Attachment 10 - Acquisition Instruction (AI).pdf

Jan 2024

ACC’s Corrective Action Request Procedures

1. Purpose. This document provides the standardized ACC Corrective Action Request (CAR) (formerly Nonconformance Report) procedures for issuing, overseeing, and closing CARs, and for managing contractual nonconformances on ACC administered contracts as directed in the ACC Acquisition Instruction (AI) and FAR subpart 46.407 Nonconforming supplies or services.

2. References.

a. FAR Part 46 Quality Assurance;

b. FAR Part 46 clauses (the clauses at FAR 52.246-1 through FAR 52.246-26);

c. FAR Part 12.208 Commercial Contract Quality Assurance

d. FAR 52.212-4 Contract Terms and Conditions, para (a) Inspection/ Acceptance;

e. DFARS Subpart 246.407 Nonconforming supplies or services;

f. DFARS Clause 252.242-7005 Contractor Business Systems

3. CAR Usage. A CAR alone is not considered a contract remedy. It is used as a notice to the contractor to document a nonconformance, notify the contractor of Government rejection of supplies or services (including construction) not conforming to contract requirements, and to require contractor corrective action. The purpose is to provide the contractor an opportunity to correct or replace nonconforming supplies and services when this can be accomplished within the required delivery schedule IAW FAR 46.407 and contract terms and conditions. Nonconformances identified in CARs must be traced to contractual requirements. CARs may be issued as precursors to contract remedies but are not a required precursor to contract remedies.

a. Unless contract remedies are issued, use a CAR for the following:

i. To document all types of contractor nonconformance identified by the government on contracts administered by ACC;

ii. To document and correct significant deficiencies on contractor business systems (CBS) as defined at DFARS 252.242-7005(b);

iii. To document rejection or refusal to accept supplies, services, construction work, and nonconforming deliverables;

iv. To give the contractor an opportunity to correct or replace nonconforming supplies, services, construction, or deliverables;

v. To evaluate the effectiveness of contractor corrective actions to track performance trends and establish contract risk levels used to determine the appropriate level of oversight;

b. CARs should be included as part of performance information in Contractor Performance Assessment Reporting System (CPARS), Program Management Reviews, Performance Feedback Sessions, Award Fee Boards, and Incentive Fees.

c. CARs also identify and track Government actions to specific contractor nonconformance(s).

d. DCMA and other non-ACC Contract Administration Offices (CAOs) receiving

ACC delegations may use their own processes and tools to address contractor nonconformance (e.g. the DCMA CAR process).

e. CARs shall not be used to address nonconformance of internal contractor processes unless those processes are directly traced to contract requirements (i.e.

Government approved Quality Control Plans or Property Management Systems). See paragraph 11 “Letters of Concern” of this attachment for procedures to address performance concerns that are not traced to contract requirements.

4. CAR Levels. There are four CAR levels. The level of the CAR documents and communicates the seriousness of the nonconformance. To determine the appropriate CAR level, analyze the impact and/or effect of the nonconformance and associate that impact to one of the four levels as defined below.

a. Level I – A Level I CAR describes a deficiency on a product or service and is not a systemic breakdown of a process or system. It includes those nonconformances that are minor in nature and can be promptly corrected by the contractor, present no need for root cause analysis, no determination if other contract requirements are affected, present no need for further preventive action, and do not materially reduce the usability of the supplies, services, construction, or deliverables. While the Government must document the nonconformance and the contractor must correct the nonconformance, further actions and Government follow-up are not required, and no written response from the contractor is needed. Level I CARs are considered closed immediately upon issuance.

b. Level II:

i. A Level II CAR describes deficiencies in a contractor’s processes or systems but are not significant deficiencies. Some examples of systems affected may be quality inspection/management systems, and CBS identified in DFARS 242.70, or issues such as:

1. Multiple deficiencies on products or services indicating a systemic issue throughout the process, or,

2. An escalation of repetitive Level I CARs for the same or similar nonconformance demonstrating the contractor is failing to institute effective corrective action and/or failing to implement effective quality and/or internal control(s).

ii. Level II CARs shall require the contractor to correct the nonconformance, perform root cause, and develop and provide a corrective action plan (CAP) acceptable by the government.

c. Level III:

i. A Level III CAR describes deficiencies in a contractor’s system that is affecting a contract’s or program’s ability to meet cost, schedule or performance requirements, or are:

1. A significant deficiency pursuant to DFARS 252.242-7005(b), “Contractor Business Systems” (CBS), or,

2. A failure to respond to Level II CARs, or to remedy a recurring nonconformance

ii. If not resolved satisfactorily, a Level III CAR may result in the initiation of available contractual remedies, such as reductions of payments, cost disallowances, revocation of government assumption of risk of loss, or business management system disapprovals, etc.

