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The Business

Operations Center and

CPSRs

Breakout Session # D08

Andrew C. Obermeyer, Director, DCMA Business

Operations Center

Karen Zinn, Team Leader, DCMA CPSR Group

Date: Tuesday, July 28, 2015

Time: 11:15am – 12:45 pm

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– Fourth level » Fifth level Functions:

• Evaluate contractor’s purchasing systems and provide expert

recommendations whether to approve or withhold/withdraw approval of the system.

• Arrange timely and cost effective reutilization, sale, and disposal of

excess government property in the possession of contractors.

• Settle contracts terminated for the convenience of the

Government.

• Evaluate the adequacy of contractor’s property management

system to ensure Government Property in the hands of contractors is appropriately managed.

Centralized Lines of Service

Plant Clearance Group

Terminations

Group Property Group Contractor Purchasing

System Review Group

Business Operations Center

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DCMA-AQBCA Northeast Team (Boston, MA)

John Foley

Supervisory Procurement Analyst

DCMA-AQBCB

Southeast Team (Smyrna, GA) Randy Shelby

8 - Procurement Analysts, GS-12 1 – Procurement Analyst, GS-11 9 - Procurement Analysts, GS-12 1 - Procurement Analyst, GS-11 DCMA-AQB Andrew C. Obermeyer Director

Business Operations Center Ft. Lee, VA DCMA-AQBC Elizabeth Alicea Director CPSR Group Boston, MA Kathy Wehner Management Assistant DCMA-AQBCC

Northwest Team (Phoenix, AZ) Richard Seals

DCMA-AQBCD Central Team (Dallas, TX)

Karen Zinn

8 - Procurement Analysts, GS-12 1– Procurement Analyst, GS-11 8- Procurement Analysts, GS-12 1 – Procurement Analyst, GS-11 Boston, MA Smyrna, GA Dallas, TX Phoenix, AZ Fort Lee, VA

CPSR ORGANIZATIONAL

STRUCTURE

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• Ensure that suppliers have

purchasing systems in place that

contribute to effective subcontract

management. Effective subcontract

management includes development

of, as well as performance to,

internal policy and procedures,

public laws and adequacy of cost

and price analyses performed on

subcontractors.

What is the CPSR mission?

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• Contractor Purchasing System

Reviews

‾ Evaluation of the efficiency and effectiveness with which the contractor spends Government funds and complies with Government policy when subcontracting ‾ Complete evaluation of a contractor’s purchasing of

material and services, subcontracting, and subcontract management from development of the requirement through completion of subcontract performance

‾ Report findings to Contracting Officer providing a basis for granting, withholding, or withdrawing approval of the purchasing system

‾ Review corrective action plan for effectiveness and validate implementation

What is the purpose of a CPSR?

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What are the review categories?

• Types of CPSRs

– Initial

– Comprehensive

– Special

– Follow-up

• First two types include same 24

elements of analysis listed at

DFARS 252.244-7001-(c)

• Last two types are tailored to need

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• Annual FY Eligibility Tasker includes Risk

Assessments Reference FAR 44.302(a)

‾ Qualifying Sales of $25 million

‾ Subcontracting volume, complexity and dollar

amount

‾ Contractor past performance

‾ ACO identification of risk

• DCMA List of Potential Contractors built from

MOCAS data – about 600 CAGE codes yielding

375 potential reviews

• ACOs solicit input by the Contractors and

perform RA using policy template

• Eligibles determined by CPSR team with ACO

input and coordination

Who determines the need for a

CPSR?

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How does the CPSR Group

schedule reviews?

• CPSR Group develops the annual schedule based

on:

– Risk Assessments received from ACOs from the annual tasker, – Any other risk assessment received from an ACO throughout the

year,

– DCMA’s Contract Business Analysis Repository (CBAR) etool for: • Not Yet Evaluated Systems (Who meet the criteria for a CPSR) • Disapproved Systems who may require a Follow-up review

• Approved Systems with a system approval date of 3 years or greater

• Required reviews are then prioritized based on risk to the Government.

