According to FAR 15.4, which of the following is one of the two most preferred price analysis techniques?
Comparison of proposed prices received in response to the solicitation *
How may you request an audit?
All of these are correct
A “questioned cost” is one that has not yet been evaluated.
False *
True or False: “Direct labor positions” share the same titles and pay levels.
False *
For which of the following procurements would you require certified cost or pricing data?
An offer of $800,000 for an item from the only known source of an electronic system unique to Government requirements.
How is simple linear regression used?
To make predictions about one dependent variable based on one independent variable *
Which of the following is a phase in the allocation cycle?
Final Allocation Phase
You are preparing to negotiate a service task for routine maintenance of Government equipment. A sample of 25 records for similar maintenance tasks indicates that the average time required to perform similar maintenance tasks has been six hours and 40 minutes. How can you use this?
Selecting the appropriate contract type
Developing a price negotiation objective for labor costs *
Evaluating the bill of materials
Assigning the risk factors for profit calculations
The purpose of an audit is to:
Verify transaction legality
Determine if the data is accurate and complete
All of these are correct *
Determine the degree of compliance with established procedures
Who has the authority to waive CAS applicability for a particular contract?
The Agency Head *
A cost is allowable if it is:
Reasonable, allocable and compliant with CAS/GAAP *
What is an important driver to a successful negotiation?
Listen to understand *
Which regression method assumes a linear relationship between the dependent and independent variables?
Simple linear regression *
What is the single most important decision the Contracting Officer must make to mitigate cost risk?
Selection of contract type *
When a contract is subject to CAS, the Contracting Officer may not award a contract until a written adequacy determination has been made by the cognizant Federal agency official.
True
Each Price Negotiation Memorandum must contain which one of the following?
Statement that the price is fair and reasonable *
Select the item below that would likely be categorized as a Direct Material Cost.
The purchase of 104 motor assemblies needed to manufacture vehicles *
Using a direct comparison with the cost of a similar contract effort is an acceptable summary estimating technique.
True *
Which of the following would be a proper method of determining the reasonableness of a contractor’s proposed labor hour estimate?
-Compare proposed hours with a Government should-cost estimate *
A Disclosure Statement is required when Contractor receives a CAS covered contract or a subcontract valued at $60 million in a cost accounting period.
True *
Identify the ultimate objective of performing proposal analysis.
To ensure the final agreed to price is fair and reasonable *
Identify the correct definition of “Cost Analysis”.
The review and evaluation of individual cost elements and proposed profit/fee in and offeror’s proposal *
True or False: The national average mortgage rate is used in calculating Facilities Capital Cost of Money (FCCOM)
False *
Which of the following is an effective use of stratified sampling?
Analyzing the items that make up 80% of the total material cost and 10% of the remaining items
When is it most appropriate to document or model a contractor’s proposal?
When the value, importance, and complexity warrant the modeling *
When is the working capital adjustment used while calculating profit/fee?
On all fixed price contracts with progress payments *
The cost accounting systems that are used by a contractor manufacturing a number of identical units for multiple customers are:
-Generally Accepted Accounting Practice
-Cost Accounting Standards
True or False: Special test equipment that is engineered, designed, fabricated, or modified to meet specific contract needs and cannot be used for other contracts can be categorized as “other direct costs”.
True *
When the Contracting Officer has relied on certified cost or pricing data in the price determination, which of the following statements is true?
They must certify that they relied on that certified cost or pricing data in the Price Negotiation Memorandum *
The first step when conducting stratified sampling is to identify the population of items to be sampled.
True *
What is the most common base for calculating the General and Administrative (G&A) overhead rate?
Total of all costs *
A measure of the amount of dispersion, or distance, between data points is the:
Standard Deviation *
Which of the following is the preferred method for determining if a proposed cost is reasonable?
Comparing with other competitive proposals received in response to the solicitation *
Which situation below would you use improvement curve analysis to evaluate proposed costs?
Assembly line with high proportion of manual labor *
Which of the following situations are considered exempt from the submission of Certified Cost or Pricing Data?
Prices are set by law or regulation. *
When calculating the confidence interval, the sample standard deviation is used to derive the standard error of the mean.
True
Identify the response below that correctly describes the term “Data other than certified cost or pricing data”.
