In the past two years, a number of global companies have been fined for committing major violations of law or safety regulations. General Motors (GM) was fined $35 million. A US Congressional investigation determined that GM engineers looking at ignition switch complaints, made a design change, but failed to issue a recall notice.

Toyota was fined $1.2 billion for misleading investigators and consumers about an acceleration problem. Volkswagen officials were found to have falsified emission counts for diesel engines. Law suits and fines are in process.

In December 2015 the Federal Aviation Administration (FAA) and Boeing Commercial Airplanes (BCA) resolved multiple pending and potential enforcement cases. BCA agreed to pay $24 million in penalties and for five years meet certain compliance standards. These standards could be used as a risk template. The major elements of the agreement are presented below.

FAA AGREEMENT

According to press releases, the purpose of the agreement is to allow BCA to detect potential regulatory and compliance problems early. The agreement has the following  major elements.

1. Improve Management Oversight and Accountability
2. Implement the Safety Management Systems through the adoption of internationally accepted standards
3. Use FAA’s safety analysis modeling and BCA’s proprietary risk modeling.
4. Comply with a new Regulatory Compliance Plan – by assigning each compliance matter to a manager-level employee for resolution and accountability.
5. Review of regulatory compliance performance of BCA managers.
6. Internal Auditing
7. Improve the internal auditing process by requiring the teams to report directly to BCA’s Vice President of Quality. In addition, the teams are to conduct audits across all processes (Engineering, Supplier Management, Production, Modification, Repair and Customer Service) at all BCA sites.
8. Enhanced Supplier Management
9. BCA will conduct an initial set of audits of its suppliers and consult with the FAA on audit findings.
10. Conduct a second more extensive set of audits focusing on the level of risk identified in the initial audits.
11. Quality and Timeliness Regulatory Submissions
12. Meet progressively more stringent performance metrics in quality and timeliness of its written submissions to the FAA.
13. Annually, for the duration of the agreement, review and simplify at least 15 process specifications used to design, build, deliver and support BCA products.
14. Stamping and Other verification Records Accuracy
15. Conduct mandatory training for all manufacturing and quality employees who exercise stamping approval authority, and conduct recurrent training at least every 24 months.
16. Conduct mandatory training of all engineering employees on their regulatory compliance obligations.
17. During each year of the agreement conduct at least three internal audits of each product line and at least one audit of each BCA fabrication site.
18. Prevent any repeat findings of improper stamping.
19. Corrective Action Development, Implementation and Sustainment
20. Apply the “Boeing Problem-Solving Model” to a wide variety of analyses that BCA submits to the FAA.
21. For future violations that FAA identifies, conduct a second, follow-up audit within 12 months of the original incident, to ensure corrective actions were taken in a timely manner and that corrective action is sustained.
22. Reporting Obligations
23. Report to FAA at least annually about the effectiveness of BCA’s regulatory compliance.
24. Report to FAA each quarter the results of any internal audits pertaining to safety management, regulatory compliance, corrective action, process compliance and conforming products.

While the reporting requirements are typical for a regulator, the emphasis on sustaining and improving product quality, the focus on risk and compliance with international standards and the requirement that internal reports be reviewed by the Vice President of Quality, are consistent with element of ISO 9001:2015. It is possible that this agreement may be used by other regulatory agencies as a Risk Management template.

Bio:

James Kline PhD is an ASQ certified Six Sigma Green Belt and Manager of Quality/Organizational Excellence. He has over ten year’s supervisory and managerial experience. He has consulted on economic, quality and workforce development issues for the City of Corvallis, Benton County Oregon, the State of Oregon and the League of Oregon Cities. He has also published numerous articles related to quality in government.