Procurement Policy

Version: 3.0
Last Updated: 06/25/2019
DCN: VMD-CON-001

Confidential and Proprietary – All Rights Reserved

Approval Date: 06/25/2019

Approved By: CON
DCN: VMD-CON-001
Version: 3.0
 Procurement Policy
Version: 2.0
Approved By: CON, 06/25/2019

Table of Contents
1 Policy Statement................................................................................................................................1

2 Purpose..............................................................................................................................................1

3 Scope.................................................................................................................................................1

4 Documentation...................................................................................................................................1
4.1 Document Control............................................................................................................................................1

4.2 Records............................................................................................................................................................. 1

4.3 Distribution and Maintenance...........................................................................................................................1

5 Privacy...............................................................................................................................................2

6 Responsibility....................................................................................................................................2

7 Policy.................................................................................................................................................2
7.1 Purchasing System Ethics.................................................................................................................................2

8 Overview of the Procurement Process...............................................................................................4

8.1 Needs Determination........................................................................................................................................4

8.2 Make-Or-Buy Program (Self-Perform or Outsource)........................................................................................5

8.3 Purchase Requirements.....................................................................................................................................5

8.4 Approval and Signing Authority.......................................................................................................................8

8.5 Delegation of Approval Authority....................................................................................................................9

8.6 Maintenance of Vendor Lists............................................................................................................................9

8.7 Vendor Rating System....................................................................................................................................10

8.8 Competitive Buying Reports...........................................................................................................................10

9 Additional Provisions for Subcontract Award and Administration..................................................10

9.1 Subcontractor Qualifications..........................................................................................................................10

9.2 Source Selection.............................................................................................................................................11

9.3 Subcontract Contract Types............................................................................................................................15

9.4 Subcontract Terms and Conditions.................................................................................................................16

9.5 Representations and Certifications..................................................................................................................17

9.6 Subcontract Approval and Execution..............................................................................................................17

9.7 Small Business Program.................................................................................................................................18

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9.8 Management of Subcontracts..........................................................................................................................19

10 Records Retention and Contract File Contents................................................................................21

10.1 Related Forms.................................................................................................................................................21

10.2 Documents......................................................................................................................................................21

11 Audit and Internal Controls.............................................................................................................22

11.1 Standard Audit Program.................................................................................................................................22

11.2 Subcontractor Audits......................................................................................................................................23

11.3 Discipline....................................................................................................................................................... 23

11.4 Training.......................................................................................................................................................... 23

Appendices................................................................................................................................................24
Appendix A: Acronyms and Key Terms.........................................................................................................................24
Appendix B: Roles and Responsibilities.........................................................................................................................26

List of Tables
Table 1: Signing Authority...............................................................................................................................................9
Table 2: FAR Provisions with Certifications..................................................................................................................17
Table 3: Acronyms......................................................................................................................................................... 24
Table 4: Key Terms........................................................................................................................................................ 24
Table 5: Roles and Responsibilities................................................................................................................................26

List of Figures
No table of figures entries found.

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Version: 2.0
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Revision History
Rev. # Release Date Author Reviewer(s) Approver Description of Change
1.0 09/09/15 J. Maeger M. Couto M. Couto Update Appendix B and added Section for
Reference documents
2.0 06/25/19 M. Parimi CRB M. Couto Updated the document to match
rebranding

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1 Policy Statement
While it poses an inherent risk to VMD and its operations, supplier relationships are necessity to continued success
within the federal contracting sphere. Although it can never be eliminated, mitigation through stating clear
expectations in all agreements with their suppliers including propagation throughout supply chain can dramatically
reduce risk.

2 Purpose
The purpose of the Procurement Policy is to ensure that goods and services are acquired in a cost-effective,
compliant, efficient, and prudent manner is a key part of the overall success and profitability of VMD Corp. (VMD).

In furtherance of these goals, the VMD Procurement Policy (hereinafter the “Policy”) was developed describing
procurement practices at VMD.

3 Scope
This policy applies to all VMD employees, contractors, and third-party vendors and suppliers. Specific roles and
responsibilities are included in Appendix B: Roles and Responsibilities.

4 Documentation
The documentation shall consist of a Procurement Policy and related procedures and guidelines including security
requirements stated in federal regulations.

4.1 Document Control

The Procurement Policy document and all other referenced documents shall be controlled. Version control shall be
used to preserve the latest release and the previous version of any document.

4.2 Records
Records being generated as part of the Procurement Policy shall be retained for a duration as identified via the VMD
Management Review Board (MRB) in accordance with corporate records management procedure. Records shall be
in hard copy or electronic media. The records shall be owned by the respective Contracts Department and shall be
audited annually.

4.3 Distribution and Maintenance

The Procurement Policy document shall be made available to all concerned persons. All changes and new releases
of this document shall be made available to all concerned persons upon approval. The maintenance responsibility of
the document shall be with the Director of Contracts. Laws, regulations, and contractual requirements are subject to
change, which could require revision to this Policy. The Policy shall be reviewed for accuracy and completeness
annually by the Chief Operating Officer (COO). All personnel with procurement responsibilities shall keep
themselves current with any such changes and shall comply with such changes, regardless of whether the change has
been incorporated into the Policy. Any questions regarding conflicts with this Policy, or recommended changes to
the Policy, shall be addressed to the Director of Compliance.

