GC-208 Preparing for the CPSR A Practical Guide. Christine Williamson, Member, Watkins Meegan LLC Rich Wilkinson, Director, Watkins Meegan LLC

Transcription

1 GC-208 Preparing for the CPSR A Practical Guide Christine Williamson, Member, Watkins Meegan LLC Rich Wilkinson, Director, Watkins Meegan LLC

2 Session Content Background Where to Start (And, It s Not Where You Think) Procurement Policies and Procedures The Process A Look Forward Questions

3 Background

4 Background The Contractor Purchasing System Review (CPSR) has been around since the early days of DCAA DCMA has had primary responsibility for the review at Major Contractors (>$50M of ADV) since 1990 (DCAA did the smaller firms if and when they were reviewed) DCMA now has sole responsibility for the CPSR under the final DFARS Business Systems Rule (Feb 2012) DCAA may assist at the request of DCMA Purchasing System adequacy determination is the sole purview of the Administrative Contracting Officer (ACO)

5 The Business Systems Rule DFARS defines six (6) contractor systems subject to determination of adequacy (subject to applicability) Three are audited by DCAA Accounting (1) Estimating (1) Material Management Accounting System (MMAS) (2) The remaining three are reviewed (not audited) by DCMA Purchasing (3) Government Property (2) Earned Value Management (2) (1) Always applicable (2) Applicable only when system is required (3) Applicable, but reviewed only above a threshold or on request

6 More on Business Systems Authority for adequacy determinations vested solely in the ACO DCAA issues findings and can recommend, but not determine DCAA will report findings in subsequent reports as if it was making a determination nearly the same effect Threshold for Purchasing System review currently set at $25M in ADV (administrative and subject to revision without notice) Review on request (by PCO) very common in recent experience

7 Where to Start

8 The Adequacy Criteria The Business Systems Rule sets forth 24 system criteria that must be present in all contractor purchasing systems in order for a purchasing system to be acceptable (see DFARS (a)) DCMA CPSR checklist contains 55 items to be examined (specific policies) with space to indicate presence (or absence) and adequacy The system criteria of the DFARS and the review checklist have NOT YET BEEN RECONCILED

9 General Company Policies Organization plan that establishes clear lines of authority and responsibility; Policy to ensure that all purchases are based on authorized requisitions and include documentary support for vendor selected, price paid, and files which are subject to Government review; Internal audits or reviews, training, and policies for the purchasing department to ensure the integrity of the system

10 General Procurement Policies System description including policies, procedures, and purchasing practices that comply with the requirements of the FAR and DFARS Organizational and administrative structure to ensure effective and efficient procurement of requirements at the best value from responsible and reliable sources

11 Procurement Policies and Procedures

12 Adequacy Criteria Deep Dive Procurement Planning/Market Research (2 Criteria) Conflict of Interest/Misconduct (1 Criterion) Competition (2 Criteria) Negotiated Procurement (1 Criterion) Cost or Pricing Data and Price Reasonableness (5 Criteria) Source Selection (3 Criteria) Contract Formation and Content (3 Criteria) Foreign Purchasing and Performance (3 Criteria) Procurement Administration (4 Criteria)

13 Procurement Planning/Market Research Apply a consistent make-or-buy policy that is in the best interest of the Government Ensure proper type of contract selection and prohibit issuance of cost-plus-a-percentage-of-cost subcontracts

14 Conflict of Interest/Misconduct Enforce adequate policies on conflict of interest, gifts, and gratuities, including the requirements of the Anti-Kickback Act

15 Competition Use competitive sourcing to the maximum extent practicable, and ensure debarred or suspended contractors are properly excluded from contract award Require management level justification and adequate cost or price analysis, as applicable, for any sole or single source award

16 Negotiated Procurement A practice of documenting negotiations in accordance with the FAR requirements for negotiation memoranda

