Monday, October 11, 2010

Additional Data Provided at Negotiations

After submitting a proposal, contractors have a continuing responsibility to provide current, complete, and accurate cost or pricing data right up until the date of agreement on price. Realistically, most of the updated data is provided just before or during contract negotiations rather than piece-mealed. Many things can change between the time the proposal was submitted and when negotiations begin. The pay raise that was projected for proposal purposes might have become historical data by the time of negotiations. Indirect rates could have changed. Perhaps there were some updated vendor quotations or subcontractor estimates. Or perhaps, because of other circumstances, that thing you were going to build in-house must now be outsourced. All of these events are cost or pricing data and must be disclosed to the Government (and certified to) prior to the date of agreement on price.

If the contracting officer requested an audit of your proposal and the audit resulted in significant findings, there is a strong likelihood that the auditor will participate in negotiations to answer questions about audit rationale/computations. Where significant updates were provided after the audit was completed, the contracting officer might also request the auditor to assess the propriety of the additional data provided. This may include, for example, providing advice on the contractor's rationale for a revised estimate, verifying data to the contractor's books and records or other supporting data, or running various Government position scenarios using the data through audit report schedules and underlying spreadsheets, where appropriate.

There is a fine line between supporting the negotiations process and performing additional audit work. The auditor will need to exercise some judgment here and there may be situations where he/she cannot comment on the updated data because of its significance relative to the proposal that was audited. Sometimes the auditor will have to back off and recommend the contracting officer request a supplemental audit.

Sometimes, with particular data, contractors think their chances of explaining its impact are better with the contracting officer then with the auditor so they withhold data from the auditor with the intention of providing it to the contracting officer at negotiations. Don't do that. If an auditor attends negotiations and finds that the contractor furnished data that should have been disclosed during the audit, it will not enhance your position and could very well lead to a referral for investigation.

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