Practice Test Geeks(CFCM) Certified Federal Contracts Manager Practice Test
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Pricing and Negotiation Flashcards

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  1. Under FAR 31.205-6, which of the following compensation elements is generally UNALLOWABLE?

    Answer: Golden parachute payments contingent on a change in control of the company

    FAR 31.205-6(l) specifically makes golden parachute and similar change-in-control compensation unallowable as government contract costs.

  2. The government negotiating team uses 'BATNA' in preparation. What does BATNA stand for and why is it important?

    Answer: Best Alternative To a Negotiated Agreement—it defines the negotiator's walk-away point and strengthens their position

    BATNA (Best Alternative To a Negotiated Agreement) defines what happens if negotiations fail, and knowing it prevents accepting a worse deal than the alternative.

  3. A contractor's final indirect cost rates are audited post-award and found to be lower than the rates used in billing. What happens under FAR 42.705?

    Answer: The government issues a final indirect cost rate agreement and the contractor refunds the overbilling plus interest

    FAR 42.705 requires settlement of final indirect cost rates, and if billing rates exceeded actual rates, the contractor must refund the excess with interest.

  4. Which of the following best describes 'most favored customer' (MFC) pricing in federal contracting?

    Answer: A requirement that the contractor offer the government prices no less favorable than those offered to the contractor's best commercial customer

    MFC pricing requires the contractor to extend to the government pricing at least as good as what its most favored commercial customer receives for similar quantities.

  5. Under FAR 15.403-3, when certified cost or pricing data are not required, what information may the contracting officer still require?

    Answer: Data other than certified cost or pricing data, such as information on prices at which the same or similar items have been sold

    Even when certified cost or pricing data are not required, FAR 15.403-3 allows the CO to require data other than certified—such as sales data, catalog prices, or market information—to support price reasonableness.

  6. What is the primary difference between a fixed-price economic price adjustment (EPA) contract and a firm-fixed-price (FFP) contract?

    Answer: EPA contracts allow the contract price to be revised upward or downward based on specified contingencies such as labor or material cost changes

    Economic price adjustment clauses allow preset price revisions tied to identified economic indicators (e.g., Bureau of Labor Statistics indices), protecting both parties from significant cost fluctuations.

  7. A contracting officer is negotiating contract modifications after award and discovers the contractor is using the 'salami' tactic—submitting many small changes instead of one large modification. What is the best response?

    Answer: Consolidate the modifications and require a consolidated cost or pricing analysis for the total change

    The salami tactic is used to keep individual changes below certified cost or pricing data thresholds; the CO should aggregate related changes and require appropriate cost data for the total impact.