Quality Systems Manual

Transcription

1 Hardy Machine & Design, Inc. Quality Systems Manual Meeting ISO9001:2008 Requirements Ankur Goel August 21, 2015

2 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 2 AS 9100 Quality Management Systems Table of Contents 1 Scope General Application References Terms and Definitions Quality Management System General Requirements Processes Documentation Requirements General Quality Policy Quality Objectives Quality Manual Control of Documents Control of Records Records Retention Time Management Responsibility Management Commitment Customer Focus Quality Policy Planning Quality Objectives Quality Management System Planning Responsibility, Authority, and Communication Responsibility and Authority Management Representative Internal Communication Management Review... 14

3 Quality Systems Manual Hardy Machine & Design Rev. 015 Page General Review Input Review Output Resource Management Provision of Resources Human Resources General Competence, Training, and Awareness Infrastructure Work Environment Product Realization Planning of Product Realization Project Management Receipt of Order Job Folders and Shop Folders Traveler System Setup Programming Material Purchase Raw Material Receiving Shipment of Customer Order Risk Management Configuration Management Control of Work Transfer Customer-Related Processes Determination of Requirements Related to the Product Review of Requirements Related to the Product Quotation Processing Customer Communication Design and Development Purchasing Purchasing Process Purchasing Information... 25

4 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Verification of Purchased Product Production and Service Provision Control of Production and Service Provision Production Process Verification Control of Production Process Changes Control of Production Equipment, Tools and Software Programs Post-delivery Support Validation of Processes for Production and Service Provision Identification and Traceability Customer Property Preservation of Product Identification / Marking and Labeling including safety warnings Handling Packaging Storage Protection Cleaning Prevention, Detection and Removal of Foreign Body Objects Special handling for sensitive products Shelf-Life Control and Stock Rotation Special Handling for Hazardous Material Control of Monitoring and Measuring Equipment General Equipment Identification Master Standards Adequacy of Master Standards Availability of Procedures and Equipment Environmental Control Calibration Procedures Calibration Records Subcontractor Control Inaccurate Gage Procedures... 35

5 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Labeling and Recall Measurement, Analysis, and Improvement General Monitoring and Measurement Customer Satisfaction Internal Audit Monitoring and Measurement of Processes Monitoring and Measurement of Product Product Recall Inspection Provisions Customer Source Inspections Control of Non-Conforming Product Non-Conformance Records Analysis of Data Improvement Continual Improvement Corrective Action Purpose Responsibility and Authority Procedure General Initiation of Corrective Action Origination Review and Implementation Preventive Action Purpose Responsibility and Authority Procedure General Initiation of Preventive Action Origination Review and Implementation... 46

6 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 6 9 Documents and Records Reference Quality Records Matrix Referenced Forms Organization Chart Job Descriptions President General Manager Quality Manager Quality Inspector Machine Shop Foreman Fabrication Shop Foreman Treasurer CNC Programmer Machinist Code Welder Pipe Fitter Shipping & Receiving Maintenance & Cleaning Management Review Committee Revision History... 53

7 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 7 1 Scope Hardy Machine & Design, Inc. of Houston, TX was formed in 1970 as a manufacturer of oil-field related parts and has been supplying precision machined parts to the wellhead, chemical, and industrial sectors. Hardy Machine & Design, Inc. has worked with the Department of Defense since 1985, with several logistical centers, and with prime contractors. Hardy Machine & Design, Inc. has the capability to start and finish every job it accepts due to a variety of equipment combined with the knowledge and experience of its personnel. As well as precision machining, Hardy Machine & Design is a complete welding, fabrication, and 3 rd party dimensional inspection facility. 1.1 General This manual covers Hardy Machine's implementation of the requirements of ISO9001:2008 quality management systems. The purpose of the quality management system is: 1 Demonstrate our ability to consistently provide product that meets customer requirements through the "Order Fulfillment" Process, as well as through secondary processes, such as "Gaging Practice". 2 Enhance customer satisfaction through effective application of the system described in this manual and by continual improvement of the system itself. We achieve continual improvement by performing and reviewing audits of the system. This manual will work in conjunction with Hardy Machine's Welding Quality Manual for use with ASME Pressure Vessel fabrication, but this manual does not cover the requirements associated with the ASME. Hardy Machine & Design, Inc. is compliant within the limited scope of machining in accordance with ASME Sect. III, NCA Application Hardy Machine currently excludes the following sections from this quality system: Section 7.3 ("Design and Development"). Currently, Hardy Machine is a contract machine shop that offers direct labor hours to machine and fabricate parts to our customer's designs. Any prototyping, designing, or development work is done in conjunction with our client's engineers who ultimately approve engineering designs. 2 References ISO9000:2005 "Fundamentals and Vocabulary". ISO9001:2008 "Requirements". 3 Terms and Definitions For the purposes of this manual, the following terms apply:

8 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 8 "Hardy Machine" This manual will use "Hardy Machine" as a short-hand for "Hardy Machine & Design, Inc." "Supplier" This manual will use the terms "supplier", "vendor", and "subcontractor" interchangeably. "Customer" This manual will use the terms "customer" and "client" interchangeably. "Key Characteristics" This manual will use term "key characteristic", "dimension", and "feature" interchangeably. 4 Quality Management System 4.1 General Requirements This manual establishes and documents the Hardy Machine quality management system. Section identifies the processes determined for the quality management system and their application through Hardy Machine, as well as determines their sequences and interaction. The rest of the manual determines the criteria and methods needed to ensure the operation and control of these processes, as well as monitoring and measuring the processes for planned results where applicable Processes Maintenance Training / Human Resources Accounting / Finance Customer Requirements Quoting Order Fulfillment Regulatory Requirements Core Business Non- Conformance Purchasing and Vendor Review Gaging Practice Associated Processes Internal Auditing Quality Systems Review Management Review

9 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 9 "Order Fulfillment" Order fulfillment covers the act of receiving orders, manufacturing them, and shipping them to the customer. Quoting The quoting process occurs before an order arrives, and estimates cost and lead time for manufactured parts. Maintenance Each machine used in the manufacture of parts is periodically maintenance to reduce unplanned downtime. The maintenance process determines maintenance requirements for each machine and schedules Gaging Practice Gages are used to measure all features of manufactured parts, and different gages are used depending on the required precision of tolerance involved. Gages must all be calibrated on a regular basis and traced to a master set of gages. Training (Human Resources) Personnel must be trained for the jobs they are performing. Performance and training are reviewed on a regular basis. Vendor Purchasing & Vendor Review Vendors perform direct and indirect actions on manufactured parts. Vendors are approved based on quality requirements and are reviewed on a regular basis. Accounting / Finance Accounting tracks order payments and makes sure money is available to implement the other processes. Non-Conformances Non-conforming product and non-conforming processes are tracked and recorded. Customer Requirements Customers who have specific needs of the quality management system will have those requirements documented and controlled by Hardy Machine. All employees shall be made aware of those requirements. Regulatory / Statutory Requirements Any requirements imposed by applicable statutory and regulatory agencies will have those requirements documented and controlled by Hardy Machine. All employees shall be made aware of those requirements. Internal Auditing Internal auditing checks the implementation of the quality system described in this manual. Management Review Using data from all of the above processes, management regularly reviews the effectiveness of the quality system.

10 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Documentation Requirements General Quality Policy Hardy Machine & Design, Inc. works to provides world-class service to its customers. We seek to offer increasing levels of quality and faster delivery at competitive prices. We will continually improve our quality and service to make our customers proud to do business with us Quality Objectives 1. Record and analyze internal scrap rate on a monthly basis. This should be measured in both dollars of scrap and in volume of Non-conformances generated. Pareto analysis of scrap should trend down over time. 2. Record and analyze customer satisfaction based on quality and delivery. 3. Continually improve the quality system by improving processes to verify results. We are committed to maintaining a process management approach to drive the total quality management system by accelerating continuous improvement through teamwork, training coordination skills, and by focusing on consistent customer satisfaction through superior quality and service. Overall responsibility for quality system management rests with the President of Hardy Machine & Design, Inc. The Quality Control Manager (QCM) is responsible for the administration of the quality system. All personnel are vested with the responsibility for living the quality policy and for implementing the stated quality system during operations. Each employee of Hardy Machine & Design is required to acknowledge this responsibility by completing an Employee Acknowledgement Statement (Form 13) Quality Manual This manual will serve as the documented quality management system for Hardy Machine & Design. This document is subject to change and improvement as determined by management, but will always reflects requirements of the ISO9001:2008 standard. The quality policies and procedures found in this Quality Manual will be reviewed and amended as needed, when found warranted through the analysis of quality data, customer complaints, contract changes, or improvement suggestions. All documented procedures required by ISO9001:2008 are included in this manual, with the exception of the Internal Audit Procedure (Form 22) and Gage Calibration Procedures (Form 5) Control of Documents Documents required by the quality management system are controlled in various ways depending on the type of document. Hardy Machine uses Unipoint quality software as an electronic document control database. The following documents are stored in unipoint document control:

