What to Look for When Vetting a Contract Manufacturer

Choosing the wrong contract manufacturer can cost your brand tens of thousands of dollars in failed batches, compliance violations, and lost time to market. Whether you're launching a new skincare line or scaling an existing hair care brand, the contract manufacturer you select becomes the backbone of your product's quality, safety, and consistency.

With the passage of the Modernization of Cosmetics Regulation Act (MoCRA) in December 2022, the stakes are even higher. For the first time in over 80 years, the FDA has expanded regulatory authority over cosmetic manufacturing — and the manufacturer you choose directly impacts your brand's compliance posture.

This guide walks you through the critical checkpoints every brand should evaluate before signing a manufacturing agreement.

MoCRA Compliance

The Modernization of Cosmetics Regulation Act represents the most significant update to U.S. cosmetic regulation since 1938. MoCRA fundamentally changes the relationship between the FDA and the personal care industry, and it has direct implications for how you evaluate contract manufacturers.

What MoCRA Requires — and Why It Matters

How to Evaluate MoCRA Readiness

During your vetting process, ask these questions:

• Can you provide your FDA Establishment Identifier (FEI) number and confirm your facility registration is current?
• What systems do you have in place for routing adverse event reports to the responsible person?
• Have you conducted a MoCRA gap analysis to identify areas of non-compliance?
• Are you currently operating under ISO 22716 GMP, and if not, what is your timeline for compliance?
• How do you handle product listing submissions for the brands you manufacture for?
• What is your process for ensuring label compliance with MoCRA's contact information requirements?

ISO 22716 & GMP Compliance

The first question you should ask any prospective contract manufacturer is whether they operate under ISO 22716 — Cosmetics Good Manufacturing Practices (GMP). This international standard governs every aspect of cosmetic production, from raw material handling and personnel hygiene to equipment maintenance, production controls, and deviation management.

With MoCRA directing the FDA to establish mandatory GMP regulations aligned with ISO 22716, this standard is no longer simply a best practice — it is the framework that will underpin federal compliance requirements.

What Compliance Should Look Like in Practice

During your facility audit or virtual assessment, ask to review the following:

• Standard Operating Procedures (SOPs) — Written procedures for each product type and process. SOPs should be version-controlled with documented review cycles.
• Batch Manufacturing Records (BMRs) — Complete traceability from raw materials through finished goods, including ingredient lot numbers, equipment used, in-process checks, and operator sign-offs.
• Deviation and CAPA Documentation — A formal Corrective and Preventive Action (CAPA) system for handling out-of-spec results or process deviations.
• Training Records — Personnel trained on GMP principles and the specific SOPs relevant to their roles, with documentation to prove it.
• Internal Audit Schedule — Evidence of internal audits and the corrective actions taken from findings.

Water Systems & Purification

Water is the primary ingredient in most personal care formulations — often comprising 60% to 80% of a finished product. Despite this, many brands overlook water system quality during the vetting process. The sophistication and maintenance of a manufacturer's water purification system is one of the most reliable indicators of overall facility quality.

What a Proper Water System Looks Like

At minimum, a contract manufacturer should operate a multi-stage purification system:

Water Testing and Record Keeping

A quality-driven manufacturer maintains documented water testing records including:

• Daily or per-shift microbial testing of purified water at the point of use, not just at the source
• Total dissolved solids (TDS) readings to verify RO membrane performance, typically targeting below 10 ppm
• UV lamp intensity monitoring and replacement logs — lamps should be replaced on a defined schedule, typically annually, regardless of illumination status
• Sanitization records for the entire water system including holding tanks and distribution lines
• Trend analysis that tracks metrics over time and triggers investigation when results approach action limits

The Quality Agreement

A Quality Agreement is a separate, legally binding document that defines the quality responsibilities of both the brand and the contract manufacturer. It is distinct from the manufacturing agreement and should be executed before any production takes place.

Under MoCRA's framework, the Quality Agreement takes on even greater importance. With mandatory adverse event reporting, safety substantiation requirements, and incoming GMP regulations, the division of responsibilities must be unambiguous and documented.

