Nonconforming product in service
I think nonconforming product in the service world would revolve around what the requirements of the contract are. In the case of a well driller specifics such as well location, size, depth, cost and project timing are all items that can result in the driller not meeting the terms of the contract. (I'm thinking a water well, but for other things the same might apply)
In the product world, nonconforming product is product that does not conform. But to what? To the specifications (contract). Service applications are no different. If I want a 6" well here, and you drop a 4" well over there, then you have just made 'nonconforming product'.
Just my thoughts