CFCM Contract Financing & Payments 1

Question 1

Under FAR 32.5, which type of contract financing allows the government to make payments to a contractor based on costs incurred prior to delivery of the end item?

Accepted Answer

Progress payments based on costs

Answer

Progress payments based on costs (FAR 32.5) are the most common form of financing where the government pays a percentage of allowable costs incurred before delivery.

Question 2

The standard progress payment rate for large businesses under FAR 32.501-1 is:

Accepted Answer

80%

Answer

FAR 32.501-1 establishes 80% as the customary progress payment rate for large businesses based on total costs incurred.

Question 3

Under the Prompt Payment Act, what is the standard payment due date for supplies and services if no other date is specified in the contract?

Accepted Answer

30 days after receipt of a proper invoice

Answer

The Prompt Payment Act establishes 30 days as the standard payment due date for most federal contracts when no other date is specified.

Question 4

Performance-based payments (PBPs) differ from progress payments primarily because PBPs are:

Accepted Answer

Tied to the achievement of defined performance events or criteria

Answer

Performance-based payments are financing payments tied to the accomplishment of specific performance events or criteria, not costs incurred.

Question 5

Under FAR 32.4, advance payments are considered the least preferred method of contract financing because they:

Accepted Answer

Represent the greatest risk of loss to the government

Answer

Advance payments carry the greatest risk to the government because funds are disbursed before any work is performed or costs incurred.

(CFCM) Certified Federal Contracts Manager Practice Test

(CFCM) Certified Federal Contracts Manager Practice Test

CFCM Contract Financing & Payments 1