CPPB Cost and Price Analysis 2

Question 1

In a competitive sealed bid environment, which pricing method is most commonly used?

Accepted Answer

Firm-fixed-price

Answer

Firm-fixed-price contracts are preferred in competitive sealed bidding because they place maximum risk on the contractor and provide stable pricing for the government.

Question 2

What does the term 'price reasonableness' mean in public procurement?

Accepted Answer

The price is fair to both the buyer and seller based on current market conditions

Answer

Price reasonableness means the price is fair and equitable to both parties given the circumstances, not necessarily the lowest possible price.

Question 3

Which document provides the government's independent estimate of contract costs before solicitation?

Accepted Answer

Independent Government Cost Estimate (IGCE)

Answer

The Independent Government Cost Estimate (IGCE) is prepared before solicitation to establish a baseline for evaluating whether vendor prices are reasonable.

Question 4

What is the difference between direct costs and indirect costs in a government contract?

Accepted Answer

Direct costs are specifically identified with a single contract; indirect costs benefit multiple contracts

Answer

Direct costs can be attributed to a specific contract (e.g., labor, materials), while indirect costs—like overhead and G&A—benefit multiple contracts and are allocated proportionally.

Question 5

A public buyer is evaluating a sole-source proposal. Which analytical method is most appropriate?

Accepted Answer

Cost analysis of the vendor's detailed cost breakdown

Answer

Without competition to benchmark against, cost analysis of the vendor's detailed cost elements is the most rigorous method to determine price reasonableness.

CPPB - Certified Professional Public Buyer Practice Test

CPPB - Certified Professional Public Buyer Practice Test

CPPB Cost and Price Analysis 2