iii. The Contractor shall be required to provide a CAP that is acceptable by the government.

d. Level IV – A Level IV CAR documents a critical nonconformance of such serious nature that is issued to the contractor’s business segment or corporate management for their attention to both the nonconforming condition and the company’s corrective action, or when a Level III CAR has been ineffective. A Level IV CAR will result in a mandatory review of available contractual remedies, such as cost disallowance, reduction or suspension of payments, revocation of government assumption of risk of loss, CBS disapproval, or suspension of all product and service acceptance activities. Contractual remedies will be implemented IAW applicable FAR/DFARS clauses and/or ACC Acquisition Instructions if applicable. Action to suspend product or service acceptance will be accomplished via a Level IV CAR.

Contractor shall be required to provide a CAP that is acceptable to the government.

5. Overarching CAR Process Flow. The following outlines the normal process flow for the corrective action process. Follow the steps provided within the PDREP CAR Module User Guide and the system design permissions in Table 8.1 of this instruction. (Note:

Steps in subparagraphs (f)-(j) below do not apply to Level I CARs as they are considered closed immediately upon issuance.)

a. Identify a contract nonconformance;

b. Create a CAR;

c. Review the CAR;

d. Coordinate and approve the CAR;

e. Issue the CAR to the contractor;

f. Receive and review the contractor’s CAP;

g. Accept/reject the contractor’s CAP;

h. Oversee contractor corrective action using a risk based approach;

i. Receive notification from the contractor that corrective action is accomplished;

j. Verify corrective action was accomplished satisfactorily;

k. Close the CAR;

6. CAR System of Record (SOR)

a. SOR. The PDREP CAR Module is the SOR for CARs processed and issued on ACC administered contracts. The CAR Module is one of the applications housed in the Product Data Reporting and Evaluation Program (PDREP) Automated Information System (AIS) located on-line at: https://www.pdrep.csd.disa.mil/default.htm.

b. Access. For access to this system, go to the PDREP website and click on the “REQUEST ACCESS” button and follow the directions for “US Government Access”.

The website also includes user guides and manuals under the “REFERENCES” button.

Review the “DoD Corrective Action Request” Manual for guidance on access and how to use this PDREP-AIS. Accessing the CAR Module will be enabled through PIEE in early calendar year 2024. To access through PIEE, add the appropriate role following the PIEE process. After the PIEE single sign on is enabled, the SOR may be accessed either through PIEE or PDREP.

c. User Roles. Refer to Table 1.1 of the DoD CAR Manual or Table 8.1 of this acquisition instruction for a description of the functions available to each role. NOTE:

Ensure CORs register as a Functional Specialist under the contracting office DoDAAC they will support.

https://www.pdrep.csd.disa.mil/default.htm

d. Proprietary Information. Do not include any proprietary information as part of the CAR in the SOR. It should normally be included only by reference (cite specific document and identifying paragraph number). Consult with your supporting legal office when determining if information is suspected to be proprietary.

e. Classified information. Classified information will not be entered into the CAR Module.

7. Issuing CARs to the Contractor. Address CARs to the appropriate level of contractor management based on the seriousness of the nonconformance. This requires subjective judgement by the reviewer(s) and issuing official. Consideration should also be given to established lines of communication with the contractor and/or contractor requested addressees. The following are guidelines for addressing CARs:

a. Level I CARs: Lower-level management responsible to correct the nonconformance (e.g. shop foreman /supervisor/ quality manager).

b. Level II CARs: Functional level manager responsible for corrective action

(e.g. the quality manager or site manager).

c. Level III CARs: Top-level management on-site or locally.

d. Level IV CARs: Corporate-level management.

e. Subcontractors. If a subcontractor’s performance is nonconforming, address

CARs to the prime contractor who is responsible for subcontractor performance and has privity of contract.

f. Verbal. It is appropriate to verbally notify the contractor when the

Government identifies a nonconformance or potential nonconformance. Refrain from telling the contractor that ‘a CAR shall be forthcoming’ or the anticipated level of a CAR.

Official notification of the nonconformance shall be through the PDREP CAR Module and issuance of the CAR.

g. Do not issue a CAR if the contractor self-identifies contractual nonconformances and takes timely and effective corrective action. If the corrective actions prove ineffective, then issuing a CAR is appropriate. Contractor identification and self-initiated corrective actions are not only desired behaviors but are a requirement of quality and quality systems required by clauses. Joint inspections (i.e. an inspection with both a Gov’t inspector and Contractor inspector) should be considered a Government inspection. Therefore, any nonconformance identified in a joint inspection would be considered a Government identified, not contractor self-identified nonconformance.

