Federal Aviation Administration Supplier Control Audit (SCA)

1. Federal Aviation AdministrationSupplier Control Audit (SCA) Presented by: Ed Bayne Boeing Enterprise and Industry Interface Representative Prepared by: Brian Simons Boeing Oversight Representative

2. What is an SCA? • FAA Order 8120.2, Part 3, section 124. Certificate Management Activity: • Certificate management activity will be focused on the Production Approval Holder’s (PAH) control of its suppliers. • The FAA will determine if a PAH (e.g. The Boeing Company) is complying with its supplier control system by performing the following activities: • b. Supplier Control Audit. The Principle Inspector (PI) will determine that the supplier complies with purchase order and/or quality requirements.

3. What is an SCA? (Cont.) • FAA Order 8120.2, Part 6. Supplier Control Audit, section 139. General: • A SCA is conducted as part of the Certificate Management of the PAH (e.g. The Boeing Company PC700). • Evaluates the outside sources’ (e.g. supplier) system to control parts, materials, supplies, and services. • The SCA determines that the supplier complies with purchase order and/or quality requirements, including any statistical sampling that may be utilized.

4. What are the results of an SCA? • FAA Order 8120.2, Part 3, section 125. Determination of Supplier Control: • The PI determines whether a PAH is controlling its suppliers by reviewing the results of the supplier control audits. • The PI looks for evidence that may indicate a system breakdown in supplier control by the PAH. • Corrective action is requested for a system breakdown.

5. What are the results of an SCA? (Cont.) • If the FAA identifies evidence indicating a system breakdown in supplier control, a Letter of Investigation (LOI) or Surveillance Evaluation Report (SER) is issued to the PAH. • LOI vs. SER depends on the severity of the issue(s) • The LOI/SER informs the PAH that the FAA is investigating the matter. • The LOI/SER describes each of the identified nonconformances as follows: • Required Condition (e.g. AS9100 requirement, supplier procedure, etc.) • Encountered Condition (e.g. “PAH failed to ensure AS9100…was implemented at supplier”) • Example (e.g. specific evidence collected during SCA: un-calibrated inspection tools, past due internal audits or management reviews, incomplete corrective action, missing training records, etc., etc., etc.)

6. What are the results of an SCA? (Cont.) • The PAH is requested to provide a response containing: • Additional evidence or statements addressing the conditions or examples • Mitigating circumstances relevant to the case • Nonconformance cause, and action to correct and prevent recurrence • Response is typically due within 20 working days, upon receipt of LOI This language sounds like legalese, because it is!

7. What are the results of an SCA? (Cont.) • The PAH, and it’s suppliers, are required to maintain a quality management system per Code of Federal Regulations, 14 CFR 21.165. • The PAH’s Production Certificate is at risk during every SCA • The PAH is at risk for civil penalties stemming from LOIs • By law, 14 CFR 13.14; Each violation is subject to civil penalty of not more than $25,000 per occurrence. (i.e. each individual bolt improperly torqued, each part improperly heat treated)

8. What are the results of an SCA? (Cont.) • Past supplier Issues resulting in a civil penalty have included: • Special Manufacturing Processes (9100 clause 7.5.2) – Improper Heat Treating • Design Control (clause 7.3) – Revision Control of Drawings & Specifications, Parts Manufactured Without Proper Engineering Approval • Material Control (clause 8.3) – Level of Control Over Non-conforming Product – Parts Not Properly Identified for Scrap • Tool & Gauge Control (clause 7.6) – Non-compliance of Calibration/Certification System • Inspection System (clause 8.2.4) – Control of Sampling System (Lack Training, Audits) • Manufacturing Control (clause 7.5.1) – Inadequate Work Instructions • Certifications (clause 6.2.2) – Employees Not Properly Certified Performing Operations

