diff --git a/mcp-server/observer.ts b/mcp-server/observer.ts
index b1d0fa2..17e23d8 100644
--- a/mcp-server/observer.ts
+++ b/mcp-server/observer.ts
@@ -224,6 +224,165 @@ async function escalateFailureClusterToLLMTeam(sigHash: string, cluster: Observe
 // persists across cycles.
 const escalatedSigHashes = new Set<string>();
 
+// ─── Hand-review for scrum/agent candidate responses (2026-04-25) ───
+//
+// Observer is OUTSIDE the scrum loop's epistemic scope, so its verdict
+// can be treated as truth about whether a candidate review is grounded.
+// Two-tier evaluator:
+//   1. Try cloud LLM (qwen3-coder:480b) — semantic judgment with
+//      response + source excerpt + grounding stats as context.
+//   2. On cloud failure (throttle/timeout) → deterministic heuristic
+//      over grounding_pct + total_quotes. Marked source: "heuristic"
+//      so consumers can tell which rung produced the verdict.
+// Every verdict is persisted to data/_kb/observer_reviews.jsonl.
+
+const OBSERVER_REVIEWS = "/home/profit/lakehouse/data/_kb/observer_reviews.jsonl";
+
+interface HandReviewInput {
+  file_path: string;
+  model: string;
+  response: string;
+  source_content: string;
+  grounding_stats: { total: number; grounded: number; groundedPct: number | null };
+  attempt: number;
+}
+
+interface HandReviewVerdict {
+  verdict: "accept" | "reject" | "cycle";
+  confidence: number;
+  notes: string;
+  source: "cloud" | "heuristic";
+}
+
+async function handReview(input: HandReviewInput): Promise<HandReviewVerdict> {
+  const t0 = Date.now();
+  let verdict: HandReviewVerdict;
+
+  try {
+    verdict = await cloudHandReview(input);
+  } catch (e) {
+    console.error(`[observer/review] cloud failed (${(e as Error).message}); using heuristic`);
+    verdict = heuristicHandReview(input);
+  }
+
+  // Persist regardless of source so we can later compare cloud vs
+  // heuristic verdicts on the same input and tune the heuristic.
+  const row = {
+    ts: new Date().toISOString(),
+    file_path: input.file_path,
+    model: input.model,
+    attempt: input.attempt,
+    response_chars: input.response.length,
+    grounding_stats: input.grounding_stats,
+    verdict: verdict.verdict,
+    confidence: verdict.confidence,
+    notes: verdict.notes,
+    source: verdict.source,
+    duration_ms: Date.now() - t0,
+  };
+  try {
+    const { appendFile } = await import("node:fs/promises");
+    await appendFile(OBSERVER_REVIEWS, JSON.stringify(row) + "\n");
+  } catch { /* best-effort persistence */ }
+
+  return verdict;
+}
+
+async function cloudHandReview(input: HandReviewInput): Promise<HandReviewVerdict> {
+  const grounded = input.grounding_stats.grounded;
+  const total = input.grounding_stats.total;
+  const pct = input.grounding_stats.groundedPct;
+  // Truncate to keep the prompt under typical context windows.
+  // 2000 + 4000 = ~6000 chars ≈ 1500 tokens, plus response context.
+  const responseExcerpt = input.response.slice(0, 2000);
+  const sourceExcerpt = input.source_content.slice(0, 4000);
+
+  const prompt = `You are a code-review quality observer. Decide whether the following automated review is grounded in the actual source — not invented, not hallucinated.
+
+FILE: ${input.file_path}
+MODEL: ${input.model}
+ATTEMPT: ${input.attempt}
+ANCHOR GROUNDING: ${grounded}/${total} backtick-quoted snippets matched the source verbatim${pct !== null ? ` (${pct}%)` : ""}
+
+REVIEW (first 2000 chars):
+\`\`\`
+${responseExcerpt}
+\`\`\`
+
+SOURCE EXCERPT (first 4000 chars):
+\`\`\`
+${sourceExcerpt}
+\`\`\`
+
+Respond ONLY with a JSON object:
+{
+  "verdict": "accept" | "reject" | "cycle",
+  "confidence": 0-100,
+  "notes": "<1-2 sentences on what makes this grounded or hallucinated>"
+}
+
+- accept: review references real symbols/lines in source; findings could be acted on.
+- reject: review invents APIs, fabricates calls, contradicts source. Do NOT record.
+- cycle: review is mediocre — partially grounded but wrong shape, try a stronger model.`;
+
+  const resp = await fetch(`${LAKEHOUSE}/v1/chat`, {
+    method: "POST",
+    headers: { "Content-Type": "application/json" },
+    body: JSON.stringify({
+      provider: "ollama_cloud",
+      model: "qwen3-coder:480b",
+      messages: [{ role: "user", content: prompt }],
+      max_tokens: 300,
+      temperature: 0.0,
+    }),
+    signal: AbortSignal.timeout(45000),
+  });
+  if (!resp.ok) {
+    throw new Error(`/v1/chat ${resp.status}: ${(await resp.text()).slice(0, 200)}`);
+  }
+  const j: any = await resp.json();
+  const content = (j?.choices?.[0]?.message?.content ?? "").trim();
+  // Pull JSON object from the response — model may wrap it in prose.
