99-26802. Total Quality Systems Audit Implementation

[Federal Register Volume 64, Number 198 (Thursday, October 14, 1999)]
[Notices]
[Pages 55691-55692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26802]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation


Total Quality Systems Audit Implementation

AGENCY: Commodity Credit Corporation, USDA.


[[Page 55692]]


ACTION: Notice of institution of ``Total Quality Systems Audit'' 
program for Commodity Credit Corporation food purchases.

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SUMMARY: Notice is hereby given that, the Commodity Credit Corporation 
(CCC) is phasing in the Total Quality Systems Audit (TQSA) program for 
CCC's purchases of food for humanitarian food assistance programs. This 
program is being implemented to ensure that CCC purchases meet customer 
requirements and needs. Vendors offering processed commodities covered 
by TQSA for sale to CCC will have to be approved under the TQSA 
standards which involve inspecting the vendor's quality control system 
and relying on that system to assure the quality of the end product. 
TQSA will reduce Government oversight of the commercial sector, but can 
increase confidence in the final product. The TQSA program is a fee-
for-service program, and will be primarily administered for CCC by the 
Department of Agriculture's Farm Service Agency (FSA) through FSA's 
Warehouse Licensing and Examination Division, Kansas City Commodity 
Office. All vendors must consult individual procurement announcements 
to determine whether their commodity is subject to TQSA procedures.

EFFECTIVE DATE: July 1, 1999.

FOR FURTHER INFORMATION CONTACT: Dean Jensen, Chief, Contract 
Management Branch, Procurement and Donations Division, Farm Service 
Agency, U.S. Department of Agriculture, STOP 0555, 1400 Independence 
Avenue, SW, Washington, DC 20250-0551, telephone [phone], fax 
[phone]; or Timothy Mehl, Chief, Warehouse Licensing and 
Examination Division, Kansas City Commodity Office, 9200 Ward Parkway, 
Kansas City, Missouri 64114, telephone [phone], fax (816) 926-
1774.

SUPPLEMENTARY INFORMATION: TQSA is a new method of identifying 
suppliers who are considered sufficiently responsible to supply foods 
for CCC food purchases. The program relies on audits by FSA of the 
vendor's quality control system. Those audits will be conducted against 
an established standard. Not all products procured under CCC food 
assistance programs will be evaluated using TQSA procedures. Vendors 
should consult the applicable commodity purchase announcement, 
invitation, Notice to the Trade, or contact the Kansas City Commodity 
Office to determine whether their product is covered.
    The audit program will be conducted in lieu of or will reduce the 
need for traditional full-scale end-item inspections where only the 
final product is checked for conformance to product specifications. 
Under TQSA suppliers are instead required to establish and maintain a 
quality management system that addresses all aspects of production. By 
auditing this quality management system, the absolute amount of 
Government oversight in this process can be substantially reduced while 
increasing confidence in the quality of the final product.
    The audit program will apply specific criteria that a supplier must 
meet to establish bidder eligibility. During an audit, the supplier's 
quality management system will be given a rating of ``meets,'' 
``partially meets,'' or ``does not meet'' on multiple criteria. Once 
all required questions have been addressed by the vendor and the audit 
team, a score is generated which will provide FSA with a numerical 
rating. FSA will establish the minimum score necessary for bidder 
eligibility. If a supplier fails to meet this minimum, they will be 
considered ineligible to bid until the score is improved to an 
acceptable level. FSA will phase in TQSA requirements on a commodity by 
commodity basis, and vendors will be provided sufficient notification 
in order to meet TQSA requirements before TQSA compliance is 
incorporated in the applicable commodity contract terms.
    Also, by reducing Government oversight and approving vendors prior 
to awarding contracts, the costs associated with inspecting commodities 
procured for food assistance programs can be substantially reduced. 
Also, by decreasing the likelihood of product non-conformance and 
subsequent rejection, costs associated with reacquiring and replacing 
product are further reduced. These cost reductions benefit the food 
assistance programs by allowing higher quality products to be procured 
more economically.
    Annually, more than 825 million pounds of food products valued at 
approximately $850 million are purchased by CCC and distributed for use 
in domestic and international food assistance programs. CCC and its 
suppliers have spent over $5 million annually on inspection of those 
products. TQSA aims to reduce the cost of inspection by a minimum of 
30-50 percent.
    During the initial months that a supplier is subject to TQSA 
requirements, they will be required to submit samples to the 
appropriate commodity testing laboratory for compliance testing. This 
requirement is intended to provide supplemental verification of program 
effectiveness and supplier compliance with TQSA. If deemed appropriate 
by the contracting office and TQSA staff, the required final product 
testing by a third party laboratory may be eliminated or reduced.
    The development of TQSA started in 1997, when CCC began a pilot 
program to develop a quality management program that would replace 
traditional end-item inspection. During the two years of the pilot 
program, FSA staff worked with members of academia, industry, and 
Government to develop the criteria and determine the effectiveness of 
the TQSA program.
    Prior to the implementation of the TQSA procedures, CCC relied 
almost entirely on end-item inspection to ensure that food purchased 
for domestic and international food asistance programs met the needs 
and requirements of the program recipients. Traditional statistical 
sampling methods and finished product testing gives little 
consideration to the conditions under which a product is produced, only 
to the characteristics of the final product. This approach only finds 
nonconforming product and allows it to be removed from the system, it 
does not prevent the nonconformance from occurring which avoids 
problems of non-detection that might apply where there was reliance on 
end-item inspection.
    TQSA is based on the proven premise that product conformance can be 
attained by allowing the supplier to define how production, delivery, 
and service are handled. USDA's role is to verify that the methods 
chosen are effective and meet applicable regulatory and contractual 
requirements, and that the supplier adheres to its stated policies and 
procedures.

    Signed at Washington, DC, on October 6, 1999.
Keith Kelly,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 99-26802 Filed 10-13-99; 8:45 am]
BILLING CODE 3410-05-P