AF CONTRACTING OFFICER STUDY FINAL
PAPER 2026 COMPLETE QUESTIONS AND
ANSWERS
◉ You are the PCO on a new $2B aircraft development program. The
program is in contract negotiations for a Fixed Price Incentive (Firm
Target) System Development and Demonstration contract award to a
sole source contractor. The program director, a fast-burning young
colonel, e-mails you that she is very concerned with the aircraft's
ultimate speed at the full specification payload. She would like the
contractor to achieve the faster, desired objective speed rather than
the mandatory threshold speed, and thinks that an objective
performance incentive would be the way to go to achieve her goal.
You are asked to go to her office and discuss the matter and the
issues involved in using such an incentive. What do you tell the
colonel? Answer: There are a number of considerations for the
colonel:
The desired additional speed should provide benefit to the Air Force
in order to justify the expenditure of funds to achieve it. The colonel
should be able to articulate the justification.
The situation is very amenable to a classic performance incentive
that would allow the contractor to earn profit for achieving the
desired speed above and beyond what the final FPIF profit would be
for achieving threshold speed. If the contractor perceives this can't
happen, he will either not sign up to the incentive or will ignore it
from Day One.
,The incentive and resulting payment have to be structured so as to
be based on observable, measurable results that would determine
how much is earned by the contractor. Subjectivity is not allowable
under current AF policy without HCA approval.
We have to be very careful to understand what possible unintended
consequences could be caused by the existence of this feature in the
contract. For example, will the contractor reduce aircraft weight
beyond safe limits in order to help achieve the payment? Also, will
the contractor consume excessive schedule to get the extra speed?
There has to be a cost incentive in place so that the contractor
doesn't spend an unconstrained amount of money to win the
payment, such as under a CPFF contract. The FPIF share line serves
this purpose when balanced against the incentive.
The incentive has to be balanced with the FPIF share line so that the
contractor doesn't spend more money to achieve the desired speed
than he has potential to earn by receiving the payment. Similarly, the
contractor can't be allowed to spend an excessive amount of money
with little cost penalty to achieve success.
◉ : In AFRL, Contracting Officers are also Grants Officers. They can
award Grants and Assistance Instruments as well as contracts. What
is Assistance? How does it differ from Acquisition? What gives the
Grants Officers their authority to enter into assistance? What are the
types of Assistance? Answer: When the principal purpose is to
transfer a thing of value, to carry out a public purpose of support or
stimulation authorized by law of the United States, it is Assistance.
,Acquisition, by contrast, has the principal purpose of acquiring
property or services for the direct benefit or use of the United States
Government.
Federal agencies must be authorized by statute to support or
stimulate a public purpose. The statutory authority from Congress
must exist either in broad legislation or in a program-specific
statute. Absent that statutory authority, a Grants Officer may not use
an assistance instrument.
Authorities to issue Assistance can be of three types: (1) Provide to
the Secretary of Defense by statute, e.g., 10 U.S.C. 2391; (2) Authority
provided to DoD components that requires no delegation by the
Secretary of Defense, e.g., 10 U.S.C. 2358; (3) Authority coming
indirectly from statutes, i.e., federal statute authorizing a program
that is consistent with using a grant or cooperative agreement.
Two types of Assistance are Grants and Cooperative Agreements.
They differ in the following way: In a Grant, substantial involvement
is not expected between the agency and the recipient. In Cooperative
Agreement, substantial involvement is expected between the agency
and the recipient. Cooperative Agreements, then, are particularly
useful in the research arena when the Government is interested in
being involved in program decisions or may be doing some testing
or research themselves.
◉ You are the Contracting Officer for a well established transport
aircraft program. The program is nearing the end of production. A
Program Manager approaches you requesting that you issue a Broad
Area Announcement (BAA) to support the development of a source
list to supply active noise reducing headsets. The headsets are
, commercially available from multiple sources and the PM wants to
receive performance specification sheets from each offeror and then
request sample headsets be submitted for testing. The end result of
the effort will be the development of a source list that can be used by
various Air Force Bases to individually procure the needed headsets
for the Base's specific requirements. The PM tells you that he will
not be procuring any of the headsets as a result of the BAA. What do
you advise the PM? Answer: You should advise the PM that BAAs are
a method of solicitation and can only be used if the Government
intends to award a contract. You might suggest that the development
of the source list could be achieved by issuing a Sources Sought
Synopsis with the synopsis specifying the 2 step process (spec
sheets first and then sample headsets from selected offerors), and
the ultimate intent of the process, e.g., a source list for use by
individual users in future procurements. You might also advise the
PM that there could be liability issues associated with the use,
handling, and return of the headsets to the offerors and that it might
be appropriate for the Government to cover shipping and any
damage/wear to the units for the testing.
