1. MODULE 5 Subcontractors and Delegations
15November2013
Lesson 4: Safety Stock

2. Module Objective
After completing this module, the student will be able to complete QA responsibilities in regards to subcontractors and delegated QA duties.

3. LESSON 1 Prime Control of Purchasing
15November2013
Lesson 4: Safety Stock

4. Lesson Introduction
Given a contract, the student will be able to determine whether the supplier’s system for controlling subcontracted items and services is adequate.

5. Issues with Outsourcing
(Made in America)
(Not Made in America)
CLICK FOR SOUND
CLICK FOR SOUND

6. Lesson Objectives
Upon completion of this lesson, you should be able to:
Identify the requirements that drive the supplier's responsibility to implement the controls.
Recognize the supplier's techniques for evaluating its vendors.
Identify elements/areas of concern the supplier evaluates in regard to the vendor.
Identify the methods the Quality Assurance Specialist (QAS) uses to ensure the adequacy of the supplier's control of its vendors.
Recognize challenges and potential issues the QAS may have when evaluating the adequacy of the supplier's control of its vendors.
Lesson 4: Safety Stock

7. Lesson Topics This lesson covers the following topics:
Buy American Act
Prime Supplier’s Evaluation Techniques
Determining Qualified Suppliers
Monitoring Prime’s Vendor Selection Process
Basic QAS Issues

8. WIIFM? This lesson will:
Stress the significance of purchasing subcontractor services using specific criteria.
Emphasize the prime supplier's responsibility for ALL subcontracted materials.
Examine the processes that warrant QAS focus.

9. Policy and Authority Federal Acquisition Regulation (FAR) 46.103
States the Contracting Office's responsibilities.
FAR
States the supplier's responsibilities, primarily that the supplier is responsible for all purchased products.
FAR through -9
Gives the government the right to perform inspection at “all places and times.”
FAR
Higher-level quality clause that brings in the other ISO standards that require some form of process control for purchased items.

10. Purchasing Control Guidance
International Organization for Standardization (ISO) 9001 Standards
Establishes control of the purchasing process.
Specifies the purchasing
requirements.
Explains the verification
of purchased products.

11. Question and Answer
Which of these clauses defines the supplier’s responsibility to implement vendor controls?
FAR
FAR
FAR
FAR

12. Buy American Act Lesson Topics: Buy American Act
Prime Supplier’s Evaluation Techniques
Determining Qualified Suppliers
Monitoring the Prime’s Vendor Selection Process
Basic QAS Issues

13. Topic 1: Buy American Act
Buy American Act is legislation that requires the U.S. Government to give preference to U.S.-made products in its purchases.
Policies
Berry Amendment
Requirements
Exceptions
QAS Role

14. Buy American Act (BAA) Policies
Public Law - 41 Unites States Code (U.S.C.) 10a through 10d
Multiple requirements in Public Law
Supplement BAA with additional, specific requirements
100% vs. 51%
FAR 25.1 (Supplies) through
FAR 25.2 (Construction Materials)
FAR Buy American Act Policies
Defense Federal Acquisition
Regulation Supplement (DFARS)

15. Berry Amendment Berry Amendment - 10 U.S.C. 2533a and 2533b
Enacted during World War (WW) II
Any item manufactured from or containing fibers, yarns, fabrics
Clothing and materials thereof
Tents, tarps, covers
Cotton and other natural fiber products
Silk, wool
Specialty Metals
Certain steel alloys
Nickel, iron-nickel, cobalt
Titanium and titanium alloys
Zirconium and zirconium alloys 22 Ti
Titanium 28 Ni
Nickel 40 Zr
Zirconium

16. BAA Requirements Applies to purchases over $3,000
Item must be manufactured in the U.S.
The cost of domestic components must exceed 50% of the cost of all components

17. BAA Exceptions Procurement < $3,000
Products intended for use outside the continental U.S. (OCONUS)
Non-availability – Items not mined, produced, or manufactured
in U.S. in sufficient and
reasonably available quantities
and of satisfactory quality
Inconsistent with public interest
Unreasonable cost – Procuring Contracting Officer (PCO) determination

18. When in doubt, involve DCMA Management!
BAA - QAS Role
Contract Phase
QAS Role
Preaward Survey (PAS)
Ask about source of components
Contract Technical Review (CTR)
Review contract clauses to identify Buy American FAR/DFARS requirements
Post Award
Confirm source of components
Contract Performance Period
Purchasing System Review
Consult Administrative Contracting Officer (ACO)
Consult PCO
Consult Legal (CIC)
Consult Industrial Specialist (IS)
Accepting Product
Basis of Confidence - Material Certifications
When in doubt, involve DCMA Management!

