The Federal Acquisition Regulation is the primary regulation for use by all federal agencies in acquiring supplies and services. Sections 46 and 52, which discuss and set forth quality assurance and contract clauses, respectively, provide guidance in determining quality assurance responsibilities. According to the Federal Acquisition Regulation, government contract quality assurance is defined as the various functions, including inspections, performed by the government to determine whether a contractor has fulfilled the contract obligations pertaining to quality and quantity. These inspections can either be conducted at the contractor’s place of manufacture and production (source) or at the receiving location for the parts (destination). DCMA is DOD’s primary organization for performing quality assurance oversight for contracts and this oversight responsibility typically only covers prime contractors. DCMA’s execution of its quality assurance responsibility is primarily through its source inspection program. Source inspections are defined as inspections at the point where goods are manufactured or assembled. There are three types of source inspections: physical inspection; contractor process reviews; and kind, count, and condition. Physical inspection involves inspecting parts by comparing the parts to a specification, drawing, or other instruction. Contractor process reviews are inspections of processes and procedures for establishing confidence that the procured parts will produce a desired outcome. Inspections involving kind, count, and condition are inspections intended to visually identify and verify the quantity and exterior appearance of a part to determine if it visually meets contract specifications. During fiscal year 2003, DCMA was responsible for government source inspection for approximately 273,000 contracts. The Federal Acquisition Regulation requires that contracts include inspection and other quality requirements that will protect the interest of the government. It also provides guidance in establishing which clauses to include in the various types of contracts. The clauses included in each contract dictate the type and level of quality assurance oversight to be performed. DCMA quality assurance specialists are expected to follow the inspection and acceptance provisions in each contract in determining whether they are required to perform quality assurance oversight. If the contract states that inspection and acceptance will be at destination, then DCMA does not perform any quality assurance oversight. End users within military units, such as Army battalions and Air Force squadrons, perform inspection and acceptance for these contracts. Questions have been raised about the efficiency of DCMA’s quality assurance oversight program. In October 2003, the DOD Inspector General reported that of the 518 contracts requiring DCMA source inspection that they reviewed, at least 172 of the inspections provided either nominal or no value to the DOD quality assurance process. The DOD Inspector General also pointed out concerns in the DOD quality assurance program, including (1) ambiguity in the level and extent of requested source inspections; (2) inconsistent and unclear application of items defined as critical or having a critical application; (3) inconsistent implementation of inspection procedures for items considered commercial, off-the-shelf; and (4) arbitrary and inconsistent inspection procedures for items purchased from distributors. In our review of 15 contracts awarded to 11 contractors, DCMA provided quality assurance oversight and enforcement over these spare parts prime contractors. DCMA used three types of inspections to perform quality assurance oversight over the contractors. DCMA adhered to the Federal Acquisition Regulation, contract quality requirements, and DCMA guidance in providing quality assurance oversight over these prime contractors. Federal Acquisition Regulation clauses included in the contracts guide whether or not DCMA would perform quality assurance oversight. DCMA provides oversight for those contracts requiring inspection at the place of manufacture of the parts. Enforcement of spare parts quality and safety during the production process was achieved through the issuance of corrective action requests. DCMA quality assurance specialists followed established policies, procedures, and guidance in performing their oversight over the spare parts prime contractors in our review. As shown in table 1, the quality assurance specialists performed one or a combination of three types of inspections over prime contractors. The three types of inspections include: physical inspection to measure the dimensions of parts or to test the parts; process reviews; or an observation of the kind, count, and condition of the parts. At 7 of the 11 contractor locations , DCMA quality assurance specialists performed both process reviews and physical inspections. For physical inspection of spare parts, the quality assurance specialist selects a sample of the parts from various production runs and inspects them by comparing the parts to a specification, drawing, or other instruction. For example, at one location, the prime contractor had procured the part from a subcontractor and required the subcontractor to provide test data related to the part. The quality assurance specialist reviewed the test data and compared it to the part specifications. Also, the quality assurance specialist inspected the number imprinted on the parts, exterior painting, and workmanship of the received parts to ensure they complied with contract specifications. The second type of inspection involves evaluating the prime contractors’ processes to determine compliance with established contract requirements and production procedures. During these inspections the quality assurance specialist assesses the prime contractor’s processes and production line procedures in relation to established industry practices and provides the contractor an early opportunity to make