CFCM Exam Tips

Take a look at this sample question:

If a proposed contractor was discovered to have insufficient financial resources to perform the proposed contract, it would be determined to be not

responsive.
reasonable.
responsible.  <--
authorized.

"responsible" is the correct answer. According to FAR 9.1 Responsible Prospective Contractors, federal contracts would be awarded to responsible prospective contractors only. No purchase or award would be made unless the government contracting officer makes an affirmative determination of responsibility.  

As can be seen from this sample, the question does not explicitly say what FAR section it is referring to, instead it kinda "links" to FAR indirectly. 

Another example:

A contractor who fails to meet a delivery date

may be terminated for default only after being given a 10-day grace period.
may be terminated for default immediately. <--
may be terminated for default at any time within two years.
may not be terminated until the Government assures itself of the contractor's fault.


This is how we should think about the situation presented in the question. In theory, the contractor must immediately advise the contract officer of any circumstance or event that could result in late completion of work called for to be completed on a date certain. If the contractor cannot meet the contract completion date for any work required to be completed by a date certain, the contractor could be held liable. There are usually clauses in the contract about what to do if delivery is late. A reasonable clause will accommodate for sudden and unexpected situation, or that there will be room for the contractor to fix the problem (some sort of grace period, length of the period could vary). To protect the right of the government, however, there will usually be a clause which allows the government to reserve its rights in terminating the contract for default plus seeking damage recovery.

The question does not mention any use of any clause for grace period, and there is no information on how late the delivery is. There is also no information on whether late delivery is due to unexpected natural disasters or other acts of God. It simply says the contractor fails to deliver on time. Therefore, it is apparently the contractor's fault, and he may be terminated for default immediately.
 

If you understand the logic behind the CFCM questions & choices, you will have no problem picking the right answers!
 

SAMPLE TEXT on our introduction to FAR

Contracting with the US government is based on many of the same principles as commercial contracting, although special regulations do exist to put controls in place. A commercial contract made with the US government must comply with the laws and regulations that permit it, and must be made by a Contracting Officer who has actual authority to make such contract. Along the process of entering into the contract there are tons of rules to follow. The FAR is what you need to be aware of. The URL of the official FAR is http://acquisition.gov/far/loadmainre.html.

The primary purpose of the Federal Acquisition Regulations (FAR) is to provide a uniform set of policies and procedures for acquisition. It is codified in Title 48 of the United States Code of Federal Regulations. It doesn't regulate the purchasing activities of private sector companies UNLESS parts of it are being incorporated into government solicitations and contracts by reference.

You want to know the difference between Federal Procurement and Federal Assistance. The distinction between them was established in law under the Federal Grant and Cooperative Agreement Act of 1977 (PL 95-224). That statute states that when the principal purpose of the transaction is to purchase something for the Federal government's own direct benefit or use, the federal agency must use a procurement contract. However, if the principal purpose of the transaction is to assist, stimulate or support a non-federal party in the conduct of a public program, the federal agency must use an assistance instrument in the form of a grant or a cooperative agreement.

The overall guiding principle of FAR is to have an acquisition system that can satisfy customer's needs yet minimize administrative overhead without sacrificing integrity, fairness, openness and public policy objectives. When a government agency issues a contract, a list of FAR provisions would be specified to apply to the contract. In order for a contractor to be awarded a contract, he must either comply with the provisions, demonstrate that he can comply with them at the time of award, and/or claim an exemption. Keep in mind, the FAR and the relevant agency supplements have been said by the Federal courts to have "the force and effect of law" (this is about the Christian Doctrine, that government regulations would have the force and effect of law, that government personnel may not deviate from the law UNLESS there is proper authorization), even though some agencies could be exempt.
 

*****************

SAMPLE TEXT on our introduction to contract clauses

Damage recovery

The primary purpose of damages is at best to place the injured party in as nearly as possible the same position he/she would have been in had the contract been properly performed. Damage may be settled through monetary compensation and/or through forcing the other party to fulfill the contractual duties.

