Page 1 of 21 Subject Matter Expert: Mark Chapman Responsible Officer: Mark Savoff Approved By: Corporate Compliance Committee Approval Date: May 31, 2001 I. POLICY SUMMARY This policy outlines the guidelines for procuring materials, goods and services to explain, among other things, that: requests for procurement of materials, goods and services must be approved in accordance with the Entergy System Approval Authority Policy; only Procurement personnel are authorized to commit to suppliers, except as provided in this Policy, or in the case of emergencies or limited purchases through Corporate Purchasing Card, Managers Fund, Vouchers, and Field Service Contracts; except as provided in this Policy, Procurement personnel are responsible for all required bidding and determination of the appropriateness of purchases of materials, goods and services, including the retention of third party contractors and leased employees; letters of Intent may only be issued by Procurement; requests for exclusion from this Policy should be directed to the Vice President and Chief Procurement Officer; and improper or unauthorized purchase may result in disciplinary action of those directly and indirectly responsible, up to and including discharge from employment. All employees, agents and contractors of Entergy shall immediately report known, suspected or potential violations of this policy by following the procedures described in the Reporting Violations Policy. Please refer to the following detailed Policy and its attachments for further information.
Page 2 of 21 1.0 PURPOSE AND APPLICABILITY II. DETAILED POLICY The purpose of this policy is to establish efficient and effective purchasing and contracting standards and controls to be used for the procurement of materials, goods and services by Entergy System Companies, including regulated and competitive business units and/or legal entities. THIS POLICY APPLIES TO ANY AND ALL EMPLOYEES OF ANY ENTERGY SYSTEM COMPANY, UNLESS OTHERWISE EXPRESSLY EXCLUDED, AS WELL AS AGENTS AND CONTRACTORS OF ANY COMPANY. FOR PURPOSES OF THIS POLICY, COMPANY SHALL MEAN ENTERGY CORPORATION AND ALL OF ITS SUBSIDIARIES AND AFFILIATES IN WHICH ENTERGY CORPORATION HAS A DIRECT OR INDIRECT MAJORITY OWNERSHIP IN SUCH SUBSIDIARY OR AFFILIATE. FOR EMPLOYEES COVERED BY A COLLECTIVE BARGAINING AGREEMENT, THE APPLICABLE COLLECTIVE BARGAINING AGREEMENT WILL GOVERN TO THE EXTENT IT CONFLICTS WITH THIS POLICY. NOTHING CONTAINED IN THIS POLICY SHOULD BE CONSTRUED TO SUGGEST THAT EMPLOYEES OF A PARTICULAR SUBSIDIARY OR AFFILIATE OF ENTERGY CORPORATION ARE ALSO EMPLOYEES OF ENTERGY CORPORATION OR ANY OTHER AFFILIATE OR SUBSIDIARY OF ENTERGY CORPORATION. MOREOVER, THIS POLICY DOES NOT CREATE ANY EMPLOYMENT RELATIONSHIP BETWEEN ANY PERSON AND ANY COMPANY. 2.0 REFERENCES AND CROSS REFERENCES 2.1 Entergy Corporation Code of Entegrity 2.2 Entergy System Policies & Procedures, Approval Authority 2.3 Entergy System Policies & Procedures, Capital Project Approval 2.4 Entergy System Policies & Procedures, Corporate Purchasing Card 2.5 Entergy System Policies & Procedures, Real Estate
Page 3 of 21 2.6 Entergy System Policies & Procedures, Reimbursement of Business Expenses 2.7 Entergy System Policies & Procedures, Reporting Violations 2.8 Legal Services Policy Manual 3.0 DEFINITIONS 3.1 Arm s Length Transaction is defined as required under the PUCT s Chapter 25 Rules as the standard of conduct under which unrelated parties, each acting in its own best interest, would carry out a particular transaction. Applied to related parties, a transaction is at arm s length if the transaction could have been made on the same terms to a disinterested third party in a bargained transaction. 3.2 Approved Supplier is defined as Suppliers providing materials, goods, or services to Entergy that have been approved by Procurement. Approved Suppliers should be used for the purchase of materials, goods and services whenever available. The Approved Supplier List can be found on the EntergyNet, except for EOI/Nuclear who utilizes People Soft Financial for commercial vendor selection data and Qualified Supplier List for verification of mandatory nuclear quality assurance qualification data. 3.3 Capital Expenditure Authorization (CEA) is defined as a document used to (1) establish the basis for tracking Capital Project costs, (2) transfer Capital Assets from one legal entity to another, and (3) dispose of Capital Assets. 3.5 Texas Competitive Affiliate is defined as an affiliate of a utility that provides services or sells products in a competitive energy-related market in the state of Texas. 3.6 Contract Management Information System or CMIS is defined as an electronic system to track and monitor requisitions, contract orders and Change Orders, agreements, request for proposals, contract ceilings and contract cost. 3.7 Contract Manager is defined as the employee responsible for the day-to-day coordination of a contractor's activities, contractor performance, verifying receipt of billed services, approval of invoices, ensuring that total expenditures are within the approved contract ceiling, and initiating contract close-out.
