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Tom S

DPAS Help. Can I flow DPAS and maintain cost and efficiency.

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All, 

My company currently sells a defense related widget to two different branches of the US military (two different contracts).  We will very likely pick up other military branches as customers.  The contracts are now DPAS rated.  From what my purchasing group tells me, now we have to change the way we purchase.

Currently, we purchase our parts into our company's inventory instead of project inventory.  The company inventory is "common" but only to this widget we make.  As a simplified example, if I'm making 2 of my widgets and they take 10 screws a piece, I can cut one PO for 20 screws (flowing all my quality requirements).  I can easily keep them in my asset inventory, build with them, then in the end, I send one of my widgets to contract 1 and the other to contract 2.

I'm being told now we have to purchase material directly into the contract and not "common" inventory bucket for this widget. I'm being told I have to buy to the contract, so I'm doubling some of my indirect labor (2 REQs, 2 POs for 10 screws instead of 1 for 20), my warehouse might have to be bigger (certainly more complex to manage), and I have to be very careful not to build contract 2's widget with a screw purchased for contract 1...but in the end all my widgets are the same that I'm selling to my Government customers.

Is there some way that would allow me to flow the DPAS rating that would allow me to keep my efficiencies and not add extra cost or complexity?  Maybe something creative with the contract?  Can I buy 20 screws on 1 PO for 2 different DP rated contracts for the same widget? 

Looking for ideas to keep my cost's and my customer's costs under control and make my life easier. 😉

Thanks in advance.

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53 minutes ago, Tom S said:

From what my purchasing group tells me, now we have to change the way we purchase.

What have they told you and have they told you why this is correct?

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4 hours ago, Tom S said:

Currently, we purchase our parts into our company's inventory instead of project inventory.  

I'm being told now we have to purchase material directly into the contract and not "common" inventory bucket for this widget. 

I don't know who's telling you this but you shouldn't listen to them. Companies buy to inventory all the time. CAS 411 permits it. Disclosure Statements discuss it. Most of the major ERP systems essentially require it if you want to obtain the benefits of demand aggregation (e.g., volume pricing discounts). There is absolutely no requirement to "buy to contract" just because you have to flow-down DPAS ratings to subcontractors. 

Indeed, it's not just DPAS. There are a whole host of prime contract flow-down clauses that need to be managed. The job of your acquisition folks is to figure how how to flow-down what needs to be flowed-down. "Buying to contract" is the lazy and ill-informed approach to doing so. Suggest you tell your nay-sayers to figure it out. Trust me, it can be done.

 

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5 hours ago, Tom S said:

My company currently sells a defense related widget to two different branches of the US military (two different contracts).  We will very likely pick up other military branches as customers.  The contracts are now DPAS rated.

You should review use of rated order examples at 15 Code of Federal Regulations (CFR) Part 700.17 and discuss with Procurement. https://ecfr.io/Title-15/se15.2.700_117

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