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5 Privacy
The Procurement Policy document shall be considered as “non-confidential” and shall be made available to all
concerned persons. Subsequent changes and versions of this document shall be controlled.

6 Responsibility
The Director of Contracts is responsible for procuring products and services. In addition, the organization should
ensure that suppliers assign responsibilities for reviewing compliance and enforcing the requirements of the
agreements with corporate oversight by the MRB. Any deficiencies that arise will be reported through monthly
review with the Director of Quality and documented with action created for response and correction.

7 Policy

7.1 Purchasing System Ethics

All VMD personnel involved with purchasing or subcontracting must operate in an objective and fair manner with
suppliers and vendors. Accordingly, employees should avoid any actual, potential, or the appearance of Personal
Conflicts of Interest (PCI)1 and Organizational Conflicts of Interest (OCI) 2 in awarding or administering
subcontracts and purchase orders. Employees should also avoid receiving personal benefits from subcontractors in
exchange for favorable treatment in the source selection process in violation of the Anti-Kickback Act of 1986.
To ensure the interests of the Government and VMD are preserved, purchasing and subcontracting must be
accomplished at arm’s length terms, which helps ensure that market competition is preserved. PCIs, OCIs, and
Kickbacks are discussed below as they relate to the procurement function. For full treatment of these issues and
other ethics guidelines, employees should consult the VMD Ethics Policy.

See FAR Part 3.11, Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions.
2

See FAR Part 9.5, Organizational and Consultant Conflicts of Interest.

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7.1.1 Personal Conflicts of Interest

A PCI is anything that might cause an individual’s private interest to interfere in any way – or even appear to
interfere – with the interests of VMD. A personal conflict situation can arise when an employee’s actions or interests
make it difficult to perform company work objectively and effectively. It is anything that might deprive VMD of an
employee’s undivided loyalty as he / she does business on VMD’s behalf.
As it relates to procurements, employees should abide by the following restrictions to avoid any PCIs:

 Employees should not receive gifts, gratuities, or entertainment from individuals or companies that do
business, or are seeking to do business with VMD. This is not inclusive of normal business gifts of $50 or
under.
 Employees should not own or have greater than a 5% interest in any vendor or subcontractor.
 Employees with a romantic, personal friendship or familial relationship with an employee of a vendor /
subcontractor shall disclose the relationship to the Director of Compliance before the vendor /
subcontractor is selected.

7.1.2 Organizational Conflicts of Interest

Generally, an OCI occurs where, because of other activities or relationships, VMD is unable (or potentially unable)
to render impartial assistance or advice to the Government; VMD’s objectivity in performing the contract work is
impaired; or VMD has an unfair competitive advantage.
To avoid potential OCIs, employees should abide by the following principles:
 Prevent the existence of conflicting roles that might bias the judgement of any personnel involved in
procurement.
 Prevent unfair competitive advantage, which may exist where a contractor competing for award of a
Federal contract possesses:
o Proprietary information that was obtained from a Government official without proper
authorization; or
o Source selection information that is relevant to the contract but is not available to all competitors
and would assist that contractor in obtaining the contract. impaired; or VMD has an unfair competitive
advantage.

7.1.3 Kickbacks
The Anti-Kickback Act of 1986 (41 United States Code (“U.S.C.”) § 51 et seq.) (the “Act”) makes the giving,
attempting to give, accepting, or attempting to accept a kickback illegal. The Act also imposes the obligation on
Government contractors to report reasonable suspicions of kickbacks and to implement internal procedures to detect
kickbacks.
VMD personnel shall be aware that providing or receiving anything of value for the purpose of improperly obtaining
or rewarding favorable treatment in connection with a prime contract or subcontract could constitute a violation of
the Act. The improper exchange of a thing of value need not be complete; even attempts to provide or receive
anything of value could be a violation.
To ensure that VMD does not provide or receive kickbacks, employees shall comply with the following mandates:
 Only authorized personnel shall make purchases that exceed the simplified acquisition threshold.

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 Periodically, personnel with procurement responsibilities may be required to certify to VMD that they are
not aware of any VMD personnel receiving anything of value, except for normal business gifts as described
below, personally or on behalf of VMD, in transacting business with subcontractors or suppliers.
 VMD employees who are aware of any violation of this policy or who suspect that a violation has taken
place or could take place, must immediately notify the Director of Compliance.
Normal business gifts are not considered to be “kickbacks” and may be offered to or accepted from commercial
suppliers and vendors only when the following criteria are met:

 The offering or acceptance of the gift is not contrary to law, regulation, or policy of VMD or the giver.
 The cost of a business meal is not considered to be an inappropriate gift or kickback if the primary purpose
of the meal is to discuss a legitimate business issue. Business meals shall be approved by the Project
Manager before expenses are incurred.
VMD employees who have been offered or who have received a gift that cannot be accepted under this policy shall
return the gift or pay the giver its market value. If the gift is perishable, or it is not practical to return it, the gift may
be given to charity or shared in the office. The Director of Compliance shall be notified of such a gift and whether
an improper motive is suspected.