Page 4 of 21 3.8 Contract is defined as a legally enforceable document executed between an Entergy System Company and a provider of goods or services that defines their relationship and the terms and conditions that govern it. 3.9 Corporate Support Services are services shared by a Texas utility, its parent holding company, or a separate affiliate created to perform corporate support services, with its affiliates of joint corporate oversight, governance, support systems and personnel. Examples of services that may be shared include human resources, procurement, information technology, regulatory services, administrative services, real estate services, legal services, accounting, environmental services, research and development unrelated to marketing activity and/or business development for the Texas Competitive Affiliate regarding its services and products, risk management services, community relations, corporate communications, financial services, corporate services lobbying and corporate planning. 3.10 Emergency is defined as any situation that has or would result in an interruption of service, a significant loss of Entergy System assets, or an imminent health or safety hazard to an employee or the public. 3.11 Entergy, Entergy System, or Entergy System Company Entergy Corporation and all of its regulated and competitive subsidiaries and affiliates. However, nothing herein should be construed to suggest that employees of a particular subsidiary or affiliate are also employees of Entergy Corporation or any other affiliate or subsidiary of Entergy Corporation. 3.12 Initiating Procurement Document is defined as the document (Purchase/Material Request, Contract Requisition or any written document as required by the respective SBU Procurement group) that is forwarded to Procurement by the Requester of materials, goods or services. 3.13 Lease is defined as a legally enforceable document that grants occupation or use of property or equipment during a certain period in exchange for a specified rent. 3.14 Materials Management Information System or MMIS is defined as the system used by the Entergy System for Purchase Order issuance and data storage. This system is also used to track, monitor and account for issues, receipts, and other transactions for inventory management.
Page 5 of 21 3.15 Non-Purchase Order and Non-Contract Purchases is defined as the process for small dollar purchases below the level requiring a Purchase Order or Contract. Non-P.O. methods of payment include the following: 3.15.1 PEARL (Non-Purchase Order Payment Request) is defined as an electronic invoice processing system used to process invoices for payment of limited purchases of non-nuclear safety-related materials and goods valued under $3,000 and non-nuclear safety-related services under $5,000 that are not purchased through a P.O. or Contract. Requires user to enter invoice data and valid Code Block distribution, then route for electronic approval. 3.15.2 Corporate Purchasing Card is defined as a charge card that provides Entergy System end-users with an alternate method of procuring low dollar materials, goods, and services. This card must not be used for entertainment and personal expenses and has limited use for travel expenses. (Refer to Attachment II in the Entergy System Policies & Procedures, Corporate Purchasing Card.) 3.15.3 EARL (Employee Account Reporting Log) Expense Account is defined as a method of reimbursing employees for business related expenses for small dollar purchases when the employee does not have the Corporate Purchasing Card and the Supplier is not set up with a vendor number or the invoice amount is very low. 3.15.4 Managers Fund is defined as a replenishable fund such as checking accounts and petty cash used for the purchase of small dollar items. The expenditure limit is $1,000 per check. 3.16 PUCT is defined as the Public Utility Commission of Texas. 3.17 Purchase Order or P.O. is defined as the document issued to the Supplier to formally authorize or confirm the purchase of materials and supplies in excess of $3,000 or stock materials. EOI/Nuclear requires a P.O. for all safety related buys. The P.O. specifies what, and how much is being purchased, shipping information and Code Block distribution, along with the terms and conditions that govern the purchase. 3.18 Requester is defined as the person responsible for determining the materials, goods or services desired and conveying accurate information to Procurement.
