Government contract purchasing system requirements vary depending on a contractor’s size, types of contracts, and other risk factors. Federal Acquisition Regulation (“FAR”) Part 44 – Subcontracting Policies and Procedures, establishes the requirements for review, evaluation, and approval of contractor purchasing systems. For government contractors expected to exceed $25 million in annual sales within the following 12 months (excluding competitive firm-fixed-price and commercial items contracts), the Administrative Contracting Officer (“ACO”) must assess the need for a Contractor Purchasing System Review (“CPSR”). For Department of Defense (“DOD”) contractors, the threshold requiring review is $50 million per DOD Federal Acquisition Regulation Supplement (“DFARS”) Part 244. The assessment is based on the contractor’s past performance and the volume, dollar value, and complexity of its subcontracts. If a contractor’s purchasing system has not been reviewed, or has been disapproved, the contractor is required to provide advance notice to the ACO and obtain consent prior to entering into subcontract agreements. Failing a CPSR may result in the contractor being ineligible to bid on future work.
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