36.214 Special procedures for price negotiation in construction contracting
Source: FAR 36.214 on acquisition.gov
FAR 36.214 requires contracting officers to rigorously compare construction proposals to Government estimates, request additional cost data when discrepancies arise, and document all corrections to ensure fair and reasonable pricing.
Overview
FAR 36.214 outlines special procedures for price negotiation in construction contracting, emphasizing adherence to FAR Part 15 negotiation policies. Contracting officers must evaluate proposals and compare them to the Government estimate, scrutinizing both certified and non-certified cost or pricing data. If certified cost or pricing data is not required and there are significant discrepancies between proposed costs and the Government estimate, the contracting officer should request additional cost information from the offeror. When a proposed price is significantly lower than the Government estimate, the contracting officer must ensure both parties fully understand the scope of work and correct any errors in the Government estimate, documenting changes in the contract file. The section also encourages the use of additional pricing tools, such as comparisons to similar projects and the use of cost yardsticks, to ensure fair and reasonable pricing in construction contracts.
Key Rules
- Adherence to FAR Part 15
- Agencies must follow Part 15 policies and procedures for price negotiations in construction contracts.
- Proposal Evaluation
- Contracting officers must evaluate proposals and compare them to the Government estimate, considering all relevant cost or pricing data.
- Request for Additional Cost Information
- If certified cost or pricing data is not required and there are significant cost differences, contracting officers should request more detailed cost information from offerors.
- Addressing Low Proposals
- If a proposal is significantly lower than the Government estimate, ensure mutual understanding of the scope and correct any errors in the estimate, documenting changes.
- Use of Additional Pricing Tools
- Contracting officers may use comparisons to similar work and cost yardsticks to support price reasonableness.
Responsibilities
- Contracting Officers: Evaluate proposals, compare to Government estimates, request additional data as needed, ensure understanding of scope, correct and document estimate errors, and use additional pricing tools.
- Contractors: Provide cost information when requested and clarify scope as needed.
- Agencies: Ensure compliance with FAR Part 15 and maintain documentation of negotiations and estimate corrections.
Practical Implications
- This section ensures construction contract prices are negotiated fairly and based on sound data.
- It helps prevent misunderstandings about scope and cost, reducing the risk of disputes or cost overruns.
- Common pitfalls include failing to request additional cost data when needed or not documenting corrections to the Government estimate.
(a) Agencies shall follow the policies and procedures in part 15 when negotiating prices for construction.
(b) The contracting officer shall evaluate proposals and associated certified cost or pricing data and data other than certified cost or pricing data and shall compare them to the Government estimate.
(1) When submission of certified cost or pricing data is not required (see 15.403-1 and 15.403-2), and any element of proposed cost differs significantly from the Government estimate, the contracting officer should request the offeror to submit cost information concerning that element (e.g., wage rates or fringe benefits, significant materials, equipment allowances, and subcontractor costs).
(2) When a proposed price is significantly lower than the Government estimate, the contracting officer shall make sure both the offeror and the Government estimator completely understand the scope of the work. If negotiations reveal errors in the Government estimate, the estimate shall be corrected and the changes shall be documented in the contract file.
(c) When appropriate, additional pricing tools may be used. For example, proposed prices may be compared to current prices for similar types of work, adjusted for differences in the work site and the specifications. Also, rough yardsticks may be developed and used, such as cost per cubic foot for structures, cost per linear foot for utilities, and cost per cubic yard for excavation or concrete.