M3 - Cost or Pricing Arrangement Exercise Answer Key - Slide 13.pdf

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Cost or Pricing Arrangement Exercise Instructions: For each of the scenarios below, identify which cost or pricing arrangement best describes the scenario using one of the contract types identified in FAR part 16. To do this, you will have to refer to the description of each of the contract types discussed in FAR part 16. Do not base your answer on the name of the contract type – base it on the description of the contract type. Scenario 1: The buyer agrees to pay the seller $100,000 for the delivery of 100 ruggedized laptops by April 30, 2019. If the seller delivers 50 of the laptops by April 15, 2019, the buyer will pay the seller an additional $10,000. FFP [FAR 16.202-1] Scenario 2: The buyer agrees to pay for the seller’s allowable incurred costs up to $1,000,000, provided the seller makes its best efforts in completing a project. If the cost of the project exceeds $1,000,000, the buyer is not obligated to pay anything more, nor is the seller required to continue working. In addition, the buyer agrees to pay the seller $50,000.

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