NCMA Contract Types and Pricing

Question 1

Which contract type places the maximum cost risk on the contractor?

Accepted Answer

Firm-Fixed-Price (FFP)

Answer

Cost-Plus-Fixed-Fee (CPFF)

Answer

Time-and-Materials (T&M)

Answer

Cost-Plus-Award-Fee (CPAF)

Question 2

Under a Cost-Plus-Fixed-Fee (CPFF) contract, the fixed fee is:

Accepted Answer

Negotiated at contract award and does not vary with actual costs incurred

Answer

A percentage of actual costs that adjusts as costs change

Answer

Determined solely at contract completion based on performance

Answer

Adjusted upward or downward based on contractor performance ratings

Question 3

Which contract type is MOST appropriate when the extent or duration of work cannot be precisely estimated at the time of contract award?

Accepted Answer

Time-and-Materials (T&M)

Answer

Firm-Fixed-Price (FFP)

Answer

Fixed-Price with Economic Price Adjustment (FP-EPA)

Answer

Fixed-Price-Incentive-Firm (FPIF)

Question 4

Under FAR, a Time-and-Materials (T&M) contract is required to include:

Accepted Answer

A ceiling price that the contractor exceeds at its own risk

Answer

A guaranteed minimum fee payable to the contractor upon award

Answer

Government approval prior to billing each individual labor hour

Answer

A performance-based incentive fee structure tied to deliverables

Question 5

What is the primary feature that distinguishes a Fixed-Price-Incentive-Firm (FPIF) contract from a standard Firm-Fixed-Price (FFP) contract?

Accepted Answer

FPIF includes a share ratio to divide cost underruns and overruns between the parties

Answer

The contractor bears no cost risk whatsoever under FPIF

Answer

The government assumes all cost risk in an FPIF contract

Answer

FPIF has no ceiling price limitation on government payments

Question 6

Which of the following is classified as a cost-reimbursement contract type under FAR?

Accepted Answer

Cost-Plus-Award-Fee (CPAF)

Answer

Fixed-Price-Incentive-Firm (FPIF)

Answer

Fixed-Price with Economic Price Adjustment (FP-EPA)

Answer

Labor-Hour contract

Question 7

Which statement about Cost-Plus-Award-Fee (CPAF) contract award fee determinations is accurate?

Accepted Answer

Award fee decisions are largely within the government's subjective discretion and are generally not subject to appeal

Answer

The award fee amount is fixed and set at the time of contract award

Answer

Award fee determinations are routinely subject to appeal under the Contract Disputes Act

Answer

The award fee is earned automatically upon achieving technical performance thresholds