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Sections in This Document

1. Purpose ....................................................................................................................................2

2. Scope .......................................................................................................................................2

3. Responsibility............................................................................................................................3

4. Background...............................................................................................................................5

5. References ...............................................................................................................................6

6. Procedure .................................................................................................................................6

6.1. Overview ........................................................................................................................6

6.2. Auditor Qualifications .....................................................................................................7

6.2.1. Contract Auditor Training Requirements..........................................................7

6.2.2. Auditor Training and Verification ......................................................................7

6.3. Contract Audit Elective...................................................................................................8

6.3.1. Phase II............................................................................................................9

6.3.2. FDA Verification Audits ....................................................................................9

6.3.3. Verification Audit Failure ................................................................................10

6.4. Audit Requirements......................................................................................................10

6.4.1. Minimum Audit Requirements........................................................................10

6.4.2. Contract Audit Tracker...................................................................................11

6.4.3. Audit Selection ...............................................................................................11

6.4.4. Audit Reduction Request ...............................................................................12

6.4.5. Posting of Audit Completion Data ..................................................................13

6.5. Audit Procedures..........................................................................................................13

6.5.1. Human and Animal Food Contract Audits......................................................13

6.5.2. Human and Animal Food Verification Audits .................................................14

6.5.3. Egg, Medical Device, and Other State Inspection Programs ........................15

6.6. Reporting Audit Findings..............................................................................................16

6.6.1. Human and Animal Food Contracts...............................................................16

6.6.2. Egg, Medical Device, and Other State Inspection Programs.........................16

6.7. Audit Requirement Deficiencies...................................................................................16

6.8. Performance Deficiencies ............................................................................................17

6.8.1. Individual Inspector Performance Deficiencies ..............................................17

6.8.2. Program Performance Deficiencies ...............................................................18

6.8.3. Documenting Performance Deficiencies........................................................18
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6.9. Process for Contract Modifications for Program and Performance Deficiencies.........19

6.10. Dispute Resolution.......................................................................................................20

6.11. Quality Assurance........................................................................................................20

6.11.1. State Program Quality Assurance..................................................................20

6.11.2. Contract Program System Audit ....................................................................20

7. Glossary/Definitions................................................................................................................20

8. Records ..................................................................................................................................22

9. Supporting Documents ...........................................................................................................22

10. Document History ...................................................................................................................23

11. Change History.......................................................................................................................24

12. Attachments............................................................................................................................26

1. Purpose

The purpose of this Field Management Directive (FMD) is to delineate the 

required: (1) procedures for conducting audits of state contract inspections, (2) 

frequency of audits, (3) auditor training, and (4) records documenting audits. 

Specific audit procedures and forms, data reporting instructions, and audit 

summary report forms are included as appendices.

This FMD-76 document governs the Food and Drug Administration (FDA) 

Office of Regulatory Affairs’ (ORA’s) oversight of the state contract audit

program.

2. Scope

FMD-76 applies to contract inspections in these programs:

• Human Food

• Animal Food

• Egg, Medical Device, and Other State Inspection Programs

When a contract or contract program is suspended or terminated, the audit 

requirements within this FMD are similarly suspended or terminated.

This FMD does not address training requirements and procedures for 

oversight of states performing inspections of mammography facilities certified 

by the FDA under the Mammography Quality Standards Act of 1992 (MQSA).

This FMD does not delineate the procedures for reviewing the quality of state 

contract inspection documents. ORA program divisions are encouraged to 
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conduct a quality assurance review of state documents as part of their quality 

assurance program. Refer to SOP-000115 Management of ORA State 

Contract Inspection Process. Deficiencies in state inspection reports 

completed under contract are also beyond this FMD’s scope.

For this directive, the term “state” refers to both state and territorial agencies 

participating in the state contract inspection program.

In situations where this directive conflicts with the agency’s contract, the 

contract takes precedence.

3. Responsibility

A. Associate Commissioner of Regulatory Affairs (ACRA), Assistant 

Commissioner for Human and Animal Food Operations, Assistant 

Commissioner for Medical Products and Tobacco Operations

1. Ensures Program Directors (PDs) comply with FMD-76 requirements

2. Initiates actions to correct national deficiencies

B. Program Director (PD)

1. Ensures that the PD’s respective program division complies with FMD76 requirements

2. Reviews contract modification requests

C. Program Division Director (PDD)

1. Ensures the required numbers of audits are completed

2. Ensures documented program and performance deficiencies are

corrected

3. Ensures adequate staff are assigned to accomplish Audit Program 

responsibilities

D. FDA Auditor

1. Conducts audits of state inspectors performing contract inspections

2. Trains and verifies state auditors’ performance

3. Submits audit reports to the state liaison

E. State Liaison

1. Manages the Contract Inspection Audit Program for assigned state(s)

2. Informs program division management of contract audit performance
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3. Works with management and the state agency to:

a. Assign audits to the FDA employees

b. Ensure the required numbers of audits are completed and that

identified inspectors are audited

c. Document and ensure correction of individual and program

performance deficiencies

d. Ensure required documentation, including audit reports, is

completed, maintained, and distributed, as needed

F. Director, Office of Partnerships (OP)

1. Has primary oversight of the administration of the contract inspection 

and associated audit program

2. Resolves disputes in audit classification findings

3. Approves audit-rate reduction requests

G. Director, OP Division of Partnership Investments and Agreements 

(DPIA)

1. Reviews changes to the contract proposed by the program division

H. Project Manager (PM), OP DPIA

1. Leads oversight of the contractor’s technical performance, in 

conjunction with the Contracting Officer Representative (COR) and the 

state liaison

2. Reviews proposals for corrective actions

I. Contracting Officer’s Representative (COR), Office of Regulatory 

Management Operations (ORMO)

1. Works with the Project Manager and others to support the contract and 

provide financial oversight of a specific contract

2. Recommends contract modifications

J. Audit Program Manager, OP DPIA

1. Conducts the national system audit

2. Coordinates the audit program

K. State Auditor (Phases II and III only)

1. Conducts audits of state inspectors performing contract inspections.

2. Trains and verifies the performance of state auditors.
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3. Submits audit report or memorandum to the state liaison for review 

through the state agency.

4. Background

The original FMD established procedures for joint ORA‒state inspections and 

independent audit inspections for the human food, medicated feed (currently 

animal food), and interstate travel programs. In 1982, ORA revised the FMD, 

combining the general procedures for all current programs into one document. 

In 1999, ORA added instructions for auditing food sanitation and medicated 

feed contract inspections.

In June 2000, the Department of Health and Human Services, Office of 

Inspector General (OIG), published the results of its evaluation of the FDA’s 

oversight of food firm inspections conducted by states contracted to do so. The 

report recommended that the FDA take steps to address shortcomings in its 

system of oversight. In 2006, ORA revised this FMD to incorporate the OIG’s 

recommendations and to improve the oversight of human food, animal food, 

and other inspections done under contract by the states. 

ORA updated this FMD in 2012, strengthening the processes for ensuring the 

audit rates are met and identifying and correcting systemic problems identified 

during the audits. The revision expanded the oversight of egg contract 

inspections and added procedures and computer-automated forms to improve 

reporting and tracking of completed audits.

ORA had based evaluations on audit rate (as a percentage of the total number 

of contract inspections), but its May 2015 revision of this FMD changed to an 

inspector-focused evaluation. This change makes this audit program 

consistent with the requirements for Manufactured Food Regulatory Program 

Standards (MFRPS) and the Animal Feed Regulatory Program Standards 

(AFRPS) and ensures that each inspector performing contract work is 

periodically evaluated.

ORA updated this FMD in March 2019 to reflect the organizational structural 

changes stemming from the May 2017 implementation of Program Alignment, 

which transformed ORA programs and offices from being geographic-district 

focused to being regulated-commodity focused (i.e., specialized for specific 

FDA-regulated commodities). Terminology was updated to reflect changes in 

regulations and included an elective for the Animal Food programs to 

participate in the audit phases, previously reserved for Human Food programs.

Additional changes were intended, where possible, to align the state contract 

audit program with the other audit programs. In addition, to improve oversight, 
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ORA added audit questions — regarding Limited Scope and Modified 

Preventive Controls — to the human and animal food program audit forms. 

ORA also added an audit option for the egg program.

Current changes (Rev 05) are necessary to incorporate the revised human 

food audit form (FDA Form 3610H) to incorporate new questions, develop an 

electronic form, and to automate the audit form routing process. The form was 

revised to have questions that are specific to each individual human food 

inspection type and to include new questions that cover Full Scope Preventive 

Control inspections. 

5. References

SOP-000115 Management of ORA State Contract Inspection Process

Contract Statement of Work (SOW)

ORA Records Management Program

SOP-000321 OHAFO State Contract Inspection Report Review Process 

Procedure

FORM-000585 OHAFO State Contract Report Quality Factor Checklist

6. Procedure

6.1. Overview

The FDA audits contract inspectors to ensure that the quality of stateconducted inspections purchased through contracts is adequate and complies 

with the contract requirements. The Contract Inspection Audit Program 

(hereafter known as the Audit Program) is a standardized system of formal

field audits conducted by qualified FDA and state auditors at a minimum 

frequency or audit rate.

The Audit Program is implemented in three phases:

1. Phase I: The program division is responsible for conducting the 

minimum number of contract audits.

2. Phase II: The program division and state agency share responsibility for 

conducting the minimum number of contract audits to meet the audit 

rate.

3. Phase III: The state agency assumes full responsibility for conducting 

the minimum number of contract audits to meet the audit rate.
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NOTE: Phases II and III apply only to the human food and animal food 

contracts. Section 6.3 provides instructions for implementing Phases II and III 

of the Audit Program.

6.2. Auditor Qualifications

To conduct contract audits, the FDA or state auditor must have completed the 

auditor training below, the training courses specified in the contract, and all 

training course prerequisites, as required by Office of Training Education and 

Development (OTED). The auditors must have experience in conducting 

inspections in the program area and understand the relevant FDA compliance 

program and regulations. Additional program qualifications for state auditors 

are listed in Section 6.2.1.

6.2.1. Contract Auditor Training Requirements

A. All Human Food Contract Auditors

1. FD320W100 - State Food Contract Audit Course

2. Program specific training

B. All Animal Food Contract Auditors

1. VM212W100 - State Bovine Spongiform Encephalopathy (BSE)/Feed 

Establishment Contract Audits course

2. Program specific training

6.2.2. Auditor Training and Verification

A. The program division and state agency develop a plan to accomplish the 

training and verification audits for those state inspectors who have 

completed the training requirements in Section 6.2.1 and the SOW. If 

requested by the program division, the state agency provides records to 

verify that state auditors have completed the training requirements.

B. The state auditor must complete one training audit and one verification 

audit for each type of inspection the auditor will be responsible for auditing. 

For example, to conduct audits for current Good Manufacturing Practices 

(cGMP) and Seafood Hazard Analysis Critical Control Points (HACCP) the 

state auditor must complete at least one training and one verification audit 

for cGMP and one training and one verification audit for Seafood HACCP. 

A state auditor must pass a cGMP audit to qualify as a specialty area 

auditor. An audit may cover multiple areas in one inspection depending on 

the scope of the inspection.

C. The FDA auditors train and verify the performance of state auditor trainees. 

States with one qualified auditor may conduct the training and verification 
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audits for new state auditor trainees. States with two qualified state auditors 

may conduct verification audits of state auditors following the Phase III 

audit procedures (See Section 6.3.2). The contract audits completed during 

the training and verification audits are counted toward the audit obligation.

D. One auditor should train only one state auditor trainee during a contract 

inspection. The state supervisor or additional state inspectors are not 

permitted to accompany the auditor during a training or verification audit.

E. During the training audit, the state auditor trainee observes the FDA or 

state auditor conducting a contract inspection audit. The auditor, not the 

trainee, completes Form FDA 3610H (Appendix B) or the Animal Food 

Audit Form (Appendix C).

F. During the verification audit, the FDA or state auditor observes the state 

auditor trainee conducting a contract audit. The state auditor trainee 

completes Form FDA 3610H or Animal Food Audit Form (not the 

verification auditor).

G. The original audit forms are submitted to the state liaison no later than 30 

business days after the audit. The auditor follows the guidelines in 

Appendix D to document the state auditor trainee’s performance during the 

verification audit. The FDA sends a copy of the memorandum to the state 

agency when FDA conducts the audit, and vice versa.

H. Only the state inspector, not the state auditor, reports his/her time in the

electronic State Access to Field Accomplishment and Compliance Tracking 

System (eSAF). The number of hours is reported as an audit, not an 

inspection. At the time data is entered in eSAF, the state data entry user 

changes the Inspection Type field on the Add/Update Inspection Operation 

screen from "State" to "Audit.”

6.3. Contract Audit Elective

Full implementation of the Audit Program occurs when the state agency

assumes responsibility for auditing its food (human and animal) contract

inspections. This process begins in Phase II and is completed in Phase III.

Phases II and III of the Audit Program are offered to the state agency as an

elective under the Human Food & Animal Food Contract SOWs. If the state 

agency bids on this elective, an agreement (Appendix H State Implementation

Agreement and Yearend Evaluation) must be completed and signed by the 

PDD and the director of the state inspection program. The state must submit 

this signed agreement with its contract quote/proposal prior to award of the 

contract.

At the end of the contract performance period, the program division updates 

the agreement to include a year-end evaluation and a summation of the 
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number of audits completed. The updated agreement is emailed to the director 

of the state program and to the Contract Audits mailbox 

(ContractAudits@fda.hhs.gov) no later than 30 business days after the end of 

the contract performance period.

6.3.1. Phase II

Phase II occurs when the contracting agency assumes partial responsibility for 

auditing its human food and animal food contract inspections. Phase III

Phase III occurs when the state agency assumes full responsibility for auditing 

its human food and animal food contract inspections. The state agency must 

have a quality assurance program (QAP) that requires correcting inspection or 

audit performance deficiencies. The QAP must describe the remedial training 

process and an internal audit of an auditor who fails to recognize: (1) deficient 

performance by an auditor or inspector or (2) an inspector’s performance that 

should be rated as “needs improvement,” as discussed in Section 6.8 of this 

FMD.

The state lists all state auditors who can conduct contract audits for the 

contract performance period when completing Appendix H, (Section V). The 

state agency must audit its own auditors every 36 months, considering the 

inspection priorities listed in the human food and animal food contract SOW 

and the inspections performed under contract. To meet this requirement, the 

state agency must have a minimum of two qualified state auditors. If during the 

contract year the state agency is unable to retain a qualified auditor for 

contracted specialized inspections or a minimum of two auditors, the state 

remains in Phase III for the remainder of the contract year. The state agency is 

moved to Phase II the following contract year and remains in Phase II until it

has a minimum of two qualified auditors trained in all areas in which contract 

audits will be conducted.

6.3.2. FDA Verification Audits

For Phase II states, the FDA conducts two verification audits per auditor every 

36 months. For Phase III states, the FDA conducts one of the two verification 

audits, and the state conducts the second. The FDA or state auditor evaluates 

a state auditor performing an audit of a state contract inspector. The FDA 

auditor prioritizes evaluation of new state auditors who have not previously 

been audited by the FDA. Verification audits should be conducted in a 

specialized area (e.g., Seafood HACCP, Juice HACCP), whenever possible.

States in Phases II and III may count new auditor verification audits toward the 

verification audit rate. Verification audits of specialized inspection types count 

toward the state auditor’s verification audit rate.
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The performance and documentation of a verification audit follows the 

procedures in Section 6.5.2 of this FMD.

6.3.3. Verification Audit Failure

If the verification auditor assigns an overall rating of “needs improvement” in a 

specialized area (e.g., Seafood HACCP, Juice HACCP), the auditor is 

considered to have failed and is removed from performing audits in that 

specialty area. The auditor may continue to perform audits in the cGMP area, if 

approved by the program division and state program. To determine an 

appropriate course of action, the state liaison must notify the Audit Program 

Manager at the Contract Audits mailbox (ContractAudits@fda.hhs.gov) within 

10 business days and copy the Program Division Director if the failure may 

impact the contract.

The “needs improvement” audit rating counts only toward the audit rate, not 

the performance rating.

In the event an auditor fails a verification audit, the inspector must undergo 

another audit.

6.4. Audit Requirements

6.4.1. Minimum Audit Requirements

The minimum audit requirements to be accomplished each contract year by 

the inspection program are shown in Table 1. All human food and animal food 

inspectors must be audited a minimum of twice in a 36-month period. The 36-

month period is distinct to each inspector. All inspectors within a state program 

are not required to be on the same 36-month cycle.

A state must complete a separate Appendix H State Implementation

Agreement and Yearend Evaluation form for each contract program in Phases

II and III and for each contract type, human food or animal food. For states in 

the audit program, a state implementation agreement (Appendix H) must be 

submitted with the contract proposal or option year letter. At the end of the 

contract year, the state liaison completes Section IV (Planned and Completed 

Audits) and Section VII (Yearend Evaluation) for the contract performance 

period.
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Table 1. Audit Rate for Contract Inspection Programs

Inspection Program Minimum Audit Rate

Human Food1 2 audits per role (inspector and auditor) every 36 months

Animal Food2 2 audits per role (inspector and auditor) every 36 months

Egg One joint audit inspection or audit option audit per 

performance year

Medical Device, and 

Other State Inspection 

Programs

One joint audit inspection of each inspection program per 

performance year

By the end of the second quarter of the contract performance period, if less 

than 25 percent of the required audits of a state’s human food or animal food 

contract inspections have been completed, the Audit Program Manager emails 

a status reminder to the state liaison.

6.4.2. Contract Audit Tracker

The state liaison must enter the following information in the Contract Audit 

Tracker for all human food and animal food contracts:

• Number of inspections to be performed

• Names of inspectors performing contract inspections

• Names of auditors performing contract audits (Phase II & III)

• Number of audits to be performed during the contract year

6.4.3. Audit Selection

The program division and the state agency managers develop an audit 

schedule when assigning the firms to be inspected under contract by the state 

agency. Firm selection should be based on the inspection priorities listed in the 

SOW and the contractual obligation of the contractor including the state’s 

implementation of the contract audit program.

The types of contract inspections conducted by an inspector must be 

considered when scheduling an audit. The most complex inspections should 

1 Includes low-acid canned foods and acidified foods, Preventive Controls, Seafood HACCP, and Juice HACCP inspections,

where appropriate. 2 Includes BSE only for inspections at licensed and non-licensed feed-mill inspections.
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be audited. The state or program division must rotate inspection types to 

ensure the state inspector is audited in all applicable program areas (i.e., 

Seafood HACCP, Juice HACCP, Low-Acid Canned Foods (LACF), Preventive 

Controls (PC), medicated feed, BSE). If an inspector is trained in multiple 

specialized inspection areas, at least one of the audits in the 36-month period 

should be in a specialized area. Refer to Appendix D.

A training or verification audit is counted as one audit, because a single

contract audit is being performed during a training or verification audit of a 

state auditor.

Program divisions may schedule joint inspections as needed for training 

purposes. These approved joint inspections count toward the FMD-76 audit 

requirement when an audit form is completed.

If a state auditor also performs inspections under the contract, the state auditor 

must be audited as an inspector as well (see Table 1).

6.4.4. Audit Reduction Request

In limited circumstances, a state agency may request a reduction in the 

number of audits to be conducted in a contract year. Reductions are not given 

when a program division or state agency fails to conduct the required audits. 

When evaluating such a request, OP considers the number and type of 

contract inspections, the number of state inspectors conducting the contract 

inspections, and previous individual and program performance. The OP 

director has final discretion in granting a reduction. If the request is not 

approved, OP provides an explanation and the program division and state 

agency have an opportunity to provide additional information.

Audit reduction requests for human and animal food are requested using the 

Request for Audit Reduction Form (see Appendix I). Audit reduction requests 

for other contract types are made by memoranda.

The program division must submit the request for audit reduction via email to 

Contract Audits mailbox (ContractAudits@fda.hhs.gov) during the first quarter 

of the contract performance period. Requests may be submitted later if

conditions change during the contract performance period. Submission of a 

separate form for each program is required to request an audit reduction in 

both human and animal food. A response will be provided by OP within 20 

business days of receiving the request. The audit rate reduction is valid for the 

specified contract performance period and can be canceled if conditions 

change.
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The state and program division understand that the audit reduction is valid for 

the contract performance period specified in this agreement. If any of the 

following conditions occur, the audit reduction is reevaluated:

1. The state changes the number of inspectors conducting contract 

inspections.

2. An inspector/auditor receives an overall rating of “needs improvement”; 

and/or

3. The contract is significantly modified (e.g., increases in the specialized 

inspections or number of inspections).

The program division and state are responsible for reporting any changes to 

the information provided on the request form (Appendix I). The state notifies 

the program division of any changes within 10 working days. The program 

division is responsible for reporting the changes to OP within 10 working days. 

6.4.5. Posting of Audit Completion Data

The annual summary audit completion data for each state program is posted 

by OP on the FDA internet site. Information includes:

• Number of contract inspections completed

• Number of audits completed

• State program overall audit performance rating (see Section 6.8.2)

6.5. Audit Procedures

This section describes the references, audit requirements, performance

documentation and factors, and timeframes for submitting performance 

documents for all contract inspection programs.

6.5.1. Human and Animal Food Contract Audits

A. Audit Requirements - Every inspector must be audited a minimum of

twice in 36 months for each role they serve.

B. Timeframe for Submitting Performance Documentation

1. When the FDA conducts the audit, the FDA auditor sends a copy of the

audit form to the state liaison. The state liaison sends the audit 

information to the state agency no later than 30 business days after the

audit is completed.

2. When the state agency conducts the audit, the state agency sends the

original audit form to the state liaison no later than 30 business days

after the audit is completed.
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3. If a contract audit is rated as “needs improvement,” the state liaison or

state agency must notify the other party no later than 10 business days

after the audit is completed (see also Section 6.8).

6.5.1.1. Human Food Contract Audits

A. References

1. Appendix A - Instructions for Evaluating Contract Inspections

2. Appendix B.2 - Instructions for Reporting Human Food Contract Audits

B. Performance Documentation - Appendix B - Human Food Field 

Inspection Audit Form (Form FDA 3610H) is used to evaluate the state

inspector’s performance.

