APMP Pricing Strategy and Cost Volume Development

Question 1

What is the primary purpose of the cost/price volume in a government proposal?

Accepted Answer

To provide a detailed, auditable breakdown of proposed costs that allows the government to evaluate reasonableness and realism

Answer

To summarize the executive team's compensation structure

Answer

To list the subcontractor profit margins for government review

Answer

To justify the company's overhead rates independently of the technical solution

Question 2

What does 'cost realism' mean in the context of government proposal evaluation?

Accepted Answer

Whether the proposed costs accurately reflect the true cost of performing the work as proposed

Answer

Whether the price is lower than all competitors

Answer

Whether the cost volume was formatted correctly per RFP instructions

Answer

Whether indirect rates are consistent with DCAA audit findings

Question 3

What are 'indirect costs' in a government proposal context?

Accepted Answer

Costs not directly tied to a specific contract but allocated across multiple projects, such as overhead and G&A

Answer

Costs charged directly to a specific task or deliverable

Answer

Costs associated with proposal preparation that are billed to the customer

Answer

Costs that require prior approval from the contracting officer

Question 4

What is the role of DCAA (Defense Contract Audit Agency) in the context of proposal pricing?

Accepted Answer

To audit contractor accounting systems and proposed costs for adequacy and compliance with federal regulations

Answer

To approve the proposal format before submission

Answer

To negotiate final pricing on behalf of the government

Answer

To evaluate technical approaches for cost effectiveness

Question 5

What is a 'basis of estimate' (BOE) in cost proposal development?

Accepted Answer

A documented explanation of how labor hours, materials, and costs were estimated for each cost element

Answer

A summary of the company's annual revenue used to justify indirect rates

Answer

A historical price list from prior government contracts

Answer

A contractor's proposed profit percentage above total cost

Question 6

Why is it important to align the cost volume with the technical and management volumes?

Accepted Answer

Inconsistencies between volumes raise evaluator concerns about the offeror's understanding of the work

Answer

Government regulations require identical content in all volumes

Answer

The cost volume page count must match the technical volume

Answer

Alignment is required only for cost-plus contract types