Page 6 of 21 3.19 Request for Proposal or RFP is defined as the bid solicitation document issued to bidders by Procurement. The RFP contains pertinent information such as technical and commercial requirements, scope, quantities, terms and conditions, deadlines, and instructions to bidders. 3.20 Strategic Alliance is defined as an agreement formed with another company or group of companies for the purpose of accomplishing common business goals or objectives. Such an agreement allows a company to share in the competitive advantages of another enterprise. A strategic alliance allows a company to effectively hedge against business risks without giving up its independence. Although a strategic alliance presents many benefits, it includes implicit costs as well. These costs include coordinating with other companies, reconciling goals with independent entities, and giving up profits. 3.21 People Soft Financial is defined as the electronic vendor management database that contains vendor information (e.g., vendor name and address information, vendor number, tax ID number, SIC codes, etc.). Only authorized Procurement and Accounts Payable personnel are allowed to add, delete or change information to the vendor database. 4.0 RESPONSIBILITY 4.1 The Vice President and Chief Procurement Officer is responsible for approving any exclusion from this policy. (See Attachment II for exclusions from this Policy.) 4.2 The Vice President and Chief Procurement Officer and his designees are responsible for the interpretation and administration of this policy. 4.3 Procurement personnel are responsible for all bidding and negotiation of prices, payment terms and other terms and conditions of purchase. Procurement is responsible for ensuring that the Initiating Procurement Document is approved in accordance with the Entergy System Approval Authority Policy prior to issuing Purchase Orders and Contracts. Procurement will maintain evidence of the authority, which each transaction is executed upon. Procurement is responsible for communicating to employees the availability of Approved Suppliers, tracking compliance on the use of available Approved Suppliers and for maintaining the Approved Supplier List. 4.4 The Requester is responsible for determining the materials, goods or services desired and conveying accurate information to Procurement. The Requester is
Page 7 of 21 responsible for ensuring availability of funding, preparation of a CEA (where applicable), accurate and complete Code Block information, and obtaining required approval signatures. The Requester should monitor credit memos and ensure that proper credits or payments for such memos are received from the Suppliers and submitted timely to Accounts Payable. If applicable, the Requester must ensure that credit memos are obtained from Suppliers and submitted timely to Accounts Payable. 4.5 The Contract Manager is the employee responsible for the day-to-day coordination of a contractor's activities, contractor performance, verifying receipt of billed services, approval of invoices, ensuring that total expenditures are within the approved contract ceiling, and initiating contract close-out. The Contract Manager is responsible for ensuring that a properly approved CEA exists (where applicable). The Contract Manager is responsible for monitoring and approving contractor invoices up to the authorized contract ceiling amount. The Contract Manager must ensure that the original invoice is supported by appropriate documentation. In addition, the Contract Manager is responsible for ensuring that the Supplier s invoices contain the necessary information for payment processing including complete Code Block information and are processed for the proper amount including sales tax and in accordance with the negotiated contract terms. The Contract Manager is responsible for ensuring that Supplier invoices are applied to the correct Contract. The Contract Manager should monitor credit memos and ensure that proper credits or payments for such memos are received from the Suppliers and submitted timely to Accounts Payable. The Contract Manager is responsible for ensuring that the contractor has performed the services as required by the contract. 4.6 All employees, agents and contractors of Entergy shall immediately report known, suspected, or potential violations of this policy by following the procedures described in the Reporting Violations Policy. 5.0 DETAILS 5.1 Approved Suppliers Qualification 5.1.1 Approved Suppliers, if applicable, should be used to purchase materials, goods and services. EOI/Nuclear should refer to Section 5.1.4. 5.1.2 Request for new suppliers should be forwarded to Procurement personnel for orders that will be placed on a purchase order or contract.
