Office of the State Administration for Market Regulation on Administrative Licenses for Special Equipment in 2018

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Circular from the General Office of the State Administration for Market Regulation on the Supervisory Spot Checks and Administrative Penalties Related to Administrative Licenses for Special Equipment in 2018, Document No. Jian Te She Han [2019] 94 To the market regulation bureaus (departments, commissions) of all provinces, autonomous regions, and municipalities directly under the Central Government, as well as relevant organizations: In order to strengthen supervision over certified special equipment manufacturing units and inspection and testing institutions, to ensure that they continue to meet the requirements for such licenses, and to enhance the role of certification and evaluation agencies in fulfilling their duties and exercising proper oversight, in accordance with the relevant provisions of the Law of the People’s Republic of China on Safety of Special Equipment, the Law of the People’s Republic of China on Administrative Licenses, and the Regulations on Safety Supervision of Special Equipment, the State Administration for Market Regulation conducted supervisory spot checks on 486 certified manufacturing units, inspection and testing institutions, and certification and evaluation agencies in 2018. The relevant information is reported as follows: 1. Methods of supervision and random inspection: (1) Supervision and random inspection by certified entities and appraisal and evaluation agencies. 　　The supervised random inspections conducted by certified entities and certification and assessment agencies focus on the operation of the quality system, the quality of work (products), and resource conditions, and are carried out as supervised random checks on certified manufacturing units, testing and inspection agencies, as well as certification and assessment agencies. In this inspection of certified special equipment manufacturing units and inspection agencies, the General Administration adopted a “double random” inspection mechanism, which involves randomly selecting inspection targets and randomly assigning inspectors. The supervised random inspections by non-destructive testing agencies are carried out by the market supervision departments of various provinces (autonomous regions, municipalities directly under the Central Government), as assigned by the General Administration. 　　(II) Supervisory spot checks after evaluation and before certification. 　　Supervisory spot checks conducted after evaluation but before issuance of certificates (hereinafter referred to as process supervisory spot checks) focus on assessing the quality of the evaluation work, and are carried out as supervisory spot checks on entities applying for administrative permits for special equipment after the evaluation but before the issuance of certificates. 　　II. Situation regarding supervision and random inspections
(1) Situation regarding supervision and random inspections of production units. 　　A total of 76 production units were subject to supervision and random inspections, including 10 boiler manufacturing units, 11 pressure vessel manufacturing units, 5 gas cylinder manufacturing units, 6 pressure pipeline component manufacturing units, 9 pressure pipeline installation units, 10 elevator manufacturing units, and 25 manufacturers of large-scale amusement facilities. 　　The main aspects of the random inspections conducted on special equipment manufacturing units include whether the units continue to meet the requirements for licensing, and whether the product quality complies with the requirements of safety technical specifications and relevant standards. Special attention is paid to changes in the units’ resource conditions, the operation of their quality assurance systems, and the control of product quality. 　　Based on the results of the random inspections, most of the inspected units were able to carry out special equipment manufacturing activities in compliance with laws and regulations, safety technical specifications, and relevant standards, ensuring the quality of their products ； However, there are also a small number of units for which, after obtaining the permit, their resource conditions deteriorate, the quality assurance systems are not properly implemented, and the quality and safety standards of their products decline, rendering them unable to continue to meet the requirements of safety technical specifications. The main issues identified during the random inspections are as follows: 1. Pressure-bearing special equipment. 　　(1) In terms of resource conditions. 　　The management personnel, professional technicians, inspectors, or production equipment in the quality assurance systems of some manufacturing units fail to continuously meet the requirements of the licensing conditions ； The testing instruments and equipment have not been calibrated or verified. 　　(2) Establishment and implementation of the quality assurance system. 　　The quality assurance systems of some organizations are inadequate and not implemented as required. In some organizations, the regulatory documents referenced in their quality assurance system documents are no longer in force, or the list of regulations is incomplete, and no dissemination or training has been carried out ； It was not labeled as required, and there are no records of document revisions, distribution, or retrieval ； A product manufacturing quality plan has not been prepared, or the quality plan does not cover all aspects, or the approval procedures are incomplete. Some units lack complete inspection and testing procedures, or their testing procedures do not cover all relevant aspects ； The radiation exposure curve report and the information on the film are incomplete ； The inspection record for purchased parts lacks signature confirmation by the responsible person ； The non-destructive testing work instructions were not revised in accordance with relevant standards; no subcontracting agreement was signed for the outsourced non-destructive testing; the person responsible for non-destructive testing did not verify the results of this testing; and the persons who signed the non-destructive testing reports did not possess the required qualifications. Some units have incomplete archival materials, lacking product quality certificates ； The copy of the material quality certificate is missing the supplier’s official seal ； The design changes were not reflected in the as-built drawings, and the general construction drawings and design change notices did not specify clearly the standards for non-destructive testing, the levels of testing technology, or the acceptable criteria. 　　