20250306AVU to Staff 40 Attachment B.pdf

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Supply Chain Procedures
Overview
Avista strives to conduct the procurement of goods and/or services in a disciplined manner,
consistent with good business and internal control practices. This includes sustainable
procurement decisions which consider environmental, economic, and social impacts.
Supply Chain Management ("Supply Chain") acts as Avista's authorized agent and primary
contact for the procurement of goods and services to protect the financial and commercial
interests of the Company and to obtain maximum value for each dollar of expenditure.
Supply Chain responsibilities include:
• Acquire goods/services to meet Avista's quality, quantity, safety, financial, supplier diversity
and time requirements.
• Negotiate for optimum value in terms of lowest overall cost.
• Establish and maintain competent, reliable, and competitive supply sources.
• Develop and maintain effective, fair, and ethical relationships with Contractors.
All expenditure requests for the purchase of goods and contracts for services must be approved
by the responsible manager in accordance with established corporate signature authority.
Definitions
Avista Representative: An individual authorized to act on Avista's behalf and who serves as the
primary point of contact related to third party performance and administration of a contract.
Contractor: All businesses, organizations and individuals that provide the goods and services
that Avista uses in its operations. Includes, but is not limited to contractors, subcontractors,
manufacturers, agents, distributors, and suppliers.
Master Agreements: Contracts with a particular Contractor that are utilized for multiple projects
and/or to leverage company-wide purchases or services to achieve the greatest corporate value.
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Sourcing Approval Form: Document appropriate review and approval when there are
exceptions to standard procurement processes for goods and services. This Form requires
approval by the corporate manager with signature authority equal to the estimated value of the
transaction for:
• Sole source (no bid) agreements with a value of$100,000 or more
• Contracts awarded to other than the lowest evaluated bidder if the value exceeds $100,000
• A new agreement executed to replace an expired agreement with an existing Contractor. If
the agreement is being executed for Avista's best interest in continuing its relationship with
the Contractor, such justification should be explained. In this case, only the Supply Chain
Manager's signature is required on the Sourcing Approval Form.
Supplier Diversity: Supplier diversity is a business strategy of incorporating diverse-owned
businesses, suppliers and contractors into a company's supply chain and business practices.
Diverse-owned businesses are companies that are at least 51% owned and operated by
members of underrepresented ethnic groups, women, veterans, service-disabled veterans,
and members of the LGBTQ+ community.
Federal Compliance Provisions
Avista must comply with specific federal compliance provisions as described below. Supply
Chain is responsible for administering the compliance processes unless otherwise noted. For
additional information and guidance, contact the Legal Department or Supply Chain.
Buy America Act
Avista is subject to Buy America Act requirements when the Company is acting as a provider of
goods or services for a federal-aid high construction program (highways, bridges, transit systems
and terminals). Under Buy America, federal aid funds may not be obligated for a project unless
iron and steel products used in such projects are manufactured in the United States.
Conflict Minerals
Under the Dodd-Frank Act, Avista must disclose the use of conflict minerals which are
"necessary to the functionality or production" of a product manufactured by the Company or
contracted by the Avista to be manufactured. Conflict minerals are minerals sourced from
conflict-affected locations and which directly contribute to ongoing violence and forced labor in
these regions. The Legal Department is responsible for the diligence and reporting processes.
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Davis-Bacon Act ("DBA")
Avista and our subcontractors must pay the prevailing wage to all laborers and mechanics when
we work on construction sites for public buildings and public works. We must also comply with
DBA if the construction project involves a DBA related act or if the federal government provides
assistance in the construction project with grants, loans and loan guarantees, or insurance. The
purpose of DBA is to protect local workers from outside contractors who may underbid the local
wage level when competing for federal projects.
Federal Award/Grant Provisions
For projects of which Avista is a recipient or subrecipient of a federal award or grant, we must
comply with additional federal requirements (e.g., Buy American Act) and follow certain
verification protocols to ensure our Contractors are not debarred, suspended, or otherwise
excluded from receiving federal funding. Such verification is the responsibility of Supply Chain.