8. CAR Roles and Responsibilities.

a. Roles. The CAR Module design limits actions that individuals can perform by assigning permission levels to each user role within the contracting activity. The following table denotes those permissions with an “X.” When requesting access, users will choose the “PDREP User Role” listed in parentheses. Ensure CORs request a Functional Specialist role and use the ACC contracting office DoDAAC they support. All CARs will be coordinated, reviewed, and transmitted IAW Table 8.1.

Table 8.1.

User Role > (PDREP User Role)

COR /

Industrial Property Management Specialist (Functional Specialist)

Quality Assurance Specialist / Property Administrator (Team Lead / Non- Supervisor)

Contracting Specialist (Supervisor)

Contracting Officer (Warranted 1102 Access)

Responsibility

Level I CAR

- Create X X X X

- Review X X X

- Issue X

Level II CAR

- Review X X X

- Accept / Reject

X

- Verify & Validate

X X X X

- Close CAR X X

- Transfer X X

Level III / IV CAR

- Review X X X

- Accept / Reject

X

- Verify & Validate

X X X X

- Close CAR X

- Transfer X X

Withdraw CAR X

b. Responsibilities for Level III / IV CARs

i. The cognizant contracting officer may issue a Level III / IV CAR only after it has been pre-coordinated and concurred by the SCO IAW local procedures.

Each SCO will develop their own review and concurrence process with the goal of applying the appropriate level of CAR, discussing potential courses of actions the government may take, and obtaining a legal review. SCOs should not sign or issue CARs. If the CAR is contested by the contractor, a contracting officer-issued CAR allows the SCO to adjudicate any contractor concern. Pre-coordination IAW local procedures will be performed outside of the CAR Module, therefore, upload correspondence and decision supporting documents in VCE-PCF.

ii. Issuance of Level III / IV CARs require a Serious Incident Report (SIR) or Commander's Critical Information Requirement (CCIR) be submitted to HQ ACC prior to issuance. The type of report depends on the severity of the nonconformance.

1. This notification should provide an executive-level synopsis of the underlying nonconformance and the impact/potential impact.

2. A subsequent SIR should be submitted if CAPs are rejected.

Contact ACC G3 Current Operations (G33) for latest SIR/CCIR procedures or for assistance at ACC G3 | Mission Operations (army.mil).

3. Submit SIRs through the SCO operations personnel to usarmy.redstone.acc.mbx.hqacc-g3ops@army.mil after following local procedures.

iii. Notify the requiring activity, supported unit/organization leadership upon discovering a Level III / IV nonconformance since it could impact the delivery of the product or services.

iv. If the Contract Administration Office (CAO) is different than the awarding office, the CAO will coordinate with the current Procuring Contracting Officer (PCO) prior to issuance of a Level III / IV CAR. This is necessary to ensure a coordinated, consistent message to contractor management. The PCO may request management of the CAR by having it transferred to the PCO.

v. When a significant deficiency of a CBS is discovered, notify and coordinate with the contracting officer with cognizance over the business system (i.e.

the Corporate Administrative Contracting Officer (CACO) or Division Administrative Contracting Officer (DACO)) prior to issuance. The CACO/DACO may agree to issue the CAR instead. If not, ACC shall issue the CAR against the ACC administered contract and copy the CACO/DACO. When DoD is the Cognizant Federal Agency, many of the CACOs and DACOs reside in DCMA and their contact information can be https://acc.aep.army.mil/G3/default.aspx mailto:usarmy.redstone.acc.mbx.hqacc-g3ops@army.mil found in the PIEE CBAR Module of EDA. If DCMA is not the Cognizant Federal Agency, there is no other system to determine if there is a CACO or DACO assigned. Therefore, the contracting officer must ask the contractor if there is an assigned CACO/DACO if the contracting officer is not already aware of the person (sometimes the CACO/DACO may be outside the DoD). If the CACO/DACO cannot be identified, contacted, or does not respond to communications in a reasonable time, do not hold up issuance of the CAR. However, continue efforts to identify and/or contact the CACO/DACO if one exists. If a CACO/DACO does not exist, then treat the business system nonconformance as a contract nonconformance.

vi. Coordinate the CAR with local legal advisors if fraud, corruption, serious contractor employee misconduct, counterfeit items are suspected, and/or if there is suspicion a law has been violated. If criminal activity is suspected, contact the Army Criminal Investigation Division (CID).

