Transcript GOOD BUSINESS CASE PRACTICE, NOAA Acquisition Process Guide

GOOD BUSINESS CASE
PRACTICE,
NOAA Acquisition Process Guide
Background
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Price Negotiation Memorandum:
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Required by FAR 15.406-3
Why Business Cases?
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A Business Clearance is the artifact that demonstrates to the
stakeholders that the Contracting Officer has fulfilled his statutory and
regulatory responsibilities
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1.602-1(b) No contract shall be entered into unless the contracting officer
ensures that all requirements of law, executive orders, regulations, and all
other applicable procedures, including clearances and approvals, have been
met.
1.602-2 Contracting officers are responsible for ensuring performance of all
necessary actions for effective contracting, ensuring compliance with the
terms of the contract, and safeguarding the interests of the United States in
its contractual relationships. In order to perform these responsibilities,
contracting officers should be allowed wide latitude to exercise business
judgment. Contracting officers shall—
(a) Ensure that the requirements of 1.602-1(b) have been met, and that sufficient funds
are available for obligation;
(b) Ensure that contractors receive impartial, fair, and equitable treatment; and
(c) Request and consider the advice of specialists in audit, law, engineering, information
security, transportation, and other fields, as appropriate.
In Other Words …
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Cases
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Provide a framework in which the negotiator
prepares for negotiations
Convey to the reader that NOAA’s position—pre
and post negotiation—is a fair and reasonable
deal by forcing the negotiator to articulate the key
issues pertaining to the negotiations
Provide an audit trail for post-award review
Leave a guide for the next negotiation
Bottom Line
A good pre case demonstrates
that you have prepared for negotiations;
A good post case demonstrates
that the deal is a good one
Practical Guidance
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Organize it
Keep it simple
Get to the point
Make sure the wheels stay on
Organize it
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It doesn’t matter to the reviewer how the
contractor wrote the proposal or how your
team and you did the analysis; organize the
clearance to tell the story
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NEVER let the contractor dictate the direction of your
analysis or the format of your clearance
Organize your sections before you write the first word
Determine what is best explained using words, numbers
or pictures
Organize it (cont’d)
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Address each element of cost as a whole, unless it’s
absolute necessary to tell the story differently
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Direct Material by type
Material Overhead
Direct Labor by type
Labor Overhead
Other direct costs
General and Administrative costs
FCCM
Profit or fee
Organize it (cont’d)
Recommended Pre-negotiation clearance headers
Contractor
Proposal
DCAA Audit
Pre-negotiation
Objective
Recommended Post-negotiation clearance headers
Original
Contractor
Proposal
Revised
Contractor
Proposal*
*Last proposal prior to bottom line settlement
Negotiation
Settlement
Keep it simple
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Address the issues at the highest meaningful
level
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For example, within cost elements, group tasks by
estimating technique, either the contractor’s or
your’s
Avoid acronyms whenever possible
If you don’t understand what the contractor,
the auditor, or the technical evaluator did,
don’t explain it to the reader until you do
Get to the point: Plan “A”
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For each position in the clearance—contractor,
auditor and negotiator, tell me
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What is the estimate?
What is the estimate based on?
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How was it derived?
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Data from analogous work
Parametric (cost estimating relationships)
Engineering (time-motion studies, industry standards)
History
What are the mechanics of calculating the estimate?
What assumptions about the future caused the estimator to
adjust the base data to derive the estimate?
Why is it (un) reasonable?
Get to the point: Plan “B”
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For each position in the clearance—
contractor, auditor and negotiator, tell me
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Why Plan “A” won’t work
What judgment your are applying for now
What your plan is to improve the estimate during
negotiations
That you plan to tell me about it in the “Post”
Keeping the Wheels on
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Have you really told me the story
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The basis of your analysis is fully explained
 “The negotiator accepted the technical evaluator’s
engineering judgment” is unacceptable unless you
explain the basis of that judgment.
 Did you test the cost estimating relationships (CER)?
Just because the contractor says there is one, doesn’t
mean it’s true. That’s what regression analysis is for.
 Did you test for trends in the data, especially when the
estimate is based on analogous programs or historical
data
 For each cost element, have you addressed differences
in negotiation position due to:
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Quantities (labor hours and material dollars)
Rates (labor and indirect rates)
Timing (differences between the contractor, the auditor and
the negotiator due to differences in resource loading over
time)
Keeping the Wheels on (cont’d)
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Do all the numbers add?
Do all the numbers track?
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Is the grammar correct?
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Within the clearance body?
Between the clearance body and the exhibits?
Use complete sentences. A clearance is not PowerPoint or
instant messaging
Avoid passive voice whenever possible
Are all the blanks filled in?
Did you proofread it?
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Spell and grammar check are not substitutes for
proofreading
Business Cases: The Prime Directive
The numbers tell a story.
Either you can write the tale
or the Washington Post will.