Certified Professional Contract Manager: Contract Risk Assessment and Mitigation Flashcards

A contractor requests a contract modification to add a force majeure clause after a supply chain disruption. What is the contracting officer's primary obligation?

Answer: Evaluate the request against applicable regulations and existing contract terms

The contracting officer must evaluate modification requests against applicable regulations and existing contract terms before approval or denial.

Which risk mitigation strategy involves sharing potential losses with another party through a contractual arrangement?

Answer: Risk transfer

Risk transfer shifts the financial burden of a potential loss to another party, commonly achieved through insurance requirements or indemnification clauses.

In a cost-plus-fixed-fee (CPFF) contract, which party bears most of the cost risk?

Answer: The government/buyer

Under CPFF contracts, the buyer reimburses all allowable costs, so the buyer bears the majority of cost risk if costs exceed estimates.

A risk register is BEST described as:

Answer: A document identifying, analyzing, and tracking project risks throughout the contract lifecycle

A risk register is a living document used to identify, analyze, prioritize, and monitor risks across the contract lifecycle.

Which contract clause is primarily used to allocate the risk of sovereign acts by the U.S. government that affect contract performance?

Answer: Sovereign acts doctrine

The sovereign acts doctrine protects the government from liability when a public law or regulation—not a contractual action—affects contractor performance.

During contract execution, the contractor experiences a 20% cost overrun. Under a firm-fixed-price (FFP) contract, who is responsible for the overrun?

Answer: The contractor, because FFP places cost risk on them

Under FFP contracts, the contractor bears full cost risk and cannot recover cost overruns from the buyer.

What is the purpose of a warranty clause in a government contract from a risk management perspective?

Answer: To transfer post-delivery performance risk back to the contractor

Warranty clauses require the contractor to correct defects discovered after acceptance, transferring post-delivery risk back to the contractor.