Pricing data, cost data, and judgmental information that is not certified, but is used to determine a fair and reasonable price
Which sampling technique is used to focus on high-value items?
Stratified *
Given the following data, calculate the standard deviation. Sample data: 13, 12, 9, 15, 11, 16, 17, 8, 12, 7, 12
3.19 *
When using simple linear regression to analyze the estimated price for a used car, which of the following independent variables would result in a realistic estimating equation?
Mileage of all similar cars
Weight of all similar cars
Color of all similar cars
True of False: After completing the five-step Least-Best-Squares-Fit (LBSF) process when developing a regression equation, you must evaluate the “goodness” of the fit and the statistical significance.
True
What is the negotiation term that reflects each party emphasizing the long term effects and benefits as well as both parties defining their interests to be achieved in conjunction with the outcome?
Win-Win *
What is the best method for determining an improvement curve slope?
-Using actual historical data *
The moving average inventory pricing method is being used when a company recalculates inventory prices every time that a new item is added to inventory.
True *
What two costs elements are required to calculate an indirect cost rate?
Expense Pool and Allocation base *
What is the government’s primary objective in negotiations?
-To establish profit/fee percentage that is in line with previous contracts with the particular contractor
-To agree on each element of cost with the contractor
-To agree on a price that is fair and reasonable to the government and contractor
Identify the primary issue you should consider when analyzing direct labor categories in a contractor’s proposal.
-Is the proposed skill mix identical to the independent government estimate?
-Does the contractor compensate their employees for unpaid overtime?
-Is the proposed skill mix reasonable for the work required?
Which of the following must be true to properly classify a cost as an “other direct cost”?
The proposed cost benefits only the proposed contract work *
Which of the following labor classifications most likely involves fashioning parts from raw materials or purchased materials?
Fabrication
Which of these situations warrants the use of a round-table estimate?
A contract is for a unique item, and there is no historical data available (i.e., detailed drawings, bill of materials, firm specifications).
When is it most appropriate to document or model a contractor’s proposal?
When the value, importance, and complexity warrant the modeling
Which of the following are factors used in calculating the Facilities Capital Cost of Money (FCCOM) amount?
-Proposal allocation base amounts
-Division-wide allocation base amounts
What is the “base” that used in the calculation of the performance risk, contract type risk, and cost efficiency factor when using the weighted guidelines to determine a profit/fee objective?
Total costs
A cost is ALLOCABLE if it:
-Is distributed equally among the benefiting contracts
-Is incurred specifically for the contract being considered
-Results in an inequitable allocation costs.
Given the following improvement curve data, calculate the cost objective for unit #64. Labor hours for unit #32: 42,000 hours Labor hours for unit #1: 79,000 hours Rate of improvement: 20% Improvement curve slope: 80%
62,200
33,600 *
8,400
155,800
A contractor incurs costs for raw materials to be used in two different government contracts. Is the total value of this raw material allocable to one contract?
-No, material must be used and charged specifically to the benefiting contract *
Which one of the choices below is the correct definition of other direct costs?
-Costs that can be identified with a specific contract and which the offeror does not treat as a direct material cost or a direct labor cost *
A contractor incurs a cost which is determined to be unallowable. Other costs which would not have been incurred had the unallowable cost not been incurred are also unallowable.
True *
Which variable is also considered the independent variable?
R
X *
Y
Z
True or False: Simple linear regression is most appropriate when there is more than one independent variable.
True
Which of the following labor categories in a contractor’s proposal for Grounds Maintenance would raise concern?
Millwright *
Identify when cost analysis would be required.
When certified cost or pricing data are required *
True or False: “Position class” is a grouping of all positions that share the same title and pay level.
True
Which of the following type of costs would most likely be categorized as both direct costs and indirect costs, depending on the circumstance?
Travel Expense *
In reviewing the proposal for the robotic surveillance vehicle you asked for clarification on the travel cost listed as an ODC. Which response would justify travel as an ODC?
-The travel costs are for the project manager and the manufacturing supervisor to deliver the prototype to the Government testing site for final demonstration testing. *
What is Certified Cost or Pricing Data subsequently found to have been inaccurate, incomplete, or noncurrent known as?
