# DLAD PGI PART 15 – CONTRACTING BY NEGOTIATION

- DLAD PGI PART 15 – CONTRACTING BY NEGOTIATION

- PGI SUBPART 15.1 – [RESERVED.]
- PGI SUBPART 15.2 – [RESERVED.]
- PGI SUBPART 15.3 – SOURCE SELECTION

- PGI 15.300-90 Scope. When the DoD Source Selection Procedures (SSP) applies, the DLA supplement to the DoD SSP at Appendix C is mandatory.
- PGI 15.304-90 Automated systems supporting contractor past performance evaluation and past performance information systems.

- PGI SUBPART 15.4 – CONTRACT PRICING

- PGI 15.402 (a)(S-90)(3) First Destination Packaging Program.

- PGI 15.402-90 Instructions for completing form “reporting requirements for purchases from exclusive distributors/dealers”.
- PGI 15.402-91 Procedures for performing price analysis on commercial catalogs to be added to DoD electronic mall (EMALL).
- PGI 15.402-92 Acquisitions for sole-source items subject to limited competition.
- PGI 15.404-1(c)(91) One pass pricing.
- PGI 15.406-1 Prenegotiation objectives.
- PGI 15.406-3 Documenting the negotiation.
- PGI 15.406-3-90 Documentation - Acquisition of Services.
- PGI 15.408-90(c) Reverse auction candidate selection criteria and weekly reporting requirement.

- PGI SUBPART 15.6 -- UNSOLICITED PROPOSALS

- PGI 15.604-90 Agency procedures for handling of unsolicited proposals.
- PGI 15.606-90 Agency procedures for review and evaluation of unsolicited proposals.

DLAD PGI PART 15 – CONTRACTING BY NEGOTIATION

PGI SUBPART 15.1 – [RESERVED.]

PGI SUBPART 15.2 – [RESERVED.]

PGI SUBPART 15.3 – SOURCE SELECTION

(Revised February 8, 2013 through PROCLTR 2012-31)

PGI 15.300-90 Scope. When the DoD Source Selection Procedures (SSP) applies, the DLA supplement to the DoD SSP at Appendix C is mandatory.

PGI 15.304-90 Automated systems supporting contractor past performance evaluation and past performance information systems.

(a) Scope. This section prescribes the mandatory procedures, guidance, and instructions for using past performance information systems in evaluating contractor past performance as non-cost factor in negotiated competitive best value acquisitions.

(b) General past performance information.

(1) When used in competitive negotiated best value source selections, past performance information will be evaluated based upon each offeror’s demonstrated recent and relevant (relevancy) record of performance in order to reach the final performance confidence assessment rating.

(2) Contracting officers are advised not to rely solely on the ABVS, PPIRS-SR, PPIRS-RC or other performance assessments/ratings, and should consider reviewing the data used to construct the performance score if the circumstances of the procurement dictate (e.g., significant price differential or close past performance assessments).

(3) Past Performance information used in source selection is confidential source selection information, and as such, is protected from release under the procurement integrity rules (see FAR 3.104-4 and 3.104-5). The information is available only to the business entity to which it applies. The past performance information used in the source selection process must carry a restrictive legend substantially the same as the following: ‘Source Selection Information – see FAR 2.1.1 and 3.104”. This legend must appear on all hard-copy printouts. Release of past performance information to non-DLA Governmental entities must have the concurrence of the local counsel. Release to private entities shall be strictly limited, have the concurrence of the local counsel, and be in accordance with Freedom of Information Act (FOIA, 5 U.S.C. 552) guidelines (see FAR Subpart 24.2, Freedom of Information Act, and DFARS 224.2, Freedom of Information Act). Any FOIA decision to release performance data to other contractors will be made on a case-by-case basis.

(c) Automated best value system (ABVS)

(1) Information on ABVS to include how ABVS delivery and quality scores are calculated/determined and contractor data challenges can be found in PGI 13.106-2(b)(3)(D)(S-90)(e).

(d) [Reserved.]

(e) Evaluation using ABVS scores and PPIRS-SR classifications

(1) Information on understanding and using ABVS scores and PPIRS-SR classifications is located at 13.106-2(b)(3)(D)(S-90). When ABVS scores and PPIRS-SR classifications are used to evaluate past performance, if applicable the DoD SSP as supplemented by Appendix C shall be followed. A comparison of ABVS scores or PPIRS-SR classifications between contractors is prohibited.

PGI SUBPART 15.4 – CONTRACT PRICING

(Revised March 20, 2013 through PROCLTR 2013-39)

PGI 15.402 (a)(S-90)(3) First Destination Packaging Program.

Under the First Destination Packaging (FDP) program, commercial packaging in accordance with the American Society for Testing and Materials (ASTM) standard D 3951 in lieu of military packaging will be required when appropriate.

(i) Definitions

(A) “ASTM D 3951” is a commercial packaging standard that contains acceptable, known, and measurable standards for packaging of material. The standard requires packaging sufficient to preserve the material for one year and, when appropriate, package smaller items together. The packaging requirement states that packaging data “shall be packaged standard commercial in accordance with ASTM D 3951”.

(B) “MIL-STD 2073” is a detailed military packaging standard that directs the type of packaging needed to preserve the material based on the type of material and is stated on or in the packaging data with information on preservation, wrapping, and cushioning.

(ii) Negotiation guidelines for the acquisition specialist or buyer:

(A) Review the packaging requirement on the current acquisition and determine whether commercial packaging is now required, versus a previous military standard.

(B) Utilize the following negotiation guidelines on manually awarded acquisitions to obtain possible savings from any change in packaging requirements from military to commercial standards.

(1) Negotiation efforts should always consider packaging and be appropriate and consistent with the value of the procurement.

(2) If the historical buy was automated, attempt to negotiate better pricing regardless of the previous packaging level.

(3) To realize savings from a change in packaging requirements, compare the currently offered price to the historical price, however, do not change the packaging requirements without consulting with the packaging or product specialist. (This includes changes to the quantity unit pack (QUP) which is the number of items that may be in one package.)

