Frontier 13 Procurement Process

1. Frontier 13Procurement Process October 8, 2010 1

2. Procurement Process by Product/Service • Non-Network Products and Services • Contract Labor • Other Goods and Services 2

3. Procurement of Non-network Services Services that are handled through this process are • Verizon Wireless • Staples (office supplies) • SHI (Software House International – software, desktops, laptops, and computer peripherals) • CS/CTS (Corporate Service/Corporate Telephone Services - LAN, fax, and phone lines…..desk phones “zero dollar orders”) • USADatafax (copiers, faxes, printer, scanners) • Sencomm Communications – head set for telephones 3

4. Procurement of Non-network Services Process • The employee logs into the FTR 13 eWeb using SSO (single sign on) to the PEG@S/Ariba Buyer software • Requisition is completed by the employee and the requisition runs through the approval process flow (Attached) • Once the proper approvals are received, the requisition turns into a purchase order and is electronically transmitted to the vendor via the ASN (Ariba Supplier Network) • The order is shipped by the supplier and the invoice is received electronically through the ASN to PEG@S/Ariba Buyer • FTR13 IT personnel pull the invoice file out of PEG@S/Ariba Buyer weekly and send the invoice file to FTR 13 PeopleSoft for to process the invoice file for payment to the vendor 4

5. Procurement of Non-network Services Approvals and Authorizations – Capital 5

6. Procurement of Non-network Services Approvals and Authorizations – Expense 6

7. PEG@S/Ariba Buyer Architecture USER Web Browser Ariba Supplier Network (ASN) FIREWALL SenComm Interfacing Systems Supplier Interface CGI A D A P T E R S Verizon Wireless PegasARIBA Buyer 8.2 Server Transaction Routing cXML LDAP EDI Staples Secure HTML F1V AP system Software House International Auto-FAX OBIEE Email CS/CTS Requests Supplier Registration PEG@S Database Server Catalogs

8. Procurement of Contract Labor Process • An employee identifies the need to obtain contract labor and services in FTR13 properties • The employee logs into the FTR 13 eWeb using SSO (single sign on) to the Fieldglass software to fill out a requisition • Once the requisition is filled out by the employee, the requisition runs through the approval flow authorized process (approval as of July 2010) 8

9. Procurement of Contract Labor • Once the proper approvals are received, the requisition turns into a blanket purchase order and is electronically transmitted to the vendor via Fieldglass • The worker fills out a weekly time sheet in Fieldglass • The worker’s timesheet is approved weekly by the hiring manager • Bartech Workforce Management sends one weekly consolidated invoice for all contractors, based on approved time sheets with line item detail, to FTR 13 PeopleSoft for invoice processing and payment 9

10. FTR 13 Contract Labor Process

11. Procurement of Goods and Services • The purchase requisition defines a need for goods or services. • The requisitioning process integrates information from three other systems and the SRM module in SAP: • V-build • SRM • CCP • APO • Those requisition processes trigger: • Purchase Order creation • SRM and vBuild look to see if there is an SPK (Special Procurement Key) loaded on the Final Ship To plant in the material master. If one is loaded then the PReq will source the stocking location. If the SPK is blank, it will go direct. For some MRP released inter-company PReqs, a Source List is used to determine the warehouse source 11

12. Procurement of Goods and Services • CCP creates a TEO (Telephone Equipment Order) and Issues it to SAP. Before it gets to SAP Source Determination Logic looks to see if there is inventory available at the Re-Use plant. If there is no inventory at the re-use plant then it will look at the NSI (Tier 1) plant closest to them geographically • If there is no inventory at any of the locations it looks to see if the item is planned at any of the NSI locations. If the item is planned it will backorder at the closest NSI warehouse, regardless of where it is planned. APO (Advanced Planning Optimizer) creates a planned order to replenish the NSI Plant that holds the backorder • Any purchase requisition created with the same vendor, same plant and same purchasing group will process into one purchase order. There may be different variants set up however based on the business needs. Orders turn at the top of the hour 12

13. Procurement of Goods and Services SAP CCP VBuild Master Data Validation Purchase Req Creation Goods Receipt Purchase Order Creation Invoice Verification SRM APO 13

14. PREQ to purchase from vendor STO PREQ from NSI PO/STO created SAP Stock Item Procurement of Goods and Services VBUILD, CCP and SRM orders No Yes 14

15. Procurement of Goods and Services • Manual PO’s and STO’s are both created using ME21N • Automatic PO’s and STO’s created from a PREQ are both created either using ME59N or there are jobs running every hour at the top of the hour to create PO’s/STO’s from requistions. • PO’s are to external suppliers, STO’s are transfers of Frontier owned inventory • The sequential numbering for PO’s and STO’s start with 945 and are 10 digits long (945XXXXXXX) • The purchase order type will appear on the purchase order display screen 15

16. Procurement of Goods and Services • Purchase orders identify: • Vendor • Material or Material group • Quantity ordered • Price • Delivery date • SAP purchase order requirements: • Vendors with whom to place purchase orders must exist is SAP • Materials for which to place purchase orders must exist is SAP • Material group which to place purchase orders must exist is SAP • An approved purchase requisition is used to automatically create the PO the majority of the time 16

17. Procurement of Goods and Services Requisition PO Goods Receipt Vendor Invoice AP Check 17

18. Procurement of Goods and Services • Processing purchase order outputs: • EDI Supplier set up for EDI (initial PO only) • Print Print and send to supplier • Fax Fax from SAP to supplier • Purchase orders not marked for automatic PO generation and emergency PO’s will be manually created using ME21N • Purchase orders are transmitted to the supplier by Electronic Data Interchange (EDI) or by another agreed upon method. Generally Fax • The supplier receives the PO and transmits an order acknowledgement. The supplier fills the order according to the terms specified in the PO 18

19. Procurement of Goods and Services • SAP will allow approval processes to be set up in the system according to the Frontier approvals/signature authority • The Release Strategy tab appears on external purchase orders greater than $2,500 (not on STO’s) • You cannot print, fax, or send a PO EDI until it is released • Once released the purchase order will hold the approved information on the purchase order header Release Strategy tab • If not released within two days, the next level of authorization will be notified (except if it is at the last stop in the approval process… then it stays there till released) • If a person will be out of the office, they can delegate their release authority to another person their same level or above • Purchase orders Over $2,500 are subject to approval 19

20. Procurement of Goods and Services 20