Chapter 10

Receiving, Inspection, Acceptance Testing and Acceptance

or Rejection
Table of Contents

Receiving, Inspection, Acceptance Testing and Acceptance or Rejection........................1

Chapter 10 ........................................................................................................................3
Receiving, Inspection, Acceptance Testing and Acceptance or Rejection........................3
Overview ...........................................................................................................................3
Introduction.....................................................................................................................3
Contents .........................................................................................................................3
Topic 1 General Process for Taking Possession of Goods Purchased..........................4
10.1.0 Receiving process ..............................................................................................4
10.1.2 Eliminate the risk of error....................................................................................4
10.1.3 Packaging and shipping standards.....................................................................5
10.1.4 Shipping multiple containers...............................................................................5
10.1.5 Timely release of purchasing documents ...........................................................5
10.1.6 Substitution of goods ..........................................................................................5
10.1.7 Resolving disputes when state pays shipping ....................................................5
10.1.8 Follow-up on open orders...................................................................................5
Topic 2 Receiving Goods, Non-IT and IT .......................................................................6
10.2.0 Questions to consider when receiving goods .....................................................6
10.2.1 Standard receiving package ...............................................................................6
10.2.2 Packing slip ........................................................................................................6
10.2.3 Receiving stock ..................................................................................................7
10.2.4 STD.106 signature authority...............................................................................7
10.2.5 Receiving partial deliveries.................................................................................7
10.2.6 Receiving goods at field locations ......................................................................8
10.2.7 Need for complete receiving documentation ......................................................8
10.2.8 Recom-mendations ............................................................................................9
10.2.9 File documentation .............................................................................................9
Topic 3 Inspection of Goods ........................................................................................10
10.3.0 Inspection, acceptance and rejection standards ..............................................10
10.3.1 Inspecting a shipment.......................................................................................10
10.3.2 Conduct timely inspections...............................................................................10
10.3.3 Partnering inspections ......................................................................................10
10.3.4 Installation checklist..........................................................................................10
10.3.5 Documenting the results...................................................................................11
Topic 4 Acceptance Testing and Acceptance ..............................................................12
10.4.0 Acceptance testing ...........................................................................................12
10.4.1 Documenting the criteria...................................................................................12
10.4.2 IT software acceptance language.....................................................................12
10.4.3 Acknowledging successful acceptance testing.................................................12
Topic 5 Rejecting Non-Conforming Goods ..................................................................13
10.5.0 Process for rejection of goods ..........................................................................13
10.5.1 Timely supplier notification ...............................................................................13
10.5.2 Returned Stock Report (STD. 108) ..................................................................13
10.5.3 Suppliers return authorization..........................................................................14
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 Topic 6 Supplier Performance......................................................................................15
10.6.0 Documenting performance ...............................................................................15
10.6.1 Supplier Performance Report (SPR) ................................................................15
10.6.2 Access to information .......................................................................................15
Topic 7 Asset Management .........................................................................................16
10.7.0 Securing assets ................................................................................................16
10.7.1 Physical control over assets .............................................................................16
10.7.2 Identification and tagging..................................................................................16
10.7.3 Property control ................................................................................................16
10.7.4 Surveyed property ............................................................................................16
10.7.5 Lost, stolen, or destroyed property ...................................................................17
10.7.6 Replacing lost, stolen or destroyed property ....................................................17
10.7.7 Software disposal .............................................................................................17
Topic 8 Receiving Service Deliverables .......................................................................18
10.8.0 Accepting or rejecting services .........................................................................18
10.8.1 Maintenance services.......................................................................................18
10.8.2 Tracking maintenance services ........................................................................18
10.8.3 Creating history ................................................................................................18

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 Chapter 10
Receiving, Inspection, Acceptance Testing and Acceptance
or Rejection
Overview

Introduction This chapter describes the processes of receiving, inspecting, accepting

and/or rejecting goods regardless of the purchasing type, non-IT or IT goods
and services, acquired through the purchasing authority procurement
process.

