NCMA Contract Types and Pricing 2 — Questions and Answers
Question 1: Cost analysis is required by the contracting officer when:
- Adequate price competition exists among multiple offerors
- The procurement is based on established catalog or market prices
- There is no adequate price competition and no other valid commercial pricing basis (Correct answer)
- The contract value falls below the simplified acquisition threshold
Correct answer: There is no adequate price competition and no other valid commercial pricing basis
When adequate price competition does not exist and commercial pricing benchmarks are unavailable, the contracting officer must perform cost analysis of the proposed cost elements.
Question 2: 'Should-cost' analysis is best described as:
- An audit of actual costs already incurred under a prior contract
- An independent estimate developed solely from historical contract data
- A review of minimum acceptable profit margins for the contractor
- A government assessment of what an efficiently managed contractor should spend to complete the work (Correct answer)
Correct answer: A government assessment of what an efficiently managed contractor should spend to complete the work
Should-cost analysis is a specialized form of cost analysis that uses industrial engineering and accounting techniques to project what an efficiently managed, performing contractor should pay for a contract.
Question 3: Price analysis differs from cost analysis primarily in that price analysis:
- Evaluates each proposed cost element individually and in detail
- Always requires the contractor to submit certified cost or pricing data
- Examines proposed prices without evaluating their separate underlying cost elements (Correct answer)
- Is used only as a last resort when cost data cannot be obtained
Correct answer: Examines proposed prices without evaluating their separate underlying cost elements
Price analysis evaluates the reasonableness of a total proposed price without breaking it down into cost elements, relying instead on comparison to market prices, catalog prices, or prior prices.
Question 4: The Weighted Guidelines method is primarily used by contracting officers to:
- Evaluate the technical merit and capabilities of competing offerors
- Develop a fair and reasonable profit or fee negotiation objective (Correct answer)
- Assess the allowability of proposed indirect cost rates
- Prioritize contract performance requirements by criticality
Correct answer: Develop a fair and reasonable profit or fee negotiation objective
The Weighted Guidelines method is a structured approach under DFARS that helps contracting officers develop a pre-negotiation profit objective by weighting factors such as contractor risk, capital investment, and performance.
Question 5: An Indefinite-Delivery/Indefinite-Quantity (IDIQ) contract differs from a requirements contract primarily because:
- IDIQ contracts specify both a minimum guaranteed quantity and a maximum quantity the government may order (Correct answer)
- IDIQ contracts obligate the government to purchase all requirements from the contractor
- IDIQ contracts cannot be used with multiple award task order structures
- IDIQ contracts always use cost-reimbursement pricing arrangements
Correct answer: IDIQ contracts specify both a minimum guaranteed quantity and a maximum quantity the government may order
IDIQ contracts guarantee only the minimum quantity stated in the contract and allow the government to order up to the stated maximum, unlike requirements contracts which obligate all purchases to the contractor.
Question 6: Bottom-up cost estimating is best described as:
- Using costs from a prior analogous project as the baseline for a new estimate
- Applying statistical relationships between historical cost drivers and project parameters
- Estimating costs for individual work elements or components and aggregating them into a total (Correct answer)
- Using published industry parametric data without detailed work breakdown analysis
Correct answer: Estimating costs for individual work elements or components and aggregating them into a total
Bottom-up estimating develops cost estimates by pricing each element of the work breakdown structure individually and then summing them to arrive at a total contract cost estimate.
Question 7: Forward Pricing Rate Agreements (FPRAs) between the government and a contractor are:
- Binding commitments to rates that cannot be revised under any circumstances once signed
- Government unilateral determinations of indirect cost rates imposed on the contractor
- Annual audits that establish final allowable indirect cost rates for completed fiscal years
- Negotiated agreements establishing rates to be used in pricing future contract actions during the agreement period (Correct answer)
Correct answer: Negotiated agreements establishing rates to be used in pricing future contract actions during the agreement period
FPRAs are prospective rate agreements negotiated between the government and contractor for use in pricing future proposals, reducing the time needed to negotiate individual contract actions.
NCMA Contract Types and Pricing 2
Cost analysis is required by the contracting officer when: