CLC 056 /CLC 056 Analyzing Contract Costs Exam
QUESTIONS AND ANSWERS GRADED A
1. Identify the circumstances when cost analysis should be
performed by answering the following question: "Unless
an exception to certified cost or pricing data applies, you
can perform cost analysis on which of the following
procurements?"
a. All of these are correct
b. The award of a subcontract at any tier, if the
contractor and each higher-tier subcontractor have been
required to furnish certified cost or pricing data
c. The modification of any sealed bid or negotiated
contract
d. The award of any negotiated contract (except for
undefinitized actions such as letter contracts)
Answer: a. All of these are correct
Rationale: Cost analysis is required when certified cost or
pricing data are required. This includes negotiated
1
,contracts (except undefinitized actions), subcontract
awards where certified cost or pricing data have been
required, and modifications to sealed bid or negotiated
contracts.
2. What is the best method for determining an
improvement curve slope?
a. Using the median percentage from similar products
b. Using established slopes from the Cost Estimator's
Reference Manual
c. Using actual historical data
d. Using averages derived from recent procurements
Answer: c. Using actual historical data
Rationale: Actual historical data from the contractor's own
experience provides the most accurate basis for
determining improvement curve slopes. While reference
manuals and industry averages can be helpful, they are
2
,less reliable than actual performance data from the
specific contractor and production environment.
3. Each Price Negotiation Memorandum must contain
which one of the following?
a. Statement that the price is fair and reasonable
b. Signature of the Contract Specialist
c. Signature of the Legal Counsel
d. Statement that the FAR was consistently followed
Answer: a. Statement that the price is fair and reasonable
Rationale: The Price Negotiation Memorandum (PNM)
must contain a statement that the price is fair and
reasonable. This is a required element documenting the
contracting officer's determination that the negotiated
price is fair and reasonable. The Contracting Officer, not
the Contract Specialist, signs the PNM.
3
, 4. What is the process of examining and evaluating a
proposed price without evaluating its separate cost
elements and proposed profit?
a. Cost analysis
b. Price analysis
c. Cost realism analysis
d. Profit analysis
Answer: b. Price analysis
Rationale: Price analysis is the process of examining and
evaluating a proposed price without evaluating its
separate cost elements and proposed profit. Cost
analysis, by contrast, involves the review and evaluation
of the separate cost elements and profit or fee.
5. When is cost analysis required?
a. For all proposals exceeding the micro-purchase
threshold
b. Whenever a price proposal is received
4
QUESTIONS AND ANSWERS GRADED A
1. Identify the circumstances when cost analysis should be
performed by answering the following question: "Unless
an exception to certified cost or pricing data applies, you
can perform cost analysis on which of the following
procurements?"
a. All of these are correct
b. The award of a subcontract at any tier, if the
contractor and each higher-tier subcontractor have been
required to furnish certified cost or pricing data
c. The modification of any sealed bid or negotiated
contract
d. The award of any negotiated contract (except for
undefinitized actions such as letter contracts)
Answer: a. All of these are correct
Rationale: Cost analysis is required when certified cost or
pricing data are required. This includes negotiated
1
,contracts (except undefinitized actions), subcontract
awards where certified cost or pricing data have been
required, and modifications to sealed bid or negotiated
contracts.
2. What is the best method for determining an
improvement curve slope?
a. Using the median percentage from similar products
b. Using established slopes from the Cost Estimator's
Reference Manual
c. Using actual historical data
d. Using averages derived from recent procurements
Answer: c. Using actual historical data
Rationale: Actual historical data from the contractor's own
experience provides the most accurate basis for
determining improvement curve slopes. While reference
manuals and industry averages can be helpful, they are
2
,less reliable than actual performance data from the
specific contractor and production environment.
3. Each Price Negotiation Memorandum must contain
which one of the following?
a. Statement that the price is fair and reasonable
b. Signature of the Contract Specialist
c. Signature of the Legal Counsel
d. Statement that the FAR was consistently followed
Answer: a. Statement that the price is fair and reasonable
Rationale: The Price Negotiation Memorandum (PNM)
must contain a statement that the price is fair and
reasonable. This is a required element documenting the
contracting officer's determination that the negotiated
price is fair and reasonable. The Contracting Officer, not
the Contract Specialist, signs the PNM.
3
, 4. What is the process of examining and evaluating a
proposed price without evaluating its separate cost
elements and proposed profit?
a. Cost analysis
b. Price analysis
c. Cost realism analysis
d. Profit analysis
Answer: b. Price analysis
Rationale: Price analysis is the process of examining and
evaluating a proposed price without evaluating its
separate cost elements and proposed profit. Cost
analysis, by contrast, involves the review and evaluation
of the separate cost elements and profit or fee.
5. When is cost analysis required?
a. For all proposals exceeding the micro-purchase
threshold
b. Whenever a price proposal is received
4
