2024: The FAR, Federal Acquisition Regulations - Part 15

2024 Webinar Series
The FAR:
Federal Acquisition Regulations
Understand the rules of the federal contracting game - and play to win!
J Schaus & Associates, WASHINGTON DC – hello@JenniferSchaus.com

2024 Webinar Series
THE FAR
ABOUT THE SERIES:
⮚ We’ll cover each PART of THE FAR
⮚ Typically held Wednesdays and Fridays, 12pm
⮚ Complimentary
⮚ Recorded
⮚ Video Posted on YouTube ; PPT Posted on
SlideShare.net
⮚ Sponsor/Advertising Options Available

2024 Webinar Series
THE FAR
ABOUT US:
⮚ Services for FED GOV CONTRACTORS:
⮚ Washington DC based;
⮚ Professional services for established gov cons;
⮚ Market Analysis to GSA Schedules;
⮚ Contract Administration, etc.

2024 Webinar Series
THE FAR
ABOUT US:
⮚ Services for THOSE SELLING TO FED
CONTRACTORS:
⮚ Newsletter Advertising;
⮚ Webinar Advertising;
⮚ Social Media Advertising;
⮚ Event Sponsorship;
⮚ Ask for our MEDIA KIT!

2024 Webinar Series
THE FAR
FAR PART #15:
Contracting by Negotiation
SPEAKER: Karri Palmetier
FIRM: Palmetier Law, LLC
EMAIL: karri@palmetierlaw.com
This presentation has been prepared for information purposes and general guidance only and does not
constitute professional advice. You should not act upon the information contained in this publication without
obtaining specific professional advice.

What is Contracting
By Negotiation
• Any contract for which
• an awardee is selected on a Trade-Off basis, or
• terms are negotiated (including sole source)
• What is it not?
• Micropurchase (FAR 13.2)
• Simplified Acquisition (FAR 13.3)
• Invitation for Bid (FAR 14)
• In one hour, we will only have time to cover a little of everything and a couple items in detail:
• Source Selection Process
• Proposal Pricing
• Proposal Evaluation and Analysis
• Notifications and Debriefs
• No special exceptions or alterations for small businesses other than a standard exemption; e.g. below
simplified acquisition threshold, competition, and commercial item/service.

Source Selection Process
Exchanges with Industry
• At any time prior to receipt of proposals - not only is it permitted, it’s encouraged to improve the
understanding of requirements and industry capabilities to enhance ability to obtain quality supplies and
services.
• Prior to release of a Solicitation, industry may engage within all government personnel
• After release of a Solicitation, the Procurement Integrity Act in FAR 3.104 applies and all
communications must pass through the contracting officer. after release of Solicitation.
• After proposals have been submitted, all communications must comply with the formal requirements for
exchanges
Solicitations
• Must describe: requirements, anticipated terms and conditions, information required for proposals, factors for
evaluation, and whether oral presentations apply
• Must also state if certified data are required, if offerors may request an exception to certified Cost and Pricing
Data, if there is any requirement for data other than certified Cost and Pricing Data, if there is a requirement
for Government to have access to offerors’ records, and the format to be used to submit Cost and Pricing
Data.

Source Selection Process
Lowest Technically Acceptable Price (LTAP)
• Solicitation must explicitly state LTAP as basis for award
• Proposals are evaluated for acceptability but not ranked using the non-Price factors
• Trade-offs are not permitted
• LTAP may not be used for some procurements (differs for civilian and DoD)
Best Value Trade-Off Criteria
• Solicitation must state award on basis of Best Value and basis for government Trade Off: Price is required
• Past performance is required with exception
• May also include technical solutions, technical excellence, management capability, personnel
qualifications, and other similar criteria
• Unless set aside for small businesses, a large business’ small business Subcontracting history must be
evaluated
• Government has broad discretion to select type and weight of criteria but must state how criteria relate to
Price

