Missing Contract Review Records on big contracts

[phxsun2001]

I audited a company's contract review (CR) function to ISO9001 and AS. I could not find records of CR on big contracts with Boeing or USAir. I expected to find a one-page Contract Review form signed by affected Departments Managers.

I was told that they received the bid request and they send the proposal back. If Boeing sends a contract back to the company with no changes and if the president of this company signs the contract, it is evidence of records of contract review. It is because the company President would not sign anything without having his staff check it out.

I asked if there were evidence that the affect departments reviewed the contract. The answer was- there is no requirement in the std to show that.

I asked if this method of satisfying the CR record requirement is documented? The answer was- There is no requirement to document it. They are showing evidence of CR by the signature of the President.

This is how I look at it. 7.2.2 requires records of contract review. If the company decides to use the signature of the President on the final contract as the record, it needs to be documented somewhere. Otherwise, using the signature alone as record of CR does not meet the intent of the standard.

What do you think?

[Wes Bucey]

Originally Posted by phxsun2001

I audited a company's contract review (CR) function to ISO9001 and AS. I could not find records of CR on big contracts with Boeing or USAir. I expected to find a one-page Contract Review form signed by affected Departments Managers.

I was told that they received the bid request and they send the proposal back. If Boeing sends a contract back to the company with no changes and if the president of this company signs the contract, it is evidence of records of contract review. It is because the company President would not sign anything without having his staff check it out.

I asked if there were evidence that the affect departments reviewed the contract. The answer was- there is no requirement in the std to show that.

I asked if this method of satisfying the CR record requirement is documented? The answer was- There is no requirement to document it. They are showing evidence of CR by the signature of the President.

This is how I look at it. 7.2.2 requires records of contract review. If the company decides to use the signature of the President on the final contract as the record, it needs to be documented somewhere. Otherwise, using the signature alone as record of CR does not meet the intent of the standard.

What do you think?

I think that if it was a one-man shop, the question wouldn't arise. I, personally, espouse multi-function contract review boards, but the buck stops at the door of the top manager, who can overrule everyone. If he is satisfied with the sufficiency of the review, so be it!

The intent of the Standard is for the parties to the contract to assure themselves of the sufficiency of the capability and capacity of themselves AND the other party to complete the contract according to the terms and conditions of the contract. Is any company President in his right mind going to take a lot of time to question the capability and capacity of Boeing to fulfill its part? Who is going to question the President's understanding of his own company's capability and capacity?

[BradM]

Wes, as always, you speak wisdom. I do have a question, though.

I have never espouse to a "check the box" approach to quality systems. However, a standard is a standard.

Shouldn't the customer at least provide some methodology to assure a contract has been reviewed. I mean, a spreadsheet or something saying, "yep", on this date, I looked at WVT contract, and signed it.

Too, contracts should be reviewed on the front-end, and back-end to assure the contract was completed, etc.

So this small company doesn't keep any copies of contracts? They just willy-nilly sign/ approve them, without keeping something for their records? I was a one-man shop, but you can bet the bank I reviewed contracts forwards and backwards, and always demonstrated review by me and my customer on it.

So did I miss something in your explanation? Because I do believe this shop, however big or small, should be able to demonstrate that contracts are reviewed.

[AndyN]

I'm thinking that the majority of the review is in the proposal phase. Sure, if a customer goes with the proposal, then the multi-disciplinary review has been done, but some record of the fact that the customer's acceptance didn't change anything, is required. So just have them sign off on to indicate that (cursory) look over actually occured.

[Wes Bucey]

Originally Posted by phxsun2001

I audited a company's contract review (CR) function to ISO9001 and AS. I could not find records of CR on big contracts with Boeing or USAir. I expected to find a one-page Contract Review form signed by affected Departments Managers.

I was told that they received the bid request and they send the proposal back. If Boeing sends a contract back to the company with no changes and if the president of this company signs the contract, it is evidence of records of contract review. It is because the company President would not sign anything without having his staff check it out.

I asked if there were evidence that the affect departments reviewed the contract. The answer was- there is no requirement in the std to show that.

