CPCM Contract Formation and Types 2 — Questions and Answers
Question 1: What is the primary purpose of a letter contract or undefinitized contract action (UCA)?
- To bypass competitive bidding
- To authorize work to begin before final price negotiation is complete (Correct answer)
- To establish a long-term pricing agreement
- To document verbal agreements between parties
Correct answer: To authorize work to begin before final price negotiation is complete
UCAs allow work to start immediately when urgency demands it, with the understanding that the final terms will be definitized within a specified period.
Question 2: Under US federal contracting, which FAR part primarily governs contract types?
- FAR Part 12
- FAR Part 15
- FAR Part 16 (Correct answer)
- FAR Part 19
Correct answer: FAR Part 16
FAR Part 16 covers contract types, including policies for selecting appropriate contract types and descriptions of each type.
Question 3: A Basic Ordering Agreement (BOA) is best described as:
- A binding contract with a guaranteed minimum order
- A written instrument establishing terms for future orders but not itself a contract (Correct answer)
- A framework agreement that obligates the government to a set quantity
- A type of blanket purchase agreement used only for commercial items
Correct answer: A written instrument establishing terms for future orders but not itself a contract
A BOA pre-establishes terms and conditions to speed future contracting but does not itself commit either party to buy or sell any specific quantity.
Question 4: Which statement about requirements contracts is most accurate?
- They guarantee a fixed purchase quantity
- They obligate the government to purchase all actual requirements from the contractor (Correct answer)
- They are used exclusively for construction projects
- They allow multiple contractors to compete for each delivery order
Correct answer: They obligate the government to purchase all actual requirements from the contractor
A requirements contract obligates the government to order all its actual requirements for specified supplies or services from the contractor during the contract period.
Question 5: What distinguishes a unilateral contract modification from a bilateral one?
- Unilateral modifications require the contractor's signature
- Unilateral modifications are signed only by the contracting officer (Correct answer)
- Bilateral modifications cannot change the contract price
- Bilateral modifications must be approved by the SBA
Correct answer: Unilateral modifications are signed only by the contracting officer
A unilateral modification (SF 30, Block 13, 'A') is signed only by the contracting officer using a contract clause authority such as the Changes clause.
Question 6: Which contract type provides the contractor an incentive fee based on achieving target cost and performance objectives?
- Firm-Fixed-Price
- Cost-Plus-Award-Fee
- Fixed-Price Incentive (Firm Target) (Correct answer)
- Cost-Plus-Fixed-Fee
Correct answer: Fixed-Price Incentive (Firm Target)
A Fixed-Price Incentive (Firm Target) contract establishes a target cost, target profit, and ceiling price with a sharing ratio that adjusts profit based on final cost.
CPCM Contract Formation and Types 2
What is the primary purpose of a letter contract or undefinitized contract action (UCA)?