Proposal Drafting
Proposals must include non-price (technical, past performance, etc) and Price
Non Price Part of Proposal
• Burden is on offerors to fully articulate how it will accomplish Solicitation requirements and why it offers the
Best Value
• Do not assume Government knows anything even if they are familiar with your company. If it’s not included,
they cannot consider even if they observed firsthand
• Comply with formatting, structure, and other Solicitation requirements

Proposal Pricing
• Offerors (and applicable Subcontractors) must provide Cost and Pricing Data either as certified or other than
certified
• Contracting officer must determine that Price is fair and reasonable
• If offeror refuses/cannot provide data, it is ineligible to receive an award unless Head of Contracting
Activity determines award is in the Government’s best interest
Cost and Pricing Data
• Includes facts (not judgment)
• Elements of cost (direct labor, indirect costs, and material costs)
• Proposals or quotations for all Subcontractors
• Information on changes in production methods and in production or purchasing volume
• Data supporting projections of business prospects and objectives and related operations costs
• Unit-cost trends such as those associated with labor efficiency
• Estimated resources to attain business goals
• Information on management decisions that could have a significant bearing on costs
• Profit or fee

Proposal Pricing
• Certification is prohibited if contract is below the simplified acquisition threshold
• Certification of Cost and Pricing Data is exempted if
• Adequate price competition occurs when:
• Two or more independent offers received,
• Award based on Best Value with Price a substantial factor, and
• Successful offeror’s Price is not unreasonable
• Prices set by law or regulations (rare)
• Commercial Products or Services
• Contracting Officer must make determination that product/service meets the definition
• Waivers are not impossible and must be approved by the Head of the Contracting Activity

Proposal Pricing
Not Certified
• Contracting officers are supposed to request only the type and quantity of Cost and Pricing Data necessary to
make determination and not more
• Use data available from Government and other secondary sources; and, if not available or sufficient
• Request data other than Cost and Pricing Data (same type of information but not certified)
Certified
• Means all Cost and Pricing Data (facts) provided to Government were current, accurate and complete
• Unless exemption applies, certification is required if contract value exceeds the following thresholds:
• Initial contract value is $2,000,000 or more
• Any modification that is $750,000 or more
• The Certificate of Current Cost or Pricing Data must be in the exact format specified at FAR 15.406-2
• Must be signed by Offerors (including Subcontractors)
• If Price was not negotiated, then signed as of date of proposal submission.
• If Price is negotiated, then updated and signed as of date upon which Price agreement is reached.

Proposal Submission,
Changes, and Withdrawal
• Offerors are responsible for submitting on time
• Late proposals cannot be considered except:
• caused by Government electronic submission system
• provides more favorable terms
• Contracting Officers must notify if proposal is late and if proposal will be considered
• Proposal Modifications – offerors may revise proposals
• before closing date and time,
• in response to an amendment to Solicitation, or
• correct a mistake before award
• Withdrawal – Contractors may withdraw a proposal before award but will not be allowed to correct or resubmit

Proposal Evaluation
Contracting officer is responsible for evaluation
• Complex contracts should have other experts to include technical and financial
Evaluation must assess relative qualities solely on Trade-Off criteria to determine ability to perform successfully
• Past Performance
• One indicator of ability to perform
• Currency (within usually 3 years)
• Relevancy (similar scope and complexity)
• Responses to rated satisfactory or less
• Lack of past performance can’t be negative but doesn’t have to be positive [read Solicitation]
• Predecessors, key personnel, Subcontractors if major or critical Subcontractors
• Record of compliance with past small business Subcontracting requirements
• May consider information not in proposal; must consider if known to evaluation team
• Technical
• Ability to accomplish the technical requirements
• Understanding of complete statement of work

