Overview
This section defines the authority and procedures for the Administrative Contracting Officer (ACO) regarding the status of a contractor's purchasing system. It outlines the criteria for system approval, the formal notification requirements, and the specific conditions that necessitate withholding or withdrawing that approval.
Key Rules
- ACO Authority: The cognizant ACO has sole responsibility for determining if a contractor’s purchasing system is efficient and protects the Government’s interests.
- Effects of Approval: An approved system waives the requirement for advance notification and consent to subcontracts for fixed-price contracts, and for specified subcontracts in cost-reimbursement contracts (unless identified for "special surveillance").
- Cross-Servicing: System approval applies to all Federal Government contracts at the approved plant location through cross-servicing arrangements.
- Mandatory Withdrawal/Withholding: The ACO must withhold or withdraw approval for major weaknesses, inability to provide sufficient information, or recurring noncompliance with certified cost or pricing data, Cost Accounting Standards (CAS), advance notification requirements, or small business subcontracting rules.
- Strict Timelines: If approval is withheld or withdrawn, the ACO must notify the contractor within 10 days of the review; the contractor then has 15 days to provide a corrective action plan.
Practical Implications
- Reduced Administrative Burden: Obtaining and maintaining an approved purchasing system (CPSR approval) significantly streamlines operations by removing the need for the government to review and approve individual subcontracts.
- High Stakes for Compliance: Because approval can be withdrawn at any time for "deterioration" or to "protect the Government’s interest," contractors must maintain continuous compliance with specialized areas like Small Business Subcontracting and CAS to avoid a sudden increase in administrative oversight and potential delays in subcontract awards.