(4) Document the levels of the packaging for the current buy and the previous buy, whether there was a change in requirements from military to commercial packaging, and the negotiations to secure price reductions as a result of a change to commercial packaging. (See PGI 13.106-3(b)(S-90) for a sample format to document a simplified acquisition.)

(C) Receive confirmation from the contracting officer that packaging was reviewed and negotiated.

PGI 15.402-90 Instructions for completing form “reporting requirements for purchases from exclusive distributors/dealers”.

(a) The form “reporting requirement for purchases from exclusive distributors and/or dealers” which has been loaded into the DLA preaward contracting system (DPACS) for completion by the contracting officer will include the following information:

(1) Contractor name and data universal numbering system (DUNS) number for the exclusive/distributor/dealer;

(2) Subcontractor name and DUNS number (e.g., original equipment manufacturer (OEM) or actual manufacturer);

(3) Contract number, modification or order number if applicable;

(4) Date and amount of the contract action;

(5) Steps taken to attempt price analysis without requiring cost-type data;

(6) Contractor’s rationale for refusing to provide the data;

(7) Actions taken by the contracting activity to obtain the data;

(8) Data used to determine price reasonableness and the resulting determination; and,

(9) Actions planned to avoid this situation in the future.

(b) DLA contracting activities will report this information on a quarterly basis by January 30 for October 1 – December 31 actions; April 30 for January 1 – March 31 actions; July 30 for April 1 – June 30 actions; and October 30 for July 1 - September 30 actions. J73 will ensure the completeness of the form and submit results through J7 to DPAP by March 15 for October 1 – December 30 actions; June 15 for January 1 – March 31 actions; September 15 for April 1 – June 30 actions and December 15 for July 1 – September 30 actions.

PGI 15.402-91 Procedures for performing price analysis on commercial catalogs to be added to DoD electronic mall (EMALL).

The contracting officer shall use the procedures below as applicable when adding a new commercial catalog to DoD EMALL, adding additional items to existing catalogs, or renewal of such a catalog.

(a) The offeror should provide unit prices for all catalog items in an electronic format that can be sorted in Excel from high to low dollar amounts.

(b) The offeror must describe the basis or methodology for determining how prices in their catalog were established. This information may include, for example, evidence of prices on a GSA schedule held by the contractor, evidence of commercial sales at the prices quoted, invoices from suppliers, and the overhead and profit factors added by the contractor to derive the catalog price. This information will be reviewed and discussed in the price negotiation memorandum.

(c) If the proposed catalog is extremely voluminous, consider requesting the vendor to separate it into manageable segments and award the segments separately.

Type of EMALL commercial catalog contract | Pre-award price reasonableness determination | Post-award price reasonableness determination
New catalog | For items selected for 100% review using stratification, the contracting officer will perform price analysis using the techniques in FAR 15.404-1(b) to determine the price reasonableness of each item evaluated. For any item selected for 100% review where the contracting officer is unable to determine that the price is fair and reasonable, the item will be prohibited from being ordered, until either the vendor revises the offered price to a fair and reasonable price or adequately justifies to the contracting officer’s satisfaction that the price is fair and reasonable. The contracting officer shall select a statistically valid sample of remaining catalog items (using DCAA EZ Quant software) and perform price analysis on the items in the sample using techniques listed at FAR 15.404-1(b) to determine general reasonableness of the catalog prices. The sample should be selected to produce a 95% confidence level with a presumed error rate of 10%. The random number feature of DCAA EZ-Quant software shall be used to ensure that no personal bias or subjective consideration is used in selection of the catalog items to be evaluated. The EZ-Quant physical unit sample selection option shall be used to select a physical unit sample. The EZ-Quant dollar unit sample selection option shall be used to select a dollar unit sample. | The contracting officer will perform a post award review of those items which are being ordered by EMALL customers in large dollar amounts (i.e., more than $25,000 in a fiscal year), and that were not selected for review during the pre-award sampling process. This procedure shall be supplemented by performing a statistical analysis similar to that performed in the pre-award phase for other items not examined during the pre-award sampling process.
New catalog | When selecting items for comparison or developing the aggregate comparison price the contracting officer shall first use the price analysis techniques discussed in FAR 15.404-1(b). These include: (i) Comparison of proposed prices received on the solicitation such as catalogs for similar items. (ii) Comparison of previously proposed prices and previous Government and commercial contract prices for the same or similar items, (if both the validity of the comparison and the reasonableness of the previous price(s) can be established. (iii) Use of parametric estimating methods, application of rough yardsticks (such as dollars per pound, or per horsepower, or other units) to highlight significant inconsistencies that warrant additional pricing inquiry) (iv) Comparison with competitive published price lists, published market prices of commodities, and similar indexes). (v) Comparison of proposed prices with the Independent Government Cost Estimate (IGCE). (vi) Comparison of proposed prices with prices obtained through market research for the same or similar item. If none of these price analysis techniques provides an adequate comparison then the contracting officer shall request other than certified cost and price data and perform cost analysis using techniques discussed in FAR 15.404-1(c). If the comparison reveals that the vendor’s total proposed aggregate price (for all items in the statistical sample) to be less than the total aggregate price that the contracting officer’s (CO) used in their price reasonableness comparison (for the same or similar items) then no action needs to be taken on the universe of items not selected for review. However, the contracting officer needs to take action on any individual item in the statistical sample exceeding the CO’s determination of fair and reasonable prices as outlined below. If the comparison reveals that the vendor’s total proposed aggregate price (for all items in the statistical sample) exceeds the total aggregate price that the contracting officer’s (CO) used in their price reasonableness comparison (for the same or similar items) then the CO will negotiate a reduction to the entire universe of items. The CO will also address any individual items exceeding the CO’s determination of fair and reasonable pricing as outlined below. For any item in the catalog where the contracting officer is unable to determine that the price is fair and reasonable, the item will be prohibited from being ordered, until either the vendor revises the offered price to a fair and reasonable price or adequately justifies to the contracting officer’s satisfaction that the price is fair and reasonable. |

