FAR 15.4 Contract Pricing

Question 1

What is Price Analysis?

Answer 1

Evaluate proposed price without evaluating separate cost elements and profit. Analyzing the “bottom line” proposed price.

How we shop every day. Example: Buying a car. We care about the bottom line pricing.

Question 2

What is Cost Analysis?

Answer 2

Analyzing the Individual cost elements of a proposed price.
Shall be used to evaluate cost elements when Certified Cost or Pricing Data is required.
Can perform Cost analysis on “other than certified” cost or pricing data.

Question 3

What is the Preferred Price Analysis Technique?

Answer 3

Adequate Price Competition

Question 4

What are the less preferred methods for Price Analysis?

Answer 4

Comparison to Historical Pricing (Quantity Differences, size of production runs, extent of competition, market conditions).

Comparison w/ published price lists, market prices.

Comparison to independent Government Estimate (IGE)

Comparison to market research for same or similar items.

Parametric analysis (rough yardstick) Example: Price per foot, Price per yard.

Analysis of other than Certified Cost or Pricing data provided by the offeror.

Question 5

What are the Elements of Cost? (5)

Answer 5

Labor (How many hours? What’s the price per hour?) (Fringe Benefits)

Material (Raw material, purchased parts, Subcontractor Costs) (Purchase history, quotes, proposal)

Other Direct Costs (ODCs) - Travel (FTR/JTR), Royalties, Preservation, Packaging, Packing, Special Tooling, Equipment)

Indirect Costs/Overheads - Labor Overhead and Material Overhead. (FPRRs/FPRAs help with this)

G&A

Question 6

What are Labor Costs?

Question 7

What are Material Costs?

Question 8

What are Other Direct Costs (ODCs)?

Question 9

What are some examples of Indirect Costs/Overheads?

Question 10

What do we mean when we talk about G&A?

Answer 10

Management, financial, and other expenses related to the general management and administration of the business unit as a whole.

Question 11

What is Profit or Fee used for?

Answer 11

Used to promote efficient performance.

Question 12

How do we determine Profit (Fixed Price) or Fee (Cost Reimbursement)? (DFARS 215-404-70)

Answer 12

Weighted Guidelines

Question 13

When is Certified Cost or Pricing Data required? (FAR 15.406-2)

Answer 13

Actions over TINA ($2 Million)

Question 14

What are some exceptions to Certified Cost or Pricing Data?

Answer 14

Adequate Price Competition

Price set by law or regulation

Commercial Item (FAR 12)

Cost or Pricing data is Waived by the HCA

Question 15

What is Other than Certified Cost or Pricing Data?

Answer 15

Pricing data, cost data, and judgmental information necessary for the CO to determine a fair and reasonable price,.

May include the identical types of data as CCPD but without the Certification.

Any information reasonable required to explain the offeror’s estimating process.

Question 16

When must you reach out to PZCF for Pricing Support?

Answer 16

AFLCMC: $25 Million

AFSC and AFNWC: $10 Million

All Competitive Acquisitions: $100 Million

Question 17

What is used to Document the story of how the PCO came to find the Price Fair and Reasonable?

Answer 17

Price Negotiation Memorandum

Question 18

What is Defective Pricing referring to?

Answer 18

When CCPD was required, but the contractor did not submit or disclose to the Government current, accurate, or complete information.

Also known as a Post Award Audit.

Question 19

What happens when defective pricing is found?

Answer 19

Provides for a reduction in the contract price whenever the CO determines that the contract price increased by a significant amount because the contractor furnished inaccurate, incomplete, or non-current cost or pricing data.

Question 20

Who is performing a data sweep?

Answer 20

Contractor

Question 21

What is a data sweep?

Answer 21

When the KTR audits themselves to see if they used current, accurate, and complete information to provide their CCPD.