Procurement Guidelines

1016.2.4 If Supplier / Subcontractor Assessment result is Assessorunacceptable and recommended for suspension /blacklisting, CMP shall endorse to CMC.Refer to clause 6.4.1 for the Consequence Manage-ment Committee.6.2.5 For those under conditional acceptable butrequires coaching / provision of warning letter, therespective recommended together with SPU shallcarry out the action.6.2.6 Return the assessment documents / CMP to Approv-Assessor for the re-assessment if required. er6.2.7 Submit the approved Supplier / Contractor As- Assessorsessment and approved CMP (if any) to SPU VendorPerformance and Development (VPD) within 15 daysupon approval of SBU head.6.2.8 Compile and update the details of information SPU,VPDreceived in Supplier/Contractor Database within 7days receipt of Supplier/Contractor Assessment orapproved CMP (if any)6.2.9 Vendors may be de-listed outright from the Listof Accredited Vendors/Contractors in cases offraud, misrepresentation, collusion, breach of con-tract of similar nature and similar or related offensescommitted against Magsaysay and/or third parties6.3 CMC Meeting Arrangement6.3.1 Arrange CMC Meeting to discuss and deliber- CMCate on the Supplier/contractors recommended for Secretar-suspension and/or blacklisting. iat6.3.2 Send invitation / notification e-mail to respec- CMCtive parties regarding the CMC sitting schedule. Secretar- iat6.3.3 Present and obtain approval of the Conse- Assessorquence Management Paper.6.3.4 Deliberate on the CMP, and decide on the rec- CMCommended action. The decision of the CMC shall and Ap-be based on chairman’s authority. However, strong provingdisagreement from other members shall be noted in Authoritythe minutes of meeting or proceeding or delibera-tion of the CMC .

102 6.3.5 During the deliberation, everyone is ex- CMC and Ap- pected to practice good corporate values proving Au- (professionalism, fairness and integrity) and re- thority spect the outcome of decision. 6.3.6 Execute and communicate the approved CMC Secretari- recommendation to supplier/contractor and at related internal parties. 6.3.7 If the recommendation is not approved, CMC perform / re-assess the supplier / subcontractor assessment as per clause 6.2 onwards. The as- sessing team will be identified by the CMC. 6.3.8 Once the CMC has made the decision on the consequence management , there will be no appeal unless advised by the Approving Authority to open the case .6.4 Approval Committee6.4.1 Consequence Management Committee & AllApproving Authority are as follow: Category Committee , Quorum and Approving Authority1. Chairman/Members  Chairman – CFO (MSL/AMI/MMC)  Vice Chairman – SPU  Members – Heads Legal / Head Finance-SBU / HeadAudit / BU Head  Secretariat – SPU-VPM2. Quorum  Chairman  Vice Chairman  Two Members3. Approving  Blacklisting of Companies / DirectorsAuthority – President/CEO  Suspension for more than 1 year – President/CEO  Suspension up to 1 year – CMC- Chairman  Warning Letter / Coaching – Busi- ness / Service Units6.4.2 The chairman may elect a proxy from oneof the Vice Chairman to chair the meeting. Theproxy must not have any interest in the case.

103 6.4.3 The members of CMC are comprised of CMC respective Business / Service Units Head from Finance Services, Legal, Audit and SPU. There- fore, in every meeting, if a member is not able to attend, the Business / Service Unit Heads may send a representative. Note: The participation of the members from different Business/Service Units will be based on the relevance of the supplier/contractor on the unit itself based on the frequency and high val- ue transactions.6.5 CMC Meeting Success Factor 6.5.1 The meetings outcome is dependent on CMC the following: i. Facts on the case . ii. Accuracy of supporting documents such as contracts, minutes of meetings, corre- spondences etc. 6.5.2 The success of the process of conse- CMC/SPU quence management is also dependent on regular and timely decision making. Therefore, meetings must be conducted within the shortest time possible of the non-performance to ensure that decision made is relevant and give the desired impact. 6.5.3 Since time is of an essence in the situation and since availability of facts or hard data may be time consuming, a balance had to ensure that actions are taken timely to address the is- sue at hand.6.6 Update Supplier/Contractor Assessment Data- SPU, VPDbase 6.6.1 Record / update the tracking database based on Supplier/Contractor Rating and con- solidate the assessment rating as follow: i. Class A – Value Driven Supplier or Contractor ii. Class B – Partnering Supplier or Contractor Iii. Class C – Basic Partnering Supplier or Con- tractor iv. Class D – Cost Driven Supplier or Contractor

104 6.6.2 Movement from one class to another SPU, VPD shall be based on assessment rating of above 90% for five consecutive assessments con- ducted with financial standing and shall be approved by Senior Manager, Supply Chain Services Department. Re-classification shall be carried out once a year. 6.6.3 Publish the assessment result (Supplier/ SPU, VPD Contractor Assessment Database) in K-Hub as reference.7. APPENDICES 7.1 Supplier Assessment Form 7.2 Contractor Assessment Form 7.3 Consequence Management Paper Template 7.4 Supplier/Contractor Performance and Consequence Management Committee Terms of Reference

105Appendix 7.1: Supplier Assessment Form

106Appendix 7.2: Contractor Assessment Form

107Appendix 7.3: Consequence Management Paper Template

108CONSEQUENCE MANAGEMENT PAPER CONFIDENTIAL<Vendor Name>____________________________________________________________PERFORMANCE ISSUE OF <VENDOR NAME>1. BACKGROUND INFORMATION2. ISSUES/ AREAS OF CONCERN3. CHRONOLOGY OF EVENT4. IMPLICATION5. ACTION TAKEN6. RECOMMENDATION