Type of EMALL commercial catalog contract | Pre-award price reasonableness determination | Post-award price reasonableness determination for new items added to catalog.
New items added to catalog after initial price reasonableness determination was made. | The price reasonableness determination and testing for new items added to existing catalogs will follow the same techniques as the review of the initial catalog. However, the universe of items selected for 100% review (using stratification of high dollar items) or statistical sampling will consist of only the new items added since the initial catalog price reasonableness determination was made. | The contracting officer will perform a post award review of those items which are being ordered by EMALL customers in large dollar amounts (i.e., more than $25,000 in a fiscal year), and that were not selected for review during the pre-award sampling process. This procedure should be supplemented by performing a statistical analysis similar to that performed in the pre-award phase for other items not examined during the pre-award sampling process.
Re-solicitation and award of contract when it expires or reaches maximum ordering limit. | The price reasonableness determination for renewal catalogs will use the same process as for new catalogs. However, the contracting officer should also consider using the results of previous pre-award and post award reviews in the risk assessment used in selecting items for 100% (or stratified review). Additionally the contracting officer should consider using applicable producer price index (PPI) changes from the old price timeframe to develop estimated fair and reasonable prices for items in the renewal catalog and compare this to the contractor’s proposed prices. | The contracting officer will perform a post award review of those items which are being ordered by EMALL customers in large dollar amounts (i.e., more than $25,000 in a fiscal year), and that were not selected for review during the pre-award sampling process. This procedure should be supplemented by performing a statistical analysis similar to that performed in the pre-award phase for other items not examined during the pre-award sampling process.

PGI 15.402-92 Acquisitions for sole-source items subject to limited competition.

Contracting officers shall use the following guidelines in making the determination required by 15.402-92(a):

(a) Assessing “Extent of Competition.” In acquisitions for sole-source items that are subject to limited competition, a major factor that must be considered is whether the original equipment manufacturer (OEM) exerts control over the competitors in the procurement, especially with regard to pricing, or whether the nature of the business relationship otherwise results in the OEM’s competitors’ pricing being directly dependent on the OEM’s pricing without significant independent pricing decisions by the competitors. If the OEM exerts control over dealers or distributors by controlling the resale prices that dealers or distributors may charge, adequate price competition does not exist. If, however, the dealers and distributors have access to adequate supplies of the OEM’s product and may set their own prices (even if those prices, by virtue of economic exigencies, vary very little from one dealer or distributor to another), then adequate price competition may be found to exist for Truth in Negotiations Act (TINA) purposes and for buys where TINA would not apply.

(1) OEM strategies. There are a variety of different alternatives employed by OEMs for selling/distributing products, including:

(i) selling directly to all customers;

(ii) selling through their own financially-affiliated network of dealers/distributors;

(iii) selling to multiple independent (not financially affiliated) dealers/distributors; and/or

(iv) entering into a sole dealer/distributor relationships (often found to lack transparency not conducive to independence and is often characterized by both parties refusing to make available the OEM’s cost data to substantiate atypical rapid growth in prices to the Government over time).

(2) OEM Control. The assessment should examine whether there is a financial (organizational) relationship under common ownership or control, or other business relationship not conducive to dealer/distributor independence and objectivity because the OEM exerts control over dealers or distributors. OEMs in situations involving competition with independent dealers/distributors may disclose cost details of their price.

(i) If the OEM does not provide a detailed breakdown of direct material, direct labor, overhead, along with general and administrative costs (G&A) to dealers/distributors, this could be an indication of OEM control over the dealer(s)/distributor(s). In this type of situation the contracting officer may not have enough information to determine price reasonableness of the item being purchased.

(ii) Dealers/distributors should generally:

(A) conduct appropriate cost or price analysis on the OEM (that may be acting as a subcontractor to the dealer/distributor) to establish the reasonableness of the proposed price (DFARS PGI 15.404-3); and

(B) include the results of this analysis in its price proposal.

(iii) In instances when the OEM is unwilling to furnish data required for this analysis to the dealer/distributor, higher tier subcontractor/contractor, or directly to the Government; or if the dealer/distributor is unable or unwilling to perform the analysis, this could be considered an indication of control by the OEM and a sign that adequate price competition does not exist.

(iv) The unwillingness to provide, or unavailability of, a written contract/agreement documenting an OEM’s business relationship with a dealer/distributor may also provide further evidence indicating the absence of an arm’s-length business relationship, which in turn may be indicative of a lack of a competitive market for sole-source parts offered by the dealer(s)/distributor(s).

(b) Determining price reasonableness. In situations where sole-source items are subject to limited competition, consider the low offerer’s price in comparison to historical prices paid, along with the need for information on the offeror’s systems, which may be useful indicators of price realism and/or reasonableness.

(1) Historical price comparison.

(i) An explanation of the basis and frequency of the OEM’s price increases to dealers/distributors should be requested and considered when the contracting officer is basing a price reasonableness determination on a price comparison to previous prices.

(ii) A pattern of frequent/substantial price increases since the inception of a dealer/distributor relationship may indicate the absence of an arm’s-length business relationship. For example, if a dealer/distributor increases prices by 20 percent annually, but the applicable producer price index (PPI) or cost indexes for material and labor increased at a significantly lower rate, this should be investigated.

(iii) Where available, price increase information for both the dealer/distributor and OEM (that may be acting as a subcontractor) should be evaluated to determine the reasonableness of proposed price increases. If the OEM is proposing price increases significantly higher than the applicable independent measure(s) of cost/price growth by the dealer/distributor, and if the OEM refuses to provide appropriate documentation to support its proposed costs to the dealer/distributor, this could be viewed as an indication of OEM control over the dealer(s)/distributor(s) and indicate that adequate price competition may not exist.

