What is a “Purchasing System?” It is all of the activities required by FAR Subpart 44 that relate to a Prime Contractor’s purchasing of goods and services. It starts at the decision to make a purchase. This is typically called the “make or buy” decision and applies regardless of what is being purchased: services or materials. It continues through the sourcing and solicitation process; the award decision; subcontractor or vendor management; and up to subcontract or purchase order closeout. Each and every decisional process must be documented and kept in the procurement files.
Who can approve a “Purchasing System?” The only authority within the Federal Government that can “approve” your purchasing system is the Defense Contract Management Agency (DCMA). The DCMA conducts a Contractor Purchasing System Review, commonly known as a CPSR, by coming to the Prime Contractor’s location and reviewing their Purchasing Policy and Procedures and Procurement Files. The current “pass rate” for a first time review is somewhere around 3%.
Do I need an approved “Purchasing System?” So why would you want to have a CPSR and an approved purchasing system? First and foremost, it may help you win proposals and get new business. More and more, the Federal Government is requiring Prime Contractors to have “approved” business systems (accounting, purchasing, estimating) before they are eligible to receive an award, and sometimes even before you can submit your proposal. Having an approved system also saves you time as you will not be required to provide your Contracting Officer advanced notification and receive consent to subcontract on your existing contracts such as your GSA Schedule contracts. Okay, so now you are interested in getting an approved purchasing system, but how do you get the DCMA out to do a CPSR? Well, if your sales to the Government (with some exceptions – see FAR 44.302) are expected to exceed $25M over the next 12 months, you can ask your Contracting Officer to request DCMA to come out and perform a CPSR. DCMA will then schedule your CPSR for approximately 12 months after the request as, yes, they are currently that busy doing CPSRs, with no relief in sight. That is good news for you, because it gives you time to review your system, make sure your Purchasing Policy and Procedures meet DCMA requirements, and ensure your files are complete and ready for review.
How do I prepare for a CPSR? If you are unsure of what the DCMA requirements are, just go to GOVCON360.com, where you will find the latest DCMA Purchasing Policy and Procedures Checklist. We can also help with readiness reviews whereby we perform a pre-CPSR review and help you shore up your weak areas before the DCMA comes on-site. This can dramatically reduce the number of first-time findings. Also, feel free to review slide decks from our recent lunch and learn on the topic here.