Price or Cost Analysis

Question 1

What type of contracts put more risk on the contractor?

Answer 1

Fixed-price contracts

Question 2

What FAR reference provides specific pricing policies?

Answer 2

FAR 15.401 and 15.402

Question 3

T/F: price means cost plus any fee or profit applicable to the contract type.

Answer 3

true

Question 4

T/F: Fair and reasonable is not explicitly defined in the FAR and is determined based on the judgment of the contracting officer.

Answer 4

true

Question 5

____________ normally establishes price reasonableness

Answer 5

competition

Question 6

When contracting on a firm-fixed price basis, what will usually satisfy the requirement to perform a price analysis?

Answer 6

a comparison of proposed prices

Question 7

T/F: Cost realism analyses can never be used on fixed-price incentive contracts.

Answer 7

false; When justified, cost realism analyses may also be used on fixed-price incentive contracts or, in exceptional cases, on other competitive fixed-price-type contracts.

Question 8

What is the objective of proposal analysis?

Answer 8

to ensure that the final agreed-to price is fair and reasonable (FAR 15.404-1(a)).

Question 9

When a contracting professional determines that a price is reasonable, what does that mean?

Answer 9

They made a decision based on what a prudent and competent buyer would be willing to pay.

Question 10

Price analysis is used…

Answer 10

-When certified cost or pricing data are not required.
-To verify that the overall price offered is fair and reasonable.

Question 11

Cost analysis is used…

Answer 11

-To evaluate the reasonableness of individual cost elements
-To evaluate data other than certified cost or pricing data to determine cost reasonableness or cost realism

Question 12

When using Simplified Acquisition Procedures at FAR Part 13, whenever possible, the contracting officer should base price reasonableness _________.

Answer 12

on competitive quotations or offers

Question 13

When using a sealed bid source selection approach at FAR Part 14, the contracting officer shall determine ________.

Answer 13

that prices offered are reasonable before awarding the contract.

Question 14

etermining price reasonableness in a sealed bidding approach is typically accomplished by:

Answer 14

comparing prices offered and accepting the lowest price proposed from a responsible bidder

Question 15

The overall goal of cost analysis is to determine _________________.

Answer 15

whether the price is reasonable (not too high) and if the underlying costs are realistic (not too low)

Question 16

What requires contractors to provide actual costs and cost estimates in the form of certified cost or pricing data to aid the contracting officer in determining fair and reasonable prices.

Answer 16

TINA (Truth in Negotiation Act)

Question 17

According to FAR 2.101, cost or pricing data…

Answer 17

Is factual

Question 18

T/F:Certified cost or pricing data should be obtained for acquisitions at or below the simplified acquisition threshold, or when an exception applies.

Answer 18

false

Question 19

What are some exceptions to obtaining certified cost of pricing data IAW FAR 15.403-1(b) are

Answer 19

-Adequate price competition;
-Prices set by law or regulation
-Commercial items
-Waivers
-Modifying a contract for a commercial item

Question 20

Before burdening contractors with providing data, where shall the contracting officer first obtain data to determine a fair and reasonable price?

Answer 20

The government or other secondary sources

Question 21

A contractor assumes the least cost risk in which type of contract?

Answer 21

cost plus fixed fee contracts

Question 22

when does unbalanced pricing occur?

Answer 22

when the overall price appears reasonable but cost or price analysis indicates the price of one or more contract line items is significantly over or understated.