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On December 31, 2019, the Department of Defense (DOD) issued a final rule increasing the DOD contractor purchasing system review (CPSR) dollar threshold from $25 million to $50 million. The new final rule, which was proposed in May 2019, empowers administrative contracting officers (ACOs) to determine the need for a CPSR only if a contractor’s sales to the government are expected to exceed $50 million over the following twelve months. Excluded from this requirement are competitively awarded firm-fixed-price and competitively awarded fixed-price with economic price adjustment contracts and sales of commercial items pursuant to FAR Part 12. This new final rule will substantially lessen the compliance burdens for many small, growing contractors.

Importantly, contractors that previously were subject to CPSRs but will not exceed the new $50 million threshold can choose to allow current CPSR approvals to expire, rather than maintaining compliance with CPSR-required criteria.

This is the first CPSR revenue threshold raise since 1996, and its explicit intent is to reduce the compliance and administrative burden on smaller contractors. The DOD also noted that smaller contractors are often exempt from many of the CPSR review elements as a result of the recent increase to the dollar threshold for obtaining certified cost or pricing data.

The final rule can be found at DFARS 244.302 Requirements.