AS9100D Contract Review

#1
I work at a small company where many of us wear many hats and it can be difficult to get through the lengthy contracts some companies provide. I was wondering how a small company saves money and time dealing with these contracts. If our products are “off the shelf”, are all the standard and conditions required or the external links?

For the record, a couple years ago (As9100 C) a previous auditor recommended and allowed us to explicitly state on our quotes that we were only held accountable for the explicit terms and conditions stated directly on the PO (no external links). Our new auditor let us know that was not valid and that we are accountable for all terms and conditions.

How do you, smaller companies deal with these lengthy contracts? Do you expand your contract review process a few days? Hire a third party legal consultant? Communication with buyers? Anything helps. Thanks!
 
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John Broomfield

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#2
I work at a small company where many of us wear many hats and it can be difficult to get through the lengthy contracts some companies provide. I was wondering how a small company saves money and time dealing with these contracts. If our products are “off the shelf”, are all the standard and conditions required or the external links?

For the record, a couple years ago (As9100 C) a previous auditor recommended and allowed us to explicitly state on our quotes that we were only held accountable for the explicit terms and conditions stated directly on the PO (no external links). Our new auditor let us know that was not valid and that we are accountable for all terms and conditions.

How do you, smaller companies deal with these lengthy contracts? Do you expand your contract review process a few days? Hire a third party legal consultant? Communication with buyers? Anything helps. Thanks!
Cflor,

These Terms and Conditions tend not to change that frequently but they are important.

I’d be surprised if the person in charge of your company’s bidding or sales process did not arrange a legal review before bidding for work with a new customer. If that person lacks the necessary competence then the system may have another nonconformity until the necessary competence is made available and used effectively.

Small businesses tend to rely on their trade association for supplementary expertise in this area.

Once the T&Cs are accepted (priced for) then the person responsible will say that future reviews need only consider the requirements specific to the RFQ and any changes to that Customer's T&Cs; and I agree.

International, national and industrial standards for the services and products that your company delivers are essential to your company’s expertise and should already be under control and deployed effectively to your processes.

That leaves the laws and regulations that are applicable to your company and you’ll have a process for monitoring changes to these so your management system is updated to assure compliance.

Naturally, if your company decides to do business in another country it will take into account the applicable laws and regulations as part of its planning this new venture.

I cannot imagine a sound business reason for ignoring these requirements.

Mind you, I don’t read those Google T&Cs either!

John
 

Sidney Vianna

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Staff member
Admin
#3
Anything helps. Thanks!
Have you seen the Interesting Purchase Order for its Terms and Conditions thread?

Be very careful before you open this Pandora box. Can you realistically imagine your small organization trying to negotiate terms and conditions with a multi-billion corporation? For the most part, their approach is take it or leave it. It will boil down to your company leadership and how much risk appetite they have to sign a contract/PO that has draconian stipulations. Because the customer won't budge.

And, in their perspective, as long as you accepted the PO, you have agreed with ALL the T&C's contained therein. If a legal dispute arises, can you afford a legal battle against a multi-billion dollar corporation?
 

Mike S.

Happy to be Alive
Trusted Information Resource
#4
The T's and C's are getting more ridiculous by the year. Very typical are 50-100 pages of company specific general T's and C's plus quality specific T's and C's and FARs, and DFARs.

Many company Purchasing and QA people don't know and understand the stuff they are flowing down.

It's amazing anyone can do business with anyone else these days. I think the only reason they can do business is that most suppliers close their eyes and pray that all goes well and they never have to wade into the weed fields created by these requirements.
 

Chad

Registered
#5
I have a similar question and was hoping someone has a good solution to it. To get around the multi billion dollar companies we create a Sales Order that states that our companies T's and C's apply. A recent auditor states that this does not cover the requirements of AS9100, because it is not mutually agreed upon. If I were to push this hard to the big companies it would shut down everything and I'm guessing would take months to resolve through their legal departments. Is anyone else dealing with this issue and what are you doing to comply?
 

Big Jim

Trusted Information Resource
#6
I can hardly believe this conversation exists. You need to adhere to your customer's terms and conditions unless you can get them to remove them. Accepting the order is accepting them. Not obeying them is what in the insurance trade is known as a target risk and is uninsurable.
 

Sidney Vianna

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Staff member
Admin
#7
I have a similar question and was hoping someone has a good solution to it. To get around the multi billion dollar companies we create a Sales Order that states that our companies T's and C's apply. A recent auditor states that this does not cover the requirements of AS9100, because it is not mutually agreed upon. If I were to push this hard to the big companies it would shut down everything and I'm guessing would take months to resolve through their legal departments. Is anyone else dealing with this issue and what are you doing to comply?
Very likely nobody at the customer acknowledges your Sales Order, isn’t it? Conflicting Terms & Conditions between customers and suppliers plague the business world. Contract review done ineffectively.

As for your auditor feedback, what exact requirement is s/he citing for the finding?
 

Chad

Registered
#8
Very likely nobody at the customer acknowledges your Sales Order, isn’t it? Conflicting Terms & Conditions between customers and suppliers plague the business world. Contract review done ineffectively.

As for your auditor feedback, what exact requirement is s/he citing for the finding?
Section 8.2.3.1 states, "If upon review the organization determines that some customer requirements cannot be met or can only partially be met, the organization shall negotiate a mutually acceptable requirement with the customer."

There are large corporations that in their T's and C's allow many things to include the right to your IP. Tricky situation as it can become grid lock when negotiated. We have done a T's and C's accept/deny matrix in the past, but very cumbersome and can take months to go back and forth on. Also we have some documents that would prove acceptance. Just curious what others are doing out there to comply.
 

Sidney Vianna

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Admin
#9
Section 8.2.3.1 states, "If upon review the organization determines that some customer requirements cannot be met or can only partially be met, the organization shall negotiate a mutually acceptable requirement with the customer."
Thanks for the clarification and it makes sense. One thing to keep in mind is: AS9100D 8.2.3.1 relates to the products and services and the supplier capability to deliver the requirements or, alternatively, a mutually acceptable solution.

There are many T&C's that are outside of that realm/scope, such as insurance requirements, your own example of intelectual property rights, etc... So, in my view, the CB auditor verifying conformance to this requirement has to realize that the standard is focusing on requirements related to product.

Good luck.
 
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