PRICE NEGOTIATION MEMORANDUM (PNM) TEMPLATE FOR DOCUMENTING NEGOTIATIONS

INSTRUCTIONS FOR USING TEMPLATE APPLICABILITY. Required temp !te "#r prep!ri$% ! pri&e $e%#ti!ti#$ mem#r!$dum (PNM) "#r $e%#ti!ted pr#&ureme$t' i" di'&u''i#$' (ere &#$du&ted) i$& udi$% $e( &#$tr!&t !(!rd' !$d &#$tr!&t m#di"i&!ti#$'. E*CEPTIONS. T+i' temp !te d#e' $#t !pp , t# #rder' u$der -# pe Ce$ter I$de"i$ite.De i/er, T,pe C#$tr!&t' ('ee ADIP N#. 01.2)) #rder' p !&ed u$der Feder! Supp , S&+edu e' (FSS)) G#/er$me$t(ide A%e$&, C#$tr!&t' (G3AC) #rder' p !&ed 4, t+e G3AC +#'t !%e$&,) #r pr#&ureme$t' pr#&e''ed u$der Simp i"ied A&qui'iti#$ Pr#&edure' (SAP). CUSTOMI5ATION. I$'tru&ti#$' !re pr#/ided u$der e!&+ p!r!%r!p+ +e!di$% &#$t!i$ed i$ t+e temp !te 'tipu !ti$% t+e i$"#rm!ti#$ required t# 4e !ddre''ed. I" t+ere i' $# &+!$%e "r#m t+e pre$e%#ti!ti#$ mem#r!$dum (PM)) ! &r#'' re"ere$&e t# t+e PM m!, 4e &ited u$der t+e !pp i&!4 e +e!di$%. A '#) t+e '&#pe !$d dept+ #" !$! ,'i' 'upp#rti$% t+e "i$! $e%#ti!ted p#'iti#$ '+#u d 4e dire&t , re !ted t# t+e d# !r /! ue) imp#rt!$&e) !$d &#mp e6it, #" t+e pri&i$% !&ti#$. T# "!&i it!te e6e&uti#$ #" t+i' d#&ume$t7 I$& uded i' ! &#p, #" t+e temp !te &#$t!i$i$% #$ , t+e p!r!%r!p+ tit e' t# m!8e it e!'ier t# "i i$ t+e i$"#rm!ti#$. COLUMNAR SUMMARY FORMATS9TOP LE-EL PRICE SUMMARY . I$& ude t+e T#p Le/e Pri&e Summ!r, &#mp!ri$% e!&+ O""er#r:' i$iti! pr#p#'! ) t+e G#/er$me$t:' pre$e%#ti!ti#$ #4;e&ti/e' !$d t+e $e%#ti!ted re'u t' u'i$% t+e "#rm!t '+#($ +erei$. T+i' Summ!r, i' required t# 4e i$& uded i$ ! Pri&e Ne%#ti!ti#$ Mem#r!$d!) u$ e'' i$& u'i#$ #" t+i' Summ!r, (!' pre/i#u' , e6&epted "#r t+e PM. COLUMNAR SUMMARY FORMATS9COST ELEMENT SUMMARY. I$& ude t+e C#'t E eme$t Summ!r, '+#($ +erei$ (+e$e/er &#'t !$! ,'i' i' u'ed u$ e'' i$& u'i#$ #" t+i' 'umm!r, (!' pre/i#u' , (!i/ed "#r t+e PM. T+i' 'umm!r, &!$ 4e !pp ied 'ep!r!te , t# e!&+ O""er#r !' !ppr#pri!te !$d '+#u d 4e &#$'i'te$t (it+ t+e &#'t e eme$t 'tru&ture &ited i$ t+e PM. MAR<ING. E$'ure ! &#pie' #" t+i' d#&ume$t i$& ude t+e +e!di$% =SOURCE SELECTION INFORMATION > SEE FAR ?.@ABC !$d !tt!&+ ! &#p, #" DOT &#/er p!%e'7 DOT F BDDA.?1 !$d DOT F BDDA.?E. (NOTE7 T+e S#ur&e Se e&ti#$ I$"#rm!ti#$ +e!der (i 4e em4edded i$ t+e temp !te). RELATED LIN<7 F#r i$"#rm!ti#$ #$ per"#rmi$% pri&e !$! ,'i' #r &#'t !$! ,'i') 'ee C#$tr!&t Pri&i$% Re"ere$&e Guide' !t
http://www.acq.osd.mil/dpap/contractpricing/chap-index.htm DTS85T.3 (12/01)

DTS85T.3

(12/01)

