ASO Contract Types & Administration 3 — Questions and Answers
Question 1: Which document typically accompanies a security services contract and outlines insurance coverage requirements the contractor must maintain?
- Certificate of Insurance (COI) (Correct answer)
- Incident report form
- Post order binder
- Wage determination schedule
Correct answer: Certificate of Insurance (COI)
A Certificate of Insurance proves the contractor carries the required coverage types and limits specified in the contract.
Question 2: The Service Contract Act (SCA) primarily affects security contracts by:
- Capping the number of armed officers per site
- Setting minimum wage and fringe benefit rates for service workers on federal contracts (Correct answer)
- Requiring all contracts to include arbitration clauses
- Mandating quarterly contract audits
Correct answer: Setting minimum wage and fringe benefit rates for service workers on federal contracts
The SCA requires contractors on federal service contracts above a threshold to pay prevailing wages and fringe benefits as determined by the Department of Labor.
Question 3: A security company is awarded a contract with a base year and four option years. Who typically holds the right to exercise each option year?
- The security company
- The client/contracting authority (Correct answer)
- A neutral arbitrator
- The state licensing board
Correct answer: The client/contracting authority
Option years give the client the unilateral right to extend the contract for additional periods without re-soliciting bids.
Question 4: A security contract requires the contractor to carry $1 million per occurrence / $2 million aggregate in general liability insurance. 'Aggregate' means:
- The maximum paid for any single claim
- The total maximum the insurer will pay for all claims during the policy period (Correct answer)
- The deductible amount per incident
- The combined coverage for all subcontractors
Correct answer: The total maximum the insurer will pay for all claims during the policy period
The aggregate limit is the total amount an insurer will pay out across all claims during the policy term.
Question 5: When a security contract is awarded through a competitive bidding process, the document that solicits proposals from vendors is called a:
- Letter of Intent (LOI)
- Request for Proposal (RFP) (Correct answer)
- Change order
- Wage determination
Correct answer: Request for Proposal (RFP)
An RFP outlines the client's requirements and invites security companies to submit detailed proposals for consideration.
Question 6: If a client requests additional security coverage beyond what the original contract specifies, the contractor should:
- Provide the extra coverage and bill later without documentation
- Refuse until a new contract is signed
- Execute a formal change order or contract modification before proceeding (Correct answer)
- Have the on-site supervisor verbally authorize it
Correct answer: Execute a formal change order or contract modification before proceeding
A change order formally documents scope changes, protecting both parties by recording the agreed-upon modifications and any price adjustments.
Question 7: A security contract clause requiring the contractor to replace any officer the client deems unsatisfactory within 24 hours is an example of a:
- Liquidated damages clause
- Personnel substitution clause (Correct answer)
- Non-solicitation clause
- Most-favored-nation clause
Correct answer: Personnel substitution clause
A personnel substitution clause gives the client authority to request replacement of specific officers and sets the timeline for doing so.
ASO Contract Types & Administration 3
Which document typically accompanies a security services contract and outlines insurance coverage requirements the contractor must maintain?