This presentation was delivered 6/24/2020 at ProPricer’s Virtual GCP summit. I walk through some CPSR basics and then get into examples of “sure-fire techniques” for receiving findings in a CPSR.
Okay. Welcome, everybody. My name is Patrick Mathern. You are attending “How to Fail Your Next CPSR.” All right. So basic agenda, what we’re going to do here today, I’m going to talk to you a little about who I am. My company is SpendLogic.
I’m going to talk to you about what we do, and you’re going to see some references to the company, you know, throughout the presentation. But I’m really not going to be talking about that too much. I’m going to get into the basics of a CPSR. So, I’m not going to dwell on this, but for those of you that may or may not understand what a CPSR is all about and how it might apply to you, I’ll give you a very high-level overview of what that looks like.
Then I’m going to get into how you can fail your CPSR, and failure is all about significant findings, right? We’re going to talk about what that means. And I’ll give you some examples of some proven failure methods. So, and then I’ll have resources and some links. By the end of the day today, I guarantee you will fail your CPSR. If you follow the tips that I’m going to provide you here today, money-back guarantee, you will fail your CPSR.
I personally guarantee it. I will give you your money back from the time and the money that you’ve spent on today’s presentation if you don’t fail your CPSR. So, you know, you don’t often see a money-back guarantee in this industry, but there you go. All right. So a little introduction about myself. My name is Patrick Mathern. I live in sunny Santa Barbara, California.
And I am the president and founder of a company called SpendLogic. So you can see my email address there, [email protected] Again, if you have questions that we don’t get to today, feel free to reach out to me directly. But basically, think of SpendLogic as TurboTax for price analysis. It’s built for government contractors, both primes and subs.
And we do price analysis, commercial item determinations, and source justifications. We started the company back in 2008 as consultants. And we do cost analysis, we do price analysis and different training and tools for folks. But then we expanded in 2016 with SpendLogic.
We started that project in 2014, used it internally, and then started finally, you know, offering it for sale in 2016. My background is at Boeing and Microsoft. So, I was a procurement cost analyst at Boeing. And then I went off to Microsoft and lived another life for a little while and learned a little bit about software.
And so, here we go, put it together, you get SpendLogic, which is price analysis and software. All right. Let’s keep going. So, basic idea behind a CPSR, okay? Is that you’ve got your prime contractors, and they are asking the government, “Can we spend some money? We want to spend your money.”
Right? I’ve got a couple of big prime contractors here on the screen. There are lots of contractors. And basically, they’re saying, “We want to spend money. “The government says, “Well, how do we make sure that you’re going to spend it responsibly?” And the more they ask, the more they ask, the DCMA finally comes back and says, “Ah, I can’t take it. I’m not going to give you, you know, $20 every time you want to put gas in your gas tank. So, I’m going to go ahead and review your purchasing system, okay?”
That way, these companies can prove that they are being responsible with taxpayer dollars, basically. And let me get into, you know, when this would occur. By the way, I like my…looks like I have, like, fox ears or something if I put my head just right on this logo.
But so the actual CPSR, what it stands for is Contractor Purchasing System Review. It is not certified purchasing system review, although your purchasing system basically gets certified. Just little-known fact. So this applies to contractors that meet what the DCMA uses as their risk criteria. So, first of all you should have about $50 million or more in anticipated government prime contracts in the next year.
If you pass that, then they’re going to look at how your contracts are comprised. So, where things get really sticky with purchasing is when a contractor is letting contracts and subcontracts that are not competitive. So, as you know, the government buys a lot of very specialized stuff, and in those cases, which are single and sole source, you’re buying them from one supplier, the ability to analyze price and determine whether price is reasonable is very difficult if you can’t compete it.
So, in a CPSR when they look at risk criteria, they remove all the competitive awards. So, if everything that you’re doing is competitive, which means that there are multiple people that can provide adequate pricing, and you can use market forces to make sure that you’re getting the best price, then that really shrinks what’s called your universe, the number of POs that are actually going to be included in your CPSR.
If you want to learn a little bit more about the CPSR and you want to actually look in the DFARS, which is the defense supplement to the FAR, and look at what the DFARS says, which I would recommend you all do if you are involved in the CPSR, check out 252.244-7001. You can look at the criteria.