8 Overview of the Procurement Process

The procurement of goods or services for a VMD contract will result in the issuance of a subcontract or a Purchase
Order (PO). At the beginning of the procurement process, the Project Manager and Contracts Department will
collaborate to determine if a subcontract is needed. If a subcontract is needed, the Contracts Department will have
the primary responsibility of creating and negotiating the subcontract. All purchases other than a subcontract will
typically involve a Project Manager and managers within the Operations, Contracts Department, and Accounting
Departments.
To initiate the procurement process for purchases other than a subcontract, a manager within the Operations
Department will gather order details and prepare a purchase requisition for all purchases over the micro-purchase
threshold. The Project Manager will then review and approve the purchase requisition and send the completed
purchase requisition form to the Accounting Department for review and approval. If not approved, the Accounting
Department will return the purchase requisition to the Project Manager for adjustments. After approving the
purchase requisition, the Accounting Department will send the approved purchase requisition to the Contracts
Department for generation of a PO. The Contracts Department will send the PO to the Accounting Department for
review and approval.
Once the PO has been approved by the Accounting Department, the Contracts Manager will mail, scan, or fax the
PO to the vendor and retain a copy of the PO in the proper procurement file. The manager within the Operations
Department will receive the goods or services from the vendor, inspect the goods to ensure conformity with the PO,
sign and date a copy of the PO, and attach a packing slip (if applicable) indicating that the order has been received,
and match the receiving copy of the PO to the invoice and make any necessary adjustments to the PO. The Project
Manager will review any adjustments made to the PO and then forward the invoice to the Accounting Department
for processing. The Accounting Department will pay the invoice and file the payment packet in the vendor file.

8.1 Needs Determination

For all procurement needs exceeding the simplified acquisition amount, the VMD employee requesting the purchase
of goods or services shall prepare a detailed description of the requirement. This prepared description will be placed

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in the appropriate part of the purchase requisition. The description shall utilize parameters customary to the type of
good or service seeking to be procured and shall be sufficiently detailed that it may serve as the Statement of Work
(SOW) in a Request For Proposal (RFP) or Request For Quotation (RFQ).
At a minimum, the description shall include the following:
 Technical scope of work,
 Required performance / delivery schedule,
 Quality specifications, and
 Any unique requirements, if necessary.
The Contracts Department will maintain specifications for all subcontractor materials and services.

8.2 Make-Or-Buy Program (Self-Perform or Outsource)

Whenever practical, VMD outsources or buys from outside vendors when making or self-performing unless doing
so would be unduly expensive, unreasonable, infeasible, or would not be a sound business judgment or any other
reason. Under certain federal contracts, the government may also require the submission of a make-or-buy program
when necessary to ensure negotiation of reasonable contract prices, satisfactory performance, or implementation of
socioeconomic policies (See FAR Part 15.407-2, Make-or-Buy Programs).
Accordingly, for all procurements above the simplified acquisition threshold, a detailed buy / outsource
determination must be provided in writing on the purchase requisition for approval by the Project Manager (PM).
For purposes of this section, a “buy / outsource” item is any item or work effort to be purchased by VMD that is not
produced or performed by VMD.
The buy / outsource determination should include, at a minimum:
 A description of each major item and / or work effort.
 For each item or work effort, the reasons for categorizing the item as a buy / outsource and an analysis
estimating costs to complete the work effort in house vs. outsourcing.
 Identification of proposed subcontractors, if known, and their location and size status.
 Any recommendations to defer make-or-buy decisions when categorization of some items or work efforts is
impracticable at the time of submission.
Generally, a decision to buy / outsource items shall be justified when the items requested are available — quality,
quantity, delivery, and other essential factors considered — from another company at equal or lower prices.
As a small business, VMD employees with procurement responsibilities must take care to ensure compliance with
FAR Part 52.219-14 – Limitations on Subcontracting. This section of the FAR generally requires that at least 50%
of the work awarded to VMD as a small business must be performed by VMD employees.
VMD shall promptly notify the Government of any changes to a make-or-buy decision.

8.3 Purchase Requirements

8.3.1 Use Competition to Maximum Extent Possible

VMD personnel involved with purchasing or subcontracting should select vendors and suppliers on a competitive
basis to the maximum extent possible. The U.S. Government looks to prime contractors to ensure that competition in

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subcontracting is actively pursued. Competition at the vendor and subcontractor level is a means of reducing the risk
of kickbacks and fraudulent practices.
While competition should be sought for all procurements, there are certain reasons where full and open competition
may not be practical, including if:
 There is only one responsible source (FAR Part 6.302.1 – Only One Responsible Source and No Other
Supplies or Services Will Satisfy Agency Requirements), or
 There is unusual or compelling urgency for a purchase (FAR Part 6.302.2 – Unusual and Compelling
Urgency).

8.3.2 Specific Competition Requirements

8.3.2.1 Purchases Below the Micro-Purchase Threshold

For purchases below the micro-purchase threshold, employees shall use vendors who provide the overall best value
to VMD. Employees are encouraged to consider the offerings of more than one vendor before making a purchase but
are not required to conduct a formal competition.

8.3.2.2 Purchases Above Micro-Purchase but Below the Simplified Acquisition Threshold
For purchases that exceed the micro-purchase threshold but are less than the simplified acquisition threshold,
Operations Department managers must obtain three vendor quotes. The quotes shall be attached to the purchase
requisition that is sent to the Project Manager for review along with the Operations Department manager’s
recommended vendor selection. Operations Department managers should obtain quotes from preferred vendors first
in accordance with Section 9.7 below.
If the Operations Department Manager determines that it is not possible to obtain three quotes because there are not
three known vendors who supply the product or service seeking to be obtained or because identifying and obtaining
quotes from three vendors would be unduly burdensome, the Operations Department manager shall attach any
quotes that have been obtained and indicate on the purchase requisition the reasons for not obtaining three quotes.
The Project Manager will then determine the best way to ensure that VMD is receiving a fair and reasonable price.

