CCM Regulatory Framework & Compliance 3 — Questions and Answers
Question 1: Under Export Administration Regulations (EAR), an 'Export Control Classification Number' (ECCN) is used to:
- Calculate import tariffs on goods
- Determine whether a product requires an export license (Correct answer)
- Register suppliers with the Commerce Department
- Classify goods for domestic tax purposes
Correct answer: Determine whether a product requires an export license
ECCNs classify items on the Commerce Control List and determine whether a license is needed to export specific products to certain destinations.
Question 2: A 'liquidated damages' clause in a commercial contract serves what primary purpose?
- To punish the breaching party
- To pre-establish damages for a specific breach (Correct answer)
- To limit the non-breaching party's remedies
- To void the contract upon material breach
Correct answer: To pre-establish damages for a specific breach
Liquidated damages clauses establish in advance a specific amount payable upon breach, particularly useful when actual damages would be difficult to calculate.
Question 3: Which U.S. regulation requires contractors with federal contracts above $750,000 to disclose credible evidence of fraud, conflicts of interest, or overpayments?
- Truth in Negotiations Act
- FAR 52.203-13 Contractor Code of Business Ethics (Correct answer)
- Defense Contract Audit Agency Rules
- Sarbanes-Oxley Act Section 406
Correct answer: FAR 52.203-13 Contractor Code of Business Ethics
FAR 52.203-13 mandates mandatory disclosure of credible evidence of certain violations to the contracting officer and the Office of Inspector General.
Question 4: The 'Buy American Act' in federal procurement primarily requires:
- All contract employees to be U.S. citizens
- Preference for domestically manufactured goods in U.S. government purchases (Correct answer)
- Exclusion of all foreign subcontractors
- Tariffs on non-domestic goods above market price
Correct answer: Preference for domestically manufactured goods in U.S. government purchases
The Buy American Act gives preference to domestic end products in federal government purchases unless exceptions apply.
Question 5: In the context of anti-money laundering (AML) compliance, what is a 'Suspicious Activity Report' (SAR)?
- A tax filing for unreported foreign income
- A report filed with FinCEN when a financial transaction raises AML concerns (Correct answer)
- A document required for all international wire transfers
- An audit finding submitted to the SEC
Correct answer: A report filed with FinCEN when a financial transaction raises AML concerns
SARs are filed with the Financial Crimes Enforcement Network (FinCEN) when institutions detect transactions that may involve money laundering or other illicit activity.
Question 6: Which principle in contract law holds that a party who breaches a contract cannot benefit from their own wrongdoing to avoid liability?
- Doctrine of Impossibility
- Prevention Doctrine (Correct answer)
- Doctrine of Frustration
- Substantial Performance Rule
Correct answer: Prevention Doctrine
The Prevention Doctrine prevents a party from claiming the other side failed to perform a condition when the claiming party itself prevented that performance.
Question 7: Under the Federal Acquisition Regulation (FAR), 'cost realism analysis' is primarily conducted when evaluating:
- Fixed-price competitive bids
- Cost-reimbursement contract proposals (Correct answer)
- Sole-source contract awards
- Commercial item purchases under simplified acquisition thresholds
Correct answer: Cost-reimbursement contract proposals
Cost realism analysis is performed on cost-reimbursable contracts to assess whether proposed costs reflect a realistic understanding of the work.
CCM Regulatory Framework & Compliance 3
Under Export Administration Regulations (EAR), an 'Export Control Classification Number' (ECCN) is used to: