Certified Professional Public Buyer (CPPB) Practice Test

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What is a key characteristic of a term contract?

It is always fixed-priced
It only applies to government contracts
It includes a specified period for delivery of services or supplies
It cannot be renewed after expiration

The correct answer is: It includes a specified period for delivery of services or supplies

A term contract is defined by the presence of a specified period for the delivery of goods or services. This characteristic helps both the buyer and seller to manage expectations and planning over a predetermined timeframe. In public procurement, term contracts often aim to secure supplies or services over a set duration to ensure stability and predictability in operations. By establishing a clear timeline, term contracts facilitate effective budget planning and resource allocation, which is crucial for government entities and public agencies. This specific timeframe also assists in performance evaluations and compliance monitoring of the contracted services or supplies.