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UGE Procurement policy

Responsible Department: Procurement

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Responsible
Official: Procurement Manager and VP of Projects

Effective
Date: 2018-01-01                 Last
Revision Date: 2017-12-29

 

This policy governs the acquisition of
goods and services, under the general direction of the VP of Projects.

1. procurement
principles

·        
Goods and services should be acquired competitively,
with consideration to internal resources allocated, project specific requirements,
alternative vendors, lead time, and payment terms, to achieve the best value.

 

·        
The Acquisition of goods and services must meet legal
and ethical obligations; the vendor selection process should be fair and non-discriminatory.

 

·        
Competing bids, including price, terms, vendor
name, as well as UGE’s budget, target price, lowest bid, or other similar info
must not be shared externally.

 

·        
Approvals for Purchase Orders (POs) must be
obtained in writing; documentation shall be retained for internal and external
review and auditing.

 

·        
Staff involved in procurement should be skilled
in negotiating, identifying risks, reducing cost and lead time, and reviewing
contractual terms and conditions

 

·        
Employees cannot accept gifts or favors from
vendors that may influence a person’s purchasing decisions.  Employees should review with their
supervisors any offers of gifts.

2. COMMUNICATION

Procurement
is the first point of contact for existing and potential vendors and their
sales representatives.  Vendors are
informed of the following with regards to UGE’s Procurement Policy:

 

·        
All procurement of goods and services from
vendors must be accompanied by an official PO.

 

·        
All invoices should be sent directly to
Accounting.  Invoices must reference the correct
PO number and project name to be processed. 
In cases where an invoice is received for a purchase without PO, an
official PO must be created and approved, before the invoice can be approved.

 

·        
Accounting will send invoices to Project
Managers whenever their approval is required prior to payment.

3. Signing
authority and limits

3.1. Purchase
orders

·        
VP, Projects, if $50,001 or greater

·        
Senior Project Manager, up to $50,000

·        
Project Manager, up to $3,000

·        
Procurement Manager, always required

3.2. Subcontractor
AGreements/contracts

·        
UGE USA: President

·        
UGE CANADA: President

·        
UGE RE: President

·        
UGE PHILIPPINES: President

3.3. Credit
APPLICATIONS

3.3.1.  
Main Agreement

Generally,
all credit applications will require a signature that authorizes the Seller to
obtain credit and financial information concerning UGE, its Officers, and its
Principals, from any source, for evaluating UGE’s creditworthiness.

3.3.1.1.  
authorized signatories

·        
UGE USA: President

·        
UGE CANADA: President

·        
UGE RE: President

·        
UGE PHILIPPINES: President

3.3.2.  
Personal Guaranty section

·        
The Personal Guaranty is usually at the end of
the application, or as an attachment.  If
neither is true, read every word of the application to make sure there is no
language that suggests that any person signing anywhere in the credit
application, is personally responsible for any debt or obligation incurred.

3.3.2.1.  
authorized signatories

·        
None

 

 

4. Procurement
process

4.1. GENERAL
PROCESS

SEE APPENDIX A:
PROCUREMENT PROCESS FLOWCHART

4.2. RESPONSIBILITY
by department

4.2.1.  
finance

·        
Creation of Purchase Orders (PO)

·        
Match invoices to correct PO numbers

·        
Revise POs

4.2.2.  
procurement

·        
Oversee the Procurement process of goods and
services in accordance with UGE’s official Procurement Policy.

·        
Prepare and send RFQ

·        
Receive and review quotations

·        
Negotiate price and terms

·        
Manage Vendor Relations

·        
Review and approve POs, along with Project Management

4.2.3.  
project management

·        
Specify Scope of Work (SOW)

·        
Keep the Bill of Material (BOM) up-to-date

·        
Review and negotiate scope of work

·        
Review and approve POs, along with Procurement

·        
Manage payment and delivery schedule

4.2.4.  
engineering

·        
Specify Technical Requirements

·        
Review Technical Specifications and Drawings

·        
Approve Technical Specifications and Drawings

4.3. purchase
orderS (PO)

All procurement of goods or services require an approved PO,
except for purchases of $500 or less, or in rare situations where the VP of
Projects approves an exemption. 
Depending on the amount of the PO, the appropriate approvals must be
obtained in writing before it may be sent out.

4.3.1.  
Approval Levels matrix

SEE APPENDIX B: UGE
APPROVAL LEVELS FOR PROJECT RELATED GOODS AND SERVICES

4.3.2.  
$500 or less.

When the purchase $500
or less, there is no requirement for a PO, though the company has the option of
issuing a PO.  Verbal quotations are
accepted, but not recommended.  Use of a
corporate credit card is allowed if payment is required urgently and in
advance.  Purchases must be approved by
the Project Manager.

4.3.3.  
$501 to $3000

When the purchase
is $500 to $3,000, at least two (2) quotations must be obtained in writing from
different vendors.  Verbal quotations are
not accepted.  Use of a corporate credit
card is allowed if payment is required urgently and in advance.  POs must be approved by the Procurement
Manager as well as the Project Manager.

4.3.4.  
Purchases from $3,001 to $50,000

Goods or services $3,000
and higher are considered high value purchases. 
At least three (3) quotations must be obtained in writing from different
vendors.  Use of a corporate credit card
is not allowed, unless in rare situations where the Procurement Manager
approves an exemption.  POs must be
approved by the Procurement Manager as well as the Project Manager, and the
Senior Project Manager (or Regional Deployment Director).

4.3.5.  
Purchases $50,001 and above

Procurement for
goods and services $50,001 and above, require a formal Request for Quotation
(RFQ) or Request for Proposal (RFP), unless in rare situations where the VP of
Projects Manager approves an exemption.  The
Department of Procurement must be involved with transactions of this magnitude.
 POs and contracts must be approved by
the Procurement Manager as well as the Project Manager, the Senior Project
Manager (or Regional Deployment Director), as well as the VP of Projects.

 

Due to the nature
of procurement in this category, sufficient time must be allowed for each of
the following steps:

 

·        
UGE to prepare the and send the RFQ to qualified
vendors

·        
competing vendors to gather the information
required to create and submit their bid

·        
UGE to review, negotiate and select the winning
bid

·        
UGE to create, review, approve, and issue an
official PO

·        
In some cases, UGE to prepare, negotiate, and
sign a Master Supply Agreement, Stipulated Price Contract, or other contractual
agreements

4.3.6.  
Exceptions

Competitive
quotations are not required for goods or services where the only supplier is a
department, agency, or utility of the government.  However, a PO should still be created internally,
if the amount is more than $500.

4.3.7.  
Splitting Purchases

All amounts in this
policy are in USD, do not include taxes, and refer to the total cost of the
group of goods and services being purchased over the entire project.  It is not acceptable to split the purchase
into smaller orders to avoid obtaining quotations or to avoid going through the
PO approval process (e.g. splitting a purchase of 4 inverters with a total
value of $20,000 into 4 purchases of $5,000 each).

4.3.8.  
Inventory and spares

To help avoid
theft, damage, storage cost, additional freight cost, and any eventual
write-offs, all POs must be for exactly what is required to build the project.  In some cases, such as connectors, hardware
and modules, spares of up to 0.50% may be purchased:

·        
to reduce the risk of not meeting project
deadlines

·        
to take advantage of the low cost of bulk
shipping, and/or bulk pricing.

·        
to avoid long lead times, if replacement units
are needed in the future

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