Page 8 of 21 5.1.3 Procurement will maintain the Approved Supplier List. 5.1.4 EOI/Nuclear utilizes People Soft Financial for commercial vendor selection data and the Qualified Supplier List (QSL) for verification of mandatory nuclear quality assurance qualification data. 5.2 Competitive Bidding 5.2.1 Procurement will coordinate with requesters, as needed, to develop scope statements and gather specifications for preparation of Requests for Proposals ( RFPs ). All written RFPs must be sent out by Procurement or personnel using methods of informal solicitation set forth in contracts developed in accordance with this policy. Procurement will receive and open all bids. Requesters will participate in the evaluation process providing any required technical evaluations. Procurement will evaluate and negotiate any associated commercial terms. The final evaluation should provide the lowest total cost considering form, fit, function, delivery, quality, performance, price and commercial terms. 5.2.2 If applicable, in adherence with the General Services Administration Agreement ( GSAA ), all bids for purchases of materials, goods and services greater than $100,000 should indicate whether small/small disadvantage/women owned business concerns were or were not solicited. Additionally, bid documentation must indicate reasons the award was not made to a small/small disadvantaged/women owned business. 5.2.3 A minimum of three (3) written bids should be requested for all purchases of materials greater than ten thousand dollars ($10,000) and for all purchases of services greater than fifty thousand dollars ($50,000), based on the total order value. Approved documentation of reason for not obtaining three (3) bids (Emergency or sole/limited source) is required. 5.2.4 Sealed (formal) bids should be requested for purchases of materials, goods or services greater than two hundred fifty thousand dollars ($250,000) and lesser amounts when appropriate. All bids must be opened at the same time with a minimum of two employees present, with at least one being from Procurement. 5.2.5 Bid files will be kept by Procurement. Bid responses, including prices, must not be shared with competing Suppliers before or after the award, except in the event of an on-line auction.
Page 9 of 21 5.2.6 Procurement reserves the right to reject any or all bids. Late bids shall be rejected. 5.2.7 Procurement may purchase repeatedly requested materials, goods or services without the benefit of written bids when blanket orders provide standing quotations, price lists, or discount sheets that represent the best prices obtainable that are guaranteed by Suppliers for a certain period of time, or strategic alliances with Suppliers that provide Entergy System Companies with the best overall service and value. 5.2.8 The Vice President and Chief Procurement Officer and his designees may approve negotiation in lieu of competitive bidding when circumstances warrant. Such circumstances must be documented. 5.2.9 Texas Provisions. Bidding requirements covering transactions with Texas Competitive Affiliates for utilities in Texas: 5.2.9.1 The utility shall conduct competitive bidding, to procure products and services, other than corporate support services, that are offered by a Texas Competitive Affiliate, or to sell to a Texas Competitive Affiliate assets that have a per unit value of more than $75,000, or a total value of more than $1 million. 5.2.9.2 The utility shall provide reasonable notice of any RFP s using trade journals, newspapers, mailing lists or electronic media as appropriate. RFP s must clearly state the eligibility and selection criteria and specify the weighting for any non-cost criteria. The utility will strictly enforce the criteria specified in the RFP. 5.2.9.3 When a Texas Competitive Affiliate does submit a bid the utility must use an independent evaluator. The utility must document all communications with the evaluator. The evaluator, in writing, shall identify the most advantageous bids based on the RFP criteria but the utility retains responsibility for final selection. It is imperative that an arm s length relationship be maintained throughout the bidding process. 5.2.9.4 Other than corporate support services, transactions with Competitive Affiliates that do not require competitive bidding shall be at arms-length.
