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

The cost volume must demonstrate that proposed costs are reasonable, allowable, and consistent with the technical approach described in other volumes.

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

Cost realism analysis determines if costs are too low to actually perform the work, which could indicate an unrealistic or risky offer.

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

Indirect costs like overhead, fringe benefits, and G&A are allocated to contracts through approved rates and must be disclosed in cost proposals.

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

DCAA audits help the government determine if a contractor's accounting practices and proposed costs are reliable and allowable under FAR.

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 BOE provides the rationale and methodology behind every cost estimate, giving the government confidence in the proposal's accuracy.

APMP - Association of Proposal Management Professionals Practice Test

APMP - Association of Proposal Management Professionals Practice Test

APMP Pricing Strategy and Cost Volume Development