SOURCE SELECTION INFORMATION SEE FAR 3.104

PRICE NEGOTIATION MEMORANDUM (PNM) 1. DESCRIPTION. Provide a brief description of the acquisition, including appropriate identifying numbers (e.g., !P "o.#, as necessary to ensure a clear correlation with the Prenegotiation $emorandum. 2. PURPOSE OF NEGOTIATION. %xplain why negotiations were necessary. &he 'ontracting (fficer)s primary concern is the overall price the *overnment will actually pay. &he 'ontracting (fficer)s ob+ective is to negotiate a contract of a type and with a price providing the (fferor the greatest incentive for efficient and economical performance. 3. ATTENDEES AT NEGOTIATIONS. ,ist the name, position, and organi-ation of each person representing the (fferor and the *overnment in the negotiation. 4. SUMMARY OF KEY DOCUMENTS. .dentify the title and date of each /ey document. .nclude, as applicable, the following: ('ite the &ab under which each of the relevant documents is filed.# a# b# c# d# e# f# Prenegotiation $emorandum (P$#. $inutes of "egotiations. !inal Proposal evision(s# submitted by Prospective (fferor(s#. 0mended !ield Pricing eview esults, including audit and price history information, as applicable. 0mended &echnical %valuation esults. (ther: 111111111111111111111.

5. CONTRACTOR SYSTEMS. 2escribe the current status of any *overnment approved contractor systems (e.g., purchasing, estimating, accounting, and compensation# to the extent they affected and were considered in the negotiation. . COST OR PRICING DATA. .f cost or pricing data were required (see !0 34.567-5# and submitted after the establishment of the pre-negotiation ob+ectives and therefore not addressed in the Prenegotiation $emorandum, describe the extent to which the 'ontracting (fficer: (3# relied on the cost or pricing data submitted and used them in negotiating the price8 (9# recogni-ed as inaccurate, incomplete, or nonconcurrent any cost or pricing data submitted8 the action ta/en by the 'ontracting (fficer and the (fferor as a result8 and the effect of the defective data on the price negotiated8 or (7# determined that an exception applied after the data was submitted and, therefore, considered not to be cost or pricing data. !. SUMMARY OF OFFEROR(S) PROPOSAL(S). Provide a summary of each (fferor)s proposal, any field pricing assistance recommendations, including the reasons for any pertinent variances from them, the *overnment)s negotiation ob+ective, minutes of negotiations, and the negotiated position. T"#$ $%&&'() *'+ ,- .(-.'(-/ '$ ' $-.'('0- '00'*"&-+0 12( -'*" 211-(2(3$ .(2.2$'45 *2+$#$0-+0 6#0" 0"- PM. 0ddress the results of the technical evaluation, including wea/nesses and deficiencies, as well as administrative matters related to the (fferor)s proposal, including discussions on either of these areas with the (fferor. :pecifically address the disposition of pricing or audit recommendations that were incorporated into the prenegotiation ob+ectives. .f no discussions were conducted or revisions received regarding this information and it is basically unchanged from the Prenegotiation $emorandum, simply include a cross reference to the section of the Prenegotiation $emorandum where the information can be found. ;nless exempt during the P$ process, include a &op ,evel Price :ummary &able (see &able 3# displaying each offeror)s initial proposed price, the *overnment)s prenegotiation ob+ectives and each offeror)s final negotiated amount. <hen determination of price reasonableness is based on price analysis (!0 34.565-3(b##, the summary shall include the source and type of data used to support the determination.

DTS85T.3

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SOURCE SELECTION INFORMATION SEE FAR 3.104

