15.406-3
Documenting the negotiation
Contracting officers must thoroughly document all key aspects of the negotiation process to ensure transparency, compliance, and support for pricing decisions.
Overview
FAR 15.406-3 requires contracting officers to thoroughly document the principal elements of every negotiated agreement in the contract file, typically through a Price Negotiation Memorandum (PNM). This documentation must cover the purpose of the negotiation, acquisition details, participants, relevant contractor systems, cost or pricing data considerations, summaries of proposals and negotiation positions, significant facts influencing the negotiation, the impact of external direction, profit or fee determinations, and evidence of fair and reasonable pricing. When field pricing assistance is used, the documentation must be shared with the supporting office, and feedback on advisory support should be provided when appropriate.
Key Rules
- Comprehensive Negotiation Documentation
- Contracting officers must record all principal elements of the negotiation, including rationale, participants, and pricing data considerations.
- Price Negotiation Memorandum (PNM)
- The PNM must detail the negotiation process, including summaries of proposals, objectives, positions, and justifications for pricing decisions.
- Field Pricing Assistance
- If field pricing assistance is used, a copy of the negotiation documentation must be sent to the assisting office, with feedback provided as needed.
Responsibilities
- Contracting Officers: Must prepare and maintain detailed negotiation documentation, ensure all required elements are included, and distribute documentation to relevant offices when field pricing assistance is used.
- Contractors: Must provide accurate cost or pricing data and participate in negotiations as required.
- Agencies: Should oversee compliance with documentation requirements and facilitate effective field pricing support.
Practical Implications
- This section ensures transparency, accountability, and auditability in negotiated procurements.
- Proper documentation supports price reasonableness determinations and protects against disputes or challenges.
- Incomplete or inadequate documentation is a common audit finding and can delay contract awards or lead to compliance issues.