Factory Acceptance Test (FAT)

A Factory Acceptance Test is a structured test performed at the manufacturer's or supplier's facility, in the presence of the buyer's representatives (and often a third party inspection agency), to verify that equipment or systems conform to the technical specifications and performance requirements stated in the purchase order before they are despatched to the project site. FAT is standard for complex equipment such as turbines, switchgear, control panels, SCADA systems, pumping sets, and industrial machinery procured by central and state PSUs, railways, defence establishments, and major infrastructure projects.

What is FAT in government procurement?

FAT is a formal milestone in the delivery lifecycle, not an ad hoc check. The procedure and acceptance criteria are defined in the FAT protocol or inspection test plan (ITP), which is submitted by the supplier and approved by the buyer before manufacturing commences. On the scheduled FAT date, the buyer's technical team travels to the supplier's factory, witnesses the prescribed tests, reviews test records, and signs the FAT completion certificate if all parameters are met.

A typical FAT protocol for a medium-voltage switchgear panel includes: visual inspection against approved drawings, dimensional verification, insulation resistance measurements, high-voltage withstand tests, functional operation tests of protection relays and interlocks, secondary injection testing of metering circuits, and communication tests with the SCADA system if applicable. All test results are recorded in a FAT report, which becomes part of the contract documentation.

If any test fails during FAT, the supplier is given a defined period to rectify the defect. A re-FAT or partial re-test is then conducted, sometimes at the supplier's cost. Persistent failures can trigger termination clauses or performance bank guarantee invocation in severe cases.

FAT is typically a prerequisite for despatch clearance. The purchase order will specify that "despatch will not be permitted until a satisfactory FAT completion certificate is issued by the buyer/TPI." This creates a hard dependency: if the supplier misses the FAT date or fails the FAT, the delivery commitment slips, potentially triggering LD clauses.

Why it matters for bidders

FAT readiness requires advance planning. The supplier must ensure that the equipment is fully assembled and commissioned at the factory before the FAT date, all test instruments are calibrated and NABL-certified, factory space is adequate for the buyer's team, and any special test equipment specified in the FAT protocol is available. Last-minute rushing to complete assembly before FAT is a common cause of failures.

Bidders should also factor FAT-related costs into their quote: travel and accommodation for the buyer's team is sometimes reimbursable, sometimes not, the NIT will specify who bears this cost. The supplier's cost of setting up for FAT, staff deployment, and potential re-FAT after rectification must be included in the unit rate.

FAT records and the signed FAT completion certificate are important commercial documents. Payment milestones in many purchase orders are structured as: 70-80% on FAT completion, 10-20% on delivery and SAT completion, and the final 5-10% after defect liability period. Delays in FAT therefore directly delay cash flow.

Example

A metro rail corporation places a purchase order for 10 sets of traction motors for a new rolling stock project. The FAT protocol requires full-load dynamometer testing at rated voltage and frequency, measurement of efficiency at 50%, 75%, and 100% load, temperature rise test, overspeed test, and vibration measurement at rated conditions. The motor manufacturer schedules FAT six weeks before the committed delivery date. The metro corporation's traction engineer and a nominated TPI agency representative attend. All tests pass on the first attempt; the FAT report is signed and the despatch clearance issued on the same day. The manufacturer invoices 75% of the order value upon submission of the signed FAT certificate.

Key rules / thresholds

• FAT date must be communicated to the buyer and TPI agency with adequate notice, typically 10-21 days in advance as specified in the purchase order.
• All test instruments used during FAT must have valid NABL-accredited calibration certificates.
• A signed FAT completion certificate from both buyer and supplier is the standard acceptance document.
• If the buyer's representative cannot attend the scheduled FAT without cause, the supplier can document a notice and request the buyer to reschedule, delays on the buyer's side should be formally recorded to protect the supplier's delivery timeline.