The welding management in some units is not standardized. There are issues such as the absence of dehumidification equipment, excessive humidity levels, failure to label leftover materials, discrepancies between the labeled quantities and the actual quantities, and failure to conduct re-inspections as required. Some units lack records for the inspection of solder upon receipt, as well as records for drying, distribution, and recycling. In the welding processes carried out by some units, there are issues such as welders working without proper certification, and the welding procedure qualifications not being adjusted in accordance with relevant standards ； There are no welding procedure cards or procedures for repairing welds; there are no records of chemical composition analysis for surfacing; and the welding record sheets do not contain information on the welding parameters. 　　2. Special mechanical and electrical equipment (elevators, large-scale amusement facilities). 　　(1) In terms of resource conditions. 　　The professional technicians, inspectors, or production equipment in some organizations fail to meet the requirements set for licensing on a continuous basis, and individual organizations have provided false certificates of educational qualifications and employment status for their technicians. In a few units, the testing instruments required under the licensing conditions have not been sent for calibration beyond their scheduled inspection periods. Some elevator manufacturers do not have test towers as required by the administrative licensing regulations. 　　(2) Establishment and implementation of the quality assurance system. 　　In some units, the list of qualified suppliers is incomplete; the evaluation documents for subcontractors are outdated, and no evaluations have been conducted on certain product suppliers ； Internal audits were not conducted in accordance with the requirements of the quality assurance system ； The records and product files are generally incomplete and insufficient. The management of inspection specifications, work instruction documents, and operational procedures in some units is rather chaotic; there are issues such as incomplete level-3 documents, insufficient design and calculation data, calculation processes that do not conform to relevant standards, and incomplete signatures on technical drawings and calculation documents, or signatures that are not made by employees of the company. In some units, the documents specifying personnel positions do not correspond to their actual job responsibilities. Some units do not pay enough attention to the inspection of purchased components; there are issues such as incomplete inspection records for these components, mismatch between the inspection items and the records, and the absence of product numbers and actual measurement data in the inspection records, which makes it impossible to track the components ； Lack of attention is given to the handling of defective products; similar issues occur repeatedly without effective control ； In the welding processes of some manufacturing units, welders are operating without the necessary certifications ； A few large amusement ride manufacturers have cases of non-destructive testing personnel performing inspections without the necessary certifications during the product self-inspection process. 　　(3) Compliance with the licensing system. 　　Some elevator manufacturers have been producing and selling complete elevator units during the period when their old manufacturing licenses had expired and new licenses had not yet been obtained. Some large amusement ride manufacturers have failed to go through the necessary procedures to update their manufacturing addresses. 　　(II) Supervisory random inspections of testing and inspection agencies. 　　1. Supervisory random inspections by comprehensive testing institutions. 　　A total of 2 comprehensive inspection agencies for special equipment were supervised and sampled, and these inspection agencies met the requirements of the approval rules. 　　2. Supervisory random inspections by non-destructive testing agencies. 　　A total of 361 non-destructive testing agencies were supervised and randomly inspected. The main issues identified during the inspection are as follows: (1) Resource conditions. 　　Some organizations do not have enough certified personnel; the personnel responsible for testing are not in their assigned positions to carry out their duties; there is chaos in position management; address changes are not processed in a timely manner; the office premises of the project departments are poorly managed; the quantity of instruments and equipment, as well as the frequency of their calibration, does not meet the required standards; the testing sites lack the necessary regulations, rules, safety technical specifications, and standards; the ability to cover compensation for damages is insufficient; and some employees work for multiple organizations without having signed employment contracts. 　　(2) Regarding the establishment and implementation of the quality management system. 　　