11 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 11 Forms Customer Specifications Manuals and Procedures Non-Conformances Corrective and Preventative Actions Unipoint allows the following controls via software controls: Only the General Manager and Project Manager has the ability to approve documents and their revisions added to unipoint document control, allowing him to ensure adequacy prior to use. Unipoint document control allows updating and review. Unipoint document control shows approval date and revision level for all documents. Unipoint document control is the only way to get access to these documents, and is available for the management team to use and make available at the point of use. Electronic documents stored in Unipoint document control are always legible and identifiable by document number. Unipoint document control allows Hardy Machine to note documents from an external origin, and that they are marked correctly. Unipoint maintains a master list of internal and external documents. Unipoint only makes available the most recent revision to any document in the system. Changes to documents can be noted several ways: Where appropriate, procedures will have a Revision History section that notes changes from one version to the next. If a Revision History section is inappropriate for a document, then those changes will be noted in Unipoint document control. Any changes to the documents shall be communicated to the customer and/ or regulatory agencies in accordance with contract or regulatory requirements. If changes to a document render a previous version obsolete, all effort will be made to dispose of the obsolete documents. Any obsolete documents retained will be marked "Obsolete" or "Old". Documents which are not stored in unipoint document control are controlled as follows:

12 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 12 Customer Drawings and Bills of Material Stored in hierarchical folder on electronic file server. Revision control handled manually by General Manager. Records Stored in Job Folders. Includes signed travelers, data sheets, MTR's, subcontractor certifications. (See Section 4.2.4) Quotations Stored in the same hierarchical folders on electronic file server as customer drawings. Travelers Stored in Syspro database. Maintained by General Manager for contract review purposes Control of Records Hardy Machine's records are maintained and controlled to provide evidence of conformity to requirements and effective operation of the quality management system. Records that are related to order fulfillment (production orders) are stored in Job Folders (see Section ). Other records are stored in locations as defined in Section 9.1. Job Folders provide control to maintain the following: Legibility all original records are stored in job folders Identification all job folders are stored by job number, which can be cross-referenced by customer, part number, purchase order number, and many other identifying features. Storage job folders are stored in temperature-controlled environments Protection job folders maintain all records in a single packet protected from unauthorized use and protected from deterioration. Retrieval job folders can be easily retrieved since they are indexed by job number. Retention time job folders are also indexed by age, and can be easily disposed after the specified retention time described in Disposition of records after the specified retention, job folders can be destroyed as a package. Any records created or retained by suppliers are also provided to Hardy Machine and stored in Job Folders. Records are available to customers and regulatory authorities for review in accordance to contract and regulatory requirements Records Retention Time All records specific to order fulfillment will be retained for at least seven (7) years, or longer if specified by customer requirements. All other records will have a retention time shown in Section 9.1.

13 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 13 5 Management Responsibility 5.1 Management Commitment The President of Hardy Machine shall be the driving force in implementing, maintaining, and improving the effectiveness of the Quality System. Evidence of the President's commitment shall be provided by: Communications to all employees of the importance of meeting customer as well as statutory and regulatory requirements. Meeting minutes, training records, newsletters, etc. shall be kept of such communications; Establishing the quality policy; Ensuring that quality objectives are established; Conducting Management Reviews of this quality system on an annual basis; and Ensuring the availability of resources. 5.2 Customer Focus The President shall ensure that customer requirements are determined and met with the aim of enhancing customer satisfaction. This will be accomplished utilizing such methods as market/customer surveys (Form 10), industry reports, field reports, and outside sales reports. The President shall also ensure that product conformity and on-time delivery performance are measured and that appropriate action is taken if planned results are not, or will not be, achieved. 5.3 Quality Policy The President ensures that the Quality Policy: Is appropriate and reviewed for continuing suitability during management reviews; Includes a commitment to comply with requirements and continually improve the effectiveness of the quality management system; Provides a framework for establishing and reviewing quality objectives and ensuring that these objectives are consistent with the Quality Policy; Is communicated and understood within Hardy Machine; and Is review for continuing suitability. 5.4 Planning Quality Objectives The President ensures that the quality objectives in Section are measurable, consistent with the quality policy, and established at relevant functions and levels of Hardy Machine.

14 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 14 During the annual management review, the President will review these quality objectives to make sure they are consistent with the Quality Policy (Section 5.3) Quality Management System Planning Implementation of Hardy Machine's quality management system will be carried out in order to meet the requirements of the system as well as the quality objectives. Planning will ensure that any changes in the quality system manual are conducted in a controlled manner and that the integrity of the system is maintained during the change. 5.5 Responsibility, Authority, and Communication Responsibility and Authority The President ensures that responsibilities and authorities are defined and communicated within Hardy Machine. These responsibilities and authorities are communicated through organization charts, job descriptions, documented procedures, and training documents Management Representative The President has appointed the General Manager, a member of the management team, with the defined authority and responsibility to: Establish, implement, and maintain processes needed for the quality management system; Report to the President, annually, on the performance of the quality system and any need for improvement; and Promote awareness of customer requirements throughout Hardy Machine Resolve matters pertaining to quality management issues with the help of top management Internal Communication The President ensures that appropriate communication processes are established within Hardy Machine and that communication takes places regarding the effectiveness of the quality system. This communication takes the form of team briefings, meetings, notice boards, s, and formal reports. 5.6 Management Review General The President and his management team review the quality system annually to ensure its continuing suitability, adequacy, and effectiveness. The review assesses opportunities for improvement and the need for changes to the quality system manual, the adequacy of the quality policy, and the quality objectives Review Input Input to the Management Review includes information on: Results of internal and external audits,

15 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 15 Customer Feedback, Status of preventative and corrective actions, Follow-up actions from previous management reviews, Planned changes that could affect the quality management system, and Recommendations for improvement. Results of metrics from the Quality Objectives shown in Section Review Output The output from the Management Review includes decisions and actions related to: Improvement of the effectiveness of the quality management system and its processes, Improvement of products and their conformity to customer requirements, Resource needs. Recommendations for improving Quality Objective Metrics. Records of the management review are maintained in as a summary of the output described above. 6 Resource Management 6.1 Provision of Resources The President is responsible to ensure that resource needs are indentified and adequately provided: To implement and maintain this Quality Systems Manual while continually improving its effectiveness; and To enhance customer satisfaction by meeting or exceeding customer requirements These resources include, but are not limited to: People; Infrastructure; Work environment; Information; Suppliers; and

16 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 16 Financial resources. Personnel in each position with a function in this Quality System shall be qualified to establish requirements for that function based on appropriate education, training, skills, and experience. 6.2 Human Resources General Hardy Machine's management team will: Determine the necessary competence for new and current personnel performing work affecting conformity to product requirements. This shall be done through resumes, records of qualification, job descriptions, performance reviews, and observations; Provide training or take action to satisfy functional needs; Evaluate the effectiveness of those actions through observation and evaluation; Ensure that personnel are aware of the relevance and importance of their activities and how they contribute to the achievement of quality objectives; and Maintain appropriate records of education, training, skills, and experience Competence, Training, and Awareness Hardy Machine will ensure that all personnel have the necessary training, background, and qualifications to perform assigned tasks contributing to product requirement conformity. Additionally, Hardy Machine will maintain Personnel Qualification Records (Form #4) and certificates of continuing education in the personnel files of persons who receive training. The General Manager will review these records on an annual basis. Any training activity will be documented on Form #4 Employee Training Form. This Form can be signed off by the General Manager, Project Manager, Shop Foreman, or Quality Manager. Hardy Machine will ensure that its personnel are aware of the relevance and importance of their activities and how they contribute to the achievement of the quality objectives. 6.3 Infrastructure Hardy Machine will determine, provide, and maintain the infrastructure needed to achieve conformity to product requirements. Infrastructure will include, but is not limited to, the following: Buildings, workspaces, and associated utilities, Process equipment (including any necessary hardware and software), and Supporting services, such as communications services.