C. Performance Factors - See Appendix B.

6.5.1.2. Animal Food Contract Audits

A. References

1. Appendix A - Instructions for Evaluating Contract Inspections

2. Appendix C.1 - Instructions for Completing the Animal Food Safety 

Inspection Audit Form

3. Appendix C.2 - Instructions for Reporting Animal Food Contract Audits

B. Performance Documentation - Appendix C - Animal Food Safety 

Inspection Audit Form

C. Performance Factors - See Appendix C.

6.5.2. Human and Animal Food Verification Audits

A. Audit Requirement - Each state auditor must be audited a minimum of

twice in 36 months. Verification Audits for programs in Phase II are 

conducted by the FDA. Verification Audits for programs in Phase III have 

one (1) of the two (2) required audits conducted by FDA.

B. Timeframe for Submitting Performance Documentation

1. The program division sends a copy of the audit memorandum to the 

state liaison and state agency no later than 30 business days after the 

audit is completed.

2. When the state agency conducts the audit, the state agency sends the 

memorandum for the verification audit to the state liaison no later than 

30 business days after the audit is completed.
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3. If a verification audit is unacceptable, the program division or the state 

agency should notify the other party no later than 10 business days 

after the audit is completed (see also Section 6.8).

C. References - Appendix D - Instructions for Conducting Joint Audit

Inspections, Verification Audits for State Auditors, and Joint Inspections

D. Performance Documentation - The FDA or state auditor follows Appendix 

D to document the state auditor’s performance.

E. Performance Factors - Follow instructions in Appendix D.

6.5.3. Egg, Medical Device, and Other State Inspection Programs

A. Audit Requirement - One joint audit inspection or audit (audit option 

applies to egg program only) is required of each inspection program every

contract year.

B. Audit Option for Egg Program - The program division makes auditing 

decisions, in consultation with the FDA auditor and state program, based 

on the number of trained inspectors in the program. If the state program 

has two or more trained inspectors, the annual requirement is an audit, 

unless the division determines training is needed and elects to do a Joint 

Audit Inspection. The division identifies the state inspectors to be audited,

based on past audit history and inspector performance. Each inspector is

assigned specific roles during the audit, determined at a pre-audit meeting. 

The auditor evaluates each inspector on performance in those roles. A 

separate audit memo is created for each inspector to document the 

assigned areas and the inspector’s performance in those assigned areas. 

The audit memo is also used to plan future audits to ensure inspectors are 

audited in all aspects of an egg inspection.

The program division determines how many inspectors can be evaluated 

during an audit. This decision should consider the firm’s requirements for 

the number of personnel allowed in their facility. The designated lead 

inspector creates one inspection report. Evaluation of the inspection report 

is not part of this audit.

(NOTE: This process remains in place until the draft Egg Safety Regulatory 

Program Standards are approved by Office of Management and Budget.)

C. Timeframe for Submitting Performance Documentation – The FDA

sends a copy of the audit memorandum to the state agency no later than 

30 business days after the audit is completed. If the audit/joint audit 

inspection is unacceptable, the program division should notify the state 

agency no later than 10 business days after the audit is completed.

D. References
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1. Refer to Relevant Contract: Statement of Work (SOW)

2. Appendix A - Instructions for Evaluating Contract Inspections

3. Appendix D - Instructions for Conducting Joint Audit Inspections, 

Verification Audits for State Auditors, and Joint Inspections

E. Performance Documentation - The FDA or state auditor follows Appendix 

D to document the state auditor’s performance.

F. Performance Factors for Joint Audit Inspections - See Appendix D.

6.6. Reporting Audit Findings

The state liaison reports the audit findings for each quarter. All audit results

must be reported, even when more than the required numbers are performed.

The state liaison ensures the audit results in the Contract Audit Tracker (CAT)

Tool are representative and accurate at least on a quarterly basis. The state 

liaison confirms prior contract year audit data before the program division 

conducts work planning with the state. This enables them to plan audits for 

the current contract year. The CAT is used to:

1. Ensure state inspectors and auditors meet the minimum audit 

requirements

2. Ensure verification audits are completed timely

3. Calculate an overall rating for the contract performance period

4. Evaluate the audit ratings for a single performance factor

5. Ensure the minimum audit requirement is being met

6.6.1. Human and Animal Food Contracts

The state liaison records the type of audit as joint inspection, contract audit, or 

verification audit and the inspection type. Contract audits also contain a record 

of the inspection individual performance factor results.

6.6.2. Egg, Medical Device, and Other State Inspection Programs

The state liaison records egg, medical device, and other state inspection 

programs as joint audit inspections and records the overall rating of the audit.

6.7. Audit Requirement Deficiencies

When the minimum audit requirement is not met, the PDD must provide a 

written explanation as to why the audit requirement was not met no later than 

30 business days after the end of the contract performance period. The 

memorandum is emailed to the Contract Audits mailbox 

(ContractAudits@fda.hhs.gov) and includes the following information:

1. The number of inspections awarded in the contract and the number of 

inspections for each type of inspection
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2. The number of audits completed for each type of inspection

3. The number of audits not completed

4. Detailed reasons for not completing the required number of audits

5. Detailed recommendations for solving issues that caused the required 

number of audits not to be met

6. Detailed proposal for meeting the required number of audits for the next 

contract performance period

The OP Director reviews the memorandum and discusses the need to adjust

the state agency’s implementation phase with the PDD and the director of the 

state commodity program.

In Phase I, the PDD prepares the memorandum.

In Phase II, the PDD and state agency work together to prepare the

memorandum. The PDD also documents how to increase oversight of the

program and, if necessary, implement action to assume increased

responsibility for completing the audits.

In Phase III, the director of the state agency prepares the memorandum and

sends it to the PDD for concurrence; the PDD forwards it to the PD. The 

memorandum includes the following content:

1. Support of the memorandum submitted by the state agency

2. Summary of discussions held between PDD, state liaison, and state 

agency to prevent program deficiencies from reoccurring

3. The proposal for increasing oversight of the audit program to ensure the 

required number of audits are met in the next contract performance 

period

6.8. Performance Deficiencies

6.8.1. Individual Inspector Performance Deficiencies

A. When there is an individual performance deficiency, the program division 

or state agency notifies the other party no later than 10 business days after 

the audit is completed. The program would be credited with completing a 

contract inspection and receive payment.

B. An individual performance deficiency occurs when a:

1. Contract audit is rated as “needs improvement” by receiving an overall 

score of less than 80%.

2. Verification audit is rated as “needs improvement” (this applies to

human food and animal food contracts only); or
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3. Joint audit inspection of an inspector conducting an egg, medical 

device, or other inspection done under contract is rated as 

“unacceptable.” (Refer to Appendix D).

C. The program division or state agency follows these steps to address 

individual performance deficiencies identified during audits. The state 

inspector or state auditor cannot return to performing inspections or audits 

until all these steps are completed and passed.

1. The program division and state agency discuss the deficiencies

identified during the audit.

2. The state inspector or state auditor discontinues conducting or auditing

that type of inspection, respectively, until remedial training is completed.

The state may be required to absorb the cost of the training.

3. State inspectors receiving an overall rating of “needs improvement”

must complete remedial training in deficient areas. The program

division and state agency managers agree on the remedial training 

needed to allow the state inspector or state auditor to resume

conducting or auditing contract inspections, respectively. The remedial

training should directly address the deficiencies noted during the audit.

4. After remedial training is completed, the state agency conducts an

internal audit of the state inspector or state auditor while conducting or

auditing a non-contract inspection, respectively. The internal audit

should evaluate the effectiveness of the remedial training.

5. The program division audits the state inspector or state auditor while

conducting or auditing a contract inspection, respectively, once

remedial training and the internal audit has been completed.

6.8.2. Program Performance Deficiencies

When there is a program performance deficiency, the PDD or state or territorial 

agency notifies the other party no later than 10 business days after the end of 

the contract performance period.

A program performance deficiency occurs when the overall audit performance

rating is below 80 percent “acceptable” when averaged across the contract 

performance period. 

6.8.3. Documenting Performance Deficiencies

The program division and state agency follow these steps to address

individual or program performance deficiencies:

1. Develop a plan to correct the deficiencies. The plan must address:
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a. The possible causes for the individual or program performance

deficiency

b. The corrective actions that will improve performance.

2. Complete the Corrective Action Plan for Program and Individual 

Performance Deficiencies (Appendix J) form and submit to the Audit 

Program Manager upon completion of the corrective action.

3. The program division records corrective actions taken by the state in the 

Quality Management System (QMS) for national trending.

6.9. Process for Contract Modifications for Program and Performance

Deficiencies

A. The OP Audit Program Manager or state liaison immediately notifies the 

Project Manager of any individual or program performance deficiency that 

may affect a contractual requirement. The Project Manager works with the 

Contracting Officer’s Representative (COR) to make any necessary 

contract changes. The program division provides the Project Manager with 

additional notification of all follow-up actions and copies of any written 

correspondence to the state agency.

B. If the program division proposes a change to the contract, the PDD emails

a recommendation to change the contract to the PD and OP DPIA Director,

no later than 10 business days after the decision to propose a change to 

the contract is identified.

C. The recommendation must contain the following information:

1. Documentation of the problem including attached copies of pertinent 

state inspection reports and the FDA audit reports

2. A description of the steps taken by the state agency and the program

division to correct the problem

3. Copies of correspondence such as emails between the program

division and state agency documenting efforts to address and correct

the problem

4. An assessment by the program division of the cause of the problem

and suggested changes to the contract

D. The OP DPIA Director, Project Manager, and COR review the program

division’s proposal to determine if the recommended action is appropriate

and complies with contracting regulations and procedures. The OP DPIA

Director discusses with the program division any potential action to be

taken. OP requests the Office of Acquisitions and Grant Services (OAGS) 

send an official notification of any action to the contractor. Any actions
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pursued under this section are in accordance with the instructions provided

in the SOW regarding alteration of the contract and payment for work 

conducted under the contract.

6.10. Dispute Resolution

The program division and the state agency must make every effort to resolve 

disputes about audit findings and overall audit ratings. If, however, the 

program division and state agency are unable to resolve a dispute, both 

parties send a written summary of the situation and a proposed resolution to 

the Director, OP. All related documents, including the FDA audit reports and 

state inspection reports, shall be included. The OP Director reviews the reports 

and works with the program division and the state agency to arrive at a 

resolution. If the state agency fails to respond, the disposition of the contract 

may be affected.

6.11. Quality Assurance

Quality assurance for the contract programs is a combined effort between the

state program, ORA program division, and OP. The inspection audits 

referenced in this FMD ensure the quality assurance of individual inspector 

performance in relation to meeting contract requirements.

6.11.1. State Program Quality Assurance

The program division conducts a performance audit of each state program

within the first quarter of the fiscal year for the completed contract year. The 

internal audit evaluates program performance as described in Section 6.8.2 

and the division’s management of the state contract inspection program. The 

internal audit findings are be provided to the PDD, state liaison, and OP and 

addressed per QMS procedures.