17 Cost or Pricing Data and Price Reasonableness Evaluate price, quality, delivery, technical, and financial capabilities of competing vendors to ensure fair and reasonable prices Perform cost or price analysis and technical evaluation for each proposal or quote to ensure fair and reasonable subcontract prices Document negotiations in accordance with FAR Take discounts, including cash discounts, trade discounts, quantity discounts, rebates, freight allowances, and companywide volume discounts Establish and maintain procedures to ensure performance of adequate price or cost analysis on purchasing actions

18 Source Selection Use competitive sourcing to the maximum extent practicable, and ensure debarred or suspended contractors are properly excluded from contract award Evaluate price, quality, delivery, technical capabilities, and financial capabilities of competing vendors to ensure fair and reasonable prices Establish and maintain selection processes to ensure the most responsive and responsible sources and to promote competitive sourcing so that purchases are reasonably priced and from sources that meet quality requirements

19 Contract Formation and Content Ensure purchase orders and subcontracts contain all flowdown clauses, including terms and conditions, and any other clauses needed to carry out the requirements of the prime contract Notify the Government of the award of all subcontracts that contain flowdown clauses that allow for Government audit of subcontracts, and ensure the performance of audits of those subcontracts Ensure purchase orders and subcontracts contain mandatory and applicable flowdown clauses, as required by the FAR and DFARS

20 Foreign Purchasing and Performance Ensure compliance with all relevant domestic preference requirements Ensure compliance with export control regulations Ensure agreements are not executed with prohibited parties

21 Procurement Administration Maintain subcontract surveillance to ensure timely delivery and procedures to notify the Government of potential subcontract problems that may impact delivery, quantity, or price Document and justify reasons for subcontract changes that affect cost or price Ensure that proper types of subcontracts are selected, and that there are controls over subcontracting, including oversight and surveillance of subcontracted effort Establish and maintain procedures to timely notify the Contracting Officer, in writing, of excessive pass-through concerns

22 The Process

23 Process Basics Begins with a request by the ACO to perform a review Should ALWAYS be scheduled, never unannounced Should be reasonably convenient for both parties Unless you KNOW you are well prepared, get as much lead time as you can Plan on one to two weeks on-site (your facility) for two or more people (based on recent experience) One of the participants is often from DCAA

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28 Process Results Draft report to the ACO on findings Report is a DCMA document, NOT DCAA Does NOT come under the DCAA Rules of Engagement DCMA usually cooperative on getting contractor input No set time frame for issuance of determination by ACO Often issued first as a formal draft report with a request for a reponse ACO will sometimes permit follow-up review before issuing final Once issued, DFARS Business Systems Rule controls clocks for the process No one passes on the first try

29 A Look Forward

30 Near Term Outlook DCMA has undertaken a large number of CPSRs in 2012 DCAA is participating heavily, but may not continue given agency workload DCMA current backlog estimated at more than one year

31 Longer Term Outlook Purchasing System status now tracked by DCMA in Business Systems database Contractors meeting threshold for review will be shown with a (purchasing) system status of Unassessed if Never reviewed Last adequacy determination more than 3 years old Status of unassessed may adversely affect eligibility for contracts that require an approved purchasing system Growing backlog of CPSRs may put many contractors in exactly that position

32 Resources CPSR Flowchart (Word) DCMA CPSR Checklist (Excel) or Procurement Policies Checklist (Excel) CPSR Review Guide or

33 Questions? 33 10/2/2 012 CONFIDENTIAL 2011 Deltek, Inc. All Rights Reserved

34 Call to Action / Contact Us 34 10/2/2 012 CONFIDENTIAL 2011 Deltek, Inc. All Rights Reserved

35 Call to Action / Contact Us 8000 Towers Crescent Drive Tysons Corner, VA Christine Williamson, Member (703) Christine.Williamson@WatkinsMeegan.com Rich Wilkinson, Director (703) Rich.Wilkinson@WatkinsMeegan.com