COR Cost & Pricing Analysis 3 — Questions and Answers
Question 1: Which of the following is a valid exception to the TINA requirement for certified cost or pricing data?
- The contract is awarded to a foreign contractor
- Adequate price competition exists (Correct answer)
- The contract period of performance exceeds five years
- The contractor is classified as a small business
Correct answer: Adequate price competition exists
When adequate price competition establishes price reasonableness, certified cost or pricing data is not required under the competition exception to TINA.
Question 2: A COR reviewing invoices notices the contractor is billing G&A expenses at a rate higher than the rate stated in the contract. The COR should:
- Approve the invoices since G&A rates naturally fluctuate throughout the year
- Pay the invoices and flag the discrepancy for the post-award audit team
- Reject the invoices and promptly notify the contracting officer of the discrepancy (Correct answer)
- Ask the contractor to submit a contract modification to update the approved rate
Correct answer: Reject the invoices and promptly notify the contracting officer of the discrepancy
The COR must reject invoices that include costs billed at rates exceeding contractually agreed indirect rates and immediately notify the contracting officer.
Question 3: What is the primary mission of the Defense Contract Audit Agency (DCAA)?
- Negotiate contract prices on behalf of the government
- Perform contract audits and provide financial advisory services to contracting officers (Correct answer)
- Approve contractor accounting systems as a prerequisite for contract award
- Determine and set final overhead rates for all government contracts
Correct answer: Perform contract audits and provide financial advisory services to contracting officers
DCAA performs audits and provides financial advisory services to contracting officers and DoD officials; it advises but does not make contracting decisions.
Question 4: Which contracts are generally exempt from Cost Accounting Standards (CAS) coverage?
- Contracts valued over $100 million awarded competitively
- All firm-fixed-price contracts regardless of dollar value
- Contracts with small businesses and contracts below the CAS threshold (Correct answer)
- Contracts with universities and nonprofit research organizations only
Correct answer: Contracts with small businesses and contracts below the CAS threshold
CAS exemptions include contracts awarded to small businesses and contracts below the CAS coverage threshold, per 48 CFR 9903.201-1.
Question 5: A contractor offers 'most favored customer' pricing as price reasonableness evidence. This is an example of which price analysis technique?
- Parametric pricing analysis
- Analogous program comparison
- Catalog or market price analysis (Correct answer)
- Engineering build-up analysis
Correct answer: Catalog or market price analysis
Catalog or market price analysis uses prices offered to the general public or most favored customers to establish reasonableness without requiring certified cost data.
Question 6: A contractor invoices costs for an employee dinner where alcohol was served during a client entertainment event. Under FAR 31.205-14, these costs are:
- Allowable if the entertainment directly supported the contract mission
- Allowable up to 2% of total direct costs with contracting officer approval
- Allowable only for the food portion; alcohol is unallowable
- Unallowable in their entirety regardless of business purpose (Correct answer)
Correct answer: Unallowable in their entirety regardless of business purpose
FAR 31.205-14 expressly categorizes entertainment costs, including alcoholic beverages, as unallowable costs under government contracts.
Question 7: In a Fixed-Price Incentive (FPI) contract, what happens when the contractor's final costs exceed the established ceiling price?
- The government absorbs all costs above the ceiling price
- Costs above the ceiling are split equally between the government and contractor
- The contract automatically converts to a CPFF arrangement above the ceiling
- The contractor absorbs all costs above the ceiling price (Correct answer)
Correct answer: The contractor absorbs all costs above the ceiling price
The ceiling price in an FPI contract is the maximum the government will pay; all costs exceeding the ceiling are entirely the contractor's responsibility.
COR Cost & Pricing Analysis 3
Which of the following is a valid exception to the TINA requirement for certified cost or pricing data?