(2) Contractor purchasing system. For acquisitions involving sole-source items subject to limited competition that exceed the truth in negotiation act (TINA) threshold, the contracting officer should consider:

(i) Obtaining current contractor purchasing system review (CPSR) status information from the cost and price office/analyst (see 15.404-1(a)(90)(5)), or direct from the cognizant Defense Contract Management Agency administrative contracting officer (ACO) of the most recent completed, pending, or planned review; and

(ii) If the contractor does not have an approved purchasing system, or if the system has not been reviewed, consider requesting that the ACO evaluate whether the OEM’s projected sales to Government during the next 12 months meet the FAR 44.302 criteria, to determine if a contractor purchasing system review should be performed.

(iii) If a contractor purchasing system review should be performed, the contracting officer should request that the ACO perform this review so that the information is available to the contracting officer.

(iv) Documentation related to the contractor purchasing system review status, any request for a CPSR review or eligibility assessment, and the contractor purchasing system review report shall be included in the contract file supporting the award, and a copy furnished the cognizant local pricing office that is responsible for providing support for the acquisition.

(3) Contractor estimating system review (CESR). For acquisitions of sole-source items subject to limited competition that exceed the TINA threshold and will result in an award to a large business, the contracting officer should consider obtaining current contractor estimating system review status information of the proposed large business awardee from the cost and price office/analyst or direct from the cognizant Defense Contract Management Agency ACO (DFARS 215.407-5). This information shall be documented in the contract award file supporting the award.

PGI 15.404-1(c)(91) One pass pricing.

(i) The OPP process may be used by the contracting officer to price sole-source items in establishing a long-term contract (LTC), addition/modification to an existing LTC, or a stand alone fixed quantity contract. The process is supported by a Memorandum of Agreement (MOA) which establishes the procedures for OPP agreed to by the contractor and the government.

(ii) The following criteria apply when using the OPP process:

(A) The contractor should:

(1) Be an active registrant in the Central Contractor Registration (CCR)

(2) Maintain acceptable purchasing, estimating, and accounting systems, approved by DCMA. Any system deficiencies noted by DCAA or DCMA which might have a material impact on price should be addressed and/or resolved prior to conducting OPP pricing sessions. If the contractor does not have approved system(s), the contractor will submit information to support that their systems will provide sufficient information to support the simultaneous proposal preparation, proposal analysis and agreement on price.

(3) For contractors with CAS covered contracts, provide the impact of any CAS non-compliances on the pricing action.

(4) Provide current, accurate, and complete cost and pricing information at each pricing session (e.g., material costs, labor hours, etc.) and supporting documentation at the item level.

(5) Have a Forward Pricing Rate Agreement (FPRA), or other agreement, for all direct and indirect rates.

(6) Sign an OPP Memorandum of Agreement (MOA) prepared in accordance with paragraph (iii) below.

(B) The contracting officer shall:

(1) Comply with Part 1 review and approval thresholds and as supplemented by local policy.

(2) Discuss OPP in the Acquisition Plan or Advance Acquisition Planning Template (AAPT) for new contract actions when anticipating using the process for the acquisition.

(3) Ensure the contract file contains documentation that supports the decisions and rationale used in the development and approval of the MOA. This includes a Pre-Negotiation Business Memorandum/Price Negotiation Memorandum (PBM/PNM) that supports the rates and profit rate cited in the MOA .

(4) Establish an OPP team with the appropriate personnel to provide the broad “skill set” necessary to evaluate information at the OPP pricing session to support “real–time” decisions. At a minimum the team shall consist of the contracting officer and the cost/price analyst. Other team members may include a product specialist and/or DCMA representative.

(5) Determine if there are any system deficiencies and/or CAS non-compliances noted by DCAA or DCMA which may have a material impact on the pricing action. OPP pricing sessions should not be conducted until such conditions are resolved. All system deficiencies and/or CAS non-compliances will be addressed in the PBM/PNM, including materiality and resolution.

(6) Contact DCMA to obtain the most recent FPRA and/or to request assistance and coordination in evaluating the contractor’s proposed rates in order to establish an agreement on rates.

(7) Request a DCAA audit or other field pricing assistance as applicable to the OPP action.

(8) Document the application of the OPP process in a PBM/PNM. The PBM/PNM shall comply with requirements of FAR 15.406, DLAD Part 1 and local guidance.

(9) Ensure the following information (at a minimum) are documented for each NSN in the PBM/PNM

(i) Annual demand quantity (ADQ);

(ii) Minimum order quantity;

(iii) Selected comparison award (award number, PRC, quantity, award date, and unit price);

(iv) Adjusted comparison price which is the selected comparison award unit price adjusted for current circumstances (e.g., quantity, time and basis for adjustment);

(v) Annual demand value (ADQ times adjusted comparison price);

(vi) Exchange of information between the government and the contractor relevant to the developed price;

(vii) Variance between the proposed price and the adjusted comparison price;

(viii) Price analyst’s recommendation on price reasonableness;

(ix) Contracting officer’s decision on price reasonableness; and

(x) Detail explanation if the price analyst’s recommendation and the contracting officer’s decision on price reasonableness differ.

(10) Provide a spreadsheet to the field pricing office analyst listing each NSN, the required or annual quantity, and the minimum order quantity, if applicable, at least 30 days prior to the OPP pricing session to allow sufficient time for the pricing office to select comparison prices from the procurement history and calculate adjusted comparison prices for each NSN. Additional time may be required depending on the number of NSNs to be addressed during the pricing session.

(11) Ensure prior to an OPP pricing session an agreement on rates and profit has been reached between the contractor and the contracting officer. The contracting officer shall review the criteria used for the profit rate in the MOA and ensure it is applicable to each OPP pricing session.

(12) After approval by the Chief of the Contracting Office (CCO), sign an OPP Memorandum of Agreement (MOA) prepared in accordance with paragraph (iii) below.

(C) The CCO shall

(1) Establish review procedures for OPP MOA that includes legal counsel and any stakeholders, e.g. DCMA, DODIG, etc.

(2) Ensure a price analysis report is prepared by the pricing office and provided to the contracting officer for each NSN to be addressed during the OPP pricing session.

