Pre-Negotiation Business Clearance (Sole Source)

What: The Pre-Negotiation business clearance document, is submitted to the appropriate level contracting authority to show that applicable laws and regulations have been complied with and that the Government team has performed analyses needed to develop and support a realistic negotiation objective. The Pre-Negotiation Business Clearance presents:

• The prospective contractor’s proposal,
• Rationale for the contractor’s proposed cost/price broken down by various cost elements,
• The technical team’s recommendations,
• Recommendations received from DCAA and the DCMC assigned ACO,
• The basis for the various recommendations (with supporting rationale),
• The PCO/Contract Specialist’s negotiation objective position developed by an independent assessment of the recommendations and supporting rationale received from all parties.

These analyses generally include, types and quantities of labor, labor and indirect rates, material and other direct costs, material prices,and supporting rationale for the developed objective profit.

Although some business clearances can be supported through price analyses alone, the majority of high dollar value acquisitions require a detailed analysis of cost elements. In general terms, this consists of a detailed review of the Contractor’s proposal and estimating system, as well as proposed vs. Government requirements, to determine what the supplies or services should cost.

As a minimum, when detailed cost analysis is required, a supportable position should identify:

• The portion of the WBS/SOW being discussed,
• Why the work is necessary,
• How the contractor plans to meet the Government’s requirement,
• The basis for the contractor’s cost estimate,
• What the Government subject matter expert recommends, and
• The basis for the recommendation.

The basis of the recommendation should be discussed in terms of:

• How it was developed,
• Basis of the estimate,
• Why it’s reasonable and
• Why it deviates from or supports the Contractor’s proposal.

Note: Recommendations and analyses should be done at the most sensible level of the WBS so that a negotiator, reviewer and/or analyst can understand. Also, each WBS level discussed should roll up to the next level, i.e. all 4th level WBS’s should roll up to the 3rd level recommendation, to roll up to the 2nd level, etc.

Who: Although the Contracting Officer and Contract Specialist have overall responsibility for the clearance and negotiations, each team member is responsible for providing a recommendation to the PCO in their area of expertise. Likewise, the PCO is required to obtain a recommendation from DCAA, DCMAO, and internal subject matter experts, although he/she is not required to follow the recommendation. If the recommendation is not followed however, the PCO must identify that the recommendation was received, identify the basis of the recommendation, and explain why it wasn’t followed.

When: The Pre-Negotiation Business Clearance is submitted after all necessary cost/price analyses have been completed and a supportable negotiation objective has been established.

Results: If the clearance is approved, the PCO and the team have authority to commence negotiations with the contractor. If the clearance is not approved, the cognizant review/approval authority will either reject the clearance outright, under which condition the team must correct the problems identified and resubmit, or the clearance may be approved, conditioned upon meeting certain identified requirements which are to be specifically addressed in the post-negotiation clearance.

		Training Systems Division	Last Update: 10 February 2005