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Negotiation

What are the advantages of negotiation as a solicitation method?

Negotiation is a more flexible method than the other two solicitation methods (sealed bidding and simplified acquisition) because negotiations allow the government and the contractor to discuss the contractor's proposal, and contractors can revise their proposals during these discussions. While sealed bidding is limited to only two contract types (firm fixed price and fixed price with economic price adjustment), any contract type may be used with negotiation. Finally, negotiation can help the government and the contractor arrive at a fair and reasonable price through an analysis of price and costs that drive the price.

What criteria are used in selecting negotiation as a solicitation method?

The CO should select negotiation (i.e., competitive proposals under FAR Part 15) if any of the following conditions exist:

The government does not reasonably expect to receive more than one sealed bid.

Time does not permit the solicitation, submission, and evaluation of sealed bids.

Award will in part be made on other than price and price-related factors.

Discussions with offerors are necessary and cannot be limited to questions of technical acceptability.

What evaluation factors are used in a negotiated procurement?

Unlike sealed bidding, in which price and price-related factors alone can be used, in negotiated solicitations offerors' other attributes, such as quality of work, management, delivery, technical approach, and subcontracting plans, may also be considered. The specific factors being considered and the relative importance of each must be stated in the solicitation, and the evaluation, whether formal or informal, must be in accord with this statement. "Best value" dictates that the contractor in line for award will not necessarily be the lowest priced.

An informal evaluation of the chosen factors may last a few days. A formal evaluation usually lasts weeks, and a source selection authority of high rank is usually involved. Some individuals who eventually become CORs may be involved in either an informal or a formal source selection process. The knowledge of what decisions were made, and why, during the negotiation and source selection phases will help the COR immensely during contract administration.

Memoranda documenting these evaluation and negotiation actions are a part of the contract file and should be made available upon request.

Contract Type Selection

What role does the COR play in assisting in contract type selection?

The COR must identify the factors in the requirement that are the most uncertain or unpredictable, determine the potential risks entailed by those uncertainties, and assist the CO in selecting the type of contract that will:

Minimize the potential risks (in terms of cost and performance) inherent in the requirement and the expected cost of contract administration (both to the government and industry), taken together

Have the greatest likelihood of motivating contractors to perform at optimal levels

Provide a reasonable allocation of risk between the government and the contractor

Conform to FAR Part 16 and agency requirements and limitations on the use of the different contract types.

The COR's responsibilities will differ significantly according to contract type. For this reason, it is important to know the distinguishing characteristics of the two basic types of contracts:

Fixed price

Cost reimbursement.

The administration of a fixed price contract is very different from the administration of a cost reimbursement contract. In a fixed price contract the government holds the contractor accountable for results, whereas in a cost reimbursement contract the "best effort" of the contractor may be all the government gets from the contractor.

 
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