CTCM Contract Financing and Payment Management 2

Question 1

Under a cost-reimbursable contract, which cost category requires the most rigorous documentation and pre-authorization from the agency?

Accepted Answer

Other Direct Costs (ODCs) such as travel and equipment

Answer

Other Direct Costs (ODCs) like travel, equipment, and subcontracts require detailed receipts and often prior approval because they vary and are most prone to abuse.

Question 2

What is the primary risk to a state agency when a contractor submits invoices for unallowable costs under a cost-reimbursable contract?

Accepted Answer

The state pays for costs it is not legally or contractually obligated to fund

Answer

If unallowable costs are paid without audit detection, the state wastes public funds on costs that fall outside the contract scope or applicable cost principles.

Question 3

Which document type is used by a Texas contract manager to formally authorize a vendor to incur costs before the contract is fully executed in urgent situations?

Accepted Answer

Notice to Proceed (NTP)

Answer

A Notice to Proceed (NTP) formally authorizes the contractor to begin work and incur costs, and may be issued before formal contract execution in time-sensitive situations with proper approvals.

Question 4

A Texas agency discovers a contractor has been double-billing — submitting the same cost to two different agency contracts. What is the correct course of action?

Accepted Answer

Demand repayment, suspend payments pending investigation, and notify the State Auditor if fraud is suspected

Answer

Double-billing is potential fraud requiring the agency to demand repayment, suspend payments during investigation, and report suspected fraud to the State Auditor's Office.

Question 5

When managing a Texas state contract with a fixed-price structure, what is the vendor's financial obligation if costs exceed the contract price?

Accepted Answer

The vendor absorbs the cost overrun — the agency pays only the fixed price

Answer

Under a firm-fixed-price contract, the vendor bears all cost risk; if actual costs exceed the fixed price, the vendor must absorb the overrun without additional payment from the agency.

CTCM - Certified Texas Contract Manager Practice Test

CTCM - Certified Texas Contract Manager Practice Test

CTCM Contract Financing and Payment Management 2