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sylvia

CPSR File for $3,500 Subcontract Micropurchases

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We are re-evaluating our purchasing processes in an effort to improve our efficiency.  One of the pain points we would like to eliminate is creating hard copy paper files for every microthreshold purchase.  The DCMA CPSR Guidebook dated October 13, 2015, states that the CPSR analysts are to verify that the contractor's files includes a purchase requisition, purchase order, and documentation that the price is fair and reasonable and the basis for determination. We currently make hard copy paper files for each purchase, and verify compliance on every purchase--even microthreshold purchases.  As you can imagine, this process is time-consuming with very little value or benefit except to aggregate the paper for a purchase.  Our hard copy paper files contain the purchase requisition, purchase order, and a documentation on why the price is fair and reasonable and the basis for that determination.  I would like to abandon making hard copy paper files for the microthreshold purchases, and rely on the identical scanned documentation stored in our Oracle system and SharePoint for the microthreshold purchases.  We would create hard copy paper files for the microthreshold purchase samples that are requested by an auditor in support of the CPSR audit.  Thoughts?  Is there anything that obligates us to keep hard copy paper files for the micropurchases? 

Sylvia

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Hi Sylvia -

This is something a lot of companies are looking at right now - there is not a requirement that I know of to maintain original paper copies of this documentation, but if there is one out there, Vern will no doubt be able to point to it!  

From a practicality standpoint, the risks of going this direction typically apply when companies do not intend to provide paper copies at all, but rather intend to just provide system access in the event of a CPSR.  This opens up a plethora of issues, but it sounds like you've already addressed this by planning to print out requested documents.

It will be a slow move, but this is the future of documentation.  We've also embraced it by creating an online price analysis reporting / documentation tool, SpendLogic.

Good luck!

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Just make sure to comply with FAR 4.703(c) and (d), as well as 4.705-3(f).

 

 

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??

Did I misinterpret the original question? It seemed to me that the paper records were the original records and sylvia wanted to scan the original (paper) records, save the scanned copies, and then throw away the original (paper) records. Upon audit, sylvia would print out the scanned copies as paper copies. Did I miss something?

H2H

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Sorry, H2H.

I didn't read the OP carefully enough.

Quote

I would like to abandon making hard copy paper files for the microthreshold purchases, and rely on the identical scanned documentation stored in our Oracle system and SharePoint for the microthreshold purchases.

I took the first half of the sentence to mean that they weren't going to create paper documents at all anymore. I overlooked the second half, which seems to say they're going to create paper documents and then toss them.

My bad.

 

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Sylvia:  Please help clarify. What I typically see is documentation that is emailed to buyers and then printed.  In addition, the buyers create electronic documentation that is also then printed.  In both of these cases, the electronic documents (not printed copies) are technically the "originals."  Do your buyers work with truly original non-electronic documentation that would then be subject to the 1 year rule pointed out by H2H, or are they using printed reproductions of electronic documents?  Are the electronic copies modified manually after printing?

H2H & Vern:  Am I off-base here by saying that the original documentation is the electronic copy and that the paper copies therefore aren't subject to retention unless modified manually?

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Patrick,

I can't speak for DCMA reviewers, but I can say with some authority (based on my experience) that DCAA auditors do NOT understand the concept of electronic records. At one (very large DOD) contractor we had electronic P.O.'s and electronic invoices and electronic receivers and EFT payments and it simply horrified them. How could we do a three way match when there were no paper copies to compare? Does DCAA's discomfort make it wrong? Obviously not -- and many companies are, as you say, moving in that direction because it saves time and money. But in my view the DCAA audit guidance is woefully behind the times in this particular area. And that creates risk for contractors seeking to have their claimed costs be found to be reasonable, allowable, and allocable.

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First, I appreciate everyone's helpful comments! 

 

Our originals are electronic.  We have been printing out the purchase req, purchase order, our justification document, and putting them in a folder.  The purchase req is stored in Oracle.  The purchase order is stored in Oracle.  The justification for award and compliance sign-off document and any other related back-up documentation is stored in SharePoint. 

Currently, all of those types of documents are printed out and manually routed for internal approval sign-off, and then that approval package is put into a paper file and sent away to sit in a file cabinet.  We've been using this process for all purchases regardless of value. 

My goal was to change the process for micropurchases under $3,500.  The idea was to reduce overall waste for these low dollar purchases.I was planning to keep making traditional hard copy paper file folders for everything above $3,500 for now.  I'd like to stop making the files as long as the documentation exists in either our Oracle or SharePoint system.  We would conduct mini-internal audits to verify that the buyers are completing their justification for price reasonableness.

 Does this give you enough information to understand what I'm trying to do? 

 

Thanks! 

Sylvia

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If the only "original" document that's created is the approval signoff page and the rest is just a reproduction of an electronic document, you should only need to keep the signoff page.

To H2H's point, I agree that reviewers typically have a fairly severe reaction when confronted with the possibility of accessing electronic documents.  Additionally, providing access to systems tends to snowball in unintended ways.  Having said that, as noted previously, I think that you've sufficiently addressed this concern by planning to print requested documents rather than provide access electronically.

Hope this helps!

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I did a CPSR review for one division of a major defense contractor some years ago, and all of their records were electronic. They reported no difficulties with DCMA to me. It was, however, a pain to go through the electronic files.

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Thank you everyone for your helpful input!  I think I have enough information to move forward with implementing our process change.

 

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