Proposal Evaluation
• Cost or Price
• Must purchase supplies and services from responsible sources at fair and reasonable Prices.
• Techniques to Evaluate Price
• Price Analysis is process of examining and evaluating a proposed Price without evaluating its
separate cost elements and profit to verify overall Price is fair and reasonable
• Required for all proposals (unless cost analysis is performed)
• Techniques include
• comparison to other proposals, historical purchases appropriately adjusted,
competitive published prices, and independent government estimate,
• parametric estimating methods/application of rough yardsticks
• value analysis
• For commercial products/services without adequate competition, information other than certified
data may be requested

Proposal Evaluation
• Cost Analysis is review and evaluation of any separate cost elements and profit to determine fair and
reasonable Price
• Used for cost reimbursement contracts and when certified data is required
• Techniques include
• Verification of data and evaluation of cost elements
• Evaluation of offeror’s current practices on future costs
• Comparison with offeror’s historical incurred actual costs
• Verification of costs against cost principles and, if applicable, cost accounting standards
• Cost Realism is process of reviewing and evaluating specific elements to determine if proposed cost
realistically represents work to be performed, i.e. reflects a clear understanding of requirements
• Required for cost reimbursement contracts
• Probable cost – result of cost realism – shall be used to determine Best Value

Proposal Evaluation
• Excessive Pass-Through Charges
• If more than 70% of contract will be Subcontracted, contracting officer shall determine if different
acquisition strategy would be in government’s interest
• Also limits ability to recover fee on Subcontract costs
• Subcontractor
• Contracting officer’s Price determination includes Subcontract costs
• Prime (and subsequent tiers) shall
• Conduct Cost or Price Analysis, as applicable, and include analysis with proposal
• If required, include Subcontractor certification of Cost and Pricing Data
• Audit assistance – Subcontractors may request to provide proprietary financial data direct to the
Government

Proposal Evaluation
• “It is in the Government’s interest to offer contractors opportunities for financial rewards sufficient to
stimulate efficient contract performance, attract the best capabilities of qualified large and small
business concerns to Government contracts, and maintain a viable industrial base.”
• Profit is a motivator of efficient and effective performance and “[n]egotiations, aimed merely at
reducing prices by reducing profit, without proper recognition of the function of profit, are not in the
Government’s interest.”
• Unless a cost analysis is being performed, negotiation of profit is not required
• Only statutory limitations on profit: 10 U.S.C. §2306(d) and 41 U.S.C. §3905.
• For cost-plus-fixed-fee for experimental, developmental, or research work, the fee shall not
exceed 15% of contractor’s estimated cost.
• For most architect-engineer contracts, the estimated cost and fee for production and delivery of
designs, plans, drawings, and specifications shall not exceed 6 percent of the estimated cost of
construction.
• For other cost-plus-fixed-fee contracts, the fee shall not exceed 10 percent of the contract’s
estimated cost.
• Sole source awards will follow the above process with more analysis and negotiation because of the lack of
competition.

Proposal Negotiation
• Contracting officer’s primary concern is to ensure the overall Price (not individual Price elements) is
fair and reasonable while providing Contractor the greatest incentive for efficient and economical
performance.
• Pre-Negotiation Objectives
• Shall be completed and documented before starting any Price negotiation
• Establishes Government’s initial negotiation position
• Contracting officer may elect not to engage with offerors, have limited exchanges (“Clarifications”), or engage
in full negotiations (“Discussions”) but the process has firm rules
• Depending on the number of offers, contracting officers may establish a Competitive Range and only engage
in Discussions with these offerors
• In the end, the contracting officer shall document all negotiations

Award without Discussions
• May simply accept offer
• May engage in Clarifications regarding certain aspects of proposals but offerors may not revise
proposals
Pre-establishment of Competitive Range,
• Exchanges are allowed to establish Competitive Range only with offerors:
• Whose past performance is reason not to be included in Competitive Range
• Whose exclusion from/inclusion in Competitive Range is uncertain
• Any adverse past performance must be raised if the offeror has not had an opportunity to comment
• Purpose is only to enhance understanding, allow reasonable interpretation, or facilitate evaluation of
proposal; e.g. ambiguities, and past performance
• Offerors may NOT cure Deficiencies or material omissions or otherwise revise proposal