19. Prime Supplier’s Evaluation Techniques
Lesson Topics:
Buy American Act
Prime Supplier’s Evaluation Techniques
Determining Qualified Suppliers
Monitoring the Prime’s Vendor Selection Process
Basic QAS Issues

20. Topic 2: Prime Supplier’s Evaluation Techniques
Evaluation techniques include:
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection

21. Prime Control of Subcontractors
Methods for prime control of subcontractors include, but are not limited to:
Material certifications and vendor surveys
Receiving inspections
Periodic audits or surveys
Source inspections
Many primes NOT using source inspection
Government relies on Government Source Inspection (GSI) for assurance of supplier compliance to requirements
Prime should never rely on Government (DCMA) source inspection!

22. Evaluating Adequacy of Procured Items (1 of 6)
Evaluation Techniques
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection

23. Evaluating Adequacy of Procured Items (2 of 6)
Evaluation Techniques
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection

24. Evaluating Adequacy of Procured Items (3 of 6)
Evaluation Techniques
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection

25. Evaluating Adequacy of Procured Items (4 of 6)
Evaluation Techniques
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection

26. Evaluating Adequacy of Procured Items (5 of 6)
Evaluation Techniques
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection

27. Evaluating Adequacy of Procured Items (6 of 6)
Evaluation Techniques
Qualification/First Article Testing
Review of Quality Data
Surveillance Visits/Audits
Source Inspection
Receiving Inspection
Prime suppliers use these techniques to evaluate the adequacy of procured items.

28. Question and Answer
Which of the following are used by the prime supplier in the evaluation of the adequacy of procured items?
Material certifications
Source inspections
Periodic audits and surveys
II only
III only
I and II
I, II, and III

29. Determining Qualified Suppliers
Lesson Topics:
Buy American Act
Prime Supplier’s Evaluation Techniques
Determining Qualified Suppliers
Monitoring the Prime’s Vendor Selection Process
Basic QAS Issues

30. Topic 3: Determining Qualified Suppliers
Equipment & Facilities
Supplier Experience
Type of Item or Service
Qualifications & Certifications
Available Quality Evidence

31. Equipment and Facilities
Equipment & Facilities
Supplier Experience
Type of Item or Service
Qualifications & Certifications
Available Quality Evidence
Type
Production Rate
Equipment Capability
Equipment Control
Facilities Control

32. Supplier Experience Equipment & Facilities Supplier Experience
Type of Item or Service
Qualifications & Certifications
Available Quality Evidence
Workforce Stability
New Supplier
Existing Supplier
Similar Product Line
New Product Line

33. Type of Item or Service Equipment & Facilities Supplier Experience
Qualifications & Certifications
Available Quality Evidence
Engineering
System/Subsystem
Components/Assemblies/Subassemblies
Processes/Tests

34. Qualifications and Certifications
Existing?
Controls and Procedures
Compliance with Plans and Procedures
Equipment & Facilities
Supplier Experience
Type of Item or Service
Qualifications & Certifications
Available Quality Evidence
NOTE
Design should be considered as applicable.
Design
Manufacturing
Quality Engineers

35. Available Quality Evidence
Industry Source Lists
Internal Historical Data
Equipment & Facilities
Supplier Experience
Type of Item or Service
Qualifications & Certifications
Available Quality Evidence

36. Question and Answer
Which item should NOT influence the prime supplier's decision when determining a qualified vendor?
Existing personnel certifications
Number of inspectors
The production rate of the equipment being used
How long the supplier has been producing the product

37. Monitoring the Prime’s Vendor Selection Process
Lesson Topics:
Buy American Act
Prime Supplier’s Evaluation Techniques
Determining Qualified Suppliers
Monitoring the Prime’s Vendor Selection Process
Basic QAS Issues

38. Topic 4: Monitoring the Prime’s Vendor Selection Process
The QAS must monitor the prime’s vendor oversight
Prime is responsible for controlling quality of purchased products

39. Prime Supplier’s Responsibility for Quality
The prime is always responsible for controlling the quality of the purchased products, regardless of the arrangement between the supplier and the subcontractor.
The QAS must ensure that the prime supplier is capable of performing QA oversight for all subcontractors!

40. Evaluating Prime’s Subcontractor Control (1 of 5)
Determine Adequacy of Purchasing Process
Perform Product Examination
QAS Considerations
Periodically Select Random Lot Samples for Product Examination
Prime’s Frequency and Intensity of Subcontractor Surveillance

41. Evaluating Prime’s Subcontractor Control (2 of 5)
Determine Adequacy of Purchasing Process
Are the prime's controls adequate?
What are the supplier's methods of data collection?
Are the controls used for vendor rating?

