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Navigating the Tail-End of the DCMA CPSR Process - from Exit Briefing to DCMA’s Corrective Action Request to the DCMA CPSR Report

July 12, 2022

As the country was waiting in line for COVID vaccines, the DCMA CPSR Group quietly changed its process, specifically related to the DCMA Corrective Action Request process. The DCMA corrective action request and response phase has been compressed, putting greater burden on the contractor to rapidly implement meaningful corrective actions.

By:  Chase Kunk, Managing Partner, Capital Edge Consulting, LLC   
         Michael Carter, Director, Capital Edge Consulting, LLC

Learning Objectives - New DCMA Corrective Action Request Process

Some of the salient questions this document is intended to answer include:

  • What is the new DCMA Corrective Action Request (CAR) process that the CPSR Group has adopted?
  • How much time will my company have to respond to deficiencies stemming from a DCMA CPSR?
  • What if the DCMA CPSR deficiencies are not resolved?
  • Are all deficiencies from a DCMA CPSR considered a significant deficiency?
  • How do I prepare a Corrective Action Plan (CAP) that is acceptable to the DCMA CPSR Group?

As the world grappled with the realities of COVIDover these last couple of years, the Defense Contract Management Agency (DCMA) has been quietly refining the Contractor Purchasing System Review (CPSR) process. Of course, during this period, DCMA moved the reviews to a virtual, remote format, which brings about many challenges for DCMA and the contractor to overcome. Beyond those realities and challenges, what else is new and notable in the DCMA CPSR? For one – DCMA’s process after the exit briefing is conducted. Specifically, the intricacies, timing and expectations of the DCMA Corrective Action Request (CAR) process and contractors’ responses.

The New DCMA CAR Process

As previously reported, as of mid-April 2021, all deficiencies stemming from an Initial or Comprehensive DCMA CPSR are initially categorized as Level II deficiencies (and therefore materializing in the form of a DCMA Level II CAR). The initial Level II designation is obviously a favorable change when compared to DCMA’s old process (e.g., some deficiencies would be Level II while others would rise to the level of draft Level III significant deficiencies). Of course, because of this change, this does mean that the DCMA CPSR procurement analyst determines acceptability of all Corrective Action Plans (CAP) initially stemming from the CPSR. For each CAP (one CAP per deficiency) not accepted by the analyst, the deficiency will be escalated to the contractor’s cognizant federal agency official (CFAO) for review and next steps – e.g. Initial Determination with draft Level III significant deficiency language and a response due within 30 days which is a longstanding step in the post-CPSR process and remains unchanged.

This post-exit briefing process change also includes compressing the timeline betweenDCMA’s exit briefing and the issuance of the Level II DCMA Corrective Action Request (CAR) to the contractor, which of course also pulls forward thedate of CAP submission to the DCMA CPSR analyst. Historically, the timeframe from the exit briefing to when the Level II CAR was issued would be approximately 30 business days – today, is it three business days or less. The period to respond to the CAR has not changed from the prior process – the contractor still has 30 calendar days (from the date the CAR is received) to prepare and submit a formal CAP for each deficiency.

Preparing Corrective Action Plans Without the CPSR Report

Finally, this also means that the contractor is responding to DCMA’s Corrective Action Request (Level II) without the DCMA CPSR Report in hand. Yes – the new process requires the contractor to develop and implement full-blown corrective actions plans to business system deficiencies based on: (1) a few informal conversations with the DCMA CPSR analyst during the CPSR (“daily debriefs”); (2) the hyper high-level and generic DCMA CPSR Exit Briefing PowerPoint template; and (3) a short-hand deficiency description found in the DCMA Corrective Action Request. Once the CAP(s) is submitted and the analyst determines acceptability, the analyst annotates the DCMA CPSR Report to that effect and submits the Report to the CFAO.

