ACAP Defense Acquisition and Cost Policy 2

Question 1

What is the 'Defense Contract Audit Agency (DCAA)' and how does it support Army cost analysis?

Accepted Answer

DCAA audits contractor accounting systems, incurred costs, and proposals to verify accuracy and reasonableness, providing the government with independent assurance of contractor financial data

Answer

DCAA audits provide the Army with confidence that contractor-reported costs are accurate and that accounting systems are adequate, supporting both source selection and contract administration.

Question 2

What is 'should-cost management' under the Better Buying Power initiative and how does it differ from traditional cost estimating?

Accepted Answer

Should-cost management challenges program and contractor teams to identify and achieve specific cost reduction targets, rather than simply predicting what costs will be

Answer

Better Buying Power elevated should-cost from an occasional review to an ongoing management discipline, requiring program managers to actively drive costs down rather than accept historical cost trends.

Question 3

What does 'allowable cost' mean under FAR Part 31 in the context of cost-type Army contracts?

Accepted Answer

A cost that is reasonable, allocable to the contract, conforms to applicable CAS standards, and is not expressly unallowable under FAR 31.201-6

Answer

Allowability under FAR Part 31 determines what costs the government will reimburse on cost-type contracts; unallowable costs (e.g., entertainment, advertising) must be excluded from billings.

Question 4

What is 'cost realism analysis' and when is it performed during source selection?

Accepted Answer

An assessment of whether proposed costs are realistic for the work, performed on cost-reimbursement proposals to determine the probable cost of contract performance

Answer

Cost realism is mandatory on cost-type solicitations; the government adjusts unrealistically low proposed costs to probable cost for evaluation purposes to avoid awarding to a contractor that cannot perform for the proposed amount.

Question 5

What is the 'Cost Accounting Standards (CAS)' and what is their purpose for Army contracts?

Accepted Answer

CAS are standards issued by the CAS Board requiring defense contractors to consistently measure, assign, and allocate costs to government contracts, ensuring comparability and auditability

Answer

CAS ensure that contractors allocate costs consistently and fairly to government contracts, preventing practices that shift costs from commercial work to government contracts or distort reported costs.

ACAP - Army Cost Analysis Position Practice Test

ACAP - Army Cost Analysis Position Practice Test

ACAP Defense Acquisition and Cost Policy 2