8.3.3 Procurement Planning

8.3.3.1 Conducting Market Research

For procurements exceeding the simplified acquisition threshold, the Project Manager shall conduct market research
before soliciting offers.
The Project Manager shall also conduct market research on an ongoing basis using appropriate methods to identify
vendor capabilities, including the capabilities of small businesses and new entrants into Federal contracting that are
available in the marketplace for meeting VMD Systems’ requirements.
Uses for Market Research. The Project Manager shall use market research results to:

 Determine if commercial sources capable of satisfying the company’s requirements exist; and
 Determine the practices of companies engaged in producing, distributing, and supporting commercial
items, such as type of contract, terms for warranties, buyer financing, maintenance, and packaging, and
marking.

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8.3.3.2 Market Research Procedures

Managers within the Operations Department shall describe their purchasing needs in sufficient detail for the Project
Manager to conduct market research. The Project Manager shall then survey the market by any one or more of the
following methods:

 Contacting knowledgeable individuals in applicable industries regarding market capabilities to meet

requirements,
 Reviewing the results of recent market research undertaken to meet similar or identical requirements,
 Publishing formal requests for information in appropriate technical or scientific journals or business
publications, and
 Reviewing catalogs and other generally available product literature published by manufacturers,
distributors, and dealers or available on-line.
Through its market research, VMD should seek to determine the following:

 Whether there is at least one available vendor that can meet its needs;
 Customary practices regarding customizing, modifying, or tailoring of items to meet customer needs and
associated costs;
 Customary practices, including warranty, buyer financing, discounts, contract type considering the nature
and risk associated with the requirement, etc., under which commercial sales of the products are made;
 The requirements of any laws and regulations unique to the item being acquired; and
 The distribution and support capabilities of potential suppliers, including alternative arrangements and cost
estimates.

8.3.4 Purchase Requisition Requirements

For all purchase requisitions, effective numerical document controls shall be maintained to record the receipt of
purchase requisitions and the actions taken to accomplish the purchase. The requisition will indicate the specific
contract, project, department, or account (i.e., cost objective) to which the materials or service will be charged.
The Project Manager will notify the originators of purchase requisitions and other personnel concerned with the
receipt of requisitions, the result of purchase actions, and other pertinent matters affecting the purchase. The Project
Manager will also be responsible for preventing unauthorized use of canceled or voided purchase requisitions.

8.3.5 Purchase Order Requirements

All purchase orders will be pre-numbered, and all numbers will be accounted for. Purchase orders will be specific
and complete as to nomenclature, specification, delivery dates, freight, discounts, price, and clauses of any type
required by the terms of the prime contract or subcontract. Copies of purchase orders will be furnished when issued
to the Accounting Department.
Care should be taken to avoid issuing numerous purchase orders for small amounts.

8.3.6 Produce RFQ / RFP

The Contracts Department will draft an RFP. The RFP should at least include details on each of the following items:

 Statement of Purpose – Describe the extent of products and services VMD is seeking to buy, as well as, the
overall objectives of the contract.

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 Background Information – Provide a brief overview of VMD including key statistics, customer
demographics, strengths, and weaknesses. Also include comprehensive information on the people who will
handle future correspondence.
 Scope of Work – Enumerate the specific duties to be performed by the vendor and the expected outcomes.
This information should already be provided in large part in the purchase requisition submitted to the
Project Manager.
 Outcome and Performance Standards – Specify the outcome targets, minimal performance standards, and
quality requirements expected from the vendor. Also enumerate methods for monitoring performance and
process for implementing corrective actions.
 Deliverables – Provide a list of all products, reports, and plans that will be delivered to VMD and propose a
delivery schedule.
 Term of Contract – Specify length, start date, and end date of the contract, and the options for renewal.
 Payments, Incentives, and Penalties – List all the terms of payment for adequate performance. Highlight the
basis for incentives for superior performance and penalties for inadequate performance or lack of
compliance.
 Contractual Terms and Conditions – Attach standard contracting forms, certifications, and assurances.
Included may be requirements specific to a particular contract. Include required flow-down clauses.
 Requirements for Proposal Preparation – Provide a simple and consistent structure in terms of content,
information, and documents to be included in vendor proposal submissions.
 Evaluation and Award Process – Provide the procedures and criteria used for evaluating proposals and for
making the final contract award. The RFP shall describe the approach for evaluating past performance,
including evaluating offerors with no relevant performance history, and shall provide offerors an
opportunity to identify past or current contracts for efforts similar to the VMD requirement. The RFP shall
also authorize vendors to provide information on problems encountered on the identified contracts and the
vendors’ corrective actions.
 Process Schedule – Clearly and concisely present the timeline for the steps leading to the final decision,
such as the dates for submitting the letter of intent, sending questions, submitting the proposal, etc.
 Contacts – Include a complete list of people to contact for information on the RFP or with any other
questions. Incorporate their name, title, responsibilities, and the various ways of contacting them into this
list.

8.3.7 Bid Solicitation Procedures

The vendors identified during market research will be provided with an RFP. All quotations received for an RFP
must be in writing. Each prospective supplier will be given a complete set of specifications for the item or service to
be procured, and enough lead time will be allowed for the preparation of the proposal.
The Contracts Department will review all Government directives for special considerations concerning small
businesses and labor surplus areas.