(3) Include OPP actions in all local procurement management reviews (PMRs).

(4) Ensure approval of OPP team membership at least two levels above the contracting officer prior to the OPP sessions.

(D) The Component Acquisition Executive (CAE) shall ensure OPP actions are included in DLA HQ Procurement Management Reviews.

(E) The center of excellence for pricing will conduct reviews of OPP pricing sessions and documentation to ensure compliance with the OPP policy and procedures.

(iii) The OPP Memorandum of Agreement (MOA) is an agreement signed by the contractor and the government which defines the application of the OPP process for sole-source items. A template is provided for reference. The elements of the MOA should include, but is not limited to the following:

(A) Definitions of terms used in the MOA and during the application of the OPP procurement process.

(B) The conditions under which the agreement can be terminated.

(C) Reference the agreed upon rates and factors and how they are applied to the cost data or cost information used to develop prices.

(D) Recommended profit rate and criteria for application of this rate.

(F) The procedures for engaging in the OPP process.

(G) How the items are identified and prioritized for the OPP process (e.g., strategic material sourcing (SMS) items, items with unfulfilled orders (UFOs), high-frequency items).

(H) How items will be handled if a fair and reasonable price cannot be agreed upon by both parties (e.g., table for a future pricing session, remove from consideration for an LTC).

(I) Any FAR, DFARS, DLAD, or local regulations applicable to the process (e.g. DFARS 215.404-1?).

(J) Special conditions that may be unique to the items or the particular contractor.

(K) Identify by name or by position the individuals authorized and required to sign the MOA and the effective date of the agreement.

(iv) The steps in the OPP process are:

(A) Engage the contractor to explain the OPP process.

(B) Create a draft MOA.

(C) Conduct a “mock” or practice pricing session by selecting a small group of items and walking through the OPP process as defined in the MOA.

(D) Finalize the MOA.

(E) Request and receive an independent audit opinion, as applicable.

(F) Conduct “live” pricing sessions.

(G) Discuss the underlying pricing data/information during the live session that results in adequate documentation to support a recommendation to award without negotiations at fair and reasonable prices.

(H) If required, obtain a certificate of current cost or pricing data.

(I) Document the results of the OPP pricing sessions in the combined pre-briefing memorandum/price negotiation memorandum (PBM/PNM) and reviewed in accordance with the DLAD and local guidance.

(J) Continue periodic live pricing sessions until:

(1) All viable items for the OPP process have been considered, or

(2) One or both parties decide to discontinue the OPP process.

PGI 15.406-1 Prenegotiation objectives.

(a) Procedures for resolving audit disagreements.

(1) Applicability: Contract proposals valued at $10 million or more.

(2) Definition: Significant disagreement – The situation that occurs when the contracting officer’s prenegotiation objective plans to sustain less than 75 percent of the total recommended questioned costs in the DCAA audit report. This does not include costs classified as “unsupported” in the audit report.

(3) Contracting officers are charged with making informed decisions utilizing the advice of specialists in audit, law, engineering, etc., to ensure we fulfill the requirements of our warfighters while obtaining the best business deal for the taxpayers. While the contracting officer and the auditor may not necessarily agree on every issue, it is expected that they will work together recognizing that it is the contracting officer’s ultimate responsibility to determine fair and reasonable contract value. This PGI establishes the DLA procedures for attempting to resolve significant disagreements in accordance with DoD policy.

(4) Resolution of contract audit disagreements.

(i) Prior to establishing the prenegotiation objectives, the contracting officer shall discuss the results of the audit report with the auditor to attempt to resolve disagreements.

(ii) The contracting officer shall document the results of the discussion with the auditor and the reasons for disagreement with specific elements of costs questioned by DCAA.

(iii) Approval of the prenegotiation objectives memorandum in accordance with local procedures confirms that the discussion with DCAA and the contracting officer’s basis for deviating from the audit recommendations has been adequately documented and supported.

(iv) If the approved prenegotiation objectives memorandum does not plan to sustain at least 75 percent of the total audit recommended questioned costs, the contracting officer shall notify the auditor in writing (email notification is acceptable). The notification will require DCAA to advise within 3 days if a higher level management review is requested. If DCAA confirms (in writing) to the contracting officer that a higher level review is requested, the contracting officer will provide the contact information of the higher level review authority (the HCA) and begin planning for discussions. Concurrent with providing the higher level review information to the auditor, the contracting officer shall notify their HCA through their chain of command that a higher level review has been requested by DCAA (activities for which J7 is the HCA shall notify the J73 Division Chief who notify the Director, DLA Acquisition (J7)). After all parties have been notified of the request for a higher level review, it is within the discretion of the contracting officer and his/her chain of command to decide whether negotiations should proceed or be suspended pending final resolution of the disagreement.

(v) Concurrent with notification to their HCA, DLA Energy, DLA Troop Support, DLA Land and Maritime, and DLA Aviation contracting officers shall also notify the J73 Division Chief of the request for higher level review. J73 will track the frequency and disposition of audit resolution issues.

(vi) At the HCA level, a review will attempt to determine if the auditor’s and the contracting officer’s positions can be reconciled. The contracting officer shall document the disposition of the higher level review of the disagreement(s) in a memorandum for the contract file.

(vii) If the HCA is other than J7 and is unable to resolve the differences with DCAA, the approving authority shall notify J73 with copies of the contracting officer’s documentation of the issue. In turn, J73 shall inform the Director of Acquisition Management, J7, of the unresolved audit and the possibility of discussions with the DCAA Director prior to any DCAA referral to the Director, Defense Procurement and Acquisition Policy.

PGI 15.406-3 Documenting the negotiation.

(a)(1) – (10) [Reserved.]