We’re going to look at some of that here today. But, you know, whenever I provide training to folks, I recommend they go directly to the source. I can tell you my spin on it. But as you know, you’re going to have your own spin, and that’s the way to do it. Go look at the actual source documentation. So, first of all, if your company has never had a CPSR before, and you crossed this $50-million threshold, and you’ve got a lot of single or sole-source procurements, then you’re going to have an initial CPSR, which is basically they go, you know, soup to nuts and look at absolutely everything.
Every three years after that, they’re going to have a follow-on CPSR, which is a little less intrusive, but I wouldn’t say not intrusive at all. Anybody that’s been through CPSR knows that it’s a lot of work, all right, just to prep for it.
And even filling out the initial risk documentation is quite a bit of work, and it’s pretty confusing. So, it’s a big job, if you don’t have a CPSR, or you’re not subject to it, or you don’t have a certified procurement system, don’t cry too loudly. If it creates a lot of work for you and for the DCMA, then your day is coming, and you will eventually be subject to a CPSR.
All right. So, a little pop quiz to start out with here. You know, how do you fail, right? How are you going to fail your CPSR? Well, it’s all about significant deficiencies. I’m going to define significant deficiencies in a second. But kind of to start out with, you know, A, B, C, or D, which of these could be an area of significant deficiency?
We’re all familiar with public law violations. You’ve maybe heard about policies and procedures, sole source documentation, commercial item determinations, you know, which of these are considered significant? Well, it’s not really a fair question, okay? It’s a little tricky. So, there’s E, and that was outside of your screen.
You couldn’t see it. But if that’s what you said, then you’re on the ball today. Congratulations. So, all of these could be potential significant findings, okay? If you have a public law violation at the top of the list, which I’m sure some of you chose, that’s always going to be a significant deficiency.
Anytime that your system is out of sync with public law, you’re going to have a significant deficiency, and it’s going to be a big deal. So, if you want to start anywhere in getting ready for a CPSR, that’s the first place to start. Make sure that you’re aligned with all of the required public laws. So, let’s get into these significant deficiencies, okay? If all of those things could be, then how do you decide whether something is or is not?
Well, a significant deficiency definition basically states that it’s a shortcoming in your system…a shortfall in your system that requires that the DOD suspends their belief in the adequacy of your system. So, it doesn’t allow them to make decisions based on purchasing in your purchasing system, you know, based on whatever it is that they’ve found.
So, you know, if you look at this definition, it’s anything that is needed for management purposes, and that, you know, they can’t rely on that information. So that could be a wide range of things. So, you know, we have clients that come to us and say, “Listen, we just want to look at the areas that could be a significant deficiency.”
The punchline here is that, you know, whatever information your system is providing has the possibility of being a significant deficiency depending on what kind of information it’s providing and how bad it really is. Okay? Having said that, there are some areas that are more typical than others. Okay? This is a little old.
It’s from FY18, but it holds. Pretty much every year the findings are the same. They might juggle around a little bit in the order. But the top 10 findings on the left, you see significant. And, by the way, material is another way to refer to significant. That’s the way DCMA typically talks about it. So, material findings are on the left, non-material findings are on the right.
These are the top 10 in each category for FY18 as provided by the DCMA. And you can see there at the top of the list on the left-hand side is cost and price analysis. There are some…anything that you see on the left list that is highlighted in yellow is also present over in the right side.
Okay? The non-material. So this is just kind of an illustration showing that, you know, any of these findings could be material or non-material depending on how you look at it and depending on what kind of impact it has on your overall system. Also, to note, where you see the little symbol for Spendlogic, the little circle with a checkmark in it, those are areas where we focus on, and I’ll talk more about these as I walk through some methods for failing your CPSR.
All right. For those of you of the David Letterman Generation, Top 10, right? He had a top 10 list every night of top 10 whatevers. And so, we have the top 10 proven failure techniques in a CPSR. Number 10, upon introducing yourself for the first time when you sit down for a CPSR or even in emails, promptly insult your CPSR team.
All right. Now, this is a little over the top. Nobody’s going to insult their CPSR team, but there is something to be said for entering your CPSR with a sense of respect but also just kind of, you know, being cordial and being open with your CPSR team.
It doesn’t mean you have to fall over backwards to give them more than what they would want. You don’t want to, you know, plate in gold the findings or tell them exactly where your findings are to begin with by any means. But you should be cordial. Listen, these folks are, you know, people, just like us. They sit in the DCMA, they do a lot of these every year, and one of the things that they have to do is they go from contractor to contractor, and they typically get put in a little room that’s filled to the brim with written documentation that may have…some of it’s going to be standardized.
