[Federal Register: August 9, 2000 (Volume 65, Number 154)]
[Notices]               
[Page 48714-48716]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09au00-78]                         

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GENERAL ACCOUNTING OFFICE

 
Fastener Quality Act Amendments Act of 1999; Statutorily Required 
Study

AGENCY: General Accounting Office.

ACTION: Notice of inquiry; request for comments.

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SUMMARY: The General Accounting Office is requesting interested parties 
to provide information for a report to Congress on any changes that 
manufacturers, importers, distributors, or retailers of fasteners have 
made as a result of the ``small lot'' exemption clause of the Fastener 
Quality Act Amendments Act of 1999 (FQAAA). Fasteners include metallic 
screws, nuts, bolts, studs, or load-indicating washers; and 
manufacturers, importers, distributors and retailers make up the 
fastener industry. The FQAAA exempts those fasteners that are ``a part 
that is ordered for use as a spare, substitute, service, or replacement 
part, unless that part is in a package containing more than 75 of any 
such part at the time of sale, or a part that is contained in an 
assembly kit.'' We refer to both exemptions as the ``small lot'' 
exemption. The FQAAA requires GAO to submit a report to Congress 
``describing any changes in industry practice resulting from or 
apparently resulting from'' the enactment of the small lot exemption; 
we expect to use information from your comments in this report.

DATES: Comments must be received by November 30, 2000.

ADDRESSES: Send a copy of any comments or examples of changes in 
industry practice to the U.S. General Accounting Office, General 
Government Division, Room 2908, 441 G St., NW., Washington, DC 20548, 
Attention: Ms. Theresa Roberson. Submit electronic comments and other 
data to fasteners@gao.gov. See SUPPLEMENTARY INFORMATION for file 
formats and other information about electronic filing.

FOR FURTHER INFORMATION CONTACT: Theresa Roberson, 202-512-3431, e-
mail: robersont.ggd@gao.gov, or Al Stapleton, 202-512-3418, e-mail: 
stapletona.ggd@gao.gov.

SUPPLEMENTARY INFORMATION: Metallic screws, nuts, bolts, studs or load-
indicating washers are collectively known as fasteners. Sec. 3(6)(B) of 
the Fastener Quality Act Amendments Act of 1999 (FQAAA), Pub. L. 106-
34, amended the Fastener Quality Act (FQA), Pub. L. 101-592, by adding 
the small lot exemption quoted above. Congress was concerned that the 
small lot exemption created a potential loophole for members of the 
fastener industry to circumvent the law's requirements and sell unsafe 
fasteners either in packages of 75 or fewer or in assembly kits. This 
concern led Congress to include sec. 12 in the FQAAA requiring GAO to 
prepare a report to Congress describing any changes in fastener 
industry practice ``resulting from or apparently resulting from'' the 
small lot exemption. The report is to be issued not later than 2 years 
after enactment of the FQAAA, June 8, 2001. This notice asks interested 
parties to provide information on any changes in fastener industry 
practice resulting from or apparently resulting from the small lot 
exemption. We expect to use information from your comments in our 
report.

Background

    In the late 1980s, congressional hearings showed that poor quality 
or mislabeled fasteners might have posed a threat to public safety. The 
Defense Supply Center (DSC), which supplies fasteners to the armed 
services, found its inventory contained over 30 million ``bogus'' 
fasteners and Army depots contained another 2.6 million counterfeit 
fasteners. Similarly, the National Aeronautics and Space Administration 
(NASA) found substandard fasteners in space shuttle equipment and six 
of its fastener vendors were found to have inadequate quality control 
systems.
    As a result of the evidence presented at these hearings, Congress 
enacted the FQA in 1990. This law imposes a number of requirements on 
manufacturers, distributors, importers, and others that make and sell 
fasteners. To prevent unsafe fasteners from entering the U.S. market, 
the law requires persons who manufacture and sell fasteners covered by 
the Act to, among other things, assure that they meet applicable 
standards and specifications through laboratory testing. The Secretary 
of Commerce has overall responsibility for the law. Within Commerce, 
the National Institute of Standards and Technology (NIST) is 
responsible for implementing regulations and for accrediting testing 
laboratories, and the Bureau of Export Administration (BXA) is 
responsible for enforcing the law. Major concerns over