Also included in this chapter is a discussion of asset management and the

process of determining whether or not a service deliverable is acceptable.

Contents This chapter contains the following topics:

Topic See Page

Topic 1 General Process for Taking Possession of
Purchased Goods 4
Topic 2 Receiving Goods, Non-IT and IT 6
Topic 3 Inspection of Goods 10
Topic 4 Acceptance Testing and Acceptance 12
Topic 5 Rejecting Non-Conforming Goods 13
Topic 6 Supplier Performance 15
Topic 7 Asset Management 16
Topic 8 Receiving Service Deliverables 18

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Topic 1 General Process for Taking Possession of Goods
Purchased

10.1.0 Each department determines whether or not the goods or services received
Receiving are acceptable and conform to all of the terms and conditions of the
process purchase document. The entire receiving process consists of:

Term Definition Example

Receiving The act of taking possession of A worker on the receiving dock who
goods in order to stage them for signs for goods provides the
inspection or place them into acknowledgement that the goods were
inventory. delivered, not that they were
accepted.
Inspecting The act of examining goods that The U. S. State Department of
have been delivered to determine Agriculture or the California
conformance to what was ordered via Department of Agriculture inspects
the purchase document. In some fresh produce and provides a
cases, the acquisition may require certification of inspection to the
specialized skills or expertise in purchasing institution.
examining the goods to determine
conformance.
Acceptance The act of testing what is purchased, A department has purchased a printer.
Testing either all items delivered, or the first The solicitation document identified a
item delivered or by random 30-day acceptance-testing period,
sampling of some or all items during which the printer would be
delivered. Testing determines what required to run error-free from the first
is purchased is in substantial accord day of installation.
with the contract and suppliers and/or
manufacturers published technical
specification and performs at a
satisfactory level.
Acceptance The legal act of documenting that the Completing an inspection or
goods and/or services conform to the performance test, the department
requirements of the purchase provides the supplier a notification
document terms and conditions. letter confirming that the
inspection/test has occurred, the
equipment passed the inspection/test
and the department accepts the
product

10.1.2 Departments should maintain sufficient separation of duties in order to

Eliminate the reduce the risk of error or fraud in their purchasing program. No one person
risk of error should control all key aspects of an entire transaction or event. Refer to
Chapter 1, Purchasing Authority, Topic 4.

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Topic 1 General Process for Taking Possession of Goods
Purchased, Continued

10.1.3 The DGS/PD General Provisions (GSPD-401 Commodities and GSPD-

Packaging 401IT) describes to suppliers how goods will be packaged and shipped to a
and shipping State facility. Any special packaging and shipping requirements and/or
standards instructions over and above the standard provisions must be documented in
detail within the purchase document.

10.1.4 Article 12 of both versions of the General Provisions instructs a supplier

Shipping shipping multiple containers to identify the shipments as follows:
multiple Identify the number of the container and the total number of containers in
containers the shipment; and
Identify the number of the container in which the packing slip has been
enclosed.

10.1.5 Timely Buyers must promptly release fully executed and properly approved
release of purchase documents to appropriate personnel involved in post-award
purchasing activities such as receiving shipments, accepting goods or authorizing
documents payments. These personnel should have a current, complete and accurate
purchase document to compare shipments received to what was ordered.
Refer to Chapter 10 and Chapter 11 for additional information.

10.1.6 Receiving staff must ensure that the goods delivered to the department
Substitution match in every detail to that described on the purchase document and
of goods immediately notify the buyer when the products do not match the purchase
document.

Product substitutions, over shipments or under shipments must not be

accepted without being properly documented. A purchase document
amendment must be executed. Refer to Chapter 8 Purchase Document,
Topic 7 for information on processing a purchase document amendment.

10.1.7 DGS/PD Transportation Management Unit (TMU) shall be contacted at

Resolving (916) 573-2203 if a department encounters disputes with freight carriers or if
disputes filing lost, over, short or damaged shipment claims against shipping agents
when state when the state pays for shipping. Refer to SAM section 3861 for additional
pays shipping information.

