LESSON 5 Product Acceptance and Release

LESSON 5 Product Acceptance and Release
15November2013 Lesson 4: Safety Stock

Lesson Introduction Given the Defense Contract Management Agency (DCMA) acceptance and release policies and procedures, the student will be able to determine which acceptance and release method to use when authorizing product/service acceptance and release.

Lesson Objectives Upon completion of this lesson, you should be able to: Identify the regulations governing the role of DCMA Quality Assurance (QA) in acceptance and release of products and services. Identify the reasons why documenting the QA records in the official contract file is important. Discuss the use and application of Department of Defense (DoD) inspection stamps. Identify the conditions for authorizing shipment and acceptance of products via Alternate Release Procedures (ARP). Discuss DCMA’s policy on the use of ARP. Lesson 4: Safety Stock

Lesson Objectives (cont.)
Upon completion of this lesson, you should be able to: Identify radio indicators on the supplier’s shipping document that are required when ARP or Certificate of Conformance (CoC) are authorized. Identify the conditions for authorizing shipment and acceptance of products/services via CoC. Distinguish the differences between ARP and CoC usage for authorizing release of shipment. Discuss the use of the Wide Area Work Flow (WAWF) Receiving Report (RR) and DD Form 250 by DCMA in the acceptance of products and services from suppliers. Recognize common mistakes made by suppliers on acceptance documents. Lesson 4: Safety Stock

Lesson Topics This lesson covers the following topics:
Authority and Regulations Quality Assurance Product Acceptance Guidelines Inspection Stamps Alternate Release Procedures (ARP) Certificate of Conformance (CoC) Documenting Product Acceptance

WIIFM? The ultimate goal of the QAS is to reach the point where he/she can accept a product on behalf of the Government. This is a major role in the Quality Assurance Specialist (QAS) function. Team Takes Pride in SV-1 Successful Launch

Authority and Regulations
Lesson Topics: Authority and Regulations Quality Assurance Product Acceptance Guidelines Inspection Stamps Alternate Release Procedures (ARP) Certificate of Conformance (CoC) Documenting Product Acceptance

Topic 1: Authority and Regulations
Federal Acquisition Regulation (FAR) Contract Administration Office Responsibilities FAR 46.5 – Acceptance Defense Federal Acquisition Regulation Supplement (DFARS), Appendix F – Material Inspection and Receiving Report (Rev Sept 2011)

FAR Regulations 46.5 Acceptance 46.501 General
Responsibility for Acceptance Place of Acceptance Certificate of Conformance Transfer of Title and Risk of Loss

FAR – General Acceptance constitutes acknowledgment that supplies/services conform with contract quality and quantity requirements. Acceptance may take place before delivery, at the time of delivery, or after delivery, depending on the provisions of the terms/conditions of the contract.

FAR – General (cont.) Supplies/services shall ordinarily not be accepted before completion of Government QA actions. Acceptance shall ordinarily be evidenced by execution of an acceptance certificate on an inspection or receiving report form.

FAR 46.502 – Responsibility for Acceptance
Acceptance of supplies and services is the responsibility of the cognizant contracting officer. When this responsibility is assigned to a cognizant contract administration office or to another agency, acceptance by that office or agency is binding on the Government.

FAR 46.503 – Place of Acceptance
Each contract shall specify the place of acceptance. Contracts that provide for Government contract QA at source shall ordinarily provide for acceptance at source. Contracts that provide for Government contract QA at destination shall ordinarily provide for acceptance at destination. Supplies accepted at a place other than destination shall not be reinspected at destination for acceptance purposes, but should be examined at destination for quantity, damage in transit, and possible substitution or fraud.

FAR 46.503 – Place of Acceptance DCMA Summary
The DCMA QAS performs Government Contract Quality Assurance (GCQA) when the contract specifies that the contract will be administered by DCMA and also specifies inspection and/or acceptance at source.

FAR 46.504 – Certificate of Conformance
A certificate of conformance (see ) may be used in certain instances instead of source inspection (whether the contract calls for acceptance at source or destination) at the discretion of the contracting officer if the following conditions apply: (a) Acceptance on the basis of a contractor’s certificate of conformance is in the Government’s interest.

