APP Regulatory Compliance & Standards 2 — Questions and Answers
Question 1: Under the Federal Acquisition Regulation (FAR), which clause requires contractors to flow down certain requirements to their subcontractors?
- FAR 52.222-26 Equal Opportunity
- FAR 52.244-6 Subcontracts for Commercial Items (Correct answer)
- FAR 52.215-2 Audit and Records
- FAR 52.203-13 Contractor Code of Business Ethics
Correct answer: FAR 52.244-6 Subcontracts for Commercial Items
FAR 52.244-6 mandates that prime contractors include specific clauses in subcontracts for commercial items, ensuring regulatory flow-down.
Question 2: Which U.S. regulation prohibits federal contractors from engaging in human trafficking activities in their supply chains?
- Trade Agreements Act (TAA)
- Executive Order 13627 and FAR 52.222-50 (Correct answer)
- Buy American Act (BAA)
- Walsh-Healey Public Contracts Act
Correct answer: Executive Order 13627 and FAR 52.222-50
Executive Order 13627, implemented through FAR 52.222-50, prohibits federal contractors and subcontractors from engaging in human trafficking.
Question 3: The Sarbanes-Oxley Act (SOX) Section 404 most directly impacts purchasing departments by requiring:
- Competitive bidding on all contracts over $10,000
- Internal controls over financial reporting including procurement processes (Correct answer)
- Disclosure of all supplier relationships to shareholders
- Annual third-party audits of all vendor contracts
Correct answer: Internal controls over financial reporting including procurement processes
SOX Section 404 requires management to assess and attest to the effectiveness of internal controls over financial reporting, which includes procurement and purchasing controls.
Question 4: Which standard establishes a quality management system specifically for the aerospace industry that purchasing professionals must understand when sourcing aerospace components?
- ISO 9001
- AS9100 (Correct answer)
- ISO 14001
- IATF 16949
Correct answer: AS9100
AS9100 is the quality management system standard specifically developed for the aerospace industry, building upon ISO 9001 with additional aerospace-specific requirements.
Question 5: A purchasing professional discovers that a supplier's country of origin has been sanctioned by OFAC. The best immediate action is to:
- Continue purchasing but document the transaction
- Halt purchasing and consult legal counsel immediately (Correct answer)
- Request a waiver from the supplier
- Notify only the CFO and continue operations
Correct answer: Halt purchasing and consult legal counsel immediately
OFAC sanctions carry severe civil and criminal penalties, so halting transactions and consulting legal counsel immediately is the required response.
Question 6: The Robinson-Patman Act primarily protects against which purchasing practice?
- Bid rigging between purchasing professionals and suppliers
- Price discrimination where a seller charges different buyers different prices for the same goods (Correct answer)
- Procurement fraud involving government contracts
- Antidumping violations in international trade
Correct answer: Price discrimination where a seller charges different buyers different prices for the same goods
The Robinson-Patman Act prohibits price discrimination, preventing sellers from charging competing buyers different prices for the same goods when it lessens competition.
Question 7: Under GDPR, when a U.S. company's purchasing department collects personal data from EU-based suppliers, they must primarily ensure:
- All supplier data is stored on U.S.-based servers only
- A lawful basis for processing and appropriate safeguards for data transfer (Correct answer)
- Supplier consent is obtained via email confirmation alone
- Data is deleted after each transaction regardless of legal requirements
Correct answer: A lawful basis for processing and appropriate safeguards for data transfer
GDPR requires a lawful basis for processing personal data and appropriate safeguards (such as Standard Contractual Clauses) when transferring data outside the EU.
APP Regulatory Compliance & Standards 2
Under the Federal Acquisition Regulation (FAR), which clause requires contractors to flow down certain requirements to their subcontractors?