CON 1300 TEST REVIEW QUESTIONS
WITH COMPLETE SOLUTIONS
What is the definition of contract risk? - ANSWER-"a measure of future uncertainties in
achieving program goals and objectives within defined cost, schedule, and performance
constraints."
What are the three key risk elements of a contract? - ANSWER-1. Cost
2. Schedule
3. Performance
_____ and _____ are two ways to mitigate risk. They are closely related and should be
considered together. - ANSWER-1. Contract type
2. Contract pricing
_____ is the risk that activities will take longer than expected, and is typically the result
of poor planning or unforeseen circumstances. - ANSWER-Schedule risk
_____ is an escalation of project costs. It is the risk that the project will cost more than
the budget allocated for it. Perhaps the most common project risk, cost risk is due to
poor budget planning, inaccurate cost estimating, and scope creep. - ANSWER-Cost
risk
_____ is the risk that the project will fail to produce results consistent with project
specifications. - ANSWER-Performance risk
Schedule Risk Mitigation by contract type:
1. Fixed Price contracts = contractor must perform and meet the _____.
2. Cost Reimbursement contracts = contractor will perform their _____. - ANSWER-1.
delivery schedule
2. "best effort"
Cost Realism Analysis is used to mitigate _____. - ANSWER-Cost risk
Cost Risk Mitigation by contract type:
1. Cost-reimbursement contract types with Cost Realism analysis would be preferable
when there is _____ of risk to the contractor such as a _____ contract
2. _____ contract types would be preferable when there is a stable, well defined, or re-
occurring requirement - ANSWER-A high amount
R&D
Fixed Price
,The objective of proposal analysis is to _____. The complexity and circumstances of
each acquisition should determine the level of detail of the analysis required. -
ANSWER-ensure that the final agreed-to price is fair and reasonable
The _____ is responsible for evaluating the reasonableness of the offered prices. -
ANSWER-contracting officer
While the FAR does not define what constitutes a fair and reasonable price, it does
establish specific steps we need to take in order to determine prices proposed as fair
and reasonable. This process is called ______. - ANSWER-"Proposal Analysis."
What are some proposal analysis techniques? (7 Total) - ANSWER-1. Price,
2. Cost,
3. Cost Realism,
4. Technical Analysis,
5. Unit Pricing
6. Unbalanced Pricing
7. Past Performance
Past performance is evaluated automatically for contracts above the SAP and under two
parameters:
1. _____ - No more than 3 years (6 if construction)
2. _____ - The level of similarity to the end item or service. - ANSWER-1. Recent
2. Relevant
_____ states that costs should be realistic for the work to be performed; reflects a clear
understanding of the requirements; and is consistent with the unique methods of
performance and materials described in the offeror's technical proposal. - ANSWER-
Cost Realism Analysis
What are the two main objectives of the KO when negotiating a contract? - ANSWER-1.
Result in reasonable risk to the contractor and the Government
2. Provide the contractor with the greatest incentive for efficient and economical
performance
R&D contracts are primarily. - ANSWER-Cost Plus Fixed Fee
Fixed Price Level of Effort also fits this category but are more meant for technical
reports, so they are more considered as only research without development.
What are some preferred techniques to determine the price fair and reasonable? -
ANSWER-1. Comparison of proposed prices received in response to the solicitation
(Competition)
2. Comparison of previously proposed prices to historical prices paid for the same or
similar items
3. Parametric estimating methods/application of rough yardsticks
4. Comparison with competitive published price lists
, 5. Comparison with Independent Government Cost Estimate (IGCE)
6. Comparison with prices obtained through market research
7. Analysis of data other than certified cost or pricing data provided by the offeror
What is an IGCE? - ANSWER-Independent Government Cost Estimate (IGCE)
What are two types of factors under price-related factors for GFP? - ANSWER-1.
Eliminate competitive advantage
2. Consider government costs or savings related to providing property
What is Free-on-Board (F.O.B.) Destination? - ANSWER-1. Contractor bears the
expense of transporting the item to the government's desired location
2. Risk of loss and damage passes to the government on arrival after acceptance
Cost or Price Analysis? Why?
The firm-fixed price requirement for a fleet of 75 passenger vans had specifications
common to the commercial marketplace. The solicitation resulted in four offerors with
significant past performance capable of delivering the product. The offers ranged from
$2.5M - $3.5M. - ANSWER-PRICE Analysis: Because we use price analysis daily when
comparing prices of say: Cars or Restaurants. IE these are common items that have
readily available comparable. This is also common in fixed price contracts.
Cost or Price Analysis? Why?
Acquisition of an air-to-surface missile. A quantity of 300 to be procured with a proposed
price of $100K per unit under a cost-reimbursement contract type. One company
possesses the data rights and has the capability to produce. - ANSWER-COST
Analysis: Review and evaluation of separate cost elements and profit/fee in the offeror's
proposal in order to determine that the price is fair and reasonable. Because this is a
sole source contract for a unique item whose component costs are not readily known
and there is no commonly available comparable. Often seen in cost-reimbursement
contracts
Three (3) additional steps to conclude the price analysis process: - ANSWER-1. Step 5
- Determine lowest evaluated price
2. Step 6 - Compare offered prices with other prices
3. Step 7 - Account for Differences
_____: Applies when full and open competition is expected and requirement exceeds
the micro-purchase threshold. Adds _____% price evaluation preference (PEP) to all
offers except _____ Small Businesses or otherwise successful Small Businesses. -
ANSWER-1. HUBZone
2. 10
3. HUBZone
You are adding 10% price to non-hubzone businesses
WITH COMPLETE SOLUTIONS
What is the definition of contract risk? - ANSWER-"a measure of future uncertainties in
achieving program goals and objectives within defined cost, schedule, and performance
constraints."