National Defense Authorization Act
Avista and our contractors and subcontractors must comply with the terms of Section 889 of the
National Defense Authorization Act ("Section 889") which creates a general prohibition on
telecommunications or video surveillance equipment or services that are provided or produced to
be used as a substantial or essential component of any system or as critical technology as part of
any system. Avista and our contractors and subcontractors must ensure that all equipment
provided to Avista does not include any equipment, materials parts or components that are
produced, derived or maintained (regardless of any warranty provided) from companies and their
associated subsidiaries or affiliates, including equipment produced by U.S. manufacturers that
incorporate elements supplied by the covered entities as original equipment manufacturers or
other kinds of supplier relationship that are based in or are related to those identified in Section
889, which, at the time of execution of the Agreement, includes the following companies: Huawei
Technologies Company; ZTE Corporation; Hytera Communications; and Dahua Technology
Company. The list of specified companies may change in accordance with modifications to
Section 889 including the addition of new companies.
Bulk Power System Equipment
Avista and our contractors and subcontractors must comply with Executive Order 13920,
Executive Order on Securing the United States Bulk-Power System, dated May 1, 2020 ("E.O.
13920"), which generally prohibits an acquisition, importation, transfer, or installation of bulk
power system electric equipment designed, developed, manufactured, or supplied by persons
owned by, controlled by, or subject to the jurisdiction of a foreign adversary. Avista and our
contractors and subcontractors must ensure that all equipment provided does not include any
equipment, materials, parts or components that are produced, derived or maintained (regardless
of any warranty provided) from persons (and their associated subsidiaries or affiliates) owned by,
controlled by, or subject to the jurisdiction of a foreign adversary (including equipment produced
by U.S. manufacturers that incorporate elements supplied by covered persons). At this time
identified foreign adversaries include the following countries: China, Russia, Cuba, Iran, North
Korea, and Venezuela. The list of specified foreign adversaries may change in accordance with
modifications to E.O. 13920 and the associated rulemaking process, including the addition of new
foreign adversaries.
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Third Party Management
U.S. Department of Justice Criminal Division Evaluation of Corporate Compliance Programs
(Updated March 2023) 7 E. Third Party Management A well-designed compliance program
should apply risk-based due diligence to its third-party relationships. Although the need for, and
degree of, appropriate due diligence may vary based on the size and nature of the company,
transaction, and third party, Supply Chain should assess the extent to which the company has an
understanding of the qualifications and associations of third-party partners, including the agents,
consultants, and distributors that are commonly used to conceal misconduct, such as the
payment of bribes to foreign officials in international business transactions. Supply Chain should
also assess whether the company knows the business rationale for needing the third party in the
transaction, and the risks posed by third-party partners, including the third-party partners'
reputations and relationships, if any, with foreign officials.
Anti-Bribery & Corruption
Avista is committed to conducting its business ethically and in compliance with all applicable laws
and regulations governing bribery and corruption. All forms of bribery and corruption are
prohibited, specifically bribery of government officials (both U.S. and foreign). A bribe or other
improper payment to secure a business advantage is never acceptable and can expose
individuals and Avista to possible criminal prosecution, reputational harm, or other serious
consequences. This Policy is designed to familiarize employees with anti-bribery and corruption
laws to ensure all business transactions are conducted in a compliant and transparent manner
that does not compromise the integrity or harm the reputation of Avista. This Policy applies to all
officers, employees, agents, or other intermediaries acting on Avista's behalf while conducting
business anywhere in the world. Overall governance and oversight are the responsibility of
Avista's Chief Ethics & Compliance Officer.
Service Contracts
A written contract is required, regardless of value, for all services including general, construction,
professional, and field services. As a standard practice, the use of open-ended (evergreen) or
time and materials service contracts without a not-to-exceed ("NTE") amount is discouraged.
All contracts must meet corporate financial, tax, insurance, legal and risk management
standards. Supply Chain is responsible for identifying and evaluating any liabilities as well as
negotiating terms that result in a well-balanced and fair contract. Legal and Risk Management will
be consulted as needed.
Avista Representative
An Avista Representative, authorized to act on Avista's behalf, shall be identified for all contracts.
