If you're an individual contractor working for an agency of U.S. Government you've almost probably dealt with FAR, or Federal Acquisition Regulation. This dense legal document contains the rules and regulations that government agencies and prime contractors must abide by when working with each other.
In this article, we'll detail a particular section which focuses on a key element in any negotiations between Government and prime contractor: the record of the negotiations.
Since the responsibility for accountable spending of Government funds falls on the contractor that is the primary contractor therefore it's crucial to be exact and thorough when capturing negotiations.
Any discrepancies might be caught by a Contractor Purchasing System Review, commonly referred to as a CPSR. This process of review ensures that the principal contractor is spending taxpayer money effectively.
Using this article, you'll be able to make a complete record of negotiation that's in line with FAR 15.406-3 this is especially important for contracting officers who are responsible for collecting and submitting the necessary documents to the official contract file.
What must each price negotiation memorandum have?
As a whole, the document described throughout this post is known as a Price Negotiation Memorandum, or PNM for short. In FAR 15.406-3, the PNM is composed of eleven principal elements:
Section 1
This section is relatively simple, since it simply clarifies the intent of the negotiation. The reasons for negotiation may differ depending on the situation, like the negotiation of the new contract on the sole source model or negotiation of an equitable adjustment or adjustment. These are determined during the objective phase of negotiation, which is defined by FAR 15.406-1.
Section 2
This section must outline the acquisition in its entirety comprising materials, services, construction or even real estate which the government plans to acquire. This should include all pertinent identifiable numbers. "Identifying numbers" includes things like"RFP" (Request for Proposal) numbers that relate on the precise proposal document for what the contractor has to offer.
Section 3
This section must include the name, title and affiliation of each person who represents an individual contractor, as well as the Government in negotiations.
Section 4
In this section, cover the state of affairs of all contractor systems that relate during the process of negotiation. This could include accounting, purchasing, estimation and/or compensation. The section should specify how these systems are related to the negotiation and the extent to which they were assessed.
What portion of FAR refers to contract pricing?
The two following sections are somewhat related in that we'll cover the document with regard to. When a prime contractor submits a bid, it must typically include an estimate of the amount of work to cost i.e. a pricing proposal. If we look back to the construction example, the fundamental cost elements include an estimate of materials and labor for a specific project. In this regard, the FAR has a special document intended for this use, which is known as the Certificate of Current Cost or Pricing Data.
In FAR 15.406-2 in FAR 15.406-2, you can find a template for the certificate. It includes your firm's name and lines for your name the title, signature as well as the date on which you signed. This certificate affirms that, from your understanding, the cost outline which you've prepared is correct. Also, this certificate is only valid for prime contracts that exceed $2 million which were given on or the 1st of July, 2018. We will look over the specific guidelines that apply to this document:
Section 5
This section covers instances where the certification of actual cost or pricing information wasn't required to determine reasonable contract price, even though contract award was over the $2 million threshold. FAR 15.403-1 describes the situations where this certificate isn't required but a few of them include:
When the contracting officer is able to determine that the prices agreed to are from prices determined by law or regulation
In the event that a commercial product commercial service is acquired
If you are changing the terms of a contract or subcontract to commercial services or products
You can refer to FAR 15.403-1 for the complete list, but , in essence, if click here your contract doesn't require a certified copy of current pricing or cost information, Section 5 has to specify the particular exception which lets you skip the certificate and the basis your contract will be able to benefit from that exception.