CFCM Ethics, Compliance & Risk Assessment 4 — Questions and Answers
Question 1: Which law established the requirement for contractors to establish and maintain a written code of business ethics and an internal control system for contracts over the applicable threshold?
- Sarbanes-Oxley Act of 2002
- Duncan Hunter National Defense Authorization Act for FY2009 (Correct answer)
- Federal Acquisition Reform Act of 1996
- Competition in Contracting Act of 1984
Correct answer: Duncan Hunter National Defense Authorization Act for FY2009
The Duncan Hunter NDAA for FY2009 codified requirements that led to FAR 52.203-13, mandating written codes of ethics and compliance programs for large contractors.
Question 2: A contractor's compliance program under FAR 52.203-13 must include all of the following EXCEPT:
- An anonymous employee hotline for reporting suspected violations
- Periodic reviews of company business practices and internal controls
- Mandatory quarterly ethics certifications signed by all employees (Correct answer)
- Training for all employees on the code of ethics
Correct answer: Mandatory quarterly ethics certifications signed by all employees
FAR 52.203-13 requires a hotline, internal reviews, and training, but does not mandate quarterly ethics certifications signed by all employees.
Question 3: Under the Procurement Integrity Act (41 U.S.C. § 2101-2107), which action is prohibited for a government official involved in a procurement?
- Discussing contract requirements with industry during market research
- Disclosing contractor bid or proposal information before award (Correct answer)
- Requesting technical assistance from other agency contracting offices
- Publishing a synopsis of the procurement on SAM.gov
Correct answer: Disclosing contractor bid or proposal information before award
The Procurement Integrity Act specifically prohibits government officials from disclosing contractor bid or proposal information or source selection information prior to award.
Question 4: In a risk assessment framework for a federal contract, 'risk probability' and 'risk impact' are combined to produce:
- The risk tolerance level
- The residual risk after mitigation
- The risk exposure or risk score (Correct answer)
- The risk transfer cost
Correct answer: The risk exposure or risk score
Risk exposure (or risk score) is calculated by multiplying or combining probability and impact, and is used to prioritize risks for mitigation planning.
Question 5: A subcontractor on a federal contract engages in bid rigging with competitors. Under FAR 3.301, the prime contractor's responsibility is to:
- Terminate the subcontract and replace the subcontractor at its own cost
- Report the suspected antitrust violation to the contracting officer and the DOJ Antitrust Division (Correct answer)
- Withhold payment from the subcontractor until the issue is resolved
- Notify the subcontractor that it must self-report to the government
Correct answer: Report the suspected antitrust violation to the contracting officer and the DOJ Antitrust Division
FAR 3.301 requires contractors who suspect antitrust violations to promptly report the matter to the contracting officer, who forwards it to the DOJ Antitrust Division.
Question 6: Which of the following best describes a 'significant overpayment' that triggers mandatory disclosure under FAR 52.203-13?
- Any overpayment regardless of amount that is discovered through internal audit
- Overpayments over $100,000 per occurrence identified in a single fiscal year
- Credible evidence of overpayment that the contractor believes is significant in context of the contract (Correct answer)
- Overpayments exceeding 10% of the contract's annual invoiced amount
Correct answer: Credible evidence of overpayment that the contractor believes is significant in context of the contract
FAR 52.203-13 requires disclosure of credible evidence of a significant overpayment, which is a judgment call based on the facts and contract context, not a fixed dollar threshold.
Question 7: When a contractor identifies a potential organizational conflict of interest after contract award, it must:
- Immediately suspend work until the OCI is resolved by the contracting officer
- Promptly disclose the potential OCI to the contracting officer in writing (Correct answer)
- Internally resolve the OCI and document the mitigation without government notification
- Terminate and recompete the affected portion of the contract
Correct answer: Promptly disclose the potential OCI to the contracting officer in writing
Post-award discovery of a potential OCI requires prompt written disclosure to the contracting officer, who then determines the appropriate remedy.
CFCM Ethics, Compliance & Risk Assessment 4
Which law established the requirement for contractors to establish and maintain a written code of business ethics and an internal control system for contracts over the applicable threshold?