1. C ONGRES S -.,- -- 2016 --- W E L C O M E T O
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2. CPSR Expectations – Before, During and After Review
Breakout Session #: C04
Andrew C. Obermeyer, Director, Business Operations Center, Defense Contract Management Agency
Karen M. Ouellette, Procurement Analyst, Contractor Purchasing System Review Group, Defense Contract Management Agency
Date: Monday, July 25 Time: 4:00pm–5:15pm

3. Business Operations Center
Ensure that suppliers’ have purchasing systems in
Ensure that contractors’ property management systems control, use, preserve, protect, repair and maintain the Government property (GP) in their possession.
place that contribute to effective subcontract management.
Evaluation of the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting.
Perform Property Management System Analysis (PMSA) and investigate Property Loss to determine liability
CONTRACTOR
PROPERTY GROUP
PURCHASING SYSTEM REVIEW (CPSR) GROUP
The CPSR Group’s recent focus has been on improving supplier sourcing practices and promoting intelligent pricing decisions. Set to conduct over 130 reviews in FY16.
PMSAs performed FY15 – 1025
Total acquisition cost of GP -
$138,121,543,421
DCMA employs 244 of the s in DoD
Total Personnel Authorized: 394
Negotiate settlements for Contracts terminated for the convenience of the Government.
Provide timely, cost effective disposal of excess government property in the possession of contractors.
Facilitate the reutilization of Government Property saving time and money that might otherwise be expended in re-procurements.
Assure Government Property is disposed of properly and demilitarized when required.
TERMINATIONS GROUP
PLANT CLEARANCE GROUP
Provide technical assistance and guidance to Buying Activities by facilitating policy and procedures and technical support •
Conduct post-termination briefings. •
Selling surplus Government Property returning proceeds from sales to the Government
Approve contractors’ settlements with subcontractors.
Clearing Plant Clearance cases while maintaining data integrity in our case files and PCARSS. FY15 cleared 17K cases; Acquisition Cost - $5.9B
Approve interim payments prior to final settlement.
Currently have over 700 actions valued at $26.6B in process.
CPSR Group – travel cost savings of $56k in FY15 as a result of remote access to contractor records
Benefits to DOD Customers
Property Administrators investigate losses of Government property, and when contractually appropriate, recommend that the contractor be held liable. In FY15, this resulted in the recoupment of $2,982,624.
Terminations had negotiated savings of $78.1M in FY15 and has saved $11.8M to date in FY16.
Plant Clearance reutilized $500M in Gov’t Property and returned
$6.8M to the U.S. Treasury through sales of Surplus Gov’t Property in FY15. FY16 YTD reutilized $185M and sales $2.3M.

4. CPSR Mission
Ensure that suppliers have purchasing systems in place that contribute to effective subcontract management.
Effective subcontract management includes development of, as well as performance to; internal policy and procedures, public laws and adequacy of cost and price analyses performed on subcontractors.

5. Types of Contractor Purchasing System Reviews (CPSRs)
Initial - System not yet evaluated and Contractor meets FAR
(CPSRs) dollar threshold requirement
– Review addresses all 24 system criteria in DFARS , Contractor Purchasing System Administration
Comprehensive - System previously approved and usually conducted 3 years after initial or previous review
Review addresses all 24 system criteria in DFARS , Contractor Purchasing System Administration
Follow-up - Validation of Correction Action Plan (CAP) on a disapproved purchasing system
Review addresses previously identified deficiencies
Special - Evaluation of specific risk areas
Review addresses one or more of the 24 system criteria in DFARS , Contractor Purchasing System Administration

6. Who determines the need for a CPSR?
ACO identifies the need and requests a CPSR
– Contractors do not request CPSRs
The ACO determines the need for a CPSR based on the prime award and subcontract volume
– Also considered are: subcontract types, program complexity, and past performance
The ACO is responsible for determining approval, disapproval, or withholding of approval of the contractor’s purchasing system

