June 11, 2013

Working with Subcontractors on Price Analysis - Do You Cooperate or Instigate?

I'll continue with Internal Review discussions in the next post, but I've found an issue during my current support of a client preparing an FMS proposal that I thought might be helpful to review.

Believe it or not, subcontractors are often your best source for price analysis documentation. Many (MANY) procurement professionals seem to equate "Analysis and Evaluation" with "Antagonism and 'Hide the Ball'" Negotiation. This is an incorrect posture. Your subcontractor is your team member. It is not the role of the prime contractor to beat a subcontractor until they provide a lower price. In fact, the FAR clearly states that negotiation is intended to reach fair and reasonable pricing not necessarily to accomplish downward pricing.

When you treat someone aggressively, the natural (and correct) tendency is defense - treating subcontractors roughly only guarantees that they will not provide assistance when you really need it.

How should you treat your subcontractors when evaluating price? Easy answer - the same way you'd hope a prime would treat you. If you need supporting documentation from a subcontractor [on commercial item determinations to avoid TINA application, to get redacted funding documents to support a FAR 15.404-1(b)(2)(ii) analysis, etc.] there's nothing wrong with telling them why you want the information.

While supporting this FMS, I clearly communicate to subcontractors:

* Why I want supporting documentation [e.g. DCAA requires complete price analysis in accordance with 15.404-1(b)(2); adequate supporting documentation prevents unnecessary and potentially inappropriate downward negotiation, etc.];
* The bases for these requests (most of the foreign subs have never had exposure to a DCAA audit and need help understanding why we need documentation at all!); and

* Exactly what I need (e.g. explain available redactions, alternatives to primary supporting documentation, etc.).

When your subcontractor feels like a part of the team they're much more likely to act like a team player. That means open communication, clear direction and providing alternatives whenever practicable.