CCNP Pricing Analysis 5

Question 1

Which scenario best illustrates 'price realism' analysis in source selection?

Accepted Answer

Evaluating whether an offeror's low price reflects a credible understanding of requirements and can actually be performed

Answer

Price realism assesses whether a low offer is realistic and executable, not just whether it is low, to protect against risk of poor performance.

Question 2

'Value engineering' in contract pricing is best described as:

Accepted Answer

A systematic process to achieve required functions at the lowest life-cycle cost without degrading quality

Answer

Value engineering (VE) identifies cost-saving alternatives that maintain performance, often resulting in shared savings between buyer and seller.

Question 3

A contract includes a 'most-favored-customer' (MFC) clause. This means the buyer is entitled to:

Accepted Answer

A price no higher than the lowest price the seller offers any comparable customer

Answer

An MFC clause ensures the buyer receives pricing at least as favorable as the seller's best customer for comparable purchases.

Question 4

In multi-year contracting, a key pricing benefit to the buyer is:

Accepted Answer

Reduced unit prices because the supplier can plan production and amortize setup costs over a longer period

Answer

Multi-year contracts provide production stability that lets suppliers invest in efficiencies, yielding lower unit prices than annual contracts.

Question 5

When analyzing a supplier's indirect cost rate proposal, a buyer should be most concerned if:

Accepted Answer

Unallowable costs such as entertainment or fines are embedded in the pool

Answer

Unallowable costs embedded in indirect pools inflate the rate and cause the buyer to overpay on cost-reimbursable contracts.

(CCNP) Certified Contract Negotiation Professional Practice Test