8.4 Approval and Signing Authority

The below employees are granted the authority to approve invoices up to the amounts provided in the chart
immediately below. All transactions and expenditures must comply with the authority provided for processing and
payment to take place. The following approval thresholds have been established for general signing authority:

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Table 1: Signing Authority

Job Level Total Dollars Anticipated to be Spent

CEO Unlimited
? ?
? ?
Exceptions from these procedures are indirect supplies and services necessary to support day to day company
activities (e.g., insurance, personnel, recruiting, public utilities, real estate, investments, a reasonable level of office
supplies and support, temporary services, miscellaneous leased office equipment and maintenance, employee
development such as dues, subscriptions, seminars, conferences, medical monitoring, and business travel), which
will be handled by Human Resources.

8.5 Delegation of Approval Authority

In those circumstances when an employee requires the ability to approve requisitions and invoices in excess of the
general signing levels described in Section 9.4, the following stipulations apply:
 Only Project Managers or their equivalents in the Accounting and Contracts Department, and more senior
employees, can receive a delegation of authority to approve requisitions and invoices;
 Only the Director of Compliance and more senior employees may approve a delegation of authority;
 An employee may not approve his/her own delegation (i.e., no self-approvals);
 Employees cannot be delegated more than the amount of signing authority in the job level above them;
 All delegations must be recorded in a form deemed acceptable by the Director of Compliance.
For the purposes of this provision, self-approval refers only to the action of receiving a delegation authority.
All delegation approvals can only be granted by individuals with a general signing authority amount equal to or
greater than the amount of the requested delegation.
The Director of Compliance or their designee has the authority to approve all exception requests for the above
signature delegation policy based on his or her determination that a special delegation of authority is reasonable and
does not compromise the integrity of corporate governance.
All delegations must be requested and approved in writing. Delegations may not exceed 12 months, and all expire
on December 31st in the year it was active. The Accounting Department will maintain a database of all such
delegations and will notify the affected parties no later than 60 days prior to their expiration date. Employees must
reapply to maintain delegated approval authority. Copies of delegation must be maintained in the files of the
individual making the delegation, with the original being forwarded to the Accounting Department.

8.6 Maintenance of Vendor Lists

The Contracts Department shall maintain a list of approved vendors for commonly acquired items. Operations
Department managers who purchase items whose total dollar amount exceeds the micro-purchase threshold, but is
less than the simplified acquisition threshold, are required to seek quotes from three approved vendors before
submitting their purchase requisitions to the Project Manager for review and approval.
If less than three approved vendors exist for the items to be purchased, employees shall provide quotes from any
approved vendors that do exist. If only one approved vendor exists, the Operations Department manager shall obtain

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quotes from at least one other non-approved vendor (but preferably two other vendors) and shall attach all quotes to
the purchase requisition to be sent to the Project Manager for review.

8.7 Vendor Rating System

The Contracts Department shall maintain a Vendor Rating System that tracks the price, quality, delivery, technical
capabilities, financial capabilities, and service of each of VMD’s vendors. The rating system will have the following
characteristics:
 Allow for consistency of comparisons among competing subcontractors;
 Protect rating information;
 Provide documentation on each element rated;
 Allow for the opportunity for new subcontractors to compete; and
 Be kept current and accurate.
Well-performing vendors shall be listed in an Approved Vendor List. Project Managers will be required to assess
vendors’ performance on a regular basis.

8.8 Competitive Buying Reports

The Contracts Department will prepare regular reports on competitive buying which, in addition to identifying the
number of competitive bids, will also identify suspect situations where the lowest bidder may always be the same
and always slightly under the next lowest.

9 Additional Provisions for Subcontract Award and Administration

9.1 Subcontractor Qualifications

9.1.1 Debarment, Suspension, and Ineligibility

Prior to awarding a subcontract, it is necessary to ensure that the selected subcontractor has not been debarred or
suspended from doing business with the Government and, therefore, ineligible to perform services for VMD.
The Contracts Department will review the Government’s System for Award Management (“SAM”) 3 to ensure that
proposed vendors and suppliers have not been debarred or suspended from doing business with the U.S.
Government.

The System for Award Management (“SAM”) is the Official U.S. Government system that consolidated the capabilities of
Central Contractor Registration, Federal Register, Online Representations and Certification Applications, and the Excluded
Parties List System. SAM can be accessed online at https://www.sam.gov/portal/SAM.

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9.1.2 Organizational and Personal Conflicts

Any subcontractor that has an Organizational or Personal Conflict of Interest with VMD or with the Government
shall not be eligible for contract award unless authorized by the CEO.

9.1.3 Compliance with Relevant Public Laws and Regulations

Any subcontractor who is not in compliance with all applicable laws and regulations will not be eligible for award.
In certain instances, subcontractors must be compliant with the Truth in Negotiations Act, the Cost Accounting
Standards, Service Contract Act, Davis Bacon Act, Trade Agreements Act, Buy American Act, etc.
The Contracts Department shall be responsible for determining, based on the details of each individual subcontract,
which laws and regulations are applicable. The Contracts Department shall also be responsible for ensuring that all
necessary representations and certifications have been gained from subcontractors before that subcontractor is
eligible for award.

