1. Vendor Performance and Conduct Policy November 15, 2006 Seoul, Korea

2. PRINCIPLES The Department of Public Works and Government Services Canada (PWGSC) is committed to enhancing the integrity and efficiency of the government contracting process To meet this commitment, the Department contracts with vendors who comply with the terms and conditions of bid solicitation documents and other contractual obligations The Vendor Performance and Conduct Policy (VPCP) ensures value to the Crown, and Canadians by contracting with quality suppliers who operates in a timely and cost effective manner, and maintain high ethical standards 2

3. VPCP PRINCIPLES (con’t.) Rehabilitative, not punitive Proactive, rather than reactive Vendor Management approach Contract Planning Contract Management and File Close Out Central Coordination and Data Repository Cooperative and collaborative relationship between the Government of Canada, it’s vendors, and potential vendors Provides an effective level of strategic management information where the Government can stay informed about issues 3

4. VPCP PROCESS All contractual documents within scope will be evaluated, as a rule Performance expectations and consequences for breach of contractual terms are communicated in solicitations and resultant contracts Formal performance evaluation at the end of contract Vendor informed of results prior to entry into centralized database Evaluation results may be used to determine future business with the Crown Vendor Performance Review Secretariat (VPRS) to centrally manage process and database Action taken when there is a breach of contractual terms and conditions, or continual issues of non-conformance 4

5. VPCP PROCESS VENDORS EVALUATION Recording of factual information, by both the client and the contracting officer, using a standard evaluation report form: Conformance to requirements Delivery requirements Technical requirements (includes items/services, training, documentation) Contract Management / Administrative requirements (includes invoices, claims, progress reports) Vendor Conduct (overall behaviour) Termination for default NOTE: No rating to be made by the Contracting Officer 5

6. ROLE OF THE VENDOR PERFORMANCE REVIEW SECRETARIAT (VPRS) Acts as a coordination office Ensures consistency, fairness in treatment of vendors Reviews vendor performance evaluation reports received from contracting officers Monitors vendor performance database Conducts investigations Recommends and implements corrective measures Coordinates the review of vendors records: Assigns a rating (for bid evaluation in future contracts) Recommends a Vendor Performance Corrective Measure 6

7. VPCP SANCTIONS Vendor Performance Corrective Measures (VPCMs) Debarment - disqualification of a vendor from entering into contracts with the PWGSC, including disqualification from submitting bids or having bids evaluated. Suspension - temporary debarment pending investigation by PWGSC of poor performance or pending satisfaction of contract conditions Conditions - the imposition of conditions to current and future contracts, designed to provide financial or performance security for the government of Canada to ensure improved contract performance. NOTE: Corrective Measures applied are not published 7

8. VPCP SANCTIONS (con’t.) Bid Rejection PWGSC may reject bids in cases where: Bidder is subject to a Vendor Performance Corrective Measure Bidder is convicted under specified sections of the Canadian Criminal Code Evidence of bribery, fraud and fraudulent misrepresentation Past performance may jeopardize the successful completion of the requirement being bid on 8

9. VPCP CENTRALIZED DATABASE The new Vendor Performance Information Management System will: collect, store and track vendor performance records and evaluation reports present history of vendors performance and conduct over numerous contracts act as a reference point for contracting officers on vendor performance related matters contain oversight and reporting functions Database entries to remain in the system for a specified period depending on the severity of the contractual breach 9

10. VPCP PROCESS Key Actions by Contracting Officer Bids Solicitation stage Incorporate standard VP clauses in bids solicitations Check VP database prior to bids evaluation Apply established sanctions (Reject bids, Incorporate imposed conditions in resultant contracts) Contract stage Incorporate standard VP clauses in resultant contracts Monitor Vendor’s performance and conduct File close out Objective Assessment of vendor’s performance Consensus evaluation report – client & PWGSC officers Validation of evaluation with vendor Reports sent to the VPRS for incorporation in database 10

11. REVISED VPCP PROCESS Incorporate Performance Expectations in RFP Check Database for Vendor Status before Bids Evaluation No VPCM applied No litigations VPCM applied Reject Bid if Suspended or Debarred Receive Bids Bids Evaluation Add Conditions to Contract Award Contract Contract Management Vendor Evaluation (contracting officer with client) Validation of Report with Vendor 11 Vendor Status (final check before award) VPRS Add Notation to VP database Database Analysis / Vendor Rating coordinated by VPRS