FCC Contract Types: FFP, T&M, CPFF 2

Question 1

Under a Firm-Fixed-Price (FFP) contract, who bears the risk of cost overruns?

Accepted Answer

The contractor

Answer

In an FFP contract, the contractor assumes full responsibility for cost overruns since the price is fixed regardless of actual costs incurred.

Question 2

Which FAR part primarily governs the selection and use of contract types in federal procurement?

Accepted Answer

FAR Part 16

Answer

FAR Part 16 covers types of contracts and the policies governing their selection and use in federal acquisition.

Question 3

A Time-and-Materials (T&M) contract reimburses the contractor for direct labor at:

Accepted Answer

Fixed hourly rates that include profit

Answer

T&M contracts pay fixed hourly rates that already incorporate wages, overhead, general and administrative costs, and profit.

Question 4

What is the primary limitation that must accompany every Time-and-Materials contract at award?

Accepted Answer

A ceiling price the government will not exceed

Answer

FAR 16.601 requires that every T&M contract include a ceiling price to limit the government's cost exposure.

Question 5

Under a Cost-Plus-Fixed-Fee (CPFF) contract, the fixed fee is expressed as a percentage of:

Accepted Answer

Estimated cost at the time of award

Answer

The fixed fee in a CPFF contract is established at award as a percentage of the estimated cost and does not change as actual costs vary.

(FCC) Federal Contracting Certification Practice Test