COR Contract Types & Administration 2 — Questions and Answers
Question 1: Under a Time-and-Materials (T&M) contract, what is the government's primary financial risk?
- The contractor may underperform without penalty since profit is fixed (Correct answer)
- Costs can escalate indefinitely if hours worked exceed the estimate
- The ceiling price can be exceeded without a contract modification
- The government pays a fixed price regardless of actual hours worked
Correct answer: The contractor may underperform without penalty since profit is fixed
In T&M contracts, the contractor is paid a fixed hourly rate regardless of efficiency, reducing the contractor's incentive to control costs or labor hours.
Question 2: Which contract type places the MOST financial risk on the contractor?
- Cost-Plus-Fixed-Fee (CPFF)
- Firm-Fixed-Price (FFP) (Correct answer)
- Cost-Plus-Incentive-Fee (CPIF)
- Time-and-Materials (T&M)
Correct answer: Firm-Fixed-Price (FFP)
Under a Firm-Fixed-Price contract, the contractor bears all cost risk because the price does not change regardless of actual costs incurred.
Question 3: A COR notices the contractor is consistently billing labor categories at rates higher than those specified in the contract. What should the COR do first?
- Immediately reject the invoice and terminate the contract
- Document the discrepancy and notify the Contracting Officer (Correct answer)
- Allow the billing since the work is being performed satisfactorily
- Authorize payment to maintain contractor goodwill
Correct answer: Document the discrepancy and notify the Contracting Officer
The COR must document billing discrepancies and report them to the Contracting Officer, who has the authority to take corrective action.
Question 4: What distinguishes a Cost-Plus-Award-Fee (CPAF) contract from a Cost-Plus-Fixed-Fee (CPFF) contract?
- CPAF reimburses all costs while CPFF only reimburses allowable costs
- CPAF has a variable fee tied to subjective performance evaluation; CPFF has a fixed fee (Correct answer)
- CPAF is used only for research; CPFF is used only for services
- CPAF requires a ceiling price; CPFF does not
Correct answer: CPAF has a variable fee tied to subjective performance evaluation; CPFF has a fixed fee
CPAF allows the government to award an additional fee based on periodic subjective evaluation of contractor performance, whereas CPFF pays a predetermined fixed fee.
Question 5: Which FAR part primarily governs contract types in federal acquisition?
- FAR Part 12
- FAR Part 15
- FAR Part 16 (Correct answer)
- FAR Part 32
Correct answer: FAR Part 16
FAR Part 16 establishes policies for selecting and using various contract types, including fixed-price, cost-reimbursement, and incentive contracts.
Question 6: An Indefinite-Delivery Indefinite-Quantity (IDIQ) contract must specify a:
- Fixed total price for all orders
- Minimum and maximum quantity or dollar value (Correct answer)
- Single delivery schedule for all task orders
- Single contractor for all awarded orders
Correct answer: Minimum and maximum quantity or dollar value
FAR 16.504 requires IDIQ contracts to state a minimum quantity the government guarantees to order and a maximum quantity the contractor must be prepared to deliver.
Question 7: When a contractor submits a request for equitable adjustment (REA), what triggering event typically gives rise to this request?
- The contractor's overhead rates increase mid-performance
- A government-directed change increases the contractor's cost or time to perform (Correct answer)
- The contractor finds a more efficient way to complete the work
- The contract's option year is exercised late
Correct answer: A government-directed change increases the contractor's cost or time to perform
An REA arises when a government action—such as a directed change or differing site condition—causes the contractor additional costs or schedule impact not anticipated at award.
COR Contract Types & Administration 2
Under a Time-and-Materials (T&M) contract, what is the government's primary financial risk?