Government Contracts DFARS Rule Raises Purchasing System Review Threshold
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Thursday, January 30, 2020

DFARS Rule Raises Purchasing System Review Threshold

By Government Contracts Editorial Staff

The Department of Defense has finalized, without change, the proposed rule (¶70,020.433) in DFARS Case 2017-D038, which amended the Defense Federal Acquisition Regulation Supplement to increase the threshold for contractor purchasing system review to $50 million. The rule implements a Defense Contract Management Agency recommendation to raise the FAR 44.302(a) CPSR threshold from $25 million to $50 million. FAR 44.302(a) requires the administrative contracting officer to determine whether a contractor’s sales to the government are expected to exceed $25 million during the next 12 months and, if so, to perform a review to determine if a CPSR is needed. The ACO uses this dollar threshold in conjunction with the surveillance criteria in FAR 44.302(a) (contractor past performance, and the volume, complexity, and dollar value of subcontracts). Competitively awarded firm-fixed-price and fixed-price with economic price adjustment contracts and sales of commercial items pursuant to FAR Part 12 are excluded from this requirement.

Burden Lessened. FAR 44.302(a) authorizes the agency head responsible for contract administration to raise or lower the $25 million CPSR threshold if in the government’s best interest. The $25 million threshold has not changed since 1996. An analysis conducted by DCMA’s CPSR group concluded that a $50 million threshold would appropriately account for inflation, reduce burden on small contractors, and allow a more efficient and effective use of CPSR resources to review larger contractors where more taxpayer dollars are at risk. DoD estimates that with the higher threshold, DCMA ACOs can reduce the number of contractor reviews by approximately 20 percent, while reducing by the value of contract dollars covered by CPSRs by only 2 percent. The rule adds the increased threshold at new DFARS 244.302. For the text of this final rule, which has an effective date of December 31, 2019, see ¶70,017.27.

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