• Reviews are assigned to a regional CPSR team based on most cost effective travel costs.

• Teams coordinate final review dates with the Contractor and ACO.

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What is the cycle time for a

CPSR?

• CPSR Timeline

– R-120 Final Schedule Agreement

– R-90/60 CPSR Data Questionnaires to CO

– R-90/60 CPSR Data Questionnaires to Contractor POC – R-30 Policy and Universe Reviews

– R-30 Request T&Cs, Purchasing/Procurement forms from Ktr

– Review – Entrance Brief, Daily Outbrief, Exit Conference

– R+20 CPSR Report due to CPSR Management – R+30 Management review, Report to CO

– R+40 CO approval if no deficiencies, or initial determination

– R+70 Ktr response to initial determination

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Most common CPSR findings

• Based on results of FY 14 Reviews

‾ Documentation

‾ Protecting the Government’s Interest when

Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment (FAR 52.209-6)

‾ Policies and Procedure Manual ‾ Cost/Price Analysis

‾ Sole Source Selection Justification ‾ Negotiations

‾ Training

‾ Limitation on Use of Appropriated Funds to Influence Certain Federal Contracting and Financial Transaction (Public Law 101-121) (Anti-Lobbying)

‾ Defense Priorities and Allocation System (DPAS) Rating (15 CRF Part 700(4))

‾ Internal Review/Self Audit

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Who decides if a System is

approved?

• Business System Determinations are made

by ACOs

– And in some case PCOs

– But not by Business Operations Center

personnel

• ACO decisions recorded in the DCMA

Contractor Business Analysis Repository

(CBAR) by CAGE Code

‒ As of 28 May 2015

• 21 Disapprovals

• 741 Approvals

• 42 Not Evaluated

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Actions post CPSR and System

approval

• ACO Surveillance Performed Annually

– ACO performs annual surveillance IAW DCMA

Inst. 109 of a Contractor’s purchasing system

based on criteria in DFARS 252.244-7001 for an

acceptable purchasing system.

• The ACO completes a Risk Assessment

and requests a CPSR Review when:

– Contractor’s policy or practice in regards to their

purchasing system criteria appear to not be in

compliance with the FAR, DFARS, or public laws

based on ACO surveillance, or

• Three years have passed after CPSR has

been completed and the ACO has made a

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Additional functions performed

by the CPSR Group

• Consent to Subcontract CPSR Group Desk Audits

– Advance notification and consent required if

the prime does not have an approved

purchasing system and Government is

assuming a large portion of the contract risk

– DCMA Instruction 143 addresses Consent to

Subcontract

• Established policies, assigns roles and responsibilities and outlines procedures for ACOs to gain insight into prime contractor’s subcontracting actions

• ACO submits a request for support to the CPSR team • Procurement Analyst reviews and provides

recommendation

• Averaging 28 reviews per month for CY15

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CPSR Performance and Staffing

Overview FY10 FY11 FY12 FY13 FY14 FY15

Risk Assessments 113 85 226 219 145 165 Eligible 100 66 100 105 107 126 Scheduled 97 66 70 118 126 143 Completed 78 40 43 57 103 111 (est) Carried Over 3 16 27 32 23 38 Authorized/Onboard 30/26 44/24 44/31 44/35 46/32 45/36 14

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• Risk Assessments Received

– Larger number of reviews completed in FY10 resulted in decrease in RAs in FY11

– In FY12 and FY13 the number of RAs sharply increased after the New Business System rule, 5/8/11

