel expenses, technical assistance,
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