Contract Types and Pricing Flashcards
7 cards from real NCMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contract Types and Pricing flashcards as text
Which contract type places the maximum cost risk on the contractor?
Answer: Firm-Fixed-Price (FFP)
Under a Firm-Fixed-Price contract, the contractor bears all cost risk because the price is fixed regardless of actual costs incurred.
Under a Cost-Plus-Fixed-Fee (CPFF) contract, the fixed fee is:
Answer: Negotiated at contract award and does not vary with actual costs incurred
The fixed fee in a CPFF contract is negotiated before work begins and remains constant regardless of the actual costs incurred during performance.
Which contract type is MOST appropriate when the extent or duration of work cannot be precisely estimated at the time of contract award?
Answer: Time-and-Materials (T&M)
Time-and-Materials contracts are used when it is not possible to estimate accurately the extent or duration of the work or anticipated costs, making FFP or cost-reimbursement unsuitable.
Under FAR, a Time-and-Materials (T&M) contract is required to include:
Answer: A ceiling price that the contractor exceeds at its own risk
FAR requires T&M contracts to include a ceiling price, and any costs above that ceiling are at the contractor's risk, providing a degree of government cost protection.
What is the primary feature that distinguishes a Fixed-Price-Incentive-Firm (FPIF) contract from a standard Firm-Fixed-Price (FFP) contract?
Answer: FPIF includes a share ratio to divide cost underruns and overruns between the parties
FPIF contracts establish a target cost, target profit, ceiling price, and share ratio so that both parties share in cost savings or cost overruns up to the ceiling price.
Which of the following is classified as a cost-reimbursement contract type under FAR?
Answer: Cost-Plus-Award-Fee (CPAF)
Cost-Plus-Award-Fee (CPAF) is a cost-reimbursement contract in which the government reimburses allowable costs and pays a fee determined by government evaluation of contractor performance.
Which statement about Cost-Plus-Award-Fee (CPAF) contract award fee determinations is accurate?
Answer: Award fee decisions are largely within the government's subjective discretion and are generally not subject to appeal
CPAF award fee determinations are made at the government's discretion based on subjective performance evaluations and are generally not appealable under the Contract Disputes Act.