ASA Meets with Zhengzhou University of Aeronautics

May 10, 2019: Jason Dickstein meets with faculty from the Zhengzhou University of Aeronautics

May 10, 2019: Jason Dickstein meets with faculty from the Zhengzhou University of Aeronautics

ASA met today with a delegation from the Zhengzhou University of Aeronautics.

The Zhengzhou University of Aeronautics, is a university located in Zhengzhou, Henan, China.  University staff are helping to develop the Zhengzhou Airport Economy Zone, and are interested in learning about norms for aircraft parts distribution.

ASA discussed the international norms for design and production approval of aircraft products and articles.  We discussed the specific ways that those norms are implemented in Europe and North America.  We also discussed the EU and US standards for installing aircraft parts, and the role that distributors play in the chain of commerce from approved part manufacturing to installation of those same parts. We discussed ASA’s role in distributor accreditation and our recent meetings with CAAC and CAMAC to discuss partnering with them on safety promotion.

The group had a lot of questions about distributor accreditation and about business norms in our industry.

The University has more than 28,000 full-time students and appears to offer a wide variety of aviation-related degrees (they also offer non-aviation degrees in other fields like law).  Keeping the faculty informed about the industry’s opportunities is just the first step in ensuring that the next generation is prepared to improve safety and push the boundaries of excellence.

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New EASA Guidance on Supplier Evaluation: Who is a “Supplier?”

EASA has published new guidance directing Part 145 organizations to have procedures for accepting components, standard parts and materials (EASA 145.A.42(b)(i)), and to ensure that those procedures include supplier evaluation (EASA AMC1 145.A.42(b)(i)).  Full details on the new supplier evaluation requirement are in yesterday’s blog post.

Who needs to be evaluated?  It is not just the traditional distributors.  The definition of supplier connected to this guidance is a very broad one:

“A supplier could be any source that provides components, standard parts or materials to be used for maintenance. Possible sources could be: Part-145 organisations, Part 21 Subpart G organisations, operators, stockist, distributors, brokers, aircraft owners/lessees, etc.” EASA GM2 145.A.42(b)(i).

This means that manufacturers, repair stations, operators, and aircraft owners are all suppliers, for purposes of the new guidance and rules.  And they all need to be evaluated by Part 145 organizations when they are being used as suppliers of components, standard parts and materials.  Evaluation should be based on the 16 elements of the supplier’s quality system, that were published by EASA.  EASA GM3 145.A.42(b)(i).

Luckily, EASA established a reasonable mechanism for supplier evaluation.  While it is possible for a repair station to perform its own evaluations to the standards set in the EASA guidance material, EASA has also permitted reliance on accredited distributors.  This allows Part 145 organizations to purchase components, standard parts and materials from accredited distributors and to rely on the accreditation to meet the supplier evaluation requirements.

Note that relying on accreditation does not relieve the Part 145 organization of its other obligations to ensure that the component, standard part or material is acceptable for installation.

Europe Formally Recognizes AC 00-56 and ASA-100

The European Union has formally recognized FAA AC 00-56 and ASA-100 as acceptable methods for supplier evaluation.

Some of you will remember that ASA was working with the European Aviation Safety Agency (EASA) to establish protocols for aircraft parts suppliers.  EASA examined various proposals for regulating distributors, and ultimately concluded that the FAA’s Voluntary Industry Distributor Accreditation Program was an appropriate model upon which to rely.  EASA sought comments on the proposal and ultimately issued a recommendation to the European Commission.

The first part of that recommendation was acted upon in August when the European Commission issued a new rule that required repair stations (EASA 145 organization) to

“establish procedures for the acceptance of components, standard parts and materials for installation to ensure that components, standard parts and materials are in satisfactory condition and meet the applicable requirements”  EASA 145.A.42(b)(i).

