Craftsman's Cribsheet: Contract Review — Thought Starters

Precision machining manufactures critical components for advanced technologies where human safety is in the balance. How can risk be intelligently managed for all parties — ourselves, our customers, their customers and the public? The answer is an effective contract review process — one that covers both explicit (clearly stated) requirements and implicit (implied by application or process) requirements.

Explicit Requirements

Purchase Order Issues

• Is QS 9000, AS9100 or other Quality System required to quote? 
• Are there other agency requirements — DFARS, ITARS, QS-9000, AS9100, Conflict Minerals, RoHS or REACH — that could limit materials used or acceptable suppliers? 
• If the materials used to produce the parts are not compliant, the parts will not be acceptable.
• Is there a contract? Terms and conditions? Did you acknowledge the acceptance of their terms and conditions? In writing? Can you show it?
• Fine print? Did you take any exceptions? In writing? Were these acknowledged?
• Are releases firm? Payment terms acceptable? Evergreen/automatically renewing?
• Provision for cost escalations?

Print Issues

• Is the Part ITARS? If so, can you show it to all employees in your shop? Your vendors? What if the vendor is foreign?
• Can you read the print? If the print has non-disclosure statements and you need to send to an outside vendor, is it in English? 
• Are the tolerances being asked typical for your shop? 
• Any callouts that will require new methods of gaging? 
• Does your method of measurement match that of customer for those tolerances (especially surface finish and GDT)?
• Is material readily available? Is the grade designation a standard U.S. grade? Or a foreign designation? Or a company specific designation? Who has the Analysis? If customer supplied material, will it be optimized for machining or is that unknown- low sulfur, not annealed, peeled hot roll not cold drawn?

Implicit Requirements

• What is implied? Many fastener specifications imply cold heading or forging to fabricate the product. 
• Are cut threads anticipated by the spec? Are they supposed to be rolled or cold formed? Does the grade suggest that cold heading is the expected process?
• Are the mechanical properties that are required controlling? Or do they need to be achieved as a result of a process, such as quenching and tempering — as opposed to heavy draft cold drawing?
• Will the parts that you produce undergo subsequent cold work or transformation? By your customer or their customer? 
• What happens to the part once it leaves your shop? Different steel making processes can impact subsequent cold work after machining due to higher amounts of nitrogen, increased cold work and higher or lower ductility. How will the material that you provide impact subsequent operations downstream?
• What other unstated expectations might be waiting, unconsidered in that item for you to quote?