• Establishment of Competitive Range.
• Include only most highly rated proposals
• Goal is to maximize Best Value to Government
• Discussions must be fair and tailored for each offeror’s proposal
• May include bargaining (persuasion, changing positions, give-and-take)
• Must identify all Deficiencies, significant Weaknesses, and adverse past performance for
which not yet had opportunity to respond
• Encouraged to Discuss aspects that could enhance opportunity for award but not required to
address every area of improvement
• May suggest Price is high or low and Government analysis of Price and even Government
assessment of what is reasonable
• May not
• Favor one offeror over other
• Furnish source selection information: reveal technical solutions, compromise intellectual
property, another offeror’s Price
• Reveal names of references

Proposal Revisions
• Once eliminated from Competitive Range, offeror may not submit any revisions
• For offerors in the Competitive Range, they must be allowed to update proposal after Discussions
Decision
• Decision shall be based on comparative assessment against all Solicitation criteria
• Source Selection Authority may consider input from others but must make a decision based on
independent judgment
Documentation
• Assessment must be documented sufficiently to support the adjectival ratings and the final decision
• Include supportive narrative documenting rationale for any business judgments and Trade-offs,
including benefits of additional costs
• Need not quantify precisely

Notifications
Unsuccessful Offerors must be notified
• Preaward
• Must notify promptly and in writing when excluded from the Competitive Range or excluded from competition.
• Notification must state basis for determination and that no proposal revision will be allowed
• Postaward
• 3 days after date of award, notify all unsuccessful offerors in writing of
• number of offerors solicited
• number of proposals received
• name/address of all awardees
• items, quantities, unit prices of each award (May list only total contract Price if unit prices are
proprietary)
• Unit prices shall be public if requested.
• In no event may the following be disclosed: cost breakdown, profit, overhead rates, trade secrets,
manufacturing processes and techniques, or other confidential business or financial information
• In general terms, the reasons that proposal was not selected

Notifications
If contract is set aside for the Small Business Program, then after negotiations but before award
• Must notify all unsuccessful offerors that no response required unless challenging size of apparent
awardee in addition to the name and address of potential offerors and that no proposal revisions will
be accepted
• Notification is not required if contracting officer determines that scope necessitates award without
delay or if contract is accepted into the 8(a) program
Successful Offerors
• May send unilaterally executed contract for signature
• May alternatively send other written notice such as notice of award

Debriefings
• Debriefings may happen
• Upon exclusion from the competition (pre-award) or
• After selection of awardee (post-award)
• Debriefings may be oral, written or other method acceptable to contracting officer
• Contracting officers must summarize each debriefing
Preaward
• Within 3 days of receipt of notice of exclusion, may request debriefing in writing
• Contracting officer provides debriefing as soon as practicable
• Content is limited to:
• Evaluation of significant elements in offeror’s proposal
• Summary of rationale for eliminating from competition
• Reasonable responses to relevant questions about whether procedures properly followed
• If requested timely, offeror may delay debriefing until after award
• Offeror will receive more detailed debriefing information but could affect ability to protest award
• May only have one debriefing so must choose pre- or post-award

Debriefings
Postaward
• Within 3 days of receipt of notice, any offeror, including awardee, may request debriefing in writing
• If not timely, no debriefing is required but is optional and does not extend protest deadlines
• Debriefings should occur within 5 days of receipt of request
Content
• Evaluation of significant elements in offeror’s proposal
• Summary of rationale for eliminating from competition
• Reasonable responses to relevant questions about whether procedures properly followed
• Number and identify of offerors
• But may not include
• Ranking or content of proposals
• Evaluation of offerors or point-by-point comparisons
• Names of individuals providing past performance
• Information prohibited from release under the Freedom of Information Act (e.g., trade secrets,
proprietary manufacturing processes, proprietary commercial and financial information)

