New DCMA Guidebook on Purchasing Systems

UPDATE 2: The May 9, 2017  CPSR Guidebook discussed below has been replaced with a March 1, 2018 version.

UPDATE: The January 18 2017 CPSR Guidebook referenced below has been replaced with a May 9, 2017 version.

Government prime contractors have the responsibility of managing their purchasing program. DCMA (Defense Contract Management Agency) and specifically DCMAs' CPSR (Contractor Purchasing System Review) teams 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.

CPSRs are conducted at contractors where annual sales to the Government (including subcontracts) are expected to exceed $50 million in a 12 month period. The ACO determines the need for a CPSR based on various factors such as past performance, volume, complexity and dollar value of subcontracts. The ACO must perform a risk assessment at least once every three years to determine whether a CPSR is needed.

The requirements for an adequate purchasing system are found in FAR 44.3, 44.202-2, and DFARS (DoD FAR Supplement) 244.3. DFARS 252.244-7001(c) contains a listing of 24 criteria that a system must meet in order for it to be considered adequate.

DCMA performs various levels of review. First there is the Initial/Comprehensive review which is exactly what the title states. Both reviews cover the 24 criteria. The next level down is a "Special Review" which investigates specific weaknesses identified during contract performance. Finally, there is the "Followup  Review" which examines the sufficiency of contractor corrective action to previously disclosed purchasing system deficiencies.

DCMA recently published an update to its CPSR Guidebook (January 18, 2017). The first fifteen or so pages deal with internal policies for performing and reporting on CPSRs. The good stuff is in the 25 Appendices which takes up the bulk of the 100 page Guide. These appendices roughly correspond to the 24 DFARs criteria for an adequate purchasing system but go much deeper into the fundamental requirements. For example, the appendix on "Limitation on Pass-Through Charges" includes an introduction, a section citing regulatory references, the applicability, exemptions, contractor practices, policies and procedures, and best practices.

The DCMA CPSR Guidebook can be a very valuable resource for contractors (and subcontractors) for establishing their own purchasing systems and for evaluating existing systems against DCMA criteria for adequacy. Download it here.