COR Cost & Pricing Analysis 2 — Questions and Answers
Question 1: Under FAR Part 15, when is a contractor required to submit certified cost or pricing data?
- When the contract exceeds the Simplified Acquisition Threshold
- When the negotiated contract action exceeds the TINA threshold (Correct answer)
- Whenever a sole-source contract is awarded regardless of value
- When the contracting officer requests it regardless of contract value
Correct answer: When the negotiated contract action exceeds the TINA threshold
Certified cost or pricing data is required when a negotiated contract action exceeds the TINA threshold (currently $2 million), unless a statutory exception applies.
Question 2: Which cost element is classified as an indirect cost?
- Direct labor hours charged to a specific contract
- Raw materials purchased exclusively for one contract
- Facility overhead shared across multiple contracts (Correct answer)
- Subcontractor invoices tied to a single deliverable
Correct answer: Facility overhead shared across multiple contracts
Indirect costs like facility overhead benefit multiple contracts and cannot be traced directly to a single cost objective.
Question 3: Which FAR provision guides the contracting officer's determination of appropriate profit or fee on a negotiated contract?
- FAR 31.205
- FAR 52.215-2
- FAR 15.404-4 (Correct answer)
- FAR 16.306
Correct answer: FAR 15.404-4
FAR 15.404-4 establishes guidelines for profit and fee analysis, including the structured approach for determining reasonable profit objectives.
Question 4: What does 'should-cost analysis' mean in government contracting?
- An estimate of what the government believes the contract should cost based on efficient performance (Correct answer)
- The contractor's internal cost estimate submitted with its proposal
- A post-award audit comparing actual costs to proposed costs
- A cost comparison between two competing proposals
Correct answer: An estimate of what the government believes the contract should cost based on efficient performance
Should-cost analysis is a government assessment of what a contract should cost if the contractor performs efficiently, used as a negotiation baseline.
Question 5: Under FAR 31.201-2, a cost is considered allowable only if it meets which criteria?
- Approved by the contracting officer in writing before being incurred
- Incurred after contract award and supported by original receipts
- Reasonable, allocable, and compliant with CAS and contract terms (Correct answer)
- Included in the contractor's approved accounting system and audited annually
Correct answer: Reasonable, allocable, and compliant with CAS and contract terms
FAR 31.201-2 states a cost is allowable only if it is reasonable, allocable, consistent with CAS, and not prohibited by the contract or regulations.
Question 6: Which type of contract places the greatest cost risk on the government?
- Firm-Fixed-Price (FFP)
- Fixed-Price Incentive (FPI)
- Fixed-Price with Economic Price Adjustment (FP-EPA)
- Cost-Plus-Fixed-Fee (CPFF) (Correct answer)
Correct answer: Cost-Plus-Fixed-Fee (CPFF)
Cost-Plus-Fixed-Fee contracts reimburse all allowable costs incurred by the contractor, placing virtually all cost risk on the government.
Question 7: A contractor lists fringe benefits as a direct cost in its proposal. This practice is:
- Always unallowable under FAR Part 31 cost principles
- Acceptable if the contractor's disclosed accounting practices consistently treat them as direct costs (Correct answer)
- A misclassification that must be corrected before contract award
- Permissible only on cost-plus contracts with DCAA approval
Correct answer: Acceptable if the contractor's disclosed accounting practices consistently treat them as direct costs
Cost accounting consistency is key; if a contractor consistently treats fringe benefits as direct costs per its disclosed accounting practices, the treatment is acceptable.
COR Cost & Pricing Analysis 2
Under FAR Part 15, when is a contractor required to submit certified cost or pricing data?