Contract Management Exam Study Guide & Practice Questions 2013 Edition
Covering the Federal Knowledge module.
With new info on the Sept 2012 FAR updates.
CFCM will need to pay special attention to the topics on
federal contract management. In order to earn the CFCM, a candidate
must fulfill the eligibility requirement and must pass the Federal Contract module.
In the new CFCM exam syllabus, General
Business Knowledge is no longer tested. HOWERVER, taking into account
the fact that knowledge on the general business environment would help a
lot in your exam study effort (even though the GB module is no longer
required), GB related materials are retained in this study guide. For
CFCM, FAR is definitely the focus. Still, knowledge on commercial
acquisition and contract is essential as it forms the foundation of
modern contract management. You should therefore go through the sections
on business procurement and commercial contracting in addition to
As of the time of this writing, the CFCM exam has 150 questions. The 110
question format is no longer in use. In this study product we have both
contracting-specific and business knowledge sections. We label those
business knowledge sections as “Foundation Knowledge” sections. These
sections have information that is not on the technical aspect of
contracting but is still relevant for day-to-day contract admin works.
For the Federal contract exam contents, keep in mind that special
emphasis has always been placed on FAR Parts 12 and 15. Part 4 primarily
deals with the policies and procedures relating to the administrative
aspects of contract administration, such as execution, contractor
submitted paper documents, distribution, reporting, retention and files.
Our CFCM Study
Guide goes the expert-advice way. Instead of just giving you the hard facts,
we also give you information that covers the best practices. With these
information, you will always be able to make the most appropriate expert
judgment in the exams. Instead of following a rigid topic
flow, we give you the freedom to review topics in any order you like.
Taking into account the fact that knowledge on commercial contract as
well as general business
environment would help a lot in your exam study effort (even though they
are not explicitly tested), related materials are retained in
this study guide. For the best possible exam performance, you may want to
use our study guide together with other study resources. Do your
readings, and give yourself enough time to digest what you have read.
Link the theories and concepts to your real world contract management
experience, then you will do fine for sure :)
Click HERE to review the
TOC of the book.
CFCM Exam Tips
Most Federal Knowledge questions are based on FAR. The questions do
not directly refer to FAR, but the correct answers would for sure be
based on FAR.
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
"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
A contractor who fails to meet a delivery date
may be terminated for default only after being given a 10-day grace
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
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
If you understand the logic behind the CFCM
questions & choices, you will have no problem picking the right
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
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
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
NOTE: Punitive damages are generally not available in lawsuits on
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
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
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
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
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
To order this book in printed
CFCM Contract Management Exam Study Guide
& Practice Questions 2013:
Building your Federal contract management exam readiness
Binding Type: US Trade Paper
Trim Size: 8" x 10"
Color: Black and White
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