109Appendix 7.4: Supplier/Contractor Performance and Conse-quence Management Committee Terms of Reference1. Background The process of vendor consequence management for non-performing suppliers and contractors is sets out in the Strate-gic Procurement Unit – Supplier/Contractor Assessment andConsequence Management procedure. The process calls for the formation of a committee, namely– Supplier/Contractor Performance and Consequence Man-agement Committee (SCP-CMC) - as a party to formulatestrategies in developing performing suppliers/contractors aswell as deliberate on the cases of non-performance of suppli-ers and contractors of Magsaysay Group of Companies. 1.1 Part of the committee functions is to review, delib- erate and approve recommended processes and guide- lines to be use in deriving decisions and execution of oper- ating procedures. 1.2 As the cases of non-performance are based on contractual obligation as well as business ethics, the man- agement has agreed that a committee consist of personnel from Strategic Procurement Unit (SPU), Audit, Finance, Legal and respective business unit.2. Purpose The primary purpose for this committee is to ensure thatMAGSAYSAY GROUP OF COMPANIES suppliers/contractors areperforming based on the company’s standard and expecta-tion, properly rewarded on high performance, fair in judgmentand have to take into consideration the risk involved in takingactions against a non-performing supplier or contractor fromvarious aspects such as legal implication, business impact andfinancial impact

1103. The Committee Members The SCP-CMC members consist of:Chairman Committee MembersVice Chairman CFO MSL or CFO AMI/MMCMembers SPU Head Finance Head – AMI/MMC or MSLSecretariat Legal Head Audit Head Respective BU Vendor Performance Management -SPUPresenter of the Consequence Management PaperServices Related Matters Material Related MattersBusiness Unit Personnel and Business Unit Personnel andImmediate Head Immediate HeadUnit head ( if required ) Unit head ( if required )4. Roles and Responsibilities 4.1 Chairman 4.1.1 Chair the SCP-CMC meetings.  Encourage all members to be fair in their evaluation of the assessment presented.  Allow all members to be heard.  Ensure the smooth running of the meetings.  Adjourn the meetings.  Have the authority to call off the meetings due to insuffi- cient facts and have the final say in recommendation for actions to be taken on non-performing suppliers and contractors.  Approve and finalized the decision on any procedures and guidelines to be executed in the company in terms

1114.1.2 Members Attend meetings regularly and give opinion or advice on the cases of non-performing suppliers and contrac- tors based on the facts presented to ensure a fair and balanced recommendation is put forward for manage- ment’s decision. Review procedures and policies proposed to ensure adaptation to current market scenario and continuously enhance the operating guidelines on the vendor man- agement activities.4.1.3 Secretariat Give notice for meetings. Ensure presenters and papers are ready. Arrange for venue. Take minutes of meetings and later distribute to all committee members of CMC. Act on the recommendations for changes in the CMC members as and when required. Review the Terms of Reference periodically. Finalized and distribute the approved new or en- hanced procedures and ensure that all related par- ties were informed on these guidelines.5. Approving AuthorityThe Approving Authority for consequence management onsuppliers and contractors and new procedures are:Decision Approving AuthorityBlacklisting of Companies / Board AMI President / Chief Execu-of Directors tive OfficerSuspension For More Than 1 Year AMI/MSL/MMC PresidentSuspension For Up to 1 YearWarning Letter / Coaching ( if the CMC Chairmanevidence provided do not warrantsuspension or blacklisting ) Supplier/Contractor Perfor- mance and ConsequenceApproval of new/change proce- Management Committee anddures Respective BU Supplier/Contractor Perfor- mance and Consequence Management Committee

1126. Expected OutcomeThe expected outcomes from any CMC meetings are:  Agreement on the justification presented for suppliers or contractors to be considered as non-performing and subject to consequent management.  Agreement on proposed recommended action(s) to be taken on the non-performing suppliers or contractors for management’s decision.  Approval of the proposed procedures and guidelines.7. Success FactorsThe meetings outcome is dependent on the following:  Facts of the case.  Accuracy of supporting documents such as contracts, minutes of meetings, correspondences.  Presentation and statements of the parties involved in the alleged non- performance of vendors. The success of the process of consequence manage-ment is also dependent on regular and timely decision mak-ing. Therefore, meetings must be conducted within the short-est time possible of the non-performance to ensure that deci-sion made is relevant and give the desired impact. Since time is of essence in the situation and sinceavailability of facts or hard data may be time consuming, anadequate amount of time should be spent to ensure that ac-tions are taken timely to address the issue at hand. For new procedures and policies to be proposed orderived from the decision or issues raised, the committee isexpected to provide guidance and decisions prior to imple-mentation of those guidelines and see the benefits of imple-menting such process.8. Agreement between CMC The decision of the CMC shall be based on the con-sensus of the committee in which the chairman will proceedon the finality of the decision. Any strong contention from oth-er members arises during the meeting shall be noted.

113 It is important that the members in their deliberationmaintain good corporate values which include professional-ism, integrity, fair and impartiality.9. Frequency of Meetings Ad-hoc Meeting - Due to the importance of timely deci-sion making, meetings may be called at other times subject toavailability of quorum.10. QuorumThe quorum for the meeting shall be five (5), consist of:  Chairman,  Vice Chairman,  Two members and  One secretariat11. Delegation of Authority The Chairman may elect to delegate his/her chairman-ship to either one of the Vice Chairman to chair the meeting.The nominated chairman must not have any interest in thecase going to be deliberated during the meeting. The other members of CMC are as per nomination bythe respective BU/SU Heads of Finance, Legal, Audit, SPU andrespective BU. Therefore, in every meeting, if the first nomina-tion is not able to attend, the respective heads may provide asecond nomination.