Contractor Purchasing System Review (CPSR)
Lightbridge ERP defines a Contractor Purchasing System Review, or CPSR, as a Government evaluation of a contractor’s purchasing system under FAR subpart 44.3 and, when applicable, DFARS 252.244-7001. The cognizant contract administration office conducts the review, and the cognizant administrative contracting officer decides whether to grant, withhold, or withdraw system approval.
The cognizant contract administration office conducts the CPSR, and the ACO decides whether to approve the system.
A Contractor Purchasing System Review evaluates the process a contractor uses to solicit, price, award, and manage subcontracts and purchase orders. FAR 44.301 states that the review evaluates how efficiently and effectively the contractor spends Government funds and complies with Government policy when subcontracting. FAR 44.302 assigns the determination of need to the ACO and the conduct of a needed review to the cognizant contract administration office. For DoD contracts that contain DFARS 252.244-7001, that clause supplies additional purchasing-system criteria. The DoD-specific review threshold is addressed separately in DFARS 244.302; DFARS 252.244-7001 does not establish the general authority for every CPSR. The contractor enters its own subcontracts. It is not acting as a Government procurement agent and, when included in the contract, remains responsible for contract performance under FAR 52.244-2, unless the consent or approval specifically provides otherwise.
A CPSR is a FAR purchasing-system review. It is distinct from accounting-system surveys, incurred-cost audits, and other contractor business-system reviews. SF 1408 is a Standard Form used to report a preaward survey of a prospective contractor's accounting system. An incurred-cost audit addresses claimed costs and indirect rates for a period. DFARS 252.242-7005 lists contractor business systems for covered CAS contracts when the corresponding clauses are included, including accounting, earned value, estimating, material management and accounting, property, and purchasing. For more detail on incurred-cost work, see the DCAA Contract Audit Manual. For DoD matters, DCMA may be the cognizant office. Other agencies may use their own cognizant offices and procedures. The Department of Energy, for example, publishes a CPSR methodology. For accounting-system context, see the guide to DCAA-compliant accounting.
A CPSR may be needed after a sales review, not automatically when a threshold is crossed.
FAR 44.302 directs the ACO to perform a review to determine whether a CPSR is needed when expected sales to the Government exceed $25 million in the next 12 months. For DoD contracts, DFARS 244.302 substitutes a $50 million threshold for that FAR threshold. The calculation excludes competitively awarded firm-fixed-price contracts, competitively awarded fixed-price contracts with economic price adjustment, and sales of commercial supplies and commercial services under FAR part 12. Sales include prime contracts, subcontracts under Government prime contracts, and modifications. The ACO also considers past performance and the volume, complexity, and dollar value of subcontracts. The agency head responsible for contract administration may raise or lower the applicable review level. The review level is not an automatic CPSR decision; DFARS 252.244-7001 supplies purchasing-system criteria, while DFARS 244.302 supplies the DoD-specific review threshold.
An approved purchasing system affects contract-specific advance-notification and consent requirements. Without approval, FAR 44.201-1 and the applicable subcontract clause generally require consent for certain cost-reimbursement, time-and-materials, labor-hour, unpriced, or higher-value fixed-price subcontracts. With approval, FAR 44.305-2 generally waives specified notice and consent requirements, subject to identified exceptions and special surveillance. Contract type still matters. For the broader cost and contract-type context, see the guide to government contract project accounting.
A CPSR evaluates the purchasing system, with special attention from market research through postaward oversight.
FAR 44.303 identifies eleven areas for special attention: market research, price competition, pricing policies and data, responsibility and exclusions, affiliates, small-business policies, major subcontract programs, Cost Accounting Standards compliance, contract types, management controls including progress payments, and higher-level quality standards. The five examples below are representative, not a complete test. For DoD contracts containing DFARS 252.244-7001, the basic clause contains 24 system criteria, while its alternate changes the set. Reviewers may sample purchasing records and compare them with the contractor's policies and procedures.
Competition
Whether market research and price competition are appropriate to the purchase, and whether the source-selection record explains the result. Competition is pursued to the maximum extent practicable when the applicable contract criteria require it. A sole-source or single-source award is not automatically prohibited, but it must have the justification and analysis required by the applicable contract and system criteria.
Price and cost analysis
Whether the contractor performs timely and adequate cost or price analysis, as applicable, and uses it to support a fair and reasonable subcontract price. The method depends on the action and applicable contract requirements.
Make-or-buy decisions
Whether the contractor applies a consistent make-or-buy policy and documents the rationale for performing work in-house or subcontracting it. For a contract containing the Basic clause of DFARS 252.244-7001, the policy must be in the Government’s best interest; Alternate I deletes that Basic-clause requirement.
