Under price negotiations, when the price negotiation is not based on cost analysis, what are COs not required to do?

• A. Analyze cost
• B. Develop prenegotiation objectives
• C. Analyze profit
• D. Determine the contract type

Answer: (C)

When price negotiations aren’t based on cost data, the focus is on price analysis rather than cost analysis. Profit analysis is a component of cost analysis, which looks at the cost elements and the contractor’s profit to judge reasonableness. If you aren’t conducting cost analysis, there’s no required step to analyze profit separately. Instead, you work with price reasonableness and other price-related factors. Prenegotiation objectives and determining the contract type are still part of the negotiation planning process, but analyzing profit specifically isn’t required when you’re not using cost data.