FAR 46.504 – Certificate of Conformance (cont.)
(b) (1) Small losses would be incurred in the event of a defect; or (2) Because of the contractor’s reputation or past performance, it is likely that the supplies or services furnished will be acceptable and any defective work would be replaced, corrected, or repaired without contest. In no case shall the Government’s right to inspect supplies under the inspection provisions of the contract be prejudiced.

FAR 46.505 – Transfer of Title and Risk of Loss (1 of 5)
(a) Title to supplies shall pass to the Government upon formal acceptance, regardless of when or where the Government takes physical possession, unless the contract specifically provides for earlier passage of title.

(b) Unless the contract specifically provides otherwise, risk of loss of or damage to supplies shall remain with the contractor until, and shall pass to the Government upon–– (1) Delivery of the supplies to a carrier if transportation is f.o.b. origin; or (2) Acceptance by the Government or delivery of the supplies to the Government at the destination specified in the contract, whichever is later, if transportation is f.o.b. destination.

(c) Paragraph (b) of this section shall not apply to supplies that so fail to conform to contract requirements as to give a right of rejection. The risk of loss of or damage to such nonconforming supplies remains with the contractor until cure or acceptance. After cure or acceptance, paragraph (b) of this section shall apply.

(d) Under paragraph (b) of this section, the contractor shall not be liable for loss of or damage to supplies caused by the negligence of officers, agents, or employees of the Government acting within the scope of their employment.

(e) The policy expressed in (a) through (d) of this section is specified in the clause at , Responsibility for Supplies, which is prescribed in

DFARS Appendix F Material Inspection and Receiving Report
Introduction, Sections F Contract Quality Assurance on Shipments between Contractors, Section F201 Preparation of the Wide Area Workflow Receiving Report (WAWF-RR), Sections F Preparation of the DD Form 250 and DD Form 250C, Sections F Distribution of WAWF-RR, DD Form 250 and DD Form 250C, Sections F Preparation of the DD Form (Loading Report), Section F 601 Preparation of DD Form (Discharge Report), Section F701 Distribution of the DD Form 250-1, Sections F Material Inspection and Receiving Report

Question and Answer How is acceptance of a product ordinarily evidenced? (Select all that apply.) WAWF-RR signed by the DCMA QAS with inspection and acceptance blocks checked DD Form 250 acceptance block checked and signed by Government representative WAWF-RR signed by the QAS with ARP and acceptance blocks checked A stamp on the shipping document/packing list

Question and Answer Fred is a new QAS. He needs guidance on using, preparing, and distributing the Wide Area Workflow Receiving Report that his customer uses. Where does he find this information? FAR FAR 46.5 DFARS, Appendix F DFARS

Question and Answer When FOB destination is stipulated, who is responsible for the transportation arrangements and costs? Government Customer Supplier Shipping company

Quality Assurance Product Acceptance Guidelines

Topic 2: Quality Assurance Product Acceptance Guidelines
FAR (c) requires documentation of surveillance results Acceptance of: Shipments Software

QA Documentation Requirements
FAR (c) Results of all surveillance must be recorded in any convenient format; but as a minimum, records must reflect who performed the surveillance, where the surveillance was performed (in-plant location), the number and nature of observations made, the number and nature of defects found, and corrective actions initiated to resolve deficiencies.

Authorizing and Accepting Shipments
DCMA personnel must not accept or approve products/supplies offered by the contractor unless there is a basis of confidence in conformance to contract technical and quality requirements. Where no such confidence exists and it cannot be derived from credible data, personnel must escalate the issue to management for resolution with the customer.

Accepting Software Product
Software acceptance, whether stand-alone or embedded (end item or system), is performed by, or in coordination with, Software Professional Development (SPDP) Journeyman Certified personnel.

Question and Answer Katie cannot determine if the solid rivets being manufactured for aircraft use meet the requirements of the contract. What should she do? Accept the rivets because it’s only a minor nonconformance. Not accept the rivets and escalate the issue to DCMA management. Accept the rivets, but notify the Administrative Contracting Officer (ACO). Not accept the rivets and escalate the issue to the Procuring Contracting Officer (PCO).

