When performing an installation review, HGI also reviews the condition of the material not yet installed. There are some jurisdictions that still perform an outlet inspection of all delivered material. When fabricating welded outlets, NFPA 13 requires that the hole be cut the full diameter of the fitting. For grooved outlets, you should not see any of the pipe wall when looking through the outlet. The example below is in obvious need of remediation and was removed from the project.
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But on threaded outlets there may be some measure of forgiveness available since the internal diameter of the pipe or sprinkler to be threaded into the outlet is smaller than the internal diameter of the threaded outlet.

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We recently queried four sprinkler manufacturers and asked if they would be comfortable with their K=22.4 or K=25.2 sprinklers being installed in 1-inch threaded outlets like the one above. Three out of four replied anything less than the full diameter of the outlet would be unacceptable to them. The fourth indicated that they did not want to be in the business of justifying this condition, but there may be a testing option that could determine if the waterflow was affected by the occlusion.

We also requested an NFPA informal (staff) interpretation that supports our concern about occluded outlets. The response we received follows:

In my opinion, if you are strictly interpreting NFPA 13 (2019), the situation you describe is not acceptable. Section clearly states that “Holes in piping for outlets shall be cut to the full inside diameter of fittings prior to welding in place of the fittings.” If you can see the edge of the pipe when looking through a welded outlet, it is my opinion that the requirement of is likely being violated. Intrusion of the pipe wall into the opening of the welded outlet decreases the area of flow, which can have a major impact on the hydraulic performance of the system. It can also cause excess turbulence, which also affects hydraulic performance. I do understand that pipe screwed into a threaded outlet effectively reduces the size of the opening, but there is still an area of flow reduced by the pipe sticking into the opening of the outlet. It would still be my opinion that the situation does not meet the intent of Ultimately, sprinkler installation approval is under the purview of the AHJ, and it is up to the AHJ to decide if it constitutes an acceptable welding practice for installation per NFPA 13. You should consult the AHJ to determine if it is acceptable to them.

(Important Notice: Any opinion expressed in this correspondence is the personal opinion of the author and does not necessarily represent the official position of the NFPA or its Technical Committees. In addition, this correspondence is neither intended, nor should it be relied upon, to provide professional consultation or services.)