Work Authorizations
Work under a master contract is administered under a Work Authorization ("WA"). Each WA
should represent a specific element of work under a master agreement. Combining WA's for
similar or related work may be acceptable providing the WA's are not split into multiple
documents as a means of circumventing the proper review and approval process.
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Change Orders
A Change Order ("CO") should specify the reason for the change, the impact on the schedule (if
any) and the impact to the compensation (if any). Signature authority for approval of the CO is
determined by comparing the total new dollar amount created by the CO to the original contract.
Additional Work and Amendments
Additional work under a project-specific contract is administered via a Change Order ("CO").
Revisions to an executed contract that change contractual terms are administered via an
amendment, or by a CO, if the change involves the work or compensation. Finally, additional
work and/or changes to an executed WA are administered via a CO. Supply Chain Management
will work with the requestors to execute the appropriate contract document.
Exceptions and Non-Standard Terms
Avista's standard contract terms and conditions govern all contracted activities. Significant
deviations from Avista's standard terms or use of terms and conditions provided by the
counterparty must be approved by Legal. Waivers or adjustments to standard insurance
requirements require Legal and Risk Management approval.
Sourcing Approval Form:
If a contract exceeds $100,000 and it was not subject to Avista's Request for Proposal ("RFP")
process, a Sourcing Approval Form is required. A subsequent Sourcing Approval Form may be
required if a change order or amendment is made to the contract such that the total
compensation exceeds the original approval amount.
Contract Review and Approval Form:
The Contract Review and Approval Form is used to document review and approval of
arrangements for services by authorized representatives of Supply Chain, Legal, BU
Management, and Risk Management.
Procurement of Goods
A purchase order is required for purchases exceeding $1,000. Material requirements may not be
split into multiple purchases as a means of circumventing the proper review and approval
process. Requisitions are submitted via the iProcurement System utilizing established signature
authority to ensure proper review and approval of expenditures.
Competitive Bidding
Avista is committed to contracting via competitive bidding to the maximum extent practical. Avista
strives to invite enough bidders, including qualified diverse, local, and small businesses, to
ensure sound competitive offerings. Bids are by invitation only.
Supply Chain is responsible for administering Avista's Request for Proposal ("RFP") processes
and serves as the single point of contact to manage all communications, including clarifications or
modifications, to ensure all RFP-related information is issued simultaneously to all potential
bidders. Competitive bids are solicited through a formal, confidential RFP when the potential
value of the contract is $100,000 or more. RFPs of lesser value are evaluated for opportunity and
subject to competitive bidding or written quotations as advised by Supply Chain.
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CONTRACTED VALUE BIDDING GUIDELINES
Over $100,000 Formal Request for Proposal from
Qualified Bidders
$50,000 - $99,999 Written Quotations from Qualified
Contractors
Less than $50,000 As Advised by Supply Chain
Initiating an RFP
The requestor is responsible for providing the Statement of Work ("SOW'), including technical
specifications, drawings, tasks, deliverables, and/or special considerations. Requestors should
strive to make the SOW and all attachments clear, understandable, and precise to invite
competition whenever possible.
Bidders are encouraged to present their products and services at prices that reflect the current
competitive markets, and to ensure that any exceptions are clearly noted by the bidders.
RFP Evaluation
Bids are opened privately by Avista only after the deadline for receiving proposals has passed.
Supply Chain will work with the requestor to review bids for responsiveness and perform a
comparison with an emphasis on pricing, safety record, diverse, local, and small businesses,
terms, exceptions and/or delivery.
The requestor is responsible for performing a technical evaluation to ensure each bid conforms to
the technical specifications, standards, quality and/or other physical or operational concerns
required under the RFP.
When the RFP is unusual or complex, or interpretation or comparison is difficult, Supply Chain
and the requestor will validate pricing and commercial terms to ensure the integrity of the bids;
determine if the bid contains an apparent error(s) and decide if a re-bid is warranted.
Additional financial and risk analyses will be performed as required. Legal and/or Risk
Management will review exceptions, as necessary.
Following the review and evaluation of conforming proposals, Avista may: enter negotiations with the
preferred Contractor or invite a short list of qualified bidders whose proposals are deemed most
responsive to the RFP to participate in a second, "Best and Final Offer" evaluation round.