<here the determination of price reasonableness is based on cost analysis (see !0 34.565-3(c##, the summary shall address each ma+or cost element stipulated in the solicitation instructions. .nclude cost realism analysis on cost reimbursement contracts to determine the probable cost of performance of each (fferor (see !0 34.565-3(d##. [Reminder: Cost realism1 is a form of cost analysis.] Provide a 'ost %lement :ummary comparison in columnar format of the respective positions of each (fferor)s proposal (:ee &able 3 for sample format. .ndividual cost elements can be modified as necessary to fit the particulars of any given procurement =owever, ensure the format used in the P"$ is consistent with that used in the corresponding P$.# !or competitive acquisitions, a cost element brea/down is required only for those (fferors determined to be in the competitive range. .f the (fferor is identified as a small disadvantaged business concern, and the procurement falls within the authori-ed "orth 0merican .ndustry 'lassification :ystem ("0.':# .ndustry :ubsectors as determined by the 2epartment of 'ommerce, ensure the offer is evaluated consistent with !0 3>.33 and 3>.39. .f the (fferor is identified as a =;?@one small business concern, ensure the offer is evaluated consistent with !0 :ubpart 3>.37. 8. SIGNIFICANT FACTS. 2escribe the most significant facts or considerations controlling the establishment of the negotiated agreement including an explanation of any significant differences between the negotiated agreement and the position established in the prenegotiation ob+ectives. eminder: the negotiation of a contract type and a price are related and should be considered together with the issues of ris/ and uncertainty to the (fferor and the *overnment. 7. 8IG8ER9LE:EL DIRECTION. &o the extent such direction arises after issuance of the Prenegotiation $emorandum and has a significant effect on the action, provide a discussion and quantification of the impact of direction given by 'ongress, other agencies, and higher-level officials (i.e., officials who would not normally exercise authority during the award and review process for the contract action#. (therwise, simply state A"ot 0pplicable.B .t is expected this section will rarely apply. 10. NEGOTIATED PROFIT/FEE. 2escribe any significant difference between the profit or fee prenegotiation ob+ective (if negotiations are based upon cost analysis, see &0$ 3934.565-5 for the 2(& structured approach - 2(& ! 5996.79, <eighted *uidelines Profit/!ee (b+ective# and the profit or fee negotiated. &he *overnment)s cost ob+ective and proposed pricing arrangement directly affect the profit or fee ob+ective. ?ecause profit or fee is only one of several interrelated variables, the 'ontracting (fficer shall not agree on profit or fee without concurrent agreement on cost and type of contract and until all outstanding issues are brought to closure. 11. FAIR AND REASONA;LE PRICING. 2iscuss how the final negotiated amount is considered fair and reasonable9. 0 fair and reasonable price does not require that agreement be reached on every element of cost, nor is it mandatory that the agreed price be within the 'ontracting (fficer)s initial negotiation position. &he 'ontracting (fficer should not become preoccupied with any single element and should balance the contract type, cost, and profit or fee negotiated to achieve a total result - a price that is fair and reasonable to both the *overnment and the (fferor.

C#'t re! i'm !$! ,'i' i' t+e pr#&e'' #" i$depe$de$t , re/ie(i$% !$d e/! u!ti$% 'pe&i"i& e eme$t' #" e!&+ #""er#r:' pr#p#'ed &#'t e'tim!te t# determi$e (+et+er t+e e'tim!ted pr#p#'ed &#'t e eme$t' !re re! i'ti& "#r t+e (#r8 t# 4e per"#rmedF re" e&t ! & e!r u$der't!$di$% #" t+e requireme$t'F !$d !re &#$'i'te$t (it+ t+e u$ique met+#d' #" per"#rm!$&e !$d m!teri! ' de'&ri4ed i$ t+e #""er#r:' te&+$i&! pr#p#'! . 9 Add t+e "# #(i$% i" t+e !&qui'iti#$ i' pr#&e''ed !' ! 'm! .4u'i$e'' #r 0(!) 'et !'ide) #r ! pri&e e/! u!ti#$ !d;u'tme$t "#r 'm! di'!d/!$t!%ed &#$&er$' #r GUB5#$e 'm! 4u'i$e'' &#$&er$' i' !pp ied: Aand a fair mar/et price.B

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SOURCE SELECTION INFORMATION SEE FAR 3.104

4. 12. SOURCE SELECTION DECISION.3 2escribe the comparative assessment of proposals against all source selection criteria in the solicitation performed by the 'ontracting (fficer. .nclude the rationale for any business +udgements and tradeoffs made or relied on by the 'ontracting (fficer, including benefits associated with additional costs. <hile tradeoffs need not be quantified, it is essential that the record clearly indicate the benefits to the government from awarding a contract to a higher-cost offeror. .dentify those aspects of an offeror)s proposal (i.e. strengths# that merit a price premium and include an explanation of the benefits associated with any particular strength.

13. SIGNATURES. &he following shall be inserted and completed at the end of each P"$: &he following signatures represent: (3# agreement with the information contained herein, including the source selection decision78 and (9# that the final negotiated price is fair and reasonable5.

