NCMA Contract Types and Pricing 3

Question 1

In a Fixed-Price-Incentive-Firm (FPIF) contract, the 'ceiling price' represents:

Accepted Answer

The maximum price the government will pay regardless of the contractor's actual costs

Answer

The ceiling price in an FPIF contract is the absolute maximum the government will pay; if costs exceed the ceiling, the contractor absorbs 100% of costs above that point.

Question 2

Fixed-Price contracts with Economic Price Adjustment (FP-EPA) are most suitable when:

Accepted Answer

There is significant uncertainty in future labor or material costs due to volatile economic conditions

Answer

FP-EPA contracts include price adjustment clauses tied to labor or material indices, protecting both parties when market volatility makes fixed pricing for the entire period unreasonable.

Question 3

Cost-reimbursement contracts are generally more appropriate than fixed-price contracts when:

Accepted Answer

Significant technical uncertainties make it difficult to define requirements or estimate costs with confidence

Answer

Cost-reimbursement contracts are appropriate when uncertainties in contract performance do not permit costs to be estimated with sufficient accuracy to use a fixed-price contract.

Question 4

Under the Truth in Negotiations Act (TINA), a contractor must submit certified cost or pricing data for negotiated procurements generally exceeding:

Accepted Answer

$2,000,000

Answer

The NDAA for FY2018 raised the TINA certified cost or pricing data threshold to $2,000,000, above which contractors must certify that submitted data is accurate, complete, and current.

Question 5

Defective pricing is established when the government proves that a contractor:

Accepted Answer

Submitted cost or pricing data that was inaccurate, incomplete, or noncurrent at the time of price agreement

Answer

Defective pricing under TINA occurs when a contractor's certified cost or pricing data was not accurate, complete, and current as of the date of final agreement, entitling the government to a price reduction.

NCMA - National Contract Management Association Certification Practice Test

NCMA - National Contract Management Association Certification Practice Test

NCMA Contract Types and Pricing 3