Many contracts include an agreement on a set amount of "liquidated damages" which are to be paid if something goes wrong. These are generally acceptable to the court as long as the amount indicated is a reasonable estimation of the harm. However, If the amount is too excessive the court may choose to ignore the liquidated damages clause and assess damages by actually measuring the harm financially.


NOTE: Punitive damages are generally not available in lawsuits on commercial contracts.

NOTE: Equity refers to the set of legal principles which supplement strict rules of law where their application would be too harsh for the situation, so as to achieve a sort of "natural justice." One primary distinction between law and equity is the set of remedies available. The most common civil remedy a Court of law can award is damages in $ form. Equity, on the other hand, often offers injunctions or decrees directing someone either to act or to not act.
Damages must not be too remote. If a damage is too difficult to be expected early by the parties, it is too remote. Reasonable expectation is always emphasized.

NOTE: Always include a provision which says that contract is to be enforced under the laws of a specific jurisdiction.


Generally speaking, domestic courts are bound to apply their own national law, which would usually include the relevant conflict of law rules. As suggested by Bonell (2000), according to the traditional and still prevailing view the conflict of law rules tend to restrict the choice of the law(s) applicable to international contracts to the law(s) of (a) State(s), to the exclusion of any supra-national or a-national set of rules.

Anticipatory Repudiation refers to the unjustifiable denial by a party to a contract of any intention to perform contractual duties. Such denial occurs before the time performance is due. Remedies available generally depend on how the innocent party respond. If the innocent party chooses to ignore the repudiation and proceeds with performance, the duty to mitigate damages may become an issue. The key is that nothing should be done to increase the damage.

If the innocent party insists that the other party perform, he/she may still claim damages later as long as the other party ends up choose not to perform. The simplest thing to do, however, would be to do nothing for now and to sue after the time for performance has lapsed.


Satisfaction Clause

With a "satisfaction clause", a promisor may refuse to pay if he/she isn't subjectively satisfied with the promisee's performance. Strictly speaking, the court will imply that the promisor must act in good faith in such a way that rejection of the deal is raised only if he/she is genuinely dissatisfied. In other words, a commercial contract conditioned on the satisfaction of one party is a binding one which can preclude recovery by the other party when the satisfaction clause is exercised in good faith. In many cases, dissatisfaction is not measured objectively but subjectively.

The court generally interprets satisfaction clauses using subjective standards due to the element of personal taste.

The determination of good faith usually requires the court to inquire into the party's state of mind. Showing evidence of bad faith on behalf of the party would be required in order to invalidate the satisfaction clause, which would be practically uneasy.


Contract compensation and financing

Talking about the forms of agreement in regards to compensation, a lump sum compensation is a remuneration which establishes a specific total amount payable for the performance of the contractual work. Lump sum compensation would be appropriate if you can establish with high precision the Scope, Character, Complexity and Duration of the work and that just compensation for the contractual work can be evaluated in advance with reasonable accuracy.

Cost plus net fee compensation is a form of reimbursement very popular for consultant contracts. It is basically a combination of a consultant’s actual allowable costs and the net fee as set forth in the agreement. You would want to go for this when the extent of the work cannot be well defined. Payment would be based on the actual allowable costs incurred and the completion percentage times the applicable net fee.

Rate of pay compensation is a type of remuneration which establishes a specific rate of pay in the agreement applicable for each classification of employee. You would want to use this if the indirect costs and profit would be tied directly to extent of services utilized. For this to work the contractual rates for each classification must be carefully defined.

A unit of work compensation is a form of remuneration which establishes a specific unit amount payable for each unit of services performed. It is doable when the unit cost can be determined in advance with reasonable accuracy but the number of units is indefinite. You may especially find it useful for items of additional work.

NOTE: Generally, lump sum type agreements are way more easily administered but are relatively inflexible when dealing with changes in the work. Actual cost agreements would be capable of providing more flexibility but would require relatively more administrative effort.