CFCM Pricing and Negotiation 4

Question 1

Under FAR 16.301, which contract type places the greatest cost risk on the government?

Accepted Answer

Cost-plus-fixed-fee (CPFF)

Answer

CPFF contracts place maximum cost risk on the government because the contractor is reimbursed all allowable costs and receives a fixed fee regardless of the final cost outcome.

Question 2

What is the 'point of total assumption' (PTA) in a fixed-price incentive firm (FPIF) contract?

Accepted Answer

The cost point above which the contractor bears 100% of additional cost overruns because the ceiling price is reached

Answer

The PTA is the cost level at which the contract's ceiling price is reached, and above that point the contractor absorbs all additional costs, effectively assuming full risk.

Question 3

A contracting officer is preparing to negotiate a cost-plus-incentive-fee (CPIF) contract. Which element is NOT established at the time of contract award?

Accepted Answer

Final fee earned

Answer

The final fee earned under CPIF is not established at award—it is calculated after performance based on actual costs compared to target cost using the share ratio.

Question 4

Under FAR 15.405, when must a contracting officer document the price negotiation memorandum (PNM)?

Accepted Answer

For all negotiated contracts, documenting the negotiation history and basis for the agreed-upon price

Answer

FAR 15.406-3 requires a price negotiation memorandum for all negotiated contracts, documenting the negotiation history, government and contractor positions, and the basis for the final price.

Question 5

Which cost accounting standard (CAS) specifically addresses the allocation of business unit general and administrative (G&A) expenses to final cost objectives?

Accepted Answer

CAS 410

Answer

CAS 410 requires that G&A expenses be allocated to final cost objectives using a base that represents the total activity of the business unit.

(CFCM) Certified Federal Contracts Manager Practice Test

(CFCM) Certified Federal Contracts Manager Practice Test

CFCM Pricing and Negotiation 4