Documenting Negotiations In Accordance With FAR 15.406-3

If you are an contractor that works with government officials from the U.S. Government you've almost definitely dealt with the FAR, that is the Federal Acquisition Regulation. This dense legal document governs the rules, rules, and regulations that Government and prime contractors have to follow when working together.

In this article we'll go over a particular section that covers a key step in any negotiations between Government and the prime contractor: the documentation of said negotiations.

The responsibility for the responsible use of Government funds is the responsibility of the prime contractor that's why it's vital to be exact and thorough in the documentation of negotiations.

Any discrepancies might be caught during a Contractor Purchasing Systems Review, otherwise known as a CPSR. The process of reviewing ensures the principal contractor is spending taxpayer money in a responsible manner.

By following this guideline, you'll learn how to provide a complete and complete account of negotiation that's compliant with FAR 15.406-3 This is essential for contracting officers, who are charged with taking and submitting all required paperwork to the contract file.

What must each price negotiation memorandum comprise?
The document that is discussed in this article is referred to as a price Negotiation Memorandum, or PNM for short. According to FAR 15.406-3 The PNM is comprised of eleven essential elements.

Section 1
This section is relatively simple, since it simply states the purpose of the negotiation. Purposes of negotiation can vary in the case of negotiation of one new contract with sole source basis and negotiation of an equitable adjustment and more. These are determined during the prenegotiation objectives phase, which is detailed as part of FAR 15.406-1.

Section 2
This section should describe the acquisition itself that could comprise of products, services, construction, or even real estate that the government aims to purchase, with all necessary identification numbers. "Identifying numbers" includes things such as the RFP (Request to Proposal) numbers that are linked towards the exact proposal document for what the contractor will propose.

Section 3
This section must include the name, title and organization of every person who represents an individual contractor, as well as the Government in the negotiations.

Section 4
In this section, cover the state of affairs of all contractor-related systems that are pertinent during the process of negotiation. This could include accounting, accounting, purchase and/or compensation. The section should specify how these systems were related to negotiation and in what extent they were considered.

What section of the FAR concerns contract pricing?
The following two sections are sort of linked and we'll begin by examining the document in relation to. When a prime contractor makes an offer, it will typically contain an get more info estimate on how much the job will cost i.e. a pricing proposal. When we consider the construction industry, the basic cost elements will be an estimate on labour and materials on a specific task. In this instance it is the FAR contains a specific document that is specifically designed for this function, known by the name of 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 or title, signature and date of signing. This certificate affirms that, from your understanding, the cost outline you're submitting is true. In addition, this certificate is only valid for prime contracts in excess of 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 addresses instances when the certificate of the current pricing or cost information was not required to determine reasonable contract prices , even if the contract signed exceeded the $2 million threshold. FAR 15.403-1 provides examples of situations in which the certificate is not required, but some examples are:

The contracting officer will determine that the agreed-upon prices are in accordance with prices established by regulation or law

If a commercial product or commercial service has been purchased

Modifying any contract or subcontract for commercial services or products

The FAR 15.403-1 for the full list of requirements, but in a nutshell if your contract doesn't require a certified copy of current pricing or cost information, Section 5 has be able to provide the specific reason that allows you to skip the certificate as well as the basis your contract is in compliance with that exception.

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