Contracting Exam 6

Question 1

When is it appropriate to use cost realism?

Answer 1

For all cost type contracts.

Question 2

Who develops the Forward Price Rate Agreements (FPRA)?

Answer 2

The ACO (DCMA) and Contractor

Question 3

What is the Contracting Pricing Reference Guide (CPRG)?

Answer 3

The basic guide for basic pricing policy

Question 4

Fair and Reasonable price is determined by:

Answer 4

• Economic conditions
• Supply and Demand
• Competition

Question 5

________ analyzes prices in their entirety

Answer 5

Price Analysis

Question 6

________ analyzes prices by reviewing the individual elements of cost (price) & the appropriateness & necessity of each element of cost

Answer 6

Cost Analysis

Question 7

________ independently reviews cost elements to determine are they realistic for the work to be performed.

Answer 7

Cost Realism

Question 8

_______ costs remain constant, even as activity level changes.

Answer 8

Fixed Costs

Question 9

________ costs which increase or decrease with respect to each change in the activity level.

Answer 9

Variable Costs

Question 10

_______ fixed portion & variable portion

Answer 10

Semi-Variable Cost

Question 11

True of False: There is no maximum profit?

Answer 11

TRUE

Question 12

When is it appropriate to use cost realism?

Answer 12

For all cost type contracts.

Question 13

When is it appropriate to use cost analysis?

Answer 13

When TINA applies, you must use cost analysis

Question 14

When is it appropriate to use price analysis?

Answer 14

You must use price analysis to determine if a price is fair and reasonable when an offeror is not required to provide certified cost and pricing data.

Question 15

What is the best definition of a price related factor?

Answer 15

A situation where you must determine the benefit associated with two different things (i.e. lease vs. buy GFP, FOB Origin or Destination).

Question 16

Overhead is developed by the contractor using ___________________.

Answer 16

Pool over Base

Question 17

True or False: Cost of money must be removed before profit is applied.

Answer 17

True

Question 18

Define Cost of Money:

Answer 18

Cost of Money is an imputed (or hypothetical) measure of the cost of capital related to facilities investment that is calculated using a rate set by the Secretary of the Treasury.

Question 19

What is a “fair and reasonable” price?

Answer 19

• Fair to both parties
• Too high or too low
• To a prudent and competent buyer

Question 20

Cost Accounting Standards are:

Answer 20

Standards designed to achieve uniformity and consistency in cost accounting practices governing measurement, assignment, and allocation of costs to contracts with United States Government.

Question 21

There are two types of CAS coverages. They are:

Answer 21

• Full: all 19 standards required

- Modified: 4 standards required

Question 22

Who submits the Disclosure Statement (DS)?

Answer 22

The Contractor.

Question 23

True or False: Contracting officers cannot charge profit on the cost of money.

Answer 23

True

Question 24

Cost of Money equation problem is:

Answer 24

Base x Factor, add it together

Question 25

CPFF fee maximums are:

Answer 25

R&D 15%

10% on others

Question 26

What are the two categories of Indirect Costs?

Answer 26

• Overhead

- G&A

Question 27

DCAA Proposal Review Thresholds:

Answer 27

$100 Million Cost-Reimbursable, $10 Million Fixed Price.

Question 28

What are the 5 types of price analysis. Which one is the most preferred?

Answer 28

• Other proposed (PREFERRED)
• Historical proposed
• Parametric
• IGE
• Commercial pricing

Question 29

How do you calculate the relative price difference between two indexes?

Answer 29

NI/OI = Price difference

Question 30

What is a Forward Pricing Rate Agreement (FPRA) and who negotiates it? (All answers are correct on Test!)

Answer 30

• FPRA is the formal binding agreement between ACO and contractor.
• FPRA are unilateral rates developed by ACO.
• FPRA are bilateral agreements resulting from negotiations with the contractor.