For MRO Management, Jason Dickstein, president of Washington Aviation Group, explains that a robust receiving inspection and detailed communication with parties in a chain of commerce is vital to protect your business and help the industry strive for zero-fraud.
Since the summer, there has been a lot of talk about aircraft parts documentation. Much of this was generated by a company that has been accused of issuing falsified documentation with respect to engine parts. The core of the allegations centre around a claim that the company bought used parts, created false documentation, and then sold the parts as new parts.
The false documentation scheme seems to have been identified by an air carrier whose receiving inspector looked at the ‘new’ parts and thought that they did not look new. The receiving inspector identified this as a red flag that needed to be investigated. The company checked the trace documentation by contacting the issuer and found that it was altered from the original. This resulted in additional investigations which revealed the scope of the falsifications.
There are several things we can learn from this event. It highlights the importance of a thorough receiving inspection. It shows that receiving inspectors need to feel comfortable segregating parts for further investigation. It also shows the importance of being willing to engage in the investigation by communicating with parties in the chain of commerce. Robust implementation of these factors in your business model will help protect your business.
1. Receiving inspection
Train your receiving inspectors to look at the parts. Receiving inspection is an important part of every business that deals with aircraft parts. It is the opportunity to make sure that you are getting what you expected to get. To properly perform receiving inspection, there are at least three different investigations that have to be made:
1a) Look at the paperwork
You must check the paperwork to make sure it matches your internal documentation, like your purchase order. If part numbers on the documentation do not match your purchase order, these could be ‘cover goods’, offered because the original goods were unavailable. Cover goods can be acceptable substitutes, but may require some extra analysis to ensure they are acceptable for your intended installation. If the cover goods are based on an OEM substitution, then there should be documentation to show that the new OEM part number is a replacement for the number you ordered.
Sometimes cover goods are PMA alternatives. These can easily be verified by checking the PMA Supplement information on the FAA’s website (drs.faa.gov). If the FAA information identifies the PMA part as a substitute, then the FAA has reviewed and verified the engineering data to show it is acceptable. If the FAA database does not identify the PMA part as eligible for your installation, then check with the PMA manufacturer because the FAA online information might not yet be up to date if a new eligibility has recently been added. The PMA manufacturer should be able to share their latest PMA supplement with you.
You must ensure that the paperwork you receive meets your expectations. If you receive a life-limited part without back-to-birth traceability, then this can be a red flag. Even if it is not a legal requirement, it is a common commercial requirement. On the other hand, for non-life-limited parts, commercial traceability back to the last operator or back to the last certificated entity (like an overhaul shop) can be more common.
1b) Match the part to the paperwork
You must look at the parts to make sure they match the paperwork. This means checking whether the paperwork description matches the parts. If the nomenclature describes the part as a bushing but it appears to be a hinge, this is a disconnect that must be investigated. The documentation part numbers, serial numbers, lot numbers and so on should all be consistent with any comparable numbers printed on the part itself. If the documentation includes a serial number but the part does not include a serial number, then this is an issue that must be investigated.
1c) Look at the part
Finally, you must look at the part itself and ensure it is consistent with your expectations. If you are buying a new part, then is the part new? If the finish on the part appears to be marred, then the receiving inspector needs to identify whether this is marring that is consistent with storage or whether it appears more consistent with installation or use.
2. Investigation, when necessary
Don’t be afraid to segregate a part that needs further investigation, and to keep it segregated until the investigation is complete. If something doesn’t look right, then that feature should be investigated until you are satisfied with the answers you are getting.
Don’t forget to protect your commercial rights, as well. Often, sales contracts may limit the period during which an inspection can occur. If you plan to reject a part, then make sure you identify the planned rejection to your source before the inspection period has concluded.
Communication is very important in our industry. Years ago, I was asked to support a prosecutor’s office that was examining a traceability package associated with an aircraft part. They shared the package with me, and I noticed that the chain of commerce included a document signed by a good friend. I decided to start my due diligence with that document. I called my friend, gave him the document control number, and asked whether the document he signed had been issued to the party whose name was on the document I had in my hand. It turned out that the control number on my document had never been used by his company. He confirmed that the document I was holding was not one issued by his company. This became a very useful starting point for our investigation, which ultimately provided the prosecutor’s office with evidence that the documentation they had was fraudulent.
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How do you get started in your own investigation?
Look for the contact information that is often found on the top of the commercial documentation. Usually there is a phone number – call the person who signed the document and verify the information that you think may be suspect. Don’t have the right information? Look up the company on the internet and find their contact information on their website.
There is some common information that can typically be found in the commercial traceability documentation that accompanies most aircraft parts transactions. This information should align throughout the chain of commerce. If part numbers change in the documentation package, then ask “Why?”
If parts nomenclature is inconsistent through the chain of commerce, then this can also be a red flag. Sometimes there are legitimate reasons for changes – for example an alteration might have changed the dash number on the part. Nomenclature might have changed because the OEM changed the nomenclature in the IPC. But asking questions until you are satisfied with the answers can be a very effective approach.
Looking for commonality in the way that commercial information is presented? The Aviation Suppliers Association has a template for commercial documentation (the ‘ASA Statement Form 2020’). It is designed to have fields for the information that is most commonly requested in aircraft parts commercial transactions. If your suppliers aren’t using the ASA Statement, then show them where they can download a free template as well as free instructions (aviationsuppliers.org/ ASA-Publications).
The trade association community is actively looking for ways to protect this industry. Fraud is rare in our industry but if it happens it can pose a severe safety jeopardy. As an industry we must continue to strive for a zero-fraud/ zero-accident environment.
Fraud can be difficult to detect, but the industry is constantly striving to develop new tools to make it even harder to introduce fraud into the system. Groups such as the Modification and Replacement Parts Association (MARPA), the Aviation Suppliers Association (ASA) and the Aircraft Fleet Recycling Association (AFRA) are working on solutions to help protect our industry from fraud and make our parts community even more secure.
If you want to be a part of the solution, then consider joining one or more of these associations and working on their committees to develop the protocols and practices that will help keep our industry safe.
This feature was first published in MRO Management – November/December 2023. To read the magazine in full, click here.