CLC 056 Analyzing Contract Costs Questions and Answers 100% Correct(SCORED A+)

What is a fair price to the seller? - ANSWER-A fair price for the seller means that the seller will be able to satisfy the terms and conditions of the contract. An offer that is too low is considered unrealistic. It may: •Cut corners on the quality of the product •Deliver the product late •Default on delivery, forcing a time-consuming reprocurement •Refuse to deal with the government in the future Below-Cost Prices - ANSWER-Below-cost prices are NOT necessarily unfair to the seller. An offeror, for various reasons as part of business judgment, may decide to submit a below-cost offer. However, these types of offers are not invalid. Mistakes - ANSWER-The offered price may be unexpectedly low because the seller has made gross mistakes in estimating costs or is non-responsible. A prospective contractor must affirmatively demonstrate its responsibility, including, when necessary, the responsibility of its proposed subcontractors. Single-source Procurements - ANSWER-You need to remember that you CANNOT force a final price/cost that will be below cost on the offeror, even if you believe that the offeror has the financial ability to absorb the probable loss. Instead, negotiate a contract with a type and price that is likely to cover all allowable costs of performance, assume reasonable economy and efficiency, and provide a reasonable profit. Review FAR 15.404-4 and DFARS 215.404-4 on profit analysis. Ensure your opening position is based on a more optimistic reading of the potential production improvements, risks, and costs of providing the contract deliverable rather than targeting price.