Are Your Purchasing Policies & Procedures Compliant With DFARS 252.244-7001(c)?
A Contractor Purchasing System Review (CPSR) begins with your policies and procedures. They are the foundation of your procurement system upon which the Department of Defense (DoD) can rely to spend Government funds effectively, efficiently, and in compliance with regulations and laws. Two of the primary authoritative regulations for a CPSR are DFARS 252.244-7001, Contractor Purchasing System Administration and FAR Subpart 44.3, Contractors’ Purchasing System Reviews.
Are your policies and procedures adequate, up to date, and do they include all of the requirements outlined in DFARS 252.244-7001(c)? Do they ensure the Government’s interests are protected and all contracting requirements are being met? If your response is other than, HECK YEAH, please continue to read.
The significance of policies and procedures in a CPSR can be understood with the following must-haves.
DFARS 252.244-7001(c) Must-Haves
- Compliance: DFARS 252.244-7001(c), Contractor Purchasing System Criteria lays out 24 criteria your purchasing system must have. Specifically, DFARS 252.244-7001(c)(1) states that you shall have an adequate system description including policies, procedures, and purchasing practices that comply with the FAR and DFARS. Click here 252.244-7001 to see a list of all 24 criteria. DCMA CPSR’s Guidebook includes 30 Job Aids used by DCMA auditors when conducting a CPSR.
- Consistency: Do you practice what you preach in your policies and procedures? Your policies and procedures should provide instructions and directions for the day-to-day operations of your procurement personnel. They outline the steps to be followed, specify roles and responsibilities, and define the necessary documentation. These should be organized and accessible to all procurement personnel. Consistency in practice and compliance with policies and procedures will ensure smooth operations, reduce mistakes, and enhance accountability during the purchasing process. If you have a few rogue buyers who can’t be bothered with following policies and procedures, you will certainly have issues when DCMA audits their files.
- Risk Mitigation: Having robust policies and procedures and consistency in adherence to those policies and procedures allows contractors to identify and mitigate potential risks associated with a company’s purchasing activities. Some of these risks are related to missing or outdated policies, especially with regard to threshold values, fraud, conflicts of interest, public law violations, or inadequate supplier performance. Your policies and procedures should demonstrate a commitment to managing risks effectively.
- Auditability: If your policies and procedures are clear, concise, organized, and well-documented, internal and external auditors will be able to follow the life cycle of a procurement with ease. Auditors will compare your procurement practice, via file documentation, against your procurement policies and procedures. Documenting the story of your procurement is of utmost importance and is what auditors use to ensure you are compliant. If your documentation does not show the cradle to grave activity of a procurement, you’ll likely receive findings during your audit.
- Efficiency and Cost Savings: If your policies and procedures are effective and streamlined, you, your company, and the government customer benefit from increased efficiency and cost savings. These efficiencies can get a supplier on contract quicker, which translates to improved supplier and customer relationships and better utilization of company resources. In other words, buyers aren’t spending the majority of their time with archaic, convoluted, or manual purchasing processes.
- Continuous Improvement: Policies and procedures should be reviewed, at a minimum, on an annual basis in order to identify new and revised laws and regulations which may impact policies, procedures, and practices. Improvements to your purchasing process ensure it remains effective, compliant, and adaptable to evolving customer needs and government regulations.
A few recommendations you may wish to consider as you review your own company policies and procedures:
- Don’t have regulatory definitions or thresholds in multiple places within your policies and procedures. Rather, reference the citation or regulation where the definition is found, even consider adding a hyperlink to the definition in your policies and procedures. This will ensure a buyer is looking at the most current definition at the time they are issuing an award and you don’t have to worry about making sure you updated a definition everywhere throughout your policies and procedures.
- Don’t reference a specific dollar threshold in your policies and procedures. For example, rather than state in your policies that a cost analysis is required for a FAR Part 15, non-commercial, non-competitive procurement over $2 million, have an exhibit to your policies with all applicable thresholds and regulatory references and effective dates so that when a threshold value is updated, all you have to do is make one update to the exhibit.
- Check for DoD Class Deviations that might have an impact on your policies and procedures. These don’t always show up as revisions to the FAR or DFARS right away. You can find these at Class Deviations (osd.mil).
SpendLogic recommends using SpendFile for your organization’s procurement documentation needs. SpendFile embeds SpendLogic’s Price Analysis, Source Justification, and Commercial Determination tools within it which ensures consistency in the way buyers are documenting files; ensures risks are being mitigated due to triggered requirements populating based on contract type, dollar thresholds, etc.; ensures auditability based on company peer/management/compliance review processes and identifies, at a granular level, the areas and individuals of compliance concern; creates efficiencies and cost savings because the tool has built in logic-based Q&A so buyers aren’t guessing whether something on a paper checklist is required for their procurement; and SpendLogic professionals monitor and update industry to ensure its clients and tools align with the most current regulations.
Whether you are a small or large business, SpendFile can help your organization comply with government procurement requirements. Give us 15 minutes to show you how. Schedule a demo today.