17 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 17 Infrastructure decisions will be documented during Management Review. 6.4 Work Environment The President, in consultation with employees, determines and manages the work environment needed to achieve conformity to product requirements ensuring that Hardy Machine also complies with any applicable regulatory requirements. Factors that may affect conformity of the product include temperature, humidity, lighting, cleanliness, protection from electrostatic discharge, etc. The machine shop will be temperature controlled to control temperature and humidity. Tight tolerance measuring devices will be stored under tighter temperature controlled conditions to mimic customers' environmental conditions (such as CMM and optical comparator). 7 Product Realization 7.1 Planning of Product Realization Hardy Machine will plan and develop the processes needed for order fulfillment. Planning of order fulfillment will be consistent with the requirements of the processes of this Quality Systems Manual. Order fulfillment planning will determine the following as appropriate: Quality objectives and requirements for the product, The need to establish processes and documents, and provide resources specific to the product, Any required verification, validation, monitoring, inspection, and test activities specific to the product and the criteria of product acceptance, Records, such as travelers and inspection checklists, that provide evidence of order fulfillment and product quality, Configuration management appropriate to the product, and Note: Quality Objectives and requirements include considerations such as: Product and personal safety Reliability, availability, and maintainability Producibility and inspectability, Suitability or parts and materials used in the product Recycling or final disposal of the product at the end of it life. The identification of resources to support operation and maintenance of the product. The output of this planning shall be a shop traveler, as described in the following sections Project Management Hardy Machine plans and manages product realization in a structured and controlled manner to meet requirements at acceptable risk within resource and schedule constraints. The sequence of operations is detailed from to

18 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Receipt of Order Customer orders are processed as follows: 1. A purchase order for machined and fabricated parts can be received from customers via mail, fax, or . Additionally, purchase contracts can be agreed to between Hardy Machine and its customers for out-of-the-ordinary orders. 2. The original quotation that applies to the received order will be reviewed, if applicable, by the President or General Manager for verification of "as quoted" details. This will include checking for proper drawing numbers and drawing revisions of the order. If the order matches the quotation, Hardy Machine will transmit an order confirmation either via or fax to the customer. Any discrepancy between the quotation and order are reviewed and listed. If it is determined that a change order will be necessary, the client will be notified. 3. For any cost-plus projects, the drawings are reviewed for completeness and to ensure that Hardy Machine, its approved vendors, and its partners can handle the work. Tooling and fixture equipment are defined and reviewed. 4. The customer is informed immediately if Hardy Machine determines that certain parts of the work are beyond its capabilities or the capabilities of its vendors. Hardy Machine will work with the client, if required, to find a competent vendor for that work. 5. Any information not clear in the documentation with the order is reviewed with the customer. This can include drawings, specifications, delivery instructions, or post-delivery tasks. 6. Customer contact will continue as the project progresses to assure that all aspects of the job are understood Job Folders and Shop Folders Once an order is accepted, a job number is assigned to the order and then a job folder and a shop folder are created to store documentation as the order is being manufactured and after the order is delivered. The job folder is a permanent record of all documentation for a job, including purchase orders, sales orders, material certifications, incoming material reports, non-conformance reports, travelers, drawings, specifications, test results, quality control data sheets, and any other information or documentation that pertains to a job. These job folders are maintained by the Quality Manager. The job folder allows full traceability by linking the job number to customer purchase orders, vendor sales orders, material orders, individual part quality data sheets, and drawing records. The job folder information is available to a customer's representative for as long as the folder is maintained by Hardy Machine. The shop folder travels around the machine shop facility as material moves through the shop. The shop folder identifies which job the material is being used for, and is used by the machinists for instructions. Once a job is completed, the documentation is transferred to the job folder and the shop folder is discarded. The shop folder contains:

19 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 19 A job traveler with routing instructions and material requirements, A copy of the part drawing Any special instructions, including thread form data or internal drawings Traveler System Setup The shop traveler is prepared by either the General Manager or the Project Manager. It includes: A planned routing for each of the processes required for the job, including any necessary subcontracting work; Detailed work instructions for each work center involved in the manufacturing process, their quality goals, and their inspection requirements; A list of raw material needed to be released to the shop floor before work can begin, Final inspection and packaging requirements. The shop traveler will be updated based on the availability of work centers, changes in processes, or changes in vendors. These updates will be made as soon as possible Programming If a job requires the use of CNC work centers, the job is first sent to the CNC Programmer who follows these processes: He reviews the job folder to assess the programming needs. He will check to see if the job is a repeat, in which case he can use an existing program using the most recent update to the program. If a new program is written for a job, he will write the new program, assign tools, and design fixtures as appropriate. He will then ensure that all tools for the machines are available. If these tools need to be purchased, he will made a list and procure it himself. When the tools are received, the Programmer will verify that these are the same as requested. The Programmer will then submit all fixture requirements to the Shop Foreman, who will order material for the fixture. It will be made under the guidance of the Shop Foreman. The Programmer will assist the CNC machinists in setting all tooling and fixtures before the first article is run Material Purchase All material is purchased from Hardy Machine & Design s approved vendor list or from a client-approved vendor. When material is purchased, the following steps are taken:

20 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 20 The job folder is reviewed for material specifications and vendor requirements where applicable; Material purchase orders are made using either the customer purchase order number or job number as an identifier; Material purchase orders are placed in the job folder Raw Material Receiving When raw material is received, the following process is followed: Any material test reports received from the vendor are checked against the matching purchase order to verify accuracy; Received material is marked with its heat number, the client s name, the job number, the purchase order number, and, if required, the customer heat code number; Once material is received, it is moved to a designated job-staging area and will have the shop folder placed with the material. Material heat numbers or customer material code numbers are reaffixed to material anytime the manufacturing process removes the prior markings. Any excess material is permanently marked with its heat number and material type and then moved to company stock or returned to the customer as required by the purchase order Shipment of Customer Order When an order is shipped, the Shipping department will prepare: A shipping documentation package as required by the customer, Job documentation for filing into permanent storage, and Finished product for shipping, incorporating any necessary protection that ensures the receipt of a quality product by the customer Risk Management Hardy Machine's process for risk management includes: Assignment of responsibilities for risk management, Definition of risk criteria, Identification, assessment, and communication of risk throughout product realization, Identification, implementation, and management of risk actions, and

21 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 21 Acceptance of risks remaining after implementing mitigating actions Configuration Management Hardy Machine does not design and manufacture end products. There is no necessity for Hardy Machine to develop a formal configuration management system. However, customer configurations are acknowledged. Customer designated revisions and drawing changes are controlled throughout the process. Part number and revisions supplied by the customer are noted on all required documentation. Drawing revisions are reviewed for applicable changes to the product or processes. Review and or changes are noted on the fixed or frozen processes when required. Configuration Management is also a means by which identification and traceability may be maintained. In the event additional Configuration Management is required, ISO will be referenced for developing additional requirements Control of Work Transfer When planning to temporarily transfer work to a location outside the Hardy Machine's facilities, Hardy Machine will provide information via a purchase order that defines the processes to control and validate the quality of the work. 7.2 Customer-Related Processes Determination of Requirements Related to the Product Both during the quotation process and after receipt of a customer order, Hardy Machine will determine requirements related to the product. Requirements will be listed on the customer's purchase order, or will be referenced on a customer-provided bill of materials. Hardy Machine will determine: Requirements specified by the customer, including the requirements for delivery (i.e. shipping dates, packaging, etc. ) and post-delivery activities (i.e. servicing, warranty, etc.) Requirements not stated by the customer but necessary for specified and intended use where known (i.e. special processes, materials, coatings), Statutory and regulatory requirements related to the product and its use, and Any additional requirements as we determine appropriate. If the customer provides no documented statement of requirement, the customer's requirements are confirmed by Hardy Machine before acceptance. The following items will be included when determining requirements: Technical drawings Bills of Material, including raw material requirements and special processing

22 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 22 Inspection requirements Delivery date Quantity requirements Certification requirements Review of Requirements Related to the Product The General Manager, Project Manager and Shop Foreman review the requirements related to the product prior to Hardy Machine's commitment to supply a product to the customer (including before submission of tenders, before acceptance of contracts or orders, and before acceptance of changes to contracts or orders). They will ensure that: The product requirement are defined; Contract or order requirements differing from those previously expressed are resolved; Hardy Machine has the ability to meet the requirements; Special requirements of the product are determined; and Risks have been evaluated. This review will be recorded as the routing on the traveler with appropriate notes (see Section ). Where the customer provides no documented statement of requirement, the customer requirements shall be confirmed by Hardy Machine before acceptance. Where product requirements are changed, Hardy Machine shall ensure that relevant documents are amended and that relevant personnel are aware of the changed requirements. These changes will be reflected in updated travelers Quotation Processing Customer bids and Requests for Quote are processed as follows: 1. All quotations are received by any of mail, fail, , or via an online quotation service. The documents are stored electronically on the company server and indexed by customer and part number. 2. All quotation documents sent by the prospective customer are collected and reviewed for completeness. If the quotation is missing information, Hardy Machine will request the prospective customer provide that information before proceeding with the quotation. 3. The quotation requirements are reviewed and compared to Hardy Machine's in-house capabilities and to the capabilities of its suppliers to assure that we can handle the job. The decision is then made to bid the project or to decline the bid.

