CLC 056 exam Analyzing Contract Costs Exam (contains
55 questions) With Correct Answers
What is a fair price to the seller? - Correct Answer A fair price for the seller means that
the seller will be able to satisfy the terms and conditions of the contract. An offer that is
too low is considered unrealistic. It may:
•Cut corners on the quality of the product
•Deliver the product late
•Default on delivery, forcing a time-consuming reprocurement
•Refuse to deal with the government in the future
Below-Cost Prices - Correct Answer Below-cost prices are NOT necessarily unfair to
the seller. An offeror, for various reasons as part of business judgment, may decide to
submit a below-cost offer. However, these types of offers are not invalid.
Mistakes - Correct Answer The offered price may be unexpectedly low because the
seller has made gross mistakes in estimating costs or is non-responsible. A prospective
contractor must affirmatively demonstrate its responsibility, including, when necessary,
the responsibility of its proposed subcontractors.
Single-source Procurements - Correct Answer You need to remember that you
CANNOT force a final price/cost that will be below cost on the offeror, even if you
believe that the offeror has the financial ability to absorb the probable loss. Instead,
negotiate a contract with a type and price that is likely to cover all allowable costs of
performance, assume reasonable economy and efficiency, and provide a reasonable
profit. Review FAR 15.404-4 and DFARS 215.404-4 on profit analysis.
Ensure your opening position is based on a more optimistic reading of the potential
production improvements, risks, and costs of providing the contract deliverable rather
than targeting price.
One of the elements of the government pricing objective is to ensure that contract prices
are fair and reasonable.
Which of the following statements is true about "fairness to a seller" that involve
concerns? (Select all that apply)
*Sellers need to be concerned about an unrealistic low price because of the risk.
*Sellers need to be concerned about the market implications of a price that is too high.
*Sellers need to be concerned about major mistakes in estimating costs.
*Sellers need to be concerned about recovering buy-in losses. - Correct Answer All
statements are true.
What is cost analysis? - Correct Answer Cost analysis is the review and evaluation of
the separate cost elements and proposed profit/fee of an offeror's certified cost or
pricing data or data other than certified cost or pricing data.
55 questions) With Correct Answers
What is a fair price to the seller? - Correct Answer A fair price for the seller means that
the seller will be able to satisfy the terms and conditions of the contract. An offer that is
too low is considered unrealistic. It may:
•Cut corners on the quality of the product
•Deliver the product late
•Default on delivery, forcing a time-consuming reprocurement
•Refuse to deal with the government in the future
Below-Cost Prices - Correct Answer Below-cost prices are NOT necessarily unfair to
the seller. An offeror, for various reasons as part of business judgment, may decide to
submit a below-cost offer. However, these types of offers are not invalid.
Mistakes - Correct Answer The offered price may be unexpectedly low because the
seller has made gross mistakes in estimating costs or is non-responsible. A prospective
contractor must affirmatively demonstrate its responsibility, including, when necessary,
the responsibility of its proposed subcontractors.
Single-source Procurements - Correct Answer You need to remember that you
CANNOT force a final price/cost that will be below cost on the offeror, even if you
believe that the offeror has the financial ability to absorb the probable loss. Instead,
negotiate a contract with a type and price that is likely to cover all allowable costs of
performance, assume reasonable economy and efficiency, and provide a reasonable
profit. Review FAR 15.404-4 and DFARS 215.404-4 on profit analysis.
Ensure your opening position is based on a more optimistic reading of the potential
production improvements, risks, and costs of providing the contract deliverable rather
than targeting price.
One of the elements of the government pricing objective is to ensure that contract prices
are fair and reasonable.
Which of the following statements is true about "fairness to a seller" that involve
concerns? (Select all that apply)
*Sellers need to be concerned about an unrealistic low price because of the risk.
*Sellers need to be concerned about the market implications of a price that is too high.
*Sellers need to be concerned about major mistakes in estimating costs.
*Sellers need to be concerned about recovering buy-in losses. - Correct Answer All
statements are true.
What is cost analysis? - Correct Answer Cost analysis is the review and evaluation of
the separate cost elements and proposed profit/fee of an offeror's certified cost or
pricing data or data other than certified cost or pricing data.
