CPCM 1.5 Contract Structures Exam 2024 with correct Answers

CPCM 1.5 Contract Structures Exam 2024 with correct Answers Fixed price -Answer-A type (family) of contract providing for a firm pricing arrangement established by the parties at the time of contracting. This family of contracts includes firm fixed price, fixed price with economic price adjustment, fixed price incentive, fixed price redetermination (prospective and retroactive), firm fixed price level of effort, and fixed price award fee. Firm-fixed-price contract -Answer-Provides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. This contract type places on the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentives for the contractor to control costs and perform effectively and imposes a minimum administrative burden on the contract parties. Fixed-price contract with economic price adjustment -Answer-Provides for upward and downward revision of the stated contract price on the occurrence of specified contingencies. There are three general types of economic price adjustments: (1) adjustments based on established prices; (2) Adjustments based on actual costs of labor or material; (3) Adjustments based on cost indexes of labor or material. Adjustments based on established prices -Answer-Where price adjustments are based on increases or decreases from an agreed-upon level in published or otherwise established prices of specific items or the contract end items. Adjustment based on actual costs of labor or material -Answer-Where price adjustments are based on increases or decreases in specified costs of labor or material that the contractor actually experiences during contract performance Adjustments based on cost indexes of labor or material -Answer-Where price adjustments are based on increases or decreases in labor or material costs standards or indexes that are specifically identifed in the contract. Fixed-price incentive contract -Answer-Provides for adjusting profit and establishing the final contract price by a formula based on the relationship of final negotiated total cost to total target cost. Fixed-price contract with prospective price redetermination -Answer-Provides for (1) a firm fixed price for an initial period of contract deliveries or performance, and (2) prospective redetermination at a stated time (or times) during performance of the price for subsequent periods of performance Fixed-price contract with retroactive price redetermination -Answer-Provides for (1) fixed ceiling price and (2) retroactive price determination within the ceiling after completion of the contract. Firm-fixed-price, level of effort -Answer-Requires the contractor to provide a specified level of effort, over a stated period of time on work that can be stated only in general terms; requires the buyer to pay the contractor a fixed dollar amount. Fixed-price award-fee contract -Answer-Award fee provisions may be used in fixed-price contracts when the government wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively. Such contracts shall establish a fixed price (including normal profit) for the effort. This price will be paid for satisfactory contract performance. Award fee earned (if any) will be paid in addition to that fixed price. Cost reimbursement -Answer-A form of pricing arrangement that provides for the payment of allowable, allocable, and reasonable costs incurred in the performance of a contract to the extent that such costs are prescribed or permitted by the contract. This family of contracts includes cost plus award fee (CPAF), cost plus fixed fee (