Contract Development and Administration
This domain tests contract type selection, drafting, change control, performance monitoring, acceptance, payment, termination, disputes, and closeout.
Contract types and terms
- Fixed-price contracts place cost risk on the seller and fit clear scope.
- Cost-reimbursement contracts place cost risk on the buyer and require cost controls and audit rights.
- Time-and-materials contracts carry open-ended hours risk; set caps and monitor usage.
- Indefinite-delivery/indefinite-quantity contracts establish minimums, maximums, and ordering procedures.
- Include scope, deliverables, acceptance criteria, payment terms, insurance, termination, disputes, records, and audit rights.
Administration rules
- Only a written modification signed by an authorized official changes scope, price, or time.
- Inspect and document acceptance before paying.
- Track deliverables, KPIs, invoices, and the contract file.
- Closeout includes final acceptance, release of claims, records retention, and a performance evaluation.
Worked example
A fixed-price janitorial contract adds weekend coverage. The vendor starts work after a verbal request from a facility manager. The procurement officer should not simply pay the invoice. First determine whether the change is within scope, then issue a written modification with price and time, confirm the approver's authority, and document the file. If work was unauthorized, follow ratification rules. Reasoning: verbal direction creates obligation and audit risk.
Traps that cost marks
- Ratifying unauthorized work without approval.
- Using a minor amendment to materially expand scope and avoid competition.
- Accepting deliverables without inspection or documentation.
- Missing closeout, records retention, or final performance evaluation.
- Letting a project manager direct changes outside authority.