23 Quality Systems Manual Hardy Machine & Design Rev. 015 Page If we decide to bid the project, all requirements are defined, such as: Material requirements, Programming, New fixture development, Work center operation routings and timings, Subcontracted services, Quality requirements Packaging, and Final destination. 5. Pricing and availability of raw materials and subcontracted services are checked with approved vendors. Prices for all work centers are obtained from company standards. Overhead prices (such as setup, CNC programming, and fixture development) are added on an as-required basis. Other costs, including contingency, management costs, and profit requirements will be added to reach the final price, in accordance with Hardy Machine's standard terms and conditions of sale. 6. All quotation documentation, including client documents, quote prices, materials and outside service quotes, and worksheets will be kept electronically on the company server Customer Communication The General Manager is responsible for determining and implementing effective arrangements for communicating with customers for: Product information (through outside sales, brochures, and web sites), Inquiries, contract or order handling, including amendments (through web site, s, or faxes), Customer-planned feedback (sales reports, customer meetings, and surveys), and Unplanned feedback (customer complaints and returns). 7.3 Design and Development Excluded 7.4 Purchasing Purchasing Process The General Manager is ultimately responsible for ensuring that purchased products and services conform to Hardy Machine's specified purchasing requirements and will delegate authority as he sees

24 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 24 necessary for various purchasing functions. The type and extent of control applied to the supplier and the purchased product will be dependent upon the effect of the purchased item on finished product quality. The Project Manager will provide Hardy Machine's suppliers with the information they need to perform their services, such as drawing and specifications, upon issuing a purchase order. If the supplier informs Hardy Machine that they do not have the required information, the Project Manager will provide it. Ultimately, Hardy Machine is responsible for the conformity of all products purchased from suppliers, including product from sources defined by the customer. Subcontractors are selected based on their ability to meet contract requirements including quality system requirements and any specific quality-assurance requirements. One or more of the following methods is used to approve subcontractors: 1. Receipt and evaluation of statistical data, 2. Sampling of product during receiving inspection, 3. Second or third party assessments of subcontractor sites, 4. Evaluation by accredited laboratories. 5. The subcontractor is on a Customer Approved Subcontractor list. 6. The subcontractor receives an onsite review from Hardy Machine personnel, including completion of a Supplier Evaluation Form (Form 11). 7. Historical performance over a 1 year horizon 8. ISO approval as a basis for further performance review. If a customer has a preferred supplier, all effort will be made to utilize that preferred supplier. If a customer makes his preference known, it is assumed that the customer has already approved the supplier based on customer requirements. Hardy Machine shall: a) Maintain a dated Approved Vendors list that includes both approval status and the scope of approval. The Approved Vendors list shall also include the type and extent of control applied to the processes they supply. The following controls may be applied to vendors: i. Documentation Only Approved vendors with this control must provide documentation for their services. Generally, these vendors are controlled by third-party requirements. This control applies to Calibration labs, destructive and non-destructive vendors. ii. Dimensional Verification Approved vendors with this control will have the results of their work dimensionally checked by Hardy Machine's in-house inspectors. This control

25 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 25 applies to vendors who provide Machining services such as gundrillers, EDM, and grinding. iii. Documentation and Verification Approved vendors with this control will have their work visually and/or dimensionally checked by Hardy Machine's in-house inspectors and must provide certification as to the quality of work. This control applies to Platers and Coaters. iv. Documentation and Sampling Approved vendors with this control will have their processes confirmed by a third-party on a sampling basis. For raw material vendors and heat treat vendors, this means Hardy Machine will occasionally send a test sample to an independent lab for verification of chemical and mechanical testing. b) Periodically review supplier performance. Records of these reviews shall be used as a basis for establishing the level of controls to be implemented. Supplier performance can be reported via Syspro, which records purchase orders issued and received. c) Define the necessary actions to take when dealing with supplier that do not meet requirements. When suppliers do not meet requirements, they will be issued an NCR and will be asked to rework product to meet requirements. d) Ensure where required that both Hardy Machine and its suppliers use customer-approved special process sources; e) The General Manager and the Project Manager have the responsibility for approving supplier quality systems and have the authority to disapprove the use of sources. He shall coordinate vendor audits and review finding on a regular basis. He will also periodically review vendor NCR's and determine a supplier's approval status. f) The General Manager shall determine and manage risk when selecting and using suppliers Purchasing Information Purchasing documents (Requests for Quotations and Purchase Orders) shall describe the product or service to be purchased, including where appropriate: a) Requirements for approval of product, procedures, processes, and equipment (for example, necessary calibration procedures may be sent to a grinding vendor, or heat treatment instructions may be sent to a heat-treat vendor), b) Requirements for qualification of personnel (for example, NDT Level 3 inspector qualifications for X-Ray testing), and c) Quality System requirements for a certificate of compliance (such as API specification compliance)

26 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 26 d) The identification and revision status of specifications, drawings, process requirements, inspection instructions and other relevant technical data. e) Requirements for design, test, examination, inspection, verification (including production process verification), use of statistical techniques for product acceptance by Hardy Machine and as applicable critical items including key characteristics, f) Requirements for test specimens (e.g. production method, number, storage conditions) for design approval, inspection/verification, investigation, or auditing, g) Requirements regarding the need for the supplier to: o o o o Notify Hardy Machine of non-conforming product. Obtain Hardy Machine approval for non-conforming product disposition, Notify Hardy Machine of changes in product and/or process, changes of suppliers, change of manufacturing facility location and, where required, obtain organization approval, and Flow down to the supply chain the applicable requirements including customer requirements. h) Records retention requirements, and i) Right of access by Hardy Machine, our customers, and regulatory authorities to all areas of facilities at any level of the supply chain involved and to all applicable records. This access will be to verify the supplier's quality systems, quality of work, quality records, and material specification records. Purchasing requirements for processes directly related to product quality as listed above are maintained in the job routing during requirements review (Section 7.2.2). This allows all purchasing requirements to be automatically included on purchase orders when they are issued. Purchasing requirements are reviewed prior to communication to the vendor and personnel responsibilities for the review are identified on the purchasing documents Verification of Purchased Product Hardy Machine has established and implemented an inspection process necessary for ensuring that all purchased products and services meet specified purchase requirements and maintain precision tolerances via either inspection upon delivery from the vendor or through an assurance from a certificate of compliance. The record of this inspection process will be maintained directly on the traveler and/or the Quality Control Data Sheet (Form 1).

27 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 27 The Quality Manager establishes inspection criteria that are identified on the Quality Control Data Sheet to determine the type of inspection required and the authority for release. Determining factors for inspection criteria may include: Type of product, Control exercised at the vendors' premises, and Records of performance. Inspection criteria and verification activities may include: a) Obtaining objective evidence of the, quality of the product from suppliers (such as accompanying inspection documentation, certificates of compliance, test reports, etc.) b) Inspection and audits at supplier's sites, c) Review of the required documentation, d) Inspection of products upon receipt, and e) Delegation of verification to the supplier, or supplier certification. Purchased product shall not be used or processed until it has been verified as conforming to specified requirements. Such verification shall be recorded on the traveler. When Hardy Machine utilizes test reports to verify purchased product, the data in those reports shall be acceptable per applicable specifications as listed on our purchase order. Where Hardy Machine delegates verification activities to the supplier, the requirements for delegation shall be defined on the purchase order. Where Hardy Machine's customer intends to perform verification at the vendor's premises, Hardy Machine will state the intended verification arrangements and the method of product release in the purchasing information supplied to the vendor. Where specified in the contract, the customer or customer's representative shall be afforded the right to verify at the supplier's premises and Hardy Machine's premises that subcontracted product conforms to specified requirements. Verification by the customer shall not be used by Hardy Machine as evidence of effective control of quality by the supplier and shall not absolve Hardy Machine of the responsibility to provide acceptable product, nor shall it preclude subsequent rejection by the customer.

28 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Production and Service Provision Control of Production and Service Provision Hardy Machine & Design plans and carries out production and service provisions under controlled conditions. Controlled conditions include, as applicable: a) A traveler which contains or references information that describes the product, how it routes through the shop, and what raw materials are used in the product s production (See Section ), b) The availability of work instructions to personnel performing complex or critical operations, c) The use of suitable equipment, d) The availability and use of monitoring and measuring devices, e) The use of monitoring and measuring equipment, f) The implementation of release, delivery, and post-delivery activities, g) Accountability for all product during production (e.g. part quantities, split orders, nonconforming product) - see Section below for identification and traceability, h) Evidence that all production and inspection/verification operations have been completed as planned, or as otherwise documented and authorized. A signed traveler is that evidence, i) Provision for the prevention, detection, and removal of foreign body objects. The Quality Manager is charged for checking for Foreign Body Objects before packaging and shipping product, j) Monitoring and control of utilities and supplies such as water, compressed air, electricity, and chemical products to the extent they affect conformity to product requirements. The Shop Foreman is responsible for monitoring utilities, and k) Criteria for workmanship, specified in the clearest practical way. These criteria are listed on the traveler during requirements review. The Project Manager, in conjunction with the Shop Foreman, is responsible both for scheduling work centers and vendor services and for the proper operation of production processes. During requirements review (Section 7.2.2), the Project Manager plans shall include: Process controls and control plans where key characteristics have been identified, The design, manufacture, and use of tooling so that variable measurements can be taken,

29 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 29 Identification of in-process verification points when adequate verification of conformance cannot be performed at a later stage, and Special processes. Production operations are carried out with approved data. The data shall contain, as necessary: a) Drawings, parts lists, process flow charts including inspection operations, production documents and inspection documents. These items will be listed on the shop traveler (see Section ). b) A list of specific or non-specific tools and numeric control machine programs required and any specific instructions associated with their use. The CNC programmer is responsible for providing CNC programs that list the tools required on the NC programs along with specific instructions for their use. These instructions are provided to the CNC machinists only when a job is ready. This helps to eliminate the use of out-of-date programs Production Process Verification For low quantity production runs, Hardy Machine shall inspect each part to verify that the production process, documentation, and tooling are capable of producing parts that meet requirements. For higher quantity production runs, a representative item will be inspected to verify that the production process, documentation, and tooling are capable of producing parts that meet requirements. This process shall be repeated when changes occur that invalidate the original results Control of Production Process Changes Though any employee can suggest improvements to any particular process, only the following persons can approve a process change: President, General Manager, Project Manager, Shop Foreman, CNC Programmer Any changes that require customer or regulatory authority approval will be will be accepted in accordance with contract requirements. These changes will be recorded both in the Job Folder and as a note in the electronic document storage for that product. Customers can also change production processes while in-process during order fulfillment. These changes can include drawing updates, raw material updates, or other changes to Bill-of-Material requirements. Those changes will be communicated via an updated purchase contract from the customer.

