Cost & Pricing #3 Flashcards
Guides prepared by the AFIT and FAI that provide guidance and negotiation personnel
Cost Pricing Reference Guide
Definition of fair and reasonable price
amount that a prudent buyer would spend
Definition of cost analysis
review and evaluation of the separate cost elements and proposed profit/fee of an offeror’s certified cost and pricing data
Definition of price analysis
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
Best price analysis method
competition
How to calculate the percentage change between two indices
NI/OI x 100-100= % change
Definition of fixed cost
remain constant, even as activity level changes
Definition of variable cost
increases or decreases with respect to each change in the activity level
Definition of semi-variable cost
includes a fixed and variable element
Who develops the Forward Price Rate Agreement?
Administrative Contracting Officer (ACO)
Negotiated between the KTR and the KO
Definition of price-related factor
adjustments required by law or regulation in order to complete price evaluation
What type of analysis is always required?
price analysis
Definition of a direct cost
cost tied to a single element or one cost objective
Definition of an indirect cost
any cost that can be tied to more than one cost objective
Cost of Money
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
Know when a cost realism analysis is required
for all cost type contracts
What is the equation of overhead or indirect cost
Pool divided by Base
There are two types of indirect costs
- Overheard
2. General and Administration
Know why General and Administration is different
accounts for general and executive office, staff services (legal, accounting, financial, etc), selling and marketing
Know limits on profit and fee
No limit on profit
no more than 15% for R and D
6% for A &E for public works or utilities
10% for other
Profit ___________ be charged on cost of money
cannot
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.
resolicit; negotiate
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.
re-solicit; negotiate
Define FOB Destination
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
