CCC CCC Contract Management & Procurement 2 — Questions and Answers
Question 1: Which document formally authorizes a change to the contract price or scope?
- Executed Change Order (Correct answer)
- Request for Information (RFI)
- Submittal log
- Notice to Proceed (NTP)
Correct answer: Executed Change Order
An executed (signed) Change Order is the contractual instrument that officially modifies the price, scope, or schedule of a contract.
Question 2: A cost controller is tracking 'contract value vs. committed cost.' What does committed cost represent?
- The total of all awarded subcontracts, purchase orders, and approved change orders (Correct answer)
- Only costs already invoiced and paid
- The contractor's overhead allocation
- Actual labor hours multiplied by labor rates
Correct answer: The total of all awarded subcontracts, purchase orders, and approved change orders
Committed costs include all contractual obligations (subcontracts, POs, change orders) regardless of whether invoices have been received.
Question 3: Under the US Federal Acquisition Regulation (FAR), what is the threshold above which a contracting officer must obtain certified cost or pricing data?
- $2 million (Correct answer)
- $500,000
- $100,000
- $5 million
Correct answer: $2 million
FAR 15.403-4 requires certified cost or pricing data for negotiated contracts exceeding $2 million (as of the current threshold).
Question 4: What is the primary risk of using a Cost-Plus-Percentage-of-Cost (CPPC) contract?
- It incentivizes the contractor to increase costs since profit grows with spending (Correct answer)
- It limits the contractor's ability to recover overhead
- It fixes the contractor's fee regardless of performance
- It requires competitive bidding for every purchase
Correct answer: It incentivizes the contractor to increase costs since profit grows with spending
CPPC contracts create a perverse incentive because the contractor earns more profit as costs rise, making cost control difficult.
Question 5: A cost controller notices a vendor invoice does not match the approved purchase order amount. The correct action is to:
- Place the invoice on hold and issue a variance notice for resolution before payment (Correct answer)
- Pay the invoice and adjust the budget
- Approve the lower of the two amounts automatically
- Void the purchase order and reissue it
Correct answer: Place the invoice on hold and issue a variance notice for resolution before payment
A three-way match (PO, receiving report, invoice) must reconcile before payment; discrepancies require formal resolution through a variance notice.
Question 6: In procurement, what does 'total cost of ownership (TCO)' analysis help a cost controller evaluate?
- All lifecycle costs including acquisition, operation, maintenance, and disposal — not just purchase price (Correct answer)
- Only the upfront capital expenditure for equipment
- The contractor's overhead rate applied to labor
- Warranty periods offered by competing vendors
Correct answer: All lifecycle costs including acquisition, operation, maintenance, and disposal — not just purchase price
TCO analysis ensures procurement decisions account for the full economic impact over an asset's life, preventing low-bid traps with high operating costs.
CCC CCC Contract Management & Procurement 2
Which document formally authorizes a change to the contract price or scope?