Defective Pricing *
Which contract clause is inserted in contracts that are subject to full CAS coverage?
-FAR 52.230-2 Cost Accounting Standards *
When material prices may vary significantly from current inventory values, which estimating method should be used?
Current Supplier Quotes *
Which of the following situations would the use of improvement curve analysis likely be useful in evaluating proposed costs?
-Assembly line repair of a turret assembly for an M1/A2 Abrams tank *
Identify the correct definition of “Cost Realism Analysis”.
The process of independently reviewing and evaluating specific elements of cost, in part to determine whether they reflect a clear understanding of the requirement
Which of the following is a factor that most directly affects profit/fee calculations?
Contract type *
The “questioned cost” is one that has not yet been evaluated.
False *
Identify the circumstances when cost analysis should be performed by answering the following question. “unless an exception to certified cost or pricing data applies, you can perform cost analysis on which of the following procurements?”
-All of these are correct
-The award of any negotiated contract (except for undefinitized actions such as letter contracts)
-The modification of any sealed bid or negotiated contract
Identify the situation where you would use simple linear regression.
Direct cost analysis *
When certified cost pricing data is required, data showing that adequate price competition for acquisitions exceeding the TINA threshold was obtained is required as part of the contractor’s proposal.
True
Which of the following is an example of a cost estimating technique that would be used when producing a summary cost estimate?
Vendor Quotes comparison
Stratified sampling
Cost Estimating Relationship (CER)
A contractor submits a cost proposal and includes support that its proposed costs are what it would actually incur during contract performance. In this case, the Government contracting officer is required to consider the proposed costs as reasonable.
False *
What is the definition of a Disclosure Statement?
Written description of a contractor’s cost accounting practices and procedures
Which of the following is the best strategy to mitigate cost risk?
-Conduct adequate market research prior to entering negotiations *
The mean, median and mode are typically the same when a sample exhibits significant dispersion.
False *
One of the elements of the government pricing objective is to ensure that contract prices are fair and reasonable.Which of the following statements is 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.
Sellers need to be concerned about major mistakes in estimating costs.
Sellers need to be concerned about recovering buy-in losses.
Which of the following are market conditions that affect a reasonable price? Select all of the correct answers.
Competition
Supply and Demand
General Economic Conditions
All of the following statements are true about government contracting as part of pricing each contract separately EXCEPT:
Buyers and sellers usually have a a good working knowledge of transactions between a contractor and the government.
Which of the following is the correct definition of a contingency in government contracting?
Possible future event arising from known or unknown causes where the outcome cannot be determined
You have been asked to procure seven high definition mobile cameras. You determine that this is a commercial item. The prices for these items range from approximately $400,000 to $650,000 each. You identify six vendors but you only receive one offer from Advanced Technology Solutions (ATS). You contact ATS and they are willing to provide quantities, dates of sale, discounts offered, and prices offered to their other customers. What analysis of ATS’s offer should you use?
Price Analysis is the correct analysis to use. See FAR 13.106-3(a)(2)(ii) and FAR 15.404-1(b)(ii), (vi), and (vii) for additional information.
In reviewing the acquisition plan, which form of proposal analysis do you think the Contracting Officer contemplated using prior to soliciting offers?
Price analysis
Which of the following estimating methods produces estimates based on an analysis of the methods and materials required to complete each element of the work required by the contract?
Detailed
Which of the following are key terms associated with TINA?(Select all that apply)
Certified Cost or Pricing Data
Cost or Pricing Data
Data Other than Certified Cost or Pricing Data
Review Section B of the Acquisition Plan for the initial BBOMS contract. Did the Truth in Negotiation Act apply to this initial procurement? Why or why not?
No. While the initial award amount exceeded the TINA threshold of $2 million, the Contracting Officer determined through market research that adequate price competition would exist for this requirement. Therefore, the exception at FAR 15.403-1(b)(1) applied. Offerors were not required to submit certified cost or pricing data.
A noncommercial modification valued at $20.9 million is required for the BBOMS contract. Will we require the submission of certified cost or pricing data on this modification?
Yes. Since the initial estimate of this modification is $20.9M, it is over the threshold of $2 million and therefore requires the offeror to submit certified cost or pricing data.
What gives us the authority to request the submission of certified cost or pricing data on this modification?