9.2 Source Selection

The process of evaluating proposals from vendors and suppliers should be well documented and consistently applied
to avoid any improprieties or preferential treatment. Bids and proposals should be evaluated and rated on the basis of
the best value to VMD, which can include, where applicable:

 Past performance on prior similar jobs

 Experience on prior similar jobs
 Price reasonableness
 Record of timely performance
 Product quality
 Delivery capabilities
 Technical capabilities
 Key personnel
 Management or technical approach of the vendor

9.2.1 Bid Rating Procedures

Ratings of bids and proposals and a recommendation for award, including the underlying rationale, should be made
in writing, and retained in VMD’s files. The bid and proposal assessment document should include a section
explaining why the recommended vendor or supplier is responsive, responsible, and meets the quality requirements.
The Project Manager will ensure that bids and proposals from potential vendors and suppliers are evaluated and
rated, in writing, by at least two VMD employees, preferably with one individual from outside of the immediate
project. The Project Manager shall retain the written evaluations, ratings, and recommendations for award on file.

9.2.2 Cost/Price Evaluation

A cost or price analysis must be performed in connection with every procurement action over the simplified
acquisition threshold. When subcontracting on a cost-reimbursement basis, evaluations shall include a cost realism
analysis to determine what VMD should realistically expect to pay for the proposed effort, the offeror’s
understanding of the work, and the offeror’s ability to perform the subcontract.

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9.2.3 Past Performance Evaluation

Past performance information is one indicator of an offeror’s ability to perform the subcontract successfully. The
currency and relevance of the information, source of the information, context of the data, and general trends in
subcontractor’s performance shall be considered. The source selection decision shall include an assessment of each
contractor’s past performance including:
 Evaluation of past work on contracts with a similar scope of work;
 Significance of having no relevant past experience;
 Performance of predecessor companies;
 Key personnel who have relevant experience;
 Lower-tier subcontractors that will perform major or critical aspects of the Statement of Work; and
 Past performance of offerors in complying with subcontracting plan goals.

9.2.4 Management / Technical Evaluation

The source selection decision shall contain an evaluation of the management/technical approach of each vendor. It
shall also include a comparative assessment across vendors.

9.2.5 Sole Source Awards

Sole source awards should only be used in rare circumstances where the product or service to be procured is unique
to one company or only available from one company and is absolutely required by VMD.

9.2.5.1 Documentation of Reasoning

Sole source justifications and cost or price analyses should be made in writing and added to the procurement file.
The justification should detail why a particular product or service that is unique to a certain vendor (or only being
provided by that vendor) is required by VMD and the steps taken to ensure that VMD will be receiving fair and
reasonable pricing despite the lack of competition.

9.2.5.2 Approval Authority

All sole source contracts must be approved by the Director of Contracts

9.2.6 Handling of Sensitive Information

9.2.6.1 Procurement Integrity Act Compliance

Federal law known as the “procurement integrity provisions,” addresses restrictions on the exchange of protected
information, including contractor bid and proposal information and Government source selection information. These
provisions make it illegal for a company to have in its possession or use certain types of information. During the
competitive procurement process, certain information generally may not be requested or obtained by VMD, unless
the information is released to all competitors. Therefore, it is important for VMD personnel to be alert when offered
information that is marked in any of the following ways:

 Source Selection or Procurement Integrity Sensitive,

 Company Proprietary or Trade Secrets,
 Not Releasable Under the Freedom of Information Act, or
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 Draft – Not for Release Outside of the Government.

In addition, certain other information about VMD’s competitors is off limits irrespective of any legends or other
markings. This includes cost or pricing data, proprietary information, and trade secrets. Information available
publicly, such as on a competitor’s website, does not fall into these protected categories.
Always exercise due diligence to assure that VMD is authorized to receive information provided by Government
employees or third parties, including consultants. VMD personnel cannot assume that VMD is permitted to receive
all information it is offered. If you receive information which you are not sure you or VMD should have, contact the
Director of Compliance who will consult the COO before reviewing the information. Also, do not share the
information with anyone in VMD before obtaining clearance to do so from the Director of Compliance.
After the procurement process is complete, some otherwise protected information may be releasable by the U.S.
Government under the Freedom of Information Act or during debriefings held by the Government. Debriefings are
meeting between the Government and unsuccessful offerors and occur after the Government has announced the
award of a contract.
The procurement integrity provisions prohibit the filing of a bid protest with the General Accounting Office against
the award or proposed award of a contract alleging a violation of any one of the procurement integrity provisions,
unless the protester first reports to the federal agency responsible for the procurement no later than 14 days after the
person becomes aware of the possible violation.
It is essential that VMD personnel understand what conduct is prohibited under the procurement integrity provisions
and that information concerning a possible violation by the Government or our competitors be brought to the
immediate attention of the Director of Compliance, so that an early assessment can be made regarding the 14 day
reporting requirement.
All Company personnel shall carefully evaluate the facts and circumstances involved as to the status of source
selection and contractor bid or proposal information offered to, requested by, or obtained by VMD to ensure
compliance with this policy. This includes:
 Obtaining source selection and contractor bid or proposal information only as authorized for release by the
Government agency.
 Being cautious before receiving oral or written extracts of source selection or contractor bid or proposal
information by making appropriate inquiries to the Contracting Officer.
 Abiding by restrictive markings placed on information by the Government or VMD competitors.
 Knowing or determining the meaning and application of restrictive markings (e.g., Classified, Proprietary,
Source Selection Sensitive, Trade Secrets, For Official Use Only, and Competition Sensitive), as follows:
o Observe markings unless properly removed by the Government.
o Do not seek or receive contractor bid or proposal information or Government source selection
information from the Government or anyone else.
o Be aware that the Government does not necessarily mark all Government source selection
information with any particular legend. Whether or not marked, the material is considered source
selection information, and should neither be sought nor received.
o Avoid circumstances of receiving or using contractor bid or proposal or source selection
information under conditions that might reasonably create an appearance of impropriety or irregularity;
therefore, do not seek or accept such information under less than fully open circumstances or when the
circumstances might indicate that release of the information is unauthorized or improper.

