15.406-3 Documenting the negotiation.

(S-90) A Price Negotiation Memorandum (PNM) shall be prepared for contracting actions as described below and included in the official contract file. A PNM is not required for orders for pre-priced supplies or services placed against an established single award indefinite delivery contract, for telecommunication services and equipment accomplished using the I/Q/O process or the North Atlantic Treaty Organization (NATO) Allied Long Lines Agency (ALLA)/National Allied Long Lines Agency (NALLA) circuit demand process under the threshold for the test program for certain commercial items of $6.5M, and actions at or below the micro-purchase level). The PNM fulfills the documentation requirements in FAR 15.406-3 and provides the determination of fair and reasonable pricing.

(1)  For competitive open market, competitive Small Business Administration (SBA) Section 8(a), and competitive GSA Schedule acquisitions, use the "Competitive PNM" format; except, for FAR Parts 12 and 15 acquisitions in which the HCO or HCA serve as the Source Selection Authority, use the "Source Selection Decision Document (SSDD)" format in lieu of the PNM format.

(2)  For competitive acquisitions against indefinite delivery contracts with pre-established rates (e.g., labor rate), use the "IDIQ PNM" format.

(3)  For competitive acquisitions resulting in only one offeror, subject to the requirements of the OSD Memo, Improving Competition in Defense Procurements dated 24 Nov 10, use the "Sole Source PNM" format.

(4)  For sole source open market acquisitions and sole source SBA Section 8(a) acquisitions at or below the simplified acquisition threshold, or sole source orders placed against established indefinite delivery contracts or GSA Schedules at any dollar value, use the "Sole Source PNM" format.

(5)  For sole source open market acquisitions or sole source SBA Section 8(a) acquisitions above the simplified acquisition threshold, use the "Pre-PNM" and "Post-PNM" formats (formerly known as Pre- and Post-Business Clearance Memos (BCMs)).

(6)  For pricing modifications to contracts or orders that were previously competed and have pre-established rates, use the "Modifications PNM" format.

(7)  For pricing modifications to contracts or orders that do not include pre-established rates (e.g., cost type pricing modifications), use the "Pre-PNM" and "Post-PNM" formats.

** The PNM templates are located at https://www.ditco.disa.mil/DitcoContractingTemplates/doku.php?id=price_negotiation_memorandum_pnm_templates.

(S-91) Approvals at the contracting officer level are required for Competitive PNMs, IDIQ PNMs, or Sole Source PNMs as identified above. The contracting officer must sign these PNMs before the award of the contract/order/modification and place a copy in the official contract file.

(S-92) Pre- and Post-PNMs and Sole Source PNMs valued over $6.5M shall be routed electronically to a DITCO Contract Cost/Price Analyst for review/coordination prior to approval. Routing to the Cost/Price Analyst is not required when pricing is based on established catalog or market prices, when prices are set by law or regulation, or a fair and reasonable price determination can be made by the contracting officer by comparing prices or rates against an existing or previous Government contract.

(S-93) The approval authorities for Pre-PNMs and modification PNMs are as follows:

(1)  Contracting Officer -- contract actions not exceeding $6.5M, but not above the dollar limitation of his/her warrant. If the contracting officer is negotiating the effort and preparing the Pre-PNM, the Pre-PNM will be approved at least one level above the contracting officer.

(2)  One level above the contracting officer -- contract actions valued at more than $6.5M but less than $10M.

(3)  Head of the Contracting Office (HCO) -- contract actions from $10M but less than $50M.

(4)  Head of the Contracting Activity (HCA) -- contract actions valued at $50M or more.

(S-94) The approval authorities for DITCO Post-PNM clearances are the same as those listed for the Pre-PNM above.

(S-95) A Post-PNM is required, but the Post-PNM approval may be waived when the negotiated agreement is within the threshold approved in the pre-PNM and where there were no significant changes to the terms, conditions, or assumptions under which the pre-PNM was developed and approved. If the post-PNM approval is waived, a waiver statement will be included in the post-PNM and signed by the contracting officer. The waiver statement shall state the following: "Approval of the Post-PNM is not required, since the negotiated price is within the approved pre-negotiation objective, and there were no material changes to the pre-PNM terms, conditions, or assumptions."

Table 15-1

COMPETITIVE ACQUISITIONS

*Exception: When the HCO or HCA serves as the Source Selection Authority, a "Source Selection Decision Document" shall be used in lieu of a PNM

SOLE SOURCE ACQUISITIONS

MODIFICATIONS