(b)(90) Whenever it is decided that the contract auditor will not be participating in the prenegotiation and/or price negotiation meeting for a contracting action which involved an audit, the contracting officer shall document in the prenegotiation briefing memorandum (PBM) and/or price negotiation memorandum (PNM), as applicable, the results of discussions with the auditor or other basis for such decision.
(b)(91) Prior to the beginning of any contract price negotiation, the award of a competitive negotiated contract, or the disposition of any other recommended contract action cited below, a briefing of the proposed negotiation, award, or settlement shall be presented to the chief/acting chief of the contracting office (CCO) for approval:
(1) Every award exceeding $25,000 ($100,000 for ICPs) of a letter contract, undefinitized BOA order or other undefinitized instrument. (The responsibility in paragraph (b)(91) above is delegable only for awards that do not exceed $250,000 (ICPs only), without power of redelegation, to one level (two levels for ICPs) below the CCO, and, for ICPs only, any other awards for filling a backordered or nonstocked requirement meeting DLA's criteria for heightened management (see 17.7404-1(a));
(2) Every definitization exceeding $100,000 ($250,000 for ICPs) of a letter contract, undefinitized BOA order, or other undefinitized instrument. (For ICPs only, the responsibility in paragraph (b)(91) above is delegable, without power of redelegation, to one level below the CCO when the contract action does not exceed $550,000);
(3) Every other negotiated contract pricing, repricing and final pricing action that exceeds $100,000, ($550,000 for the ICPs). (For other than ICPs, the responsibility in paragraph (b)(91) above is delegable, without power of redelegation, to one level below the CCO when the contract action does not exceed $250,000. For ICPs, to one level below the CCO; two levels when the action does not exceed $1,000,000);
(4) "Resolution" of reports of defective cost or pricing data and other "reportable" audits (see 15.406-3(b)(91)(b)(1)). (For ICPs only, the responsibility in paragraph (b)(91) above is delegable, without power of redelegation, to two levels below the CCO if the value of the action does not exceed $100,000); and
(5) Any action not cited in (1) thru (4) above which requires HQ DLA (DIRECTOR, ACQUISITION MANAGEMENT (J-7)) review and approval. (The responsibility in paragraph (b)(91) above is delegable, without power of redelegation, to one level below the CCO.)
Note that pursuant to (1)-(5) above, (a) delegees must occupy a supervisory chief or deputy chief position at the immediately lower organizational (not procurement functional) level (or, for ICPs, at the either the first or second lower organizational level) and be certified at Level III in the Contracting Acquisition Career Field; (b) chief and their deputy/deputies are deemed to be at the same organizational level; and (c) dollar value determinations shall be made IAW 1.690-6(a).
(b)(92) At a minimum, the briefing shall cover:
(1) The acquisition situation, including any unique features.
(2) Previous price history.
(3) Where price negotiations are contemplated, the analytical methods utilized in establishing the prenegotiation objectives (i.e., price, improved delivery schedule, etc.):
(i) For proposals not involving cost or pricing data or a cost breakdown, discuss and include a written schedule showing the buildup of the offeror's price and any significant differences between the proposed price negotiation objectives (i.e., minimum, target, and maximum prices, and the proposed price, and any audit, ACO, or cost/price analyst recommendations. Also discuss when there are dissimilarities between the item or quantity offered and the commercial item for which a catalog price exists;
(ii) For acquisitions to be awarded based on cost or pricing data, or cost realism data, discuss the buildup of the offeror's price by element of cost and profit, and any significant differences between the proposed price negotiation objectives (i.e., includes minimum, target, and maximum objectives for costs, profit, fee, and price) and the contractor's proposed price, audit findings, technical report comments, ACO recommendations, and cost/price analyst recommendations, together with rationale supporting the overall price negotiation objectives. Include a comparative schedule showing each element of cost and profit included in the contractor's proposal; the recommendations contained in the audit, technical, and field pricing reports; any independent Government estimate (IGE), the cost/price analyst's recommendations; and the price negotiation objectives.
(iii) Negotiation plan (i.e., phone or in person).
(iv) Anticipated negotiation problems (e.g., contingencies, required deletions or changes in contract clause, etc.) and proposed solutions.
(v) When the contracting officer has a “significant disagreement” with the auditor’s findings (defined as one in which the contracting officer’s prenegotiation objective plans to sustain less than 75 percent of the total audit recommended questioned costs on a proposal valued at $10 million or more), the procedures at PGI 15.406-1 will be followed.
(4) Where price negotiations are not contemplated, the analytical methods utilized in determining price reasonableness:
(i) If award is to be made as a result of initial competitive offers received, include a written schedule comparing the offerors' prices, price history, and any IGE.
(ii) If award is to be made following BAFOs received, address the nature and results of discussions and offers, include a written schedule comparing the initial offers and BAFOs if exemption data or cost/cost realism data are obtained, also include the requirements (excluding prenegotiation price objectives) of (3)(i) or (3)(ii) above respectively.
(iii) If award is to be made based on competitive prices of current or recent awards for the same or comparable items, include a written schedule comparing the offered prices to such recent competitive award prices and any IGE.
(iv) For other sole offers, include a written schedule showing the price for each line item (and offeror's buildup by element of cost and price, if known, with a written comparison to any significant differences in the audit findings or review recommendations).
(b)(93) A memorandum summarizing the principal elements of the briefing prenegotiation objectives, the attendees, and the results of the briefing (including any significant comments or specific recommendations made by briefing attendees) and attaching the price schedule used in the briefing, shall be prepared for signature by the approving official.
(b)(94) The appropriate prenegotiation approval authority or delegee, shall be notified of the need for any significant change in negotiation objectives. A copy of the approval of revised price objectives shall be made an attachment to the PBM.
(b)(95) The following are exempt from the requirement for prenegotiation/preaward briefings:
(1) Perishable subsistence acquisitions.
(2) Subsistence commodity market items that are subject to marketing exigencies, such as coffee, flour, and salad oil.
(b)(96) The following exceptions are authorized to the requirements for a prenegotiation briefing to the official specified at 15.406-(b)(91):
(1) DESC petroleum acquisitions not involving a cost proposal audit, that consist entirely of unrelated line items that are consolidated solely for administrative purposes. The briefing in such cases may be conducted at a level lower than the chief of the contracting office when no single line item is valued $200,000 or more, even though the total acquisition is valued $500,000 or more.
(2) For DSCP, subsistence actions cited at 15.406-1(b)(91) may be delegated, regardless of dollar value, by the chief of the contracting office to the Defense Subsistence Region commanders, with redelegation authorized to the purchasing division chiefs.
(3) Orders against Federal Supply Schedules or mandatory orders placed under the Javits-Wagner-O'Day Act (FAR Subpart 8.7).