7. How is a CPSR scheduled?
CPSR group uses the term “Emerging System” to identify a contractor who is eligible for an initial review
The ACO and contractor complete a Risk Assessment form to request a CPSR when:
The $25M Threshold is met
Risk factors have been identified
Consent to subcontract* requests are increasing in volume
*Consent to subcontract is required if the prime does not have an approved purchasing system and the Government is assuming a large portion of contract risk

8. How is a CPSR scheduled?
CPSR group uses the term “Existing System” to identify a contractor who has an approved purchasing system
CPSR group sends out an Annual Tasker to DCMA ACOs reminding them of the need to reevaluate the approved purchasing systems
Reasons for reevaluations:
3 years or greater since last approval
Risk factors identified
Contractor not reviewed under current business system criteria (Final Rule 2012)

9. CPSR Pre-Review
Once an ACO request for CPSR is received, review is assigned to a team based on contractor geographic location
(CPSR team locations; Boston, Atlanta, Phoenix and Dallas)
The lead Procurement Analyst will contact the Contractor to confirm dates & request the following information:
PO’s/subcontracts issued during a one year period
Contractor’s policies and procedures
Contractor’s terms and conditions
CPSR will identify specific contract requirements using Government databases such as; EDA, MOCAS, EITS, FPDS

10. CPSR Pre-Review
CPSR team will also request input from the following DCMA functional specialists:
ACO
Quality Assurance
Small Business
Supply Chain Management
CPSR team utilizes a random based sampling tool to select the purchasing instruments to be reviewed
CPSR in-brief is scheduled for the first day of the on- site review 1

11. How long is an On-Site Review?
Initial or Comprehensive
1-2 weeks with 2-3 analysts
(based on sample size)
Follow-up
1 week with 2 analysts
Special 11

12. Review Elements
CPSR evaluates your files for compliance with 34 review elements
See CPSR Guidebook for details (
The 34 review elements are based on:
FAR/DFARS clauses that flow-down from your prime awards to subcontracts
The 24 Criteria identified in DFARS (c) 12

13. CPSR On-Site Activities
Entrance briefing with Contractor & Government personnel
Physical review of selected sample based on the 24 criteria listed in DFARS (c)
Discussion on policies and procedures
Utilization of question sheets to allow the contractor to provide clarity or additional information as issues arise
Conduct buyer interviews
Conduct daily briefs to keep the Contractor and ACO informed of arising concerns or issues
Exit briefing conducted to provide contractor with preliminary findings (compilation of the daily briefs)

14. CPSR Post Review Analyze data and develop statistics
Prepare a report addressing the contractor’s policy and practice for each of the review elements
Report released to ACO within 30 business days of exit briefing
When deficiencies are identified, the Procurement Analyst will initiate a Corrective Action Request (CAR) as appropriate

15. ACO System Determination
Contracting Officer determines whether a purchasing system is approved or disapproved
If no significant deficiencies exist, the ACO will issue a final determination approving the system (within 10 days of receipt of CPSR report)
If the ACO suspects one or more significant deficiencies exist, the ACO will issue an Initial Determination identifying significant deficiencies (within 10 days of receipt of CPSR report)
The contractor has 30 days to respond to the ACO
If the ACO determines the contractor response to be adequate, the ACO will make a final determination of system approval

16. ACO System Determination
If the contractor response is not adequate, the system is disapproved and the ACO issues a Level III CAR identifying the significant deficiencies
The ACO requests a Corrective Action Plan (CAP) from the Contractor
The Contractor has 45 days to either correct the deficiencies or provide an acceptable CAP
Follow up reviews are conducted on disapproved systems within 90 days of notification by the contractor and ACO that corrective actions have been completed
For deficiencies that may not rise to the level of significant, the CPSR Procurement Analyst issues a Level II CAR and the contractor works with the PA to resolve the Lev II CAR

17. Preparing for a CPSR
Review the criteria (DFARS ) for an acceptable system
Review CPSR Guidebook (
Assure your policies & procedures align with FAR/DFARS requirements
Assure your files are compliant with your policies and procedures and FAR/DFARS requirements
Files should be stand-alone and tell the whole acquisition story 17