• Number of Reviews performed has decreased

while personnel has increased

– FY10 – 78 completed with 26 Procurement

Analysts

– One Analyst performed a review in FY10 vs two

analysts now

– Length of review increased (two weeks on average

vs one week) and more in depth reviews

performed now vs FY10

• FY14 Goal was 125 reviews

– Completed 103 reviews

• FY 15 Estimated to complete 111 reviews

CPSR Management Challenges

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Priorities as we look ahead

• Cycle Time Metric – report issued in 30

days

‒ FY13 metric was 7% vs goal of 85%

‒ FY13 began at 300 days to complete, FY14 at

150, FY15 at 157

‒ Oct 1, 2014 there were 50 reports delinquent and

May 28, 2015 there were 35 reports delinquent

• Close the system gap between review

completion, report issued, and initial

determination

• Personnel to support mission

• Counterfeit Parts policy implementation

• Better Buying Power Initiatives

‒ Critical Review of Cost/Price Analysis

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Recent developments affecting

CPSR

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• Detection and Avoidance of Counterfeit Parts

- Final Rule DFARS Case 2012-D055, Detection and Avoidance of

Counterfeit Electronic Parts issued May 6, 2014

• New DFARS 252.246-7007 clause, “Contractor Counterfeit Electronic

Parts Detection and Avoidance System”

• Revised DFARS 252.244-7001, “Contractor Purchasing System

Administration” to add counterfeit system criteria

• DFARS 231.205-71 revised to make the costs of counterfeit electronic

parts or suspect counterfeit electronic parts and the cost of rework or corrective action that may be required to remedy the use or inclusion of such parts are unallowable, unless—

- The contractor has an operational system to detect and avoid

counterfeit parts and suspect counterfeit electronic parts that has been reviewed and approved by DoD pursuant to 244.303;

- The counterfeit electronic parts or suspect counterfeit electronic parts are Government-furnished property as defined in FAR 45.101; and - The contractor provides timely (i.e., within 60 days after the contractor

becomes aware) notice to the Government

• DCMA Quality Assurance has been reviewing contractors’ counterfeit

detection and avoidance systems since late 2012, this will continue with risk

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Implementation Status

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• DCMA Instructions:

‒ Drafting Counterfeit Mitigation Instruction DCMA-INST 1205 --Quality Assurance will be broadening their

surveillance to include all contracts and all potential

counterfeit supplies, not just CAS covered contracts and electronic parts

‒ Updating CPSR DCMA-INST 109 on hold

• Other Actions:

‒ The CPSR Guidebook will be revised by Contracts to incorporate the policy changes

‒ Training provided to DCMA personnel

• New requirements and how to employ the DCMA

Counterfeit Detection and Avoidance System Checklist

• To ensure understanding of possible remedies for

deficiencies for Counterfeit Parts Detection and Avoidance Systems (Level II or III CAR, Disapproved Purchasing

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Industry Outreach

• DCMA engaged in industry outreach to improve

Counterfeit parts identification processes and issue

awareness:

‒ Corporate Management Council (CMC)

‒ Council of Defense and Space Industry Associations (CODSIA)

‒ National Contract Management Association meetings

• Discussing current processes to address counterfeit

parts and what additional actions may be needed

• Collaboration between DCMA and industry developing

strategies to clarify elements and assessment criteria

for:

‒ Leverage industry standards for counterfeit prevention ‒ DFARS/FAR rule implementation

‒ Counterfeit Electronic Part Avoidance and Detection System

‒ SAE AS Standards on Counterfeit Mitigation

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Property Management

Oversight

• Risk Assessments

– Based on:

• Contractor past performance

• Inherent risk (i.e. AA&E, classified items/data)

• Loss Investigations

– Investigate reports of loss

– Relieve contractor or recommend liability to CO

– Ensure corrective actions taken to prevent recurrence

• Property Management System Analyses

– Audit contractor’s property management system and determine whether procedures and controls comply with 52.245-1(F)

– Report findings to Contracting Officer (CO)

– Re-analyze corrective actions to ensure implementation

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Property Workload Trend Indicator

FY 2010 2011 2012 2013 2014 2015 (Partial) # of Government Property (GP) Systems 3,492 2,882 1,850 2,130 2,131 2,413 GP Value $ 167.3 B $ 147.3 B $ 147.7 B $ 139.8 B $ 129.7 B $132.8 B GP Line Items 30.5 M 30.5 M 41.0 M 43.7 M 65.6 M 61.1 M Onboard/Authorized 208 205 183/185 182/197 174/201 170/199 Audits Performed 1075 1094 917 1026 1090 537 Audit Target 1113 1179 984 1121 1145 604 Complete % 97% 93% 93% 92% 95% 89% 21 21