Page 10 of 21 5.3 Non-Purchase Order and Non-Contract Purchases 5.3.1 Non-stock, nuclear non-safety-related materials or nuclear non-safetyrelated services may be purchased without the benefit of a P.O. or Contract, providing that costs do not exceed $3,000 for non-stock materials or $5,000 for services, or are covered under a purchasing agreement utilizing the Corporate Purchasing Card or the Entergy System s electronic procurement system. An employee should seek approval, whether oral or written, from his/her supervisor before placing an order with a supplier. 5.3.1.1 Purchases of non-stock, nuclear non-safety-related materials or nuclear non-safety-related services may be purchased using the Corporate Purchasing Card. If an Entergy System Company has an established agreement with an Approved Supplier, the card user should use that Supplier. In addition to limits stated in 5.3.1 above, Corporate Purchasing Cards are limited to the preestablished maximum single transaction limit and monthly transaction limit on each card. (Refer to Entergy System Policies & Procedures, Corporate Purchasing Card.) 5.3.1.2 Employees should make small dollar purchases (less than $3,000) directly with Suppliers using the Corporate Purchasing Card or the electronic procurement systems if applicable (see section 5.3.1.5). If the Supplier does not accept the Corporate Purchasing Card, then an invoice should be sent directly to the employee. The employee should promptly (within 24 hours of receiving such invoice) process the payment request in PEARL. Employees should make every effort to use Approved Suppliers or at least a supplier that has a vendor number already set up in People Soft Financial. 5.3.1.3 Purchases of non-stock, nuclear non-safety-related materials or nuclear non-safety-related services costing under $500 may be processed for payment using the Employee s Expense Account if the employee does not have the Corporate Purchasing Card or if the supplier has not been set up with a vendor number. This process is primarily intended for small dollar purchases or one time purchases. (Refer to Entergy System Policies & Procedures, Reimbursement of Business Expenses.)
Page 11 of 21 5.3.1.4 Managers Funds may be used to purchase non-stock, nuclear non-safety-related materials costing up to $1000. Managers Funds may not be used to purchase materials covered by Purchase Orders or Entergy System standards. 5.3.1.5 Non-stock materials and services will, whenever possible, be purchased using the Entergy System s electronic procurement systems. All suppliers for which a catalog exists on the electronic procurement systems will have a purchasing agreement with an Entergy System Company. Any Entergy System employee who prepares a requisition that exceeds $3,000 will require approval of at least one Entergy System supervisor, whereas all requisitions prepared by Contractors require approval by at least one Entergy System supervisor before submission of an order to a vendor. In addition, the type of purchase will also determine the approval path and business rules to be applied for each order. Employees needing access to the electronic procurement systems should complete the request form in Attachment IV. 5.4 Initiating Procurement Document - If a P.O. or Contract is required, the Requester must complete and submit an Initiating Procurement Document to Procurement. Procurement will only execute a P.O. or Contract upon receiving a properly completed and approved Initiating Procurement Document. 5.4.1 Purchase Requisition - The Purchase Requisition must include the following information: required delivery date, ship to location, requisition number, Code Block distribution, quantity requested, description of the materials, name of person requesting the material, and approval signatures. The Purchase Requisition may include a suggested Supplier, method of transportation, and estimated unit prices. 5.4.2 Contract Requisition - The Contract Requisition must include the following information: Contract Manager and address, amount of request, description of services, work location, contract schedule (start & stop dates) and approval signatures. The Contract Requisition may include a suggested Supplier and Code Block distribution. The amount of the request should include the maximum expenditure, including potential Change Orders allowed without going back to the approver. 5.4.3 Requisition Approval - The Purchase or Contract Requisition must be approved in accordance with the Entergy System Approval Authority
Page 12 of 21 Policy before a P. O. or Contract will be issued. If the proper approval signatures have not been obtained, the requisition will be returned for proper approval. 5.4.4 Furniture Purchases - All furniture purchases must be in accordance with the Entergy System standards and guidelines, and coordinated through the appropriate Facilities organization. 5.4.5 Software/Hardware Purchases - The performance and reliability of the Entergy System's information technology infrastructure is directly influenced by adherence to software and hardware standards for PC/Desktop applications. These standards are applied to purchases administered through Procurement. Due to the rapid pace of technological change, situations where Procurement has not yet been provided a standard for an item can be expected to occur. When no standard is available, any purchase of hardware or software for PC/Desktop applications must be reviewed by the IT Desktop Standards organization prior to final purchase approval. Under no circumstances should software be independently procured and installed, or hardware connected, which has not received such approval from Desktop Standards group. 5.4.6 Leased Employees and Independent Contractors. -- All requisitions of leased employees or independent contractors must be in conformity with the Guidelines for Procurement of Independent Contractors and Leased Employees (See Attachment III). In addition, all leased employees must be acquired through pre-approved vendors. 5.5 Purchase Order and Contract Execution - Once Procurement receives the appropriately authorized document, it has the authority to execute the P.O. or Contract under the authorization levels as listed on Attachment I, Purchase Order and Contract Execution Levels. 5.6 Risk Management/Legal Review - Deviations from the Entergy System's standard insurance requirements or terms and conditions must be documented by Procurement. Risk Management should be consulted for material deviations from the approved Entergy System insurance requirements. Legal Services will provide legal reviews of deviations from standard contract terms and conditions in accordance with the Legal Services Policy Manual.
