Cost & Pricing #3

Question 1

Guides prepared by the AFIT and FAI that provide guidance and negotiation personnel

Answer 1

Cost Pricing Reference Guide

Question 2

Definition of fair and reasonable price

Answer 2

amount that a prudent buyer would spend

Question 3

Definition of cost analysis

Answer 3

review and evaluation of the separate cost elements and proposed profit/fee of an offeror’s certified cost and pricing data

Question 4

Definition of price analysis

Answer 4

process of examining and evaluating a proposed price to determine if it is fair and reasonable, without evaluating its separate cost elements and proposed profit

Question 5

Best price analysis method

Answer 5

competition

Question 6

How to calculate the percentage change between two indices

Answer 6

NI/OI x 100-100= % change

Question 7

Definition of fixed cost

Answer 7

remain constant, even as activity level changes

Question 8

Definition of variable cost

Answer 8

increases or decreases with respect to each change in the activity level

Question 9

Definition of semi-variable cost

Answer 9

includes a fixed and variable element

Question 10

Who develops the Forward Price Rate Agreement?

Answer 10

Administrative Contracting Officer (ACO)

Negotiated between the KTR and the KO

Question 11

Definition of price-related factor

Answer 11

adjustments required by law or regulation in order to complete price evaluation

Question 12

What type of analysis is always required?

Answer 12

price analysis

Question 13

Definition of a direct cost

Answer 13

cost tied to a single element or one cost objective

Question 14

Definition of an indirect cost

Answer 14

any cost that can be tied to more than one cost objective

Question 15

Cost of Money

Answer 15

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 16

Know when a cost realism analysis is required

Answer 16

for all cost type contracts

Question 17

What is the equation of overhead or indirect cost

Answer 17

Pool divided by Base

Question 18

There are two types of indirect costs

Answer 18

1. Overheard

2. General and Administration

Question 19

Know why General and Administration is different

Answer 19

accounts for general and executive office, staff services (legal, accounting, financial, etc), selling and marketing

Question 20

Know limits on profit and fee

Answer 20

No limit on profit

no more than 15% for R and D
6% for A &E for public works or utilities
10% for other

Question 21

Profit ___________ be charged on cost of money

Answer 21

cannot

Question 22

If you have advertised a solicitation for less than 30 days and only receive one quote you have to _________. If you only get one offer, you must _________ the action.

Answer 22

resolicit; negotiate

Question 23

If you have advertised a solicitation for less than 30 days and only receive one quote you have to _________. If you only get one offer, you must _________ the action.

Answer 23

re-solicit; negotiate

Question 24

Define FOB Destination

Answer 24

KTR bears the expense of transporting the item to the government’s desired location. Risk of loss and damage passes to the government on arrival after acceptance

Question 25

DCAA proposal evaluation thresholds

Answer 25

$10 Million for fixed; $100 Million for cost-reimbursable

Question 26

Ar a minimum, FAR Part 15, you must analyze….

Answer 26

a technical evaluation, material and labor - how much and what kind

Question 27

FAR Part 15

Answer 27

Contracting by Negotiation

Question 28

Define facilities capital

Answer 28

typically means the net book value of tangible capital assets that are subject to depreciation (buildings and equipment NOT land)

Question 29

Who conducts pre-award survey determinations of contractor financial responsibility

Answer 29

DMCA

Question 30

How many CAS Standards

Answer 30

19

Question 31

Modified CAS Standards

Answer 31

4 (401, 402, 405, 406)

Question 32

Things we cannot do

Answer 32

1. Develop or approve overhead rates

2. Approve accounting systems

Question 33

Exceptions for CAS

Answer 33

Same as TINA

• Adequate price competition
• Price set by law/regulation
• Commercial item
• Waiver from Head of the Agency