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• ACO decisions recorded in the Contract Property

Administration System (CPAS) by CAGE Code

– 31 Disapprovals – 1698 Approvals

• 95 Approvals with minor deficiencies (PA will need to follow-up)

– 93 in “pending” status

• Awaiting Contracting Officer Determination

• 21 “pending” ACO action with possible deficiencies (PA will need to follow-up)

– 317 Contractors awaiting initial audit – 179 Contractors not evaluated

• Business System Determinations are made by

Contracting Officers

• Majority of deficiencies

:

– Poor procedures

– No flow down of clause requirements

Overall Property Systems Status

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What is Our Plant Clearance

Mission?

• Provide timely and cost effective

reutilization, sale, and disposal of

excess government property in the

possession of contractors.

Disposal includes ensuring property

not reutilized is properly disposed

to protect the safety and security of

the United States and its citizens.

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Plant Clearance Workload

Trend Indicator

1 0 1 2 3 4 5 6 7 2011 2012 2013 2014 2015 Acquisition Cost (Billions) FY 2011 2012 2013 2014 2015 (Partial) Acquisition Cost $3.93B $3.98B $4.81B $6.2B $4.16B

Total Line Items 481K 584K 612K 716K 577K

# Plant Clearance

Cases 15,824 14,558 14,969 17,573 12,039

Authorized Personnel 68 68 76 76 76

Data as of 05/31/15

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• Add property workload

slide

Plant Clearance Reutilization

1 8 13 18 23 28 33 38 43 2011 2012 2013 2014 2015 Goal: 15% FY 2011 2012 2013 2014 2015 (Partial) Reutilization Percentage 16.3% 31.9% 17.7% 42% 26% Acquisition Cost-Usable $ 1.6B $ 1.9B $ 2.6B $3.1B $1.5B Reutilized Property $255M $621M $460M $1.3B $391M $391M 25

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What is our Terminations

mission?

• Negotiate equitable settlements of

contracts terminated for the

convenience of the Government

• Receive delegations from all military

services worldwide

• Perform cradle to grave settlement

of the termination from receipt of the

termination notice to issuance of the

final settlement modifications

• Serve as the DoD technical experts

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Terminations Workload

147 27 $12,231.0 $35,497.0 $26,761.4 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 F Y 92-Q 1 F Y 92-Q 4 F Y 93-Q 3 F Y 94-Q 2 F Y 95-Q 1 F Y 95-Q 4 F Y 96-Q 3 F Y 97-Q 2 F Y 98-Q 1 F Y 98-Q 4 F Y 99-Q 3 F Y 00-Q 2 F Y 01-Q 1 F Y 01-Q 4 F Y 02-Q 3 F Y 03-Q 2 F Y 04-Q 1 F Y 04-Q 4 F Y 05-Q 3 F Y 06-Q 2 F Y 07-Q 1 F Y 07-Q 4 F Y 08-Q 3 F Y 09-Q 2 F Y 10-Q 1 F Y 10-Q 4 F Y 11-Q 3 F Y 12-Q 2 F Y 13-Q 1 F Y 13-Q 4 F Y 14-Q 3 F Y 15-Q 2 $ M ill io n s FTEs Terminated Contract Value Onhand ($M)

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• Value added provider of three of

the fifteen DCMA lines of service

• Supporting CCAS property and

Plant Clearance mission

• Supporting achievement of the

Better Buying Power initiatives

Questions?

DCMA’s Business Operations

Center

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Contact Information

• Andrew C. Obermeyer

– DCMA Business Operations Center

–

andrew.obermeyer@dcma.mil

–

www.dcma.mil

• Karen Zinn

– DCMA CPSR Group

–

Karen.zinn@dcma.mil

–

www.dcma.mil

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