30 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 30 Changes affecting processes, production equipment, tools, and programs shall be implemented as follows: The Shop Foreman shall be notified to make sure that the traveler and the NC programs will be updated to reflect the process changes, and to make sure all machinists are aware of any inprocess changes. Any changes travelers, drawings, or other production records will need to be signed off by the General Manager or a Project Manager. Changes to NC programs will be updated in the electronic data store, and the old program will be destroyed. Changes to the traveler will be updated in Syspro to reflect the new process. Results of changes to production processes shall be assessed to confirm that the desired effect has been achieved without adverse effects to conformity to product requirements. The authorized persons listed above are responsible for checking the results and making sure the NC programs and travelers are properly updated to reflect the changes Control of Production Equipment, Tools and Software Programs Production equipment, tools, and software programs used to automate and control/monitor product realization shall be validated prior to release for production and shall be maintained and inspected periodically. Production equipment, tools and NC programs are validated by the CNC programmer. He will match programs to the drawings and specifications listed on the customer's purchase order. Once validated, he will sign the traveler. Machinists are responsible for in-process inspection of each part during production. At their discretion, they can call for a first article inspection from a QA inspector to validate production equipment, tooling, and NC programs. This first article inspection shall be documented on the Quality Control Data Sheet (Form 1). All production equipment and tooling must be stored in such a manner that it remains clean and easy to find. Hardy Machine has placed adequate shelving around the facility for the Foreman, Programmer, and Machinists to store equipment and tooling as necessary Post-delivery Support Post-delivery support shall provide, as applicable, for the a) A method of collecting and analyzing in-service data, b) Actions to be taken where problems are identified after delivery, including investigation, reporting activities, and actions on service information consistent with contractual and/or regulatory requirements, c) The control and updating of technical documentation, d) The approval, control, and use of repair schemes, and

31 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 31 e) The controls required for off-site work (e.g. Hardy Machine's work undertaken at the customer's facilities. Service operations shall be documented using the traveler system in Syspro Validation of Processes for Production and Service Provision Hardy Machine shall validate any processes for production and service provision where the resulting output cannot be verified by subsequent monitoring or measurement and as a consequence deficiencies become apparent only after the product is in use or the service has been delivered. These processes are referred to as special processes. Validation shall demonstrate the ability of these processes to achieve planned results. These processes will be listed on the traveler and will be established as: a) Defined criteria for approval of process, b) Approval of equipment and qualification of personnel, c) Use of specific methods and procedures with specific controls, d) Record maintenance, and e) Revalidation as necessary Identification and Traceability Hardy Machine identifies product at each stage of production. Once an order is received for a part, a job number is generated. That job number is carried throughout the production process to serve as identification. In addition, each individual part is serialized so that inspection records can always be matched against those parts. Acceptance authority media are controlled by passwords and signatures. Only the General Manager issues passwords for any of the electronic tools Hardy Machine uses. Physical signatures are used for other physical acceptance media. To maintain traceability throughout the product life, the following process is used: Raw material is purchased using the job number. This allows easy tracking by job at the material vendor as well as incoming receiving inspection. Through each step of the production process, the job number is maintained either by paint pen, stamping, or etching. This helps to ensure traceability. The traveler with the parts will identify product status, and the quality data sheet will reflect measurement requirements.

32 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 32 Only raw material from a single batch will be used on a single job number. If multiple batches of raw material are required to complete an order, then multiple jobs will be used to track the raw material batches. During assembly, the identity of components will be maintained because each component step will have a different job number. Syspro helps track component and assembly jobs. The Job Folder will be used to store the sequential record of production Customer Property Hardy Machine will handle customer-furnished property either provided for use or incorporation into the final product in the same manner as purchased products from vendors. This ensures that customer property is identified, verified, protected, and safeguarded. Any occurrence of loss, damage, deterioration, or unsuitability of customer property is recorded on a Non-Conformance Report (Section 8.3) and reported back to the customer. Customer property includes intellectual property, including customer furnished data used for design, production, and inspection Preservation of Product Hardy Machine preserves the conformity of product during internal processing and delivery to intended destinations. Special packaging requirements are noted on the traveler under the "Deburring, Documentation, Packaging, and Shipping" routing step. Where applicable and in accordance with product specifications and/or applicable regulations, this preservation will include the following: Identification / Marking and Labeling including safety warnings Product will be positively identified throughout the process. All product will have job numbers and serial numbers on each part (through tagging, paint marking, stamping, etc.). Any applicable safety warnings will be tagged or attached to the parts or part packaging throughout the manufacturing process Handling Product will be handled in a manner that prevents damage or deterioration, using proper handling equipment (cranes, pallet jacks, forklifts, etc.) Packaging Product will be packaged per Hardy Machine procedures or as per customer-specified requirements. Packaging will ensure product protection from damage during transport, and will make sure identification is possible without unpacking Storage Product shall be placed in designated storage areas before and after manufacture so as to prevent damage or deterioration pending use or delivery.

33 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Protection Product will be appropriately protected to prevent deterioration pending use or delivery. This will include damage-protection on all threads and critical surfaces, as well as rust-preventative on all corroding surfaces Cleaning Parts shall be free of metal shavings, chips, oil, grease, and dust when stored or packaged Prevention, Detection and Removal of Foreign Body Objects Hardy Machine personnel will be trained to check for foreign body objects before packaging parts for shipment Special handling for sensitive products All customer designs are treated as proprietary confidential trade secrets. Customer drawings and their corresponding manufactured parts will be protected from non-approved third-parties. Packaging will be opaque during storage and shipment. Parts with critical features that are prone to damage will be specially protected (such as thread protectors on API tapered threads) Shelf-Life Control and Stock Rotation All parts will be stamped with a job number that will allow Hardy Machine to verify date of manufacture, part revision level, and raw material traceability. If it is determined that inventoried product has expired, it will be immediately removed from inventory and disposed Special Handling for Hazardous Material Hazardous materials will be tagged and handled as appropriate. 7.6 Control of Monitoring and Measuring Equipment General This section sets forth the policy and procedures of Hardy Machine & Design regarding the system for calibration of measuring and test equipment used to verify the conformance of material produced to the technical and quality requirements of customer contracts. Hardy Machine uses ProGage software to help with the control of monitoring and measuring devices. This software maintains a log of all measuring devices, their calibration status, calibration logs, and is used to recall gages for calibration. Its use is further described in the following sections Equipment Identification A unique identification number shall be assigned to each item of measuring equipment and measurement standard in the calibration system. The identification may be one or more of the following: Owner's Initials appended with serial number,

34 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 34 Customer identification number, Model and Serial Number, Code Marking. This unique identification will be used in ProGage to identify the device Master Standards All Hardy Machine & Design measurement master standards are calibrated by a commercial laboratory which has been certified by the Quality Manager as being capable of performing the service in accordance with the requirements of appropriate commercial standards. Calibration of Hardy Machine & Design s standards will be supported by a properly executed certificate from the laboratory showing the nomenclature and identification number of the standard, its accuracy expressed in percentage or other suitable terms, the date calibrated, evidence that the standards used by the laboratory are traceable to the National Institute of Standards and Technology (NIST), and the environmental conditions under which our standard was calibrated. Purchase orders for calibration services will contain the following clause: Calibration must be performed and certified in a manner to satisfy the requirements of MIL-STD 45662A. Master Standards will be marked as "master" in ProGage Adequacy of Master Standards Measurement standards will have an accuracy capability of at least four (4) times as great as the devices to be calibrated and will have the stability and range necessary to perform the intended function Availability of Procedures and Equipment All procedures, records, and certificates for the calibration system will be filed in the calibration room and will be available to the customer representative for review and verification. All measuring and test equipment (and personnel to operate them) will be available for use by the customer representative at the Hardy Machine & Design facility to determine that the product conforms to contract requirements. Where necessary to ensure valid results, measuring equipment will be safeguarded from adjustments that would invalidate the measurement results and be protected from damage and deterioration during handling, maintenance, and storage Environmental Control Measuring and test equipment and measurement standards shall be calibrated and utilized in a controlled environment to the extent necessary to assure continuing required accuracy giving due consideration to temperature, humidity, vibration, cleanliness, and other controllable factors affecting precision measurement. Unless specifically exempted in the calibration procedures, all measuring and test equipment will be calibrated in the quality assurance area.

