CMP CMP Pricing Strategy & Cost Analysis 1

Question 1

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

Accepted Answer

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

Answer

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

Question 2

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

Accepted Answer

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

Answer

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

Question 3

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

Accepted Answer

Firm-fixed-price (FFP)

Answer

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

Question 4

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

Accepted Answer

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

Answer

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

Question 5

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

Accepted Answer

Document the rationale and methodology behind each cost estimate element

Answer

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

(CMP) Capture Management Professional Certification Practice Test