CLC 056 -MOSTLY TESTED WITH CORRECT QUESTIONS AND
ANSWERS!!GRADED A+
Cost analysis is the review and evaluation of the separate cost elements and proposed
profit/fee of an offeror's certified cost or pricing data or data other than certified cost or
pricing data.
It is important to evaluate the separate cost elements and proposed profit/fee to determine
how the proposed costs represent the cost of the contract, assuming reasonable economy
and efficiency. - (answers)Contracting Officers are required to purchase supplies and services
from responsible sources at fair and reasonable prices. This requirement is based on the
three elements that form the foundation of the government's pricing objective.
Government Objective:
purchase at fair and reasonable price
price each contract separately
exclude contingencies - (answers)In contracting, when you act as the government's buyer,
your primary objective is to acquire supplies and services from responsible sources at fair
and reasonable prices.
The three approaches acknowledged by the government to attain this objective are:
Price analysis
Cost analysis
Cost realism analysis
It is critical that you understand techniques and terms of cost analysis. Terms that are
important not only include cost analysis, price analysis, and cost realism analysis, but also
terms such as direct costs, indirect costs, and other direct costs.
In addition, there are techniques with which you should be familiar. These include the
various price analysis techniques and procedures that help the government to ensure a fair
and reasonable price.
,You may be responsible for selecting the techniques for comparison that are used to verify
that the overall price that is offered is fair and reasonable. - (answers)In order to develop a
prenegotiation position, you will analyze contract costs and price using contract analysis
techniques.
Prenegotiation objectives establish the government's initial negotiation position. The
Contracting Officer establishes prenegotiation objectives before the negotiation of any
pricing action.
There are many methods for estimating costs in an equitable and consistently applied way.
Some cost estimating texts identify ten or more! Some common methods are:
Round-table
Comparison
Detailed - (answers)Round Table
In a round table, experts are brought together to develop cost estimates by exchanging
views and making judgments based on knowledge and experience. This method is most
commonly used when there is little or no cost experience or detailed product information
(e.g., specifications, drawings, or bills of material).
Comparison
With the comparison method, costs for a new item are estimated using comparisons with
the cost of completing similar tasks under past or current contracts. Any differences are
isolated and cost elements applicable to the differences are deleted from or added to
experienced costs. Comparisons may be made at the cost element level or total price level.
Adjustments may also be made for possible upward or downward cost trends.
This method is most commonly used when specifications for the item being estimated are
similar to other items already produced or currently in production and for which actual cost
experience is available. - (answers)Detailed
,The detailed method is characterized by a thorough review of all components, processes,
and assemblies. It requires detailed information to arrive at estimated costs and typically
uses cost data derived from the accounting system, statistical records, and other sources.
This method is most commonly used when the required information is available and future
production potential warrants the cost of the detailed analysis required. It is the most
accurate of the three methods for estimating direct cost. As you can imagine, it is also the
most time consuming and expensive.
Fairness to seller
Sellers need to be concerned about an unrealistic low price because of the risk.
Sellers need to be concerned about the market implications of a price that is too high.
Sellers need to be concerned about major mistakes in estimating costs.
Sellers need to be concerned about recovering buy-in losses. - (answers)The three market
conditions are Competition, Supply and Demand, and General Economic Conditions.
Pricing contracts separately
Business conditions can change the specifics of government contracting.
Market forces like competition and supply and demand must be considered.
Balancing of one contract against another contract in financial results is not allowed. -
(answers)The final government objective is Exclude Contingencies. This objective requires
that contracts exclude contingencies that cannot be reasonably estimated at the time of the
award.
, The definition of a contingency is a possible future event or condition arising from presently
known or unknown causes and the outcome cannot be determined at the present time. -
(answers)There are three types of analyses associated with analyzing contract costs. They
are:
Price Analysis
Cost Realism Analysis
Cost Analysis
adequate price competition, which is a form of price analysis. Adequate price competition is
an exception to obtaining certified cost or pricing data - (answers)he detailed cost estimating
method estimates based on an analysis of the methods and materials required to complete
each element of the work required by the contract
At the heart of this module is the Truth in Negotiations Act, which you will usually hear
referred to as "TINA."TINA is a public law enacted in 1962 for the purpose of providing full
and fair disclosure by contractors in the conduct of negotiations with the government. TINA
requires:
Contractors and subcontractors submit certified cost or pricing data for negotiated
procurements over $2 million.
Downward adjustment to the contract price, including profit or fee, where it is determined
that the contract price was increased because the contractor submitted defective certified
cost or pricing data - (answers)While TINA protects the government, the same laws that
establish requirements for certified cost or pricing data also provide for mandatory
exceptions. Never require certified cost or pricing data when an exception applies. Refer to
FAR 15.403-1 and DFARS 215.403-1 to learn more.