The second part of that recommendation has been implemented in ED Decision 2019/009/R.  This Decision provided guidance on what it means to establish the above procedures.  First, the guidance clarifies that “[f]or the acceptance of components, standard parts and materials from suppliers, the [] procedures should include supplier evaluation procedures.” AMC1 145.A.42(b)(i) Components, section (b).   At first glance, this appears to impose a huge new obligation on repair stations to evaluate suppliers.  But EASA has offered an easy way to meet this evaluation obligation, by relying on the existing infrastructure for supplier evaluation.

GM3 145.A.42(b)(i) Components explains how to evaluate suppliers.  It explains that a suppliers’ quality system should have certain elements.  It also permits reliance on suppliers known (through external auditing) to meet four standards that are considered acceptable: AC 00-56, ASA-100, AS/EN9120 and EASO 2012.  This means that a 145 organization can rely on a supplier that was audited to such a standard, and does not have to perform its own evaluation.  The basis for endorsing each of these standards was an analysis of each standard by EASA that found that each was in compliance with the list of elements published in this GM.

I was part of the EASA rulemaking team that performed the evaluations, so I know that EASA put a lot of effort into validating that the Voluntary Industry Distributor Accreditation Program was acceptable for use in Europe.  The entire industry of accredited distributors should be proud of this recognition, because it is the result of 25 years of commitment to safety and quality.

This is great news for the community of accredited distributors.  This verifies that aircraft parts installers who rely on AC 00-56 as an element of their supplier selection process are doing the right thing.  It also confirms that the global norms for supplier evaluation are working to enhance safety.

 

Look for tomorrow’s article on how broad is the European definition of “supplier.”

EASA Proposes New SMS (and other) Changes to Part 21 and Part 145

EASA has issued a Notice of Proposed Amendment (NPA) that would establish new SMS regulations for repair stations and manufacturers.

This NPA proposes to apply safety management systems (SMS) to Part-145 approved maintenance organizations, and to production and design organizations approved under Subparts G and J of Part 21.  It introduces elements of SMS into each set of regulations, but also makes a number of other changes in each, as well.

The proposed repair station SMS rules are published in section C of the NPA.  Many of the changes to EASA Part 145 appear to reflect terminology and cosmetic changes to make the existing regulations better reflect the terminology of SMS.  Some language from the CAMO regulations has been adopted for the repair station regulations.  There would be new regulations for airworthiness review staff.  Some changes are meant to better address risks posed by personnel fatigue and by external working teams.  Some of the oversight mechanisms (EASA Part 145.B) have been changed, and this will likely have indirect effects on the operations of repair stations.  There are also proposed changes to record-keeping requirements.  There are also significant changes to the occurrence reporting systems for repair stations.

Most distributors will be pleased to know that EASA 145.A.42 – which governs the documentation required for parts – will not change under this proposed rule.

Once the regulations go into force, existing EASA 145 organizations will have two years to modify their systems in order to comply with the new regulations.  This will likely have delayed effect on US-based EASA 145 organizations, because those organizations are required to comply with US regulations and the additional special conditions (as described in the Maintenance Annex, and also consistent with the implementation guidance in the Maintenance Annex Guidance); but the change in the EASA regulations could lead to a subsequent change in the special conditions.

The proposed manufacturer SMS rules are published in section B of the NPA.

Changes include an expansion of mandatory reporting system to require collection, investigation and analysis of all voluntary reports, in addition to mandatory reports.  It would expand the system to include requirements for reporting and managing internal errors and other hazards that do not fall under the traditional failures, malfunctions, defects and adverse effects occurrences that have been reported in the past.  While it is clearly meant well, this change could have the unintended effect of inhibiting voluntary reports, because of the new collection, investigation and analysis burden associated with these voluntary reports.

The new regulation would also impose on the production approval holder a duplicative collection, investigation, analysis and reporting obligation (currently the burden belongs to the design approval holder).

The reports made to the competent authority will also need to safeguard the identity of the reporter, which could inhibit subsequent investigation by the competent authority.

