A framework for monitoring quality control (QC) of processor contracts administered by the Department of Education's Office of Student Financial Assistance (OSFA) is presented and applied to the Pell Grant program. Guidelines for establishing QC measures and standards are included, and the uses of a sampling procedure in the QC system are outlined. Attention is focused on both the QC plan and the role of the contractor in following the QC measures. The processing function performed by the contractor is the handling of information passed between the financial aid applicant and the OSFA, including applications from students or institutions, accounting reports, or invoices. For each of the following areas, methods for developing QC measures and standards are considered: production control; fiscal control; software quality assurance; QC reporting, monitoring, and corrective action; and quality of data. Appended are a series of sample production control reports; the application of a fiscal control system to the Pell Grant application processing system; report formats for monitoring cost centers; a matrix of software testing techniques; sample productivity reports for the Pell application process; and a list of minimum requirements for a processor QC system. (SW)