The internal audits of the quality management systems in some organizations are not conducted in a proper manner; they are not updated, supplemented, or made comprehensive in a timely fashion, and there is a lack of evidence regarding their preparation, review, and approval, as well as unique identifiers ； The project department lacks management systems, and there is no effective supervision or management of the project ； The operation instructions are incomplete, staff training is not properly carried out, the quality management system is not implemented in accordance with the required standards, and signatures are not done in a proper manner ； For some projects, no testing contracts were signed; no testing ledgers or technical testing plans were established; and testing records were either not filled out in real time or contained incomplete information. 　　(3) In terms of work quality. 　　Some institutions failed to carry out testing in accordance with the relevant standards and operating procedures; the on-site record information was not filled out properly, resulting in incorrect or missing evaluations. The defect records were incomplete, lacking diagrams of the tested areas, defect descriptions, information on initial verification, and process parameters. The test results lacked corresponding test records or detailed reports, as well as supporting evidence. Moreover, the repeat photos taken during on-site testing or the test reports did not match the original photos ； The testing was not carried out in accordance with the requirements of safety technical specifications; there were instances of forged signatures and alterations in the testing records and reports, and the establishment and verification of the radiation exposure curves were not done as required. 　　3. Supervisory random inspections by type test institutions. 　　A total of 22 type testing institutions were subject to supervised spot checks, with an emphasis on examining the reports generated as part of these checks (including records and plans). Special attention was paid to the standardization, completeness, and accuracy of the recorded reports. The main issues identified during the inspection are as follows: Some type testing laboratories do not carry out all required testing items ； The chosen test method is incorrect ； Lack of test record documentation, and the format of records and reports does not meet the specified requirements, etc. 　　(III) Supervisory spot checks on appraisal and evaluation agencies A total of 12 appraisal and evaluation agencies were subject to supervisory spot checks, with emphasis placed on verifying the compliance of these agencies’ resource conditions, the completeness of their quality assurance systems, the effectiveness of the implementation of those quality assurance systems, the standardization of their appraisal and evaluation procedures, and the accuracy of their conclusions. The basic findings of these spot checks are as follows: 1. In terms of the establishment and implementation of quality assurance systems. 　　The quality system documents are not comprehensive enough; aspects of the quality management system are missing, and job responsibilities are not clearly defined (for example, in some Quality Manuals, the responsibilities and authorities of the person in charge of technical matters are not clearly specified, and the information regarding the newly appointed person responsible for the quality management system is not updated in a timely manner in the change records) ； The aspects that need further clarification in internal management have not been specified in detail (for example, the archival materials related to the inspection and evaluation of various types of special equipment are not standardized; witness documents such as social security certificates, certificates for personnel working with special equipment, calibration certificates, invitation letters, and records of preliminary reviews of evaluation materials are not kept in a proper or consistent manner). 　　2. Assess the quality of the evaluation work. 　　The records of the appraisal and evaluation process are incomplete ； Some reviewers lack sufficient professional competence and a strong sense of responsibility, and the evidence supporting their evaluation conclusions is inadequate ； Some organizations are unable to continuously collect and promptly distribute relevant safety technical specifications and standards ； In some organizations, quality management lacks supervision or is merely a formality (for example: although these organizations have established quality systems, the records of evaluation and assessment processes lack numbering, signatures, and relevant details) ； Some management personnel responsible for review work lack knowledge of the standards and documents related to quality systems, resulting in varying levels of understanding regarding the establishment and implementation of such systems during the reviews. 　　(IV) Situation of process supervision and random inspections The process supervision and random inspections of special equipment this time mainly involved the assessment and evaluation work carried out by 11 assessment and evaluation agencies; a total of 13 units that applied for permits were inspected. The main issues identified during the random inspections are as follows: 1. Regarding the establishment and implementation of the quality assurance system by the applying entities. 　　The hierarchical structure of key management positions in the quality assurance manual is not clear, and the responsibilities of certain employees and departments are undefined ； The work instructions in the system documents are incomplete; some important control elements are missing, and the signatures on the records of implementation verification are inadequate ； The implementation of regulatory standards is inadequate. The professional titles of technical personnel in certain units are suspected of being falsified. 　　2. Assess the quality of the evaluation work. 　　The evaluation reviewers failed to reflect all the issues identified during the evaluation in the records or in the memorandum ； The lack of responsibility and professional competence among evaluation panel members affects the objectivity and accuracy of the issues raised ； Some review memos do not clearly state the requirement that \"after the rectification is completed beyond the original license period, it is necessary to report to the licensing authority promptly.