35 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 35 Prior to calibration, all measuring and test equipment will be stored in the calibration standards environment for at least 2 hours Calibration Procedures Measuring and test equipment is calibrated at regularly scheduled intervals established on the basis of stability, purpose, and degree of usage or as recommended by the manufacturer. The established interval shall be shortened by 50% when any two of three consecutive calibrations reveal an inaccurate or out-of-tolerance condition. The interval may be lengthened by 50% upon authorization by the Quality Control Manager provided that five consecutive calibrations have revealed no deficiencies in the accuracy or condition of the equipment Calibration Records An individual record will be maintained in the ProGage for the calibration of each item of measuring equipment, test equipment, and production tooling used as a media of inspection. The log will identify the applicable item of equipment by nomenclature and identification number. This record will constitute a history of the item s maintenance and accuracy. The information on the individual record includes the allowable accuracy tolerance, location of the item, calibration interval, date of last calibration and when due, by whom calibrated, the master standard against which the calibration was performed, calibration procedure number, actual values of last calibration, date of out-of-tolerance calibrations, and any adjustments or repairs made Subcontractor Control Sub-contractors will be required to furnish objective evidence of a calibration system which will control his measuring and test equipment to the degree necessary to assure conformance of the product to the technical and quality requirements of the contract Inaccurate Gage Procedures When an item of measuring and test equipment is found to be out-of-tolerance by a calibration technician, he will initiate a Non-Conformance Report (Form 3) and forward it to the Quality Manager.

36 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 36 The Quality Manager will make an analysis of the impact on the quality of products examined or tested by the equipment found to be out of tolerance, and take appropriate corrective action to correct product quality and determine if any defective material was accepted. All Quality Control Data Sheets (Form 1) will be collected that used the out-of-tolerance gauge since the last good calibration date and all jobs checked using the faulty device will be listed. The clients for those jobs will be notified for a possible fault and the need for reinspection. Significant out-of-tolerance is defined as any out-of-tolerance condition that is greater than 50% of the allowable tolerance of the device Labeling and Recall Each item of measuring and test equipment will be labeled to show the date of last calibration, by who calibrated, and the date the next calibration is due. If any measuring and test equipment is calibrated for less than full capabilities, the applicable condition will be noted on the label and in ProGage. During the first week of each month, all calibration records will be reviewed by the Quality Manager to determine: That all equipment scheduled for calibration during the previous month have been calibrated, and To schedule all equipment which is to be calibrated during the next month. ProGage will be used to automatically generate a list of gages due for calibration. If it is determined that any item is overdue for calibration, it will be called in for calibration immediately. If the item cannot be located, the Quality Manager will be notified so that appropriate action may be taken. The record for that item will reflect the missed calibration. 8 Measurement, Analysis, and Improvement 8.1 General Hardy Machine & Design has planned and implemented the monitoring, measuring, and improvement processes need to: Demonstrate conformity to product requirements, Ensure conformity to this quality systems manual, and Continually improve the effectiveness of this quality system. This includes the determination of applicable methods, including statistical techniques, and the extent of their use. Statistical or other measuring techniques may be applied to establish sampling plans for inspection and testing.

37 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Monitoring and Measurement Customer Satisfaction As one of the measurements of performance of the Quality System, Hardy Machine & Design monitors information pertaining to customer perception as to whether Hardy Machine has fulfilled customer requirements. A number of different methods are used to monitor customer satisfaction. These methods include, but are not limited to: Customer Performance Survey (Form 10) This form represents a balanced scorecard or price, delivery, quality, and service goals. Each item on the form will have equal weighting for overall grading purposes. Delivery performance, Product conformity, Customer Complaints, Corrective Action Requests. Hardy Machine will develop plans to improve customer satisfaction deficiencies as identified by these evaluations. These plans will be developed in a manner as described in Section (Preventive Action) Internal Audit Hardy Machine & Design will conduct internal audits annually to determine whether the Quality System: Conforms to planned arrangements, Conforms to the requirements of ISO9001:2008, Is effectively implemented and maintained. The General Manager is responsible for planning audits and taking into consideration the status and importance of the processes and areas to be audited, as well as the results of previous audits. The General Manager will maintain an Internal Audit Schedule for scheduling audits. The audit criteria will utilize an Internal Audit Checklist (Form 16) and Internal Audit Procedure (Form 22) that summarize the necessary documentation and procedural points highlighted in this Quality Systems Manual. Audits will be conducted more frequently based on the severity of Non-Conformance Reports. The selection of auditors and conduct of audits will ensure objectivity and impartiality of the audit process and will confirm that the auditors do not audit their own work. Internal auditors from Hardy Machine staff will be trained to the Internal Audit Procedure (Form 22) so they can perform effective audits.

38 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 38 The General Manager will use the Internal Audit checklist to describe the responsibilities and requirements for planning and conducting audits, and for reporting results and maintaining records. When non-conforming conditions are identified, a Non-Conformance Report (Form 3) is issued, and the manager responsible for the affected area or activity is requested to propose and implement a corrective action without undue delay. Implementation and effectiveness of the action are recorded and verified by a follow-up audit (See Section 8.5.2) Monitoring and Measurement of Processes Hardy Machine & Design will apply suitable methods for monitoring and, where applicable, measurement of these Quality System processes. These methods will demonstrate the ability of the processes to achieve planned results. When planned results are not achieved, corrective action will be taken, as appropriate, to ensure the conformity of the product to customer requirements. The measurement of the processes may come in the form of production data, customer surveys, customer complaints, statistical samples, and internal audits. This information may be reviewed any time there is a perceived problem with any process. However, each process will be reviewed during regularly scheduled management meetings and at the semiannual Management Review. In the event of process non-conformity, the Hardy Machine will: a) Take appropriate action to correct the non-conforming process, b) Evaluate whether the process non-conformity has resulted in product non-conformity, c) Determine if the process nonconformity is limited to a specific case or whether it could have affected other processes and products, and d) Identify and control any non-conforming product as per the process specified in Section Monitoring and Measurement of Product The Job Folder system, traveler system, measurement and test system, and calibration system constitute the inspection system of Hardy Machine. This allows for the comprehensive monitoring and measuring of product characteristics to verify product requirements. The traveler verifies that all planned arrangements have been satisfactorily completed when signed off at each step. This includes verifying that all key characteristics have been inspected or otherwise verified as conforming to specified requirements. Key characteristics are identified as any dimensioned feature on a part that can be physically measured or that can be determined to affect part function. Each machinist is responsible for analyzing the key characteristics of each part drawing and developing inspection instructions at his step in the production process. These key features will be recorded on a Quality Control Data Sheet (Form 1) with clear and complete details for all inspections and tests required by the drawing. The Quality Manager will monitor the machinists to make sure they are recording each key characteristic.

39 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 39 Each row in the Quality Data Sheet will provide evidence of conformity of acceptance criteria. They will record the characteristic to measure, acceptance criteria, and the measurement device used to verify the result. Finally, they will show actual results of measurements. The Quality Control Data Sheet will be maintained and upgraded at each sequence of events (in-process inspection). At the completion of each contract or order, the Quality Manager will review and sign the Quality Control Data Sheet. This inspection document will remain with the contract and purchase order records in the job folder after delivery. The Quality Control Data Sheet will be utilized as the standard format for inspection and testing instruction and its acceptance/rejection status. The form is designed to provide all required information is a concise, easy-to-read manner. Each Quality Control Data Sheet will contain the job number and date. Hardy Machine & Design s document control system will assure that only the latest instructions are used for inspection and testing. Product will not be used or delivered to the customer until it has been inspected or verified. When sampling inspections are specified in a contract, those specifications will be followed as stated. Sampling inspections not specified in the contract will be at the discretion of the Quality Manager based upon recognized statistical principles and appropriate for use. Hardy Machine shall ensure that all documents required to accompany the product are present at delivery. Where product is released for production use pending completion of all required measurement and monitoring activities, it shall be identified and recorded to allow recall and replacement if it is subsequently found that the product does not meet requirements Product Recall Products can be recalled if inspection equipment is found to be faulty or out of calibration since the last calibration date. Arrangements will be made with the client for the recall of all inspected jobs using the bad inspection equipment. The parts will be sent back to Hardy Machine & Design s facility for reinspection Inspection Provisions If alternative inspection procedures and equipment are desired by the Quality Control Manager during a contract, a written proposal for the use of such procedures or equipment will be submitted to the customer representative prior to their use. The proposal shall include a statement of reason(s) for why the use of alternative procedures or equipment is desirable and shall demonstrate that effectiveness is equal to or better than the contractual quality procedures Customer Source Inspections The customer reserves the right to inspect at the source any supplies not manufactured or services not performed within the Hardy Machine & Design facility. Such inspection can only be requested by or under authorization of the customer representative. All documents and referenced data for purchases