+  const m = content.match(/\{[\s\S]*\}/);
+  if (!m) throw new Error(`no JSON object in response: ${content.slice(0, 100)}`);
+  const parsed = JSON.parse(m[0]);
+  const v = String(parsed.verdict ?? "accept").toLowerCase();
+  return {
+    verdict: (v === "reject" || v === "cycle") ? v as "reject" | "cycle" : "accept",
+    confidence: Number(parsed.confidence ?? 50),
+    notes: String(parsed.notes ?? "").slice(0, 500),
+    source: "cloud",
+  };
+}
+
+function heuristicHandReview(input: HandReviewInput): HandReviewVerdict {
+  // Deterministic fallback when cloud is throttled. Conservative:
+  // only flip to reject when the evidence is overwhelming, otherwise
+  // accept (fall-open principle — observer is policy, not blocker).
+  const total = input.grounding_stats.total;
+  const pct = input.grounding_stats.groundedPct;
+  const respLen = input.response.length;
+
+  // Too short to be a real review
+  if (respLen < 1500) {
+    return { verdict: "reject", confidence: 80, notes: `response too short (${respLen} chars)`, source: "heuristic" };
+  }
+  // Below 5 quotes — not enough signal to judge grounding; accept
+  if (total < 5 || pct === null) {
+    return { verdict: "accept", confidence: 50, notes: `insufficient quote signal (${total} quotes); accepting`, source: "heuristic" };
+  }
+  // Very heavy hallucination
+  if (pct < 20) {
+    return { verdict: "reject", confidence: 85, notes: `low grounding (${pct}% of ${total} quotes)`, source: "heuristic" };
+  }
+  // Mediocre — cycle to a stronger model
+  if (pct < 50) {
+    return { verdict: "cycle", confidence: 65, notes: `mediocre grounding (${pct}% of ${total} quotes); try stronger`, source: "heuristic" };
+  }
+  // Good enough
+  return { verdict: "accept", confidence: 75, notes: `grounding ${pct}% of ${total} quotes`, source: "heuristic" };
+}
+
 async function maybeEscalate(failures: ObservedOp[]) {
   // Group failures by sig_hash
   const bySig = new Map<string, ObservedOp[]>();
@@ -362,6 +521,28 @@ function startHttpListener() {
             .map(o => ({ ts: o.timestamp, ok: o.success, staffer: o.staffer_id, kind: o.event_kind, role: o.role })),
         }));
       }
+      // ─── Hand-review endpoint (2026-04-25) ───
+      // scrum/agent posts a candidate response + source content + grounding
+      // stats. Observer evaluates via cloud LLM (qwen3-coder:480b) with
+      // semantic context and returns {verdict, confidence, notes}. On
+      // cloud throttle, falls back to a deterministic heuristic over the
+      // grounding stats so the loop keeps moving with honest signal.
+      //
+      // This is the policy layer scrum was missing — pre-2026-04-25 the
+      // scrum_master applied a hardcoded grounding-rate threshold inline,
+      // which baked judgment into the wrong layer. Now scrum reports data
+      // (response + source + stats) and observer decides accept/reject/cycle.
+      if (req.method === "POST" && url.pathname === "/review") {
+        return req.json().then((body: any) => handReview(body))
+          .then((verdict) => new Response(JSON.stringify(verdict), {
+            headers: { "content-type": "application/json" },
+          }))
+          .catch((e: Error) =>
+            new Response(JSON.stringify({ verdict: "accept", notes: `observer error: ${e.message}`, source: "heuristic" }), {
+              status: 200,  // fall-open shape — scrum keeps moving on observer failure
+              headers: { "content-type": "application/json" },
+            }));
+      }
       if (req.method === "POST" && url.pathname === "/event") {
         return req.json().then((body: any) => {
           const op: ObservedOp = {
diff --git a/tests/real-world/scrum_master_pipeline.ts b/tests/real-world/scrum_master_pipeline.ts
index e1fe3d3..aabddcd 100644
--- a/tests/real-world/scrum_master_pipeline.ts
+++ b/tests/real-world/scrum_master_pipeline.ts
@@ -301,6 +301,52 @@ async function recordPathwayReplay(pathwayId: string, succeeded: boolean): Promi
   }
 }
 
+// Observer hand-review — the policy layer that decides whether a
+// candidate response is grounded enough to accept. Lives in mcp-server's
+// observer (port 3800) so it sits OUTSIDE the scrum loop's epistemic
+// scope. Synchronous so scrum can act on the verdict immediately.
+//
+// Returns {verdict, confidence, notes}. verdict ∈ {accept, reject, cycle}.
+// On unreachable observer (network, timeout, parse failure), falls open
+// to {verdict: "accept"} — the observer is the policy layer, not a hard
+// dependency. Pipeline keeps moving when the observer is down.
