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Contracting by Negotiation

Negotiation is the term used to describe a procurement method other than sealed bidding.  The solicitation form in negotiation is known as a "Request for Proposal" (RFP) and contains:

Generally, the RFP requires: (1) a technical proposal describing the offeror's approach to providing required goods and services, (2) a cost/price proposal describing estimated costs or price, and (3) a discussion of the offeror's past performance on contracts of a similar or related nature.  Instructions for preparing these sections are explicit and deserve close attention.  Moreover, you should show carefully how you will fulfill all RFP requirements and provide all requested certifications and representations.  All proposals must be received by the specified time and due date. Questions should be directed to the contracting officer designated in the RFP.

An alternative methodology that may be used for negotiated procurement uses oral presentation in place of all or part of a written proposal.  If oral presentations are anticipated, the solicitation will provide clear instructions for how to prepare them.  While the final decision concerning negotiated contract awards must consider cost, the decisive factor is usually which proposal offers the greatest value in terms of quality of management, technical capability, cost, past performance, and other relevant factors.  These factors and their relative importance are contained in the RFP.  All proposals will be judged on the basis of how well they meet these "Evaluation Factors for Award."  For this reason, it is extremely important that you submit a complete, relevant, and well-documented technical proposal that clearly illustrates how you intend to satisfy each of the evaluation factors.  Unlike proposals submitted in sealed bidding, proposals submitted for negotiation are not publicly opened.  The contracting officer keeps the cost proposal for his/her evaluation and forwards the technical proposals to a review panel that will evaluate them against the factors for award stated in the RFP.

The panel then determines which proposals are technically acceptable.  Following the initial evaluation of proposals, a competitive range is established.  A proposal may fall within the competitive range if it has a reasonable chance of being selected for award.  Written and oral discussions are held with all the firms whose proposals are in the competitive range. After these negotiations, the agency requests final proposal revisions. After this offer has been made, the agency selects for award the qualified offeror that has provided the most advantageous proposal from both a quality and cost standpoint.  The entire competitive negotiation process, from announcement of the RFP to contract award, may take from three to nine months.  Keep this time frame in mind when allocating resources and estimating costs.  Those offerors determined not to be in the competitive range are notified.  Announcement of the successful offeror cannot be made until the entire process has been completed.  The negotiation method is time consuming with a good deal of oversight to ensure full and open competition.  The contracting officer directs the process and is the appropriate person to contact for the status of proposals.

Contracts resulting from the negotiation process may range from firm-fixed price, under which the contractor delivers products conforming to specifications at a specified price, to a cost-plus-fixed-fee (CPFF) basis, under which the agency reimburses the contractor for all allowable and reasonable costs incurred within contract limits, plus a fixed fee.

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