Exam (elaborations)
CLC 058
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Exam of 21 pages for the course Small Business Programs & Subcontracting Plans at Small Business Programs & Subcontracting Plans (CLC 058)
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CLC 058Cost or Pricing Data
All facts that, as of the date of price agreement or an earlier date agreed upon between
the parties, prudent buyers and sellers would reasonably expect to affect price
negotiations significantly. Cost or pricing data are factual, not judgmental, and are
verifiable. While they do not indicate the accuracy of the prospective contractor's
judgment about estimated future costs or projections, they do include the data forming
the basis for that judgment. Cost or pricing data are more than historical accounting
data; they are all the facts that can be reasonably expected to contribute to the
soundness of estimates of future costs and to the validity of determinations of costs
already incurred. - ANS-Certified Cost or Pricing Data
Cost or pricing data that were required to be submitted and have been certified, or are
required to be certified. This certification states that, to the best of the person's
knowledge and belief, the cost or pricing data are accurate, complete, and current as of
a certain date before contract award.
Data Other Than Certified Cost or Pricing Data
Pricing data, cost data, and judgmental information necessary for the contracting officer
to determine a fair and reasonable price or to determine cost realism. Such data may
include the identical types of data as certified cost or pricing data, but without the
certification. The data may also include, for example, sales data and any information
reasonably required to explain the offeror's estimating process. - ANS-Direct Cost
Any cost that is identified specifically with a particular final cost objective. Direct costs
are not limited to items that are incorporated in the end product as material or labor.
Costs identified specifically with a contract are direct costs of that contract.
Facilities Capital Cost of Money
FCCOM is used to compensate contractors for use of capital without regard to whether
the source is owner's equity or borrowed. It is designed to help contractors achieve a
return on their investment in facilities capital. It is NOT considered interest on borrowing,
which is unallowable according to the FAR. - ANS-Fair and Reasonable Price
,A price must be considered fair to both parties. A price that a prudent and competent
buyer would be willing to pay is a reasonable price. A fair and reasonable price is
dependent on the market conditions, general economic conditions, promised quality,
competition, alternative approaches, and timeliness of contract performance.
Forward Pricing Rate Agreement
A written agreement negotiated between a contractor and the Government to make
certain rates available during a specified period for use in pricing contracts or
modifications. - ANS-General and Administrative Expense
Any management, financial, and other expense which is incurred by or allocated to a
business unit and which is for the general management and administration of the
business unit as a whole.
Indirect Cost
Any cost not directly identified with a single final cost objective, but identified with two or
more final cost objectives (i.e. contracts) or with at least one intermediate cost objective.
- ANS-Indirect Cost Rate
A percentage or dollar factor that expresses the ratio of indirect expense incurred in a
given period to an appropriate base for the same period.
Price
Cost plus any fee or profit applicable to the contract. - ANS-Pricing
The process of establishing a reasonable amount to be paid for supplies or services.
Note that the terms cost or pricing data and certified cost or pricing data are purely
fact-based, while data other than certified cost or pricing data often includes judgmental
information as well. The Federal Acquisition Regulation (FAR) defines many of these
terms in even greater detail (see FAR 2.101). But don't worry. These terms may seem
like a lot to absorb now, but you'll get acquainted with them by the end of the lesson!
Also note that FAR 15.408 includes relevant solicitation provisions and contract clauses.
- ANS-The Truth in Negotiations Act (TINA) established the requirement for submission
of cost or pricing data and for contractors to certify that the data is accurate, complete,
and current for the award of a negotiated contract (unless an exception per FAR
15.403-1(b) applies).
, The current TINA threshold effective on 1 July 2018 (and in accordance with Defense
Pricing and Acqusition Policy (DPAP) Memo, Subject: Certified Cost and Pricing Data,
dated 13 April 2018) is $2,000,000. Even though DPAP is now Defense Pricing and
Contracting (DPC), the memo is still in effect - ANS-TINA also applies to contract
modifications—even if certified cost or pricing data was not required on the initial
contract—and takes into account the total of positive and negative adjustments that may
exceed $2 million. Link to example
According to FAR 15.403-1, the primary prohibition on obtaining certified cost or pricing
data is for acquisitions at or below the simplified acquisition threshold (SAT). This
accounts for most of the contract actions in the DoD that are exempt from the certified
cost or pricing data requirement. However, this prohibition is in a category all by itself
and is not considered an "exception."
The five "exceptions" to the requirement are:
When the contracting officer determines that prices agreed upon are based on
adequate price competition;
When the contracting officer determines that prices agreed upon are based on prices
set by law or regulation;
When a commercial item is being acquired;
When a waiver has been granted by the Head of the Contracting Activity; and
When modifying a contract or subcontract for commercial items.
FAR 15.403-1(c) goes into significant detail on what each of the five exceptions
involves, but let's look here at the details for the first exception, adequate price
competition. Adequate price competition exists when:(i) Two or more responsible
offerors, competing independently, submit priced offers that satisfy the Government's
expressed requirement and if—
(A) Award will be made to the offeror whose proposal represents the best value where
price is a substantial factor in source selection
(B) There is no finding that the price of the otherwise successful offeror is unreasonable.
Any finding that the price is unreasonable must be supported by a statement of the facts
and approved at a level above the contracting officer
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