10.1.8 Follow- Departments policies and procedures shall provide a means for buyers and
up on open receiving staff to follow up on purchases of goods and services ordered and
orders not yet received.

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Topic 2 Receiving Goods, Non-IT and IT

10.2.0 In accordance with SAM section 3861, receiving staff should always consider
Questions to the following questions before taking receipt of any shipment:
consider Is it for this department?
when Is it damaged?
receiving Is the piece count correct?
goods
In addition, the following questions should also be considered when receiving
goods on behalf of the department:
Is delivery significantly late, unsatisfactory or incomplete?
Does the item comply with the specifications and packaging requirements
as defined by the contract, General Provisions or any special provisions of
the order?
Does the delivery require further inspection by another more qualified
person?
Have all the terms listed on the purchase document been met?

10.2.1 A standard receiving package should, at a minimum, contain the following

Standard documentation and be distributed to both the accounting and purchasing
receiving offices for payment and procurement file documentation:
package The invoice or packing slip
The receiving copy of the purchase document
A completed Stock Received Report (STD.106)

Note: If the freight terms required the consignee to pay the shipping costs
(FOB Origin), the bill of lading/delivery receipt verifying shipping costs
must be included as part of the receiving documentation.

10.2.2 Packing slips must be included in all shipments received by a department. At

Packing slip a minimum and in accordance with the standard States General Provisions,
the supplier must provide the following information on the packing slip to
ensure departmental receiving staff can verify products being acknowledged
as received:
Purchase document number as issued by the department
Item number
Quantity and unit of measure
Product part number
Description of the goods shipped

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Topic 2 Receiving Goods, Non-IT and IT, Continued

10.2.3 In accordance with SAM section 8422.20, departmental receiving staff must
Receiving prepare a Stock Received Report (STD.106) or may use an approved
stock purchase document to record receiving information at the time goods are
received, regardless of being designated as non-IT or IT goods. When a
copy of the purchase document is used as a stock received report, the
person checking the goods will write in the date received, the quantity
received, and note any defect in condition. The original stock received report
or the purchase document must be forwarded to the accounting office and a
copy provided to the buyer to file in the procurement file on the day the
goods are received.

The STD.106 will be stamped or similarly designated as complete when the

order is completely filled. Completely filled is determined by carefully
checking the quantity, description, and condition of the goods.

Click here to access the STD.106.

10.2.4 The staff responsible for checking and taking custody of the goods should
STD.106 sign the receiving document either the STD.106 or the approved purchase
signature document. If the STD.106 signatory is not the person who physically
authority checked and took possession of the goods, then whoever does sign the
STD.106 must take precautionary measures to assure that the goods were
actually received and checked before signing.

10.2.5 If a department elects to accept partial deliveries, a photocopy of the

Receiving approved purchase document may be used as a stock received report.
partial When using the purchase document as a stock received report, the receiving
deliveries staff checking the goods will write the:
Date received
Quantity received
Note any defect in condition.

This process is followed for each partial shipment received through

completion. The last stock received report for an order must be stamped or
designated as Complete when the order is completely filled.

Note: DGS/PD recommends that receiving staff notify the buyer whenever a
purchase is received as a partial delivery if the purchase transaction
did not state whether or not partial deliveries are acceptable. Partial
delivery documentation should be provided to the buyer on a timely
basis to allow for any necessary communications between the buyer
and the supplier to occur.