[[Page 48715]]

this law's potential burden on the fastener industry delayed the 
Department of Commerce's implementation of final regulations for nearly 
a decade.
    A manufacturer's costs for laboratory testing--on a per fastener 
basis--increase as the quantity of fasteners sold decreases. For 
example, fasteners sold or imported in lots of 100 will have a higher 
per-fastener cost for testing than lots of 1,000 or 10,000. Concerns 
over high testing costs for small lots led Congress to amend the FQA in 
1999 to exempt from testing those fasteners that are ordered for use as 
spare, substitute, service, or replacement parts in packages containing 
75 or fewer items, or parts contained in assembly kits. We refer to 
both exemptions as the ``small lot'' exemption.
    The small lot exemption was included in the 1999 amendments to FQA 
in response to concerns from industries that use fasteners, 
particularly foreign automobile manufacturers. These users were 
concerned that fastener manufacturers' compliance costs for laboratory 
testing and recordkeeping could make fasteners purchased in small lots 
for service repairs and assembly kits prohibitively expensive if they 
were subject to the testing requirements of the FQA. In turn, these 
higher testing costs could lead fastener manufacturers either to stop 
selling fasteners in small lots or to continue offering them for sale 
but at a price so high that users might stop buying them and instead 
substitute lower quality, lower cost, ``hardware store'' fasteners. 
Such substitutes could result in fastener failures in the end-users' 
products and weakening public safety rather than improving public 
safety as the law intended.
    Congress was concerned that the small lot exemption created a 
potential loophole for fastener manufacturers to circumvent the FQA's 
requirements. This concern led Congress to include sec. 12 in the FQAAA 
requiring GAO to prepare a report to Congress describing ``any changes 
in industry practice resulting from or apparently resulting from'' the 
small lot exemption.

Changes in Treatment of Small Lots Sought

    Two potential types of changes in industry practice as a result of 
the small lot exemption are: (1) Increased marketing, distribution, and 
sale of safe, properly labeled fasteners manufactured after December 6, 
1999, in packages of 75 or fewer or in an assembly kit to avoid the 
costs of complying with the Act as required of larger lots; and (2) 
increased marketing, distribution, and sale of poor quality, unsafe, or 
mislabeled fasteners manufactured after December 6, 1999, in packages 
of 75 or fewer or in an assembly kit to circumvent the testing 
requirements in the Act that would expose the mislabeling. For example, 
a manufacturer could use less expensive raw materials or perform tests 
less frequently for fasteners meeting the small lot exemption.
    For example, if a farm equipment company routinely bought fasteners 
from a particular manufacturer in packages of 500 but after December 6, 
1999, could only buy those fasteners in packages of 75 or fewer, then 
we would like the farm equipment company to report this change in 
fastener industry practice to us. As another example, if a railroad 
company routinely bought assembly kits from a particular manufacturer 
that contained safe, properly labeled fasteners but after December 6, 
1999, those assembly kits contained unsafe or mislabeled fasteners, 
then we would like the railroad company to report this change in 
fastener industry practice to us.
    For these and other examples in which an interested party believes 
that fastener industry practice has changed due to the small lot 
exemption, we would like: (1) As complete a description as possible of 
the practice before and after December 6, 1999; (2) why the change in 
practice appears to be related to the small lot exemption as opposed to 
other factors; (3) whether the fasteners involved were manufactured 
before or after December 6, 1999; (4) any data or references to sources 
of data that would provide evidence of how widespread such changes in 
industry practice may be; and (5) the name and phone number of a person 
we can contact for additional information or clarification. We are 
seeking to obtain broad input from any interested party, including 
those in the government procurement community, the fastener industry 
(manufacturers, importers, distributors, retailers), companies large 
and small that purchase fasteners to assemble various products, and 
private individuals.
    Our report is to be issued not later than 2 years after the 
enactment of the 1999 amendments to the FQA, June 8, 2001.

