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Whitepaper: The Audit World's Biggest Myths
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Whitepaper: The Audit World's Biggest Myths
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Small Business Program Compliance

From DCMA “640” Program Reviews and other Small Business Subcontracting plan development to Small Business Liaison Officer (SBLO) mentoring, our Small Business Compliance subject matter experts can help solve your small business challenges and improve your company’s overall small business program compliance and competitiveness.  

CHALLENGE FOR CONTRACTORS 

The United States federal government is the largest buyer of goods and services in the world. Since the creation of the Small Business Administration (SBA) in 1953, the federal government has placed an emphasis on small business utilization within the federal acquisition marketplace. This is particularly important because 99% of U.S. firms are small businesses and contribute to nearly 50% of private sector employment. To encourage small business participation, “Other-Than-Small-Businesses” (AKA Large Businesses) are required by law and the FAR to include small businesses within all the socio-economic sub-categories to the maximum extent practicable in their procurement processes. Most large businesses establish small business participation programs within their companies to encourage small business use companywide. As part of our service capabilities, Capital Edge places importance on helping develop programs to achieve the next level of compliance.  

In December 2023, the DCMA publicly revealed that 85% of the contractors that were reviewed during GFY2023 by DCMA in a “640” Small Business Program Compliance Review resulted in one of the two lowest ratings – Marginal and Unsatisfactory. This is meaningful because these ratings may be, and often are used as discriminators by the government during competitive source selections. Capital Edge’s experienced subject matter experts can help improve DCMA “640” Review ratings, thereby improving competitive differentiation as a leader in small business program development leading to more contracting opportunities and wins which, of course, lead to increased revenues!

CAPITAL EDGE’S CAPABILITIES

Capital Edge’s combined experience will help you maximize the effectiveness of your corporate small business program, and ensure maximum small business participation across all of the required small business socio-economic categories. We tailor our support to meet your specific small business program goals, needs and requirements.

Capital Edge’s Small Business Program Support services and solutions include:

  • DCMA small business “640” review support
  • Small business subcontracting plan strategy and development
  • Small business sourcing assistance
  • Small business compliance training
  • Small Business Liaison Officer (SBLO) mentorship
  • DoD Indian Incentive Program (IIP) strategy development

Contact Capital Edge to learn how we can help improve your small business program including your DCMA small business program rating and develop compliant small business subcontracting plans that can often be discriminators within the federal competitive acquisition environment. Our unique suite of services can upgrade your overall small business utilization which can lead to increased revenues.  

Seize your competitive Small Business utilization advantage with our Small Business Program Compliance Services

Fill out the form below or call  (855-227-3343)

Our CPSR Solutions Include:
Pre-CPSR
Federal Purchasing System Gap Analyses
“Mock CPSR”
Remedial Action Plan Development and Implementation
Federal Procurement Policies and Procedures
Federal Procurement Forms and Checklists
Federal Procurement / CPSR Compliance Training
Federal Procurement / CPSR Compliance Training for Non-Procurement Personnel
Internal Review Tools and Outsourced Support
Comprehensive Procurement File Remediation
Procurement File Remediation Advisory Support
DCMA CPSR Risk Assessment Form Support
DCMA CPSR Policies and Procedures Checklist Support (commonly referred to by some as the “DCMA CPSR Audit Checklist” or “DCMA CPSR Checklist”)
Final CPSR Preparation and Rehearsals Support
On-Demand Advisory Support Services
DCMA CPSR Risk Assessment Advisory Support
DCMA CPSR Questionnaire Response Advisory Support
Live CPSR
On-site Liaison Support with the DCMA CPSR Team
Rhetorical Advocacy Position Development
“Audit” Management of the CPSR
Strategic and Tactical Risk Management
Post-CPSR
CPSR Report Analysis and Response Development
Corrective Action Plan Development, Presentation and Implementation
Corrective Action Validation
Federal Purchasing System Compliance Monitoring
On-Demand Advisory Support Services
What is a CPSR
CPSR stands for Contractor Purchasing System Review and is commonly referred to by some as a “CPSR Audit” or “CPSR Review”. In layman’s terms, a CPSR is an adequacy evaluation of a contractor’s policies, procedures and practices against certain FAR and DFARS requirements.

CPSR Meaning
Per FAR Part 44, the CPSR means a complete evaluation of a contractor’s purchasing of materials and services, subcontracting and subcontract management from requirements through completion of subcontract performance.
The DCMA CPSR’s Group Mission
Although the CPSR is codified in FAR and is therefore not exclusively a DoD contractor concern, the Defense Contract Management Agency (DCMA) employs a team of dozens of CPSR procurement analysts to conduct the reviews of contractors’ purchasing systems. No other federal agency or department is comprised of such a large team of people solely dedicated to performing CPSRs. In fact, civilian agencies commonly engage the DCMA to perform reviews of contractors’ purchasing systems on their behalf.