9. Why should the Certification Bodies (CBs) and their auditors care about SCA results? • PAH supplier approval is based on 9100 certification recognition • The majority of tier 1 and tier 2 aerospace suppliers are 9100 certified • The supplier QMS processes assessed during the SCA are the same ones assessed by the CB during initial and surveillance activity • FAA verbal comment following a recent SCA audit, regarding a certified supplier that did not have an established FAI process, per AS9100 clause 8.2.4.2 requirements: “He (FAA auditor) is concerned that they are CRB approved and it apparently wasn’t identified as an issue by the approving CRB”

10. SCA Statistics (The Big Picture Show) • FAA supplier control audits conducted at Boeing Commercial Airplane (BCA) division suppliers from October 2005 through March 2007: • 52 clients (9100 certified suppliers) • 28 domestic / 24 non-domestic clients • 21 clients had at least 1 identified QMS nonconformance • 40% of total • 86 total nonconformances identified • Average per client: 4 • Top client: 9

11. SCA Statistics (The Good, The Bad, The Ugly)

12. SCA StatisticsTop Nonconforming 9100 Clauses • FAA SCAs conducted at BCA division suppliers from October 2005 through March 2007: • 7.5.1 Control of Production and Service Provision (13) • 8.2.4 Monitoring and Measurement of Product (8) • 8.2.4.2 First Article Inspection (7) • 7.5.1.1 Production Documentation (6) • 7.5.5 Preservation of Product (6) • 4.2.3 Control of Documents (5) • 4.2.1 Documentation Requirements (4) • 4.2.2 Quality Manual (4)

13. 7.5.1 Control of Production and Service Provision • Production work order issues: • Obsolete/inaccurate drawing and specification call-out • Missing or omitted manufacturing/inspection operation entries • Different part counts between operations (Part accountability) • Manufacturing/inspection practice does not match operation instruction • Manufacturing practice does not meet engineering/specification requirements • Recommendations for CB auditor: • Increase audit time in manufacturing/inspection areas • Increase production work order sample size during audits • Review for part accountability, required entries, evidence of operation completion • Compare work order to drawing/specification requirements • Witness manufacturing/inspection practice vs. work order, drawing, specification, instruction, etc.

14. The Loud and Clear Message • Aerospace QMS certification/registration scheme: • The FAA allows the PAH to use other-parties to perform supplier assessments, surveillance, and certification. It is an earned privilege, not guaranteed. • FAA perception of effectiveness is based on facts collected during SCA activity • Certification body management and auditor responsibilities: • Ensure theintegrity of the audit process and the validity of the issued certificate • Recognize the inherent conflict of interest perception (Clients pay for certificates) • Demonstrate ethical behavior to build trust and confidence with the PAH and FAA (i.e. no soft grading of nonconformances, thorough CA verification, etc.) • CB auditor’s role is critical for PAH’s Certificate Management

15. Proposed Process Improvements • Direct communication of SCA results from PAH to responsible CB • OASIS feedback loop • Formal PAH report (e.g. Boeing Strengths and Issues document) • Participation by CB in LOI corrective action response • Participation of CB auditor, along with PAH personnel, during a SCA • Direct communication of SCA results to accreditation body (e.g. ANAB) for CB oversight planning and auditing activity

16. The Reality of the Civil Aviation Industry....... PAH and FAA personnel: • Are not as constrained by audit agendas/plans or time during their audit activity • Audit trails can be methodically followed and investigated, allowing greater possibility of exposing process nonconformances • Spend the majority of audit time focused on manufacturing/inspection processes Shouldn’t the Certification Body Personnel: • Ensure audit planning policies and CB/Client agreements meet the intent of AS9104 clause 8.2.2 Duration of Assessment: • It is anticipated that the requirements of the AQMS Standards shall add on-site assessment time • Justify and utilize additional on-site assessment time to emphasize manufacturing/inspection documentation, personnel competence, and process conformance

17. Supplier Control Audit - SCA • Questions or clarifications? • Comments? • Discussion? • Email feedback to brian.d.simons@boeing.com • FAA CFR's and Orders:http://www.faa.gov/