Thursday, June 13, 2019

DoD Proposes to Double the CPSR Threshold

The Defense Department has issued a proposed rule to increase the CPSR (Contractor Purchasing System Review) threshold from $25 million to $50 million in sales to the Government.

Currently, there are about 670 defense contractors that are subject to DCMA's (Defense Contract Management Agency) CPSR reviews (at least) once every three years. Increasing the threshold from $25 million to $50 million will reduce that number by 20 percent or 133 contractors.

The Defense Department maintains that the $25 million threshold has not been increased since 1996 and by doubling it now, roughly equates to inflation over that same time period. Under the proposed rule, contracting officers will retain the flexibility to lower that threshold if determined to be in the best interest of the Government.

The proposed rule will certainly reduce the burden on small contractors and, according to DCMA, will allow a more efficient and effective use of CPSR resources at larger contractors where more taxpayer dollars are at risk. Larger contractors, we're certain, are thrilled at the prospect of additional oversight. We guess that its too much to expect that if DCMA's work goes down by 20 percent that there would be a commensurate reduction in DCMA staffing.

There is one downside for small contractors. There could be additional requirements for those firms to request consent to contract from ACOs (see FAR 52.244-2, Subcontracts). With approved purchasing systems, the consent to subcontract requirement does not apply.

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