The DCMA has defined the Contractor Purchasing System Review (CPSR) Group’s mission – “Ensure that [Government] suppliers have purchasing systems in place that contribute to effective subcontract management. Effective subcontract management includes the development of, as well as performance to internal policy and procedures, public law and adequacy of cost and price analyses performed on subcontractors.”

Consistent with this mission statement, the Federal Acquisition Regulation (FAR) CPSR objective in Subpart 44.3, Contractors’ Purchasing System Reviews, states that the “objective of a contractor purchasing system review (CPSR) is to evaluate the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting….”

Understanding DCMA’s CPSR meaning, mission, and objective, contractors must realistically evaluate their current purchasing system. As part of this evaluation, contractors should use the primary authoritative regulations and DCMA guidance around the CPSR, including, without limitation:

DFARS 252.244-7001, Contractor Purchasing System Administration
FAR Subpart 44.3, Contractors’ Purchasing System Reviews
The FAR and DFARS clauses tested for compliance in a CPSR (e.g. FAR 52.204-10, etc.)
DCMA CPSR Policies and Procedures Checklist (commonly referred to by some as the “DCMA CPSR Audit Checklist” or “DCMA CPSR Checklist”)
DCMA CPSR Guidebook

Frequently Asked Questions

Here are some of the more common questions being asked about CPSR

Does a CPSR include purchasing and subcontracting?

Yes. Except for certain transactions excluded under FAR 44, your purchasing and subcontracting activities are within CPSR scope. DFARS 252.244-7001 defines the purchasing system to include “…the system or systems for purchasing and subcontracting…”

What are Common Federal Purchasing System Deficiencies?

According to DCMA CPSR Reports issued in GFY2019, DCMA identified that the “most common material deficiencies” relate to:

  • Debarment
  • Payments to Influence
  • Cost Analysis / Price Analysis
  • DPAS
  • FFATA
  • Sole Source Justification
  • Policy & Procedure Manual
  • Commercial Item Determinations (CID)
  • Truthful Cost in Pricing Data (formerly known as Truth-in-Negotiations Act or TINA)
  • Negotiations
Who performs the "CPSR Audit"?
A CPSR is not an “audit” but a “review.” Within the Department of Defense (DoD), the Defense Contract Management Agency (DCMA), specifically the DCMA CPSR Group, is typically responsible for reviewing the contractor’s purchasing systems. The DCMA CPSR Group is comprised of “analysts” not “auditors.” In some cases, DCMA also reviews the purchasing system of contractors that do not hold DoD contracts.

What are the Impacts of a Purchasing System Disapproval?

A DCMA purchasing system disapproval can cause many issues for a contractor, including:

  • Increased oversight of contractor’s business (e.g. audits and reviews of other business systems, etc.) and delay in the government acquisition process;
  • Increased application of government consent to subcontract requirements;
  • Potential withhold of payments;
  • Competitive disadvantage in responding to Government requirements; and
  • Disclosure via Contractor Business Analysis Repository.
What is the Current CPSR Requirement Threshold

A CPSR is performed on a discretionary basis if deemed necessary by the Administrative Contracting Officer (ACO).  The ACO’s decision to determine the need can be, in part, influenced by the contractor’s anticipated FAR-44 qualifying sales volume and results of the contractor risk assessment.

  • FAR 44.302: Greater than $25M in the next 12 months. 
  • DFARS 244.302: Greater than $50M in the next 12 months. 

Caution: The CPSR dollar amount established in the regulation is discretionary and may be lowered or raised. (FAR 44.303).

 

Where can the CPSR requirements be found?

The specific subject matter areas evaluated in a DCMA CPSR can be found in the DCMA CPSR Guidebook under the “Major Purchasing Areas” subsection as well as in the associated appendices to the Guidebook.

What is the CPSR Guidebook?

The Contractor Purchasing System Review (CPSR) Guidebook is published by the DCMA. The purpose of the DCMA Guidebook is to provide “…guidance and procedures to Government personnel for evaluating contractor purchasing systems and preparing the CPSR reports.”

Click to see the 2021 Revised CPSR Guidebook

What is CPSR certification?

The phrase “CPSR certification” is a misnomer. Rather, a CPSR is a review conducted by the government that results in a report which provides the basis, at least in part, for the cognizant federal agency official to make a decision – e.g. that the system is acceptable and approved. FAR 44.305 is very clear as to who has purchasing system approval authority – “The cognizant ACO is responsible for granting, withholding, or withdrawing approval of a contractor’s purchasing system.”

What Does CPSR Stand for?
“CPSR” stands for Contractor Purchasing System Review.

Seize your competitive Small Business utilization advantage with our Small Business Program Compliance Services

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About Capital Edge Consulting

Capital Edge government contract consultants support Government Contractors and Federal Grant Recipients. Our consultants specialize in the regulatory compliance matters you need.

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Whitepaper: The Audit World's Biggest Myths
Download Now
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