What are the three key risk elements of a contract? - ANSWER-1. Cost
2. Schedule
3. Performance
_____ and _____ are two ways to mitigate risk. They are closely related and should be
considered together. - ANSWER-1. Contract type
2. Contract pricing
_____ is the risk that activities will take longer than expected, and is typically the result
of poor planning or unforeseen circumstances. - ANSWER-Schedule risk
_____ is an escalation of project costs. It is the risk that the project will cost more than
the budget allocated for it. Perhaps the most common project risk, cost risk is due to
poor budget planning, inaccurate cost estimating, and scope creep. - ANSWER-Cost
risk
_____ is the risk that the project will fail to produce results consistent with project
specifications. - ANSWER-Performance risk
Schedule Risk Mitigation by contract type:
1. Fixed Price contracts = contractor must perform and meet the _____.
2. Cost Reimbursement contracts = contractor will perform their _____. - ANSWER-1.
delivery schedule
2. "best effort"
Cost Realism Analysis is used to mitigate _____. - ANSWER-Cost risk
Cost Risk Mitigation by contract type:
1. Cost-reimbursement contract types with Cost Realism analysis would be preferable
when there is _____ of risk to the contractor such as a _____ contract
2. _____ contract types would be preferable when there is a stable, well defined, or re-
occurring requirement - ANSWER-A high amount
R&D
Fixed Price
,The objective of proposal analysis is to _____. The complexity and circumstances of
each acquisition should determine the level of detail of the analysis required. -
ANSWER-ensure that the final agreed-to price is fair and reasonable
The _____ is responsible for evaluating the reasonableness of the offered prices. -
ANSWER-contracting officer
While the FAR does not define what constitutes a fair and reasonable price, it does
establish specific steps we need to take in order to determine prices proposed as fair
and reasonable. This process is called ______. - ANSWER-"Proposal Analysis."
What are some proposal analysis techniques? (7 Total) - ANSWER-1. Price,
2. Cost,
3. Cost Realism,
4. Technical Analysis,
5. Unit Pricing
6. Unbalanced Pricing
7. Past Performance
Past performance is evaluated automatically for contracts above the SAP and under two
parameters:
1. _____ - No more than 3 years (6 if construction)
2. _____ - The level of similarity to the end item or service. - ANSWER-1. Recent
2. Relevant
_____ states that costs should be realistic for the work to be performed; reflects a clear
understanding of the requirements; and is consistent with the unique methods of
performance and materials described in the offeror's technical proposal. - ANSWER-
Cost Realism Analysis
What are the two main objectives of the KO when negotiating a contract? - ANSWER-1.
Result in reasonable risk to the contractor and the Government
2. Provide the contractor with the greatest incentive for efficient and economical
performance
R&D contracts are primarily. - ANSWER-Cost Plus Fixed Fee
Fixed Price Level of Effort also fits this category but are more meant for technical
reports, so they are more considered as only research without development.
What are some preferred techniques to determine the price fair and reasonable? -
ANSWER-1. Comparison of proposed prices received in response to the solicitation
(Competition)
2. Comparison of previously proposed prices to historical prices paid for the same or
similar items
3. Parametric estimating methods/application of rough yardsticks
4. Comparison with competitive published price lists
, 5. Comparison with Independent Government Cost Estimate (IGCE)
6. Comparison with prices obtained through market research
7. Analysis of data other than certified cost or pricing data provided by the offeror
What is an IGCE? - ANSWER-Independent Government Cost Estimate (IGCE)
What are two types of factors under price-related factors for GFP? - ANSWER-1.
Eliminate competitive advantage
2. Consider government costs or savings related to providing property
What is Free-on-Board (F.O.B.) Destination? - ANSWER-1. Contractor bears the
expense of transporting the item to the government's desired location
2. Risk of loss and damage passes to the government on arrival after acceptance
Cost or Price Analysis? Why?
The firm-fixed price requirement for a fleet of 75 passenger vans had specifications
common to the commercial marketplace. The solicitation resulted in four offerors with
significant past performance capable of delivering the product. The offers ranged from
$2.5M - $3.5M. - ANSWER-PRICE Analysis: Because we use price analysis daily when
comparing prices of say: Cars or Restaurants. IE these are common items that have
readily available comparable. This is also common in fixed price contracts.
Cost or Price Analysis? Why?
Acquisition of an air-to-surface missile. A quantity of 300 to be procured with a proposed
price of $100K per unit under a cost-reimbursement contract type. One company
possesses the data rights and has the capability to produce. - ANSWER-COST
Analysis: Review and evaluation of separate cost elements and profit/fee in the offeror's
proposal in order to determine that the price is fair and reasonable. Because this is a
sole source contract for a unique item whose component costs are not readily known
and there is no commonly available comparable. Often seen in cost-reimbursement
contracts
Three (3) additional steps to conclude the price analysis process: - ANSWER-1. Step 5
- Determine lowest evaluated price
2. Step 6 - Compare offered prices with other prices
3. Step 7 - Account for Differences
_____: Applies when full and open competition is expected and requirement exceeds
the micro-purchase threshold. Adds _____% price evaluation preference (PEP) to all
offers except _____ Small Businesses or otherwise successful Small Businesses. -
ANSWER-1. HUBZone
2. 10
3. HUBZone
You are adding 10% price to non-hubzone businesses