(a)(11) The price reasonableness code (PRC), a two position code incorporated into DLA’s enterprise business system (EBS), consists of a first position reviewer code and a second position type analysis code, as follows:

First Position: | Reviewer Code: |
B | Buyer Analysis only.
C | Complete Pricing Support to buyer (field cost/price analysis, audit and/or technical reports included as part of the pricing office’s report).
F | Field Pricing Support to buyer. (One or more to include field cost/price analysis, audit and/or technical review.)
P | Local Contract Pricing Office Support to buyer. (Does not include field audit, pricing or technical assistance reports.)
V | Local Value Engineering Office support to buyer.
X | Price reasonableness determination accomplished using pricing logic of the automated purchase procedure.
Second Position: | Type Analysis Code:
Instant buy price(s) determined reasonable because of:
A | Adequate price competition from at least two independent manufacturers of the item.
B | Adequate price competition from at least one manufacturer plus at least one independent non-manufacturing source for the item or involving two or more independent non-manufacturing sources.
C | Catalog priced item sold in substantial quantities to the general public.
D | Market priced item sold in substantial quantities to the general public.
E | Item price set by law or regulation.
F | Cost analysis of offeror’s/contractor’s cost or pricing data, e.g. for UCA definitizations. (For exclusive distributors/dealers and other non-manufacturers, such cost analysis must include review of manufacturing costs from their source of supply.)
G | Price comparison to prior price(s) determined reasonable via valid price analysis.
H | Independent Government cost estimate.
I | Other cost analysis or price analysis technique(s) (includes reviews of limited cost data).
Y | Contracting officer’s determination that prices are fair and reasonable in accordance with FAR 13.106.3 or when 13.202(a)(3) applies. Used only for manual awards below the simplified acquisition threshold. Not to be used for awards using PACE or other automated procedures. For future acquisitions, actions coded with “Y” shall not be used for comparison in determining price reasonableness.
Instant buy price(s) determined reasonable based on comparison to:
J | Adequate price competition occurring in a recent procurement in comparable quantities, terms and conditions for the same item where quotes/offers were received from at least two independent manufacturers of the item.
K | Adequate price competition occurring in a recent procurement in comparable quantities, terms and conditions for the same item where quotes/offers were received from one manufacturer plus at least one independent non-manufacturing source of the item or from two or more independent nonmanufacturing sources.
L | Adequate price competition occurring in a recent procurement in comparable quantities, terms and conditions for substantially the same item where quotes/offers were received from at least two independent manufacturers.
M | Adequate price competition occurring in a recent procurement in comparable quantities, terms and conditions for substantially the same item where quotes/offers were received from either one manufacturer plus at least one independent non-manufacturing source of the item or from two or more independent non-manufacturing sources.
N | Catalog price for the same item sold in substantial quantities to the general public.
O | Catalog price for substantially the same item sold in substantial quantities to the general public.
P | Market price for the same item sold in substantial quantities to the general public.
Q | Market price for substantially the same item sold in substantial quantities to the general public.
R | Item price set by law or regulation.
S* | Analysis of cost and pricing data submitted by the offeror for a recent buy of the same item (including ACO approved Government parts catalogs and formula arrangements covering parts for which a TINA waiver was not granted).
T* | Analysis of cost or pricing data submitted by the offeror of a recent buy of substantially the same item (including ACO approved Government parts catalogs and formula pricing arrangements covering parts for which a TINA waiver was not granted).
Instant buy price(s) reasonableness not required because:
W | Award is an unpriced purchase order or undefinitized contract action. (Use with Reviewer Code B only. Price reasonableness determination shall be made at time of contract/order definitization.
X | Price not reviewed for price reasonableness by pricing logic of automated purchase procedures. Code is only applied by the automated system if a price reasonableness threshold is used/set in the initial logic. System will use with Reviewer Code X only. Not to be used for manual awards.

* Restricted to noncompetitive negotiated contract actions not exceeding the Truth in Negotiations Act (TINA) threshold (FAR 15.403-1(b)(4)) unless cost or pricing data and certification are obtained for the new buy or the offeror identifies its previous cost or pricing data submission and certifies it is still current, accurate and complete for purposes of pricing the current contractual action.

PGI 15.406-3-90 Documentation - Acquisition of Services.

Contracting officers shall obtain the approval required by 15.406-3-90(a) using the following procedures.

(a) Heads of Contracting Activities and chiefs of contracting offices for contracting offices for which the Director, DLA Acquisition, is the Head of the Contracting Activity, are responsible for submitting a complete request package to DLA Acquisition Operations Division (J72), at least fifteen business days prior to the proposed award or issuance date.

(1) The DLA Acquisition Operations Division shall obtain coordination from the Acquisition Programs and Business Operations Division (J74) services program office.

(2) The complete request package shall then be routed by J74 to the responsible portfolio manager for the service for recommendation and to DLA Headquarters Office of General Counsel for legal review.

(3) For Defense Media Activity (DMA) actions, the same process shall be followed, except the package will be routed to the DLA Head of the Contracting Activity for concurrence and then provided to the Director, DMA for approval. The package shall be routed to the DMA Senior Services Manager (SSM) for coordination prior to routing to the Director, DMA.

(4) Finally, the complete request package shall be routed to the Senior Services Manager (SSM) for concurrence, and then shall be submitted through the Director, DLA Acquisition, to the Director, DLA, for approval. This paragraph does not apply to DMA actions.

(b) Request package.

(1) The request package shall include a staff summary sheet and draft approval memorandum for Director, DLA Acquisition, approval and signature. The request memorandum shall, as a minimum, state the following:

(i) Anticipated contract or task or delivery order number and modification if applicable. If not yet assigned, provide the request for quote or proposal number;

(ii) Anticipated vendor name and contractor and Government entity (CAGE) code;

(iii) Supporting narrative justification as to why the proposed fiscal year (FY) 12 or FY13 contract price is higher than the FY10 price and why the contract must or should be awarded at the higher price;

(iv) Steps taken to negotiate reduced rates or otherwise reduce the proposed contract price; and

(v) An explanation of the impact if this service is not acquired, as well as an explanation of the impact of decreasing the contract requirement to reduce the contract value so that it is equal to or under the amount paid for FY 2010.