Navigating the Post-CPSR Process

For those who have prepared for, navigated and recovered from a DCMA CPSR, you know that the full lifecycle can be taxing on the organization and the personnel involved. With this new post-exit briefing process and timeline in place, the stresses are often magnified as the approximate 30-day period for the contractor to recover and remediate before the CAR is issued has been removed from the back-end process. Moreover, ensuring that the CAP will be accepted by the DCMA analyst requires inclusion ofdemonstrable evidence with the CAP itself –proving that not only has the CAP been implemented but it is also operating effectively and preventing recurrence of the deficiency. That “objective evidence” is absolutely paramount to creating a compelling CAP package.

Recommended Strategies for DCMA Corrective Action Request

Given this timeline compression and the need to demonstrate CAP effectiveness in less than 40 days after the exit briefing, we recommend several strategies:

  1. Gain Complete Clarity of the Issues – Remember, the DCMA Corrective Action Request itself will include only sparse details regarding the noted deficiency. During the CPSR, make every effort to obtain a full and complete understanding of what the DCMA CPSR analyst has determined is problematic. This is largely accomplished through meaningful daily debriefs with DCMA. Make sure these meetings are occurring, that you have a full understanding of DCMA’s interpretation of the applicable regulation, how DCMA is applying that regulation to your system and how DCMA understands your process or practice that is determined to be of concern. This will require copious notetaking. Generally understanding or assuming an understanding of what DCMA is deeming problematic, or waiting for the minimal documented feedback DCMA will actually share at this point in the process (e.g. exit briefing slides and the CAR itself), risks designing and implementing corrective actions that will not be accepted by DCMA and/or will not prevent recurrence of the noncompliance.

  2. Do What You Say You Do – As noted, a critical piece to the CAP acceptance process is demonstrating that the corrective actions the contractor has said it has implemented have, in fact, been implemented. The old adage– Trust but verify– rings true. The DCMA CPSR analyst is required to review your CAP for acceptability which equates to both a set of adequate corrective actions to prevent recurrence of the underlying cause of the noncompliance as well as artifacts demonstrating that those corrective actions are working to do just that. For example, if the contractor’s Defense Priorities and Allocations System deficiency was the result of not including the 15 CFR 700.12(a) program identification symbol in applicable purchase orders, then the objective evidence to demonstrate the actions to prevent recurrence of this noncompliance were effective would be inclusion of a sample of recently issued rated purchase orders containing the proper program identification symbol.

  3. Maximize the Pre-CPSR Phase – The contractor’s honest self-reflection and corrective action planning and implementation before the CPSR cannot be understated. That strategy will then either: (1) demonstrate compliance during the CPSR; or (2) create the opportunity to maximize that limited period after the CPSR with the ability to leverage objective evidence from actions previously implemented. We have seen clients who have employed the proactive approach of detecting systemic noncompliance and implementing robust corrective actions before the CPSR, navigate the post-CPSR process much more effectively. This often boils down to a simple notion – accomplishing organizational change often takes time and resources, so maximize the amount of time and resources available to adopt that change within your purchasing system and larger organizational structure.

Conclusion

In short, with the good comes some bad. Embrace the new DCMA CAR process that unfolds from your next CPSR –deficiencies are initially categorized as Level II. But also remember the expectation to clear those Level II deficiencies within a 30-40 calendar day period – design meaningful corrective actions, implement those actions, prove those actions were implemented and provide objective evidence that those actions were appropriate and are operating as intended. And then submit those CAPs on time.

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Capital Edge Consulting is a professional services company comprised of adept problem solvers who deliver tangible results to address today’s most complex U.S. government contracting challenges. Capital Edge helps clients address the challenging regulatory, contractual, and compliance requirements of U.S. federal contracts and we have experience working with a wide variety of industries that provide goods or services to the federal government including industries such as biotech and healthcare, nuclear energy, education, information technology, non-profit, professional services, defense, and software.

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Whitepaper: The Audit World's Biggest Myths
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