Original Date: 07/10/2000
Revision Date: 01/18/2007

In 1999, the Naval Sea Logistics Center, Detachment Portsmouth developed the Supplier Audit Program as a way of reducing redundant process audits and improving the oversight of critical supplier process controls. The program provides consistency for audits; fosters early identification of systemic material problems due to process control; creates a feedback loop so all parties are aware of the results; and reduces the cost of the oversight process.

In the past, private and public shipyards did not always provide sufficient oversight of critical suppliers. This situation came about from a trend in which audits tended to focus on poor suppliers. As a result, these suppliers typically endured multiple audits of the same process by different agencies. In cases of unsatisfactory audits, poor communication methods prevented naval activities and prime contractors from receiving timely notification. In 1999, the Naval Sea Logistics Center (NSLC), Detachment Portsmouth developed the Supplier Audit Program (SAP) as a way of reducing redundant process audits and improving the oversight of critical supplier process controls. The SAP is a joint government/industry effort lead by Electric Boat, Newport News Shipbuilding, NAVSEA System Command Activities, and the Defense Contracts Management Agency.

As a result of the SAP, supplier audits now focus on process control. A set of 24 Special Process Audit Guidelines were developed to assist auditors. Each guideline covers a process area and provides a consolidated list of questions. For critical suppliers, naval activities and prime contractors only audit for those processes not completed within the last two years; for non-critical suppliers, it is three years. Summary audits are submitted to the SAP through a web- enabled Audit Summary Sheet. In cases of unsatisfactory audits, naval activities and prime contractors receive notification via e-mail. Users can also view the SAP’s summary audits. In some cases, this approach may eliminate the need for another survey. Naval activities can access all summary audits, while prime contractors can only access their own audits or those of companies with which they have agreements. Vendors also can access their summary audits, enabling all parties to be aware of the information.

Since being implemented, the SAP has increased government/prime vendor awareness while reducing the number of audits that individual suppliers must undergo when working on a government contract. The program also provides consistency for audits; fosters early identification of systemic material problems due to process control; creates a feedback loop so all parties are aware of the results; and reduces the cost of the oversight process. By sharing audit responsibilities, Navy activities and prime contractors experience collective cost savings.

For more information see the Point of Contact for this survey.