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or Cost Analysis 45 Questions and
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CON 1300 Contract Award: Unit 2 Price
or Cost Analysis 45 Questions and
correct solutions.
The type of offers differ depending on the _______ ______ being used to award a contract. - ANSWER- contracting method
How does the FAR define an offer? - ANSWER-A response to a solicitation that, if accepted, would bind the offeror to perform the resultant contract. Responses to invitations for bids (sealed bidding) are offers called "bids" or "sealed bids"; responses to requests for proposals (negotiation) are offers called "proposals"; however, responses to requests for quotations (simplified acquisition) are "quotations," not offers.
FAR 2.
How does FAR 13.004 define an offer under simplified acquisition procedures? - ANSWER-A quotation is not an offer and, consequently, cannot be accepted by the Government to form a binding contract. Therefore, issuance by the Government of an order in response to a supplier's quotation does not establish a contract. The order is an offer by the Government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when the supplier accepts the offer.
The applicable FAR part depends on what is considered an "offer" for a particular type of purchase.
- An offer for a request for quotation (RFQ) under FAR Subpart 8.4 is a _______. - ANSWER-quote
The applicable FAR part depends on what is considered an "offer" for a particular type of purchase.
- An offer for quote under FAR Part 13 is a ______ _________ (FAR 13.0004). - ANSWER-purchase order
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The applicable FAR part depends on what is considered an "offer" for a particular type of purchase.
- An offer for an invitation for bids (IFB) under FAR Part 14 is a ______ or ______ ______. - ANSWER-bid, sealed bid
The applicable FAR part depends on what is considered an "offer" for a particular type of purchase.
- An offer for a request for proposals (RFP) under FAR 15 is a ________. - ANSWER-proposal
What does the contracting officer or designee do upon receipt of an offer? - ANSWER-Conducts an initial screening to verify that each offeror has submitted all of the required information in the quantities and format specified in the solicitation.
After the offer is reviewed for compliance with the terms and conditions of the solicitation, the offer must be evaluated for ______ ______. - ANSWER-risk impact
The chosen contract type and price (or estimated cost and fee) should: - ANSWER-* Result in reasonable risk to the contractor and the government.
- Provide the contractor with the greatest incentive for efficient and economical performance.
According to FAR 16.101, contract types vary according to what two elements? - ANSWER-1) The degree and timing of the responsibility assumed by the contractor for the costs of performance; and
- The amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals.
What are the main functions of the contract type? - ANSWER-To allocate responsibility for cost, technical (performance), and/or schedule (delivery) risk between the government and contractor and to motivate the contractor's performance in these areas.
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Examining and evaluating proposed total price and not the separate cost elements and profit. - ANSWER-Price analysis
Review and evaluation of separate cost elements and profit/fee.
Must be done on cost-reimbursement contracts and may be done on fixed price contracts. - ANSWER- Cost analysis
Evaluating estimated elements to determine if they:
Are realistic for the work to be performed.
Reflect clear understanding of the requirement
Are consistent with the approach outlined in the contractor's proposal.
Shall be used for COST reimbursement contracts
May be used on competitive, fixed-price incentive, and other fixed-price contracts when
Purpose is to determine the most probable cost. - ANSWER-Cost realism analysis
Analyzing the need and reasonableness of the proposed elements in the technical approach
- Minimum analysis is required for types and quantities of material as well as types, quantities, and mix of labor hours. - ANSWER-Technical analysis
Except when pricing an item on the basis of adequate price competition or catalog or market price, _______ prices shall reflect the intrinsic value of an item or service and shall be in proportion to an item's base cost. FAR 15.404-1(f)(1) - ANSWER-unit
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[True or False]: Except for the acquisition of commercial products or commercial services, contracting officers shall require that offerors identify in their proposals those items of supply that they will not manufacture or to which they will not contribute significant value, unless adequate price competition is expected. - ANSWER-True
When overall price appears reasonable but cost/price analysis indicates the price of one or more contract line items is significantly over or understated. - ANSWER-Unbalanced pricing
What are the three objectives of determining reasonable pricing? - ANSWER-1) Purchase from responsible sources at fair and reasonable prices.
Price each contract separately and independently.
Exclude contingencies.
- Contractors are not allowed to include contingencies such as the outcome of ongoing negotiations with the labor union.
What is considered a fair price to the buyer? - ANSWER-One that reflects the fair market value given the prices of market transactions between informed buyers and sellers under similar competitive market conditions.
What is consider a fair price to the seller? - ANSWER-One that must be realistic in terms of the seller's ability to satisfy the terms and conditions of the contract.
What is a reasonable price? - ANSWER-A price that a prudent and competent buyer would be willing to pay.
Is conducted by evaluating the total price proposed by the contractor. - ANSWER-Unbalanced Pricing Price Analysis
How does the FAR define price? - ANSWER-Price = cost + (fee or profit)
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- The determination that the proposed price is based on adequate price competition and is reasonable has been approved at a level above the contracting officer; or
Price analysis clearly demonstrates that the proposed price is reasonable in comparison with current or recent prices for the same or similar items, adjusted to reflect changes in market conditions, economic conditions, quantities, or terms and conditions under contracts that resulted from adequate price competition.
According to DFARS 215.404-1(b)(i) what is the preferred method to establish a fair and reasonable price when there is not adequate price competition. - ANSWER-Prices based on market prices
How does DFARS 215.401 define market prices? - ANSWER-Current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors.
According to FAR 15.404-1(b)(2)(ii), this method may be used for commercial products or commercial services including those "of a type" or when requiring minor modifications for commercial products: - ANSWER-Comparison of Previously Proposed Prices to Historical Prices Paid for the Same or Similar Items
Under what conditions can a comparison of previously proposed prices to historical prices paid for the same or similar items be used? - ANSWER-* The prior price must be a valid basis for comparison. If there has been a significant time lapse between the last acquisition and the present one, if the terms and conditions of the acquisition are significantly different, or if the reasonableness of the prior price is uncertain, then the prior price may not be a valid basis for comparison.
The prior price must be adjusted to account for materially differing terms and conditions, quantities and market and economic factors. For similar items, the contracting officer must also adjust the prior price to account for material differences between the similar item and the item being procured.
Expert technical advice should be obtained when analyzing similar items, or commercial products or commercial services that are "of a type", or requiring minor modifications for commercial products, to ascertain the magnitude of changes required and to assist in pricing the required changes.
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What questions should be asked when using a comparison of previously proposed prices to historical prices paid for the same or similar items? - ANSWER-* Has the product/service been purchased before?
_____ ______ methods/application of rough yardsticks are typically expressed as cost estimating relationships (CERs). - ANSWER-Parametric estimating
What are examples of CERs? - ANSWER-* Dollars per square foot
This technique involves comparing:
Competitive published price lists
Published market prices on commodities exchanges
Indexes for the same/similar items, such as those available from:
- The Department of Labor
- Commercial sources
- Discounts and rebate arrangements - ANSWER-Comparison with Competitive Published Price Lists
What are questions to ask when comparing prices with IGCEs? - ANSWER-* How was the estimate made?
What assumptions were made?
What information and tools were used?
Where was the information obtained?