Page 13 of 21 5.7 Letters of Intent - Letters of Intent may only be issued by Procurement when their use is necessary. The approval levels required for Letters of Intent shall be the same as those required for Purchase Orders and Contracts. 5.8 Award of Purchase Order and Contract Order 5.8.1 The lowest bid considering form, fit, function, delivery, quality, performance, price and commercial terms should be selected when possible. This decision should be based upon the best business case for the Entergy System. 5.8.2 The basis for the award must be documented. 5.8.3 Only Procurement is authorized to commit to Suppliers, except as provided in this Policy, emergencies, or when using the Corporate Purchasing Card, Managers Fund, Voucher Purchases or Field Service Contracts. 5.8.4 Except in an Emergency, a Supplier must not begin work without a P.O., Contract, or authorization from the authorized Procurement personnel. 5.9 Contract 5.9.1 Contract Execution - All Contracts must be executed in accordance with Attachment I, Purchase Order and Contract Execution Levels with the exception of Field Service Contracts and specific exclusions identified in Attachment II, Exclusions from the Entergy System Procurement Policy which must be executed in accordance with the Entergy System Approval Authority Policy. 5.9.2 Required Contract Provisions 5.9.2.1 Contracts should include, at a minimum, the legal entity for which the contract is issued, scope of work, compensation provision including payment terms, and contract term. Contracts may include insurance and indemnification requirements, other provisions deemed necessary for the protection of the Entergy System s interest, and signatures from Authorized Suppliers and Entergy System representatives.
Page 14 of 21 5.9.2.2 A Contract with an Independent Contractor must be in accordance with applicable provisions of the Guidelines for Procurement of Independent Contractors and Leased Employees (Attachment III). Among other things, the Contract must include the name, address and federal tax identification number of the Independent Contractor, a description of the scope of work, a fixed schedule, a defined term, indemnity and other insurance or accountability provisions and other terms and conditions consistent with the person s status as an Independent Contractor. 5.9.2.3 A Contract with an approved leasing organization must be in accordance with applicable provisions of the Guidelines for Procurement of Independent Contractors and Leased Employees (Attachment III). Among other things, the Contract must include the name, address and federal tax identification number of the leasing organization, a description of the type of services to be rendered, the price for services, a defined term; and clearly set forth the obligation on the leasing organization to meet all payroll requirements and tax withholding or FICA requirements with respect to any Leased Employee and, when requested by an Entergy System Company, provide evidence of same from time to time. 5.9.2.4 Texas Provisions A utility shall file with the PUCT a signed copy of any contracts entered into with a Texas Competitive Affiliate. A contract must contain the following at a minimum: effective date and the parties to the agreement; the term of the agreement; a description of the products or services provided to the utility including, by specific product or service, all the affiliate companies who provide or receive these products or services; a description of the asset being sold by the utility to the Texas Competitive Affiliate if any; the obligations of the parties; pricing information; billing and payment procedures. 5.9.3 General Service/Operations Agreements must be executed in accordance with Attachment I, Purchase Order and Contract Execution Levels. 5.9.4 General Services Administration Agreement (GSAA)
Page 15 of 21 5.9.4.1 An agreement entered into between an Entergy System Company and the Federal Government that establishes purchasing and contracting requirements for awards to small/small disadvantaged/women owned businesses. 5.9.4.2 Procurement is responsible for tracking all bids over $100,000, and maintaining appropriate documentation to support the absence of small/small disadvantaged/women owned businesses in the bidding process. In addition, Procurement shall maintain documentation showing justification for award and non-award to small/small disadvantaged/women owned businesses. 5.9.5 Lease 5.9.5.1 Only Procurement is authorized to execute equipment leases. 5.9.5.2 Only the Real Estate Group is authorized to execute real property leases in accordance with Entergy System Policies & Procedures, Real Estate. 5.9.5.3 Leases must be executed in accordance with the Entergy System Approval Authority Policy. 