Subcontractor Control

1. Subcontractor Control Joe Bocchino CPPA Honeywell Technology Solutions Inc. Phoenix, Arizona

2. Topics • Controls and Records • Purchasing Data • Pre Procurement Activities • Supplier Consignment • Transfers • Evaluation of Subcontractors (Risk Assessments, Surveillance) • Support Property Administration

3. CONTROLS AND RECORDS • The same basic controls for Gov’t Property that are required by Honeywell will be required of Subcontractors • Gov’t property stewardship records located at the Subcontractors will be maintained and controlled by the Honeywell Site Record Center unless support Property administration delegation has been issued.

4. Purchasing Data • ISC/Sourcing is responsible to ensure that • Subcontractors who possess Gov’t property as • a result of a Purchase Contract will comply with • Contracts Terms and Conditions, Honeywell • Policies and Gov’t Regulations

5. Pre Procurement Activities • Sourcingshall obtain a copy of the Supplier’s Gov’t Property Management System Approval and provide a copy to the Gov’t Property Management Site Coordinator.. • AllPurchase Orders must identify the equipment and material to be provided • or fabricated and contain any contract flow down requirements including • adequate instructions, relative clauses, specific agency applications and the • Subcontractors responsibilities. • Sourcing will include in the P.O. a Requirement that the Supplier notify the • Buyer immediately if their Property Management System is rated inadequate or Unsat or if the System Approval withdrawn. Sourcing will evaluate the • Circumstances and make recommendation to Property Management and act • In accordance with the direction of Property Management • If the Supplier does not have an approved Gov’t Property System, Sourcing • shall request a Pre-Procurement Risk Assessment.

6. Pre Procurement Activities • These system Risk Assessments are a temporary measure to ensure the Supplier has the Basic Systems controls in place. • The Site Coordinator will review the procedures and make the initial • determination of the Level of Risk • If the System is determined to be inadequate, the Site Coordinator will identify areas of non compliance. Sourcing & Site Coordinator shall develop a risk mitigation plan/corrective action. • If the risk is significant, Finance should approve the plan. Sourcing will implement and manage the plan/corrective Action. • If the Supplier does not have an approved Gov’t Property System, Sourcing shall request a Pre-Procurement Risk Assessment.

7. Supplier Consignment • Property to be provided/fabricated must be clearly identified in the P.O. • along with the terms and conditions. • Property shall be consigned to a Supplier in the terms of the P.O. as • line items that document the quantity and dollar value of each P/N. • The Gov’t Property Site Coordinator shall receive copies of all shipping • documents and put them to record. • TheProperty Identification Tag Certification & Asset Consignment Form • is used for fabricated or purchased tooling/equipment. Labels will be sent • with instructions for attaching the ID labels. • The Certification Form is signed and returned to Sourcing and a copy • is forwarded to Property Management. A legible photo of the tool with • part number and U.S. Gov’t markings visible. • ALL CONSIGNED PROPERTY SHALL BE RETURNED TO HONEYWELL OR DISPOSITIONED IN PLACE PRIOR TO THE • P.O. BEING CLOSED.

8. Transfers • When the property is transferred from one Supplier to another, Sourcing • must ensure that the receiving Supplier has the appropriate facilities to • control and maintain the property. • If the receiving Supplier has never had consigned property Sourcing • shall follow Pre-Procurement and Consignment Procedures. • The Gov’t Property Site Coordinator shall coordinate all matters involving • transfer of Supplier consigned property between contracts, contract • closeout, and use of property procurement on one contract for use on • another.

9. Evaluation of Subcontractors • Gov’t Property Site Coordinator is responsible for performing a survey • of Sub Contractors including performing Proper clauses and flow down • reviews, onsite or limited survey results, inventory accuracy and overall • risk assessments at a minimum of biannually.

10. Evaluation of Subcontractors (Risk Assessment) • Risks assessments must be performed to determine whether a Supplier requires an on-site visit (high risk), limit survey/self assessment (medium risk) or no survey (low risk). • The Supplier Surveillance Risk Assessment Tool should be utilized • to determine level of risk and type of survey . This is based on the following: • Type, quantity and value of property in the Supplier’s possession • Type of subcontract and risk-of-loss provisions contained therein • Established policies, procedures, precedence and past performance • Non-responses to inventory/system survey certification • Discrepancies or losses reported during inventory certification.

13. Evaluation of Sub Contractors (Sub Contractor Surveillance) • Full Surveillance requires a Honeywell Representative to perform an • on-site Supplier Survey with a 100% Physical Inventory • Limited surveillance may be utilized with Suppliers who have • demonstrated sound property management practices. Limited • Surveillance permits the Supplier to perform a self-assessment • utilizing the Honeywell Supplier Surveillance Form. • No surveillance indicates that the Supplier is not required to complete • a Supplier self-assessment. • The Gov’t Property Site Coordinator prepares the a Supplier • Correspondence package consisting of a Letter of Notification and • instructions, a current list of Gov’t property at the Suppliers and the • Supplier Surveillance Form.

14. Sites have the option of delegating Supplier Surveillance to HIA (Source Inspectors) to perform either limited surveillance or Supplier onsite Surveillance when required. This could be cost effective especially where HTSI technical specialists perform routine source inspections at Suppliers in their area.

15. Questions or Discussions?