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o If information is received which might be regarded as suspect, document the facts and
circumstances that indicated it was proper for you to receive and use this information. In questionable
circumstances, if the facts and circumstances suggest that VMD is not entitled to retain such
information, consult the Director of Compliance regarding the appropriate return or retention and
reporting of such information.
o Ensure that all Company information provided to the Government appropriately is labeled as
“Competition Sensitive” and “Proprietary Information,” as the case may be, to preclude its improper
release to other offerors or contractors.
o Observe laws, regulations, and Company policy regarding business meals, gifts, entertainment,
and discussions with Government employees.
o All VMD employees shall be familiar and comply with the procurement integrity restrictions
regarding discussions and employment of U.S. Government personnel and comply with VMD’s Ethics
Policy.
o Any VMD employee who knows of any violation of this Policy or suspects that a violation has
taken place or could take place, must immediately advise the Director of Compliance.

9.2.6.2 Handling of Proprietary Information

All VMD proprietary information shall be labeled, “Confidential and Proprietary; Not for Disclosure.”
Employees shall not transfer or communicate proprietary information outside of the company without authorization
from the Director of Compliance. Proprietary information should not be sent to non-VMD email addresses and
should only be saved on VMD servers and hard drives.
Employees shall be responsible for ensuring that company provided computer hardware is secured in accordance
with applicable IT security policies.

9.2.6.3 Handling of Secret of Classified Information

Any work performed by VMD at a cleared facility where its employees can possess Secret of Classified information
must be performed in accordance with the requirements of such facilities.

9.2.7 Price Negotiations

VMD should seek, take, and document economically feasible purchase discounts, including cash discounts, trade
discounts, quantity discounts, rebates, freight allowances, and company-wide volume discounts when made
available.
For significant elements of the purchase (such as facilities, tooling, engineering, setup, testing, and special
packaging), separate price breakdowns will be negotiated to allow for separate cost control. Prices will be
established at the time the order is placed for goods manufactured to order, rather than on a previously established
estimated price.
The Contracts Department will maintain and use, as a means of effecting economies, price history data and a current
copy of a priced bill of materials to ensure that:
 Material specifications recorded on the requisitions and purchase orders match the specifications on the bill
of materials;

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 Possible economies for ordering required material, recognizing the total needs as reflected in the bill of
materials and the stock level requirements, are considered;
 Nonrecurring tooling/setup, and similar type charges are not paid twice; and
 The price agreed to at the time of purchase is comparable to the price projected in the bill of materials, or
that price increases are fully explained.
Any increases in price over previous buys or over bill of material estimates and any lack of decrease in price when
circumstances indicate that the price should be lower will be documented in the purchase file. Examples of
circumstances which would indicate the price should be lowered include when quantity is increased over a previous
buy or vendor quote or when learning or other factors indicate lesser costs than in a previous buy.
If the lowest bidder is not selected, the evaluation shall contain sufficient justification for the decision. If the award
was made to other than the lowest bidder on the basis of delivery, the purchase order should provide for a downward
price adjustment if delivery schedules are not met.
Sufficient evidence of negotiation must be provided when it is necessary to establish a reasonable price because the
item is non-standard, or an insufficient number of bids have been received

9.3 Subcontract Contract Types

All contracting personnel shall strive to utilize the contract type that minimizes risk to VMD and provides the best
overall value. VMD contracting personnel should strive to use fixed-price contracts when possible in order to place
the risk of non-performance on the subcontractor and not on VMD. When selecting a contract type, the Contracts
Department will consider the consent and notification requirements of each kind of contract.

9.3.1 Fixed-Price Contracts

Fixed-price contracts provides for a price that is not subject to any adjustment on the basis of the contractor’s cost
experience in performing the contract. This contract type places upon the subcontractor maximum risk and full
responsibility for all costs and resulting profit or loss. It provides maximum incentive for the subcontractor to
control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties.
A firm-fixed-price contract is suitable for procuring commercial items or other supplies or services on the basis of
reasonably definite functional or detailed specifications when fair and reasonable prices can be established at the
outset, such as when:
 There is adequate price competition;
 There are reasonable price comparisons with prior purchases of the same or similar supplies or services
made on a competitive basis or supported by valid certified cost or pricing data;
 Available cost or pricing information permits realistic estimates of the probable costs of performance; or
 Performance uncertainties can be identified, and reasonable estimates of their cost impact can be made, and
the contractor is willing to accept a firm fixed price representing assumption of the risks involved.

9.3.2 Cost-Type Contracts

Cost-types contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These
contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the
contractor may not exceed (except at its own risk) without the proper approval.

