CIPS L4M3 Exam Questions Instant Access - No Installation Required

Question 1

Prior to circulating the service specification to a tendering supplier, it is good practice for the purchasing organisation to request completion of a non-disclosure agreement. Is this statement correct?

ANo, because the non-disclosure agreement has no legal standing

BYes, because the non-disclosure agreement protects intellectual property

CYes, because the non-disclosure agreement encourages transparent bidding

DNo, because the non-disclosure agreement only applies after contracting

Answer : B

Non-disclosure agreements (NDAs) are legally binding documents that protect confidential and proprietary information, including intellectual property, during pre-contractual discussions. NDAs ensure that sensitive data shared during early engagement or tender development is not misused.

Question 2

What pricing arrangements or schedule would be used if the buyer is operating to an exact budget?

ACost-plus pricing arrangement

BFixed pricing arrangement

CIncentivised pricing arrangement

DIndexation pricing arrangement

Answer : B

A fixed pricing arrangement means the buyer and supplier agree on a set price that does not change regardless of market fluctuations or production costs. This gives the buyer full cost certainty, which is essential when operating to a strict or limited budget. It helps avoid financial risk over the contract duration.

Question 3

Social and environmental criteria are often incorporated into which of the following type of specification?

ADesign specification

BTechnical specification

CConformance specification

DOutput specification

Answer : D

Developing and using generic specifications is as import in the sustainable procurement process as it is in the traditional procurement process. During this stage, human/labour rights and environmental performance criteria should be translated into specifications that meet specific requirements of the specified outcome, desired by the procurement action.

The specification stage is key to all types of contract. Building in environmental and social considerations at this early stage, provides a clear indication to suppliers that sustainability is important to the UN organization. Consider available alternatives which are less environmentally and socially damaging. Consider all the phases of a product's life cycle (e.g. production, transportation, maintenance, disposal, etc) when determining its cost and environmental impact. Assess the overall environmental and social integrity of suppliers by looking at their policies and practices.

Specifications which are output-based rather than input-based can increase supplier innovation, reduce waste and minimise harmful social and environmental impacts.

- Sustainable Procurement

- CIPS study guide page 95-99

LO 2, AC 2.1

Question 4

Electro Systems PLC is a public sector manufacturer of highly technical solutions for the telecommunications industry. The market in which it operates is fast-paced and ever-changing because of the latest inventions and developments. The products it procures are high-cost and can be subject to lengthy lead times. Michael Jones, the procurement director, believes that establishing framework agreements would be beneficial to the tendering process. How could this assist them?

AImprove supplier lead times

BEnable the use of mini-competitions

CImprove supplier product quality

DEnable the use of e-tendering

Answer : B

Framework agreements allow for pre-approved suppliers to be used over a contract period with simplified ordering processes. A key benefit is the use of mini-competitions among these suppliers to secure value and innovation without repeating the full tender process. This approach is highly effective in dynamic sectors like telecommunications.

Question 5

Ellie is a junior buyer and her supplier asks her to use their contract terms for an order. Which of the following are clauses that may be included in the supplier contract that could pose a risk to Ellie's business? Select TWO that apply.

AIf the contract lists the full specification

BIf the contract includes supplier contact details

CIf the contract includes a cash discount for early payment

DIf the contract includes a price escalation clause

EIf the contract includes exclusion clauses

Answer : A, D, E

Price escalation clauses allow suppliers to raise prices during the contract term, potentially undermining budget control. Exclusion clauses limit or remove the supplier's liability, which could leave the buyer unprotected in case of breach or defects. These clauses present clear risks and require careful review or negotiation.

Question 6

Which of the following are the 'fundamental' labour standards laid down by the International Labour Organisation?

1. Elimination of child labour

2. Payment of a minimum wage

3. The right to collective bargaining

4. Abolition of forced labor

A1, 2 and 4 only

B2, 3 and 4 only

C1, 3 and 4 only

D1, 2 and 3 only

Answer : C

ILO Declaration on Fundamental Principles and Rights at Work was adopted in 1948. The Declaration commits Member States to respect and promote principles and rights in four categories, whether or not they have ratified the relevant Conventions.

These categories are: freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour and the elimination of discrimination in respect of employment and occupation.

- ILO Declaration on Fundamental Principles and Rights at Work

- CIPS study guide page 161-163

LO 3, AC 3.2

Question 7

Which of the following would you expect to see in an Invitation to Tender (ITT)?

ASupplier rates

BLiquidity ratios

CDelivery milestones

DBest and Final Offer (BAFO)

Answer : C

The ITT is issued by the buyer and typically includes:

Requirements, scope, and delivery milestones (C).

Evaluation criteria, instructions to tenderers, contract conditions, etc.

Supplier rates and liquidity ratios belong in the supplier response or financial evaluation. BAFO is a later negotiation step, not content of the ITT itself.

CIPS Commercial Contracting L4M3 Exam Questions