If you're an employee of government officials from the U.S. Government you've almost certainly dealt with FAR, which is also known as Federal Acquisition Regulation. This hefty legal document governs the rules, rules, and regulations that Government and prime contractors are required to adhere to when working with each other.
In this article, we'll dissect a particular subsection which covers an important step in any negotiations between Government and the prime contractor: the documentation of the negotiations.
Since the burden of the responsible use of Government funds falls on the contractor in charge It is essential to be thorough and accurate when documenting negotiations.
Uncertainties could be uncovered in a Contractor Purchase System Review, also known as a CPSR. This review process makes sure that the principal contractor is spending taxpayer funds efficiently.
By following this guideline, you will be able to create a complete document of negotiation in accordance with FAR 15.406-3 This is particularly relevant for contracting officers, who are accountable for collating and submitting the required document to be included in the contract file.
What is the price negotiation memorandum comprise?
In total, the document that is discussed in this essay is referred to as a price Negotiation Memorandum, or PNM for short. As outlined in FAR 15.406-3 the PNM is made of eleven principal elements:
Section 1
The first part is quite simple, since it simply states the purpose of the negotiation. Purposes of negotiation can vary and include negotiation of an agreement for a new contract with an sole source basis and negotiation of an equitable adjustment as well as other such. They are first determined during the prenegotiation goal phase that is explained in Federal Regulation 15.406-1.
Section 2
This should include the purchase itself, which could consist of goods, services, construction or even real property which the government plans to acquire. Include all identifiable numbers. "Identifying numbers" includes things like"RFP (Request to Proposal) numbers that are linked in the target proposal document that the contractor is proposing.
Section 3
The section should include the name, position and organizational affiliation of each person representing both the prime contractor and Government in the negotiations.
Section 4
In this section, cover the current status of any contractor systems which are relevant to the negotiation. This could include accounting, buying, estimating or compensation. The section should describe in detail how they relate to the negotiation and in what extent they were thought of.
What section of FAR covers contract pricing?
The following two parts are in some way related to each other, and so we'll start by looking at the document the two sections are a part of. When a prime contractor submits an offer, it should typically include an estimate of how much the job will cost i.e. a pricing proposal. If we go back to the instance of construction, the most fundamental elements of cost include an estimate of labour and materials for a particular task. In this instance it is the FAR provides a specific document to be used for this purpose, referred to as the Certificate of Price or Cost Current Data.
In FAR 15.406-2 You can find an example of the certification that has names of the firm as well as lines for your name along with your title, signature and date of signature. This certificate acknowledges that in your best knowledge, the cost outline you're submitting is accurate. Additionally, this certification is only required for prime contracts in excess of $2 million which were given on or after July 1, 2018. Let's take a look at the specific guidelines that govern this document:
Section 5
This section refers to instances where the certification of current pricing or cost information is not required to establish reasonable contract pricing, even though the contract that was read more awarded exceeded the threshold of $2 million. FAR 15.403-1 provides examples of situations in which the certificate is not required. Some of them are:
When the contracting officer determines that the prices agreed on are from prices determined by law or regulation
If a commercial product or commercial service is being acquired
If you are changing or modifying a contract or subcontract that deals with commercial products or services
The the FAR 15.403-1 for the full list of requirements, but in a nutshell when your contract does not require a certificate of the current price or cost information, Section 5 has be able to provide the specific reason which permits you to avoid the certificate and which basis your contract falls within that exception.