A lot of it’s not going to be standardized. They’re going to be searching, and hunting, and pecking. And they know that everybody they deal with while they’re on-site is going to be either scared or come to them from a position of defensiveness. So, you know, you can really make things go a lot smoother if you kind of approach things with that realization in mind.
And, you know, everybody’s there to do the right thing, the auditors included. So, you know, make it easier for them if you can, and make it somewhat enjoyable. It’s not an enjoyable job for a lot of people, but make it as enjoyable as you can. Number nine, award absolutely everything via single or sole source. Another way of saying this is don’t compete.
Okay? Listen, this is kind of the whole…it’s a big part of CPSRs, right? So, there’s a distinct preference for competition in contracting when you’re working with the Department of Defense. And so, you know, the reason for that is because competition basically results in a price that is fair and reasonable, more or less by definition.
When you have people buying and selling in the open marketplace, in the commercial marketplace, right, that’s like competing every single day. So that is an example of competition. As well as, you know, a formal competition that you’re documenting with a couple of bidders or whatever it is. The magic number that’s kind of thrown around is 60%.
If you are competing around 60% more or less of your procurements, then, you know, the CPSR team, they’re going to be happy with that, right? If you’re significantly below, they’re going to have a talk with you, and it’s going to be some sort of a finding.
If it’s significantly below, and in this example, which is a little ridiculous, if your competition is zero, then you’re going to have a problem, okay? So, avoid doing everything single or sole source, doing competition, adequate competition, is your quickest get-out-of-jail-free card.
Especially when you start dabbling in things like cost analysis, things that are over $2 million, right? If you just competed, then you get out of all the extra requirements for certified cost of pricing data, which is, if you don’t have a team that’s already doing that in-house, it’s something you’ll probably have to, you know, hire out, to be quite honest, because it’s an area that you can get findings in very quickly.
And by the way, it’s a public law thing. So anyways, avoid doing everything single or sole source, work some competition in there, and get it to 60% or higher if you can. Number eight, instead of cost analysis, which I just mentioned, document price analysis for everything over $2 million.
Okay. Now, I need to caveat this. If everything that you’re buying, even if it’s over $2 million, has some sort of exception, right, it’s competed, or the price is set by law, or it’s a commercial item, those are kind of some of the big ones. Although I don’t know how often set by law is one.
But if it’s competed or a commercial item, right, then you get out of the requirement for certified cost of pricing data, and you can do price analysis. However, a lot of companies just kind of do a price analysis, and they don’t get the required data from the supplier.
And they call it a cost analysis. And this is going to be a major finding very quickly. Auditors love to look at everything over 2 million bucks, over the certified cost of pricing data threshold. And the first thing they’re going to do is see if you’ve done cost analysis and obtained certified cost of pricing data. So, one way to look at this, here’s a price analysis, okay?
This is for some widget. You’re all probably familiar with this. So this is one that’s actually done in SpendLogic, our online price analysis tool, which we offer to federal contractors. But the basic idea here is it’s short, it’s a couple of pages. You can see there’s some math, there’s some explanation of what that math is. There’s a pretty graph.
And it basically says, “Okay, here’s what price I think is reasonable compared to the proposal. And here’s how I did the math to get there.” You don’t get into the individual cost elements. You don’t go to the supplier and ask for cost element summaries or support behind those. And you don’t even have to break out profit from any of your costs.
So, it’s pretty high level. This is what you do basically day in and day out. You go to the store to buy a gallon of milk, you see it’s 15 bucks, you do a quick price analysis, and you say, “Nope, that’s pretty ridiculous. I should be paying 3 to 5 bucks, or whatever.” Right? That’s the price analysis, quick and dirty. Now, cost analysis, this is one that we did for a client. So, this is the consulting side.
This is a cost analysis, okay? And I know that you can’t get it, you can’t see the details, that’s by design. But it’s a very, very in-depth and thorough review of every cost element that’s in the proposal. So, you know, if I was to zoom in on this, you would see that this includes some discussion of labor.
And within labor, we get into every labor hour and labor estimate. So, if you’ve got engineering, manufacturing, testing, you know, QA, then we would speak to each and every one of those. The supplier would have to provide certified cost of pricing data that talks to how those estimates were built, and we would have to do an analysis on each of those on the hours. Then we’d turn the page over, and we also do an analysis of all their rates and factors.
