According to DFARS, there are 6 contractor systems subject to determination of adequacy. Three of which, the DCAA is responsible for auditing: Accounting, Cost Estimating, and Materials Management & Accounting System (MMAS). And the other three, the DCMA performs the reviews: Earned Value Management System (EVMS), Government Property, and Purchasing System (See our write up on the subject HERE). Today, we focus on the CPSR.
According to the DCMA: A “Contractor purchasing system review (CPSR)” means the complete evaluation of a contractor’s purchasing of material and services, subcontracting, and subcontract management from development of the requirement through completion of subcontract performance.
– A CPSR is conducted when a contractor’s annual sales to the government, resulting in the award of government prime contracts and subcontracts, is expected to exceed $25 million in the next 12 months.
– Ultimately, the administrative contracting officer (ACO) shall determine the need for a CPSR based on, but not limited to, the past performance of the contractor, and the volume, complexity and dollar value of subcontracts. The review provides the ACO a basis for granting, withholding, or withdrawing approval of the contractor’s purchasing system.
– All CPSRs, except a follow-up review, are predicated on a Risk Assessment (RA) evaluation.
In a write up by our partners over at Capital Edge Consulting (website), take a look at the 12 purchasing system essentials that every company must consider as they assess their system and prepare for their next CPSR: Link here.