42. Evaluating Prime’s Subcontractor Control (3 of 5)
Perform Product Examination
Flow down of technical and quality requirements

43. Evaluating Prime’s Subcontractor Control (4 of 5)
Prime’s Frequency and Intensity of Subcontractor Surveillance

44. Evaluating Prime’s Subcontractor Control (5 of 5)
Periodically Select Random Lot Samples for Product Examination

45. Basic QAS Issues Lesson Topics: Buy American Act
Prime Supplier’s Evaluation Techniques
Determining Qualified Suppliers
Monitoring the Prime’s Vendor Selection Process
Basic QAS Issues

46. Topic 5: Basic QAS Issues
QAS encounters issues relating to:
Prime’s vendor control
CMO coordination
Corrective action
Counterfeit parts

47. QAS Issues with Prime’s Vendor Control
Vendor control concerns
Prime procedures are inadequate, outdated, and/or unclear
Lack of flow down of the technical requirements to vendors
Lack of prime’s corrective action with vendors

48. Importance of Coordination Between CMOs
Data sharing
Problems

49. Information Feedback and Corrective Action
To enable QASs to review and evaluate the supplier’s system for early feedback, use corrective action relative to the supplier's performance.

50. Counterfeit Parts
The QAS should be aware of supplier sources of purchased items and potential for counterfeit parts to be introduced into production

51. Counterfeit Mitigation
Material certifications available?
Written plan needed?
Has a visual examination been performed WITH material certifications?
Have the manufacturer and the product origins been evaluated?

52. QAS Issues with Prime (1 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment

53. QAS Issues with Prime (2 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment
Inadequate
Missing
Ineffective
Unclear
Not written
Cumbersome
Lack of authority/responsibility
Not followed/adhered to
None for rating suppliers

54. QAS Issues with Prime (3 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment
Not passed down
Ineffective technical review of purchase order
Incorrect or inadequate requirements
Contractual requirements missed or dropped during vendor procurement effort
Not available at verification point
Purchase order not tailored to requirements

55. QAS Issues with Prime (4 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment
None required
No follow-up to verify action taken
Incomplete action as to cause of discrepancy
Incomplete root cause analysis
Wrong party accomplishing

56. QAS Issues with Prime (5 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment
Condition and count only
Improper inspection or inspection levels utilized
Inability to verify/test at incoming inspection
Documentation of inspection results (none, inadequate, improper, not used)

57. QAS Issues with Prime (6 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment
No provisions for evaluation of first time suppliers
Audits lacking capability/depth to provide decision basis
History used for evaluation

58. QAS Issues with Prime (7 of 7)
Procedures
Technical Requirements
Corrective Action
Receiving Inspection
Insufficient Vendor Evaluation
Insufficient Product Assessment
Testing not performed at receipt
No routine survey to assure testing accomplished correctly at supplier
No objective evidence for unique chemical and physical property requirements
Receiving inspects count and condition only
No engineering involvement at MRB

59. Summary Having completed this lesson, you should now be able to:
Identify the requirements that drive the supplier's responsibility to implement vendor controls.
Recognize the supplier's techniques for evaluating its vendors.
Identify elements/areas of concern the supplier evaluates in regard to the vendor.
Identify the methods the QAS uses to ensure the adequacy of the supplier's control of its vendors.
Recognize challenges and potential issues the QAS may have when evaluating the adequacy of the supplier's control of its vendors.
Lesson 4: Safety Stock

60. Questions

61. Review Question 1
In addition to receiving inspections, what technique(s) does the prime supplier use to evaluate the adequacy of procured items?
(Select all that apply.)
Reviews of quality data
Purchase Order reviews
Facility inspections
Government source inspection

62. Review Question 2
Which technique should be used in monitoring the prime supplier’s selection process of subcontractors?
Checking for the review of quality data.
Issuing a Corrective Action Request (CAR) and following up on progress within 96 hours.
Determining if the prime's controls are adequate.
Ensuring cooperation between Contract Management Offices (CMOs) is kept to a minimum.

63. Review Question 3
Which of the following must be present to ensure the supplier’s flow down of technical requirements to subcontractors?
Historical safety data
Material specifications, drawings, or industry standards
Statistical samples from receiving inspections
Ensuring small businesses are used for 25% of work

64. Exercise: Supplier Purchasing Control Concerns
Students work in pairs to complete the exercise.
Open the exercise document, read the scenario, and answer the questions.
CMQ101_M5_L1_E1_SupplierPurchCtrlConcerns.pdf
Time: 15 minutes