40 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 40 applying to a customer contract will be available for review by the customer representative upon request. The customer representative can also choose to have purchase requests routed to him for review prior to the issuance of a purchase order. 8.3 Control of Non-Conforming Product When an item is determined to be defective, it will be immediately identified, tagged with the Red Routing and Inspection/Reinspection Tag (Form 7) and a Non-Conformance Report (Form 3) will be issued. This will preclude the product from being accidentally used or delivered to the customer. The preliminary evaluation will be made to identify how to dispose the item: Scrap: If a determination that the part cannot be corrected, the Non-Conformance Report will be completed as such and the part will be permanently marked with a Red Routing and Inspection/Reinspection Tag and be segregated from any other material in the shop. This part will be sent to a scrap area and be marked as scrap. This material will not be used to make another part, but the material can be recycled for other uses. Rework: The item will be sent back through the standard routing until it conforms. The reworked part will be re-inspected according to the original instructions. Repair: Whatever actions are necessary to make the item conformant will be undertaken. A new traveler will be prepared to reroute the part through the necessary operations. The repaired work will be re-inspected in accordance with the original instructions. This disposition can only be used if the customer approves the deviation. Use As Is: No change will be needed to part. This disposition can only be used if the customer approves the deviation. Waiver: The item can still be used as is if the client approves a change request that allows the non-conforming product to be used. Return to Supplier: If the item s non-conformance can be traced to a vendor, it will be sent to the vendor in exchange for a new part. If the cause of the deficiency cannot be immediately determined or if the corrective action required is beyond the scope of the Inspector s authority, he will promptly notify the Quality Manager, who will initiate an investigation to determine the cause and assure that corrective and preventive action is taken to prevent recurrence and contain the effect of the nonconformity on other processes or products. If the non-conforming material is furnished by the customer, the client will be notified about the nonconforming materials. If the client requires that all of his material be returned, then the part will be sent back to him with an Inspection Tag (Form 7) and a Non-Conformance Report (Form 3). If this nonconformance will be a cause for delay, the customer will be notified.

41 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 41 Should the time and need arise, where additional parts or materials need to be manufactured to fill an order due to scrapped material, a job plan will be initiated with the same process instructions and quality/inspection requirements as was called out in the original job plan for that particular contract. The job plan number for this type of process will be the same as the original job plan with an appended dash (-) and the number one (1) (or other sequential number) to represent the same purchase order. The customer shall be notified promptly if it is discovered that a non-conforming product has been shipped, especially if it affects reliability and safety. The notification will include a description of the non-conformance, the parts affected, their serial number, their lot number, the quantity delivered, the delivery date, and the delivery ticket number. This product will be recalled, inspected, and passed through the system as any other non-conforming product. The review and evaluation for the non-conformance is carried out and the reasons are explained in the Non-Conformance Report (Form 3). The reasons can include: Bad casting or material, Tool breakdown, Machine breakdown, Programming error, Machinist Error, Inaccurate measurement by employee, Other. If it is determined that machinist training could prevent further recurrence, such training will be discussed in a management meeting. The training will be planned with the employee and carried out. If non-conformance is due to inaccurate measurement, all employee and company gages will be recalibrated Non-Conformance Records Unipoint software will be used to document non-conformance reports and their disposition. The software allows Hardy Machine to easily document: Non-conformance description, Job number, part number, and customer, Investigations as to why the non-conformance occurred, Disposition, and

42 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 42 Costing information. 8.4 Analysis of Data Hardy Machine & Design will determine, collect, and analyze data to demonstrate the suitability and effectiveness of the Quality System and to evaluate where continual improvement of the system can be made. Sources of data include, but are not limited to: Customer satisfaction reports, Conformity to product requirements, Characteristics and trends of processes and products including opportunities for preventive action, and Supplier reports. The President is responsible for identifying the need for using statistical or other measurement techniques in their departments and in other activities for which they are responsible. 8.5 Improvement Continual Improvement Hardy Machine & Design shall review and continually improve the effectiveness of the quality management system through the quality policy, quality objectives, audit results, analysis of data, corrective and preventive actions, and quality management reviews. Through the monitoring and measuring of processes, Hardy Machine & Design documents trends in quality, productivity, efficiency, and effectiveness for key product features. Trends and information found in the analysis of this data will be compared to our progress towards our quality objectives. The management team will review this information at Management Review to determine improvements to the quality system Corrective Action Hardy Machine's corrective action procedure is to meet the requirements of ISO9001:2008 Section It applies to all processes in this manual that can produce non-conformities. It is described as follows: Purpose The purpose of the Corrective Action System is to define the responsibility, authority, and processes for maintaining, implementing, and documenting nonconformities in order to prevent recurrence. Corrective actions shall be appropriate to the effects of the non-conformities encountered Responsibility and Authority The General Manager has the responsibility and authority for the administration and coordination of the Corrective Action Program for products and the processes of the Quality Control Manual.

43 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Procedure General Corrective actions are taken to eliminate the causes of nonconformity of processes, services and the Quality Management System. All corrective action investigations shall identify the action required to eliminate the cause that allowed the nonconformance to occur. Corrective action is applied to remove the cause in order to prevent recurrence of the nonconformity. Corrective actions shall be to a degree appropriate to the magnitude of problems and commensurate with the risks encountered. All corrective action activity should attempt to identify the root cause for the nonconformance and evaluate the applicability of preventive action Initiation of Corrective Action A Corrective Action Request may be initiated by any employee for: Quality Management System nonconformances reported on Internal Audits and audits by customers; Any employee recognizing an existing nonconformance in products, services or the Quality Management System; Management reviews; Customer complaints; Receipt of nonconforming products and services from suppliers and subcontractors; Management dispositions of nonconforming products and processes; Investigation of the causes of repetitive nonconformity by the customer and/or Hardy Machine dispositions Origination Corrective Action Requests (CARs) for nonconformance are submitted to the General Manager for documentation and initiation. All requests for corrective action are recorded in the unipoint Quality Toolkit as "Origination". The General Manager will: Assign an identification or tracking number to all Corrective Actions Requests. Shall convene a Review Committee to investigate and solve corrective actions. The Review Committee shall be composed of members of the Hardy Machine management team and other personnel as appropriate; Assign a target completion date; and Distributes the Corrective Action Report. Unless otherwise specified, Corrective Action Requests require response within 30 days of issuance.

44 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Review and Implementation The Review Committee charged with responsibility for the review and implementation of a Corrective Action Request: Reviews the non-conformance (including customer complaints) and determines if a short term containment or solution is required, records the decision in Unipoint under "Action Plan" and initiates the containment or short term solution activity; Investigates the causes of non-conformity relating to product, process and the Quality Management System to determine the cause, and records the results of the investigation in unipoint under "Investigation" and evaluates the need for action to ensure that nonconformities do not recur. This investigation can include the use of root-cause analysis tools. Determines and implements the corrective action needed to eliminate the cause of nonconformity and records the solution on the Corrective Action. This will be recorded under "Action Plan" in unipoint; Assures changes to documented procedures resulting from corrective actions are implemented and recorded; Applies controls to ensure that corrective action is taken and that it is effective. This will be recorded in unipoint under "Verification"; On completion of corrective action implementation, documents the results of action taken on the Corrective Action and returns it to the General Manager; Send the Corrective Action to the General Manager for review and evaluation for adequacy and applicability, and then accepted. This will be recorded in unipoint under "Reviews". If a supplier is determined to be the root-cause of the corrective action, the General Manager will be responsible for notifying them of corrective action requirements; The General Manager is responsible to follow-up the corrective action taken to ensure the action was effective. If timely and/or effective corrective actions are not achieved, the General Manager will be responsible for making specific actions to resolve it. The General Manager will also determine if additional nonconforming product exists based on the causes of the nonconformities and taking further action when required Preventive Action Hardy Machine's preventive action procedure is to meet the requirements of ISO9001:2008 Section It applies to all processes in this manual.

45 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Purpose Preventive Actions are taken to eliminate the causes of actual or potential non-conformities in order to prevent their occurrence. The purpose of this procedure is to define the responsibility, authority, and processes for preventative actions Responsibility and Authority The General Manager has the responsibility and authority for the administration and coordination of the Preventive Action Program for products and the processes of the Quality Control Manual Procedure General Preventive actions are taken to eliminate potential causes of nonconformity of processes, services and the Quality Management System. All preventive action investigations shall identify potential nonconformances. Preventive Action efforts shall be appropriate to the effects of the potential problems Initiation of Preventive Action Preventive actions are initiated when quality performance data indicate trends of decreasing quality capability and/or effectiveness of the quality system. The initiation of preventive action may come from any individual that may see the potential of a nonconformity or any other ideas that may lead to preventive action. The General Manager is responsible for collecting, compiling and reviewing available sources of pertinent information such as the following: Product nonconformity reports; Service records and reports; Equipment maintenance records; Customer complaints; Quality system audit records; and Through group meetings and team efforts, if necessary. A Preventive Action Request may be from: Customer Complaints, Receipt of non-conforming products and services from vendors, Dispositions of non-conforming products, Internal Audit, or

46 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 46 Management Review Origination Preventive Action Requests (CARs) for nonconformance are submitted to the General Manager for documentation and initiation. All requests for preventive action are recorded in the unipoint Quality Toolkit as "Origination". The General Manager will: Assign an identification or tracking number to all Preventive Actions Requests. Shall convene a Review Committee to investigate and solve corrective actions. The Review Committee shall be composed of members of the Hardy Machine management team and other personnel as appropriate; Assign a target completion date; Distribute the Preventive Action Request. Unless otherwise specified, Preventive Action Requests require response within 30 days of issuance Review and Implementation The Review Committee charged with responsibility for the review and implementation of a Preventive Action Request: Investigates the cause(s) of a potential nonconformity relating to service, process and the Quality Management System and records the results in unipoint under "Investigation"; Uses appropriate sources of information such as records of processes and production activities which affect service quality, concessions, audit results, quality records, inspection reports and customer complaints to detect, analyze and eliminate potential causes of nonconformity; Determines the steps needed to eliminate the cause of the potential nonconformity, implements any action needed, and records the results of action taken. This shall be recorded in unipoint under "Action Plan". Ensures that changes to documented procedures resulting from preventive actions are implemented and recorded. This shall be recorded in unipoint under "Verification"; Documents all problem solving and decision making factors used in the development of the preventive action solution and attach to the Preventive Action Report; and On completion of preventive action implementation, documents results on the Preventive Action Report and returns the completed Preventive Action Report and attachments (as necessary) to the General Manager to review the preventive action taken. This shall be recorded in unipoint under "Reviews".

