What is a Fair Price to the Seller? ANSWER A fair price for the seller will
enable him to fulfill the contract requirements for quality, time and delivery. A
very low bid price is not realistic. It may:
•Cut corners on the quality of the product
•Deliver late
•Default on delivery, forcing a time-consuming procurement
•Not to deal with the government again 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 price may be surprisingly low because the offeror has
made gross mistakes in estimating costs or is non-responsible. A prospective
contractor must affirmatively demonstrate its responsibility including, when
required, the responsibility of its proposed subcontractors.
Single-source Procurements - ANSWER You must remember that you
CANNOT impose a final price/cost which will be below cost on the offeror,
even if you feel that the offeror has the financial capability to absorb the
probable loss. Instead, contract for type and price likely to be adequate to cover
all allowable costs of performance while assuming reasonable economy and
efficiency and providing a reasonable profit. See FAR 15.404-4 and DFARS
215.404-4 on profit analysis. Make sure 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.
One of the elements of the government pricing objective is to ensure that
contract prices are fair and reasonable.
Which of the following statements are true about "fairness to a seller" that
involve concerns? (Select all that apply)
*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.
* Major mistakes in estimating costs are a concern for sellers.
*Sellers have to be concerned about recovering losses in buy-in. - ANSWER
All of the above are true.
What is cost analysis? - ANSWER 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.
What is the objective as buyer for the government? - ANSWER The objective
is to acquire supplies and services from responsible sources in the required
quantities and on time and at fair and reasonable prices.
What is the Prenegotiation Position?- ANSWER Pre-negotiation objectives
establish the initial negotiation position of the government. The Contracting
Officer establishes prenegotiation objectives prior to the negotiation of any
pricing action .
Review FAR 15.406-1 for more information about Prenegotiation Objectives.
enable him to fulfill the contract requirements for quality, time and delivery. A
very low bid price is not realistic. It may:
•Cut corners on the quality of the product
•Deliver late
•Default on delivery, forcing a time-consuming procurement
•Not to deal with the government again 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 price may be surprisingly low because the offeror has
made gross mistakes in estimating costs or is non-responsible. A prospective
contractor must affirmatively demonstrate its responsibility including, when
required, the responsibility of its proposed subcontractors.
Single-source Procurements - ANSWER You must remember that you
CANNOT impose a final price/cost which will be below cost on the offeror,
even if you feel that the offeror has the financial capability to absorb the
probable loss. Instead, contract for type and price likely to be adequate to cover
all allowable costs of performance while assuming reasonable economy and
efficiency and providing a reasonable profit. See FAR 15.404-4 and DFARS
215.404-4 on profit analysis. Make sure 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.
One of the elements of the government pricing objective is to ensure that
contract prices are fair and reasonable.
Which of the following statements are true about "fairness to a seller" that
involve concerns? (Select all that apply)
*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.
* Major mistakes in estimating costs are a concern for sellers.
*Sellers have to be concerned about recovering losses in buy-in. - ANSWER
All of the above are true.
What is cost analysis? - ANSWER 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.
What is the objective as buyer for the government? - ANSWER The objective
is to acquire supplies and services from responsible sources in the required
quantities and on time and at fair and reasonable prices.
What is the Prenegotiation Position?- ANSWER Pre-negotiation objectives
establish the initial negotiation position of the government. The Contracting
Officer establishes prenegotiation objectives prior to the negotiation of any
pricing action .
Review FAR 15.406-1 for more information about Prenegotiation Objectives.
