You’ve never been on a supplier quality audit, right? No way would an SQE do that, especially if the company is AS9100 certified. An SQE would review their internal processes, look at any deliverable failures they’ve had, review notes from the any other DCAA/DCMA audits. They look at any GIDEPs or DLA holds in the past and make sure it’s been resolved. They look at safety information and verify SBA stuff. 
They don’t do raw materials testing. I’ve heard the DLA did do that but who knows, in the past few years the DLA is short staffed. 

Instead the DCAA (or DCMA depending on the contract) should have caught it because the financial stuff was a big fucking clue.