+const OBSERVER_URL = process.env.LH_OBSERVER_URL ?? "http://localhost:3800";
+
+interface ObserverVerdict {
+  verdict: "accept" | "reject" | "cycle";
+  confidence?: number;
+  notes?: string;
+  source?: "cloud" | "heuristic";
+}
+
+async function observerHandReview(input: {
+  file_path: string;
+  model: string;
+  response: string;
+  source_content: string;
+  grounding_stats: { total: number; grounded: number; groundedPct: number | null };
+  attempt: number;
+}): Promise<ObserverVerdict> {
+  try {
+    const r = await fetch(`${OBSERVER_URL}/review`, {
+      method: "POST",
+      headers: { "content-type": "application/json" },
+      body: JSON.stringify(input),
+      signal: AbortSignal.timeout(60000),
+    });
+    if (!r.ok) {
+      // Observer down or rejected the request — fall open to accept so
+      // the loop keeps moving. Log so we notice degradation.
+      console.error(`[scrum] observer review unreachable (${r.status}), falling open to accept`);
+      return { verdict: "accept", notes: `observer ${r.status}`, source: "heuristic" };
+    }
+    return (await r.json()) as ObserverVerdict;
+  } catch (e: any) {
+    console.error(`[scrum] observer review failed (${e.message}), falling open to accept`);
+    return { verdict: "accept", notes: `observer error: ${e.message}`, source: "heuristic" };
+  }
+}
+
 // ADR-021 Phase C: pre-review enrichment. Fetch aggregated bug
 // fingerprints for this narrow fingerprint (same key as hot-swap —
 // task_class + file_prefix + signal_class) so the reviewer prompt
@@ -1057,22 +1103,41 @@ Respond with markdown. Be specific, not generic. Cite file-region + PRD-chunk-of
       log(`    ✗ thin/unstructured (${r.content.length} chars)`);
       continue;
     }
+    // Compute grounding stats as DATA — feed to observer for hand-review.
+    // We no longer gate locally on a hardcoded threshold; that judgment
+    // belongs to the observer (which has Langfuse traces + can call cloud
+    // models for semantic review). Local stats are still informational
+    // and get appended as a footer for humans.
+    const groundingStats = verifyAnchorGrounding(r.content, content);
+
+    // Observer hand-review — synchronous call to mcp-server :3800. Observer
+    // returns {verdict: accept|reject|cycle, confidence, notes}. If the
+    // observer is unreachable or errors, fall through to acceptance (the
+    // observer is the policy layer; pipeline keeps moving when it's down).
+    const obsVerdict = await observerHandReview({
+      file_path: rel,
+      model: `${rung.provider}/${rung.model}`,
+      response: r.content,
+      source_content: content,
+      grounding_stats: groundingStats,
+      attempt: n,
+    });
+    if (obsVerdict.verdict === "reject" || obsVerdict.verdict === "cycle") {
+      const reason = `observer ${obsVerdict.verdict}: ${obsVerdict.notes ?? "no notes"} (conf=${obsVerdict.confidence ?? "?"})`;
+      history.push({ n, model: rung.model, status: "thin", chars: r.content.length, error: reason });
+      pathwayAttempts.push({ rung: i + 1, model: rung.model, latency_ms: attemptMs, accepted: false, reject_reason: reason });
+      log(`    ✗ ${reason} — cycling ladder`);
+      continue;
+    }
     history.push({ n, model: rung.model, status: "accepted", chars: r.content.length });
     pathwayAttempts.push({ rung: i + 1, model: rung.model, latency_ms: attemptMs, accepted: true, reject_reason: null });
     accepted = r.content;
     acceptedModel = `${rung.provider}/${rung.model}`;
     acceptedOn = n;
-    // Post-acceptance: when tree-split fired, run the anchor-grounding
-    // verifier and append a footer with the grounding rate. The footer
-    // surfaces ungrounded quotes so humans can spot hallucinated
-    // findings at a glance — prevents the 0/10 confabulation pattern
-    // observed on llm_team_ui.py 2026-04-24.
-    if (treeSplitFired) {
-      const stats = verifyAnchorGrounding(accepted, content);
-      log(`    ⚓ anchor grounding: ${stats.grounded}/${stats.total} quotes matched source` +
-        (stats.groundedPct !== null ? ` (${stats.groundedPct}%)` : ""));
-      accepted = appendGroundingFooter(accepted, stats);
-    }
+    log(`    ⚓ anchor grounding: ${groundingStats.grounded}/${groundingStats.total} quotes matched source` +
+      (groundingStats.groundedPct !== null ? ` (${groundingStats.groundedPct}%)` : "") +
+      ` · observer ${obsVerdict.verdict}` + (obsVerdict.confidence ? ` (conf=${obsVerdict.confidence})` : ""));
+    accepted = appendGroundingFooter(accepted, groundingStats);
     log(`    ✓ ACCEPTED on attempt ${n} (${rung.model}, ${r.content.length} chars)`);
     break;
   }