Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D 2012 Annual PERT Workshop Best Practice Briefing The LANS P-CARD Program February 8, 2012 Slide 1

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D 2012 Annual PERT Workshop Excerpt from PERT Independent Review Team Report, February 18, 2011: “P-card Program The LANS P-Card Program is considered a complex-wide best practice. There are strong centralized controls in place for cardholders and approving officials with continuous monitoring and reporting. The P-card Program Administrator is intimately involved in the training, monitoring, enforcement, and oversight while driving efficiencies through the program.” Slide 2

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D 2012 Annual PERT Workshop LANS P-CARD PROGRAM: General Information Spend / Transaction Data Staffing Program Administrator P-Card Agents – 3 Help Desk Support -- 2 Cardholders ASM: 49 Other: 642 Slide 3 Fiscal Year$ (Spend)Transactions 2010$ 53,562,12440, $ 62,754,98446, (thru 1/12) $ 18,360,95915,716

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: SPEND LIMITS $5K per single transaction limit and $50K per month. $10K per single transaction limit and $100K per month. “Super DPR” $25K per single transaction and $250K per month

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: INTERNAL CONTROLS Identification of prohibited or unauthorized purchases. Requires invoices, packing lists, or other documentation identifying the goods or services received. Documentation reviewed by the cardholder’s approving official in order to confirm appropriate billing and actual receipt. 10:1 cardholder to approver ratio. Track and resolve delinquent reconciliations of monthly cardholder statements. Track and resolve disputed transactions.

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: INTERNAL CONTROLS (cont.) 100% desktop review of all purchase card transactions. Issue sanctions for noncompliance. On-line reconciliation. Annual refresher training. Prohibit delivery of products to a home address. Mandatory business purpose field. Restrict supplier access/MCC codes. SME system for identifying/or confirming authorized purchases.

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: ASSESSMENTS ACL Continuous Controls Monitoring (CCM) Solution for Purchase Card: o Software application used to check and validate all (100%) purchase card transaction data against control parameters and business rules to identify exceptions for further data mining and analysis, and to ensure internal controls and compliance is maintained. o Audit process initiated automatically by the ACL CCM Application on a scheduled basis; usually the seventh of the month after the bank statement has been loaded into the Purchase Card System (PCS).

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: ASSESSMENTS (cont’d) Continuous Control Monitoring System – Control Parameters and Business Rules o Unauthorized purchases o Foreign Buys o Split Transactions o Changes to cardholder accounts o Exceed single or monthly limit o Transactions with a description of numbers o Decline due to MCC code o Any order > $5K for items requiring property tagging

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: ASSESSMENTS (cont’d)  Monthly Desktop Audit - Reviews all (100%) purchases for appropriateness of the transaction; sufficiency of purchase descriptions and transaction amounts; potential unallowable costs; unauthorized items; split transactions; or potential fraud, waste, and abuse; documentation.  Property Review - Subset of the 100% Monthly Desktop Audit. Ensures property items purchased by Purchase Card were in accordance with the Purchase Card Program policies and procedures.  Disputes Review - Subset of the 100% Monthly Desktop Audit. Ensures that disputed transactions are properly identified and processed, and determines if credits were obtained on a timely basis in accordance with the Purchase Card Program policies and procedures.

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: EXCEPTION PROCESS For one time approvals or permanent approvals. Limit increase MCC issue Policy exception with request for Supplier Description Dollar amount Business purpose Justification PHD forwards to P-Card Staff. P-Card reviews request, contacts SME and/or Purchasing Manager for approval, enters into database, notifies DPR.

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: SANCTION POLICY Documented corrective actions may include: Notification – An infraction addressed in memo form. (ex. unauthorized buy, missing documentation or failure to acquire preapproval) Retraining – An infraction addressed by attending previously completed training and/or one- on-one training. Warning – An infraction when multiple notifications or retraining corrective actions appear on the DPR’s record. Suspension – An infraction with multiple recorded warnings, notifications and or retraining that result in limiting or suspending the DPR’s delegation of authority. Rescission – An infraction that results in revocation of the DPR’s delegation of authority because of actions which relate to: — Intentional disregard of policy — Intentional acts of fraud, waste or abuse — Acts that otherwise pose a safety, security, and/or quality risk resulting in the rescission of the DPRs delegation of authority — Acts which compromise the integrity of LANS’s approved procurement system — Pattern of continuous disregard of policy and procedures

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop CourseSource DPR FundamentalsCourse #32399 Annual DPR Fundamentals RefresherCourse #46822 iProcurement System TrainingCourse #32398 Non-Catalog Training (Purchase Request)Course #50303 Purchase CardCourse #25188 Annual Purchase Card RefresherCourse #25128 LANS P-CARD PROGRAM: TRAINING

Operated by Los Alamos National Security, LLC for the U.S. Department of Energy’s NNSA U N C L A S S I F I E D Slide Annual PERT Workshop LANS P-CARD PROGRAM: DPR TOOLS DPR News Bulletin - Notifies cardholders of program changes - Includes reminders of policies and procedures - Summarizes internal audit findings DPR Web-Page Purchase Card Web-Page Procurement Help Desk Approximately 600 calls / week