Generally, except a procurement from TINA requirements if:
The negotiated price is based on adequate price competition
The price is set by law or regulation
ANSWERS!!GRADED A+
Cost analysis is the review and evaluation of the separate cost elements and proposed
profit/fee of an offeror's certified cost or pricing data or data other than certified cost or
pricing data.
It is important to evaluate the separate cost elements and proposed profit/fee to determine
how the proposed costs represent the cost of the contract, assuming reasonable economy
and efficiency. - (answers)Contracting Officers are required to purchase supplies and services
from responsible sources at fair and reasonable prices. This requirement is based on the
three elements that form the foundation of the government's pricing objective.
Government Objective:
purchase at fair and reasonable price
price each contract separately
exclude contingencies - (answers)In contracting, when you act as the government's buyer,
your primary objective is to acquire supplies and services from responsible sources at fair
and reasonable prices.
The three approaches acknowledged by the government to attain this objective are:
Price analysis
Cost analysis
Cost realism analysis
It is critical that you understand techniques and terms of cost analysis. Terms that are
important not only include cost analysis, price analysis, and cost realism analysis, but also
terms such as direct costs, indirect costs, and other direct costs.
In addition, there are techniques with which you should be familiar. These include the
various price analysis techniques and procedures that help the government to ensure a fair
and reasonable price.
,You may be responsible for selecting the techniques for comparison that are used to verify
that the overall price that is offered is fair and reasonable. - (answers)In order to develop a
prenegotiation position, you will analyze contract costs and price using contract analysis
techniques.
Prenegotiation objectives establish the government's initial negotiation position. The
Contracting Officer establishes prenegotiation objectives before the negotiation of any
pricing action.
There are many methods for estimating costs in an equitable and consistently applied way.
Some cost estimating texts identify ten or more! Some common methods are:
Round-table
Comparison
Detailed - (answers)Round Table
In a round table, experts are brought together to develop cost estimates by exchanging
views and making judgments based on knowledge and experience. This method is most
commonly used when there is little or no cost experience or detailed product information
(e.g., specifications, drawings, or bills of material).
Comparison
With the comparison method, costs for a new item are estimated using comparisons with
the cost of completing similar tasks under past or current contracts. Any differences are
isolated and cost elements applicable to the differences are deleted from or added to
experienced costs. Comparisons may be made at the cost element level or total price level.
Adjustments may also be made for possible upward or downward cost trends.
This method is most commonly used when specifications for the item being estimated are
similar to other items already produced or currently in production and for which actual cost
experience is available. - (answers)Detailed
,The detailed method is characterized by a thorough review of all components, processes,
and assemblies. It requires detailed information to arrive at estimated costs and typically
uses cost data derived from the accounting system, statistical records, and other sources.
This method is most commonly used when the required information is available and future
production potential warrants the cost of the detailed analysis required. It is the most
accurate of the three methods for estimating direct cost. As you can imagine, it is also the
most time consuming and expensive.
Fairness to seller
Sellers need to be concerned about an unrealistic low price because of the risk.
Sellers need to be concerned about the market implications of a price that is too high.
Sellers need to be concerned about major mistakes in estimating costs.
Sellers need to be concerned about recovering buy-in losses. - (answers)The three market
conditions are Competition, Supply and Demand, and General Economic Conditions.
Pricing contracts separately
Business conditions can change the specifics of government contracting.
Market forces like competition and supply and demand must be considered.
Balancing of one contract against another contract in financial results is not allowed. -
(answers)The final government objective is Exclude Contingencies. This objective requires
that contracts exclude contingencies that cannot be reasonably estimated at the time of the
award.
, The definition of a contingency is a possible future event or condition arising from presently
known or unknown causes and the outcome cannot be determined at the present time. -
(answers)There are three types of analyses associated with analyzing contract costs. They
are:
Price Analysis
Cost Realism Analysis
Cost Analysis
adequate price competition, which is a form of price analysis. Adequate price competition is
an exception to obtaining certified cost or pricing data - (answers)he detailed cost estimating
method estimates based on an analysis of the methods and materials required to complete
each element of the work required by the contract
At the heart of this module is the Truth in Negotiations Act, which you will usually hear
referred to as "TINA."TINA is a public law enacted in 1962 for the purpose of providing full
and fair disclosure by contractors in the conduct of negotiations with the government. TINA
requires:
Contractors and subcontractors submit certified cost or pricing data for negotiated
procurements over $2 million.
Downward adjustment to the contract price, including profit or fee, where it is determined
that the contract price was increased because the contractor submitted defective certified
cost or pricing data - (answers)While TINA protects the government, the same laws that
establish requirements for certified cost or pricing data also provide for mandatory
exceptions. Never require certified cost or pricing data when an exception applies. Refer to
FAR 15.403-1 and DFARS 215.403-1 to learn more.
Generally, except a procurement from TINA requirements if:
The negotiated price is based on adequate price competition
The price is set by law or regulation