◉ You are the Contracting Officer on a new Research and
Development program. Proposals were recently received in
response to a Broad Agency Announcement, and a Cost Plus Fixed
Fee contract type is anticipated. The proposal most favored by the
technical team was priced significantly under what was estimated
for the effort. The contractor proposed fee in an amount that
equates to 20% of the estimated cost. The users have more than
enough funds to cover the proposal and want you to accept the price
as is. How should you advise the user and what factors should you
PAPER 2026 COMPLETE QUESTIONS AND
ANSWERS
◉ You are the PCO on a new $2B aircraft development program. The
program is in contract negotiations for a Fixed Price Incentive (Firm
Target) System Development and Demonstration contract award to a
sole source contractor. The program director, a fast-burning young
colonel, e-mails you that she is very concerned with the aircraft's
ultimate speed at the full specification payload. She would like the
contractor to achieve the faster, desired objective speed rather than
the mandatory threshold speed, and thinks that an objective
performance incentive would be the way to go to achieve her goal.
You are asked to go to her office and discuss the matter and the
issues involved in using such an incentive. What do you tell the
colonel? Answer: There are a number of considerations for the
colonel:
The desired additional speed should provide benefit to the Air Force
in order to justify the expenditure of funds to achieve it. The colonel
should be able to articulate the justification.
The situation is very amenable to a classic performance incentive
that would allow the contractor to earn profit for achieving the
desired speed above and beyond what the final FPIF profit would be
for achieving threshold speed. If the contractor perceives this can't
happen, he will either not sign up to the incentive or will ignore it
from Day One.
,The incentive and resulting payment have to be structured so as to
be based on observable, measurable results that would determine
how much is earned by the contractor. Subjectivity is not allowable
under current AF policy without HCA approval.
We have to be very careful to understand what possible unintended
consequences could be caused by the existence of this feature in the
contract. For example, will the contractor reduce aircraft weight
beyond safe limits in order to help achieve the payment? Also, will
the contractor consume excessive schedule to get the extra speed?
There has to be a cost incentive in place so that the contractor
doesn't spend an unconstrained amount of money to win the
payment, such as under a CPFF contract. The FPIF share line serves
this purpose when balanced against the incentive.
The incentive has to be balanced with the FPIF share line so that the
contractor doesn't spend more money to achieve the desired speed
than he has potential to earn by receiving the payment. Similarly, the
contractor can't be allowed to spend an excessive amount of money
with little cost penalty to achieve success.
◉ : In AFRL, Contracting Officers are also Grants Officers. They can
award Grants and Assistance Instruments as well as contracts. What
is Assistance? How does it differ from Acquisition? What gives the
Grants Officers their authority to enter into assistance? What are the
types of Assistance? Answer: When the principal purpose is to
transfer a thing of value, to carry out a public purpose of support or
stimulation authorized by law of the United States, it is Assistance.
,Acquisition, by contrast, has the principal purpose of acquiring
property or services for the direct benefit or use of the United States
Government.
Federal agencies must be authorized by statute to support or
stimulate a public purpose. The statutory authority from Congress
must exist either in broad legislation or in a program-specific
statute. Absent that statutory authority, a Grants Officer may not use
an assistance instrument.
Authorities to issue Assistance can be of three types: (1) Provide to
the Secretary of Defense by statute, e.g., 10 U.S.C. 2391; (2) Authority
provided to DoD components that requires no delegation by the
Secretary of Defense, e.g., 10 U.S.C. 2358; (3) Authority coming
indirectly from statutes, i.e., federal statute authorizing a program
that is consistent with using a grant or cooperative agreement.
Two types of Assistance are Grants and Cooperative Agreements.
They differ in the following way: In a Grant, substantial involvement
is not expected between the agency and the recipient. In Cooperative
Agreement, substantial involvement is expected between the agency
and the recipient. Cooperative Agreements, then, are particularly
useful in the research arena when the Government is interested in
being involved in program decisions or may be doing some testing
or research themselves.
◉ You are the Contracting Officer for a well established transport
aircraft program. The program is nearing the end of production. A
Program Manager approaches you requesting that you issue a Broad
Area Announcement (BAA) to support the development of a source
list to supply active noise reducing headsets. The headsets are
, commercially available from multiple sources and the PM wants to
receive performance specification sheets from each offeror and then
request sample headsets be submitted for testing. The end result of
the effort will be the development of a source list that can be used by
various Air Force Bases to individually procure the needed headsets
for the Base's specific requirements. The PM tells you that he will
not be procuring any of the headsets as a result of the BAA. What do
you advise the PM? Answer: You should advise the PM that BAAs are
a method of solicitation and can only be used if the Government
intends to award a contract. You might suggest that the development
of the source list could be achieved by issuing a Sources Sought
Synopsis with the synopsis specifying the 2 step process (spec
sheets first and then sample headsets from selected offerors), and
the ultimate intent of the process, e.g., a source list for use by
individual users in future procurements. You might also advise the
PM that there could be liability issues associated with the use,
handling, and return of the headsets to the offerors and that it might
be appropriate for the Government to cover shipping and any
damage/wear to the units for the testing.
◉ You are the Contracting Officer on a new Research and
Development program. Proposals were recently received in
response to a Broad Agency Announcement, and a Cost Plus Fixed
Fee contract type is anticipated. The proposal most favored by the
technical team was priced significantly under what was estimated
for the effort. The contractor proposed fee in an amount that
equates to 20% of the estimated cost. The users have more than
enough funds to cover the proposal and want you to accept the price
as is. How should you advise the user and what factors should you