So we get into the direct labor rates, you look at the overheads and get into their general ledger, you dig into their accounting system. So, I think, hopefully, I’ve left you with the impression of why a price analysis isn’t sufficient in this case. By obtaining and reviewing your certified cost of pricing data from your supplier, it’s going to be very obvious to the CPSR team whether you’ve done this right or not.
This is the type of information that they’re going to be looking for, a full write-up and explanation of all of the cost of pricing data that you have obtained. By the way, not just the cost analysis, you’re also going to have to obtain that signed certificate that says, you know, “I, the supplier, have provided everything, and it is current, accurate, and complete as of this date.”
And, you know, have them sign that and put it into your files. So if you’re just doing price analysis over $2 million and it’s not competed or a commercial item, then it’s likely that you would have some sort of a finding, and it would be pretty major. Anything that you do in TINA, Truth and Negotiations Act, is a significant finding.
I’ll say one more thing about this before I move on. This can kind of get uncovered other ways as well. So if you’re doing commercial item determinations and you’re calling something commercial, a commercial item determination is an exception from TINA. So you don’t have to do certified cost of pricing data if it’s commercial.
However, having said that, if your CID, or your commercial item determination, is inadequate, or inaccurate, or just insufficient, then you are going to end up with a TINA violation, likely. So, this one, this is tricky. All right. You really got to be on the lookout for this. So if you have exceptions, make sure that they’re valid exceptions before you get into a CPSR.
Number seven, this one’s a good one. Conduct history on history on history on history price analysis. So this is a very popular, a favorite finding of CPSR auditors. It goes something like this.
They go into your price analysis reports, and they take a look at how you did your price analysis and the methodologies that were used. And this happens a lot, where, you know, back in the day, five years ago, it was competed or whatever. And then after that, you know, well, you write a history on history price or a historical price analysis report that says, “Hey, I competed it last time, and, you know, that’s sufficient. And I did a price analysis, you know, bringing it forward a couple of years, and we’re good.”
And that’s okay. There’s certain parameters that you have to, you know, keep it within, but for the most part, that’s alright, if the last time you competed it, you can do, you know, historical price analysis. However, where it all falls apart is where the next one, after the historical, then you do a historical on the previous, which was also historical.
And it keeps going. All right? So, I’m not going to call out names, but we have a lot of clients who when we first walk in, that’s happening, and that’s rampant. Now, why is that a problem? Right? Well, here’s…okay, bear with me, this is a little bit of a ridiculous example, and I don’t mean to inflame emotions here by any means, but let’s talk about hand sanitizer.
All right? If you went to amazon.com on March 1st or even April 1st of this year, you would see some ridiculous prices, okay? Now, I’m not saying that that price is fair and reasonable, but that is a commercial item that is a COTS item, and that is the price that everyone is paying at that time.
So if you need it, that’s what’s going to happen. That’s what it’s going to be. Now, let’s say that you did your competition, or you looked at market resources or at market comparables, and that’s what you came up with, okay? Got it. So that’s March 1st. April 1st, you did a history on history, same economic conditions, things are the same.
Okay. Got it. It’s probably the same price, and that’s probably okay. But what about later in the year? All right? Actually, I don’t know what it’s going to be later in the year, but even now, the price of hand sanitizer has dropped dramatically. If I was to do a history on history and I continued that forward into the future, then I would have…because of escalation, my price would only grow.
Right here it’s 53 bucks a bottle for 8 ounces, right? It would continue to grow, you know, until it just goes through the roof. In 5 years down the road, I’m paying $300 for hand sanitizer, at least showing that in my price analysis. Okay. A little ridiculous, but you understand the concept.
When you do history on history, you’re basically just updating for escalation, and it just grows over time. So you lose some of the value of doing a true price analysis and resetting for market conditions. That’s what they’re looking for, and that’s why they’re wary of these types of price analysis. So, that’s kind of a long story there, but the idea here is if you want a guaranteed failure or at least a guaranteed finding, make sure that you do all history on history on history.
Forget all the competition, forget all the other methods, and just do historical across the board. That will get you a finding, okay? Don’t do that. Don’t do that. Number six, this one’s a pretty simple one, all right? But if you want to get a finding, and by the way, this would be significant right off the bat, go ahead and just skip the day of award debarment check.
Now, this one is super easy to implement, okay? Most companies have taken care of this. There’s still some out there probably that haven’t. But the basic idea here is that, you know, you have to have it signed and, you know, have the supplier certified that they are not debarred, and that has to be on the day of award.