18. Preparing for a CPSR Be aware of important dollar thresholds
• $750,000
TINA
CAS
• $700,000
Small Business Subcontracting Plan
• $150,000
Payments to Influence (Anti-Lobbying)
Advance Notification/Prior Consent
Specialty Metals
• $75,000
DPAS
• $30,000
Debarment Disclosures
Executive Compensation

19. Most Common Deficiencies
Based on FY15 CPSR reports
Policy and Procedure Manual (90/101)
Protecting the Government’s Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment (77/101)
Documentation (69/101)
Cost/Price Analysis (64/101)
Flow Downs/Terms & Conditions (56/101)
Limitation on Use of Appropriated Funds to Influence Certain Federal Contracting and Financial Transactions (Anti-Lobbying) (53/101)
Sole Source Selection Justification (53/101)
Negotiations (52/101)
Defense Priorities and Allocation System (DPAS) Rating (46/101)
Internal Reviews/Self Audits (30/101)

20. Most Common Material Deficiencies
Based on FY15 CPSR reports
Protecting the Government’s Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment (70/101)
Limitation on Use of Appropriated Funds to Influence Certain Federal Contracting and Financial Transactions (Anti-Lobbying) (51/101)
Price Analysis (47/101)
Defense Priorities and Allocation System (DPAS) Rating (40/101)
Sole Source Selection Justification (35/101)
Policy and Procedure Manual ((29/101)
Documentation (24/101)
Truthful Cost and Pricing Data (TINA) (23/101)
Negotiations (22/101)
Cost Accounting Standards (CAS) (21/101) 2

21. CPSR Performance & Staffing
Overview
FY11
FY12
FY13
FY14
FY15
FY16
Risk Assessments 85
226
219
145
166
232
Eligible 66
100
105
107
126
129
Scheduled 70
118
134
133
Completed 40 43 57
103
101
133 (est)
Carried Over 16 27 32 23 33
15 (est)
Authorized/Onboard
44/24
44/31
44/35
46/32
45/41
50/44

22. Continuous Process Improvement
Cycle Time Metric – report issued in 30 days
Closed the system gap between review completion, report issued, and initial determination
Aligned CPSR universe categories to the FAR
January 2016, required updates in place
Improved report template and Guidebook revisions
New report format- reduced elements from 43 to 34
Further streamlining and combining of associated review elements is in the works
Development of an excel DATA workbook versus Access database for compiling review data
DCMA Strategic Plan Initiative to improve CPSR effectiveness and efficiency
Champion assigned to each of the 34 CPSR review elements
Job Aids developed, 13 of the 34 complete
Training provided on completed Job Aids

23. Priorities As We Look Ahead
Initiatives
In support of Better Buying Power, the Agency Director is evaluating the merits of raising the CPSR threshold
A DCMA Internal Review Team to perform a review of the CPSR group’s processes and procedures regarding TINA and Cost/Price Analysis, June 2016
DCMA CAR Policy Compliance, January 2016
Remote access to Contractor records has resulted in travel cost savings of $56k in FY15
CPSR Annual Tasker – reducing the burden on the ACO and increasing our reliance on the data available in the DCMA Contractor Business System Analysis Repository (CBAR) e-tool system
Evaluating the advantages and disadvantages of changing the DCMA requirement from annual to every three years that the ACOs conduct contractor purchasing system surveillance

24. Resources FAR and DFARS
DFARS , Contractor Purchasing System Administration
DFARS , Contractor Business Systems
CPSR Guidebook (
DCMA Instructions
DCMA Instruction 109 – CPSR
DCMA Instruction 131 – Contractor Business Systems
DCMA Instruction 143 – Consent to Subcontract

25. Contact Information
General Mailbox –
Director, CPSR Group Supervisory Procurement Analyst Supervisory Procurement Analyst Supervisory Procurement Analyst Supervisory Procurement Analyst
Betty Alicea
Boston
John Foley
Boston
Northeast
Randy Shelby
Smyrna
Southeast
Richard Seals
Phoenix
Northwest
Karen Zinn
Dallas
Central