Prepared by: 1111111111111111111111111111 (:ignature, &itle C 2ate#

eviewed by: 11111111111111111111111 (:ignature, &itle C 2ate, of the 'ontracting (fficer if not the Preparer of the P"$#

0pproved by4: 1111111111111111111111111111 (:ignature, ?ranch 'hief)s &itle C 2ate#

I$& ude t+i' e eme$t (+e$ t+e C#$tr!&ti$% O""i&er i' t+e S#ur&e Se e&ti#$ Aut+#rit, (SSA) (u'u! , u$der H1AM.See TAM C+!pter' @D@1 I @D?B. I" t+e SSA i' #t+er t+!$ t+e &#$tr!&ti$% #""i&er i$& ude ! re"ere$&e t# t+e S#ur&e Se e&ti#$ De&i'i#$ D#&ume$t !$d !tt!&+ ! &#p,.
7 5

Add t+e "# #(i$% i" t+e !&qui'iti#$ i' pr#&e''ed !' ! 'm! .4u'i$e'' #r 0(!) 'et !'ide) #r ! pri&e e/! u!ti#$ !d;u'tme$t "#r 'm! di'!d/!$t!%ed &#$&er$' #r GUB5#$e 'm! 4u'i$e'' &#$&er$' i' !pp ied: Aand a fair mar/et price.B
4

T+e PNM mu't 4e re/ie(ed !$d !ppr#/ed 4, t+e C#$tr!&t' Br!$&+ C+ie" "#r pr#&ureme$t' e6&eedi$% H1AA<. De ete t+i' !ppr#/! 4 #&8 "#r pr#&ureme$t' e'tim!ted $#t.t#.e6&eed H1AA)AAA !' t+e C#$tr!&ti$% O""i&er:' 'i%$!ture &#$'titute' !ppr#/! #" t+e d#&ume$t.

DTS85T.3

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SOURCE SELECTION INFORMATION SEE FAR 3.104

TA;LE 1 9 COLUMNAR SUMMARY FORMATS
TOP LE:EL PRICE SUMMARY
OFFEROR NAME PROPOSED TOTAL PRICE PRENEGOTIATION O;<ECTI:ES NEGOTIATED AMOUNT

1. 2. 3. 4. 5.

T8E A;C CO. T8E >Y? CO.

= =

= =

= =

COST ELEMENT SUMMARY

COST ELEMENT T8E A;C CONTRACTOR PRENEGOTIATION O;<ECTI:ES NEGOTIATED AMOUNT NOTE(S)

1. LA;OR 2. MATERIALS 3. O:ER8EAD(S) 4. SU;CONTRACT(S) 5. OT8ER DIRECT COSTS . G@A !. PROFIT OR FEE 8. TOTAL COST 7. COST OF MONEY 10. TOTAL AMOUNT 11. PRICE AD<USTMENT

= =

= =

= =

(') (,)

U$- 0"- AN20-($)B #/-+0#1#-( 02 *(2$$ (-1-(-+*- 0"- /#$*%$$#2+ 21 -'*" 1#+'4 *2$0 -4-&-+0 '&2%+0 02 0"C2$0 E4-&-+0 S%&&'().

DTS85T.3

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SOURCE SELECTION INFORMATION SEE FAR 3.104

PRICE NEGOTIATION MEMORANDUM (PNM) 1. 2. 3. 4. 5. . !. 8. 7. DESCRIPTION. PURPOSE OF NEGOTIATION. ATTENDEES AT NEGOTIATIONS. SUMMARY OF KEY DOCUMENTS. CONTRACTOR SYSTEMS. COST OR PRICING DATA. SUMMARY OF OFFEROR3S PROPOSAL. SIGNIFICANT FACTS. 8IG8ER9LE:EL DIRECTION.

10. NEGOTIATED PROFIT/FEE. 11. FAIR AND REASONA;LE PRICING. 12. SOURCE SELECTION DECISION. 13. SIGNATURES. &he following signatures represent: (3# agreement with the information contained herein, including the source selection decision8 and (9# that the final negotiated price is fair and reasonable.

Prepared by: 1111111111111111111111111111 0pproved by: 1111111111111111111111111111

eviewed by: 11111111111111111111111

DTS85T.3

(12/01)

SOURCE SELECTION INFORMATION SEE FAR 3.104

TA;LE 1 9 COLUMNAR SUMMARY FORMATS

TOP LE:EL PRICE SUMMARY

OFFEROR NAME PROPOSED TOTAL PRICE PRENEGOTIATION O;<ECTI:ES NEGOTIATED AMOUNT

1. 2.

= =

= =

= =

COST ELEMENT SUMMARY

COST ELEMENT CCCCCCCCCCCCCCC PRENEGOTIATION O;<ECTI:ES NEGOTIATED AMOUNT NOTE(S)

1. 2. 3. 4. 5. . !. 8. 7. 10. 11.

= = = = = = = = = = =

= = = = = = = = = = =

= = = = = = = = = = =

(') (,) (*) (/) (-) (1) (D) (") (#) (E) (F)

DTS85T.3

(12/01)