corrections or improvements, if necessary. For example, at one prime contractor location, the quality assurance specialist monitored the prime contractor’s key processes during the production, including the cleaning, painting, welding, and final quality inspection of the product. To help ensure a comprehensive quality assurance check, the quality assurance specialist performed his daily quality checks at different phases of the production process. Also, the quality assurance specialist reviewed the prime contractor’s procedures for selecting its subcontractors to determine if the subcontractors were certified in accordance with the applicable industry standards. The third type of inspection consists of observing the kind, count, and condition of the parts. Observation of the kind of part includes visual identification of at least one part for each different part being procured under the contract and verifying the part number against the number required in the contract. Counting the parts involves visual confirmation of the contents of one package per line item and counting the number of packages received. The quality assurance specialists verify the physical appearance of the parts to assess their condition. For example, at one location, the quality assurance specialist performed a kind, count, and condition inspection to confirm that the contractor had the correct part by verifying the part number, checking to ensure the contractor had the proper quantity of parts, and inspecting the outward appearance of the parts. DCMA’s quality assurance oversight over the 11 spare parts prime contractors in our review was in accordance with the Federal Acquisition Regulation, contract quality requirements, and DCMA’s One Book guidance. Each contract we reviewed designated the location of inspection and acceptance by contract line item. Contracts that were designated for inspection and acceptance at the contractor’s place of manufacture and production received DCMA quality assurance oversight. When contracts are designated for inspection and acceptance at the receiving location for the parts, the end user is responsible for inspecting the procured part and the DCMA quality assurance specialist typically does not get involved with the contract. Of the 15 contracts we reviewed, DCMA provided quality assurance oversight for the 13 contracts that were designated for inspection and acceptance at source. The other two contracts were designated for inspection and acceptance at destination and did not require DCMA quality assurance oversight. In accordance with the One Book guidance, quality assurance specialists performed inspections and acceptance for its customers to ensure supplies were in compliance with contract requirements. According to a DCMA official, this guidance allows DCMA quality assurance specialists flexibility in providing quality assurance oversight over prime contractors. For example, the guidance does not include standard requirements for the number of tests, site visits, or inspections that the DCMA quality assurance specialists should perform while providing quality assurance oversight. When contracts were designated for inspection and acceptance at source, quality assurance specialists typically reviewed contract requirements, assessed the contractor’s risks of producing nonconforming parts, determined what needed to be done to mitigate the risks, and applied quality assurance oversight, including inspections, based on the contractor’s risk level. During the production process, when a prime contractor’s processes or spare parts did not meet contract requirements, DCMA used an enforcement system that involved issuing requests for corrective action by the prime contractor. According to the Federal Acquisition Regulation, contractors must be given an opportunity to correct or replace nonconforming supplies. Contractors are notified about nonconformance through corrective action requests issued by DCMA or product quality deficiency reports issued by the end user. When there is contractual nonconformance during the production process, DCMA may issue the prime contractor a corrective action request to formally communicate the deficiency and request corrective action on the part of the prime contractor. When the prime contractor does not take corrective actions, contractual remedies available to procuring contracting officers include suspension of progress payments, termination for default, and penalties such as suspension or debarment from holding contracts with the government. Only 2 of the 11 prime contractors that we reviewed received corrective action requests related to the contracts in our review. According to DCMA officials, the remaining contractors did not warrant corrective action requests related to the contracts we reviewed. Our review of DCMA files related to these contractors also did not identify any need for corrective actions by the prime contractors. Corrective actions identified by the two contractors involved the prime contractor making corrections or changes to its production processes and demonstrating how processes would be improved to prevent further instances of nonconformance. For example, DCMA issued a corrective action request to a prime contractor identifying loose insulation, an inactive gear, poor painting quality, and parts that did not meet surface finish specification requirements as nonconforming items. The prime contractor corrected the nonconformance and DCMA accepted the product. To prevent reoccurrence of the deficiencies, the prime contractor reported that it had taken the following actions: (1) discontinued the use of material that caused the loose insulation, (2) instructed operators to ensure that gears were properly adjusted, (3) arranged a meeting with all contractor paint personnel advising them on the importance of attention to detail, and (4) agreed to provide their quality assurance representatives with acceptable and unacceptable finish samples as visual standards to meet customer expectations.