(vi) For modifications, rationale why the modification is being issued.

(2) The following documentation shall be attached to the request package for reference:

(i) FY12 or FY13 labor and overhead rates (as applicable);

(ii) FY10 labor and overhead rates (as applicable), and associated contract or order number, vendor name, and CAGE code; and

(iii) A copy of the price negotiation memorandum or other document that determines the proposed price is fair and reasonable.

(3) If an integrated acquisition review board (IARB) phase 2 or phase 3 approval is required, recommend the request package be submitted with the IARB package.

PGI 15.408-90(c) Reverse auction candidate selection criteria and weekly reporting requirement.

(1) There is a weekly reporting requirement when the provision at 52.215-9023 or the clause at 52.215-9033 are used and Reverse Auctions (RA) are conducted by a DLA contracting activity. Each DLA contracting activity or office will email the reports to DLA HQ J74, Acquisition Programs and Business Operations Division, by the close of business each Friday. Direct savings will be calculated as the difference between the lowest pre-auction price and the lowest post-auction price, adjusted for quantity, escalation, and other factors necessary to achieve comparability. Definitions, calculation instructions, and reporting data elements are given in the following paragraph, (i) through (v).

(i) Definitions for direct savings calculations:

(A) Lowest pre-auction price: Lowest price offered prior to the auction, within the competitive range. This price may be obtained from the initial offer, revised offer, amendment, or other discussions or negotiations.

(B) Lowest post-auction price: Lowest price at the time the auction closes. This price may be from a different offeror than the lowest pre-auction offeror and may not be the award price.

(C) Total direct savings: Comparison of the lowest pre-auction price within the competitive range to the lowest post-auction price.

(ii) Total direct savings calculation:

(A) Lowest pre-auction price – lowest post-auction price = unit price savings

(B) Unit price savings X quantity = total direct savings

(iii) Historical savings calculation:

(A) Last price paid – final auction price = unit price savings

(B) Unit price savings X quantity = total historical savings

(iv) Long-term contracts (LTC) with estimated annual quantities savings: Report using lower case “e” when auction is performed. Report adjusted savings using plus (“+”) or minus (“–”) sign after lower case “r” once quantities are actualized (defined quantity is purchased) at end of base period or option year.

(v) Reporting data elements:

(A) Primary level field activity (PLFA) identifier;

(B) Date of report;

(C) Date of auction;

(D) Cumulative, by fiscal year, yearly number of auctions;

(E) Item with the NSN and nomenclature;

(F) Quantity as an annual estimated quantity or maximum quantity for LTCs;

(G) Reporting of RA savings by base year + options or reported in the year accrued;

(H) Type of acquisition, lowest price technically acceptable (LPTA) or best value;

(I) Final total auction price for LPTA or final award price for best value;

(J) Dollar savings or increase;

(K) Percentage savings or increase;

(L) Single award, task order on LTC or other, identified; and

(M) Comments.

(2) Criteria for selecting reverse auction candidates.

(i) General guidance:

(A) Reverse auctioning is an Internet-based or electronic commerce acquisition tool following traditional auction principles that allows the Government to procure goods and services from vendors/suppliers in a competitive and dynamic environment where the sellers successively bid prices down until the auction completes. A contract can be awarded to the winner provided it represents the best value and the rest of the offer is technically acceptable.

(B) Reverse auctions work well for competing for a delivery order for hardware or services on DoD, General Services Administration (GSA) schedules and other multiple-award type indefinite delivery/ indefinite quantity (IDIQ) type contracts. Reverse auctions are best suited for high volume, commodity type commercial items or commodity-like services, which do not need exact or lengthy specifications, are available off the shelf, and are based on competing by the price alone.

(ii) Reverse auction appears to be the best tool in certain procurements:

(A) In bulk commodity type procurements where the requirements can be well-defined or are universally understood (e.g., IT type equipment). Well-defined requirements for many forms of complex service type procurements are difficult to develop.

(B) Where the solicitation documents can be standardized with respect to procedures for the auction such as cut-off time, duration, extensions, communication interrupt procedures.

(C) Where there is a well-established supplier base for the goods.

(D) In situations where the award evaluation criteria is not subject to much interpretation, e.g., on low price versus more than one criteria that may involve trade-offs and subjective judgments.

(iii) Approach the reverse auction determination model by asking a series of questions:

(A) Is the procurement for a commodity or commodity-like service?

(B) Does the FAR allow those types of procurements?

(C) Does a reverse auction fit into the acquisition strategy?

(D) Can the requirement be defined well in a solicitation?

(E) Do the advantages outweigh the disadvantages?

(F) Has this type of item and/or service been done in a reverse auction before?

(G) What were the results and lessons learned?

(H) What is a fair auction starting price?

(I) Is there an established vendor base or price baseline?

(J) What type of market research needs to be done?

(K) How long will the process take?

(L) Do contracting vehicles exist for conducting a reverse auction that can easily be used?

(M) Is enough known about how to structure the solicitation instructions in Sections L and M?

(N) Can a reasonable estimate be made of what the auction will cost?

(O) Can the level of cost savings be estimated?

(P) Has consideration been given to the indirect or administrative costs when deciding whether the use of a reverse auction makes sense for the procurement?

PGI SUBPART 15.6 -- UNSOLICITED PROPOSALS

(Revised August 21, 2012 through PROCLTR 2012-47)

PGI 15.604-90 Agency procedures for handling of unsolicited proposals.

(a) DLA organizations that receive submissions from interested parties that appear to be within the scope of the unsolicited proposal (UP) coverage in FAR Subpart 15.6 shall forward them to their unsolicited proposal coordinator, as listed in (b) below. Upon receipt of a submission, whether from within the organization or directly from a submitter, the unsolicited proposal coordinator will immediately notify DLA Acquisition, J72 unsolicited proposal program manager that an unsolicited proposal has been received. For those unsolicited proposals received at HQ DLA Acquisition, the J72 unsolicited proposal program manager will determine the appropriate unsolicited proposal coordinator(s) for evaluation and processing.