The new regulations will feature expanded record-keeping requirements and also a requirement for arrangements (like contractual requirements) that make all “partners, supplier and subcontractors” open to competent authority investigations.  This could mean that US suppliers to Airbus, for example would need to permit EASA investigators free access to audit or investigate at any time.

This is not a complete list of all of the proposed changes – it is worthwhile for anyone in the aviation industry to review these changes carefully as they may have wide-ranging effects.  There are also draft Acceptable Means of Compliance (AMC) and Guidance Material (GM) for each Part in the NPA.

The public is permitted to submit comments using the automated Comment-Response Tool (CRT).  The deadline for comments on this NPA is July 17, 2019.

US Imposes New Sanctions on Cuba – Affect on Aircraft Parts Exports is Unclear

The President announced today that the United States would impose new sanctions on Cuba.  Rough details are available through the White House Fact Sheet, but we are still awaiting complete details.  It is unclear what effect this might have on current licenses to sell aircraft parts to entities in Cuba, which are permitted under BIS policy.  ASA will continue to monitor this situation to ascertain whether the new sanctions adversely affect aircraft parts export licenses.

U.S. Considering Tariffs on European Aircraft and Aircraft Parts

The Office of the U.S. Trade Representative has announced a preliminary proposal to implement new tariffs on a range of European products with a significant focus on the civil aviation sector, including both parts and completed aircraft.  The proposed tariffs arise as a result of a long-running WTO case brought by the U.S. against the EU and France, Germany, Spain, and the UK.  The WTO found that the EU provided substantial “launch aid” to Airbus and that those subsidies both helped Airbus launch its commercial aircraft and cost Boeing market share.

The purpose of the tariffs (or countermeasures) is to offset the estimated $11 billion per year in trade harm the USTR estimates result from EU subsidies.

It is unclear at this point at what rate tariffs would be imposed on the particular goods identified.  The proposed HTS numbers affected include numbers that are very familiar to the distribution community, including 8803.20.0030, 8803.30.0030, and 8803.90.9030, however, the scope appears to be limited to parts imported “for use in new civil aircraft, not for use by the Department of Defense or the U.S. Coast Guard, of an unladen weight exceeding 15,000 kg provided for in statistical reporting numbers 8802.40.0040, 8802.40.0060 and 8802.40.0070.” Thus from the language it appears the countermeasures target the importation of parts used in the manufacture of new aircraft, but not for the maintenance of the existing fleet.  Anyone supporting the production of new civil aircraft would be well advised to review the HTS numbers proposed for countermeasures.  They can be found here.

The USTR has requested public comments on the proposed action.  Comments can be submitted through http://www.regulations.gov under docket number USTR-2019-0003.  Any comments must be submitted by May 28, 2019.

Guidance Concerning Batch and Lot Splitting (US, EU, and Canada)

I was recently asked about guidance for batch and lot splitting.  I thought it might be useful to have an online resource for that sort of guidance.

Batch and lot splitting is typically necessary when you receive a large batch of articles, but you want to sell or transfer only a smaller subset of that batch.  For example, you might receive a lot of 10,000 fasteners; but your customers typically purchase them in lots of 100.  That means you expect to sell them in 100 lots of 100 units each.  You have one document that confirms their compliance to a standard, but says it applies to a shipment of 10,000 units.

The normal way to handle this is by making copies of the original document, keeping records and controlling the lot to ensure that (A) you only issue copies of the document for parts you sell from that lot, and (B) your count verifies that only the parts received (by number as well as identity) are associated with that document.

Generally, the questions I get about batch and lot splitting center on the legality of making copies of the authorized release certificate or other documents associated with the entire shipment.  Distributors often want to know whether they can make copies of the document to provide with the smaller (split) shipments.  Here is some guidance from three aviation authorities.

United States

First of all, remember that the FAA does not directly regulate distributors.  Thus, the FAA is not in a position to directly regulate batch or lot splitting by distributors.

