CON 1300 CONTRACT AWARD: UNIT 2
PRICE OR COST ANALYSIS EXAM
QUESTIONS AND ANSWERS
The chosen contract type and price (or estimated cost and fee) should: - ANSWER-*
Result in reasonable risk to the contractor and the government.
* Provide the contractor with the greatest incentive for efficient and economical
performance.
According to FAR 16.101, contract types vary according to what two elements? -
ANSWER-1) The degree and timing of the responsibility assumed by the contractor for
the costs of performance; and
2) The amount and nature of the profit incentive offered to the contractor for achieving
or exceeding specified standards or goals.
What are the main functions of the contract type? - ANSWER-To allocate responsibility
for cost, technical (performance), and/or schedule (delivery) risk between the
government and contractor and to motivate the contractor's performance in these areas.
What are the two elements of the compensation arrangement? - ANSWER-1) Cost
2) Profit/fee
What are the aspects that need to be considered when evaluating an offer in
accordance with the evaluation criteria from the solicitation? - ANSWER-* Stability and
clarity of the contract specifications or statement of work.
* Stability technology driving this requirement.
* Type and complexity of the item or service being purchased.
* Urgency of the requirement, and the delivery schedule.
* Contractor technical capability and financial responsibility.
* Extent and nature or proposed subcontracting.
A critical responsibility of a contracting officer is to determine proposed prices to be
______ and _______ in all contract actions. - ANSWER-fair, reasonable
Which items help contracting officers determine whether prices are fair and reasonable?
- ANSWER-* Economic conditions (inflation and interest rates) and market conditions
(supply, demand, technology, alternatives, competition) change over time.
* The government what they paid for their contracts.
Specific steps to determine whether prices are proposed are fair and reasonable. -
ANSWER-Proposal analysis
What are the proposal techniques? - ANSWER-* Price analysis
, * Cost analysis
* Cost realism analysis
* Technical analysis
* Unit pricing
* Unbalanced pricing
Examining and evaluating proposed total price and not the separate cost elements and
profit. - ANSWER-Price analysis
Review and evaluation of separate cost elements and profit/fee.
Must be done on cost-reimbursement contracts and may be done on fixed price
contracts. - ANSWER-Cost analysis
Evaluating estimated elements to determine if they:
* Are realistic for the work to be performed.
* Reflect clear understanding of the requirement
* Are consistent with the approach outlined in the contractor's proposal.
* Shall be used for COST reimbursement contracts
* May be used on competitive, fixed-price incentive, and other fixed-price contracts
when
Purpose is to determine the most probable cost. - ANSWER-Cost realism analysis
Analyzing the need and reasonableness of the proposed elements in the technical
approach
* Minimum analysis is required for types and quantities of material as well as types,
quantities, and mix of labor hours. - ANSWER-Technical analysis
Except when pricing an item on the basis of adequate price competition or catalog or
market price, _______ prices shall reflect the intrinsic value of an item or service and
shall be in proportion to an item's base cost. FAR 15.404-1(f)(1) - ANSWER-unit
[True or False]: Except for the acquisition of commercial products or commercial
services, contracting officers shall require that offerors identify in their proposals those
items of supply that they will not manufacture or to which they will not contribute
significant value, unless adequate price competition is expected. - ANSWER-True
When overall price appears reasonable but cost/price analysis indicates the price of one
or more contract line items is significantly over or understated. - ANSWER-Unbalanced
pricing
What are the three objectives of determining reasonable pricing? - ANSWER-1)
Purchase from responsible sources at fair and reasonable prices.
2) Price each contract separately and independently.
3) Exclude contingencies.
PRICE OR COST ANALYSIS EXAM
QUESTIONS AND ANSWERS
The chosen contract type and price (or estimated cost and fee) should: - ANSWER-*
Result in reasonable risk to the contractor and the government.
* Provide the contractor with the greatest incentive for efficient and economical
performance.
According to FAR 16.101, contract types vary according to what two elements? -
ANSWER-1) The degree and timing of the responsibility assumed by the contractor for
the costs of performance; and
2) The amount and nature of the profit incentive offered to the contractor for achieving
or exceeding specified standards or goals.
What are the main functions of the contract type? - ANSWER-To allocate responsibility
for cost, technical (performance), and/or schedule (delivery) risk between the
government and contractor and to motivate the contractor's performance in these areas.
What are the two elements of the compensation arrangement? - ANSWER-1) Cost
2) Profit/fee
What are the aspects that need to be considered when evaluating an offer in
accordance with the evaluation criteria from the solicitation? - ANSWER-* Stability and
clarity of the contract specifications or statement of work.
* Stability technology driving this requirement.
* Type and complexity of the item or service being purchased.
* Urgency of the requirement, and the delivery schedule.
* Contractor technical capability and financial responsibility.
* Extent and nature or proposed subcontracting.
A critical responsibility of a contracting officer is to determine proposed prices to be
______ and _______ in all contract actions. - ANSWER-fair, reasonable
Which items help contracting officers determine whether prices are fair and reasonable?
- ANSWER-* Economic conditions (inflation and interest rates) and market conditions
(supply, demand, technology, alternatives, competition) change over time.
* The government what they paid for their contracts.
Specific steps to determine whether prices are proposed are fair and reasonable. -
ANSWER-Proposal analysis
What are the proposal techniques? - ANSWER-* Price analysis
, * Cost analysis
* Cost realism analysis
* Technical analysis
* Unit pricing
* Unbalanced pricing
Examining and evaluating proposed total price and not the separate cost elements and
profit. - ANSWER-Price analysis
Review and evaluation of separate cost elements and profit/fee.
Must be done on cost-reimbursement contracts and may be done on fixed price
contracts. - ANSWER-Cost analysis
Evaluating estimated elements to determine if they:
* Are realistic for the work to be performed.
* Reflect clear understanding of the requirement
* Are consistent with the approach outlined in the contractor's proposal.
* Shall be used for COST reimbursement contracts
* May be used on competitive, fixed-price incentive, and other fixed-price contracts
when
Purpose is to determine the most probable cost. - ANSWER-Cost realism analysis
Analyzing the need and reasonableness of the proposed elements in the technical
approach
* Minimum analysis is required for types and quantities of material as well as types,
quantities, and mix of labor hours. - ANSWER-Technical analysis
Except when pricing an item on the basis of adequate price competition or catalog or
market price, _______ prices shall reflect the intrinsic value of an item or service and
shall be in proportion to an item's base cost. FAR 15.404-1(f)(1) - ANSWER-unit
[True or False]: Except for the acquisition of commercial products or commercial
services, contracting officers shall require that offerors identify in their proposals those
items of supply that they will not manufacture or to which they will not contribute
significant value, unless adequate price competition is expected. - ANSWER-True
When overall price appears reasonable but cost/price analysis indicates the price of one
or more contract line items is significantly over or understated. - ANSWER-Unbalanced
pricing
What are the three objectives of determining reasonable pricing? - ANSWER-1)
Purchase from responsible sources at fair and reasonable prices.
2) Price each contract separately and independently.
3) Exclude contingencies.
