CPSR: What Is It and Why Does It Matter, Anyway?

If you’ve worked with any kind of government agency, you know the complex challenges that come with it. From poring over regulations to checking and double-checking your compliance status, you have to spend valuable time and money on ensuring your company adheres to requirements that could make or break a contract.

Compliance with CPSR, meaning contractor purchasing system review, can be a major obstacle for GovCons of all shapes and sizes. This guide explores everything your organization needs to know about what CPSR is and how it applies to your business.

What Is CPSR, and What Does It Do?

CPSR is an evaluation of how efficiently and effectively your organization spends government funding, which helps contracting officers (COs) select contractors that best protect the government’s interest.

Part 44 of the Federal Acquisition Regulation (FAR) defines CPSR and outlines key elements of a compliant purchasing system:

• Clearly documented purchasing policies and procedures
• A thorough price analysis of all subcontractors
• A documented process for identifying and selecting qualified subcontractors
• Awareness of government consent requirements for awarding subcontractors
• An understanding of flow-down requirements for subcontracts
• Demonstrated compliance with all applicable rules and regulations

The Defense Federal Acquisition Regulation (DFAR) Subpart 244 expands on FAR 44 by establishing the process for reviewing contractors’ purchasing systems.

Organizations that work mainly with the Department of Defense (DoD) will want to pay close attention to the requirements of DFARS 252.244-7001, which has been recently updated to include new information about detecting counterfeit parts and the signs of an avoidance system.

Who Needs CPSR?

Several types of organizations must ensure compliance with CPSR:

• Businesses with many contracts or contracts involving especially large procurements
• Organizations primarily serving the Department of Defense (DoD)
• Companies with contracts containing explicit rules about CPSR compliance

The CO involved with your case will determine whether a CPSR is needed based on your past performance, the complexity of a specific subcontract or the dollar value of your contract.

When Does CPSR Happen?

Contractors usually undergo CPSR after being awarded a new contract where sales to the government will exceed $50 million within the following year. You might also receive a later audit if the agency you’re serving wants to confirm you’re following the regulations.

Fortunately, you have time to prepare for these audits. The Defense Contract Management Agency (DCMA) will notify you of an upcoming review either 60 to 90 days in advance, which gives you time to ensure all your documentation is in order.

When you receive notice of an upcoming audit from the DCMA, you’ll also have to fill out a pre-review questionnaire. This questionnaire is important because the DCMA will use your answers to determine whether the review is really necessary.

Why Is CPSR Compliance So Important?

Due to rising demand for CPSR-approved contractors, your business’s CPSR compliance status is critical to securing government contracts. As a result, your compliance is essential for standing out in the highly competitive GovCon market.

The purpose of CPSR is ultimately to mitigate risk for a government agency before entering a contract. A CPSR-compliant contractor spends their funding responsibly and ensures they get the best prices for goods and services obtained via subcontracts.

Compliance with these rules shows the government that your company is a financially safe partner to work with, significantly increasing your chances of doing business with them.

Addressing Common Compliance Challenges: A CPSR Checklist

Here are six ways your organization can resolve the most common CPSR compliance challenges:

1. Centralize document systems: Manually retrieving all the report information you need from a disjointed and disorganized system can make meeting deadlines challenging. Instead, switch to a cloud-based, centralized storage system with workflow automation capabilities to save prep time and reduce your risk of missing documents.
2. Standardize data management: Inconsistent formatting and naming rules can cause your team to misplace or overlook critical CPSR documents, which could cost you compliance status. Eliminate this risk by establishing a standardized system for storing and managing all documentation.
3. Simplify approval processes: Approval workflows can be overly complex, leading to confusion and inefficiencies. Investing in workflow automation solutions can help you track and document approvals while eliminating the need to spend time on tedious manual data entry.
4. Identify applicable clause flow-downs: Knowing which FAR and DFAR clauses “flow down” to your subcontractors can help you ensure each subcontract you sign adheres to CPSR requirements.
5. Provide secure system access: Cybersecurity is a serious concern, even when dealing with government officers. Establishing secure access protocols in your system enables government users to access the information they need without adding risk to the equation.
6. Outsource administrative tasks: From HR to CPSR compliance, administrative responsibilities take up time you may not have. You can get that time back by outsourcing those duties to experienced industry professionals who know the applicable regulations inside and out.

Why Your Organization Should Rely on Compliance Experts

Many GovCons lack the resources or time to manage compliance themselves, especially smaller businesses. Outsourcing CPSR compliance to specialists can help your organization:

• Streamline complex operations: Regulatory compliance is a challenge in virtually every industry due to the legal nuances involved, which can take time away from everyday business processes. Compliance experts can simplify the tasks and procedures associated with CPSR compliance so your team can focus on your core business operations.
• Mitigate risk: Many GovCons misunderstand the FAR clauses that apply to their subcontracts, which opens them up to noncompliance risk. Legal experts can help your company more accurately identify the relevant clauses and provide guidance on incorporating them into your processes.
• Scale with ease: Disjointed compliance training processes can stunt your company’s growth by limiting your ability to adhere to FAR at scale. Outsourcing CPSR compliance processes allows you to scale as needed without having to hire more W-2 workers.
• Get access to new tools: As companies begin to move beyond limited legacy technologies, switching to new systems is becoming increasingly critical. Partnering with an outsourcing provider gives you access to the latest technologies for any of the tasks you need help with.

If you’re looking for a compliance training partner who can help your organization reach the next level, BOOST is here for you.

BOOST Is Your Partner in CPSR Compliance

Government contracts can be incredibly complex, and ensuring compliance with CPSR requirements can be challenging without expert assistance.

When it comes to GovCons, we at BOOST know our stuff. Our consultants have years of experience working with various types of contractors, from SBA 8(a) organizations to mid- and large-tier corporations. We work hard to provide solutions that make our clients stand out from the competition, and we thrive in this industry’s chaos.

If you’re ready to get started, so are we. Contact us today for more information on our CPSR compliance training services for GovCons like yours.