The first reference above implies that the CO will make a decision as to the "acceptability" of the contractor's inspection system.
What is DoD policy or position on how we make the determination of acceptability of the contractor's "inspection system" or "quality management system" as specified under higher-level contract quality? More specifically, how should we make such a determination on a service contract?
Most contracting officers do not have the expertise to make a determination as to whether a Quality Management System referenced in the higher-level quality clause meets the specified standard or not.
Is it acceptable to rely on "third party" auditors (paid by the contractor), such is used in the ISO system? Or, does/should DoD have our own method of making the acceptability determination?
You need to start at the beginning of FAR Part 46. In FAR 46-103 thru 46-105 it very neatly lays out the responsibilities of the Contracting Office, Contract Administration Office and the Contractor. You cannot forget to research further than the FAR, as you will find additional guidance in this area in both the DFARS and the DFARS PGI. Excerpts from these sections state the following:
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46.103 -- Contracting Office Responsibilities. Contracting offices are responsible for --
(a) Receiving from the activity responsible for technical requirements any specifications for inspection, testing, and other contract quality requirements essential to ensure the integrity of the supplies or services (the activity responsible for technical requirements is responsible for prescribing contract quality requirements, such as inspection and testing requirements or, for service contracts, a quality assurance surveillance plan);
(b) Including in solicitations and contracts the appropriate requirements for the contractor’s control of quality for the supplies or services to be acquired;
DFARS 246.103 Contracting office responsibilities.
(1) The contracting office must coordinate with the quality assurance activity before changing any quality requirement.
(2) The activity responsible for technical requirements may prepare instructions covering the type and extent of Government inspections for acquisitions that are complex, have critical applications, or have unusual requirements. Follow the procedures at PGI 246.103(2) for preparation of instructions.
DFARS PGI 246.103 Contracting office responsibilities.
(2)(iv) After issuing the instructions, the technical activity must—
(A) Provide the contract administration office with available information regarding those factors that resulted in the requirement for Government inspection;
(B) Periodically analyze the need to continue, change, or discontinue the instructions; and
(C) Advise the contract administration office of the results of the periodic analyses.
What all this says is that the contracting office is going to rely on the technical activity to provide adequate contract quality requirements. The contracting office is not going to make changes to those requirements without first coordinating with the technical activity that wrote the contract quality requirements. Additionally, the technical activity will review the contract quality requirements and make the necessary changes through coordinating with the appropriate contracting office.
Additionally, FAR 46.203 -- Criteria for Use of Contract Quality Requirements, provides the technical activity and the contracting office the following guidance on the contract quality requirement as to where they fall on the scale of technical, complex and critical. Before assigning higher level criteria, review the excerpt from the FAR.
The extent of contract quality requirements, including contractor inspection, required under a contract shall usually be based upon the classification of the contract item (supply or service) as determined by its technical description, its complexity, and the criticality of its application.
(a) Technical description. Contract items may be technically classified as--
(1) Commercial (described in commercial catalogs, drawings, or industrial standards; see Part 2); or
(2) Military-Federal (described in Government drawings and specifications).
(1) Complex items have quality characteristics, not wholly visible in the end item, for which contractual conformance must be established progressively through precise measurements, tests, and controls applied during purchasing, manufacturing, performance, assembly, and functional operation either as an individual item or in conjunction with other items.
(2) Noncomplex items have quality characteristics for which simple measurement and test of the end item are sufficient to determine conformance to contract requirements.
(1) A critical application of an item is one in which the failure of the item could injure personnel or jeopardize a vital agency mission. A critical item may be either peculiar, meaning it has only one application, or common, meaning it has multiple applications.
(2) A noncritical application is any other application. Noncritical items may also be either peculiar or common.
Finally, FAR 46.102 – Policy, wants to insure when prescribing contract quality requirements that you do the following:
Agencies shall ensure that --
(a) Contracts include inspection and other quality requirements, including warranty clauses when appropriate, that are determined necessary to protect the Government’s interest;
(d) No contract precludes the Government from performing inspection.