CMP CMP Pricing Strategy & Cost Analysis

Question 1

In capture management, 'price-to-win' (PTW) is defined as:

Accepted Answer

The price at which the capture team believes it can most likely win the contract

Answer

The lowest possible price that covers all direct costs

Answer

The government's independent cost estimate for the requirement

Answer

The arithmetic average of all known competitor prices

Question 2

What does 'should-cost' analysis involve in government contracting?

Accepted Answer

The government's assessment of what a contract should cost under efficient contractor performance

Answer

The contractor's minimum acceptable profit margin on the work

Answer

A bottom-up pricing model independently built by the capture team

Answer

A comparison of prior contract prices for identical historical work

Question 3

Which contract type places the greatest cost risk on the contractor in government contracting?

Accepted Answer

Firm-fixed-price (FFP)

Answer

Cost-plus-fixed-fee (CPFF)

Answer

Time-and-materials (T&M)

Answer

Cost-plus-incentive-fee (CPIF)

Question 4

In capture pricing, a 'wrap rate' refers to:

Accepted Answer

The multiplier applied to direct labor to account for overhead, G&A, and fringe benefits

Answer

The margin added on top of subcontractor pass-through costs

Answer

The total evaluated price submitted in the cost proposal

Answer

The discount rate used for net present value calculations

Question 5

A 'basis of estimate' (BOE) in proposal pricing serves to:

Accepted Answer

Document the rationale and methodology behind each cost estimate element

Answer

Establish the final negotiated price with the contracting officer

Answer

List all subcontractors and their respective quoted amounts

Answer

Define the fee objective and profit structure for the contract

Question 6

When performing competitive price analysis, the most valuable input for a capture team is:

Accepted Answer

Modeling competitors' prices based on their estimated cost structures, labor rates, and past bids

Answer

Matching the single lowest historical price for similar scope work

Answer

Setting price equal to the government's published budget estimate

Answer

Averaging all publicly available competitor prices from USASpending.gov