February 17, 2014

Lessons Learned from a(n Eventually) Successful CPSR

I recently helped a client with their response to DCMA's initial CPSR Report. The report on their then-approved system cited 22 significant deficiencies (six public law) and the Review Team’s disapproval recommendation. This was the bad news. 

The good news is that last week this contractor received notification of approval of their purchasing system with a follow-up CPSR TBD based solely on that response and some follow-up questions. 

What happened? For me, this CPSR highlighted some important aspects of preparation and recovery I wanted to share: 

1. Balance Efficiency with CPSR Requirements. If a procurement decision requires a document, DCMA wants that paper in the file. DCMA may review documents that reside outside of the file being reviewed but they are not required to do so. 

This contractor kept Reps and Certs in a central storage area, not in files. Subcontractors accepted orders via an online vendor portal. No evidence of this acceptance was included in files; it was maintained solely in this online system. The CPSR team refused to review any "outside the file" documents. As a result, “missing” Reps and Certs resulted in public law deficiencies. The lack of documented acceptance of rated orders resulted in a significant DPAS deficiency. 

Lesson to Learn – some efficiencies simply aren’t worth it. Slimmer files are good but public law deficiencies are not. 

2. Nothing is Obvious to DCMA. The decision to buy on a commercial item basis must be documented with a Determination of Commerciality (DofC). Without a DofC, DCMA will review the file as a noncommercial procurement. This review approach can result in findings of TINA, CAS and Small Business Subcontracting Plan noncompliance when big noncompetitive commercial item procurements awarded to large businesses are completed without a DofC. 

All of the contractor’s large orders were for commercial item parts and components. The contractor processed “obviously commercial items” on a commercial item basis without a DofC. This not only led to public law findings but also to findings regarding deficiencies in the DofC process (of course) and deficiencies reporting awards to foreign subcontractors performing under DoD contracts. 

Lesson to Learn – document the obvious. Many contractors do not see the value in completing a DofC during their procurement activities for things you can buy from Target. But if the file doesn’t say it’s commercial, DCMA will not apply commercial item exemptions to the review. 

3. Clean Up Your Data Call! DCMA’s request for your list of files awarded during the data call period is a formal government request for data. A contractor’s inability to correctly respond to a formal request for data is recorded as a significant deficiency. And files incorrectly included in the data call can result in findings even if the file should have been excluded. In other words, once the file is in the review CPSR review rules apply to it – the mistake of inclusion is assessed against the contractor during the live CPSR. 

The contractor did not automate their data call response based on DCMA-imposed rules of exclusion; the entire data call process was manual. As a result, several orders under GSA contracts were included in the review along with some high dollar value orders awarded to a contractor affiliate. These incorrectly included high dollar value orders resulted in several public law deficiencies. 

Lesson to Learn – start tightening your data call process now, don’t wait to tighten up your physical data call results later. If your company’s process is “data dump from accounting system then manual review of thousands of orders” I would respectfully suggest a new process. Make sure to explore your options regarding revisions to your accounting system reports before DCMA starts asking questions of your system.