Before negotiation, which prices must POM include?

Before negotiation, which prices must POM include?

• A. IGCE price only
• B. IGCE price, Proposal price, and Objective price
• C. IGCE price and Objective price
• D. Proposal price only

Answer: (C)

The main idea is that the pre-negotiation plan uses two price anchors to guide the process: the independent government cost estimate (IGCE) and an internal target (the Objective price). The IGCE is the government’s own estimate of what the work should cost, built from the project scope, resources, labor, materials, overhead, and other costs. It provides a neutral baseline to compare bids against and to shape negotiation expectations. The Objective price, often called the target price, is the government’s negotiated price goal. It reflects market conditions, risk, and a reasonable profit allowance, and it guides negotiators on what price is considered achievable and acceptable. The proposal price, while important for evaluating bids during the competition, isn’t included in the POM before negotiation because it comes from the bidder and would bias planning. The POM should rest on the government’s own estimates and targets, not on the offers received. So, before negotiation, the POM includes the IGCE price and the Objective (target) price.

The main idea is that the pre-negotiation plan uses two price anchors to guide the process: the independent government cost estimate (IGCE) and an internal target (the Objective price). The IGCE is the government’s own estimate of what the work should cost, built from the project scope, resources, labor, materials, overhead, and other costs. It provides a neutral baseline to compare bids against and to shape negotiation expectations.

The Objective price, often called the target price, is the government’s negotiated price goal. It reflects market conditions, risk, and a reasonable profit allowance, and it guides negotiators on what price is considered achievable and acceptable.

The proposal price, while important for evaluating bids during the competition, isn’t included in the POM before negotiation because it comes from the bidder and would bias planning. The POM should rest on the government’s own estimates and targets, not on the offers received.

So, before negotiation, the POM includes the IGCE price and the Objective (target) price.