TINA and FAR 52.215-21
What clause in the FAR provides a remedy to the government in the event the contractor submits defective certified cost or pricing data on this modification? Hint: In addition to reviewing the FAR, you may want to review Section I: Clauses of the original contract under the Resources tab. Note which clauses were and were not included.
FAR 52.215-11, Price Reduction for Defective Certified Cost or Pricing Data – Modifications
Which of the following are exemptions to the Cost Accounting Standards? (Select all that apply)
Small businessesContracts based on established or market prices or fixed by law or regulationAll contracts awarded using sealed bidding
Using the CAS Coverage and Disclosure Statement Determination flowchart, determine if the original (basic) BBOMS contract is subject to CAS?
Yes, none of the listed exemptions apply. Since this is a negotiated procurement in excess of $7.5M, the contract is covered by the Cost Accounting Standards.
Select the Resources tab to review the BBOMS contract and then answer the following question. Now that you have determined that the BBOMS contract is subject to CAS, what level of coverage is applicable? Note: Technology and Support Services has never received a CAS covered contract either in the current or preceding Cost Accounting Period.
Full coverage since the contract award is for $50M or more.
Look at the BBOMS contract again. Which of the following statements is true?
Since the BBOMS contract is subject to full CAS coverage, TSS is required to submit a Disclosure Statement to the CFAO and the Cognizant Auditor.
A cost is allowable if it _________. (Select all that apply)
is reasonable
is allocable
is IAW FAR Part 31
is IAW the terms of the contract
is IAW CAS or GAAP as applicable
A cost is allocable if it is assignable or chargeable to one or more cost objectives on the basis of relative benefits received or an other equitable relationship. A cost is allocable to a government contract if it _____. (Select all that apply)
is incurred specifically for the contract
is necessary to the overall operation of the business, although a direct relationship to any particular cost objective cannot be shown.
benefits the contract and other work, and can be distributed to them in reasonable proportion to the benefits received.
A contractor proposes to use a Level III Engineer for a particular task order under a cost reimbursement CLIN. The Level III Engineer labor rate is $85.00 per hour. Your technical specialist informs you that the level of effort required under this task is suitable for a Level I Engineer. The contractor proposes 40 hours to perform the task. Your technical specialist informs you that it should take the Level I Engineer approximately 35 hours to perform this task. Is the cost for engineering labor reasonable for this task? (Select all that apply)
No, in order for a cost to be reasonable it must be, in both nature and amount, what a prudent business person would pay in the conduct of a competitive business.
No, the burden of proof is on the contractor to demonstrate the reasonableness of the level of engineer and number of hours required.
The prenegotiation objective establishes the government’s initial negotiation position and assists the contracting officer in determining a fair and reasonable price. How does proposal modeling assist the contracting officer in achieving these objectives? Select all of the correct answers.(Select all that apply)
Validates the contractor’s computations
Validates the contractor’s proposal summary with detailed back-up data worksheets
Allows real time calculation of offers and counteroffers during negotiations
Facilitates update of prenegotiation position upon receipt of updates from the contractor (e.g., updated quotes, subcontractor submissions, change in rates)
Allows the government to identify differences between the contractor’s proposed amounts and the prenegotiation position due to fact-finding results, field pricing assistance, independent government estimates and analysis
Which of the following are cost elements? (Select all that apply)
Labor
G&A
FCCOM
Which of the following are characteristics of an acceptable cost estimating system? (Select all that apply)
Provides for detection and timely correction of errors
Identifies the sources of data and the estimating methods and rationale used in developing cost estimate
Provides a written description of the organization and duties of the personnel responsible for preparing, reviewing, and approving cost estimates
What are the disadvantages of an inadequate Cost Accounting System?
It will provide data that is not current, accurate, and complete.
Under which cost accounting system does the firm account for output by specifically identifiable physical units?
Job-Order
Select the Resources tab to review the DCAA audit report. After reviewing the report, answer the following question:What step should you take next?
Contact the DCMA to verify that Technology and Support Services’ accounting and estimating systems are still considered adequate.
Who typically provides Audit Assistance?
