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Oversight of Parts Manufacturers Comes Under Withering Scrutiny

Tue, May 13, 2008 — David Evans

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A 26 February 2008 report by the Department of Transportation Inspector General (DOT/IG) seems to indicate that a greater number of airplane parts are being made by cheaper suppliers overseas, without much supervision from the Federal Aviation Administration (FAA).

The report is consistent with other DOT/IG findings about maintenance, where FAA oversight, particularly of maintenance facilities overseas that are now servicing more United States-registered aircraft, is lacking. The DOT/IG has reported that overseas maintenance facilities may receive a visit from FAA inspectors just once a year.

The findings of FAA oversight shortcomings in parts manufacture and maintenance are consistent with revelations about deficient regulatory assessment of airlines, which was the subject of a 3 April 2008 hearing by the Transportation & Infrastructure Committee of the U.S. House of Representatives. At this hearing, the FAA was severely criticized for a too-cozy relationship with the airlines it is charged with regulating. Rep. John Mica (R-FL) said at that hearing, “We put in place a self-reporting, risk based system, but we didn’t put in place a system to check the checkers.” But the value of a risk-based reporting system is undercut by the recent DOT/IG report.

While the Congressional hearing and recent DOT/IG reports focus on the FAA’s procedural shortcomings, an issue not discussed is whether the agency has enough people to carry out its myriad responsibilities. The impression that emerges from the latest DOT/IG report is that the industry is growing and changing while the FAA is not keeping pace with an expanded inspector workforce. Irrespective of incentives, the subject of the recent Congressional hearing on FAA oversight, the agency appears to lack a sufficient trained cadre of inspectors. This is evidenced in the latest report by the FAA’s reliance on risk-based criteria that theoretically should focus a limited number of inspectors on the greatest problems. Hardly explored is how fewer than 200 FAA inspectors are adequate to assure the safety of work done at over 1,700 manufacturing facilities, a ratio of one inspector for every 8.9 facilities.

The DOT/IG report suggested that manufacturers conduct more audits of suppliers. Although it agreed in spirit with this recommendation, the FAA noted that there is no requirement in regulation for such audits. Thus, the matter is unresolved. The FAA doesn’t have enough inspectors to audit requirements that do not exist.

Extracts of the DOT/IG report document the scope of the parts manufacturing problem:

“Inspectors in FAA’s Manufacturing Inspection District Offices (MIDO) oversee FAA-approved manufacturers in their geographic area. There are 23 MIDOs and 1 Certificate Management Office with 195 inspectors to oversee 1,738 FAA-approved manufacturing facilities in the United States. Although FAA does not approve manufacturers in other countries, U.S. manufacturers use both domestic and foreign suppliers to build their products. FAA is to monitor these suppliers as part of its oversight of FAA-approved manufacturers’ quality assurance systems. …

“The evolution of Boeing aircraft over the last 40 years clearly illustrated how manufacturing business models have changed. As shown in figure 1, Boeing’s first aircraft were built almost exclusively in the United States. In contrast, the airframe parts for the new Boeing 787 will primarily be manufactured by foreign suppliers.

“Since 1998, FAA has worked towards implementing a risk-based oversight system for aviation manufacturers. However, this system was implemented in fiscal year (FY) 2003 and does not take into account the degree to which manufacturers now use suppliers to make aviation products. …

“We found that FAA needs to improve its risk-based oversight system as it does not ensure that manufacturers regularly audit their suppliers. FAA also does not perform enough audits of manufacturers’ suppliers (i.e., supplier control audits) to test how well manufacturers’ quality assurance systems are working. Rather, FAA requires its inspectors to conduct, at most, four supplier audits regardless of how many suppliers a manufacturer uses. …

“Although manufacturers are ultimately responsible for the quality of parts used on their aircraft, three of the five manufacturers we reviewed did not have procedures in pace to routinely visit all their critical suppliers and sub-tier suppliers. …

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“The systemic deficiencies we identified at the 21 supplier facilities we visited indicate that manufacturers and FAA need to strengthen their oversight of these facilities. For example, nearly half (43 percent) of the suppliers had deficiencies in their tool calibration and employee training programs.

“FAA developed 21 risk-based indicators to aid inspectors in assessing manufacturers’ quality systems.

“Although the 21 indicators focused on areas within a manufacturer’s operation that might indicate risk, FAA did not consider how individual inspectors could apply those indicators. For example, ‘reduction in workforce’ may or may not have an impact on safety and the potential for producing substandard parts, depending on how, when, and where the staff reduction occurred. …

“However, as shown in the table below, in each of the last 4 years, FAA has inspected an average of 1 percent of the total suppliers used by the five manufacturers we reviewed. At FAA’s current surveillance rate, it would take inspectors at least 98 years to audit every supplier once. This is particularly troubling because, as discussed previously, manufacturers are not evaluating these suppliers frequently or comprehensively.

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“One suppliers calibration tracking system showed that approximately 94 percent of the tools were past due for calibration. Some of the tools were out of date for 3 to 4 years.

“We recommend that FAA:

“Require manufacturers to establish criteria for conducting on-site audits for initial suppler approval and conduct periodic audits of suppliers to ensure that quality assurance systems are followed throughout the supply chain. …

“Develop a risk assessment process that reduces the level of subjectivity in evaluating manufacturers so that inspectors’ risk assessments will be more consistent.

“FAA partially concurred with our recommendation to require manufacturers to perform on-site audits … FAA stated that there is no regulation to implement this recommendation as a requirement. However, FAA did agree that additional supplier selection criteria would be appropriate.

(For the full audit report, see www.oig.dot.gov/StreamFile?file=/data/pdfdocs/WEB_FILE_Supplier_report.pdf)


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