Exceptions to the Competitive Bid Process
In cases where Avista would benefit by using a specific contractor rather than conducting an
RFP, a Sourcing Approval Form must be submitted to Supply Chain for review prior to
commencing any purchasing or contracting activity.
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Situations that require immediate procurement of materials or services to avoid placing Avista in
a position that may affect its ability to conduct operations in a safe, efficient, and cost- effective
manner, a Sourcing Approval Form is required within 48 hours of the transaction, if the expense
is greater than $100,000 and traditional approval processes were not followed. Requestors
should work with Supply Chain to fulfill emergency requirements and execute any such
transactions whenever possible.
Contractor Selection
Avista Contractors are selected based on:
• Ability to provide materials, equipment and/or services in accordance with the specifications,
• Ability to meet standards for safety, quality, service level, and long-term benefit to Avista,
• Optimum value / lowest overall cost,
• Financial and business stability, past performance, and relevant experience; and
• Other pertinent factors as deemed necessary.
Employees should avoid doing anything that may imply selection of a contractor on any basis
other than the best interests of Avista or which could give an improper advantage to one
Contractor over another.
Additional consideration may be given to local Contractors having manufacturing or major
stocking facilities and diverse, local, and small businesses located within Avista's service area if
all conditions are equivalent.
Foreign Contractors may be considered when qualified domestic Contractors are non-
competitive, unable to meet delivery requirements, or the foreign product has design and
performance characteristics desired by Avista that may not be available domestically.
Contractor Relations
Employees are expected to maintain impartial, objective, and fair business dealings with
Contractors while promoting positive contractor relationships in all phases of the contracting and
procurement cycle.
Special emphasis is placed on employees who are responsible for, or in a position to influence, the
procurement of goods or services including employees with the responsibility to:
• Establish criteria or specifications for procurement of goods or services,
• Qualify, evaluate, recommend, or select Contractors,
• Receive, inspect, or accept goods or services on behalf of Avista,
• Manage projects and/or review Contractor performance, and/or
• Price, sell, or negotiate the sale of Avista goods or services.
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Employees must avoid solicitation or acceptance of any gifts or personal favors that may create
or appear to create an obligation by the employee or Avista to provide preferential treatment. To
avoid the appearance of impropriety, Avista pays employee expenses for business trips
associated with Contractor site visits.
Employees must protect the confidential information of our Contractors. Passage of one
Contractor's pricing information to a competitor is not only unethical but can be a violation of
antitrust laws. It is never appropriate to discuss a contractor's products or services with
competitors. Likewise, Avista pricing must not be shared with other Contractors and/or their
customers.
When on Avista property, Contractors must be escorted by an Avista employee, unless the
Contractor has obtained appropriate clearance, including background checks.
Concerns with Contractor performance (delivery, quality, or conduct)should be brought to Supply
Chain for resolution. The Legal Department will be consulted as needed.
Other Contracting & Purchasing Information
Equipment Leases
Equipment leases must be reviewed and facilitated by Supply Chain. Equipment lease
agreements that may potentially exceed $50,000 require additional review by the Corporate
Accounting Department.
Real Property
The Real Estate Department manages all real property (permits, franchises, deeds, and
easements) Questions or requests for copies of real estate documents should be directed to Real
Estate.
Will Call Orders
Employees must present identification at the time of pick-up for any "will call" purchases.
Employees must legibly print their name, department, and phone number on the sales order.
Inventory Material
Material stocked in an Avista storeroom is for Company purposes only. This material should be
utilized to ensure compliance with material standards and minimize additional spending on
alternative products because of supplemental purchases.
Credit Cards
Refer to Avista's Corporate Credit Card Program Guidelines & Procedures for a complete list of
acceptable uses and transaction processing.
Contractor Code of Conduct
Contractors are an important extension of our operations. Their commitment to ethics and
compliance is essential as we work together to provide clean, safe, and reliable energy to those
we serve. Avista's Contractor Code of Conduct sets forth the standards that must be met by all
Contractors. This requirement extends throughout their supply chain, including their suppliers,
agents, and subcontractors.
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Questions & Contacts
If you have questions or need further guidance, contact Supply Chain Management.
Updated 10/15/2024
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