The way you do that is you require a signature on the PO and you have them respond, you know, with a copy of their signed PO, accepting it. And in that, it says, “I certify,” you know, “on behalf of such and such company that we are not barred from government contracts.” I mean, there’s special language, but you get the idea.
Go ahead and skip that if you’d like a finding. But otherwise, and probably most of you already have this in there, you know, go ahead and do that. It’s an easy one to implement and a significant or major finding if you don’t have it. Number five, this is also a good one. Just like history on history, this is one that CPSR auditors just eat up like cheesecake.
Cite substantial duplication of cost in your source justifications but don’t provide any calculations. Okay. So the story goes something like this. There are certain rationale methods in the FAR that are great for using…you know, you have to cite why you didn’t compete something. So, competition is preferred.
If you can’t compete it, then you need to write a non-competitive source justification. In that justification, and if you look in the FAR for the rationale for why something can…how you can adequately avoid competition, one of those is substantial duplication of cost. Basically, you’re telling the government customer, “Hey, I could go out and compete this. Yes, there are other people that could do this work, but the cost of competing would be far more than what I’m likely to recoup in any competition as a result. So the business case is not there, Government, for me to actually go out and do this competition. So, therefore, I didn’t compete it, I placed it sole source.”
Great. That’s a valid way to do it. However, if you want a finding, just do what people typically do and cite that without explaining or providing any calculations. And this is kind of what it looks like. Okay. So on the left-hand side, you see the inadequate version, okay? And this is very common.
This is what we typically see. So, competition was not conducted due to substantial duplication of costs. Okay? There’s my method. It’s estimated that $30,000 would be required to compete this part, therefore, the purchase order was awarded based on sole source. Basically, that says nothing. Okay?
It says it’s going to cost us 30 grand, but it doesn’t tell you how or why. And like I said, CPSR, the auditors, they just eat this up. They love it. They love finding it because most of the time, it’s not going to be discussed in enough detail for it to actually be valid.
So, on the right-hand side, you see an example of something that would pass the CPSR. And, again, this is built into SpendLogic, and I took this directly out of SpendLogic. You can use any format you want, but we automate it with our tools. And the basic idea, I don’t know if you can see this on your screen, I think you can, but it goes into detail under the Rationale section that says, “Hey, you know, the supplier has non-recurring of 5,000 bucks, and for X, Y, and Z reasons, we have internal non-recurring of $25,000, so the total is 30 grand.
It’s the same between the adequate and inadequate. It’s a $30,000 hit to non-recurring. But then SpendLogic takes it further and says, “Okay, we’re going to buy 8 over the next 12 months or so. The unit price on these things, they run about 10 grand a piece. So if you spread the non-recurring over those units, you would actually have to save 37.5% on the unit price of every unit purchased in order to make it up.
Okay. Well, that’s not going to happen. Competition isn’t going to result in 37.5% savings. I mean, I guess it could if you’re really being ripped off, but by and large, that’s not going to be the case. It explains, it tells the story exactly how you get to, you know, saying that you can’t save that kind of money.
Again, you can do this outside of SpendLogic, you can do it using any tool you want, but it’s just telling the story. Okay? If you want the finding, go ahead and just cite duplication of cost. Don’t give any math. Guarantee you’re going to have findings in that. It’s one of the easiest places for them to find something. If you don’t want that finding, go ahead and add some math to it.
Number four, working down the list here. Number four, cite unacceptable delays in source justifications, but don’t lay out the timeline. Okay. So this one is, again, in source justifications. So, you couldn’t compete, and to tell the story as to why you couldn’t compete, you said there’s unacceptable delays.
Okay, so what does that mean? Unacceptable delays, from the government’s standpoint, means that you couldn’t meet…the requirement is within the lead time. There’s no way to compete it because the customer needs it too quickly. Okay? Here’s what we typically see, okay?
On the upper left, you see the inadequate version. So, I mean, we see this all the time. Competition could not be conducted due to delays that would not fit the customer’s required schedule. The order was therefore required to be placed as sole source. So there’s basically saying, “We couldn’t do it because the customer needed it too quickly.” However, this doesn’t tell the story.