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Topic 2 Receiving Goods, Non-IT and IT, Continued

10.2.6 Departments allowing goods to be delivered at locations other than a

Receiving headquarters site shall develop policies and procedures to inform pre-
goods at field determined field staff of their responsibilities.
locations
Staff assigned receiving duties in outlying locations will be responsible for
preparing/compiling and providing documentation of the following:
Shippers bill of lading and delivery receipt is correct.
Unit count noted on the bill of lading/shipping receipt matches the units
actually delivered.
When damage is evident, determine if the supplier or the carrier caused it.
Document the following information and route to the headquarters contact
person:
Contact name and phone number of person receiving goods.
Purchase Order number.
Documentation of what was actually delivered, verified to the purchase
document, with clear notation and explanation of any discrepancies or
partial shipments.
Signature of receiving employee.
Perform a timely inspection of received goods and report any issues
according to departmental policies and procedures directly to the
purchasing authority staff.

Note: Buyers are advised to provide receiving staff in field locations with
purchase documents in a timely manner and review any special
instructions directed by department policies and procedures to assist
in accurately and efficiently receiving goods.

10.2.7 Need The receiving package documentation initiates the payment process, as
for complete accounting staff uses this documentation to reconcile against the purchase
receiving document and supplier invoice. This documentation also provides the
documentation material necessary for the buyer to perform any post-award activities,
including closing out the purchase or conducting follow up activities with the
supplier regarding outstanding or incorrect deliveries.

Failure to provide all required documentation and follow all related policies
and procedures ultimately delays supplier payments unnecessarily and could
result in the department paying late payment penalties.

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Topic 2 Receiving Goods, Non-IT and IT, Continued

10.2.8 DGS/PD recommends receiving personnel to:

Recom- Keep purchase documents on file until suppliers have met all obligations
mendations and deliveries. This is particularly important when accepting any partial
deliveries or staggered deliveries over a period of time or in future fiscal
years.
Report immediately to the buyer identified on the purchase document any
problems or questions in delivery, receipt or discrepancies in equipment
received.

10.2.9 File Click here to access a post award file documentation listing.
documentation

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Topic 3 Inspection of Goods

10.3.0 The State has standard inspection, acceptance and rejection requirements
Inspection, as described in the General Provisions for non-IT (Article #16) and IT (Article
acceptance #17) entitled Inspection, Acceptance and Rejection to ensure these
and rejection activities are conducted in accordance with State requirements.
standards

10.3.1 Departmental receiving and/or designated staff (dependent upon the goods
Inspecting a received and whether or not staff with specialized expertise is necessary),
shipment should, upon acknowledging receipt of an order, conduct an inspection for
the following minimum conditions:
Verify that what was ordered conforms to purchase document
documentation (Statement of Work, specifications, attachments, etc.),
including the product description, model, brand and product numbers.
Verify the quantity ordered against the quantity shipped or delivered.
Inspect for damage or breakage.
Check for operability/functionality.
Confirm instructions regarding special handling or packaging were
followed.
Verify that the unit of measurement count is correct (e.g. if the unit of
measurement on the purchase document is one dozen, count 12 in the unit
package).
Verify that delivery documentation (packing slip, certifications, etc.) is
acceptable.
Verify that packaging integrity is preserved (no leakages, damages, etc.).
Verify that perishable items are in good condition and expiration dates have
not been exceeded.

10.3.2 Inspections should be completed within a reasonable amount of time. If a

Conduct department knows that the inspection will not be immediate, then the
timely purchase document must provide when the inspection will occur and how it
inspections will be accomplished.

10.3.3 Departments determining that the supplier will inspect the goods on the
Partnering states behalf (this may occur in shipments to multiple field locations and
inspections where set-up and/or installation services are required), will describe in the
documentation what activities will be performed.

10.3.4 Documentation may include a standard installation checklist for the supplier
Installation to complete and provide to a state representative upon completion of the
checklist tasks.

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Topic 3 Inspection of Goods, Continued

10.3.5 Departments are advised to document all inspection results and provide the
Documenting results to the department procurement office for filing within the procurement
the results file.

The document should, at a minimum, identify what action was performed,

who was in attendance, both department and supplier personnel by name
and title, when and where the inspection occurred, and the inspection results.

Documentation shall be retained within the procurement file.