Inspection Stamps Lesson Topics: Authority and Regulations
Quality Assurance Product Acceptance Guidelines Inspection Stamps Alternate Release Procedures (ARP) Certificate of Conformance (CoC) Documenting Product Acceptance

Topic 3: Inspection Stamps
Authority DCMA policy Who issues stamps Types Mandatory use Optional use

Authority FAR 46.4 – Government Contract Quality Assurance
FAR (g) – Agencies may prescribe the use of inspection approval or disapproval stamps to identify and control supplies and material that have been inspected for conformance with contract quality requirements.

DCMA Stamp Policy When specifically required by customer, Quality Letter of Instruction (QALI), or a Letter of Delegation (LOD), the QAS must use DoD inspection stamps upon determination of product’s and packaging’s compliance with contractual requirements. Inspection Stamping- QA Stamps 0/DCMA-INST-310.pdf DCMA HQ Operations, International, and Special Programs Directorates/CMOs must be responsible for controlling the issue and use of inspection stamps.

Who Issues Inspection Stamps
First Line Supervisor (FLS) – Determining authority for stamp issuance. Contract Management Office (CMO) Standard Operating Procedure Routinely Administrative Support activity QA Co-signature required Annual accountability

Inspection Stamps–Types
The two stamps are: Round ½ inch Square ½ inch

Inspection Stamps–Mandatory Use
Where DCMA QA proof of inspection or test is required by the customer: Mandatory Inspection Points Witness a mandated activity Test Inspection Condition of field returns, etc. In-process paperwork Traveler, test record, shipper, etc.

Inspection Stamps–Optional Use
DFARS (a)(1) – Ordinarily, a representative of the Contract Administration Office (CAO) signs or stamps shipping documentation that accompanies Government source-inspected supplies prior to release for shipment. This is done for both the prime and subcontract level. Subcontract level - DFARS, Appendix F, F-201 Shipments between Contractors DD Form 250 Acceptance Photo by Mark Woodbury, DCMA Public Affairs

Question and Answer Don is confused about DCMA’s policy on using inspection stamps. When does DCMA mandate he use inspection stamps? When required by the customer via a QALI or LOD When the product and packaging are in compliance with contractual requirements Upon CMO direction Upon ACO direction

Alternate Release Procedures (ARP)

Topic 4: Alternate Release Procedures (ARP)
Overview Conditions Exceptions Considerations Document statements Process

ARP Overview ARP application, as per DFARS (b) and DCMA Product Acceptance and Release Policy ARP eliminates only clerical function of signing shipping documents prior to product release Planned surveillance must be accomplished ARP may be invoked at facility, contract, product line, or part number level Some customers forbid ARP use (Tasking Memo )

ARP Authorization Conditions
CAO may issue the supplier written authorization to release supplies for shipment when: CAO representative’s stamping/signing of shipping papers interferes with GCQA or is too time consuming. Sufficient production continuity permits Government establishment of systematic and continuing supplier surveillance. Supplier’s record indicates satisfactory quality, including shipment preparation. Withdraw this authority when any of these conditions are not met!

ARP Exceptions ARP is NOT authorized for shipments for National Aeronautics and Space Administration (NASA), Level 1/SUBSAFE (L1/SS), or Navy Special Emphasis Programs (NSEP), unless specifically authorized, in writing. Not applicable to services

ARP Considerations ARP does not alleviate U.S. Government source inspection requirements. GCQA surveillance activities must still be planned and conducted ARP requires no contract clause. ARP is applicable for products but not services. ARP is available/applicable to both prime suppliers and sub-tier suppliers.

