CPSR 101

A CPSR, otherwise known as a contractor system purchasing review, is intended to serve multiple purposes for multiple parties, and is an indispensable tool for any business owner to utilize. Contractor system purchasing reviews, which are orchestrated by the DCMA, are intended to ensure fair prices among competitors and thereby prevents any singular monopolization from occurring. In this manner, they make it possible for multiple corporations to profit from the same niche or industry, and government regulations perpetuating this idea only further ensure that there is always some room left in any market. They are also designed to ensure that contractor purchasing systems comply with local and international laws and regulations while still remaining efficient in their application and adequately profitable. These reviews even go so far as to prevent corruption from occurring within even the highest ranks of a company by providing impartial accountability – everyone is under scrutiny, including the tenured worker who may or may not have been pocketing funds for their family’s expensive vacations and lavish lifestyle for the last decade. This fact makes CPSRs an essential tool for ensuring that money is moving in the right direction – if funds happen to be missing or you’ve had an inexplicably bad fiscal year, ordering a review of your purchasing system is a great place to start looking for issues.

There are three different types of contractor purchasing system reviews, and they are performed on a circumstantial basis. They are known as the initial/comprehensive review, the special review, and the follow-up review. Each review is carried out in different circumstances.

 An initial review is conducted as a complete analysis of a contractor’s purchasing system, where a predetermined checklist is run through and compared to the attributes of a company. A comprehensive review is then performed if the contractor in question has an approved purchasing system implemented. Comprehensive reviews are conducted every three years upon the basis of implied necessity. Both initial and comprehensive reviews 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. Because they are so thorough and encompassing, oftentimes, only an initial or comprehensive contractor system purchasing review will be needed to ensure that purchasing systems’ legal compliances and monetary efficiency percentages stay up to par.

However, in some cases a special review may be needed to accomplish this goal. A special review is any review with a focus upon the identification and eradication of specific weaknesses linked to a contractual purchasing system. This kind of review also uses a checklist-based approach, and includes the ratification of weaknesses exposed via an initial or comprehensive review, through further review of subcontracts, as a result of major changes in a company’s purchasing policies, as a result of changes in the amount or type of workload, and the awarding of an expensive contract to a vendor lacking a previously reviewed purchasing system. Some examples of situations where a special review would be required in addition to an initial/comprehensive review would include a scenario in which a company decides to work with a new vendor for a very important job, but fails to recognize that this vendor lacks an adequate purchasing system. This results in a loss of funds on both ends, and this situation can be prevented through undergoing a special review.

If a situation requires that a follow-up review be made, it is because follow-up reviews are performed after a contractor’s purchasing system has been disapproved, and the purpose of a follow-up review is to determine whether or not a plan of corrective action has been implemented on the part of the contractor. This kind of plan is called a CAP, or Corrective Action Plan. It also utilizes a checklist-based approach, and follow-up reviews check for the implementation of a corrective action plan. Follow-up reviews can generally be made as soon as notification has been received that any inadequacies or deficiencies faced by the contractors has been resolved. This notification will usually occur ninety or so days after the CAP (corrective action plan) has been implemented. It is also 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 will be performed, because weaknesses are only relevant to time – what once may have been a company’s biggest weakness could now be a non-issue, and offering a comprehensive review to companies who haven’t been evaluated in over a year helps both parties to save time and money identifying only immediately relevant company problems.

CPSRs, otherwise known as contractor purchasing system reviews, are incredibly important for any business interested in ensuring their own continued financial sustainability and prosperity. Because they offer such a comprehensive range of fixation for problems that could otherwise cripple or even bankrupt a contracting agency, obeying the law in a situation where said contracting agency is on the verge of closing can only be to the benefit of all involved. CPSRs offer businesses and contractors guidelines and the tools necessary for them to effectively mend their purchasing practices, corporate policies, and pricing schematics. Receiving this kind of input on a business model or strategy can be a game-changer for any struggling agency, or even an agency that simply wants to elevate itself to a higher echelon of financial gain. There are three kinds of contractor purchasing system reviews (initial/comprehensive, special, and follow-up), and each type offers differentiating focuses and services to businesses struggling with different subsets or groups of issues. CPSRs are important because they save contracting agencies and provide a sustainable framework to struggling businesses as to how they need to improve in the future.

To learn more about CPSRs check out our Guide to CPSR and Federal Procurement Compliance.

References:

• 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/