Cost Realism & Price Analysis Flashcards
7 cards from real FCC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cost Realism & Price Analysis flashcards as text
A proposal for a cost-plus-fixed-fee contract includes labor rates significantly below industry standards. What is the MOST appropriate government response?
Answer: Perform a cost realism analysis and adjust rates to realistic levels for evaluation purposes
Unrealistically low labor rates on a CPFF contract signal a potential misunderstanding of requirements, warranting cost realism adjustment to establish most probable cost for evaluation.
Which FAR part governs the price analysis technique of 'comparison with competitive published price lists'?
Answer: FAR 15.404-1(b)(2)(ii)
FAR 15.404-1(b)(2)(ii) identifies comparison with competitive published price lists as an acceptable price analysis technique for determining price reasonableness.
What is the primary purpose of an Independent Government Cost Estimate (IGCE) in source selection?
Answer: To provide a baseline for evaluating the reasonableness of offered prices
The IGCE gives the contracting officer a government-developed benchmark for assessing whether proposed prices are reasonable before and during negotiations.
When evaluating unbalanced pricing in a proposal, the contracting officer is MOST concerned about which risk?
Answer: The risk of overpayment on front-loaded line items or performance risk on understated quantities
Unbalanced pricing creates overpayment risk when prices are front-loaded and performance risk when prices are understated on items likely to increase in quantity.
Under the Truth in Negotiations Act (TINA), what is the threshold above which certified cost or pricing data is generally required for negotiated contracts?
Answer: $750,000
As of recent FAR updates, the TINA threshold is $2 million; however, the $750,000 threshold was the longstanding figure — always verify current FAR 15.403-4 for the operative threshold.
Which of the following best describes 'price analysis' as distinguished from 'cost analysis'?
Answer: Price analysis evaluates the total price without examining the underlying cost elements; cost analysis evaluates individual cost elements
Price analysis judges the reasonableness of the proposed price as a whole without breaking it into components, while cost analysis examines individual cost elements and profit.
A contracting officer discovers that an offeror's proposed indirect rates are significantly lower than its historical actuals. In a cost realism analysis, how should the CO treat this discrepancy?
Answer: Adjust the proposed rates upward to reflect probable costs based on historical actuals or industry data
When proposed indirect rates are unrealistically low relative to historical actuals, the CO should adjust them to reflect the most probable cost for evaluation purposes.