And what the CPSR team does immediately thereafter is they say, “Okay, when did you get the requisition? When did you place the RFP? What’s the lead time?” You know, they start digging in, and they start doing the math, and they say, “Oh, wait a minute, you received the requisition in time, but had you placed the RFP…instead of placing it two months after getting the requisition, had you placed it within a week or two weeks, then you wouldn’t be in this position, and you could have competed.”
So, long story short, what the government’s going to do is they’re going to say, “Is this really due to something that is caused by the customer? And if so, got it, great. But if not, then we need to, you know, talk to the contractor about how they need to fix their systemic problems.” On the right, you see a report that was generated in SpendLogic.
Again, so what it does is it basically asks you those questions. When did you get the RFQ? When did you get the RFP? What’s your lead time? How long does it take you to do a competition? And then it will give you a date, okay? In this case, it says you should have started 5/15, but this person didn’t receive the requisition until 6/1.
So, that’s the reason that they couldn’t do a competition. Now, this could point out other problems, you know, if the requisition just wasn’t released in time or whatever, then there could be other issues. But this will get you through that CPSR hurdle. Tell the story, make sure to include dates and timelines, because that’s what your CPSR team is going to be looking at.
Number three, write commercial item determinations that ignore market price availability. This one is near and dear to my heart, okay? I told you that I cut my teeth as a cost analyst at the Boeing company. We did a lot of cost analysis, we did a lot of price analysis in those days, and we did a lot of commercial items, right?
So, commercial items are one exception to certified cost of pricing data. That’s really the value, in my opinion. There’s Ts and Cs, and there’s flowdowns and all kinds of other stuff, but the real value is avoiding the requirement for certified cost of pricing data when you have a commercial item. So one of the problems with adequately documenting a commercial item is, like this says, not addressing the availability of market pricing.
The reason this is so near and dear to my heart is because a commercial item determination and a price analysis are very distinct, okay? These are two separate issues of documentation. A lot of times DCMA, especially the commercial item group, the CIG, will kind of commingle these into one requirement, and it’s important that they maintain separation.
So, you have your price analysis on one side, you have your commercial item deermination on the other, and they stand alone. However, the commercial item determination does need to relate to some sort of market pricing. And the reason is in the commercial item definition in the FAR, so if you went to 2.101 in the FAR and looked up commercial item, you’ll see that there is a portion of the definition that talks about customarily used by the general public or some non-governmental entity.
That customarily used by a non-government entity is often overlooked when people are doing CIDs. Okay? And the reason that’s so important is that if you are unable to show that it is customarily used, okay, and the way you show customarily used is you could show that there is a commercial marketplace where this is bought and sold, or it’s very similar to something in the commercial marketplace.
So there’s an active market for these things. If you can’t prove that there’s an active market and you can’t prove that there’s pricing that is commercial in nature, then you’re going to have a very, very difficult time making the case that this is customarily used by the general public or non-governmental entity. That’s the whole point here, okay?
With commercial item determinations, that is step number one. So make sure that your commercial item determinations, don’t just skip over commercial price availability. You have to make that connection between commercial pricing and the price that’s being offered. We recently did a webinar on this topic.
If you go to spendlogic.com and click on events or Webinars, then you can check it out there. But that’s the basic idea behind it. Number two, this one’s a big one. They get pretty ticked off. So if you went in and added DPAS verbiage to every award, even the awards that are not DPAS-rated, this becomes a significant finding.
Okay? So, hopefully, you are all familiar with DPAS. Again, we did a presentation on spendlogic.com. You can check out the free webinar there about DPA versus DPAS. And it was actually specific to the coronavirus and things, we did it a couple of months ago. You can check it out there. But basically, it says, you know, you put some magic words on your order, it becomes a rated order, and then it jumps to the front of the line, okay, in production.
Now, I’ve seen clients that haven’t had the ability to identify DPAS versus non-DPAS. So they just put DPAS on everything because they know that they’ll get in trouble if it’s DPAS rated but it’s not on the order. That’s a big no-no, but maybe not of equal importance but darn near of equal weight is if you have orders that are not DPAS-rated from your customer and you include that verbiage, that’s a big no-no, too.
So, make sure that you separate those out. And you only include DPAS verbiage on DPAS-rated orders. And last but definitely not least, okay, this is what your CPSR is going to be based on if you really want to fail.
All right. And I’m sure some of you may, you know, really like to see that. I’m joking, nobody wants to fail this thing. But one sure-fire way is to have your policies and procedures in one spot and then to operate in a way that is different from your policies and procedures. So, the FAR is not written for contractors. I know people say that all the time, right?
