Contracting Test 4

Question 1

The following are what kind of differences? Reluctance of Commercial Firms A different Culture The defense department is a final consumer Conflicting Goals Fairness Use of taxpayer money

Answer 1

Systemic and cultural Differences

Question 2

The following are what kind of differences? Higher Performance Requirements Buying In smaller Lot Sizes Cost in Pricing Issues Liability Supportability/Obsolescence Warranties

Answer 2

Product Differences

Question 3

a logical way to determine a minimum acceptable price

Answer 3

Cost (Penetration) Plus Pricing Strategy

Question 4

1) a leader-follower concept, allowing competitors to set prices and then following suit, and (2) a more traditional pricing formula such as direct material and labor costs plus 40 percent.

Answer 4

Rule-of-thumb (myopic) pricing

Question 5

is a short-term approach based on other than normal cost recovery or profit motives. It involves pricing to recover variable costs and perhaps some fixed costs to the extent that a low enough price is offered to beat the competition

Answer 5

Buy-in (Foot in the Door) Pricing

Question 6

What is the best method of price analysis

Answer 6

Other proposed prices

Question 7

Basic Pricing Policy

Answer 7

Government Price objective 1. Purchase From Responsible Sources at fair and reasonable prices 2. Price each contract separately & independently 3. Exclude contingencies

Question 8

Factors of reasonable price

Answer 8

1. Supply and demand 2. General economic Conditions 3. Competition

Question 9

a possible future event or condition arising from presently known or unknown causes and the outcome cannot be determined at the present time

Answer 9

Contingency

Question 10

How many types of contingency are there?

Answer 10

2 1. Contingencies can arise from permanently known and existing conditions with the effects of these conditions to be foreseeable within reasonable limits of accuracy 2. Contingencies can arise from known or unknown conditions, where the effects cannot be measured to provide equitable results to the contractor and the government

Question 11

Law that requires that gov’t obtain certified cost or pricing data when Award of any negotiated contract >$750,000 Modifications Even if cost or pricing data not required on initial contract Considering positive & negative adjustments exceed $750,000

Answer 11

Truth in Negotiations Act (TINA) - applies in the absence of market forces

Question 12

Exception to TINA

Answer 12

Adequate Price Competition Price set by law/reg Commercial Item* Waiver by HCA (head of contract agency)

Question 13

Who creates the IGE?

Answer 13

The Customer

Question 14

When does TINA apply?

Answer 14

in the absence of normal market forces

Question 15

Analyzes prices in their entirety

Answer 15

Price Analysis Always required

Question 16

Analyzes prices by reviewing the individual elements of cost (price) & the appropriateness & necessity of each element of cost

Answer 16

Cost Analysis Required if TINA applies

Question 17

Independently reviewing cost elements to determine are they realistic for the work to be performed

Answer 17

Cost Realism Analysis Required on every cost type contract

Question 18

Price Analysis Methods

Answer 18

1. Comparison of prices received in response to the solicitation (other proposed prices) 2. Comparison of previously proposed prices with current proposed prices for the same or similar items 3. Parametric estimating methods 4. Comparison with competitive published price 5. Comparison with independent Government cost estimates

Question 19

Preferred price analysis technique

Answer 19

Comparison of prices received in response to the solicitation

Question 20

Cost tied to a single cost objective

Answer 20

Direct Cost

Question 21

Cost tied to multiple contracts

Answer 21

Indirect Cost

Question 22

Do contractors have to use a specific cost estimation method?

Answer 22

No, whichever method must be equitably and consistently applied

Question 23

Three common cost estimating methods

Answer 23

1. Round Table 2. Comparison 3. Detailed - best

Question 24

FAR part for Market Research

Answer 24

FAR Part 10

Question 25

How many price comparison techniques

Answer 25

5

Question 26

FAR part concerning contract pricing (contract cost principles)

Answer 26

FAR part 31

Question 27

Allowable costs must comply with:

Answer 27

1.reasonableness 2.allocability 3. standards promulgate by the CAS board, if aplicable; otherwise, generally accepted accounting principles and practices appropriate to the circumstances 4. terms of the contract and any limitations set forth in 5. FAR part 31.201-2

Question 28

A cost is ______ if it is assignable or chargeable to one or more cost objectives on the basis of relative_____ or other equitable relationship

Answer 28

Allocable

Question 29

When may a direct cost be treated as an indirect cost?

Answer 29

For reasons of practicality, the contractor may treat any direct cost of a minor dollar amount as an indirect cost if the accounting treatment – (1) Is consistently applied to all final cost objectives; and (2) Produces substantially the same results as treating the cost as a direct cost.

Question 30

A cost is ______ if it is assignable or chargeable to one or more cost objectives on the basis of relative benefits or other equitable relationship

Answer 30

Allocable

Question 31

Can a cost be allocable , but not allowable?

Answer 31

Yes, FAR 31.201

Question 32

When is a rental equivalency calculation required?

Answer 32

When one offeror does not use GPE

Question 33

How does the customer/requiring agency develop the IGE

Answer 33

Visual Analysis or Value Analysis

Question 34

When does TINA apply to a MOD?

Answer 34

When TINA applies to the base and the MOD is valued over 750K

Question 35

What Factors affect comparison?

Answer 35

Government Unique Requirements Geographic Location Extent Competition Quantity or Size Technology Purchasing Power Market Conditions

Question 36

When is cost analysis required

Answer 36

When TINA applies?

Question 37

The sum of the direct and indirect costs allocable to the contract, incurred or to be incurred, plus any allocable cost of money, less any allocable credits

Answer 37

Total Cost - sum of direct and indirect costs

Question 38

Generally recognized as ordinary and necessary for the conduct of the business or contract performance

Answer 38

Reasonable cost

Question 39

No final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose in like circumstances have been included in any indirect cost pool to be allocated to that or any other final cost objective

Answer 39

Double Dipping - True

Question 40

Adjustments required by law or regulation in order to complete price evaluation

Answer 40

Price Related Factor