FAC Risk Assessment & Underwriting 2 — Questions and Answers
Question 1: Under FAR Part 16, which contract type places the MOST financial risk on the government when cost is uncertain?
- Firm-Fixed-Price (FFP)
- Cost-Plus-Fixed-Fee (CPFF) (Correct answer)
- Fixed-Price-Incentive (FPI)
- Indefinite-Delivery Indefinite-Quantity (IDIQ)
Correct answer: Cost-Plus-Fixed-Fee (CPFF)
CPFF contracts reimburse all allowable costs plus a fixed fee, so the government bears essentially all cost risk if expenditures exceed estimates.
Question 2: A contracting officer is assessing risk for a sole-source award. Which factor MOST increases the risk that the award price will be unreasonable?
- The contractor has extensive past performance data
- There is no competitive market to benchmark pricing (Correct answer)
- The requirement is for commercial items
- The period of performance is less than one year
Correct answer: There is no competitive market to benchmark pricing
Without competition, there is no market pricing signal, making it difficult to establish that the negotiated price is fair and reasonable.
Question 3: Which risk mitigation tool allows the government to reduce schedule risk by requiring a contractor to identify critical path milestones in advance?
- Integrated Baseline Review (IBR) (Correct answer)
- Quality Assurance Surveillance Plan (QASP)
- Independent Government Cost Estimate (IGCE)
- Past Performance Questionnaire (PPQ)
Correct answer: Integrated Baseline Review (IBR)
An IBR assesses whether the contractor's performance measurement baseline is realistic and whether critical path milestones are achievable.
Question 4: When performing price analysis on a proposed contract action, which technique compares the offered price to prices found in catalog or market data?
- Comparison with competitive offers
- Comparison with prior prices paid
- Comparison with commercial catalog prices (Correct answer)
- Visual price analysis
Correct answer: Comparison with commercial catalog prices
Comparing proposed prices to established catalog or market prices is a standard price analysis technique under FAR 15.404-1(b).
Question 5: A performance bond in federal contracting primarily protects the government against which risk?
- Contractor fraud during proposal submission
- Contractor failure to complete the work as specified (Correct answer)
- Subcontractor payment disputes
- Defective pricing at contract close-out
Correct answer: Contractor failure to complete the work as specified
A performance bond guarantees that the surety will complete the project or pay damages if the contractor fails to fulfill contract requirements.
Question 6: Under the FAC-C program, risk identification during source selection BEST aligns with which phase of the acquisition process?
- Contract administration
- Pre-award planning (Correct answer)
- Contract close-out
- Debriefing
Correct answer: Pre-award planning
Risk identification and mitigation strategies should be developed during pre-award planning so they can be incorporated into contract terms and evaluation criteria.
Question 7: Which document formally records identified risks, their likelihood, potential impact, and planned responses for a federal acquisition?
- Independent Government Cost Estimate (IGCE)
- Acquisition Plan (AP)
- Risk Register (Correct answer)
- Market Research Report
Correct answer: Risk Register
A Risk Register is the standard tool for capturing, tracking, and managing identified risks throughout an acquisition lifecycle.
FAC Risk Assessment & Underwriting 2
Under FAR Part 16, which contract type places the MOST financial risk on the government when cost is uncertain?