Defense Contract Audit Agency
You are reviewing historical contract information for a firm that has recently submitted a proposal. Which of the following items might be an indication that you will require technical or audit assistance? (Select all that apply)
The offeror has a history of not providing adequate cost estimate support
The offeror has a history of under estimating costs
In previous contracts, the negotiated price was significantly different than the proposed price
After you have reviewed the contents of the proposal and determined the scope of the audit necessary, select the correct order of the steps required to request Audit Assistance.
- Commit your request to writing.
- Contact the cognizant agency by phone to tell them of the upcoming request and to determine the means of communication acceptable for the assistance request.
- Query all acquisition team members.
3, 2, 1
Which of the following questions are important to ask when evaluating a report’s strengths and weaknesses?(Select all that apply)
Does the report answer the questions in your request?
Does the report explain the evaluator’s position in clear language that you can understand?
Does the report support its conclusions?
Which of the following situations should you consider subcontractor proposal analysis? (Select all that apply)
The business relationship between the prime contractor and the subcontractor is not conducive to independence and objectivity.
The prime contractor is a sole source and the subcontract cost represents a substantial part of the proposed contract cost.
The prime contractor has been denied access to the subcontractor’s records.
Which of the following are significant contract events which should be identified in a request for field pricing support when negotiating an equitable adjustment?(Select all that apply)
Date of submission of initial contract proposal and dollar amount
Date of alleged delays or disruptions
Date entitlement to an equitable adjustment was determined or a Contracting Officer decision was rendered
Dates of any pertinent government actions or other key events during contract performance, which have an impact on the contractor’s request for equitable adjustment
Review the contractor’s proposal. Do you think that the contractor has appropriately classified the construction fencing as a direct material?
No, direct materials are items such as raw materials, parts, sub-assemblies, components, and manufacturing supplies; collateral costs such as in transit insurance and related costs such as scrap and spoilage.
Which of the following statements is TRUE about the contractor’s proposal you just reviewed? (Select all that apply)
It is a detailed estimate.
The estimate contains some items that may be classified as other direct costs.
Which of the following questions should you ask to identify any proposed direct material that should be classified as an indirect cost? (Select all that apply)
Is the material cost proposed and accounted for in a manner consistent with the contractor’s disclosure statement and documented accounting practices?
Has the offeror consistently treated material similar to the proposed material as direct material?
Which of the following statements are points to consider when analyzing a summary-level estimate?(Select all that apply)
Develop and document your pre-negotiation position on direct material quantities required to complete the contract.
Give special attention to any direct material concerns identified during your preliminary review of the material mix.
Determine if cost estimating relationships (CERs) used in the proposal were properly developed and applied.
Develop and document your pre-negotiation position on direct material cost.
To determine if cost estimating relationships (CERs) used in the proposal were properly developed and applied, which of the following questions should you ask? (Select all that apply)
Is there any trend in the relationship?
Does the available information verify the existence and accuracy of the proposed relationship?
Would use of a detailed estimate or direct cost comparison with actuals from a prior effort produce more accurate results?
Does the CER estimate consider the changing value of the dollar?
Which of the following statements regarding analyzing detailed cost estimates are TRUE?(Select all that apply)
A detailed cost estimate is more costly to develop and analyze than a summary estimate.
When the contract is complex, there may be individual bills of material for different contract tasks or line items.
For supply and construction contracts, the estimator will estimate base material requirements using contract drawings.
You are trying to determine if the offeror used an appropriate base for estimating unit material costs under the current circumstances. Which of the following conditions should exist when the offeror bases estimates on current quotes?(Select all that apply)
Work will be performed using materials not currently in inventory.
Material prices may vary significantly from current inventory values.
There is sufficient proposal preparation time for the offeror to solicit and receive vendor quotes.
Did the contractor use the appropriate method of inventory pricing (FIFO) in pricing the proposal?
Yes, according to the contractor’s disclosure statement, TTS uses a FIFO method to price inventory.
Read the following situations in which statistical analysis might be used. Which one of the situations is similar to analyzing the contractor’s Bill of Materials?
Streamlining the evaluation of a large quantity of data
The __ is the observed value with the highest frequency in a data set.
Mode
Which of the following are measures of absolute dispersion? Select all of the correct answers.(Select all that apply)
Mean absolute deviation
Variance
Range
Standard deviation
What is the range for the following numbers? 13, 12, 9, 15, 11, 16, 17, 8, 12, 7, 12
10
We have an expert-written solution to this problem!
