The purpose of a CPSR is to determine if a contractor’s purchasing system and related internal controls comply with applicable laws and regulations, are effective over compliance with applicable laws and regulations, and are adequate and operating effectively. Contractors should evaluate their purchasing system by using the following regulations and DCMA guidance:
- DFARS 252.244-7001 – Contractor Purchasing System Administration
- FAR Subpart 44.3 – Contractor Purchasing System Reviews
- DCMA Instruction 109 – Contractor Purchasing System Reviews (sets forth 24 system criteria)
- DCMA Policies and Procedures Checklist
- DCMA CPSR Guidebook
What Elements of the Contractor Purchasing System Review (CPSR) Criteria You Need to Know?
CPSR Report Elements |
DFARS Criteria |
Policy and Procedure Manual |
(c)(1), (17), (19), (22), and (24) |
Truthful Cost or Pricing Data (TINA) (Public Law 87-653 |
(c)(10), (16), and (22) |
Cost Accounting Standards (CAS) (Public Law 100-679) |
(c)(2) and (19) |
Prior Consent and Advance Notification (10 U.S.C. 2306 (e)) |
(c)(1) |
Small Business Subcontracting Plans (Public Law 95-507) |
(c)(2) and (19) |
Protecting the Government’s Interest When Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment (FAR 52.209-6) |
(c)(7) |
Limitation on Use of Appropriated Funds to Influence Certain Federal Contracting and Financial Transactions (Public Law 101-121 (Anti-Lobbying)) |
(c)(2) and (19) |
Defense Priorities and Allocation System (DPAS) Rating (15 CFR 700) |
(c)(1) |
Federal Funding Accounting and Transparency Act (FFATA) of 2006 |
(c)(2) and (19) |
Counterfeit Parts Mitigation and Surveillance |
(c)(19) and (21) |
Price Analysis |
(c)(8), (9), (10), (16), and (22) |
Source Selection |
(c)(4), (5), (7), (8), (9), (10), (20, and (21) |
Negotiations |
(c) (11) and (12) |
Make-or-Buy Program |
(c) (6) |
Limitations on Pass-through Charges |
(c) (24) |
Documentation |
(c)(4), (5), and (15) |
Training |
(c)(17) and (18) |
Internal Review/Self-Audit |
(c)(17) and (18) |
Mandatory FAR/DFARS Flow Down Requirements/Terms and Conditions |
(c)(2), (16), and (19) |
Purchase Requisition Process |
(c)(4) |
Buyer Lead-Time |
(c)(5) |
Subcontract Types |
(c)(13), and (23) |
Procurement Authority |
(c)(3)and (20) |
Supply Chain Management Process |
(12), (14), (21) and (21) |
Restrictions on the Acquisition of Specialty Metals/Articles containing Specialty Metals (10 U.S.C. 2533a) |
(c)(19) |
Subcontractor/Vendor Closeout Process |
(c)(4) |
Long-Term Purchasing Arrangements |
(c)(23) |
Handling Change Orders and Modifications |
(c)(15) |
Intra/Inter-Company, Affiliate, or Subsidiary Transactions |
(c)(5) |
Recommendations for a Successful Contractor Purchasing System Review (CPSR) Review
- Make sure policies and procedures are up to date and adhere to the requirements of FARS and DFARS.
- Establish forms and techniques to document the procurement.
- Ensure appropriate flow-down clauses.
- Ensure terms and conditions are current and protect both your company and government’s interests.
- Use a checklist to ensure required documentation is included in procurement files.
- Make sure files are organized and consistent.
- Train buyers and other employees that are involved in the procurement process on FAR and DFARS requirements, adequate documentation, price analysis and negotiation techniques.
- Consider independent compliance assessments to confirm that policies, procedures, and practices are compliant or to identify and remediate gaps.
Negative Impact of Failing a Contractor Purchasing System Review (CPSR)
Failure to pass a Contractor Purchasing System Review can result in a withholding or withdrawal of your company’s purchasing/subcontracting system. This would result in your company’s inability to issue a subcontract without first seeking written approval (Advanced Notification and Consent) from the ACO. This can cause:
- Delays in deliveries and increase in overhead expenses.
- Substandard prime contract performance and increased government oversight.
- Loss of Revenue and delayed billings/collections.
- Disqualification on competitive request for proposals.
- Impact to the “bottom-line”
Redstone GCI is available to assist contractors in assessing their current purchasing system policies and practices to ensure they meet the DFARS requirements. Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Government’s expectations in applying FAR requirements.