FAR 44.3—Subpart 44.3

Objective.

FAR 44.301 states the purpose of a contractor purchasing system review (CPSR) and explains why the review matters in federal contracting. It covers two core subjects: first, the review’s objective is to evaluate how efficiently and effectively a contractor spends Government funds when it buys supplies or services from subcontractors; second, it assesses whether the contractor complies with Government policy in subcontracting. The section also explains the practical role of the CPSR in the approval process for a contractor’s purchasing system, because the review gives the administrative contracting officer (ACO) the information needed to grant, withhold, or withdraw approval. In practice, this means the CPSR is not just an audit exercise—it is a management tool that affects whether a contractor’s purchasing system is considered acceptable for Government work. Contractors should understand that their subcontracting practices can directly affect system approval status, while contracting officials use the CPSR to protect the Government’s interests and ensure responsible use of public funds.

Requirements.

FAR 44.302 explains when the Administrative Contracting Officer (ACO) must decide whether a contractor needs a Contractor Purchasing System Review (CPSR), and how often that decision must be revisited. It covers the factors the ACO must consider—especially the contractor’s past performance and the volume, complexity, and dollar value of subcontracts—and it establishes a sales-based screening threshold for making a CPSR review determination. The section also defines what counts as sales for this purpose, including prime contracts, subcontracts under Government prime contracts, and modifications, while excluding competitively awarded firm-fixed-price contracts, competitively awarded fixed-price contracts with economic price adjustment, and sales of commercial supplies and commercial services under FAR part 12. It further states that a CPSR is generally not conducted for a single specific contract, and it allows the head of the agency responsible for contract administration to adjust the $25 million review level up or down when doing so is in the Government’s best interest. Finally, it requires the ACO to reassess the need for a purchasing system review at least every three years, and if a review is needed, the cognizant contract administration office conducts it. In practice, this section is the trigger mechanism for Government oversight of a contractor’s purchasing system and is important because it can lead to deeper scrutiny of subcontracting practices, internal controls, and procurement compliance.

Extent of review.

FAR 44.303 explains how a Contractor Purchasing System Review (CPSR) is supposed to be conducted and what the review must cover. Its core purpose is to let the Government assess whether a contractor’s purchasing system is adequate, compliant, and capable of protecting the Government’s interests when the contractor buys supplies and services from subcontractors. The section also limits the scope of the review in some cases: unless subcontract segregation is impracticable, the CPSR generally does not include subcontracts used exclusively to support Government contracts that are competitively awarded firm-fixed-price, competitively awarded fixed-price with economic price adjustment, or commercial supplies and commercial services acquired under FAR part 12. In evaluating the purchasing system, the Government must look at the same considerations used for consent to subcontract under FAR 44.202-2, but it must also examine the contractor’s policies, procedures, and actual performance under the system. The section specifically calls for attention to market research, price competition, pricing methods and cost or pricing data practices, subcontractor responsibility checks including SAM Exclusions screening, treatment of affiliates and closely related firms, small business policies, major subcontract planning and administration, Cost Accounting Standards compliance, contract type selection, progress-payment controls, and implementation of higher-level quality standards. In practice, this section matters because it shapes what auditors and contracting officers will scrutinize during a CPSR and tells contractors where weak purchasing controls can lead to findings, corrective actions, or reduced confidence in the system.

Surveillance.

FAR 44.304 explains how the Government monitors a contractor’s purchasing system after award. It requires the Administrative Contracting Officer (ACO) to maintain enough surveillance to determine whether the contractor is effectively managing its purchasing program, and it requires that surveillance be carried out under a written or otherwise defined plan developed by the ACO with help from subcontracting, audit, pricing, technical, or other specialists as needed. The section identifies the major areas the plan should cover: preaward, postaward, performance, and contract completion phases, as well as other contractor operations that affect purchasing and subcontracting. It also requires the Government to check whether the contractor’s corrective actions from prior Government recommendations are actually working. Finally, it directs the Government to avoid duplicative reviews of the same areas by CPSR teams and other surveillance personnel, so oversight is effective without unnecessary burden or overlap. In practice, this section is about making surveillance targeted, coordinated, and useful enough to protect the Government’s interests while giving contractors clear expectations about how their purchasing systems will be reviewed.

Granting, withholding, or withdrawing approval.

Disclosure of approval status.

FAR 44.306 addresses disclosure of the approval status of a proposed subcontractor’s purchasing system. It tells the Administrative Contracting Officer (ACO) when and how to respond to a contractor’s request for information, including whether the subcontractor’s purchasing system has been approved, disapproved, or not yet reviewed. The section also makes clear that any information provided is only a snapshot in time: the Government does not have an ongoing duty to keep the contractor informed of later changes in that approval status. In practice, this means contractors may ask the ACO for status information when deciding whether to rely on a subcontractor’s purchasing system, but they cannot treat that information as a continuing certification. The rule exists to support informed subcontracting decisions while limiting Government responsibility for monitoring and updating contractors on subsequent changes. For contracting officers and contractors alike, the practical significance is that status checks should be made close to the time of reliance, and contractors should not assume an earlier approval remains valid without confirming current status.

Reports.

FAR 44.307 explains how the Administrative Contracting Officer (ACO) must distribute reports and related correspondence after a Contractor Purchasing System Review (CPSR) or other purchasing system action. It covers distribution of CPSR reports, notifications that grant, withhold, or withdraw approval of a contractor’s purchasing system, and Government recommendations for improving an approved system, including the contractor’s response. The section identifies the minimum recipients: the cognizant contract audit office, other activities designated by the cognizant agency, and the contractor itself. In practice, this rule ensures that the audit, oversight, and program offices that rely on purchasing system information receive the same official record, while also giving the contractor visibility into findings and proposed improvements. It supports consistency, accountability, and follow-through on purchasing system determinations and corrective actions.