Thursday, March 29, 2012

Subcontract Administration - Quality

Today we will conclude this four part series on prime contractor responsibilities when it comes to subcontracting and administering those subcontracts. We have addressed only a few of those obligations but the ones we have discussed are the ones that have monetary consequences when contractors fail to take those responsibilities seriously.

Contractors are responsible for performing or having performed all inspections and tests necessary to substantiate that the supplies or services furnished under their contract conform to contract requirements, including any applicable technical requirements for specified manufacturers' parts. These pertinent clauses are found in 52-246-1 through 14 depending upon type of contract and what is being purchased.

These clauses also give the Government the right to inspect the goods and services being purchased prior to delivery or contract completion. The inspection clause protects the Government by allowing it time to spot and correct defects or flaws before completion. It also protects the contractor because sometimes the Government will try to alter standards to a higher level than that spelled out in the contract.

Quality testing can take on many different forms but the most common attributes tested are quality, quantity, and timeliness. When the Government performs inspections and tests, it must do so in a manner that will not unduly delay the work. However, whether the Government chooses to perform testing or not, the contractor is never absolved from meeting the quality standards specified in the contract.

Just as the Government conducts inspections and testing at the prime contract level, the prime contractor must conduct similar inspections and testing at the subcontract level. Failure to do for example could introduce non-conforming parts into the supply chain. The Government has pursued many cases where companies falsely represented parts as meeting contract specifications.

In some cases, the Government may also want to conduct quality assurance testing on subcontracted supplies and services when it is in their interest. For example, if the item produced by a subcontractor is to be shipped directly to the end user, it would be in the Government's interest to conduct testing at the subcontractor. Just because the Government steps in and conducts testing/inspections at the subcontractor, the prime contractor is not relieved of any of its responsibilities under the contract.

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