Missing Contract Review Records on Boeing and USAir Contracts

Wes Bucey

Quite Involved in Discussions
#21
Re: Missing Contract Review Records on big contracts

It's an interesting question. For the sake of clarity and for those who might not have immediate access to the standard, here is 7.2.2, in part:
The question at hand is, "Can a management person's signature on a contract satisfy the "shall" with regard to maintaining records of contract review?"

Maybe. If there is system documentation that states explicitly that the signature is applied only after the requirements in 7.2.2 have been met, and there have been no changes to the contract as originally tendered for which records were kept, then the signature might suffice. I'm not sure at all though, whether implied consent is a valid answer to a "shall." If it were, all kinds of doors would be open to allow weaseling out of requirements. I would be particularly suspicious if I could find no records at all of any sort of contract amendments or questioning of "the organization's" ability to meet the requirements.

If this strategy meets the letter of the standard, I don't think it meets the intent, by any stretch, especially given that top managers are, in my experience, likely to accept work first and then try to figure out how to get it done. As far as an audit NC is concerned, I would want to review the records (if there are any) more closely before determining whether 7.2.2 has been met or not.
I have performed second party audits of repair stations when I was QM of an aerospace firm. My own experience of the TOP executives at these facilities is they are intimately familiar with capability and capacity and don't make commitments they can't keep. When dealing with commercial aircraft, the cardinal sin is to have a POG (plane on ground) one minute longer than absolutely necessary. Repair stations which make time completion commitments which are broken soon find the customers few and far between. (failure to meet a time commitment can be due to many factors, but most are controllable (spare parts, adequate supplies and tools, adequate staffing with competent, efficient personnel, sufficient hangar space, etc.))
 
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Jim Wynne

Staff member
Admin
#22
Re: Missing Contract Review Records on big contracts

I have performed second party audits of repair stations when I was QM of an aerospace firm. My own experience of the TOP executives at these facilities is they are intimately familiar with capability and capacity and don't make commitments they can't keep.
I wasn't aware until now that you were a quality manager. All I can say is that my experience is different, but then again I have no experience in business dedicated strictly to aerospace work. I still find it difficult to believe that there are aerospace jobshop owners who don't accept work before doing contract review.

When dealing with commercial aircraft, the cardinal sin is to have a POG (plane on ground) one minute longer than absolutely necessary. Repair stations which make time completion commitments which are broken soon find the customers few and far between. (failure to meet a time commitment can be due to many factors, but most are controllable (spare parts, adequate supplies and tools, adequate staffing with competent, efficient personnel, sufficient hangar space, etc.))
I understand, but even given the idea that time (and commitment to schedules) is of the essence, it's still possible for bad things to happen if conscientious contract review isn't done. I seriously doubt, for example, that top executives who are intimately familiar with capacity and timing issues take the time to review each drawing and set of specifications in detail, or check with material suppliers to get firm availability commitments, etc. Even if they do, the standard clearly states that there must be records kept of those activities, and as I stated earlier, implied consent runs counter to the intent of the standard, imo.

I'll also add that the reason that there are contract review requirements in the standard is that historically there is a tendency for companies to accept contracts and review them later, with the exception of the fiscal details, of course. In my youthful days as a mechanical inspector, I can't tell you how many times I was faced with drawings or other specifications that made no sense, which should have been dealt with much further upstream.
 

Wes Bucey

Quite Involved in Discussions
#23
Re: Missing Contract Review Records on big contracts

Here's the deal - an FAA-certified repair station MUST adhere first to the FAA regulations BEFORE the AS Standard.FAA says they shall not accept work they are not rated for.
§ 145.201 Privileges and limitations of certificate. said:
(b) A certificated repair station may not maintain or alter any article for which it is not rated, and may not maintain or alter any article for which it is rated if it requires special technical data, equipment, or facilities that are not available to it.
 

Jim Wynne

Staff member
Admin
#24
Re: Missing Contract Review Records on big contracts

Here's the deal - an FAA-certified repair station MUST adhere first to the FAA regulations BEFORE the AS Standard.FAA says they shall not accept work they are not rated for.
So you agree then? It appears that contract review is even more important in such a case, and hence records of contract review comprised of something other than someone's signature would be indicated.
 

