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  • Question

    When is it appropriate to use a Price Analysis Report versus a Price Negotiation Memorandum?


    Answer

    Good question. Terminology has fluctuated over the years and in some instances is still not standard across all agencies. The bottom line is that we are documenting that we have completed the proposal(s) analysis that ensures that the final agreed-to price is fair and reasonable. See FAR 15.404-1(a). It depends on your acquisition (what the contract is for), the nature of competition, and procurement method to determine what type(s) of proposal analysis you will need to conduct in order to determine if the price is fair and reasonable. See FAR subpart 15.4 and DFARS Subpart 215.4.

    Typically for DoD the term Price Analysis Report is usually used in three instances:

    1) In the determination that a supply or service is commercial. See the Department of Defense Guidebook for Acquiring Commercial Items, PART B: PRICING COMMERCIAL ITEMS.

    2) Another instance this term is used is when analyzing a large proposal and focusing on specific components, materials, or subcontracts because they are a major cost/price driver. See the Contract Pricing Reference Guides.

    3) When prime contractors are required to submit cost/price analysis reports of their subcontractors. See AFMC PGI 5315.404-3-90.

    So, in your instance, you should use Price Negotiation Memorandum to document the negotiations you have had with the 8(a) firm.

    References: FAR 15.406-3, DFARS 215.406-3 (and associated PGI), and for your Agency see AFFARS 5315.406-3.

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