5.9.6 Field Service Contracts - A legally enforceable document executed by Entergy System Contract Managers or employees authorized per the Entergy System Approval Authority Policy and an Approved Supplier for services in which the total amount is less than $20,000. The Field Service Contract is completed by the Contract Manager or Field Engineer and sent to the Approved Supplier for signature. A copy of the executed Contract is forwarded to the appropriate Procurement group. Use of Field Service Contracts is not applicable to EOI/Nuclear. 5.9.7 Change Order 5.9.7.1 Change Orders are required any time there is a change in the scope of work, schedule, quantity, price, or compensation provisions. The Requester should complete and forward the appropriate documents to Procurement before the Supplier begins work (except as noted in Section 5.8.4). To initiate a Change Order, the Requester prepares another Initiating
Page 16 of 21 Procurement Document and obtains the appropriate level of approval. The Change Order is then executed by Procurement. 5.9.7.2 An Initiating Procurement Document (requisition) requesting a Change Order must be approved based on the cumulative total amount of the Order in accordance with the Entergy System Approval Authority Policy unless one of the following apply: 5.9.7.2.1 The original Initiating Procurement Document contains a monetary contingency for anticipated Change Orders and the monetary contingency is within the original authorizer s approval authority. The additional funding shall be approved in accordance with the Entergy System Approval Authority Policy based on the incremental amount until the cumulative total contract amount reaches the original requested amount; or 5.9.7.2.2 The original Initiating Procurement Document is approved in accordance with the Entergy System Approval Authority Policy and a CEA exists for the work and the incremental increase in funding falls within the limits of the CEA. The additional funding shall be approved in accordance with the Entergy System Approval Authority Policy based on the incremental amount. 5.9.7.2.3 The Initiating Procurement Document is a request for the renewal of an existing contract, which contains budgeted, annual recurring expenses, and which, was originally approved by the appropriate level in accordance with the Entergy System Approval Authority Policy. Additional funding shall be approved in accordance with the Approval Authority Policy based on the incremental amount. 5.9.7.3 If the Supplier s final invoice does not cause the contract ceiling to be exceeded by the lesser of 10% or $2,500, a Change Order is not required.
Page 17 of 21 5.9.8 Closing - Procurement will close-out a contract upon receipt of a properly completed Contract Completion Form. The close-out process may also include the completion of a Contract Release signed and dated by the contractor. This documentation should be completed and submitted to Procurement by the Contract Manager. If a closeout form is not received within ninety (90) days following the termination or expiration of a contract, the contract may be administratively closed. 5.10 Invoice Processing 5.10.1 Contracts - Contract invoices should be processed in PEARL designating the CMIS contract number. The Contract Manager is responsible for ensuring that all contract invoices are applied to the contract ceiling. Signature of the Contract Manager or designee will satisfy the requirement for approval of disbursements up to the cumulative authorization amount of the contract. Invoices exceeding the total contract value require a Change Order (except as noted in Section 5.9.7.3). The Contract Manager must ensure that the appropriate contract number and payment terms are shown on the invoice and that the invoice is properly processed. 5.10.1.1 In the event a Contract Manager in Procurement oversees the overall relationship with an Independent Contractor and one or more field personnel are responsible for the day to day oversight of the Independent contractor s work, the field personnel are responsible for acceptance of the work and review and approval of invoices. In such situations, the field personnel are performing the role of the Contract Manager. The Contracts in these situations can be termed to be Non-standard Contracts (i.e. temporary services, surveying, etc.). Therefore these non-standard Contracts have multiple Contract Managers. 5.10.1.2 For a Non-standard Contracts with multiple Contract Managers, the contract invoices shall be approved by the field personnel (the extra Contract Manager that oversees the work) through his line of management in accordance with the non-p.o. approval routing process. This version of the non-p.o. approval routing process will not use the dollar threshold in the current non-p.o. approval routing process, but allow approval up to the contract ceiling.
