FCC Ethics, Risk Management & Reporting 2 — Questions and Answers
Question 1: Under FAR 52.203-13, contractors with contracts over $5 million and a performance period of 120 days or more must establish which of the following?
- A mandatory arbitration program for employee disputes
- A written code of business ethics and conduct within 30 days of contract award (Correct answer)
- A quarterly ethics audit submitted to the contracting officer
- A dedicated ethics hotline managed by a third-party vendor
Correct answer: A written code of business ethics and conduct within 30 days of contract award
FAR 52.203-13 requires covered contractors to establish a written code of business ethics and conduct within 30 days of contract award.
Question 2: Which federal law makes it a criminal offense for a contractor employee to knowingly make a false claim against the United States government?
- The Anti-Kickback Act
- The False Claims Act (31 U.S.C. § 3729) (Correct answer)
- The Procurement Integrity Act
- The Ethics in Government Act
Correct answer: The False Claims Act (31 U.S.C. § 3729)
The False Claims Act (31 U.S.C. § 3729) imposes civil and criminal liability on individuals who knowingly submit false or fraudulent claims to the federal government.
Question 3: A contractor discovers that a subcontractor has been billing for materials never delivered. What is the contractor's obligation under FAR 52.203-13?
- Quietly correct the billing and absorb the loss internally
- Report the matter only if it exceeds $100,000
- Timely disclose the violation to the agency Inspector General and contracting officer (Correct answer)
- Terminate the subcontract and notify the prime agency within 180 days
Correct answer: Timely disclose the violation to the agency Inspector General and contracting officer
FAR 52.203-13 requires timely disclosure of credible evidence of contract fraud to the agency Inspector General and contracting officer.
Question 4: In the context of federal contractor risk management, what does 'residual risk' mean?
- The portion of project budget reserved for contingencies
- Risk that remains after mitigation controls have been applied (Correct answer)
- Environmental liability left over from prior contracts
- Unapproved change orders that represent financial exposure
Correct answer: Risk that remains after mitigation controls have been applied
Residual risk is the level of risk that remains after mitigation strategies and controls have been implemented.
Question 5: What is the primary purpose of the Procurement Integrity Act (41 U.S.C. § 2101-2107)?
- To set minimum wage requirements for contractor employees
- To prohibit the disclosure of contractor bid or proposal information and source selection information (Correct answer)
- To require all federal contracts to be awarded through competitive bidding
- To mandate background checks for all contractor personnel
Correct answer: To prohibit the disclosure of contractor bid or proposal information and source selection information
The Procurement Integrity Act prohibits the unauthorized disclosure of contractor bid/proposal information and source selection information during the acquisition process.
Question 6: A federal contractor's employee is offered a gift valued at $15 by a government employee. Under the Standards of Ethical Conduct for Employees of the Executive Branch, what applies?
- Government employees may accept gifts under $25 from contractors without restriction
- The gift is permissible as a market-value exception since it is under $20
- Government employees are prohibited from soliciting gifts but may accept unsolicited gifts under $20 (Correct answer)
- All gifts from contractors to government employees are strictly prohibited regardless of value
Correct answer: Government employees are prohibited from soliciting gifts but may accept unsolicited gifts under $20
Under 5 CFR Part 2635, government employees may accept unsolicited gifts from outside sources valued at $20 or less per occasion, not exceeding $50 per year from any single source.
Question 7: Which risk response strategy involves shifting the financial consequences of a risk to a third party, such as through insurance?
- Risk avoidance
- Risk acceptance
- Risk transfer (Correct answer)
- Risk mitigation
Correct answer: Risk transfer
Risk transfer shifts the financial impact of a risk to a third party (e.g., insurance, performance bonds, indemnification clauses) without eliminating the risk itself.
FCC Ethics, Risk Management & Reporting 2
Under FAR 52.203-13, contractors with contracts over $5 million and a performance period of 120 days or more must establish which of the following?