Shipping Document Statements
When ARP is invoked, the following statements must be typed/stamped/attached to required shipping paper(s) copies and signed: The supplies in this shipment— 1. Have been subjected to and have passed all examinations and tests required by the contract; 2. Were shipped in accordance with authorized shipping instructions; 3. Conform to the quality, identity, and condition called for by the contract; and 4. Are of the quantity shown on this document. This shipment was— 1. Released in accordance with section of the Defense FAR Supplement; and Authorized by (name and title of the authorized representative of the contract administration office) in a letter dated (date of authorizing letter). (Signature and title of contractor's designated official.)

Shipping Document Statements - WAWF

ARP Process CAO issues ARP authorization at appropriate level (facility, contract, product line, or part number) QAS performs planned surveillance Authorized personnel sign paper DD250 or process in WAWF (DFARS Appendix F-301 (b)(21)(iv)(D)(2)) 1 2 3

Question and Answer Under what conditions can the Contract Administration Office (CAO) invoke ARP? (Select all that apply.) CAO issues ARP authorization at appropriate level (facility, contract, product line, or part number). QAS performs planned surveillance. Authorized personnel sign paper DD250 or process in WAWF (DFARS Appendix F-301 (b)(21)(iv)(D)(2)). A CoC has been provided.

Certificate of Conformance (CoC)

Topic 5: Certificate of Conformance (CoC)
Overview Conditions Exceptions Considerations Process

CoC Overview Certificate of Conformance (CoC)
CoC application by CAO as per FAR (Reference (n)) Shipment without QAS inspection at source – CoC is in lieu of surveillance QAS product/service acceptance based solely on supplier’s CoC CoC invoked at contract level Photo by Mark Woodbury, DCMA Public Affairs

CoC Authorization Conditions
No mandatory customer-imposed inspections In the Government’s best interest In the event of a defect, only small losses incurred

CoC Exceptions Critical item [Critical Safety Item (CSI), Mission Critical item (MCI), etc.] shipments unless authorized in writing by customer Subcontracts

CoC Considerations Data indicates good supplier performance history
Positive supplier reputation Little concern supplier would not stand behind product/service No adverse conditions exist (financial difficulties, pending strikes, etc.) QAS performs no surveillance at sub-tier levels Requires written notification to supplier informing it of CoC usage

CoC Process CMO issues letter to supplier authorizing CoC on specific contract(s) QAS signs DD250 or process in Wide Area Workflow (WAWF) Despite the CoC, the QAS should perform periodic surveillance to assure supplier’s control of processes and/or product features. 1 2 Note

CoC/ARP Comparison Matrix
Contract clause required Yes No Invoked by the Contract Administration Office (CAO) Applicable for supplies Applicable for services Available/applicable for prime suppliers Available/applicable for sub-tier suppliers

CoC/ARP Comparison Matrix (cont.)
Used instead of source inspection Yes No Government potential for “small loss” is a consideration for implementation Contractor reputation/past performance is a consideration for implementation Production continuity is a consideration Applicable for complex/critical items Not a Factor

Question and Answer Which FAR clause allows the CAO to authorize a supplier to ship a product without inspection at source? FAR Contractor Inspection Requirements FAR Certificate of Conformance FAR Certificate of Conformance FAR –16 Responsibility for Supplies

Documenting Product Acceptance

Topic 6: Documenting Product Acceptance
Product acceptance forms: DD Form 250 WAWF-RR Generic roles: QAS ACO Contract Administrator

DD Form 250 Multipurpose form/report used on an exception basis (DFARS, Appendix F, F-104): As evidence of GCQA at origin or destination As evidence of acceptance at origin or destination As a packing list For receiving/shipping As a supplier invoice As commercial invoice support

WAWF-RR or DD250 used for delivery
WAWF-RR or DD Form 250 The QAS uses the WAWF-RR or DD Form 250 for: Not used for items on a DD Form 1423 or Contract Data Requirements List (CDRL) that indicate DD Form 250 is not required WAWF-RR or DD250 used for delivery Contract line item Sub-line item Exhibit Line item Exhibit Sub-line item

DCMA DD Form 250 Requirements
FAR From PCO – When acceptance assigned by cognizant CAO or another agency, acceptance by office/agency binding on Government. From DFARS, Appendix F – Contract includes DFARS , Material Inspection Receiving Report, acceptance applies to supplies/services acquired by DoD. DCMA QAS PCO

Material Inspection and Receiving Report
Contractor submission of the material inspection and receiving information required by Appendix F of the Defense FAR Supplement by using the Wide Area Work Flow (WAWF) electronic form (see paragraph (b) of the clause at ) fulfills the requirement for a material inspection and receiving report (DD Form 250). Two copies of the receiving report (paper copies of either the DD Form 250 or the WAWF report) shall be distributed with the shipment, in accordance with Appendix F, Part 4, F-401, Table 1, of the Defense FAR Supplement.

