sector work more fnancially viable. However, it would not have been a panacea for all of the project’s chal- lenges, particularly those related to project management, changing re- quirements, and accountability. To implement this statutory change, the Defense Federal Acquisi- tion Regulation Supplement 236.606- 70 was updated in September 2024. The revised language now explicitly states that the Army, Navy, and Air Force must limit the contract price (or fee) for A-E services—specifcally for preparing designs, plans, drawings, and specifcations—to 10 percent of the estimated construction cost of the project. It is worth noting that the maximum fee for non-DoD agencies remains unchanged, as reflected in the Federal Acquisition Regulation 15.404-4(c)(4)(i)(B). The way con- tracting ofcers implement the limi- tation remains the same—only the percentage has changed. Implementation of the New Limitation It’s important to understand that this fee limitation increase applies exclusively to Army, Navy, and Air Force projects—not to all DoD proj- ects. DoD acquisition professionals working on A-E projects for other defense agencies remain unafected by this change. This includes projects owned by the Defense Health Agency, Defense Logistics Agency, Missile Defense Agency, Defense Advanced Research Projects Agency, and other defense agencies. These nonmilitary department projects will continue to operate under the previous fee cap. Changes to acquisition planning and budgeting processes must be considered. These processes must be reassessed to ensure compliance and fscal alignment. This adjustment may require reallocating funds within project budgets or increasing over- all funding to accommodate higher allowable fees. Contract pricing for A-E services, particularly for design, plans, draw- ings, and specifications—must re-
fect the new fee limitation, and any changes to existing contracts, includ- ing redesigns or scope modifcations, are also subject to the fee limitation increase. While a higher fee could attract more qualifed frms and en- hance competition and design quality, it may also lead to increased proposal costs, necessitating more rigorous cost evaluations. Agencies should update internal guidance and review procedures and ensure that budget and contracting ofcers are trained to apply the new fee limitation accurately. Addition- ally, future-year defense programs and multi-year construction plans must incorporate the increased fee potential into their cost projections President Trump’s April 9, 2025, executive order, Modernizing Defense Acquisitions and Spurring Innovation in the Defense Industrial Base , focuses on overhauling outdated acquisition pro- cesses, creating faster, more adapt- able DoD procedures to obtain new capabilities. While unrelated to the executive order, the recent increase in the statutory fee limitation for A-E services represents another impor- tant advancement, ensuring that the and funding requests. Expected Benefts
DoD can attract premier talent for military infrastructure systems while the acquisition reforms streamline the procurement process. Raising the statutory fee limit is ex- pected to help attract and retain top- tier A-E frms. The previous 6 percent cap was believed to discourage high- quality frms from pursuing DoD proj- ects. With the new 10 percent limit now more aligned with private-sector standards, the pool of highly qualifed candidates is expected to expand. Engaging higher caliber design firms through a more competitive fee structure is expected to yield more accurate, comprehensive, and constructible plans. These improve- ments reduce the likelihood of design- related errors, omissions, and ambi- guities, thereby minimizing costly and time-consuming change orders during construction. Over the long term, this approach promotes cost efciency, enhances project delivery, and supports the DoD’s objectives for improved fscal control and reduced
construction delays. Challenges and Considerations
Justifying a higher fee may prove challenging. The original 6 percent cap was meant to serve as a ceiling,
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