Cost and Price Analysis Flashcards

When is certified cost or pricing data required under the Truth in Negotiations Act (TINA)?

Answer: For negotiated contracts above the threshold (currently $2 million) unless an exception applies

TINA (codified at 10 U.S.C. 2306a and 41 U.S.C. 3502) requires certified cost or pricing data for negotiated procurements exceeding the current threshold unless an exception such as adequate price competition applies.

Price analysis differs from cost analysis in that price analysis:

Answer: Compares offered prices to market benchmarks without examining underlying cost elements

Price analysis examines the total price against market prices, historical awards, or catalog prices without decomposing individual cost elements.

Which of the following costs is generally unallowable under FAR Part 31?

Answer: Interest and financing charges on contractor borrowing

FAR 31.205-20 specifically lists interest and financing costs as unallowable because the government should not subsidize a contractor's capital structure decisions.

The term 'allocable cost' under FAR 31.201-4 means the cost:

Answer: Is assignable to one or more cost objectives in accordance with the relative benefits received

Allocability requires a logical or causal relationship between the cost and the cost objective — the cost must benefit the contract to be charged to it.

A should-cost analysis is performed by the government to:

Answer: Identify opportunities for the contractor to reduce costs through improved efficiency and management

Should-cost analysis is a government review of the contractor's work and management practices to identify inefficiencies and estimate what the work should cost with proper performance.

Defective pricing occurs when a contractor provides cost or pricing data that is:

Answer: Not current, accurate, or complete at the time of price agreement

Defective pricing under TINA means the data provided was inaccurate, incomplete, or not current as of the date of price agreement, giving the government the right to a price reduction.