Yes, they are communicating now. What is your configuration? You must be doing a manual install… but what operating system? What version of PostgreSQL?
The error message is fairly straightforward. The CPAS SQL scripts use a standard stored procedure language called PL/pgSQL. CPAS apparently created the new database, but PL/pgSQL is not installed by default on your PostgreSQL installation. So, you need to enable PL/pgSQL for the "cpas" database using CREATE LANGUAGE. The exact steps for doing this vary by PostgreSQL version… you can look it up in the PostgreSQL docs or use pgAdmin III to create the language.
Note: if you install on Windows using the graphical installer then all of this should be configured automatically.