FAR FAR Contract Negotiations & Price Reasonableness 1 — Questions and Answers
Question 1: What is the primary purpose of a price reasonableness determination under FAR 15.404?
- To verify contractor financial stability
- To ensure the government does not pay more than a fair and reasonable price (Correct answer)
- To establish contractor profit margins
- To determine contractor cost accounting practices
Correct answer: To ensure the government does not pay more than a fair and reasonable price
FAR 15.404 requires contracting officers to establish price reasonableness to protect the government from paying excessive prices.
Question 2: When is adequate price competition considered to exist under FAR 15.403-1?
- When only one offer is received but is evaluated as fair
- When two or more responsible offerors submit priced offers and award will be made based on price or price-related factors (Correct answer)
- When the contractor provides certified cost or pricing data
- When the contracting officer determines the price is reasonable without further analysis
Correct answer: When two or more responsible offerors submit priced offers and award will be made based on price or price-related factors
FAR 15.403-1(c)(1) defines adequate price competition as existing when two or more responsible offerors submit priced offers and award is based on price or price-related factors.
Question 3: Which price analysis technique under FAR 15.404-1 compares proposed prices to previously proposed or contract prices for the same or similar work?
- Market research comparison
- Technical cost analysis
- Parametric estimating
- Comparison of prior proposed prices and contract prices (Correct answer)
Correct answer: Comparison of prior proposed prices and contract prices
Comparing prior proposed prices and contract prices for the same or similar work is a recognized price analysis technique under FAR 15.404-1(b).
Question 4: What document must a contractor execute when certified cost or pricing data is required under FAR 15.406-2?
- Contractor's audited financial statement
- Certificate of Current Cost or Pricing Data (Correct answer)
- Cost Accounting Standards (CAS) disclosure statement
- Forward Pricing Rate Agreement (FPRA)
Correct answer: Certificate of Current Cost or Pricing Data
FAR 15.406-2 requires contractors to certify that submitted cost or pricing data is accurate, complete, and current via the Certificate of Current Cost or Pricing Data.
Question 5: Under FAR 15.404-1, when must a contracting officer use cost analysis rather than price analysis?
- Whenever a price is below the simplified acquisition threshold
- When adequate price competition exists
- When certified cost or pricing data is required or when cost or pricing data is submitted (Correct answer)
- Only for sole-source contracts above $10 million
Correct answer: When certified cost or pricing data is required or when cost or pricing data is submitted
FAR 15.404-1(c) states that cost analysis shall be used when certified cost or pricing data is required or when cost or pricing data is submitted by the offeror.
Question 6: What is the current threshold requiring certified cost or pricing data for negotiated prime contracts under FAR 15.403-4?
- $750,000
- $1 million
- $2 million (Correct answer)
- $5 million
Correct answer: $2 million
FAR 15.403-4 requires certified cost or pricing data for negotiated prime contracts exceeding $2 million, subject to periodic adjustment for inflation.
FAR FAR Contract Negotiations & Price Reasonableness 1
What is the primary purpose of a price reasonableness determination under FAR 15.404?