Redstone Government Consulting Blog | DFARS Business Systems (7)

What is a CPSR Review?

A CPSR Review is a Contractor Purchasing System Review. This review is performed by the Government on a contractor, in order to:

• assess the overall health of the purchasing organization,
• evaluate the efficiency and effectiveness of the contractor’s practices in expending Government funds,
• perform an independent review of the contractor’s system to optimize its effectiveness in compliance with Government policy, and
• identify risk to provide the Administrative Contracting Officer (ACO) a basis for approving or disapproving the purchasing system.

Topics: DFARS Business Systems, Contractor Purchasing System Review (CPSR)

Does the Total of All Proposed Subcontract Costs Exceed 70% of the Total Contract Costs?

Is your company submitting a proposal to the government/prime contractor that includes a total of all subcontract costs exceeding 70 percent of the total costs proposed? If so, you must identify “added value” in your proposal so the government/auditor does not classify the indirect cost applied to the total subcontract cost as “excessive pass-through charges.”  The government considers indirect costs and profit/fee that a contractor applies to subcontract costs that exceed 70 percent of the contract to be “pass through costs.” This applies to lower tier subcontract costs also. If there is no negligible value added by the contractor, the government or auditor will question the indirect costs and profit/fee applied to the subcontract costs as unallowable excessive pass through under FAR 31.203(i).

Topics: Compliant Accounting Infrastructure, Proposal Cost Volume Development & Pricing, Incurred Cost Proposal Submission (ICP/ICE), DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations

Due to the recent Russian invasion in Ukraine, there has been a significant increase in cyber-attacks reported across the world. While the U.S. Government has concerns related to attacks on U.S. companies including banks, power companies, fuel suppliers, they are also concerned with defense contractors. President Biden has issued multiple warnings to companies including defense contractors about looming cyber-attacks.

Topics: DFARS Business Systems, Contractor Purchasing System Review (CPSR), Cybersecurity

Government Contractor Purchases below the Micro-Purchase Threshold Require NO Documentation

This is a common misconception within the GOVCON community. While the expectations are clearly less documentation and effort are required than that of a larger dollar value purchase, there is not a magic threshold at which NO documentation of the fair and reasonable price is allowed.

Topics: Compliant Accounting Infrastructure, Incurred Cost Proposal Submission (ICP/ICE), Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR), Estimating System Compliance

At the end of each of the DCAA audit programs for contractor business systems, DCAA discusses what it refers to as “Less Severe Significant Deficiencies.” These are clearly deficiencies which do not meet the DFARS definition of a “Significant deficiency.”[1] As a result, the withhold requirement provided for in DFARS 252.242-7005 cannot be applied.

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR), Government Regulations, Federal Acquisition Regulation (FAR)

As more and more companies are acquiring companies or being acquired, a predominant question that arises is can I do work with my new or existing affiliates. The simple answer is yes, but there are specific requirements in the FAR on how transactions are performed between affiliates. The requirements of intercompany transactions are found in two primary cost principles FAR 31.205-26 – Materials Costs and FAR 31.205-36 Rental Costs.

Topics: Compliant Accounting Infrastructure, DFARS Business Systems, DCAA Audit Support, Government Regulations, Federal Acquisition Regulation (FAR)

This is the third blog in a three-part series on progress payments for Government contractors. In this blog we will discuss the estimate to complete, and the adjustments needed when there is a projected loss on a contract.

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR), Estimating System Compliance

This is the second blog in a three-part series on progress payments. This blog addresses Line 5, Contract Price and Line 11, Total eligible costs on the SF1443 Contractor’s Request for Progress Payment Form.

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR)

This is the first blog on a three-part series on progress payments and discusses progress payments and the applicable rates.

Topics: Compliant Accounting Infrastructure, Contracts & Subcontracts Administration, DFARS Business Systems, Government Regulations, Federal Acquisition Regulation (FAR)

Defense Federal Acquisition Regulations Supplement (DFARS) Business Systems have come into focus as DCAA and DCMA increase their audits of these business systems. This blog will help to provide the specific requirements of the Material Management Accounting System (MMAS) and the difference in MMAS and other business system reviews.

Topics: DFARS Business Systems, Material Management & Accounting System (MMAS)