6.11.2. Contract Program System Audit

A comprehensive review and analysis are conducted by OP of the national

performance data and evaluation of state program performance and identifies

continuous improvement opportunities. The OP director provides a written

report of the audit findings, accomplishments, national trends, describes

systemic deficiencies, and recommends corrective actions or opportunities for

improvement to the ACRA, and to the manager of OHAFO and other 

designated managers.

7. Glossary/Definitions

Terms relevant to audits and oversight of contract inspections are:
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Audit Performance Rating - This is the comprehensive assessment of all audits

conducted in a contract program during a single contract performance period.

The Audit Performance Rating is presented as a percentage based on the 

rating of all individual performance factors: Total rated as “Acceptable” divided 

by (the Total “Acceptable” plus the Total “ Needs Improvement”) multiplied by

100. 

Total rated as "Acceptable"

(Total rated "AAAAAAAAAAttaaaaaa " + Total rated "NN NNNN IIII IIIIII II II ")

×100%

The Audit Performance Rating must be greater than or equal to 80 percent.

Contract Audit - This is an evaluation of a contract inspection in which a 

qualified auditor accompanies a state inspector to document the inspector’s

performance. The FDA investigators or state personnel are qualified to 

conduct a contract audit after all the requirements for the specific inspection 

program listed in Sections 6.2 have been successfully completed.

Contract Year - This is the contract performance period for a state contract, 

otherwise known as the period of performance. It is specific to the state 

contract. This may or may not coincide with the calendar year or federal fiscal 

year.

FDA Auditor – Program employee who has completed the required auditor 

and program training and with appropriate program experience. 

Joint Audit Inspection - This is an audit conducted by an FDA investigator

accompanying a state inspector and observing the latter’s performance. A joint

audit inspection may be used to assess the quality of contract inspections for 

egg, medical device, and other industries that are not covered by an FDA 

audit course. Appendix D provides guidelines for conducting and reporting 

joint audit inspections.

Joint Inspection - This an inspection conducted jointly by the program division 

and state inspectors for training. Joint inspections may be counted toward the

required number of audits when used to train state inspectors. Training may

be necessary when a new contract is negotiated, new industries are added to

an existing contract, or remedial training is needed. If authorized in the

contract, the state agency may count the joint inspection as a contract

inspection. Appendix D provides additional guidelines for conducting and

reporting joint inspections.

Overall Audit Rating - This is the comprehensive assessment for an individual 

audit (see Appendices B and C). 

Specialized Inspection - This refers to contract inspections that cover a 

specialized area. Specialized inspection areas include Seafood HACCP, Juice 
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HACCP, LACF/AF, BSE, Licensed and Non-licensed Medicated Feed, and 

Preventive Controls. They are identified as electives in the contract. A state 

program can elect to perform these inspections under the contract if it has 

inspection staff with the required training and experience to perform the 

inspections.

Training Audit - This is an audit in which a state auditor trainee accompanies 

an FDA or state auditor and the state inspector during a contract inspection. 

Its purpose is to teach the trainee how to conduct an audit by observing an 

audit of a state inspector. The state auditor trainee must also meet the auditor 

qualifications in Sections 6.2, 6.3, and relevant for the specific commodity.

8. Records

Contract Audit Forms

Contract Audit Tracker database

State Implementation Agreement and Yearend Evaluation Request for Audit 

Reduction Forms

Corrective Action Plan for Program and Performance Factors Program Audit 

Record

Contract Program System Audit

Annual State Contract Inspection Audit Summary

Supporting Documents

9. Supporting Documents

Users are responsible for ensuring they use the most up-to-date version of the 

referenced documents. Please see the Contracts webpage on FDA.gov or QMIS 

(internal use only) to access the appendices. 

Appendix Internal

Document #

Document Title

Appendix A JA-000024 Instructions for Evaluating Contract Inspections

Appendix B FORM-000161

FORM FDA

3610H

Human Food Field Inspection Audit Form
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Appendix Internal

Document #

Document Title

Appendix B.2 JA-000026 Instructions for Reporting Human Food Audits

Appendix C FORM-000162 Animal Food Safety Inspection Audit Form

Appendix C.1 JA-000027 Instructions for Completing the Animal Food Safety 

Inspection Audit Form

Appendix C.2 JA-000028 Instructions for Reporting Animal Food Contract Audits

Appendix D JA-000029 Instructions for Conducting Joint Audit Inspections, 

Verification Audits for State Auditors, and Joint 

Inspections

Appendix H FORM-000163 State Implementation Agreement and Yearend Evaluation

Appendix I FORM-000164 Request for Audit Reduction Form and Instructions

Appendix J FORM-000165 Corrective Action Plan for Program and Performance

Factors

10. Document History

Revision

#

Status*

(D, I, R) Date Author Name and Title Approving Official Name and Title

1.0 R 1/10/14 Beverly Kent, OP OIG

Working Group

Barbara Cassens,

Acting Director OP

2.0 R 4/30/15 Cathy Hosman, OP FMD 76

Working Group

Barbara Cassens,

Acting Director OP

03 R 03/05/2019 Cathy Hosman, OP ACSL Barbara Cassens,

Director OP

04 R 06/19/2020 SCIPI Working Group Barbara Cassens, 

Director, OP

05 R See QMIS Graham Giesen, OP Audit 

Program Manager

Erik Mettler,

ACPP

* - D: Draft, I: Initial, R: Revision
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11. Change History

Revision # Change

1.0 Previous versions of this document exist and are archived, however version numbering was

not included. This is the first version in the new format.

2.0 Removed responsibility for Program Divisions to develop individual procedures for implementing

this FMD. Added recommendation in 5.3.2 for feed auditors to have the VM213 BSE Inspection

Training. 5.4.1 - Revised audit rate to include minimum of two audits per inspector every 36

months. 5.4.2 - Added clarification that audits should be conducted on the most complex

program. 5.8.3 – Added requirement for submission of corrective action plans to OP. 5.11 –

Added requirement to initiate a corrective action in QMS for national performance deficiency

trends.