47 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 47 If preventive action is evaluated as effective, the General Manager reviews Preventive Action Report to ensure documentation for preventive action is complete and effective and closes the Preventive Action Report. The completed Preventive Action Report is retained as a quality record in unipoint.

48 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 48 9 Documents and Records Reference 9.1 Quality Records Matrix Element Record Location Index Minimum Disposition Retention Management Review QA Shelf Date Forever Do not dispose Training Records QA Shelf Employee Name 1 yr Dispose Upon Employee Dismissal 6.3 Infrastructure Decisions Management Review Date Forever Do not dispose Manual Quote Quote File Customer / 1 yr Destroy Part Number Electronic Computer File Customer / 1 yr Destroy Quote Part Number Customer PO Job Folder Job Number 10 yrs Destroy and Order Fulfillment Approved QA Shelf Vendor 1 yr Destroy Vendors List Vendor Survey QA Shelf Vendor 1 yr Destroy / Qualification 7.6 Calibration Procedures QA Shelf / Document Control Calibration Number 1 yr Do Not Dispose Internal Audits QA Shelf Date Forever Do Not Dispose

49 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Referenced Forms Original versions of the forms listed below are maintained in the electronic document control system. Form Number Form Title Record Location 1 Quality Control Data Sheet Job Folder / Online Measurement System 3 Non-Conformance Report Electronic Quality Toolkit - Unipoint 4 Personnel Qualification Personnel Files Record 5 Calibration of Measuring Electronic Gage Database - ProGage Equipment 6 Calibration Log Electronic Gage Database ProGage 7 Inspection Tags QA Gage Crib 8 Employee Training Form Personnel Files 10 Customer Performance QA Shelf Evaluation 11 Supplier Evaluation Form QA Shelf 12 Certificate of Compliance Job Folder 13 Employee Acknowledgement Personnel Files Statement 14 Management Review Results QA Shelf 15 Internal Audit Results QA Shelf 16 Internal Audit Checklist QA Shelf 17 ISO Training Certificate Personnel Files 19 Organization Chart Electronic Document Control Unipoint 20 Quality Manual Electronic Document Control Unipoint 21 Quality Manual Revision Log Electronic Document Control Unipoint 22 Internal Audit Procedure Electronic Document Control Unipoint 23 Approved Vendor List QA Shelf

50 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Organization Chart An updated organization chart is available as Document 19 in the document control database Job Descriptions Job descriptions summarized below represent the quality aspect of these jobs President The President presides over corporate board meetings and management review committee meetings. The President is ultimately responsible for providing the means to create and implement processes to fulfill the quality objective General Manager The General Manager reports directly to the President. He is responsible for: Responding to customer Requests for Quotation, All procurement activities, All production and production-related activities, Personnel, Resources, Distribution and maintenance of this quality systems manual, and The maintenance of purchasing records Project Manager The Project Manager reports to the General Manager. The general responsibility of a Project Manager is to manage the Product Realization process on a per-order basis (Section 7.1). He is responsible for: Contract review, All procurement activities related to the order, All production activities related to the order, Scheduling orders on the factory floor in conjuction with the Shop Foreman, Additionally, Project Managers have the following responsibilities in the Quality department: Calibration, maintenance, and records for all company owned measuring and inspection instruments and equipment, and Inspection of all vendors for compliance with customer specifications.

51 Quality Systems Manual Hardy Machine & Design Rev. 015 Page ISO Auditor The ISO Auditor reports the General Manager. His is responsible to conduct internal quality audits Quality Manager The Quality Control Manager reports directly to the General Manager. He is vested with the organization freedom to identify problems impacting quality and to effect satisfactory corrective measures to prevent reoccurrence. His responsibilities include: Inspection of all incoming material for proper dimensions, quality, type, documentation, correct traceability markings, and disposition of material documentation, In-process inspection during manufacturing, Final inspection of manufactured goods, Inspection reports, maintenance reports, and document control for those reports, Quality Inspector The Inspector reports to the Quality Manager. Responsibilities include: Calibration, maintenance, and records for all company owned measuring and inspection instruments and equipment. Inspection of all incoming material for proper dimensions, quality, type, documentation, correct traceability markings, and disposition of material documentation, In-process inspection during manufacturing, Final inspection of manufactured goods, Inspection reports, maintenance reports, and document control for those reports, Machine Shop Foreman The Machine Shop Foreman reports to the General Manager. He is responsible for the management of all machine shop-wide production, including the scheduling and supervision of all machinists activities. These responsibilities include: Maintaining all facets of the machine shop for serviceability, Supervising the loading and unloading of material, Coordinating with the Quality Control Manager to meet customer requirements, Expediting all operations to maximize efficiency and timely delivery of customer orders, and

52 Quality Systems Manual Hardy Machine & Design Rev. 015 Page 52 Coordinating vendors to ensure the timely delivery of customer orders Fabrication Shop Foreman The Fabrication Shop Foreman reports to the General Manager. He is responsible for the management of all fabrication shop-wide production, including the scheduling and supervision of all fabrication activities. These responsibilities include: Maintaining all facets of the fabrication shop for serviceability, Supervising the loading and unloading of material, Coordinating with the Quality Control Manager to meet customer requirements, Expediting all operations to maximize efficiency and timely delivery of customer orders, and Coordinating vendors to ensure the timely delivery of customer orders Treasurer The Executive Secretary reports directly to the President. She is responsible for all financial statements, personnel and benefit data, employee training coordination, and other administrative functions as required CNC Programmer The CNC programmer reports to the Machine Shop Superintendent. He is responsible for programming all CNC work. He also assures that drawing numbers and revision numbers are up-to-date and match the information on the job traveler and CNC program. He transfers the programs to the CNC s, select tooling to be used, and helps the machinists set up their machines Machinist The CNC Machinist reports to the Machine Shop Superintendent. He is responsible for the evaluation of tooling requirements, proving the CNC program, set up, and the machining of material to specifications. He also is responsible for in-process inspection of his parts and can provide first-article inspection for other CNC machinists. Finally, he can also train other operators as necessary Code Welder The Code Welder reports to the Fabrication Shop Superintendent. He is certified by professional society to provide high quality welding work. They are used for brazing, cutting, joining, and forming material to specifications as well as in-process inspection of their work Pipe Fitter The Pipe Fitter reports to the Fabrication Shop Superintendent. He is used as an assistant to the Code Welder to provide grinding, spraying, and fitting work as well as helping the Code Welder test and inspect welds.

53 Quality Systems Manual Hardy Machine & Design Rev. 015 Page Shipping & Receiving Shipping and Receiving activities are directed by the General Manager in conjunction with the Quality Control Manager. Activities include: Shipping: Parts identification (stenciling, stamping, tagging, etc.), protection, packaging, crating, and securing of customer parts for delivery to the customer, loading and delivery of those parts and documenting their receipt by the customer. Receiving: Picking up material from vendors or unloading customer material from transports, verification of items with a receiving ticket (for correct material, size, and quantity), presentation of shipping documents and/or material test reports to the Quality department for verification and filing Maintenance & Cleaning The Shop Superintendents are responsible for maintenance and cleaning in their own facilities. The activities include: Checking and maintaining fluid levels in equipment (such as trucks and forklifts), Maintain restroom facilities, ensuring proper supplies, and the maintenance and cleaning of office facilities Management Review Committee The Management Review Committee is minimally composed of the President, the Executive Secretary, the General Manager, the Quality Control Manager, and the Superintendents. This committee meets regularly to discuss and improve technical matters of special concern to Hardy Machine & Design including, but not limited to: Product improvement, Training needs, Customer satisfaction survey results, Review of project progression at certain milestones, and Any other matters a member of the committee may deem warranted. The Executive Secretary both documents and files the minutes of the Management Review Committee Meetings. 11 Revision History Revision history for this document is stored in Unipoint Document Control under Document #21.