You’ve heard that, but what does it actually mean? The FAR does not tell you how you need to run your company. It does not tell you how you run your purchasing system. There are requirements in the DFARS that your purchasing system has to adhere to, but otherwise, you need to be focused on the policies and procedures that you have internally. The CPSR team is going to be reviewing…first of all, they review the policies and procedures to make sure that they’re adequate.
They have to be adequate in and of themselves. They have to meet the requirements of the DFARS and of a certified and approved purchasing system. But beyond that, once they determine that they are adequate policies and procedures, they then use that as the manual for doing your CPSR. So, everything that you do, all of your documentation needs to be in alignment with your policies and procedures.
One way to really make a mess for yourself is to have super-detailed policies and procedures. And I’ll give you an example. You know, hopefully, you can take home and look at. If your policies and procedures tell you all the steps in conducting price analysis, okay, and all the documentation and everything that you need in a price analysis, then you’re likely going a bit too deep.
And, you know, what you don’t want to do is get down to the gnat’s eyelash on your policies and procedures so that the CPSR team has ample opportunity to find things that people have forgotten or that they’ve missed. So, you know, make sure that you’re operating in a way that, you know, is in alignment with policies and procedures.
And I guess a follow-on to that is to go through your policies and procedures and make sure that they’re not so defined or so, you know, in the weeds that you’re just going to be creating findings for yourself. This happens a lot. Actually, I was on a call just this morning with a client that we were downsizing their policies and procedures because, you know, there was opportunity for findings that, you know, are not actual requirements.
So, get yourself out of some findings. Save yourself some time in explaining yourself by making sure that your policies and procedures are adequate and not overboard. So, that was it, that was the top 10 ways to fail your CPSR. Very high level. What you need to be doing in your documentation is telling the story.
I’m sure that I’ve got lots of compliance folks in here. And, you know, that’s tattooed on your arm, and I’m sure that you flash it at your folks every once in a while. That’s all you’re trying to do, tell the story, right? Get your folks to tell the story. And that’s what a CPSR is all about, is looking at, have you told the story? And by the way, does that story adhere to policies and procedures?
And make sure that that story is accurate, okay? There’s lots of tools out there that are available to help find those tools. You don’t need to reinvent the wheel. A lot of companies, you know, they see that they have a CPSR coming up and they start from scratch, and they develop everything on their own. That’s not necessary.
There’s lots of stuff out there to help you. It’s a lot of work, but you can make it much less work if you use what’s available. On the screen, you see my email address, [email protected] Feel free to reach out to me. There are other price analysis tools out there. We have one, it’s called spendlogic.com. And if you go to spendlogic.com/gcp, you’ll see the slides from today’s presentation.
There’s also, you know, like I said, links to webinars and other things that are related to cost and price analysis. You may also download a free-trial copy of SpendLogic and check it out for yourself. So check out spendlogic.com/gcp. At the very beginning, I told you to pay attention to the source documentation.
So, go check out the DCMA CPSR Guidebook, okay? Go to DCMA.mil, and in the little search box, type CPSR. You’ll come up with the latest guidebook. The reason you should go to DCMA and do that instead of Google is if you Google, they publish updates every once in a while to the CPSR guidebook, and you want to make sure that you’re looking at the latest and greatest.
Each of the sections kind of stands on its own. And so they provide updates, you know, here and there. Last year they had several, and I’m not sure that we’ve had any this year. So, go to DCMA.mil and check it out. Now, the last but not least is go to DFARS website and check out the CPSR requirements. Not a very friendly URL down there, but that’s where you can find the latest and greatest.
You can find all kinds of presentations and things online about what it takes to pass a CPSR. But go to the source, look at exactly what’s required, and check it out from there. So that’s how you get there. Okay. I’m going to go ahead and end the session then. We’re a little bit early, but if you have any questions after this, feel free to reach out to me at [email protected]
Obviously, that comes straight to me. I’d be more than happy to chat with you. And thank you for joining today’s session. Also, thanks to the GCP folks. This has been a great community effort here. And all the presentations are fantastic. This is a great event.
If you haven’t been to it in person before, definitely come back next year. This is, like I said, a great event and something that you really don’t want to miss. It’s in San Diego. Again, it’s 29th through the 1st, 2020 there in San Diego. It’s a beautiful spot. So, hopefully, I get to see you in person one of these next times that this happens. All right.
Thank you very much, and hope to see you soon.