Are You Ready for a Contractor Purchasing System Review (CPSR)?

A Contractor Purchasing System Review (CPSR) is performed by the Government to evaluate the effectiveness and efficiency of the contractor’s stewardship (spending) of Government funds on behalf of taxpayers and compliance with established government social and economic policies. The CPSR is like most audits in that it reviews the contractor’s policies and procedures, internal training, records, and testing of the system. “Say what you do, do what you say, and have evidence to support your claim.”

A CPSR is performed when ACO determines the need (evaluated at least every three years) influenced, in part, by the contractor’s annual government sales volume. According to FAR 44.302(a), that trigger is:

Greater than $25M in coming 12 months (excluding competitively awarded FFP, competitively awarded FP with economic price adjustment, and commercial item contracts)

Regulations

DFARS 252.244-7001 Contractor Purchasing System Administration

This clauses addresses 24 items (many duplicated) that should be included in an effective purchasing system including:

  • Policies and procedures
  • Flowdown clauses
  • Delegation of authority
  • Complete and accurate history
  • Evaluation of offers including determination of fair and reasonable prices
  • Oversight and surveillance
  • Avoiding excessive pass-throughs

FAR 52.244-2 Subcontracts

If contractor does not have approved system, consent to subcontract is required for cost-reimbursement, T&M, labor hour, letter contracts, and fixed-price above thresholds in FAR 52.244-2. Notification should be reasonably in advance of placing the subcontract for any subcontract that requires consent, and should include the following items:

  • Description of supplies/services
  • Identification of subcontractor and price
  • Certified cost or pricing data and subcontractor’s disclosure statement (if either required)
  • Record of negotiation

FAR 52.244-5 Competition in Subcontracting

FAR 52.244-6 Subcontracts for Commercial Items

Remember that consistency is key. Consistently doing something wrong is better than inconsistently doing something right. Above all, demonstrate:

  • Prices are fair and reasonable
  • Risk to Government (and company) is mitigated

Resources

DCMA-INST 109 Contractor Purchasing System Reviews

Do you need help with your Contractor Purchasing System Review? If so, let’s talk!

Contact us today to discuss your Government property management system needs.

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