Wes Bucey

Quite Involved in Discussions
#25
Re: Missing Contract Review Records on big contracts

So you agree then? It appears that contract review is even more important in such a case, and hence records of contract review comprised of something other than someone's signature would be indicated.
Nope - I don't agree. What I say is, especially in the case of FAA-certified repair stations, I challenge you to find an instance where ANY such station, AS registered or not, accepts work for which it is neither qualified nor capable nor for which it has no capacity to perform.

The point is: the top officer of such an organization DOES know his organization's capability and capacity and does not shoot from the hip in proposing or accepting a contract.
 

phxsun2001

Involved - Posts
#26
Re: Missing Contract Review Records on big contracts

Nope - I don't agree. What I say is, especially in the case of FAA-certified repair stations, I challenge you to find an instance where ANY such station, AS registered or not, accepts work for which it is neither qualified nor capable nor for which it has no capacity to perform.

The point is: the top officer of such an organization DOES know his organization's capability and capacity and does not shoot from the hip in proposing or accepting a contract.
These are big blanket contracts and may increase the volume of business 10 to 25%. There are penalty clauses for late delivery because airlines do not want to keep their jets on the ground waiting for a part for the landing gear. Capacity planning is important and it affects most departments for a small FAA repair station. It is so easy to meet this record requirement and they choose to ignore it, thinking that it is OK.
 

harry

Super Moderator
#27
Re: Missing Contract Review Records on big contracts

Many ‘Technoprenuers’ (technical people turned entrepreneurs) over here know their work at their finger tips and don’t really need a formal contract review as pointed out by Wes.

When I ask some of these friends whether they look forward for somebody to take over this responsibility one day and when that day arrives, whether he would like to have some formal review process or to carry on as what he does now, the answer is always – ‘I prefer to have a documented process’. Here, I concur with Jim and would prefer a formal review process (something more than meeting the basic requirement of the standard). Through experience, I see it as a ‘good’ business practice.
 

Wes Bucey

Quite Involved in Discussions
#28
Re: Missing Contract Review Records on big contracts

Many ‘Technoprenuers’ (technical people turned entrepreneurs) over here know their work at their finger tips and don’t really need a formal contract review as pointed out by Wes.

When I ask some of these friends whether they look forward for somebody to take over this responsibility one day and when that day arrives, whether he would like to have some formal review process or to carry on as what he does now, the answer is always – ‘I prefer to have a documented process’. Here, I concur with Jim and would prefer a formal review process (something more than meeting the basic requirement of the standard). Through experience, I see it as a ‘good’ business practice.
Excellent point, Harry! The question is simply - "Is it necessary, or just 'nice to have'?"
 

Jim Wynne

Staff member
Admin
#29
Re: Missing Contract Review Records on big contracts

Excellent point, Harry! The question is simply - "Is it necessary, or just 'nice to have'?"
I have no problem with the idea of informality in very small businesses. Of course, some level of formality becomes necessary when registration to a standard is considered, but it's still not the same as in a large company. My whole point was (in light of the OP) that the standard calls for records of contract review for very good reasons, and not only from the point of view of the customer. In situations where product liability is concerned, it's of the utmost importance to be able to demonstrate due diligence in documentary form. A plaintiff's lawyer would like nothing more than to see no tangible evidence of contract review when something has blown up. In such a situation, trying to convince a jury that someone's signature is an acceptable surrogate for a conscientious, documented process is absurd.
 
M

M Greenaway

#30
Re: Missing Contract Review Records on big contracts

To me its simple, the argument about only a signature, or lack of signature, or what the record of contract review is, all obviously alludes to the suggestion that the contract review process is either effective or ineffective.

I would say that if the only way you determine this at audit is by looking at the size of the recorded contract review in comparison to the contract, e.g. 20 pages of meeting minutes for a multi-million pound contract, then you are taking as huge an assumption as the conclusion that the signature only by the president was not good enough.

I say dont get hung up on the record, audit the actual transformation of contract requirements throughout the organisations processes - that is the true audit of contract review, yes it does take time and can often be beyond the technical competence of the auditor, however there is no other way of effectively auditing contract review in my opinion.
 
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