Government Procurement Certification Cost & Price Analysis 1 — Questions and Answers
Question 1: Under FAR Part 15, when is a contracting officer required to obtain certified cost or pricing data?
- When the contract exceeds the simplified acquisition threshold
- When the contract exceeds $2 million and no exception applies
- When the contract exceeds $750,000 and no exception applies (Correct answer)
- Whenever the procurement uses negotiated procedures
Correct answer: When the contract exceeds $750,000 and no exception applies
FAR 15.403-4 requires certified cost or pricing data when a contract, subcontract, or modification exceeds $750,000 and no exception (adequate price competition, commercial items, etc.) applies.
Question 2: What is the primary purpose of a price analysis in government procurement?
- To verify that individual cost elements are allowable and allocable
- To determine the reasonableness of a proposed price without examining cost elements (Correct answer)
- To audit contractor overhead rates for accuracy
- To establish a should-cost baseline for long-term contracts
Correct answer: To determine the reasonableness of a proposed price without examining cost elements
Price analysis evaluates whether a proposed price is fair and reasonable by comparing it to benchmarks such as competitive offers, catalog prices, or historical data, without dissecting individual cost elements.
Question 3: Which of the following is NOT a recognized price analysis technique under FAR 15.404-1?
- Comparison of proposed prices received in response to the solicitation
- Comparison with prices found in the contractor's disclosed accounting practices (Correct answer)
- Comparison with prices set by law or regulation
- Visual analysis of parametric estimates
Correct answer: Comparison with prices found in the contractor's disclosed accounting practices
FAR 15.404-1(b) lists price analysis techniques including competitive offers, catalog/market prices, prior prices, and parametric estimates—comparing to disclosed accounting practices is a cost analysis technique, not a price analysis technique.
Question 4: A contracting officer performing cost analysis receives a contractor's proposal with indirect cost rates. Which of the following actions is most appropriate?
- Accept the rates as proposed if they fall within 10% of prior-year rates
- Verify the rates against DCAA-audited or cognizant agency-established rates (Correct answer)
- Apply the government's standard 35% overhead rate if no audit is available
- Reject the proposal and request fixed-price only
Correct answer: Verify the rates against DCAA-audited or cognizant agency-established rates
Contracting officers should use rates established or recommended by the cognizant audit agency (typically DCAA) to ensure indirect cost rates are reasonable and consistent with the contractor's disclosed practices.
Question 5: Under the Truth in Negotiations Act (TINA), what constitutes 'defective pricing'?
- A contractor's failure to submit a cost proposal on time
- Submission of certified cost or pricing data that was not accurate, complete, or current at the time of agreement (Correct answer)
- Use of forward pricing rates that differ from historical rates by more than 15%
- Failure to disclose proprietary commercial pricing to the government
Correct answer: Submission of certified cost or pricing data that was not accurate, complete, or current at the time of agreement
Defective pricing under TINA occurs when a contractor submits certified cost or pricing data that was inaccurate, incomplete, or not current as of the date of price agreement, entitling the government to a price reduction.
Question 6: What does the term 'cost realism analysis' mean in the context of government source selection?
- An evaluation to confirm the government's independent cost estimate is realistic
- An assessment of whether a contractor's proposed costs are realistic, complete, and consistent with the technical proposal (Correct answer)
- A comparison of all offerors' proposed prices to ensure competitive pricing
- A DCAA audit of a contractor's accounting system before award
Correct answer: An assessment of whether a contractor's proposed costs are realistic, complete, and consistent with the technical proposal
Cost realism analysis under FAR 15.404-1(d) evaluates whether proposed costs in a cost-reimbursement environment are realistic, reflect a clear understanding of the work, and are consistent with the technical approach.
Question 7: Which cost is generally considered UNALLOWABLE under FAR Part 31?
- Direct labor costs for employees working on the contract
- Advertising costs for recruiting new employees
- Costs of preparing and submitting a competitive bid or proposal
- Entertainment costs for hosting a contractor appreciation event (Correct answer)
Correct answer: Entertainment costs for hosting a contractor appreciation event
FAR 31.205-14 expressly identifies entertainment costs as unallowable, meaning the government will not reimburse costs for entertainment, amusements, diversion, or social activities.
Government Procurement Certification Cost & Price Analysis 1
Under FAR Part 15, when is a contracting officer required to obtain certified cost or pricing data?