What a Quality Agreement Should Cover

• Specifications and Acceptance Criteria — Mutually agreed specs for raw materials, in-process parameters, and finished goods including appearance, viscosity, pH, microbial limits, and fill weights
• Change Control — Written notification before any changes to suppliers, equipment, processes, formulations, or facility conditions. You should have the right to approve or reject
• Deviation and Out-of-Spec Handling — Clear process for notifications, timelines, and authority regarding product disposition
• Adverse Event Reporting — Routing procedures that meet MoCRA's 15-business-day timeline. Assigned responsibilities for investigation and regulatory reporting
• Recall Procedures — Notification responsibilities, communication protocols, financial allocation, and root cause investigation. Under MoCRA, the FDA now has mandatory recall authority
• Retain Samples and Stability — Requirements for quantity, storage conditions, retention period, testing protocols, and cost responsibility
• Audit Rights — Right to audit the facility, records, and quality systems at reasonable intervals, with or without advance notice. Non-negotiable
• Regulatory Compliance — Applicable standards including MoCRA, FDA OTC monographs, EU Cosmetics Regulation, and state requirements like California Prop 65

The Manufacturing Agreement

While the Quality Agreement governs how your product is made, the Manufacturing Agreement governs the commercial relationship. This is the document that protects your intellectual property, defines pricing structures, and establishes legal remedies.

Critical Elements

• Intellectual Property Protection — Your formulation is your competitive advantage. The agreement must explicitly state that all IP remains your exclusive property. The manufacturer should be prohibited from using your formulation for any other customer, from reverse-engineering, and from claiming ownership. Include specific remedies for breach, including injunctive relief
• Confidentiality and Non-Disclosure — Covers formulations, pricing, customer lists, and sales volumes. Must survive termination — typically three to five years, longer for formulation-specific information
• Pricing, MOQs, and Payment Terms — Clearly defined unit pricing, adjustment mechanisms for raw material fluctuations, and payment terms. Watch for escalation clauses that increase minimums after year one
• Lead Times and Delivery Obligations — Production lead times, delivery schedules, consequences of late delivery, expedited production provisions, and risk of loss during shipping
• Indemnification and Liability — Mutual indemnification. Watch for liability caps limited to the value of a single production run — inadequate if a failure triggers a recall
• Insurance Requirements — General liability, product liability, and property insurance. Request certificates and ensure your brand is named as additional insured
• Termination Provisions — For-cause and for-convenience options with notice periods, work-in-progress obligations, and proprietary information handling
• Dispute Resolution — Governing law, jurisdiction, and method. Understand trade-offs of mandatory binding arbitration before agreeing

The Facility Audit

Documentation tells you what a manufacturer says they do. A facility audit tells you what they actually do. Whether you visit in person or conduct a virtual walkthrough, pay close attention to the following:

• General Cleanliness and Organization — Look at the areas they don't expect you to inspect: restrooms, break areas, loading docks, warehouse corners. These reveal the true operating culture
• Raw Material Storage — Off the floor, labeled with lot numbers and expirations, segregated by status. Temperature-sensitive ingredients in climate-controlled areas with documented monitoring
• Equipment Condition — Clean, well-maintained, and appropriately sized. Ask about preventive maintenance schedules and review equipment logs
• Personnel Practices — Gowning procedures, PPE, and hygiene protocols should be second nature — not performative behaviors during a customer visit
• Segregation and Flow — Logical flow from raw materials through batching, filling, labeling, and finished goods that minimizes cross-contamination risk

Red Flags That Should Stop the Conversation

Certain warning signs should immediately disqualify a prospective manufacturer or trigger serious additional due diligence:

• Cannot produce ISO 22716 GMP documentation or equivalent quality system records on request
• Not registered with the FDA under MoCRA, or cannot provide their FEI number
• Unwilling to grant audit rights or evasive when asked to tour the facility
• No documented water system maintenance, testing, or validation records
• Resists signing a Quality Agreement or insists on their template without negotiation
• No system for routing adverse event reports within MoCRA timelines
• Cannot provide certificates of insurance or refuses to add your brand as additional insured
• Manufacturing agreement lacks clear IP protections, or they push back on ownership clauses
• History of FDA warning letters, recalls, or regulatory actions (verify through the FDA's public database)
• Cannot demonstrate ingredient traceability from receiving through finished goods
• Pricing significantly below market rate — often indicates shortcuts in quality, sourcing, or labor
• Shows no awareness of MoCRA requirements or dismisses them as not yet applicable

Due Diligence Is Your Greatest Competitive Advantage

Selecting a contract manufacturer is one of the highest-stakes decisions a personal care brand will make. The right partner will protect your formulation, maintain consistent quality, scale with your growth, and keep your brand on the right side of an evolving regulatory landscape. The wrong partner can result in failed product launches, regulatory action, and lasting damage to your brand reputation.

The passage of MoCRA has raised the bar for the entire industry. Manufacturers who were already operating under ISO 22716 with robust quality systems are well-positioned. Those who are scrambling to catch up represent a risk to every brand they serve.

Invest the time to evaluate regulatory compliance, audit water systems and their supporting documentation, negotiate a thorough Quality Agreement, and ensure your Manufacturing Agreement provides meaningful legal protections. The brands that succeed long-term are the ones that treat manufacturer vetting not as a checkbox exercise, but as a core business competency.