$9-23.103 Definitions.

(a) The term "contractor", as used in this part, refers to a "prime" or "subcontractor" and means a separate entity of a contractor, such as an affiliate, division, or plant, which performs its own purchasing.

(b) ERDA cognizant contractors are those contractors over which ERDA has cognizance as identified in FMC 73-6, or where ERDA has the preponderance of Government business. Included are operating contractors and pilot and demonstration plant contractors.

(a) A CPSR is an evaluation of a contractor's procurement system and the effectiveness with which procurements are placed in the performance of Government contracts. It is not limited to a specific Government contract.

(b) A CPSR will be initiated when the contracting officer deterimines that the nature or extent of subcontracting warrants. Generally, a CPSR is warranted if the contractor is expected, within the next 12 months, to have in excess of $5,000,000 business with the Government from other than fixed-price, competitively awarded contracts. (For the purpose of this paragraph, contract modifications are not considered to be competitively awarded.)

(c) The procurement systems of contractors meeting the criteria in (b) above shall not be reviewed if the contracting officer determines, in writing, and the senior procurement official, Headquarters, agrees that the extent or nature of the subcontracting will not justify the cost of the CPSR. In exceptional cases, a contractor not meeting the criteria in (b) above may be reviewed if the contracting officer determines that the facts warrant such action.

(e) CPSRS will be conducted in accordance with the ERDA Handbook for Conduct of Contractor Procurement System Reviews (Draft).

(f) An outline of the proposed CPSR review, including the time schedule, composition and assignments of the review team, shall be forwarded to the Senior Procurement Official, Headquarters. Initial review teams shall include a DCAS representative and, if available, a representative from Headquarters Frocurement Division and another ERDA procurement office.

9-23.105 Types of review.

$9-23.105-1 Initial review.

An initial review shall be conducted when the contractor meets the criteria in §9-23.104. It shall be a complete evaluation as described in §9-23.106.

$9-23.105-2 Subsequent reviews.

If a contractor's procurement system is approved, the contracting officer shall determine annually the need for a subsequent review if it still meets the criteria in $9-23.104. A subsequent review may be limited to specific areas but shall include sufficient consideration of each of the factors listed in $9-23.106 (a) to establish the current adequacy or inadequacy of the entire system. Such review shall generally be conducted in order to:

(a)

(b)

examine changes instituted since the previous review;

ascertain the status of prior recommendations upon which action has not been completed; and,

(c) determine whether the contractor's procurement system, especially the significant cost impact areas, warrants continued approval.

$9-23.105-3 Special reviews of approved systems.

After approval of the contractor's procurement system, the contracting officer may initiate special reviews in connection with weaknesses revealed as a result of:

(a) the initial or subsequent review;

(b) the review of subcontracts submitted under the notification requirement of contract clauses.

(c) changes in the contractor's procurement policies, procedures, or personnel;

(d) changes in plant workload or type of work; or,

(e) information provided by Government personnel.

In conducting such reviews, the same effectiveness criteria used in previous reviews shall be applied to the area being examined.

$9-23.105-4 Review of procurement systems when approval

is withheld or withdrawn.

If approval of a contractor's procurement system is withheld or withdrawn, a review shall be made as soon as evidence is received from the contractor that the factors leading to such action have been corrected. Whether this review consists of a complete reexamination of the contractor's procurement system or is confined to the areas found deficient shall be a matter of judgment and will depend on the time lapse between the notice to the contractor of withholding or withdrawal of approval and the follow-up review.

$9-23.106 Extent of review.

(a) Generally, a review shall consist of a complete evaluation of the contractor's procurement system. This review shall be made in accordance with the ERDA CPSR handbook and shall give special attention to:

(1) the degree of competition obtained;

(2) pricing policies and techniques, including methods of obtaining accurate, complete, and current cost or pricing data, and certification as required;

ities.

(3) the methods of evaluating subcontractor's responsibil

(4) the treatment accorded affiliates and other concerns having close working arrangements with the contractor;

(5) the extent to which assurance is obtained that principal subcontractors apply sound pricing practices and a satisfactory procurement system in dealing with lower-tier subcontractors;

(6) the appropriateness of the types of subcontract used; (7) practices pertaining to small and minority businesses, labor surplus area, and other socio-economic programs;

(8) attention given to the management of significant subcontract programs,

(9) the contractor's procurement policies and procedures pertaining to such items as "make-or-buy" program, control of property, obtaining of warranties, and organizational conflict interest.

(10) compliance with cost accounting standards in award and administration of subcontracts.

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(11) effectiveness of policies and procedures.

(b) In reviewing the contractor's procurement system, a determination shall be made as to whether subcontracting is done competitively to the maximum practicable extent. This requires ascertaining

whether:

(1) a sufficient number of sources are solicited; and

(2) subcontracting procedures provide other elements needed

for adequate and effective competition, including:

and,

(i) adequate descriptions of any factors to be evaluated;

(ii) evaluation of all offers on a common basis.

(c) Decisions as to whether commercial items conform to the purpose and intent of the exemption from the requirement for submitting and certifying current cost or pricing data shall be analyzed.

$9-23.107 Review of CPSR Reports.

(a) The findings and recommendations of the review team (the CPSR Report) should be reviewed by the senior official of the ERDA organization having cognizance over the contractor and shall be concurred in by the senior procurement official, Headquarters, before the contracting officer determines to grant, continue, withhold or withdraw approval.

(b) Three copies of the CPSR report shall be furnished to the senior procurement official, headquarters, who will consult with appropriate organizations (e.g., the Office of General Counsel) in performance of his review.

The submittal shall include:

(i) a description of the present and proposed subcontract consent dollar limitations;

(ii) the effect of the proposed dollar limitations on the subcontract consent workload;

(iii) an evaluation of the anticipated benefits and problems resulting from the proposed dollar limitations change; and (iv) a description of the present (if any) and proposed surveillance plan.

(a) The contracting officer is responsible for granting, continuing, withholding, or withdrawing approval of a contractor's procurement system. The contracting officer shall approve a procurement system only after a CPSR discloses that the contractor's procurement policies and practices are effective and provide adequate protection of the Government's interests. Approval of a system shall be withheld if there are major weaknesses or if the contractor is unable to provide sufficient information upon which to base an affirmative determination. An approval may be withdrawn at any time on the basis of a determination that there has been a deterioration of the contractor's procurement system, or otherwise to protect the interest of the Government.

(b) The contracting officer shall give the contractor written notice granting, continuing, withholding, or withdrawing approval of the procurement system. If the contractor's system is approved, the notification of approval shall include:

(1) the effective date of the approval;

(2)

the plant, plants, divisions, or facility of the company that are approved;

(3)

the period that the approval covers (usually one year, maximum two years);

(4) the extent of applicability (usually all ERDA contracts with the approved facility);

(5) the effect of the approval; the senior official of the ERDA procurement organization usually approves the dollar level below which individual subcontracts need not be approved. This dollar level will be based upon the degree of confidence in the contractor's procurement system as determined through the review and the need to maintain a review of the most significant subcontracts; (9-50.302-5)

(6) any special conditions or requrements for notification or approval by the contracting office (such as intracompany transfers, critical or programmatically important subcontracts);

(7) other conditions such as:

(i) contract terms that need to be changed;