Contractor Purchasing System Review (CPSR) Guidebook

1 DEPARTMENT OF DEFENSE (DOD) DEFENSE CONTRACT MANAGEMENT AGENCY (DCMA) Contractor Purchasing System Review (CPSR) Guidebook June 14, 20191 This Guidebook revision supersedes all previous versions and has been C. ObermeyerDirector, Business Operations CenterDefense Contract Management AgencyChange #DescriptionDocument SectionChangeDate1 Validation of Contractor actions will be conducted as acomprehensive Review when a Contractor 's System is in a disapproved state for more that 12 category updated to align with new Simplified Acquisition and Chain Management (SCM) Job Aid updated to emphasize the requirements of DFARS 242/26/2019 Change LogRelease Date.

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3 51 -04'00'12 Add DFARS , as appropriate in SCM Job of Contents Part 1 Introduction .. 5 Scope of Guidebook ..5 Application of Guidebook .. 5 Definitions .. 5 Types of CPSR Reviews .. 6 Initial / Comprehensive Review .. 6 Special Review .. 8 Follow-Up Review ..9 Part 2 Planning for a Responsibilities .. 9 CO Responsibilities .. 9 DCMA CPSR Group Responsibilities ..10 Scope of the CPSR .. 13 Part 3 In-plant CPSR .. 14 Entrance Conference .. 15 Conduct In-Plant Review .. 15 Exit Conference .. 16 Part 4 CPSR Report .. 16 CPSR Report.

4 16 Contractor s Effectiveness in Major Purchasing Areas .. 17 Contractor s Current Effectiveness in Major Purchasing Areas .. 17 Part 5 Contractor s Approved Purchasing System .. 18 Part 6 Appendixes for 18 Policies and Truthful Cost or Pricing Data/Truth in Negotiations Act (TINA)..22 Cost Accounting Standards (CAS)..25 Prior Consent and Advance Small Business Subcontracting Protecting the Government s Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Limitation on Use of Appropriated Funds to Influence Certain Federal Transactions Certification (Anti-lobbying).

5 40 Defense Priorities and Allocation System (DPAS) Federal Funding Accountability and Transparency Act of Counterfeit Parts Mitigation and Price Source Make-or-Buy Limitation on Pass-through Internal Review /Self Mandatory FAR and DFARS Flow Down Requirements/Terms and Purchase Requisition Commercial Item Subcontract Procurement Supply Chain Management Buy Restrictions on the Acquisition of Specialty Metals/Articles Containing Specialty Subcontractor/Vendor Closeout Long Term Purchasing Handling Change Orders and

6 Intra/Inter-Company, Affiliate, or Subsidiary 4 Contractor Purchasing System Review (CPSR) PROGRAM FAR , FAR , and DFARS Introduction of Guidebook This Guidebook provides guidance and procedures to Government personnel for evaluating Contractor Purchasing sy stems and preparin g the CPSR reports. Application of Guidebook While the prime Contractor has the responsibility of managing its Purchasing System , the DCMA CPSR Team is responsible for evaluating the Contractor s overall Purchasing System to ensure that it is efficient and effective in the expenditure of Government funds and in compliance with contract requirements.

7 The objective of a Contractor Purchasing System Review (CPSR) is to evaluate the efficiency and effectiveness with which the Contractor spends Government funds and complies with Government policy when subcontracting. The Review provides the administrative contracting officer (ACO) a basis for granting, withholding, or withdrawing approval of the Contractor s Purchasing System . The CPSR shall be conducted in accordance with this Guidebook , DCMA instruction 109, the Federal Acquisition Regulation (FAR) subpart , and the Defense Federal Acquisition Regulation Supplement (DFARS) subpart A CPSR is conducted when a Contractor s annual sales to the Government are expected to exceed $50M in a 12 month period.

8 These Government sales include all Government contracts/subcontracts minus those competitively awarded firm-fixed-price, competitively awarded fixed-price with economic price adjustment, or sales of commercial items pursuant to FAR part , the ACO shall determine the need for a CPSR based on, but not limited to, the pastperformance of the Contractor , and the volume, complexity and dollar value of subcontracts. All CPSRs,except a Follow-up Review , are predicated on a Risk Assessment (RA) Definitions Subcontracts any contract as defined in FAR subpart entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract.

9 It includes but is not limited to Purchase Orders (POs) and changes and modifications to POs. Subcontractors any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime Contractor or another subcontractor. Sole Source Purchasing means a contract for the purchase of supplies or services that isentered into or proposed to be entered into by a contracor after soliciting and negotiatingwith only one source. Contractor Purchasing System Review (CPSR) the complete evaluation of a Contractor s Purchasing of materia l and services, subcontracting, and subcontract management from development of the requirement through completion of subcontract performance.

10 Procurement Analyst (PA) a Government functional specialist who may assist a Team Lead (TL) with a CPSR Review or may be assigned as the TL. Te am Lead (TL) the designated PA assigned to manage the CPSR and lead the CPSR team. The TL is the CO s primar y POC and is responsible for the performance and completion of the Review , preparation of the report, and Review of Contractor responses/CAPs. Contracting Officer (CO) the designated Government representative authorized to request a CPSR per FAR and issue the initial a nd/or f inal determinations for approval or disapproval of a Contractor s Purchasing System .