Overview
This section establishes that construction price negotiations must follow FAR Part 15 procedures, with a specific emphasis on comparing offeror proposals against the Independent Government Estimate (IGE) to ensure price reasonableness and a mutual understanding of the scope.
Key Rules
- Adherence to FAR Part 15: Agencies must utilize the standard contracting by negotiation policies and procedures defined in Part 15 when handling construction requirements.
- Mandatory IGE Comparison: The Contracting Officer (CO) is required to evaluate all proposals and cost data (certified or otherwise) by comparing them directly to the Government estimate.
- Cost Element Verification: If certified cost or pricing data is not required, the CO should request specific supporting data (e.g., labor rates, material costs, or subcontractor quotes) for any cost elements that differ significantly from the IGE.
- Scope Reconciliation for Low Bids: If a proposed price is significantly lower than the IGE, the CO must verify that both the offeror and the Government estimator have a consistent understanding of the work scope.
- Correction of Estimates: If negotiations reveal errors in the IGE, the CO must correct the estimate and document the changes in the contract file.
- Use of Pricing Tools: COs are encouraged to use supplemental tools such as historical price comparisons (adjusted for site conditions) or "rough yardsticks" (e.g., cost per square foot or linear foot).
Practical Implications
- The Independent Government Estimate (IGE) acts as the primary benchmark for price analysis; significant deviations from this estimate will likely trigger "clarifications" or "discussions" to mitigate the risk of performance failure or overpayment.
- Contractors should be prepared to justify specific cost components (like fringe benefits or equipment allowances) even when a full certified cost or pricing data package is not legally mandated.