If you are an individual contractor working for Government officials of the U.S. Government you've almost certainly dealt with FAR, which is also known as Federal Acquisition Regulation. This dense legal document governs the rules, rules, and regulations that Government and prime contractors must adhere to when working with each other.
In this article, we'll examine a specific section that covers a critical step in any negotiations between Government and the prime contractor: the documentation of the negotiation.
Since the burden of prudent spending of Government funds is the responsibility of the contractor in charge It is essential to be meticulous and exact in the documentation of negotiations.
Any discrepancies might be caught in a Contractor Purchase System Review, commonly referred to as a CPSR. This review process ensures that the contractor in charge is spending taxpayer funds efficiently.
If you follow this article, then you'll learn how to make a full documentation of negotiation in accordance with FAR 15.406-3 This is particularly crucial for contracting officers, who are responsible for making sure that they submit the required documents to the official contract file.
What are the essential elements that each price negotiations memorandum be?
The document that is discussed in this essay is referred to as the Price Negotiation Memorandum, or PNM for short. According to FAR 15.406-3 the PNM comprises eleven fundamental elements:
Section 1
This first section is fairly easy, as it states the purpose of the negotiation. The goals of negotiation can differ and include negotiation of an entirely new contract with the basis of sole source or negotiation of an equity adjustment and so on. They are first determined during the prenegotiation goal phase that is defined in FAR 15.406-1.
Section 2
The description should be of the acquisition in its entirety comprising goods, services, construction or even real estate that the government aims to acquire. This should include all pertinent identifying numbers. "Identifying numbers" includes things such as RFP (Request for Proposal) numbers that relate on the precise proposal document to describe what the contractor proposes.
Section 3
The document must contain the name, title and organization of every person who represents an individual contractor, as well more info as the Government in negotiations.
Section 4
In this section, cover the current state of contractor systems that relate during the process of negotiation. This might include accounting, buying, estimating or compensation. The section should specifically describe how these systems are related to the negotiation and in what extent they were considered.
What section of FAR concerns contract pricing?
The two following sections are sort of related, so we'll first cover the document that they refer to. When a prime contractor submits an offer, it should typically contain an estimate on how much the job will cost i.e. a pricing proposal. When we consider the example of construction the most fundamental elements of cost include an estimate of labour and materials to complete a particular task. In this instance the FAR contains a specific document that is specifically designed for this function, known by the name of Certificate of Price or Cost Current Data.
In FAR 15.406-2 there is an example of the certificate , which contains the name of the company and the lines for your name the title, signature and date of signature. This certificate affirms that, as far as you can understanding, the cost outline you have submitted is correct. Furthermore, this certificate is only valid to be submitted for prime contracts of greater than the amount of $2 million and awarded on or the 1st of July, 2018. Let's take a look at the specific guidelines that apply to this document:
Section 5
This section focuses on instances in which the certificate of actual pricing or cost data wasn't required to determine acceptable contract prices even though the contract that was awarded exceeded the $2 million threshold. FAR 15.403-1 gives examples of instances in which the certificate isn't needed, however a few examples are:
If the contracting office determines that the prices agreed upon are basing on the prices set by law or regulation
If a product or commercial service is acquired
If you want to modify any contract or subcontract that deals with commercial services or products
It is possible to refer to FAR 15.403-1 for the complete list, but , in essence, If your contract does not require certification of current pricing or cost data, Section 5 must to define the specific exception that permits you to bypass the certificate and on what basis your contract will be able to benefit from that exception.