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Topic 4 Acceptance Testing and Acceptance

10.4.0 Departments that require additional acceptance criteria over and above what
Acceptance is stated within the States General Provisions (GSPD-401 Commodities or
testing GSPD-401IT) must describe the acceptance criteria in the solicitation and
purchase document.

10.4.1 An acceptance testing period may occur over a period of time and that span
Documenting of time must be documented within the competitive solicitation or LPA RFO
the criteria to describe how the performance will be measured and how acceptance of
the good or service will be defined and accomplished. The acceptance
requirement must also be carried through the purchasing process into the
executed purchase document.

10.4.2 IT The DGS/PD has developed IT contract language modules to use in

software competitive solicitations. In particular, the State Model IT Software Special
acceptance Provision module provides a process for accepting software, either
language commercial software or custom software. Buyers should review these
provisions to ensure that the acceptance criterion is sufficient for their
procurement.

10.4.3 Departments shall acknowledge acceptance of goods by issuing a written

Acknowledging notice of successful acceptance to the supplier and providing copies of the
successful acceptance letter as determined by internal policies and procedures. A copy
acceptance of the acceptance letter must be retained in the procurement file.
testing

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Topic 5 Rejecting Non-Conforming Goods

10.5.0 The following process should be followed if the goods are not in conformance
Process for with any requirements of the purchase document:
rejection of
goods

Stage Description
1 The person that is rejecting the goods must immediately communicate the
problem(s) and rejection in writing to the buyer.
2 The buyer is responsible for notifying the supplier, making arrangements to hold the
rejected goods somewhere protected from damage, and taking care of rejected
goods until the supplier can take possession of the goods and remove them from the
site.
3 A notice of rejection letter should be provided to the supplier describing the defect(s)
that renders the delivery as non-conforming to the purchase document, what the
delivery and inspection criterion was, and how the delivered product does not
conform.
4 The buyer can accept any unit of measure (e.g., lot, case, and pallet) and reject the
rest.
Example:
A department executed a purchase document for 50 cases of bond paper, but the
supplier shipped 150 cases of bond paper. The receiving staff may either reject the
entire shipment or accept the 50 cases of bond paper in accordance with the
provisions of the purchase document. The remaining 100 cases of paper will be
rejected and returned to the supplier.
5 If the supplier, within a reasonable time period, does not remove rejected goods, the
department buyer may:
Ship products back to the supplier at the suppliers expense.
Store the rejected goods with reimbursement required from the supplier for any
incurred costs.

10.5.1 Timely Departments are required to contact the supplier in a timely fashion when
supplier rejecting goods that are over-shipments, defective or for any other non-
notification conformance to the purchase document.

10.5.2 In accordance with SAM section 8422.20 departments will prepare a

Returned STD.108 when returning goods to a supplier. This documentation shall also
Stock Report be provided to the buyer to follow up with the supplier as necessary. The
(STD. 108) STD.108 shall also be retained in the procurement file.

Click here to access the Returned Stock Report (STD.108).

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Topic 5 Rejecting Non-Conforming Goods, Continued

10.5.3 Suppliers may require buyers to obtain a return authorization before shipping
Suppliers goods back to the supplier.
return
authorization Buyers should contact the supplier prior to returning goods to confirm and
follow any return authorization processes as required by the supplier.

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Topic 6 Supplier Performance

10.6.0 Departments, upon confirming that goods received and inspected are in
Documenting conformance with the terms of the purchase document, shall document the
performance results of the delivery and inspection.

10.6.1 The SPR may be used by the receiving staff to report on the quality and
Supplier timeliness of a contractors delivery. Its purpose is to capture performance
Performance histories for use in supplier development and subsequent source selection
Report (SPR) activities conducted by the department.

Click here to access the Supplier Performance Report.

10.6.2 Access The purchasing staff should determine how completed SPRs are to be filed,
to information either in a centrally located area providing all buyers access to the
information or retaining the documents within the procurement files.