I asked if this method of satisfying the CR record requirement is documented? The answer was- There is no requirement to document it. They are showing evidence of CR by the signature of the President.

This is how I look at it. 7.2.2 requires records of contract review. If the company decides to use the signature of the President on the final contract as the record, it needs to be documented somewhere. Otherwise, using the signature alone as record of CR does not meet the intent of the standard.

What do you think?

Originally Posted by BradM

Wes, as always, you speak wisdom. I do have a question, though.

I have never espouse to a "check the box" approach to quality systems. However, a standard is a standard.

Shouldn't the customer at least provide some methodology to assure a contract has been reviewed. I mean, a spreadsheet or something saying, "yep", on this date, I looked at WVT contract, and signed it.

Too, contracts should be reviewed on the front-end, and back-end to assure the contract was completed, etc.

So this small company doesn't keep any copies of contracts? They just willy-nilly sign/ approve them, without keeping something for their records? I was a one-man shop, but you can bet the bank I reviewed contracts forwards and backwards, and always demonstrated review by me and my customer on it.

So did I miss something in your explanation? Because I do believe this shop, however big or small, should be able to demonstrate that contracts are reviewed.

When you ask about keeping contracts (doesn't keep any copies of contracts?) do you suppose they throw them away? The company probably keeps the contract/purchase order for billing purposes as well as for keeping track of production. In any regard, the specifics of Contract Review are different under different circumstances. If I make off-the-shelf goods and I get an order for 10,000 pieces, what more contract review do I need than to see if I have it on the shelf or have to produce more?

The company's reply is:
1) The president won't make the proposal until he has assured himself of the company's capability and capacity to fulfill a contract if Boeing agrees to the proposal. He is content with Boeing's ability to pay if they order.

2) Purchase order or proposal comes back with no changes - no more review is necessary.

3) Our record is the signed and countersigned (by the customer) proposal, evidenced by the purchase order (we are allowed to infer countersignature of the proposal if we get a purchase order exactly according to the terms of our proposal.)

On a personal note: I'm as obsessive as anyone when it comes to dotting i's and crossing t's. Yet, I had some customers who would call up and say, "Make me ten thousand pieces just like part number xyz, except make the length 2.500 inches instead of 2.250 inches. Redline a drawing of xyz with what you need, call it "xyz alternate 2.5" and I'll sign off on it."

Both customer and I had enough history that we could trust each other to perform according to this verbal contract. Note, especially, there was no query of cost - customer expected I would charge the same rate as xyz plus my actual costs and markup for making the change.

Ultimately, we both reduced the contract to paper - redline, inspection criteria, etc., including a projected delivery date once I knew our machine availability (could we suspend a running project long enough to make this short run or would we be delayed a week or so in starting until we had sufficiently surplus built up on another order to squeeze in a short run order?)

In our mind, contract review of an order like this did NOT require a formal meeting and capacity could be resolved by one person looking at the software which showed status of all running projects plus a quick verbal check with an operator to assure the machine was running smoothly and did not need unscheduled maintenance (the glorious value of regular preventive maintenance!) We already knew we were capable of making a nearly identical part. The documentation of review (by one person - equivalent to the President of the subject) and acceptance would be the issuance and countersign of the redline version of the part. I recall one instance where we manufactured 50,000 parts over 2 years based on a redline and never did receive an official release of the revision.

(In fairness, I did ALWAYS include a copy of the redline with every shipment to forestall any incoming inspection drone who pulled the previous version for inspection purposes.)

I guess the only real "final review" is when the customer accepts and pays for the goods and there is no "do over" requested.

[phxsun2001]

Originally Posted by Wes Bucey

When you ask about keeping contracts (doesn't keep any copies of contracts?) do you suppose they throw them away? The company probably keeps the contract/purchase order for billing purposes as well as for keeping track of production. In any regard, the specifics of Contract Review are different under different circumstances. If I make off-the-shelf goods and I get an order for 10,000 pieces, what more contract review do I need than to see if I have it on the shelf or have to produce more?

