CANCELLED BY PIC 09-05
Procurement Information Circular
PRICE NEGOTIATION MEMORANDUM
PURPOSE: To provide guidance on documentation required for the prenegotiation position memoranda (PPM) and the price negotiation memorandum (PNM).
BACKGROUND: NASA FAR Supplement (NFS) 1815.406-170(a) requires that a PPM document the current status of contractor systems. In addition, FAR 15.406-3 provides that the contracting officer shall document in the PNM the principal elements of the negotiated agreement. Paragraph (a)(4) of this FAR section includes as a principal element the current status of any contractor systems (e.g., purchasing, estimating, accounting, and compensation) to the extent they affected and were considered in the negotiation.
A recent OIG review of NASA’s Use of Defense Contract Audit Agency Services in Managing NASA Contracts found that NASA contracting officers were not always documenting contractor business systems. This was a repeat finding addressed in a previous review by the U.S. Government Accountability Office.
Without documentation of the adequacy of the contractor business systems, the Government has reduced assurance that --
· the contractor’s purchases charged to the contract will be reasonably priced and be made from sources that meet quality requirements;
· the contractor’s proposal and subsequent negotiations are based on verifiable and supportable cost estimates;
· the contractor’s accounting system can be relied on to record, process, summarize, and report in a manner consistent with Government contract laws and regulations; and
· compensation and other costs charged to the contract are allowable, allocable, and reasonable
GUIDANCE: Every PPM and PNM must include documentation that either addresses the status of the contractor business systems, or the nonapplicability of said systems. This is consistent with the requirements detailed in FAR 15.406-3 and NFS 1815.406-170(a).
EFFECTIVE DATE: This PIC is effective as dated and shall remain in effect until canceled or superseded.
HEADQUARTERS CONTACT: Lou Becker, Contract Management Directorate,
(202) 358-4593, e-mail: email@example.com.
Acting Director, Contract Management Division