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Topic 7 Asset Management

10.7.0 DGS/PD recommends that departments implement policies and procedures

Securing applicable to securing and safeguarding assets, regardless of how an asset
assets was acquired or whether or not the asset is considered non-IT or IT.

10.7.1 DGS/PD also advises departments to limit access to received goods to

Physical authorized staff and provide sufficient security controls to goods considered
control over vulnerable to loss or unauthorized use. Inventory should be periodically
assets counted and compared to control records.

10.7.2 In accordance with SAM section 8651, all State property must be tagged
Identification after acquisition. This includes property whether or not it meets all of the
and tagging States capitalization requirements. Refer to SAM section 8602 for
capitalization definitions.

The purpose of tagging assets is to designate the assets as belonging to the

State.

Refer to SAM section 8651 and/or individual department policies for tagging
requirements.

10.7.3 In accordance with SAM section 8650, departments shall record the following
Property information when property is acquired:
control Date acquired
Property description
Property identification number
Cost or other basis of valuation
Owner fund
Rate of depreciation (or depreciation schedule), if applicable

Further, departments will keep track of state property, either by an automated

system or by reporting information on Property Record Cards (STD. 153-A).

10.7.4 In accordance with SAM section 3520, prior to disposal of any state-owned
Surveyed personal property other than vehicles or mobile equipment, departments
property must receive approval from the DGS/PD Surplus Property Section.

A Property Survey Report (STD.152) must be submitted for approval prior to

disposition. Disposition includes sale, trade-in, discarding or turning the
property over to Property Reutilization.

Refer to the DGS/OSP web page for the forms availability.

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Topic 7 Asset Management, Continued

10.7.5 Lost, Departments are required to prepare a STD.152, in accordance with SAM
stolen, or section 8643, to adjust property records whenever equipment is lost, missing,
destroyed stolen or destroyed.
property
The report contains:
A description of the events
Precautions to be taken to prevent repeat situations
A statement that the California Highway Patrol has been notified in
accordance with GC section 14613.7

In accordance with SAM section 8643 and 20080, losses of state property
due to fraud or embezzlement must be reported to DOF, Office of State
Audits and Evaluations and the Bureau of State Audits.

10.7.6 Departments should ensure that the appropriate documentation is provided

Replacing to the buyer to support the purchase of replacement equipment as a result of
lost, stolen or being lost, stolen or destroyed.
destroyed
property

10.7.7 Departments should refer to their departments Software Management Plan

Software (refer to SAM section 4846 and SIMM section 120), IT Chief Information
disposal Officer office and/or Workgroup Computing Coordinator to ensure that the
proper departmental policies are followed when disposing of IT software.

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Topic 8 Receiving Service Deliverables

10.8.0 Buyers, in preparing purchase documents for services, must develop a clear,
Accepting or concise, and detailed description of the services to be performed. An
rejecting individual or individuals must be assigned to monitor supplier performance.
services Any deviations or unacceptable performance levels shall be documented and
provided to the buyer to assist in problem resolution.

Staff accepting written deliverables must provide the supplier with written
documentation accepting the deliverable.

Refer to Chapter 11 Contract Administration for information pertaining to

monitoring.

10.8.1 Departments acquiring equipment maintenance services should develop a

Maintenance uniform method for recording data relating to the repair or maintenance of
services equipment, which includes essential data pertaining to incidents of repair or
maintenance.

10.8.2 The following is essential data required in resolving disputes between the
Tracking supplier and the department with respect to performance:
maintenance The time the maintenance provider was notified by the State,
services The time the maintenance provider personnel arrived to repair the
malfunction,
The time the component and/or system was returned to service,
A description of the malfunction or incident; and
Signature of the maintenance provider and a representative of the State.

A maintenance form should be prepared whenever a system or component is

inoperative and left open until the repair is completed.

10.8.3 Developing a process for tracking maintenance levels creates a performance

Creating history that assists contract administrators in reviewing contract performance
history and provides necessary information to determine when a system or
component needs replacement (end of useful life).

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