Risk Assessment & Underwriting Flashcards
7 cards from real FAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Risk Assessment & Underwriting flashcards as text
During acquisition planning, a program office identifies that a key subcontractor is the only domestic source for a critical component. This scenario BEST represents:
Answer: A single-point-of-failure supply chain risk
Relying on a single subcontractor for a critical component creates a single point of failure, which is a significant supply chain and schedule risk.
When evaluating proposals under FAR Part 15, a Source Selection Evaluation Board (SSEB) rates a technical proposal as 'High Risk.' This rating MOST likely means:
Answer: The proposed approach has significant weaknesses that may cause contract failure
A 'High Risk' technical rating indicates that significant weaknesses or deficiencies in the approach could jeopardize successful contract performance.
A contractor's proposal for a complex IT system includes a very optimistic schedule with no schedule reserve. A risk-informed evaluator should flag this as:
Answer: A schedule risk that may lead to missed milestones
No schedule reserve (buffer) in a complex project leaves no margin for unforeseen delays, making milestone slippage highly probable.
Which of the following BEST describes the purpose of a Limitation of Liability clause in a federal contract?
Answer: It caps the contractor's liability for consequential damages arising from performance failures
Limitation of Liability clauses protect contractors from unlimited exposure to consequential or indirect damages that could far exceed the contract value.
Under the Federal Acquisition Certification for Contracting (FAC-C), assessing contractor financial stability is important because financial weakness increases the risk of:
Answer: Contract abandonment or inability to meet payroll and obligations
A financially unstable contractor may be unable to fund ongoing operations, pay employees or subcontractors, and may abandon the contract.
Risk transference in federal acquisitions is BEST illustrated by which of the following actions?
Answer: The government requires the contractor to obtain performance and payment bonds
Requiring performance and payment bonds transfers the financial risk of contractor non-performance to the surety, not the government.
A contracting officer conducting a price risk assessment discovers that a commercial market for the required service is volatile. Which mitigation strategy is MOST appropriate for a multi-year contract?
Answer: Include an Economic Price Adjustment (EPA) clause tied to a market index
An EPA clause tied to a market index allows contract prices to adjust with market conditions, protecting both parties from extreme price volatility over a multi-year period.