CCB Contract Compliance & Management 5 — Questions and Answers
Question 1: A contractor submits a Request for Equitable Adjustment (REA) after the government changes the contract scope. What is the contractor claiming?
- The right to terminate the contract immediately
- Compensation for increased costs or time caused by a government-directed change (Correct answer)
- A waiver of all future performance obligations
- An exemption from audit requirements
Correct answer: Compensation for increased costs or time caused by a government-directed change
An REA is a contractor's formal request to adjust price, schedule, or both to account for increased costs or time resulting from a government-directed change.
Question 2: Which ethical risk is most associated with 'organizational conflict of interest' (OCI) in government contracting?
- A contractor submitting bids in a foreign currency
- A contractor using access to non-public information to gain an unfair competitive advantage (Correct answer)
- A contractor hiring too many subcontractors
- A contractor exceeding the contract period of performance
Correct answer: A contractor using access to non-public information to gain an unfair competitive advantage
OCI occurs when a contractor's work for the government gives it unfair access to non-public information or the ability to bias future competitions in its favor.
Question 3: What distinguishes a 'warranty' from a 'guarantee' in a contract compliance context?
- A warranty is always oral; a guarantee must be in writing
- A warranty is a seller's promise about product quality; a guarantee often refers to a third-party assurance of performance (Correct answer)
- Warranties are only used in service contracts; guarantees only in product contracts
- There is no legal distinction between the two terms
Correct answer: A warranty is a seller's promise about product quality; a guarantee often refers to a third-party assurance of performance
A warranty is the seller's direct promise about goods or services meeting certain standards, while a guarantee typically involves a third party (like a surety) assuring performance.
Question 4: In contract compliance, what is the significance of a 'cure notice'?
- It formally ends the contract due to breach
- It gives the contractor a specified time to correct a failure before termination for default (Correct answer)
- It waives the government's right to damages
- It initiates the REA process
Correct answer: It gives the contractor a specified time to correct a failure before termination for default
A cure notice is a formal written warning giving the contractor a defined period (typically 10 days) to remedy a performance failure before the contract is terminated for default.
Question 5: A compliance manager is reviewing a Cost-Plus-Incentive-Fee (CPIF) contract. Which feature is unique to this contract type?
- The contractor bears all cost overrun risk
- The fee adjusts based on how well the contractor controls costs against targets (Correct answer)
- The price is fixed regardless of actual costs
- No fee is ever paid to the contractor
Correct answer: The fee adjusts based on how well the contractor controls costs against targets
CPIF contracts include a target cost and fee, with the actual fee increasing or decreasing based on the contractor's cost performance relative to the target.
Question 6: What is the role of a Contracting Officer's Representative (COR) in contract compliance?
- To negotiate and sign contracts on behalf of the agency
- To monitor contractor performance and serve as the technical liaison between the contractor and contracting officer (Correct answer)
- To set contract pricing and award decisions
- To represent the contractor's interests in disputes
Correct answer: To monitor contractor performance and serve as the technical liaison between the contractor and contracting officer
The COR monitors day-to-day contractor performance, verifies deliverables, and communicates technical issues to the contracting officer but has no authority to change contract terms.
Question 7: Which scenario best illustrates a 'constructive change' to a government contract?
- A written contract modification signed by both parties
- A government inspector's oral direction to use a higher-grade material not in the specification (Correct answer)
- A contractor's unilateral decision to upgrade equipment
- A subcontractor substituting an approved equivalent material
Correct answer: A government inspector's oral direction to use a higher-grade material not in the specification
A constructive change occurs when a government action or directive (even informal) effectively changes contract requirements, entitling the contractor to seek equitable adjustment.
CCB Contract Compliance & Management 5
A contractor submits a Request for Equitable Adjustment (REA) after the government changes the contract scope.
What is the contractor claiming?