03 Document migrated to updated SOP/FMD template. Section 5 procedures moved to Section 6 in

new template.

Changed “Feed” to “Animal Food”.

Changed communication requirements from within 20 business days to 30 business days to be

consistent with the SOWs.

Updated FMD to correlate with changes realized by Program Alignment. District becomes

Program Division. DD becomes PDD. RFDD becomes PD. Separated state liaison role from

generic District reference.

Scope – added statement to suspend/terminate audit requirements for programs that have

been suspended/terminated.

Responsibilities – Change State Contract Liaison/Monitor role to state liaison role as the

Contract Technical Advisor, added description of COR role, added Program Manager role.

6.3 - Section moved from end of procedure.

6.3.3 – Content separated from 6.3.2 under new header

6.3.4 – Section added.

6.4.1 – Minimum audit rates- clarified frequency requirements. Required frequency unchanged.

6.4.2Added description of requirements for complex inspection types.

6.4.4 - Clarified what data will be posted to the internet.

6.5 - Added Animal Food program ability to elect audit phases. Separated inspection audit and 

verification audit requirements.

6.6 – Added audit data to be tracked by Contract Audit Tracker (CAT). Removal of Appendices 

and Workbook E, F, & G. Replaced by CAT.

6.8.2 - Clarified the performance factors to be examined by the program division audit

6.8.3 – Added tracking of state corrective actions by ORA QMS.

Internal document number changed from FMD.076 to DIR-000033. Internal document numbers 

applied to FMD appendices.

Continued next page
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Revision # Change

04 Scope - Removed tissue residue from list of program areas. 

Responsibilities - Removed District Director role since all state liaisons are now aligned with HAF 

program divisions. Added Project Manager role to reflect change in OP DPIA role in the contract 

separate from the COR role now held by OM. Changed title of Program Manager, DPIA to Audit 

Program Manager to differentiate from Project Manager role. 

Background – Added summary of changes from May 2015 revision of FMD to present. 

References – Added reference to SOP-000115 Management of ORA State Contract Inspection 

Process.

 6.2 – Removed list of specialized training courses. 

6.3 – Added clarification of who signs the Appendix H and align sequence to contract SOW.

6.3.2 & 6.3.3 – Clarified requirements.

6.4 – Added Preventative Controls program areas

6.5.2 – Clarified requirements.

6.5.3 – Added egg audit option.

6.8.1C – Added statement to clarify requirements “State inspector or state auditor cannot return 

to performing inspections or audits until all of these steps are completed and passed.”

6.8.2 – Changed definition of “Needs improvement” for a single performance factor. Added “OR 

a score of less than 80% conformance in a single performance factor” and provided the program 

division to determine which is appropriate. Changed overall audit performance rating from 90% 

to 80% to align with the audit program in the regulatory program standards.

6.9 – Revised to include COR role now with OM. 

Appendix B FDA-3610 form-added questions covering audits of Limited Scope and Modified 

Preventive Controls inspections.

Appendix B1 Guidance for Completing the Contract Audit Form-added examples of “Needs 

Improvement” for new section.

Appendix C Animal Food Safety Inspection Audit Form

1. Renamed to “Animal Food Safety Inspection Audit Form”.

2. Added new section covering AFRPS inspections.

3. Revised wording of some questions to reflect changes in regulation.

Appendix C.1 Guidance for Completing the Animal Food Safety Inspection Audit Form-updated 

questions to agree with audit form.

Appendix D Guidance for Conducting Joint Audit Inspections, Verification Audits for State 

Auditors, and Joint Inspections.

1. Removed tissue residue audits since they are no longer contracted work.

2. Added description of findings that would warrant a “Needs Improvement” rating.

Appendix H State Implementation Agreement and Yearend Evaluation

1. Planned Resources-clarified the state personnel who could become qualified auditors.

2. Section I. Contact Information-updated FDA and state contact information to agree with 

contract SOW.

3. Section IV. & V. Planned and Completed Audits-minor changes to form information 

requested.

Appendix I Request for Audit Reduction-updated to reflect changes to audit requirement from 

percentage of total contract inspections to inspector audit of 2 audits in 36 months 

All - Edited for syntax, spelling, punctuation, grammar, adherence to the ORA STYLE GUIDE 

and to the principles of Plain Language (K. Lee Herring, OCPM, DC, SCB) 2/24/2020
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05 Section 2: Added statement that when there is conflict between the FMD and the contract—the 

contract takes precedence. “State” refers to state and territorial agencies participating in the 

FDA contract inspection program. 

Section 6.3.1: Created new subheading for Phase II utilizing existing language in FMD.

Section 6.4: Update steps/references for routing and documenting in CAT Tool to include 

clarifying existing requirements to submit Appendix H within 30 days end of POP.

Section 6.4.2: Created subsection heading for existing CAT Tool data requirement updates.

Section 6.5.2: Clarified existing requirements for Phase III verification audit responsibilities.

Section 6.8: Update Performance Measures - Removed requirements on single performance 

factors. 

Section 6.9B: Change timeline for requesting contract modification to 10 business days after the 

decision is made that it is necessary to modify the contract.

Glossary: Removed 4 or more needs improvement reference to individual performance.

Appendix B: Fundamental changes to 3610 to update audit questions to align with program 

specific questions and to incorporate Full Scope PC questions, now 3610H.

Appendix B1: Delete appendix as the job aid on the new form replaces this guidance. 

Appendix B2: Update PAC codes and reporting requirements

12. Attachments

See Section 9 for links to document appendices.