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   <concept id="DFARS_PGI_215.406-1"
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      <title class="- topic/title ">
         <ph props="autonumber" class="- topic/ph ">PGI 215.406-1</ph> Prenegotiation objectives.</title>
      <conbody class="- topic/body  concept/conbody ">
         <p class="- topic/p " outputclass="List1">(a) Also consider—</p>
         <p class="- topic/p " outputclass="List3">(i) Data resulting from application of
work measurement systems in developing prenegotiation objectives;
and</p>
         <p class="- topic/p " outputclass="List3">(ii) Field pricing assistance personnel
participation in planned prenegotiation and negotiation activities.</p>
         <p class="- topic/p " outputclass="List1">(b) Prenegotiation objectives, including
objectives related to disposition of findings and recommendations
contained in preaward and postaward contract audit and other advisory
reports, shall be documented and reviewed in accordance with departmental
procedures.</p>
         <p class="- topic/p " outputclass="List3">(i) <i class="+ topic/ph hi-d/i ">Significant Disagreements.</i> (A)
Contracting officers and contract auditors have complementary roles
in the contracting process and are expected to collaborate to determine
fair and reasonable contract values, in accordance with <xref href="http://www.acq.osd.mil/dpap/dars/pgi/memos/20091204%20Resolving%20Contract%20Audit%20Recommendations.pdf"
                  format="pdf"
                  scope="external"
                  class="- topic/xref ">Director, Defense Procurement
and Acquisition Policy memorandum dated December 4, 2009, Subject:
Resolving Contract Audit Recommendations</xref>. When a significant
disagreement arises on questioned costs, the contracting officer
and the auditor shall discuss the basis of the disagreement. The
contracting officer shall document that discussion and their disagreement
in a written communication to the auditor. The contracting officer
shall also document the disagreement in the prenegotiation objective
(or pre-business clearance). The contracting officer may then proceed with
negotiations when the prenegotiation objectives are approved.</p>
         <p class="- topic/p " outputclass="List4">(B) A significant disagreement is defined
as the contracting officer planning to sustain less than 75-percent
of the total recommended questioned costs in a Defense Contract
Audit Agency (DCAA) audit report of a contractor proposal for an
initial contract or a contract modification with a value equal to
or greater than $10 million. It does not apply to costs that DCAA
has categorized as unsupported or unresolved in its audit report.</p>
         <p class="- topic/p " outputclass="List1"> (ii)<i class="+ topic/ph hi-d/i "> Adjudication Procedures. </i>DCAA has 3 days to elevate the issues within the contracting officer’s activity after receipt of the contracting officer’s written communication confirming the disagreement. Furthermore, DCAA may appeal the significant issues up the chain of command as established in each component’s “Resolving Contract Audit Recommendations” policy. If issues remain, the Director, DCAA may escalate from the Defense component’s head of contracting activity or senior procurement executive, to the Principal Director, DPCAP. If the DCAA Director believes that the Principal Director, DPCAP has not adequately addressed the matter, the disagreement may finally be elevated to the Under Secretary of Defense for Acquisition and Sustainment, , and the Comptroller.</p>
         <p class="- topic/p " outputclass="List3"> (iii) Notwithstanding the above, the Director, DCAA, may always raise audit issues to the Principal Director, DPCAP.</p>
         <p class="- topic/p " outputclass="List1"> (c) <i class="+ topic/ph hi-d/i ">Cost estimates for program baselines and contract negotiations for major defense acquisition programs.</i>
         </p>
         <p class="- topic/p " outputclass="List3">(i) For the purpose of contract negotiations
and obligation of funds under this paragraph, the Government shall
prepare cost analyses and targets based on the Government's reasonable
expectation of successful contractor performance in accordance with
the contractor's proposal and previous experience.</p>
         <p class="- topic/p " outputclass="List3">(ii) Cost estimates developed for baseline
descriptions and other program purposes by the Director of Cost
Assessment and Program Evaluation pursuant to its functions, do
not meet the criteria described in paragraph (c)(i) of this subsection
and, thus, shall not be used for purposes of developing the Government’s
contract negotiation position or for the obligation of funds. However,
the Government may consider the data used to develop such estimates
when developing the cost analyses and targets described in paragraph
(c)(i) of this subsection.</p>
         <p class="- topic/p " outputclass="List1">(d) See Frequently asked ‘Questions and
Answers” at http://www.acq.osd.mil/dpap/cpic/cp/sec_808_NDAA.html
relating to the limitations placed on the Department of Defense
for aggregate annual amounts available for contracted services in accordance
with section 808 of the National Defense Authorization Act for Fiscal
year 2012, P.L. 112-81 and DFARS Class Deviation 2012-O0012, Limitation
on Amounts Available for Contracted Services, dated July 31, 2012.</p>
      </conbody>
   </concept>
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