Best Practices Forum

Michael R. Levin Building an Ethical Supply Chain November 24, 2008 “ Consumers, investors, business partners, regulators, and media organizations now expect a company and its entire supply chain to be ethical. The supplier-generated ethics scandal is probably one of the biggest (and least foreseen) business risks most leading companies face today. The damage can be great, and protective measures can and should be adopted immediately.” 2

Why create a Supplier Code of Conduct? 0 Promote inter-organizational Ethics – each part of the supply chain affects others 0 Set expectations for supplier behavior 0 Mitigate risk 0 Facilitate supplier collaboration and partnership 0 Reduce redundancy for suppliers 3

Which of the following would your organization find helpful when dealing with supply chain integrity issues? Signatory Survey Results

Supplier Code Creation Process June 2013 Best Practices Forum Initial working group session Volunteers divided into 2 subgroups August – November 2013 Selection of topics for inclusion Topics assigned to various authors 1 st draft compiled December 2013 – February 2014 Volunteer working group comments incorporated into 2 nd draft 2 nd draft approved by DII Working Group April – May 2014 Supplier Code content incorporated into final design

Table of Contents Compliance with Laws  Maintain Accurate Records Human Rights  Child Labor  Human Trafficking Employment Practices  Harassment  Non-discrimination  Substance Abuse Anti-Corruption  Anti-Corruption Law  FCPA  UK Anti-Bribery  Anti-Kickback  Gifts/Business Courtesies  Insider Trading Conflict of Interest Information Protection  Confidential/Proprietary Information  Information Security  Intellectual Property Environment, Health, & Safety  Security Global Trade Compliance  Import  Export  Anti Boycott  Conflict Minerals Quality  Counterfeit Parts Ethics Office Explanation  Whistleblower Protection  Consequences for Violating Code  Ethics Policies  Contacts/Resources

What does the Code do?  Resource for small suppliers without a code of conduct  Resource for signatories without a supplier code  Option to adopt code as-is for use  Starting point for signatories to create new supplier code  Benchmarking tool for those with a supplier code  Ideally…  Serve as common core code with company specific addenda  Achieve objective of limiting number of codes flowed to common suppliers 7

Future State Possibilities Model industry code adopted by DII DII Code applied by signatories Suppliers acknowledge receipt and review of code Suppliers agree to abide by code Shared audits of common suppliers 8 Certification Industry standard certification

Next Steps 9 DII Working Group to determine next steps

10

Purpose of the DII Supplier Toolkit 0 Provide helpful tips and guidance on how to put together an effective ethics and compliance program 0 Support them in becoming compliant with FAR Contractor Code of Business Ethics and Conduct requirements 0 Engage the supplier community in the ethics discussion 0 Strengthen the defense industry 11

Timeline June 2013 DII BPF Breakout Session October – November 2014 Solicited volunteers to participate on team November – December 2014 Discussed the deliverable, selected and assigned topics December - Present Developed content and had multiple rounds of editing 12 Thank you Team Members!!!!! Bruce Anderson – Health Net Terry Bridges – Georgia Institute of Technology Feyzan Dalay – Sikorsky Tundi Darvai – Formerly with Supreme Group Denise King – Harris Michael Miller – Aerojet Rocketdyne

Table of Contents 13 0 Introduction 0 How to Use This Toolkit 0 Leadership Commitment 0 Company Values 0 Risk Assessment 0 Ethics and Business Conduct Policy 0 Code of Conduct 0 Inquiry and Reporting Mechanisms 0 Awareness Training 0 Communication Plan and Awareness Initiatives 0 Program Assessment and Evaluation 0 Checklist

Next Steps 0 Still in draft form because we want your feedback! 0 Do you have any best practices you would like included? 0 Would you be willing to talk with a supplier one on one to share best practices and offer guidance? 0 Do you have any developed content that would be valuable to a company putting together a program? 0 Once we incorporate feedback, final review and approval will be done by the working group 14

Discussion Questions 0 DII Model Supplier Code 0 What would help you apply the DII Model Supplier Code in your organization? 0 What possibilities and questions should DII consider as regards future use of the Model Supplier Code? 0 DII Supplier Toolkit 0 What additional resources/examples could we provide to the supplier community? Do you have any to share? 0 Is their anything beyond the toolkit we could do to engage the supplier community and help them develop their ethics and compliance programs? 0 How can DII best share the Model Code and Toolkit throughout our stakeholder community? 15