CPP Procurement & Contract Management 2 — Questions and Answers
Question 1: A project manager discovers mid-project that a vendor is consistently delivering materials two weeks late. Which contract clause would BEST give the buyer leverage to remedy this situation?
- Force majeure clause
- Liquidated damages clause (Correct answer)
- Indemnification clause
- Warranty clause
Correct answer: Liquidated damages clause
A liquidated damages clause pre-establishes financial penalties for late delivery, giving the buyer contractual leverage without proving actual loss.
Question 2: Under a Cost-Plus-Incentive-Fee (CPIF) contract, what happens when the actual cost falls below the target cost?
- The seller receives only the target fee
- The buyer and seller share the savings per the share ratio (Correct answer)
- The seller forfeits a portion of the fee
- The contract converts to a fixed-price type
Correct answer: The buyer and seller share the savings per the share ratio
In a CPIF contract, cost underruns are shared between buyer and seller according to the pre-negotiated share ratio, incentivizing cost efficiency.
Question 3: Which procurement document is MOST appropriate when the buyer wants to receive competitive price proposals for well-defined, standard goods?
- Request for Information (RFI)
- Request for Proposal (RFP)
- Request for Quotation (RFQ) (Correct answer)
- Invitation for Bid (IFB)
Correct answer: Request for Quotation (RFQ)
An RFQ is used when specifications are clear and the primary selection criterion is price, making it ideal for standard, well-defined goods.
Question 4: A project team is evaluating source selection criteria. Which criterion BEST reduces risk when the deliverable requires specialized technical expertise?
- Lowest bid price
- Vendor's past performance and technical capability (Correct answer)
- Vendor's geographic proximity
- Payment terms offered
Correct answer: Vendor's past performance and technical capability
Past performance and technical capability directly assess whether a vendor can successfully execute the specialized work, reducing delivery risk.
Question 5: What is the PRIMARY purpose of a contract Statement of Work (SOW)?
- To establish the payment schedule
- To define the work the seller is expected to perform (Correct answer)
- To outline dispute resolution procedures
- To specify the vendor's organizational structure
Correct answer: To define the work the seller is expected to perform
The SOW precisely describes the products, services, or results the seller must provide, forming the technical baseline of the contract.
Question 6: During contract closeout, the buyer's project manager should FIRST verify which of the following before releasing final payment?
- The vendor's financial statements are satisfactory
- All deliverables have been formally accepted (Correct answer)
- The vendor's staff is available for follow-on work
- The contract duration has expired
Correct answer: All deliverables have been formally accepted
Formal acceptance of all deliverables confirms the seller fulfilled contractual obligations, which is the prerequisite for releasing final payment.
Question 7: A seller submits a claim for additional compensation arguing that the buyer-provided site data was inaccurate. This is BEST described as which type of claim?
- Warranty claim
- Constructive change claim
- Differing site conditions claim (Correct answer)
- Force majeure claim
Correct answer: Differing site conditions claim
A differing site conditions claim arises when actual physical conditions at a worksite differ materially from what was represented in contract documents.
CPP Procurement & Contract Management 2
A project manager discovers mid-project that a vendor is consistently delivering materials two weeks late.
Which contract clause would BEST give the buyer leverage to remedy this situation?