FAR 44.303—Extent of review.
Plain-English Summary
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.
Key Rules
CPSR evaluates the system
A CPSR is an evaluation of the contractor’s purchasing system, not just a file-by-file review of individual subcontracts. The focus is on whether the contractor’s policies, procedures, and performance together provide adequate control over subcontracting.
Some subcontracts are excluded
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 items/services under FAR part 12. This narrows the review where subcontract risk is lower or where the contract structure already limits Government exposure.
Consent factors also apply
The considerations used for consent to subcontract under FAR 44.202-2 also apply to the CPSR. That means the review looks at the same kinds of judgment factors used to decide whether a particular subcontract is reasonable and properly supported.
Market research must be examined
The review must give special attention to the contractor’s market research results. The Government wants to see whether the contractor is actively seeking competitive sources and using current market information to support subcontract decisions.
Competition and pricing are key
The CPSR must examine the degree of price competition obtained and the contractor’s pricing policies and techniques. This includes how the contractor obtains certified cost or pricing data, or data other than certified cost or pricing data, when required.
Responsibility screening is required
The contractor’s methods for evaluating subcontractor responsibility must be reviewed, including use of SAM Exclusions. If the contractor awards subcontracts to excluded parties, the contractor must have documentation, systems, and procedures that protect the Government’s interests under FAR 9.405-2.
Affiliates and close relationships matter
The review must consider how the contractor treats affiliates and other concerns with close working arrangements. This is intended to detect favoritism, noncompetitive awards, or conflicts that could distort pricing or subcontract selection.
Small business policies are reviewed
The CPSR must examine policies and procedures affecting small business concerns, including small disadvantaged, women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small businesses. The contractor’s system should support proper consideration of these firms where applicable.
Major subcontract programs need oversight
The review must address planning, award, and postaward management of major subcontract programs. This includes whether the contractor manages significant subcontract efforts in a disciplined, documented, and timely way.
CAS compliance must be checked
The contractor’s compliance with Cost Accounting Standards in awarding subcontracts is part of the review. The Government will look for consistency between subcontract pricing/accounting practices and applicable CAS requirements.
Contract type selection is reviewed
The CPSR examines whether the contractor uses appropriate types of contracts, consistent with FAR 16.103. The contractor should be able to justify why a particular subcontract type was chosen based on risk, pricing, and performance considerations.
Progress-payment controls matter
The review includes management control systems and internal audit procedures used to administer progress payments to subcontractors. Weak controls here can create payment, documentation, and allowability risks for the Government.
Quality standards implementation is reviewed
The CPSR must consider how the contractor implements higher-level quality standards. The Government is looking for evidence that quality requirements are flowed down, monitored, and enforced where needed.
Responsibilities
Contracting Officer / Government reviewers
Conduct the CPSR as a system-level evaluation of the contractor’s purchasing system, apply the consent-to-subcontract considerations from FAR 44.202-2, and focus special attention on the listed risk areas. Exclude the specified categories of subcontracts from review unless segregation is impracticable, and assess whether the contractor’s system adequately protects the Government’s interests.
Contractor
Maintain purchasing system policies, procedures, records, and performance that support compliant subcontracting. The contractor must be able to show market research, competition, pricing support, responsibility determinations, SAM Exclusions screening, small business consideration, major subcontract management, CAS compliance, proper contract-type selection, progress-payment controls, and quality-standard implementation.
Subcontract administrators / purchasing personnel
Apply the contractor’s purchasing procedures consistently when sourcing, negotiating, awarding, and administering subcontracts. They must document decisions, support pricing and responsibility determinations, and follow required controls for excluded parties, small business considerations, and progress payments.
Agency / Government acquisition officials
Use CPSR results to determine whether the contractor’s purchasing system is acceptable and whether corrective action, increased oversight, or other remedies are needed. They should also ensure the review scope is properly limited where the rule excludes certain subcontract categories.
Practical Implications
Contractors should expect auditors to look beyond individual subcontract files and test whether the whole purchasing system works in practice, including documentation quality and internal controls.
A common pitfall is assuming that competitively awarded fixed-price or commercial-item support subcontracts are always outside the CPSR; the exclusion only applies unless segregation is impracticable, so mixed systems can still draw scrutiny.
Weak market research, thin price analysis, or poor support for sole-source awards are frequent CPSR findings because the rule specifically calls out competition and pricing methods.
Screening subcontractors against SAM Exclusions is not enough by itself if an excluded party is used; the contractor also needs documented safeguards to protect the Government’s interests.
Contractors with major subcontract programs should pay close attention to planning, postaward surveillance, progress-payment controls, and quality flowdowns, because these are common areas where system deficiencies show up during review.
Official Regulatory Text
A CPSR requires an evaluation of the contractor’s purchasing system. Unless segregation of subcontracts is impracticable, this evaluation shall not include subcontracts awarded by the contractor exclusively in support of Government contracts that are competitively awarded firm-fixed-price, competitively awarded fixed-price with economic price adjustment, or awarded for commercial supplies and commercial services pursuant to part 12 . The considerations listed in 44.202-2 for consent evaluation of particular subcontracts also shall be used to evaluate the contractor’s purchasing system, including the contractor’s policies, procedures, and performance under that system. Special attention shall be given to- (a) The results of market research accomplished; (b) The degree of price competition obtained; (c) Pricing policies and techniques, including methods of obtaining certified cost or pricing data, and data other than certified cost or pricing data; (d) Methods of evaluating subcontractor responsibility, including the contractor’s use of the System for Award Management Exclusions (see 9.404 ) and, if the contractor has subcontracts with parties on the Exclusions list, the documentation, systems, and procedures the contractor has established to protect the Government’s interests (see 9.405-2 ); (e) Treatment accorded affiliates and other concerns having close working arrangements with the contractor; (f) Policies and procedures pertaining to small business concerns, including small disadvantaged, women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small business concerns; (g) Planning, award, and postaward management of major subcontract programs; (h) Compliance with Cost Accounting Standards in awarding subcontracts; (i) Appropriateness of types of contracts used (see 16.103 ); (j) Management control systems, including internal audit procedures, to administer progress payments to subcontractors; and (k) Implementation of higher-level quality standards.