Certified Texas Contract Manager Practice Exam

What defines a substantial conflict of interest?

1. Financial gain from a business

2. Influence over decision-making

3. Ownership of company stock

4. Receiving gifts from contractors

The correct answer is: Ownership of company stock

A substantial conflict of interest is primarily defined by an individual's ownership stake or financial interest in a company that could affect their decisions in a professional setting. Owning stock in a company directly ties one's personal financial outcomes to the performance and decisions regarding that company’s contracts or business dealings. This can create a situation where personal gain may cloud judgment or influence actions, thereby affecting neutrality and objectivity. While financial gain from a business and influence over decision-making can also indicate potential conflicts of interest, owning stock reflects a direct and quantifiable interest that often necessitates disclosure or management under conflict of interest policies. Receiving gifts from contractors can also introduce conflicts, but they do not usually represent the same level of substantial and ongoing financial interest as ownership of company stock does.