Receiving Report Review
Regions/Districts/CMOs must actively manage their Receiving Report rejections. QAS must review WAWF-RR [or other inspection and acceptance (I&A) document] for compliance with the contract. WAWF-RR or DD Form 250 must be completed in accordance with DFARS Appendix F. Review intensity must be based on perceived level of risk of supplier’s demonstrated past performance.

Generic Roles in WAWF QAS ACO Contract Administrator
Registers for the following roles in the Wide Area Workflow: Inspector/Admin by View Only for the assigned CMO’s DoDAAC Signs Receiving Report Source/Source Source/Destination Reviews all financing requests, makes recommendation for approval, rejection, approval for lesser amount Recommendations are visible to vendor Contract Administrator QAS Signs the WAWF-RR when authorized ACO

F09603-02-C-0 ?? No dashes or Spaces
WAWF QAS CONCERNS PIIN and SPIN numbers…13 positions F C-0 ?? No dashes or Spaces Shipment numbers must be correct 0001 7- positions always prefaced by alpha ABC0001 8- positions with ABC0001Z Consecutive shipment numbers New orders start at 0001 again CLIN info/DoDAACs correct or TRASHED! QAS MUST REJECT before allowing into system Last Shipment (Letter ‘Z’)

Example WAWF-RR PIIN and SPIN numbers Shipment numbers

Question and Answer Which responsibilities might a QAS perform if approved for an Inspector role in Wide Area Workflow? (Select all that apply.) Signs Receiving Report Inspect at source Acceptance at source Accept progress payments

Summary Having completed this lesson, you should now be able to:
Identify the regulations governing the role of DCMA QA in acceptance and release of products and services. Identify the reasons why documenting the QA records in the official contract file is important. Discuss the use and application of DoD inspection stamps. Identify the conditions for authorizing shipment and acceptance of products via ARP. Discuss DCMA’s policy on the use of ARP. Lesson 4: Safety Stock

Summary (cont.) Having completed this lesson, you should now be able to: Identify the radio indicators on the supplier’s shipping document that are required when ARP or CoC are authorized. Identify the conditions for authorizing shipment and acceptance of products/services via CoC. Distinguish the differences between ARP and CoC usage for authorizing release of shipment. Discuss the use of the WAWF-RR and DD Form 250 by DCMA in the acceptance of products and services from suppliers. Recognize common mistakes made by suppliers on acceptance documents. Lesson 4: Safety Stock

Questions

Review Question 1 According to FAR , who is responsible for the acceptance of supplies and services? Cognizant Contracting Officer Administrative Contracting Officer Contract Administrator Quality Assurance Specialist

Review Question 2 Which FAR clause directs DCMA to keep records and establish files containing all contractual actions? FAR b (15) FAR (c) FAR FAR (g)

Review Question 3 Who has the authority to determine whether a QAS is assigned an inspection stamp? DoD DCMA CMO First Line Supervisor

Review Question 4 What regulation addresses ARP responsibilities?
Tasking Memo DCMA-INST 314 DFARS (b) FAR

Review Question 5 When can DCMA authorize CoC for a shipment?
(Select all that apply.) Only small losses incurred if there’s a defect If there are no customer-imposed mandatory inspections If FAR is in the contract In Government’s best interest

Review Question 6 When a QAS signs up for the role of Inspector in WAWF, at a minimum, for what option should he/she register? Admin By View Only for CMO DoDAAC Acceptor View Only for DoDAAC DCMA View Only First Line Supervisor View Only for DoDAAC

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