The auditor used a 90% confidence interval when selecting the sample size you just viewed. What does this value indicate? Select all of the correct answers.(Select all that apply)
The level of confidence that the true population mean (or average) is contained within the confidence interval.
That 90 times out of 100, the actual error rate is expected to fall within the confidence interval computed from the sample results.
That the auditor is accepting a 10% risk that the populations mean is outside of the confidence interval (5% greater or 5% less).
The significance level is 10%.
Which of the following are steps used in the process of stratified sampling? (Select all that apply)
Apply the decrement factor to the total proposed cost of all items in the stratum.
Determine the number of items to be sampled in each stratum.
Identify a stratum of items that merit 100% analysis.
Which one of the following job descriptions can most accurately be categorized as manufacturing direct labor?
Measuring and cutting material used in the outer casing
The Berent’s Dining Hall expansion proposal’s labor mix consists of one full time equivalent (FTE) Civil Engineer and one FTE Civil Engineering Technician. Is this a reasonable labor mix?
Yes. A technical evaluation provided by Lorena Helmsly concurs with the labor hour estimates in the proposal.
The BBOMS proposal uses the comparison method instead of the round-table method to estimate hours. Which of these situations warrants the use of a round-table estimate?
The contract is for a unique item, and with no historical data available such as detailed drawings or bill of materials.
All of the following are choices that are a factor when making labor rate comparisons EXCEPT?
Government labor rate requirements
THIS ONE–>Percentage of indirect costs associated with the labor effort
The skill mix of the labor effort
The time period of the labor effort
Based on the information provided by Jessica, which of the following actions is the most correct?
Document your rationale for accepting the skill level, labor rate, and labor hours based on a technical evaluation, DCAA Audit Report, and comparison to the BLS labor statistics for the region. Adjust the contractor’s proposed amount by $1,000.
What Labor Law applies to contracts in excess of $2,000 to which the United States or the District of Columbia is a party for construction, alteration, or repair of public buildings or public works within the United States?
Construction Wage Rate Requirements statute
Which of the following company-unique factors should you consider when analyzing direct labor rates? (Select all that apply)
Uncompensated overtime
Paid overtime and shifts premiums
Compensation trade-offs
Which of the following items are examples of Other Direct Costs? Select all of the correct answers.(Select all that apply)
Patent/data rights
Travel
Consultant fee
Special Test equipment
Review the DCAA Audit Report, available under Resources, before answering this question. A charge of $1500 for the portable toilet rental and $2000 charge for fax and copy machine rental is listed as part of the Bill of Materials. Which cost element should these items be deleted from so they can properly included as Other Direct Costs?
Material and Subcontract
In reviewing a proposal for production of an unmanned aerial vehicle contract, which travel cost would justify travel as an other direct cost?
The travel costs are for the project manager and the manufacturing supervisor to deliver the prototype to the government testing site for final demonstration testing
Which of the following statements are true about Computer Service Costs and Professional and Consultant Service Costs?(Select all that apply)
If a direct computerized effort is not required, you should not accept any part of the proposed ODC.
A task previously performed by in-house personnel may now be designated for performance by consultants.
If full-time employees are available and can work at a lower cost, question the contractor’s need for consultants.
Select the correct statement for classifying a special test equipment cost as an other direct cost. The special test unit must be:
Engineered, designed, fabricated, or modified to meet specific contract needs
When you read the audit report, you see that DCAA questioned costs associated with the G&A rate. This means that the DCAA may have questioned:
Executive staff salary costs
Why would an increase in BBOMS’ sales projections affect the G&A rate?
G&A rate was reduced because the indirect cost allocation base increased.
The BBOMS contract audit from DCAA accepted the FPRA for Labor Overhead for the Technology and Support Services (TSS) labor overhead pool. Which of the following items would likely be seen in a detailed labor overhead expense summary for Technology Services and Support Services labor overhead pool?
Employee fringe benefit costs, such as vacation, health care, unemployment, and taxes
In which phase of the cost allocation cycle did DCAA catch the indirect cost rate issue that Jessica discussed with you earlier?
