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First, why should a small business care whether their purchasing practices, inter-departmental operations, and whole procurement function are in compliance with the FAR and applicable supplements (like DFARS)? Two reasons: The U.S. Government could decide the customer has cause to compare your Purchasing System to regulations; and, after the company grows, it's a lot harder to implement new restrictions and documentation requirements, than had the Purchasing System been compliant from the start.
FAR 44.302 requires that, "the ACO shall determine the need for a CPSR based on, but not limited to, the past performance of the contractor, and the volume, complexity and dollar value of subcontracts." Although a CPSR is not highly probably, "until contractor sales to the Government… are expected to exceed $25 million during the next 12 months," other than competitive awards of Government funds - any customer concern can trigger a Contractor Purchasing System Review. The CPSR compares current policies and procedures with regulations for any gaps in compliance. If the Government establishes that company policies and procedures meet regulatory requirements, the CPSR compares evidence of compliance in day-to-day practices with those policies and procedures. This is a two-step comparison.
Although the details are available at paragraph 3.3 of the DCMA Instructions plus the 22 system criteria in DFARS Part 252.244-7001(c), the consistent assembly of adequate Source Justifications, Price Justifications, and other Order supporting documentation (from checking the List of Debarred, Suspended, and Ineligible suppliers to checking the list of ITAR prohibited countries that own/house suppliers) - evidence of compliance with regulations plus evidence of compliance with policies and procedures is daunting. New requirements, such as Executive Compensation reporting of first-tier subcontractors, show that company practices must be constantly updated. Careful perusal of policies and procedures, recommending revisions and updates (for new laws), furnishing drafts to be tailored to your company's unique operations, and an overview to ensure gaps are addressed - requires a tremendous amount of time and effort.
Aren't you already paying your Purchasing staff for tasks that require their full schedule? What responsibilities must they sacrifice, in order to give this project the focus it requires?
Guidance from an outsourced consultant takes much of the burden off an already over-worked Purchasing staff, minimizes research time (because preparing several small businesses to implement compliant practices brings very applicable knowledge and experience), and affords internal resources to continue their primary function: Purchasing.
The Administrative Contracting Officer (ACO) at the DCMA, not DCAA, holds the authority to request a CPSR of a particular contractor. DCMA focuses on the company as a whole, not on any one contract, Procurement Contracting Officer (CO) or buying command. Primarily, the ACO reviews for evidence that the System, as a whole is compliant and not overcharging or under-delivering to the Government, overall. Supporting the Program does not fall within their purview. Failing a CPSR can have devastating repercussions to a contractor's ability to retain and obtain Government-funded awards.
With the priority of the ACO in mind, the champion of change - of adding more administration, of requiring more time-consuming steps before an Order is awarded, of excluding suppliers favored by requisitioners - does not enjoy the perception of being a hero. Your Purchasing staff, especially Purchasing management, works with requisitioners, evaluators of potential suppliers for the approved list, program managers with backlogged milestones, and buyers. Purchasing management continually strives to support programs and be an advocate of team goals. You want others inside and outside your company to view Purchasing management as an advocate. Who is the smart selection for leading these cumbersome compliance changes?
An outsourced consultant has time to invest effectively in guiding your company toward passage of a CPSR; the good practices that come from experience of many, similar projects; and the expectation of exiting after implementation, the best choice for villain.
Any audit trail requires several months (typically one fiscal year) of supporting evidence to demonstrate consistent compliance to policies and procedures. The typical CPSR population, from which a sample is reviewed, is one year of Orders. Orders include individual Change Orders and Initial Orders - not the cumulative Order from inception to date. This means that documented support for individual Orders would be available for more than one year before a CPSR.
Of course, fully compliant policies and procedures are created and/or revised, approved by executive management, and implemented though seminar and one-on-one training - before consistently compliant Order documentation can be expected. The time to begin preparation for a future CPSR is now. Receipt of notice that the Government plans to land on your doorstep is too late.
Bad practice does not make perfect. Avoid predictable resistance to change, later. Supplement your internal staff with outsourced guidance from compliant policies and procedures with tested forms and checklists; a review of historical Order documentation, resulting in a report of inadequate processes and one-time errors (with specific, potential corrections, where possible); plus training for buyers, requisitioners, and others toward compliance with policies and procedures that retains efficiency for customer requirements.
Do you really want to add that reading, editing, researching, sample review with reporting, and tools for implementation to the workload of internal staff?