(b) Unless otherwise directed by J72, the following are the unsolicited proposal coordinators responsible for receipt and disposition of unsolicited proposal, including providing DLA’s response to submitters, in accordance with (c) below.

(1) DLA Land and Maritime – Competition Advocate (primary) and Directorate of Procurement Process (alternate).

(2) DLA Troop Support – Chief, Pricing and Strategy Division.

(3) DLA Aviation – Chief, Pricing Division.

(4) DLA Energy –Associate Director, Acquisition Policy and Oversight.

(5) DLA Disposition Services – Chief, Acquisition Procedures Division.

(6) DLA Distribution – Chief, Acquisition Policy

(7) DLA Strategic Materials – Directorate of Contracting.

(8) DLA Logistics Information Service – Chief of the Contracting Office.

(9) DLA Contracting Services Office – Chief, Contract Clearance, Oversight, and Administration Office.

(10) DLA Document Services – Chief, Contracting Policy, Plans and Programs.

(c) Unsolicited proposal coordinators will:

(1) Be responsible for coordinating and processing unsolicited proposals in accordance with PGI 15.606-90.

(2) Protect the unsolicited proposal from unauthorized disclosure in accordance with FAR 15.602(a) and 15.609. Use the cover sheet at PGI 15.606-90(e).

(3) Contact the J72 unsolicited proposal program manager if it is determined that a unsolicited proposal may require wider consideration within DLA.

(4) Maintain an accurate and complete record of the disposition of all unsolicited proposals received.

(5) Ensure all affected evaluation offices and personnel are aware of the FAR guidance for evaluating unsolicited proposals and the prohibitions and rules regarding copying, disclosing, and using restricted data contained in the submission (see FAR 15.608 and 15.609).

(6) Ensure evaluators provide supporting rationale for their conclusions and recommendations. If the recommendation is to accept the submission as a unsolicited proposal, ensure evaluators indicate whether funds are currently available or programmed.

(7) Provide to any entity expressing interest to any DLA organization about submitting a unsolicited proposal the information covered by FAR 15.604(a)(1) through (6), as appropriate.

PGI 15.606-90 Agency procedures for review and evaluation of unsolicited proposals.

(a) The unsolicited proposal coordinator will review the submission and determine if it meets all unsolicited proposal requirements in accordance with FAR Part 15.606-1. The unsolicited proposal coordinator will notify the submitter in writing in accordance with FAR 15.606-1(b) or (c), depending on whether the submission is found to meet or not meet the requirements, no later than 10 business days after the unsolicited proposal coordinator’s receipt of the submission.

(1) If this initial letter provides an interim response stating that more review is required, it will state that the final response is expected to be completed within 30 business days from receipt of the submission, but that a further interim response will be provided at that time if evaluation cannot be completed within the 30 days, giving the estimated time for completion.

(2) In no event should the process take longer than 90 days from receipt of the submission; if it appears it will take longer, the unsolicited proposal coordinator will notify the J72 unsolicited proposal program manager and provide a complete explanation for the delay. J72 will then determine the final date for completing the evaluation and notifying the submitter.

(b) If necessary, the unsolicited proposal coordinator will forward the submission to the appropriate technical or other personnel for evaluation in accordance with FAR 15.606-2. If the evaluators request further information, the unsolicited proposal coordinator shall inform the submitter of the needed information, and that submission of the information will be at the submitter’s risk and expense, and shall create no obligation on the part of the Government. The J72 unsolicited proposal program manager will be advised that additional information from the submitter has been requested in order to complete the evaluation. After the evaluators have completed their analysis, they will advise the unsolicited proposal coordinator of their recommendation.

(c) Following the evaluation, the unsolicited proposal coordinator will inform the submitter by letter of the final determination concerning the submission.

(1) If the submission is not a valid unsolicited proposal or is otherwise unacceptable, the letter will state that determination and give an explanation of the rationale for the determination in accordance with FAR 15.603(c) and 15.607(a), as applicable.

(2) If the submission is determined to be a valid unsolicited proposal, the unsolicited proposal coordinator will inform the submitter of this but include a caution, in accordance with FAR 15.607(a), that a favorable comprehensive evaluation of an unsolicited proposal does not, in itself, justify awarding a contract without providing for full and open competition and that the unsolicited proposal will be provided to an appropriate contracting officer for a determination of whether further action is appropriate in accordance with FAR 15.607(b).

(3) A copy of the letter to the submitter indicating the disposition of the proposal will be provided to J72 unsolicited proposal program manager and maintained by the unsolicited proposal coordinator.

(d) Upon receipt of a valid unsolicited proposal from the unsolicited proposal coordinator, the responsible contracting officer will determine, in accordance with FAR 15.607(b) and in coordination with the appropriate requiring activity, whether contract action is appropriate. The contracting officer will notify the submitter in writing whether he/she is commencing negotiations on a sole source basis or will not commence negotiations because the requirements of FAR 15.607(b) are not met.

(e) A sample cover sheet is provided in Table 1 as follows and shall be used in all stages of the Government’s handling of an unsolicited proposal.

Table 1. Sample Cover Sheet for an Unsolicited Proposal.

Unsolicited Proposal --- Use Of Data Limited When this proposal is evaluated, all personnel must exercise extreme care to ensure that the information in this proposal is not disclosed to an individual who has not been authorized access to such data in accordance with FAR 3.104. This proposal should not be duplicated, used, or disclosed in whole or in part for any purpose other than evaluation of the proposal, without the written permission of the offeror. Written permission must be obtained from the submitter of the proposal before the proposal is released to an evaluator outside the Government. A written agreement shall be obtained from the evaluator not to reproduce, use, or disclose any information in the proposal. This notice does not limit the Government’s right to use information contained in the proposal if it is obtainable from another source without restriction. This is a Government notice, and shall not by itself be construed to impose any liability upon the Government or Government personnel for disclosure or use of data contained in this proposal. May Contain Proprietary Information Do Not Detach From Correspondence