\" ； Some design firms fail to provide users with feedback in a timely manner regarding the revised design drawings or modified documents. 　　III. Measures to be taken regarding the units with issues (1) Initiate investigations into Xi’an Xinhuan Energy Co., Ltd., Baoding Valve Industry Co., Ltd., Shenzhen Asia Fuji Elevator Equipment Co., Ltd., Guangzhou Zhenjie Machinery Co., Ltd., and Shenzhen Xinri Elevator Co., Ltd., and take legal action based on the results of those investigations. 　　(II) Revoke the pressure pipeline installation license of Zhongding Hanrun Construction Engineering Co., Ltd. Revoke the manufacturing license for large-scale amusement equipment held by Chengde Yanying Amusement Machine Manufacturing Co., Ltd. Revoke the non-destructive testing certification of Earth Science Exploration (Beijing) Engineering Technology Co., Ltd. and Penglai Zhengda Equipment Engineering Testing Co., Ltd. 　　(III) Order Suzhou Shenghui Equipment Co., Ltd., Tai’an Daifeng Pipeline Engineering Co., Ltd., Xuzhou Yuanda Pipeline Engineering Co., Ltd., Jiangsu Qinyu Gas Pipeline Equipment Installation Co., Ltd., Liaoning Heli Special Vehicle Manufacturing Co., Ltd., Xi’an Kaidibao Mechatronics Technology Co., Ltd., and Shenzhen Yuanwang Gantuo Technology Co., Ltd. to carry out rectifications. 　　(IV) Issue a public reprimand to 27 entities, including Nanliang Pressure Vessel Technology (Shanghai) Co., Ltd., Zhejiang Jushen Elevator Co., Ltd., Baoding Changhong Amusement Machinery Engineering Co., Ltd., etc. (see Annex 1 and Annex 2 for details). 　　The violations by some of the units selected for inspection are still under further investigation. Once the verification is completed, actions will be taken in accordance with the law and relevant regulations based on the results of the verification. 　　IV. Requirements for subsequent actions (1) The entities ordered to make corrections shall carry out those corrections promptly and submit a report on the progress of such corrections to the Special Equipment Bureau of the General Administration by April 30, 2019. The units mentioned above should draw lessons from this incident, identify the problems existing in their own work, formulate practical and effective corrective measures, and report the progress of these corrections to the Special Equipment Bureau of the General Administration. All units selected for inspection shall rectify the non-compliance items listed in the supervision and inspection memorandum; these will be subject to focused examination during the certificate renewal assessment. 　　(II) Market regulation authorities in all provinces (autonomous regions and municipalities directly under the Central Government) must strengthen supervision at the source, enhance supervision and random inspections of certified production entities within their jurisdictions, as well as regulate and oversee inspection and testing institutions; they must also strictly investigate and punish any illegal or non-compliant acts. Market supervision departments at all levels shall, in accordance with their respective responsibilities, supervise and inspect the rectification efforts of the production units and testing institutions that were found to have issues during this supervision and random inspection, in line with the law. Such units shall be designated as key targets for supervision, with increased frequency of random inspections. 　　(III) Certified entities for special equipment and appraisal and evaluation institutions should, in light of the problems identified in this supervisory spot check, conduct a comprehensive self-inspection and self-correction, so as to continuously improve the quality of special equipment products and the level of inspection and testing work. 　　V. Report on Administrative Penalties Imposed in 2018 (I) Tianjin Boan Testing Technology Co., Ltd. fabricated negative films while carrying out non-destructive testing work for the \"Dachang Chaobaihe Gate Station high-pressure gas pipeline project\" and the \"Tianshi University high-pressure pipeline relocation and crossing project\", resulting in inaccurate test results. In accordance with the Safety Law of the People’s Republic of China, administrative penalties were imposed on this entity in accordance with the law; Tianjin Boan Testing Technology Co., Ltd. had its approval as a special equipment inspection and testing institution revoked, and its new application for such approval will not be considered for 3 years. 　　(II) During his employment with Tianjin Bo’an Testing Technology Co., Ltd., Chen Chao falsified radiographs while performing non-destructive testing work for the “High-Pressure Gas Pipeline Project at the Chaobai River Gate Station in Dachang” and the “Relocation and Crossing Project of High-Pressure Pipelines at Tiens University”, resulting in inaccurate test results. In accordance with the Safety Law of the People’s Republic of China on Special Equipment, administrative penalties were imposed on him in accordance with the law; Chen Chao’s qualification as a special equipment inspection and testing personnel was revoked, and his new application for such a license will not be accepted for 3 years. 　　(III) During his employment at Tianjin Boan Testing Technology Co., Ltd., Wei Shuai fabricated negative films while carrying out non-destructive testing work on the \"Dachang Chaobaihe Gate Station high-pressure gas pipeline project\" and the \"Tianshi University high-pressure pipeline relocation and crossing project\", resulting in inaccurate test results. In accordance with the Safety Law of the People’s Republic of China on Special Equipment, administrative penalties were imposed on him in accordance with the law; Wei Shuai’s qualification as a special equipment inspection and testing personnel was revoked, and his new application for such a license will not be accepted for 3 years. 　　Attachments: 1. List of production units subject to public reprimand 　　　　 2. List of non-destructive testing and type testing institutions subject to public reprimand Office of the State Administration for Market Regulation, January 15, 2019