Types of Fasteners Covered by the Act

    The following questions will help interested parties identify only 
those changes in industry practice that involve fasteners that fall 
within the small lot exemption. Some of the information may be found on 
the fasteners themselves or on their packaging.

    1. Is the fastener a screw, bolt, nut, stud, or load-indicating 
washer?
    2. Is the fastener made of metal?
    3. Does the fastener have external or internal threads?
    4. Is the nominal diameter of the fastener 6mm or \1/4\ inch, or 
greater?
    5. Was the fastener through-hardened or represented as meeting a 
consensus standard that calls for through-hardening?
    6. Was the fastener grade identification marked or represented as 
meeting a consensus standard that calls for grade identification 
marking?

    If you answered ``YES'' to ALL of questions 1 through 6, continue 
to questions 7 through 11. Otherwise STOP, because any changes in 
fastener industry practice related to these fasteners is not to be 
included in the GAO report.

    7. Is the fastener sold as part of an already assembled product, 
subassembly, or component?
    8. Is the fastener grade marked 307A or manufactured in accordance 
with ASTM standard F432?
    9. Is the fastener Federal Aeronautics Administration approved for 
use on an aircraft or by a foreign airworthiness authority under parts 
21.29, 21.500, 21.502, or 21.617 of title 14 of the Code of Federal 
Regulations?
    10. Is the fastener manufactured under a fastener quality assurance 
system (such as ISO 9000) in accordance with the FQA?
    11. Is the fastener manufactured only to a proprietary standard?

    If you answered ``NO'' to ALL of questions 7 through 11, continue 
to questions 12 and 13. Otherwise STOP, because any changes in fastener 
industry practice related to these fasteners are not to be included in 
the GAO report.

    12. Is the fastener for use as a spare, substitute, service, or 
replacement part and in a package of 75 or fewer at the time of sale? 
(Continue to question 13.)
    13. Is the fastener part of an assembly kit for another product? 
(Continue to question 14.)

If you answered ``YES'' to EITHER question 12 or 13, any changes in 
industry practice related to these fasteners ARE to be included in the 
GAO report.
    For all fasteners that met ONE OR MORE of the requirements in 
questions 12 or 13, answer questions 14 and 15 because any changes in 
industry practice related to these fasteners fall within the small lot 
exemption.


[[Page 48716]]


    14. Can you determine the date the fastener was manufactured? (If 
yes, notify GAO of the date.)
    15. Have there been any changes in fastener industry practice 
resulting from or apparently resulting from the small lot exemption? 
(Report all such changes in industry practice to the GAO address 
above.)

Document Submission

    Do not send original documents, including photographs or graphics, 
in the mail because they cannot be returned.

Electronic Access and Filing

    This notice is available on GAO's website at http://www.gao.gov 
under the Fastener Quality Act Amendments Act of 1999.
    You may submit comments and data by sending electronic mail (email) 
to: fasteners@gao.gov. Please include the name and phone number of the 
person we should contact for clarification or additional information.
    Email messages are encouraged but attachments to email messages are 
discouraged because of the possibility of transmitting computer 
viruses. If you believe such attached files are necessary to provide 
the requested information, please send them in ASCII or Microsoft Word 
format. No graphics should be sent through email, but copies of 
graphics may be sent to the address in the ADDRESSES section at the 
beginning of this document.

    Authority: 15 U.S.C.A. 5402 note.

    Dated: August 3, 2000.
Michael Brostek,
Associate Director, General Government Division.
[FR Doc. 00-20073 Filed 8-8-00; 8:45 am]
BILLING CODE 1610-02-P