Subcontract management and oversight
Whether the contractor maintains appropriate surveillance, administers changes, addresses delivery and performance risks, and includes applicable flow-down clauses in subcontracts and purchase orders.
Purchase transaction records
Whether purchase and subcontract files contain an accurate history that supports the vendor selected and price paid, with enough records for the Government to review the action. A particular system of record or attachment method is not prescribed.
An approved purchasing system can waive specified pre-award notice and consent requirements.
A CPSR provides the basis for an approval decision. The cognizant ACO separately grants, withholds, or withdraws approval and notifies the contractor in writing under FAR 44.305-1. When approval is granted, FAR 44.305-2 says the notice identifies its scope and effective date and explains which advance-notification and consent requirements it waives. The waiver depends on contract type and the specific contract language. It does not create a universal higher dollar threshold, remove Government oversight, or relieve the contractor of responsibility. FAR 52.244-2 states that, unless the consent or approval specifically provides otherwise, neither relieves the contractor of responsibility.
Approval is not permanent. The ACO must determine at least every three years whether another purchasing system review is necessary, and the approval notification may be withdrawn at the ACO's discretion. The notification can also identify subcontracts or classes of subcontracts that still require consent. Maintaining the underlying controls matters as much as earning the initial approval.
ERP and procure-to-pay configuration can help make purchasing controls consistent and auditable.
A CPSR evaluates purchasing policies, procedures, and performance. FAR and DFARS prescribe outcomes and system criteria in applicable contracts, not a required ERP, attachment method, timestamp design, vendor master, or universal approval tiers. An ERP can make evidence easier to find and review. The four configuration patterns below are advisory examples, not a complete CPSR test or universal legal requirements.
Approval workflows
Can route requisitions and purchase orders through the contractor’s chosen approval rules, including any management review required for a sole-source or single-source action. FAR and the contract, not a universal CPSR dollar tier, determine the required control.
Competitive-bid documentation
Can associate solicitations, quotes, analyses, and source-selection rationale with the purchasing record. Multiple bids are not required for every action. For contracts containing the Basic clause of DFARS 252.244-7001, competitive sourcing is used to the maximum extent practicable and sole-source or single-source awards receive management-level justification and adequate cost or price analysis, as applicable. Alternate I deletes the Basic-clause paragraphs containing those requirements.
Audit trail
Can preserve a history of changes and approvals from requisition through receipt. The CPSR does not prescribe timestamping every change or a particular software audit-trail design.
Vendor management
Can track supplier responsibility, performance, surveillance, and applicable flow-down requirements. Required clauses belong in the applicable purchase order or subcontract. A vendor master record is one possible support, not a universal requirement.
None of these configurations guarantees system approval. They can help make the contractor's purchasing discipline visible and consistent across sampled transactions. The correct design depends on applicable clauses, contract type, agency requirements, and the contractor's policies. Lightbridge ERP provides independent readiness advice on configuration during a government contracting readiness engagement.
Lightbridge ERP works on CPSR readiness, not certification.
Lightbridge ERP is an independent readiness advisor. It helps government contractors assess their purchasing process against applicable review criteria, design approval workflows and documentation standards, advise on ERP or procure-to-pay configuration for competition, price and cost analysis, and subcontract oversight, and prepare a purchase order sample a reviewer may request. Lightbridge is vendor-neutral and advisory. It does not conduct a CPSR, make approval decisions, certify a purchasing system, or represent contractors before DCMA or another agency.
The framing matters here too: this is readiness and advisory work. The cognizant contract administration office conducts the review, and the cognizant ACO controls the approval decision. For organizations building out the broader government contracting accounting environment alongside purchasing controls, a structured platform selection and an ERP advisory engagement are the right starting points.
This guide is general information, not legal, audit, or accounting advice. Regulations, thresholds, and agency practice change. Verify any specifics against official sources such as acquisition.gov and applicable agency guidance, and consult qualified advisors before acting.
CPSR: frequently asked questions
- What is a Contractor Purchasing System Review (CPSR)?
- A Contractor Purchasing System Review, or CPSR, is a Government evaluation of a contractor's purchasing system. FAR 44.301 says the review gives the cognizant administrative contracting officer a basis for granting, withholding, or withdrawing approval. Under FAR 44.302, the cognizant contract administration office conducts a review when the ACO determines it is needed. For DoD contracts containing DFARS 252.244-7001, the clause adds purchasing-system criteria. A CPSR looks at market research, competition, pricing, make-or-buy decisions, source responsibility, subcontract administration, and related controls.
- Which contractors are subject to a CPSR?
