15.406-1
Prenegotiation objectives
Contracting officers must establish and document thorough prenegotiation objectives based on comprehensive analysis before negotiating any contract pricing action.
Overview
FAR 15.406-1 outlines the requirements for establishing prenegotiation objectives, which serve as the Government’s initial position in contract price negotiations. These objectives are critical for ensuring that the contracting officer is prepared to determine a fair and reasonable price. The objectives must be based on a thorough analysis of the offeror’s proposal and all relevant supporting information, such as field pricing assistance, audit reports, technical analyses, fact-finding, independent Government cost estimates, and price histories.
Key Rules
- Establishment of Prenegotiation Objectives
- Contracting officers must set prenegotiation objectives before any pricing negotiation, using comprehensive analysis of all available data.
- Scope and Depth of Analysis
- The level of detail in the analysis should correspond to the dollar value, importance, and complexity of the pricing action.
- Documentation Requirements
- When cost analysis is required, the contracting officer must document the issues to be negotiated, cost objectives, and profit or fee objectives.
Responsibilities
- Contracting Officers: Must establish and document prenegotiation objectives based on thorough analysis before negotiations begin.
- Contractors: Should be prepared to provide detailed, supportable proposals and respond to fact-finding or requests for additional information.
- Agencies: Must ensure oversight and that contracting officers comply with documentation and analysis requirements.
Practical Implications
- This section ensures negotiations are well-prepared and based on objective analysis, reducing the risk of unreasonable pricing.
- It impacts daily contracting by requiring thorough preparation and documentation before negotiations.
- Common pitfalls include insufficient analysis, inadequate documentation, or failure to tailor objectives to the complexity of the action.