The FAA has no regulations that would directly prohibit the copying of documents like 8130-3 tags.  Under the Paperwork Reduction Act, the FAA is not permitted to bring an enforcement action for “failing to comply with a collection of information” unless there is an OMB control number associated with the collection – and this limits the FAA”s enforcement options related to 8130-3 tags (especially since export airworthiness of parts was removed from the OMB control documents).  The FAA has no regulations directly limiting one’s ability to copy and circulate an 8130-3 tag once it is created.

This doesn’t mean that you can do anything you want with no consequences!  Fraud concerning aircraft parts is a federal crime.  Misleading statements about aircraft parts can get you into trouble with the FAA.  So it is always best practice to ensure that anything you pass along is neither fraudulent nor misleading.

The FAA does have recommendations for distributors with respect to splitting of bulk shipments, and the associated copying of 8130-3 tags.  Under FAA Order 8130.21H, the FAA has published guidance on issuing new 8130-3 tags for split lots, as well as how to control copies of the old 8130-3 when it is copied (so no new 8130-3 tag is issued).  The guidance explicitly says that distributors are authorized to split bulk shipments, and provides a three-step process for controlling the copies of the 8130-3 tag:

“(1) Make a copy of the FAA Form 8130-3 received with the original shipment of products or articles that identifies the bulk shipment.

***

(2) Include the following written statement (an example) or similar statement: “(Company name) certifies this/the attached document is a copy of FAA Form 8130-3. The prior FAA Form 8130-3 received by our facility is maintained on file pursuant to our document retention standards. That prior FAA form tracking number is [ ACE-549]. The new tracking number for this portion of the split bulk shipment is [S1-054321]. The number of products or articles being shipped under this approval is [500]. Signed [quality control/assurance manager or authorized representative] Dated [ month day year]” (Refer to appendix A, figure A-7b, to this order for an example.) A quality control/assurance manager or authorized representative from that facility must sign and date the written statement. You can include this statement by attaching a separate sheet of paper to the copy of the FAA Form 8130-3.

(3) Maintain the prior FAA Form 8130-3 and a copy of the written statement on file”

I helped write the original form of that guidance, so I am pretty happy to endorse this approach.

For those distributors that are accredited to FAA AC 00-56B, that guidance requires accredited distributors to have a the following element in its quality system:

“When documentation is required to be duplicated to meet commercial requirements, a process for controlling the copies so as to prevent the misuse, or unintended use, of a copy. Examples of appropriate documentation include lot control, batch control, and remaining inventory control and verification.”

 

European Union

There is not currently guidance in EASA materials concerning the splitting of bulk shipment.  This was intended to be addressed in the supplier evaluation and control GM (with a recommendation that suppliers have “Procedures for batch splitting or redistribution of lots and handling of the related documents”).  That GM was originally drafted to support the supplier control regulations proposed in EASA Opinion 12/2013.

The supplier control language was finally implemented last summer in Commission Regulation (EU) 2018/1142 (section 145.A.42(b)(i)).  The AMCs and GMs have not yet been updated to reflect the 2018 regulation, so there is, as yet, nothing in the EASA guidance about batch splitting or redistribution of lots and handling of the related documents.

We should expect further guidance to be forthcoming.

 

Canada

Canada just issued new guidance for 2019 that discusses splitting of bulk shipments.  It is found in CAN AC 571-024.  In section 4.2, which applies to “Parts sourced from a Canadian Approved Manufacturer or Distributor,” the advisory circular includes a note that explains a person can reproduce the authorized release certificate in the form of a certified true copy when splitting a bulk shipment:

“Note: Splitting of bulk shipments for new parts (excluding standard and commercial parts) which are certified by an approved manufacturer with an ARC is acceptable under the CARs. A single ARC may be reproduced in the form of certified true copies and utilized for the shipment of multiple items.”

Section 4.3 of that same guidance applies to “Parts sourced from a FAA Approved Manufacturer or United States (US) Distributor,” and it clarifies that it is acceptable to get a certified true copy of an FAA Form 8130-3 or a Statement of Conformity from the distributor.

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