Documenting Negotiations In Accordance With FAR 15.406-3

If you are an contractor that works with or for the U.S. Government you've almost surely dealt with FAR, or Federal Acquisition Regulation. The lengthy legal document contains the rules of regulations and guidelines that Government officials and prime contractors must follow when working with each other.

In this article, we'll look at a specific sub-section that focuses on an essential step in any negotiations between Government and the prime contractor: the record of that negotiations.

Since the responsibility of responsibly spending Government funds is on the contractor who is in charge and the contractor's responsibility, it's essential to be precise and thorough in the record of negotiations.

Any irregularities could be discovered in a Contract Purchasing System Review, which is also known as a CPSR. The review process is designed to ensure that the contractor that is the primary contractor is spending taxpayer funds in a way that is efficient.

In this article you'll have the ability to provide a complete and complete account of negotiation that is compliant with FAR 15.406-3 this is especially important for contracting officers, who are accountable for creating and submitting required information to the contract file.

What will each price negotiation memorandum have?
As a whole, the document described in the article can be 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 as it specifies the objective of the negotiation. The goals of negotiation can differ depending on the situation, like the negotiation of an entirely new contract on the sole source model or negotiation of an equitable adjustment or adjustment. These are determined during the prenegotiation objective stage, which is explained in the FAR 15.406-1.

Section 2
This should include the purchase itself it could be comprised of things, services or construction or even real property which the government is seeking to acquire. Include all specific numbers. "Identifying numbers" includes things like"RFP (Request for Proposal) numbers that refer to the specific proposal document that the contractor is proposing.

Section 3
The section should include the name, position as well as the organizational structure of each click here person representing the prime contractor and the government in the negotiation.

Section 4
In this section, describe the current status of any contractor systems that are relevant with the negotiation. This might include accounting, buying, estimating or compensation. The section should detail the way they relate to the negotiation and how they were assessed.

What section of FAR addresses contract pricing?
The two following sections are somewhat related as well, so we'll go over the document the two sections are a part of. When a prime contractor submits a bid, it must typically include an estimate of how much the project will cost i.e. a pricing proposal. When we think back to the construction example, the most fundamental elements of cost include an estimate of the materials and labor required for a specific job. In this particular instance the FAR has a distinct document intended for this use, which is known as the Certificate of Current Cost or Pricing Data.

In FAR 15.406-2 you can find a template of the certificate that includes your firm's name and the lines for your name or title, signature and date of signing. This certificate acknowledges that to the best of your information, the price outline you're submitting is true. Additionally, this certification is only required for prime contracts with a value of more than the amount of $2 million and given following July 1, 2018. Take a look at the specific guidelines for this document:

Section 5
This section refers to instances when the certificate of the current pricing or cost information was not necessary to determine reasonable contract costs even though the contract granted exceeded the $2 million threshold. FAR 15.403-1 defines the scenarios when this certification isn't needed, however a few of them are:

When the contracting officer determines that the prices agreed on are basing on the prices set by regulation or law

When a commercial service or commercial service is being acquired

When changing a contract or subcontract for commercial products or services

You can refer FAR 15.403-1 for the complete list, but in the simplest form, for those who's contract does not require a certificate of the current price or cost data, Section 5 needs to explain the specific exemption that permits you to bypass the certificate , and what basis your contract will be able to benefit from that exception.