Page 18 of 21 5.10.1.3 Only a Procurement Contract Manager can determine whether a Contract should be a Non-standard Contract in CMIS. 5.10.2 Materials 5.10.2.1 Purchase Orders require the prompt completion of a materials receipt document verifying actual receipt of materials and their acceptance or rejection. The receipt must be entered into MMIS within two working days of receipt of the materials. Supplier invoices for Purchase Orders must go directly to Source Systems from the Supplier unless otherwise specified in the contract. 5.10.2.2 Non-stock materials purchased without a P.O. must be properly received and processed for payment through PEARL per Section 5.3. 5.11 Emergency Situations In the event of an emergency during non-business hours, materials, goods or services may be purchased outside the Procurement Policy. In such event, a properly approved Initiating Procurement Document and written justification of the purchases made must be forwarded to Procurement within 72 hours of the emergency situation. 5.12 Small/Small Disadvantaged/Women Owned Businesses - Procurement will ensure that small/small disadvantaged/women owned businesses capable of meeting Entergy System's needs are given equal access to participate in the Entergy System business opportunities. Refer to Section 5.2.2 for bidding requirements and Section 5.9.4 for contracting requirements. Documentation must be maintained to show that small/small disadvantaged/women owned businesses were given the opportunity to bid and if not, why not. The documentation must include the basis for award to small/small disadvantaged/women owned businesses and if not, why not. 5.13 Ethics/Code of Entegrity - No employee shall directly or indirectly falsify or cause the falsification of any record or document that would result in an improper or unauthorized purchase. Any such action may result in disciplinary action or discharge of those directly and indirectly responsible. All employees handling purchases shall maintain the highest standards of personal conduct and business ethics in all dealings. All employees are required to strictly adhere to the Entergy Corporation Code of Entegrity. Transactions between regulated and
Page 19 of 21 6.0 PROCEDURES competitive subsidiaries and affiliates shall be accomplished in accordance with applicable regulatory laws and regulations addressing such transactions. See Directives/Procedures of Strategic Business Units. 7.0 ATTACHMENTS Attachment I - Purchase Order and Contract Execution Levels Attachment II - Exclusions from the Entergy System Procurement Policy Attachment III Guidelines for Procurement of Independent Contractors and Leased Employees (not available - under development) Attachment IV Electronic Procurement Access Request Form (access via EntergyNet Policy webpage)
Page 20 of 21 Attachment I Purchase Order and Contract Execution Levels Director, Materials, Purchasing and Contracts Manager, Materials, Purchasing and Contracts Manager, Contracts Manager, Material Control Manager, Supply Chain Director, Supply Chain Nuclear Procurement Supervisor Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Supervisor, Sr. Staff, Sr. Lead, Sr. Procurement Specialist Procurement Specialist II & III Up to and including 250,000 Up to and including 100,000 General Services/Operation Agreements and changes to Agreements may be executed by any of the above listed individuals or an appropriate level of management based on the Entergy System Approval Authority Policy if requested by Procurement.
Page 21 of 21 ATTACHMENT II Exclusions from the Entergy System Procurement Policy Consultants hired by the Office of Chief Executive; Financial transactions involving the issuance, redemption, or retirement of securities and the purchase of insurance; Hiring of expert witnesses by the Office of Chief Executive; Hiring of independent auditing firms by the Office of Chief Executive level; Legal services; Banking and investing transactions involving the opening and closing of all System bank and investment accounts including those related to Money pool activities; Purchase of bulk power by the System Operations Center; Purchase of fuels for fossil and nuclear plants; and Transactions involving the purchase, lease or disposition of real estate.