If you are a contractor working with an agency of U.S. Government you've almost probably dealt with FAR also known as the Federal Acquisition Regulation. This dense legal document defines the rules as well as regulations that both the government 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 negotiation between Government and prime contractor: the documentation of the negotiations.
The responsibility for proper spending of Government funds is the contractor in charge It is essential to be meticulous and exact in the documentation of negotiations.
There is a chance that discrepancies will be found in a Contractor Purchasing System Review, also known as a CPSR. This review process makes sure that the principal contractor spends taxpayer money effectively.
By following this guideline, you'll be able to make a complete record of negotiation that's in line with FAR 15.406-3 This is particularly important for contracting officers who are charged with collating and submitting the required papers to the contract file.
What does each price-negotiating memo contain?
The documents that are discussed in this essay is known as the price Negotiation Memorandum, or PNM for short. According to FAR 15.406-3 The PNM is comprised of eleven essential elements.
Section 1
This first section is fairly simple, since it simply describes the goal of the negotiation. The goals of negotiation can differ and include negotiation of an agreement for a new contract with only a single source basis, negotiation of an equitable adjustment or equitable adjustment, etc. They are determined in the prenegotiation objectives phase, which is explained by FAR 15.406-1.
Section 2
The description should be of the purchase itself comprising products, services, construction or even real property which the government is seeking to acquire. Include all identifying numbers. "Identifying numbers" includes things like"RFP (Request for Proposal) numbers that are linked specifically to the proposal document to describe what the contractor is proposing.
Section 3
The section should include the name, title and the organization of every person representing the principal contractor and the government in the negotiation.
Section 4
In this section, cover the state of affairs of all contractor systems that are relevant for the discussion. This could be accounting, purchasing, estimating and/or compensation. The section should specifically describe how these systems are related to the negotiation and in what extent they were examined.
What section of FAR is concerned with contract pricing?
The following two sections are somewhat related to each other, and so we'll start by looking at the document in relation to. If a prime contractor puts out bids, they should generally contain an estimate of what the job will cost i.e. a pricing proposal. If we look back to the example of construction, the basic cost elements will be an estimate on supplies and labor needed for a particular job. For this, the FAR contains a specific document that is specifically designed for this function, known as the Certificate of Current Cost or Pricing Data.
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 certifies that, at the very best of your knowledge, the cost outline that get more info you've submitted is accurate. Furthermore, this certificate is only required for prime contracts in excess of $2 million given on or following July 1, 2018. Take a look at the specific guidelines for this document:
Section 5
The section deals with instances when the certificate of the actual pricing or cost data did not have to be used to determine reasonable contract prices even though the contract signed exceeded the $2 million threshold. FAR 15.403-1 outlines the instances when this certification isn't needed, however a few of them are:
If the contracting office determines that the agreed-upon prices are based on prices set by law or regulation
If a product or commercial service is acquired
When changing a contract or subcontract for commercial products or services
You may refer to the FAR 15.403-1 for the full list of requirements, but in the simplest terms, in the event that your contract does not require certification of current pricing or cost data, Section 5 needs to explain the specific exemption which permits you to avoid the certificate and on what basis your contract can be considered to meet that exemption.