Defective Pricing
Defective Pricing is serious consequence if any certification at any tier of Cost and Pricing Data is found
to be inaccurate, incomplete, or not current
• If discovered
• Pre-award: offeror must immediately disclose to Government; or, if discovered by Government,
Government must immediately disclose to Contractor.
• The parties shall negotiate an updated Price
• Post-award: there could be an audit or investigation
• Government is entitled to a Price adjustment including
• Amount of any overpayment
• Adjustments to fee on overpayment
• Interest for overpayments
• Penalties up to amount of overpayment
• Contractor may offset amounts of overpayments for understated data
• Contracting officer may note defective pricing in past performance

Summary
• Negotiated contracts are complicated
• Source selection process must be followed exactly
• Certification of Cost and Pricing Data is serious and has consequences
• Price must be analyzed through Cost or Price Analysis
• Government must notify and debrief offerors

Definitions
• Best Value means the expected outcome of an acquisition that, in the Government’s estimation,
provides the greatest overall benefit in response to the requirement that has a continuum for which
cost/price is balanced against the other evaluation criteria
• Clarification occurs after proposal submission and are limited exchanges to clarify or resolve
minor/clerical errors
• Competitive Range means those offerors whose proposals with reasonable chance of being selected for
award
• Cost and Pricing Data means facts that, as of the date of price agreement, or, if applicable, an earlier date
agreed upon between the parties that is as close as practicable to the date of agreement on price, prudent
buyers and sellers would reasonably expect to affect price negotiations significantly. Cost or pricing data are
factual, not judgmental; and are verifiable. Cost or pricing data are more than historical accounting data; they
are all the facts that can be reasonably expected to contribute to the soundness of estimates of future costs
and to the validity of determinations of costs already incurred
• Deficiency is a material failure of a proposal to meet a Government requirement or a combination of
significant Weaknesses in a proposal that increases the risk of unsuccessful contract performance to
an unacceptable level

Definitions
• Discussions are negotiations that occur after establishment of the Competitive Range that may, at the
Contracting Officer’s discretion, result in the offeror being allowed to revise its proposal
• Excessive Pass-Through Charge, with respect to a Contractor or Subcontractor that adds no or negligible
value to a contract or Subcontract, means a charge to the Government by the Contractor or Subcontractor
that is for indirect costs or profit/fee on work performed by a Subcontractor (other than charges for the costs
of managing Subcontracts and any applicable indirect costs and associated profit/fee based on such costs).
• Lowest Technically Acceptable Price (LTAP): when anticipated that Best Value is expected to result
from the lowest priced proposal that is technically acceptable
• Price: cost plus any fee or profit
• Solicitation: any request to submit an offer or quotation to the Government
• Subcontract means any contract to furnish supplies or services for performance of the contract or a
subcontract
• Trade-Off: award to other than the lowest priced offeror or other than the highest technically rated offeror
• Weakness means a flaw in the proposal that increases the risk of unsuccessful contract performance.
A "significant weakness" in the proposal is a flaw that appreciably increases the risk of unsuccessful
contract performance

2024 Webinar Series
THE FAR
THANK YOU FOR ATTENDING!
FAR PART #15:
Contracting by Negotiation
SPEAKER: Karri Palmetier
FIRM: Palmetier Law, LLC
EMAIL: karri@palmetierlaw.com

2024 Webinar Series
The FAR:
Federal Acquisition Regulations
THANK YOU FOR JOINING US!

2024: The FAR, Federal Acquisition Regulations - Part 15

Recommended

Recommended

More Related Content

Similar to 2024: The FAR, Federal Acquisition Regulations - Part 15

Similar to 2024: The FAR, Federal Acquisition Regulations - Part 15 (20)

More from JSchaus & Associates

More from JSchaus & Associates (20)

Recently uploaded

Recently uploaded (20)

2024: The FAR, Federal Acquisition Regulations - Part 15