CMP Pricing Strategy & Cost Analysis Flashcards

In capture management, 'price-to-win' (PTW) is defined as:

Answer: The price at which the capture team believes it can most likely win the contract

PTW analysis uses competitive intelligence and customer budget data to determine the price point most likely to secure the award.

What does 'should-cost' analysis involve in government contracting?

Answer: The government's assessment of what a contract should cost under efficient contractor performance

Should-cost analysis gives the government a basis for challenging contractor-proposed prices and driving cost reductions during negotiations.

Which contract type places the greatest cost risk on the contractor in government contracting?

Answer: Firm-fixed-price (FFP)

Under FFP, the contractor absorbs all cost overruns because the price is locked regardless of actual costs incurred during performance.

In capture pricing, a 'wrap rate' refers to:

Answer: The multiplier applied to direct labor to account for overhead, G&A, and fringe benefits

Wrap rates combine all indirect cost burdens into a single multiplier applied to direct labor, enabling rapid fully-burdened cost calculations.

A 'basis of estimate' (BOE) in proposal pricing serves to:

Answer: Document the rationale and methodology behind each cost estimate element

A BOE justifies every cost element by showing auditors and contracting officers that estimates are reasonable, traceable, and defensible.

When performing competitive price analysis, the most valuable input for a capture team is:

Answer: Modeling competitors' prices based on their estimated cost structures, labor rates, and past bids

True PTW analysis requires modeling competitor behavior and cost structures rather than simply averaging historical data, which may not reflect current conditions.