Procurement and Contracts

Question 1

What is a fixed price contract?

Answer 1

setting a fixed total price for a defined service or product, used when the requirements are well defined and no significant changes to scope are expected

Question 2

Which contract should be used when no changes in scope are expected?

Answer 2

fixed fee contract

Question 3

Which contract should be used when the requirements are well defined?

Answer 3

fixed fee contracts

Question 4

What is the difference between a firm fixed price and fixed price incentive fee contract?

Answer 4

firm fixed price - price for goods and services are set at the beginning and not subject to change unless there is a change in the scope

fixed price incentive fee - a price ceiling is set, and fees above the ceiling are the seller’s responsibility

Question 5

In which contract allows flexibility to both the buyer and seller?

Answer 5

fixed price incentive fee

Question 6

What is a fixed price incentive fee contract?

Answer 6

has a price ceiling and allow for deviation in performance with financial incentives tied to agreed upon metrics

Question 7

when is a fixed price with economic price adjustment used?

Answer 7

When a contract spans several years, payments are made in a different currency

Question 8

What is cost reimbursable contract?

Answer 8

Contract involves payments for completed actual work plus a fee showing seller profit.

Question 9

What type of contract should be used if the there is a lot of uncertainty or the scope is expected to change?

Answer 9

cost reimbursable

Question 10

What type of contract is when seller is reimbursed for allowable costs and receives a fixed fee payment as percentage of the initial estimate.

Answer 10

cost plus fixed fee

Question 11

What type of contract allows for the seller to be reimbursed for and receives a predetermined incentive fee based on achieving performance criteria?

Answer 11

cost plus incentive fee

Question 12

If the final costs are less or greater than the original estimated cost, then both the seller and buyer chare costs.

Answer 12

cost plus incentive fee

Question 13

Which contract: Seller is reimbursed for costs, but the majority of the of the fee is earned based on satisfaction of certain performance criteria and not subject to appeals

Answer 13

cost plus award fee

Question 14

Which type of contract is a hybrid contract?

Answer 14

time and materials

Question 15

What is a time and materials contract?

Answer 15

has both aspects of fixed price and cost reimbursable, used for staff augment or, acquisition of experts, outside support

Question 16

Which contracts allows the buyer to transfer risk to the seller?

Answer 16

Fixed price contracts - the buyer is paying a set price for a defined service/product

Question 17

Which contract should you use if the buyer wants full control of the scope?

Question 18

Which contract to use if project is high risk?

Answer 18

cost reimbursable

Question 19

Which contract has more risk for the buyer?

Answer 19

Cost reimbursable - buyer has to pay all the costs by reimbursing the seller.

Question 20

Which contract may have an initial higher cost to account for risks and unknown factors?

Answer 20

Fixed price contracts provide the buyer with defined cost without overruns, although the initial cost may be higher to account for risks and unknown factors.

Question 21

Which contract transfers risk to the seller?

Answer 21

Fixed price contracts

Question 22

Which contract does not include profit?

Answer 22

cost plus

Question 23

Which contract includes contingency, management reserves, and profit

Answer 23

fixed price

Question 24

Which contract includes contingency and management reserves?

Answer 24

cost plus