The company's reply is:
1) The president won't make the proposal until he has assured himself of the company's capability and capacity to fulfill a contract if Boeing agrees to the proposal. He is content with Boeing's ability to pay if they order.

2) Purchase order or proposal comes back with no changes - no more review is necessary.

3) Our record is the signed and countersigned (by the customer) proposal, evidenced by the purchase order (we are allowed to infer countersignature of the proposal if we get a purchase order exactly according to the terms of our proposal.)

On a personal note: I'm as obsessive as anyone when it comes to dotting i's and crossing t's. Yet, I had some customers who would call up and say, "Make me ten thousand pieces just like part number xyz, except make the length 2.500 inches instead of 2.250 inches. Redline a drawing of xyz with what you need, call it "xyz alternate 2.5" and I'll sign off on it."

Both customer and I had enough history that we could trust each other to perform according to this verbal contract. Note, especially, there was no query of cost - customer expected I would charge the same rate as xyz plus my actual costs and markup for making the change.

Ultimately, we both reduced the contract to paper - redline, inspection criteria, etc., including a projected delivery date once I knew our machine availability (could we suspend a running project long enough to make this short run or would we be delayed a week or so in starting until we had sufficiently surplus built up on another order to squeeze in a short run order?)

In our mind, contract review of an order like this did NOT require a formal meeting and capacity could be resolved by one person looking at the software which showed status of all running projects plus a quick verbal check with an operator to assure the machine was running smoothly and did not need unscheduled maintenance (the glorious value of regular preventive maintenance!) We already knew we were capable of making a nearly identical part. The documentation of review (by one person - equivalent to the President of the subject) and acceptance would be the issuance and countersign of the redline version of the part. I recall one instance where we manufactured 50,000 parts over 2 years based on a redline and never did receive an official release of the revision.

(In fairness, I did ALWAYS include a copy of the redline with every shipment to forestall any incoming inspection drone who pulled the previous version for inspection purposes.)

I guess the only real "final review" is when the customer accepts and pays for the goods and there is no "do over" requested.

This is a FAA repair station. The missing contract review records are blanket contracts from airlines sending different parts for overhaul and repair and test and certification. This company needs to review if they have the testing capability, certified technicians, tooling, capacity ... for the different types of parts. The review probably affected all levels department managers. The contract review Operating procedure does not mention about these big contracts. It only covers the jobs that come in everyday for repair. They consider the POs "contracts" and they are processing about 50 to 70 "contract reviews" per their OP. When I questioned why the OP does not cover the big contract review, the answer was - there is no requirement to cover it, but we are doing it. The record is the signature by the president. IMO the signature does not meet the contract review record requirement. If this process is documented in their contract review OP, then it may be acceptable, because now there is a link. Without this link, the singature is not tied to the contract review record. It simply says the the company agrees to the terms and conditions of the contract and that's it.

I tried to write it up as a minor nonconformance, but the Lead Auditor and the Manager of the registrar did not think that there is a nonconformance. That's why I bring this up for clarification. Thanks.

[M Greenaway]

Without reading some of the longer posts above, my thoughts are that in terms of ISO9001 compliance the record of contract review being the presidents signature is OK. Record of review need only be endorsement that the review has been done and the order accepted, it need not detail all the decision making processes, etc, etc in the record.

If the contract were complex however, on the basis of this contract review recording method I would tend to then audit deeper to see that requirements of the contract were being met or translated into working documents, if not I could then suggest that the contract review process were inadequate rather than arguing the toss over the record of contract review - a much more powerful audit finding.

[CarolX]

Originally Posted by M Greenaway

Without reading some of the longer posts above, my thoughts are that in terms of ISO9001 compliance the record of contract review being the presidents signature is OK. Record of review need only be endorsement that the review has been done and the order accepted, it need not detail all the decision making processes, etc, etc in the record.

I have to agree here. If their process states that the president will review, and the evidence of his review is his sign-off, they have met the requirement of the standard.

Now - if there are requirements above and beyond the ISO9K2K, that may be a different story - but as far as I can tell - your question was related to this standard.