GC-153. Preparing for the CPSR A Practical Guide. Presented By: Susan Longo, Supervisor, Watkins Meegan Rich Wilkinson, Director, Watkins Meegan

Transcription

1 GC-153 Preparing for the CPSR A Practical Guide Presented By: Susan Longo, Supervisor, Watkins Meegan Rich Wilkinson, Director, Watkins Meegan

2 Session Content Background Where to Start (And, It s Not Where You Think) Procurement Policies and Procedures The Process A Look Forward Questions 2 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

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 (Price-Cost Analysis, Other-Than-FFP awards, etc.) Purchasing System adequacy determination is the sole purview of the Administrative Contracting Officer (ACO) 4 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

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 5 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

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 $50M in qualified purchasing volume on Federal contracts (administrative and subject to revision without notice) 6 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

7 How Do Contractors Get Selected for a CPSR? They Make the News (Good or Bad) Upon Contracting Officer Request Prime Contract Requirement You Had a CPSR More Than Three Years Ago By Contractor Request 7 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

8 Where to Start

9 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 61 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 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

10 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 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

11 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 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

12 Procurement Policies and Procedures

13 DFARS 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 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

14 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 Compete to the Maximum Extent Practicable (FAR ) 14 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

15 COI/Misconduct/Subcontractor Qualifications (FAR Part 9) Enforce adequate policies on conflict of interest, gifts, and gratuities, including the requirements of the Anti-Kickback Act Procurement is the Sole Authority to Bind the Company Proactive Review / Reporting Reps and Certs, EPLS, OCI Cert, Financial Responsibility 15 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

16 Competition Use competitive sourcing to the maximum extent practicable Subcontractor Competition is documented via Adequate Price Competition Require management level justification and adequate price analysis, with negotiations, for any sole or single source award 16 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

17 Price Analysis Documenting pricing as fair and reasonable to the Government Seven (7) FAR approved price analysis techniques [FAR (b)(2)] X / Y = Z; If Z 1.0, then X is Fair and Reasonable If Z > 1.0, then X is subject to Negotiation 17 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

18 Negotiations A practice of documenting negotiations (when Z > 1.0) in accordance with the FAR requirements for neg memo (FAR ) CPSR Teams assume Noncompetitive Procurements Will Be Negotiated Successful Negotiation = Lower Price or Revised and Validated Basis of Estimate 18 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

19 Truth In Negotiations Act & CAS Certify Subcontractor Cost or Pricing Data to Avoid Defective Pricing Submit Required Notices for CAS covered subcontracts Commercial Item Procurements are Exempt from CAS and TINA Competitive Procurements And Small Businesses Exempt from CAS 19 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

20 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 Small Business Participation / Plans 20 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

21 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 Selection of Contract Type / Determination of Accounting System Adequacy Flowdowns for DPAS Rated Contracts / Acknowledgement 21 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

22 Notice and Consent Advance Notice and Consent FAR (Rules) Advance Notice and Consent Prime Contract EEO Pre-Award Clearance Foreign Subcontractor Reporting (2 Notices) CAS Notice 22 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

23 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 Notification 23 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

24 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 Maintain a Vendor Rating System Establish and maintain procedures to timely notify the Contracting Officer, in writing, of excessive pass-through concerns 24 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

25 The Process

26 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 26 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

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32 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 response ACO will sometimes permit follow-up review before issuing final Once issued, DFARS Business Systems Rule controls clocks for the process Pass Rate for First Time CPSR: <1% 32 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

33 Typical CPSR Findings File Findings Inadequate Price Analysis High Dollar Value Public Law Violations Selection of Subcontract Type Enterprise Findings Organizational Structure Lead Time Accuracy of Data Call Response 33 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

34 Typical File Findings Inadequate Price Analysis Competition = Adequate Price Analysis. Lack of Competition = Inadequate Price Analysis Noncompetitive Procurements Should Be Negotiated. Everything Should Be Documented 34 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

35 Typical File Findings Inadequate Price Analysis Documenting Competition Competition Among Resellers is a Competitive Procurement ID/IQ Team Member Rates Must be Competitively Evaluated (Using Target Rates) Using Best Value Procurements to Increase Competition on SME, COTR- Directed Procurements 35 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

36 Typical File Findings High Dollar Value Public Law Violations EEO Pre-Award Clearance Christian Doctrine TINA NOT Christian Doctrine If & 13 are flowdowns, subcontractor certified cost or pricing data is independent requirement. Noncommercial + Noncompetitive + >$700, /13 flowdown = Certificate of Current Cost or Pricing Data Requirement 36 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

37 Typical File Findings Inadequate Documentation of Selection of Subcontract Type / Determination of Accounting Adequacy FAR Considerations Must Be Taken Into Account Documentation Requirements Other Than Firm Fixed Price Memorandum (FAR Part 16) Determination of Accounting System Adequacy Adequacy Depends of Contract Type Awarded Labor Hour Requirements Significantly Less Than Cost Reimbursable Flowdown and/or when appropriate 37 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

38 Typical Enterprise Findings Organizational Structure That Supports Procurement Autonomy / Authority The Procurement Structure Must Retain Structural Integrity and Autonomy Organizational Structure Protects Autonomy Question Can An Operational Employee Fire a Procurement Professional Without Oversight? 38 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

39 Typical Enterprise Findings Lead Time What Does DCMA Expect? Enterprise Average of 30 Days Per Procurement Higher the Dollar Value, the Longer the Lead Time Industry Average is 3-10 days. WHY? 39 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

40 A Look Forward

41 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 41 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

42 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 42 10/14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

43 Resources CPSR Flowchart (Word) Procurement Policies Checklist (Excel) DCMA CPSR Checklist (Excel) or DCMA CPSR Review Guide or /14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved

44 Questions?

45 Contact Us Susan Longo, Supervisor Rich Wilkinson, Director /14/2013 CONFIDENTIAL 2013 Deltek, Inc. All Rights Reserved