Forward pricing
What steps are involved in the overhead rate development process? Select all of the correct answers. (Select all that apply)
Estimate indirect cost allocation bases
Estimate indirect cost rates
Estimate indirect cost pools for the period
Estimate sales volume
There are a lot of terms to sort through when thinking about pricing rates. Match the definitions below with the correct term.
- A bilateral agreement that binds the contractor to propose the negotiated rates and the Government to accept them in pricing individual contract
- Rate recommendations developed by the cognizant ACO for all Government buying activities
- Rates proposed by the contractor that are the starting point for indirect cost rate analysis and contract pricing
- Rates developed by Government audit personnel as a result
- Forward Pricing Rate Agreements,
- Forward Pricing Rate Recommendations ,
- Proposed Forward Pricing
- Audit Recommendation Rates
The simple regression equation assumes __. (Select all that apply)
There is a linear relationship between the independent and dependent variables.
The regression equation is used to predict new values of Y based on the known values of X.
When would it be appropriate to use Regression Analysis in contract pricing?(Select all that apply)
In Indirect Cost Rate analysis
When developing cost estimating relationships
What is the first step of a simple regression analysis?
Collect the historical data required for analysis
In negotiating labor hours for production of a subassembly for a missile system, you notice that the contractor has proposed a 70% learning curve. The contractor contends that due to a major technological change as a result of this engineering change proposal, it will actually cost more per unit initially as the contractor “works the bugs out” of the design. What action do you take?
Negotiate the use of a new curve with a new first unit value and slope.
What is the slope of the learning curve described by the data given below?
Unit Row
1 2,000
2 1,600
4 1,280
80% – You can calculate the slope of a curve, by dividing the unit cost into the unit cost at twice the quantity then multiplying the resulting ratio by 100. 1600/2000 = .80 * 100 = 80%
Using the unit improvement curve theory, estimate the labor hours required to produce the 40th unit if 5,000 labor hours were required to complete the 10th unit and the improvement slope is 80 percent.
3200 labor hours
We know the slope is 80% and it took 5,000 labor hours to produce the 10th unit, so we multiply 5,000 by .8 to get the labor hours needed for the 20th unit. We now know that it took 4,000 labor hours to produce the 20th unit. To find the labor hours needed to produce the 40th unit, multiply 4,000 by .8 to get the answer – 3,200 labor hours.
The original contract was acquired under a competitive source selection. Upon review of Section I, you find that the clause at FAR 52.215-17 Waiver of Facilities Capital Cost of Money was included in the contract. What should you do?
Remove the $3598.97 from the prenegotiation objective, which is an unallowable cost IAW FAR 15.408(i).
Analysis of profit is based on the premise that it is in the government’s interest to offer contractors opportunities for financial rewards sufficient to _____. Select all of the correct answers.(Select all that apply)
Maintain a viable industrial base
Attract the best capable and qualified contractors.
Stimulate efficient contractor performance.
What constitutes Performance Risk?(Select all that apply)
Addresses the contractor’s degree of risk in fulfilling contract requirements.
Consists of two parts: Technical and Management/cost control.
Which of the following factors are issues to consider when determining contractor risk and return on profits? (Select all that apply)
Job complexity
Requirements for technical equipment.
Is this a first time requirement, or has this been accomplished before?
Is there material, labor, indirect costs and other costs to be managed?
What is the contract type?
What is the cost risk?
The weighted guidelines in our structured approach focuses on several profit factors. Which of the following are the correct profit factors to consider as you develop your prenegotiation profit/fee objective? (Select all that apply)
Performance Risk
Contract Type Risk and Working Capital Adjustment
Facilities Capital Employed
Cost Efficiency
Which of the following are factors of most successful negotiations? (Select all that apply)
Effectively prepare and plan
Communicate effectively
Foster team cooperation
Apply good business judgment
What is the most accurate definition of cost drivers?
Aspects of the proposal or contract requirements that if changed would have a major impact on contract price.
Which of the following are examples of cost drivers?(Select all that apply)
Delivery Requirements
Contract Terms
Technical Requirements
In preparing your prenegotiation documentation, you should document which of the following?(Select all that apply)
Your position on each of the key elements that will define the contract pricing arrangement
The purpose of the negotiation
Any unique aspects of the procurement action
A summary of the contractor’s proposal