What is a CPSR?
A CPSR, otherwise known as a contractor system purchasing review, is conducted by the DCMA and is intended to evaluate the efficiency and effectiveness of a Government contractor’s procurement policies, procedures, and practices.
It is designed to compare a company’s policies and procedures to the Government’s requirements, as well as to the work product being produced by the company. It ensures that contractor purchasing systems comply with local and international laws and regulations while still remaining efficient in their application. CPSRs are an essential tool for ensuring that taxpayer funds are spent properly.
What are the Different Types of CPSRs?
There are three different types of contractor purchasing system reviews, and they are performed on a circumstantial basis:
- Initial/comprehensive review
- Special review
- Follow-up review
Each review is carried out in different circumstances.
An initial review is first conducted when the DCMA determines that a contractor meets a certain risk threshold. This threshold consists of many factors, some of which are subjective, but in general, contractors doing $50M in business with the government may be subject to an initial CPSR. A comprehensive review is then conducted every three years after a contractor has their initial CPSR approved. Both initial and comprehensive reviews review a 12 month period of purchase documentation to determine a system’s adequacy. The DCMA’s review is designed to check for adequate system descriptions, government-approved procedures and purchasing policies, the presence of an organization plan in order to establish clear authoritative and responsible boundaries, proper documentation, the insurance of fair and reasonable pricing, the maintenance of internal audits or management reviews and employee training procedures, the maintenance of sub contractual surveillance in order to ensure that order is being kept, and the enforcement of policies prohibiting the acceptance of gifts/gratuities, among other things.
In some cases a special review may be required. A special review is focused upon the correction of specific weaknesses (typically identified in an initial or comprehensive review) or based on major changes to an approved purchasing system.
Follow-up reviews are conducted after a CPSR has resulted in “major” findings. When this happens, the contractor is notified that a Corrective Action Plan is required. A follow-up review is used to determine whether or not the corrective action plan has been implemented. Follow-up reviews can generally be made as soon as notification has been received that any inadequacies or deficiencies faced by the contractor have been resolved. It is important to note that a follow-up review will be undertaken only if a previous review (either special or initial/comprehensive) has been completed within the last twelve months. Otherwise, a full comprehensive review may be performed.
Why do I Need to do a CPSR?
Federal contractors often ask how they can request a CPSR from the DCMA. Our answer is always first “You can’t – it’s dependent on your Contracting Officer and the DCMA.” The second answer we give is typically “Be careful what you ask for!” CPSRs expose contractors to a host of new requirements, typically driving large increases in administrative costs. It’s true that having an approved procurement system gives contractors flexibility, but it comes at a steep price!
If your company finds itself in a position where it’s growing toward that $50M in annual government business, it’s smart to take steps now to prepare. The DCMA will be looking back at 12 months of purchase data, so the sooner you start, the sooner you’ll have enough data to pass.
SpendLogic helps businesses of every size prepare and pass their CPSRs. Our tools automate tedious tasks and provide step-by-step guidance on daily procurement documentation requirements. SpendLogic is the fastest way to get personnel, policies, and procedures up to speed to pass your CPSR.
- Contractor Purchasing System Review (CPSR) Guidebook. (2019, February 26). Retrieved February 3, 2020, from https://www.dcma.mil/Portals/31/Documents/CPSR/CPSR_Guidebook_022619.pdf
- What is a CPSR and Why Should You Care? (2019, August 1). Retrieved February 3, 2020, from https://boostllc.net/cspr-1/