Procurement & Negotiation Strategies Flashcards

When applying the 'walk-away' strategy in negotiations, what condition must the contracting officer establish beforehand?

Answer: A documented minimum acceptable position beyond which award is not justified

The walk-away strategy requires a pre-established minimum acceptable position so the negotiator knows objectively when to end talks rather than making concessions beyond a defensible point.

Under FAR 15.403-1(c)(3), which condition exempts an acquisition from requiring certified cost or pricing data?

Answer: Adequate price competition exists based on at least two independent offers

Adequate price competition — typically two or more independent responsive offers — is a primary basis for waiving the requirement for certified cost or pricing data.

A contracting officer is negotiating an undefinitized contract action (UCA). What limitation does FAR 16.603-2 place on obligations under UCAs?

Answer: Obligations cannot exceed 50% of the not-to-exceed price until the contract is definitized

FAR 16.603-2 limits government obligations under UCAs to 50% of the not-to-exceed price to control risk until the contract is definitized.

In a negotiated acquisition, what is the significance of the 'zone of possible agreement' (ZOPA)?

Answer: The range within which both parties' reservation prices overlap and a deal is feasible

The ZOPA is the overlap between the buyer's maximum price and the seller's minimum price where a mutually acceptable agreement can be reached.

Which of the following best describes a 'definitive contract' as distinguished from a letter contract under FAR 16.603?

Answer: A fully negotiated contract with agreed-upon price, terms, and scope before work begins

A definitive contract is fully negotiated with complete price, terms, and scope agreed upon before performance begins, unlike a letter contract which is a preliminary instrument.

Under FAR 15.504, when must a contracting officer award a contract after discussions are concluded and best-and-final offers are received?

Answer: Only after all required approvals and documentation are complete

FAR 15.504 requires that all required approvals and documentation — including price negotiation memorandum and legal review — be complete before award.

What is the primary risk to the government in using a Cost-Plus-Percentage-of-Cost (CPPC) contract, which is prohibited under FAR 16.102(c)?

Answer: The contractor has no incentive to control costs since profit increases as costs rise

CPPC contracts are prohibited because they incentivize contractors to incur higher costs since their fee is a percentage of those costs, creating perverse financial incentives.