9. Timelines.

a. Transmitting CARs to the Contractor. CARs are time sensitive and delayed issuance may have impacts on the requiring activity/supported unit’s mission; delay contractor corrective action; reduce the relevancy of lower-level CARs; or reduce the capability for the contractor to perform effective root cause analysis.

i. Level I CARs: The standard is to issue the CAR no later than (NLT) three business days after identification of the nonconformance.

ii. Level II CARs: The standard is to issue the CAR NLT five business days after identification of the nonconformance.

iii. Level III / IV CARs: The standard is to issue the CAR NLT ten business days after identification of the nonconformance.

b. Corrective Action Plan Due Date. When a Level II CAR and above is issued, a contractor CAP is requested with a designated number of days to respond. The CAR Module will default to 45 days but allows a contracting office to insert any number less than to respond. The recommended due dates are:

i. Level II CARs. Level II CARs in ACC should require no more than 10 business days to respond with a CAP.

ii. Level III / IV CARs. Level III / IV CARs should require no more than

15 business days to respond, with the exception of CARs related to CBS significant deficiencies. CBS related Level III / IV CARs will have up to 45 calendar days as allowed by DFARS 252.242-7005.

iii. Extensions. Contractors may request an extension of the designated due date. This is acceptable for the government to allow when reasonably justified. All results of that correspondence will be entered into the PDREP CAR Module.

c. CAP Reviews. For Government review of contractor submitted CAPs, accept or reject the CAP within 5 business days for Level II, and 10 business days for Level III / IV CARs. Use the PDREP CAR Module to input the decision and provide the contractor a formal response for acceptance or rejection.

d. Government CAP Verification & Validation of Corrective Action/CAR closure.

Timelines for verification and validation of corrective actions can vary depending on the severity of the CAR, and completion of milestones identified in the CAP. Once the Government has verified the contractor has implemented the CAP and validated the issues have been corrected and are acceptable to prevent further occurrence, close the CAR in the Module. Notify the contractor the CAR is closed via the CAR Module.

10. Contractor Claims. Performance to correct nonconforming work, including preparing CAPs and/or other contractor correspondence to the Government related to the CAR, shall be at no additional contract price/amount IAW the applicable FAR 46 inspection clause or the clause at FAR 52.212-4 paragraph (a). Therefore, contractor claims / requests for equitable adjustment addressing re-performance of nonconforming work or claims for costs responding to CARs should be denied. Per FAR Subpart 33.211(a)(2), obtain legal assistance and reference the applicable clause (FAR 46 inspection clause or 52.212-4) when responding to a claim of this type.

a. Costs. Under cost type contracts, actions to correct nonconforming work would normally be considered allowable unless one of the conditions below or regulatory requirements governing allowability are applicable. However, the contractor shall not receive fees on their actions to correct nonconformance. Seek assistance from the supporting DCAA auditor on determining the appropriate amount to disallow. When costs are considered unallowable IAW FAR Part 31.2, notify the contractor on the intent to disallow costs IAW FAR Part 42.8. Costs are unallowable if the following conditions are met:

i. Nonconformance is due to fraud, lack of good faith, or willful misconduct on the part of the Contractor’s managerial personnel;

ii. Nonconformance is the result of the conduct of one or more of the contractor’s employees that was selected or retained by the contractor after any of the contractor’s managerial personnel had reasonable grounds to believe that the employees are habitually careless or are unqualified.

iii. Nonconformance is the result of illegal activity by any of the contractor’s personnel.

11. Letters of Concern (LoC). Issues that cannot be traced to a contract nonconformance should be handled using a LoC. Examples include, but are not limited to, contractor employee misconduct that cannot be traced as a nonconformance to a contract requirement, lack of management responsiveness, planned contractor actions that could result in nonconformance, etc.

a. LoCs can also be used to supplement a CAR when the seriousness dictates additional communication to the contractor (e.g. a PCO issued LoC to supplement an ACO issued CAR, or a SCO issued LoC to supplement a ‘Level III CAR,’ etc.).

Supplementing a CAR with a LoC is not a requirement and is at the discretion of the contracting officer and their leadership.

b. Do not issue a LoC in lieu of a CAR when a contract nonconformance is identified.

c. Use the letter formatting contained in chapter 3 of AR 25-50 Preparing and

Managing Correspondence when preparing LoCs. Use the letterhead of the LoC issuing office.

d. LoCs shall not require CAPs. Depending on the issued being communicated, it may be appropriate to request a contractor response. However, since it is not used as ACC’s primary means to address a contract nonconformance, a CAP is not applicable nor appropriate. There are no specific timelines established for LoCs, but contracting offices are advised to ensure communication with the contractor is timely and relevant.

e. Ensure LoC documentation is placed in the VCE-PCF contract file.

12. Points of Contact. The POC for these procedures is HQs ACC Contracting Operations, Contract Administration Division, usarmy.redstone.acc.list.acc-hq-qa@army.mil.

mailto:usarmy.redstone.acc.list.acc-hq-qa@army.mil mailto:usarmy.redstone.acc.list.acc-hq-qa@army.mil