- FAR 44.302 does not make a CPSR automatic. The ACO determines whether one is needed based on past performance and the volume, complexity, and dollar value of subcontracts. If sales to the Government are expected to exceed $25 million in the next 12 months, a review is performed to determine whether a CPSR is needed. For DoD contracts, DFARS 244.302 substitutes a $50 million threshold for that FAR threshold. The calculation excludes competitively awarded firm-fixed-price contracts, competitively awarded fixed-price contracts with economic price adjustment, and Part 12 sales of commercial supplies and commercial services. Sales include prime contracts, subcontracts under Government prime contracts, and modifications. The agency head responsible for contract administration may raise or lower the applicable review level. DFARS 252.244-7001 is a DoD contract clause with purchasing-system criteria; DFARS 244.302, not that clause, supplies the DoD-specific review threshold. An approved purchasing system affects contract-specific consent and notice rules, not the ACO's review decision.
- What does a CPSR actually test?
- A CPSR evaluates the purchasing system as a whole and the contractor's performance under it. FAR 44.303 identifies eleven areas for special attention: market research; price competition; pricing policies and data; responsibility and exclusions; affiliates; small-business policies; major subcontract programs; Cost Accounting Standards compliance; contract types; management controls, including progress payments; and higher-level quality standards. The five examples in this guide are representative, not a complete test. For DoD contracts containing DFARS 252.244-7001, the basic clause contains 24 system criteria, while its alternate changes the set. Reviewers may sample purchasing records and compare them with the contractor's policies and procedures.
- What does CPSR approval get a contractor?
- A CPSR report does not itself grant approval. Under FAR 44.301, the review gives the cognizant ACO a basis for deciding whether to grant, withhold, or withdraw approval. If the ACO grants approval, the written notice identifies its scope and effective date and explains which advance-notification and consent requirements it waives. Under FAR 44.305-2, approval generally waives specified requirements in fixed-price contracts and specified subcontracts in cost-reimbursement contracts, but identified exceptions and special-surveillance requirements remain. Without an approved system, FAR 44.201-1 and the contract's subcontract clause generally require consent for specified subcontract types or values. Approval does not create a universal higher dollar threshold and may be withdrawn.
- How is a CPSR different from a DCAA audit or an SF 1408 survey?
- A CPSR and DCAA accounting work address different questions. SF 1408 is a Standard Form used to report a preaward survey of a prospective contractor's accounting system, as FAR 53.209-1 identifies. An incurred-cost audit examines claimed direct and indirect costs and rates for a period, including allowability, allocability, and reasonableness. It is not the same as an accounting-system preaward survey. A CPSR evaluates purchasing and subcontracting under FAR subpart 44.3. DFARS contractor-business-system treatment is contract- and clause-dependent. DFARS 252.242-7005 applies only to covered CAS contracts and lists the business systems included when their corresponding clauses are present. The systems can include accounting, earned value, estimating, material management and accounting, property, and purchasing. See the guide to DCAA-compliant accounting for the accounting-system side.
- What documentation does a CPSR reviewer expect to see?
- A CPSR reviewer samples the purchasing system's records and looks for evidence that the contractor's policies and practices work. The record should support the applicable action, which may include the need or requisition, market research, solicitations or other source-selection evidence, quotes or proposals when obtained, price or cost analysis as applicable, source-selection and sole-source or single-source rationale when applicable, subcontract terms and required flowdowns, administration and surveillance, changes, and receiving records. FAR and the contract determine what is required for a given action. A specific ERP attachment pattern is not required. Missing or inconsistent support can make the review harder and may result in findings.
- How does ERP configuration help a contractor pass a CPSR?
- An ERP can help implement and evidence a contractor's controls, but no particular ERP or attachment pattern is required. Approval workflows, document associations, change history, and supplier records are possible configuration patterns. They should reflect applicable FAR and DFARS clauses, contract requirements, and contractor procedures. For a DoD contract containing the Basic clause of DFARS 252.244-7001, the purchasing system must use competitive sourcing to the maximum extent practicable and require management-level justification and adequate cost or price analysis, as applicable, for sole-source or single-source awards. Alternate I deletes the Basic-clause paragraphs containing those requirements. Lightbridge ERP provides independent readiness advice on these controls and does not determine whether a system passes.
- How does Lightbridge ERP help with CPSR readiness?
- Lightbridge ERP is an independent readiness advisor for CPSR preparation. It can assess a contractor's purchasing process against applicable review criteria, advise on approval workflows and documentation, advise on ERP or procure-to-pay configuration to capture competition, price and cost analysis, and subcontract oversight, and help prepare a purchase order sample a reviewer may request. Lightbridge does not conduct a CPSR, grant approval, certify a purchasing system, or represent contractors before DCMA or another agency. Its recommendations are vendor-neutral and advisory.
From understanding a CPSR to being ready for one.
When the question shifts from what a CPSR checks to whether your purchasing system can support one, Lightbridge ERP provides independent, vendor-neutral readiness advice, including advice on platform configuration.