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Cost–type contracts should be used when the requirements are not sufficiently defined to accurately estimate the
amount of work required (e.g., research and development contracts). When cost–type contracts are used, VMD
contracting personnel should ensure that resources exist to effectively monitor the progress of the subcontractor and
that the subcontractor’s accounting systems are able to handle the accumulation of costs by project. However, cost-
plus-a-percentage-of-cost contracts are expressly prohibited.

9.3.3 Time and Material Contracts

Time and Material (T&M) contracts provide for the procurement of supplies or services on the basis of:
 Direct labor hours at specified fixed hourly rates that include wages, overhead, general, and administrative
expenses, and profit; and
 Actual cost for materials (except as provided for in FAR Part 31.205-26(e) and (f)).
A T&M contract may be used only when it is not possible at the time of placing the contract to estimate accurately
the extent or duration of the work or to anticipate costs with any reasonable degree of confidence.

9.4 Subcontract Terms and Conditions

9.4.1 Standard Terms and Conditions

All subcontracts shall contain a list of standard terms and conditions provided by the Contracts Department
including terms on Intellectual Property (IP), Payments, Terminations, Disputes, Liability, etc.
For a complete and updated list of standard terms employees should contact the Contracts Department.

9.4.2 Approval of Deviations

All deviations from the Standard Terms and Conditions discussed in Section 9.4.1 of this Policy shall be approved
by the Contracts Department, who will seek legal counsel if deemed necessary.

9.4.3 Contract Clause Flow-down

Related Document: Subcontractor Flow-down Clauses
Once a vendor is selected for performance of a Government subcontract, the Contracts Department will need to
determine which contract clauses must be included in the subcontract. Government contractors are required to flow
down certain prime contract clauses and requirements as well as certain standard FAR clauses. Additionally, there
are several contract clauses that, while not legally required, are necessary to protect VMD’s interests under U.S.
Government contracts. These clauses include the authority of VMD to terminate a subcontract if the underlying
Government contract or program is terminated and the authority of VMD to change the subcontract when the
Government makes unilateral changes in VMD’s Federal contract.
Whenever a Government prime contract or subcontract is awarded to VMD, the contract or subcontract shall be
reviewed by the Contracts Department for identification of any additional clauses that are required to be flowed
down to lower-tier subcontracts.

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9.5 Representations and Certifications

As a condition of many of its Federal contracts, VMD may be required to make certain representations and
certifications to the Government concerning its own subcontracting and purchasing practices, as well as the practices
of its subcontractors.
The Project Manager, through its selection of subcontractors and subcontract agreement terms, shall ensure that
VMD is able to accurately make the representations provided in the table below when they are required on Federal
contracts.

Table 2: FAR Provisions with Certifications

FAR Provision Certification

52.203-6, Restrictions on Subcontractor VMD will not improperly restrict a subcontractor’s ability to make direct sales
Sales to the Government. to the Government.
52.203-7, Anti-Kickback Procedures VMD employees are not receiving kickbacks from any of its subcontractors.
52.215-12, Subcontractor Certified Cost or VMD will obtain certified cost and pricing data from its subcontractors when
Pricing Data appropriate.
52.222-21, Prohibition of Segregated VMD will not have segregated Facilities and will ensure its subcontractors also
Facilities do not.
52.222-22, Previous Contracts and VMD will obtain Equal Opportunity compliance reports from all subcontractors.
Compliance Reports
52.222-26, Equal Opportunity VMD will ensure its subcontractors agree to be Equal Employment Opportunity
compliant.
52.225-2, Buy American Certificate VMD will only purchase U.S. (or designated foreign country) parts for supply
on Federal contracts.
52.225-4, Buy American – Free Trade
Agreements - Israeli Trade Act Certificate
52.225-6, Trade Agreements Certificate A-
Israeli Trade Act C
52.227-14, Rights in Data VMD will obtain from its subcontractors all data and rights necessary to fulfill
its obligations to the Government.
52.230-2, Cost Accounting VMD will ensure its subcontractors are CAS compliant if applicable.
Standards

9.6 Subcontract Approval and Execution

In order to effectively manage, monitor, and control the risks and costs associated with executing agreements on
behalf of, or for the benefit of VMD, it is essential that all employees engaged in procurement activities adhere to
the procedures defined in Sections 8.6.1 through 8.6.2.

9.6.1 Determining Subcontract Amount

The Contracts Department will be responsible for determining the subcontract value for all subcontracts via the
negotiation process.

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9.6.2 Extensions and Amendments

Temporary subcontract extensions, executed to extend an existing subcontract while a new subcontract is being
developed, must be approved, and signed by the Contracts Department.
Amendments that directly relate to a scope of work and/or materially and adversely affect the terms and/or
materially increase the agreed-upon subcontract will require approval from the Contracts Department. Questions on
whether an amendment “directly relates” or “materially and adversely affects” the subcontract should be addressed
to the Contracts Department for resolution.
Questions of interpretation regarding the interpretation or applicability of this signature policy should be referred to
the Director of Compliance.

9.7 Small Business Program

VMD is currently a small business and therefore exempt from small business subcontracting requirements. If and
when VMD exceeds the small business size threshold, the policies in this section shall take effect immediately.

9.7.1 Types of Subcontracting Plans

VMD shall maintain a Master Subcontracting Plan (“MSP”) that shall be effective for a three-year period after
approval by the Contracting Officer. The Contracts Department shall be responsible for maintaining and updating
the MSP.
All applicable Government contracts or subcontracts entered into by VMD shall include the MSP which shall be
incorporated into a contract-specific Individual Subcontracting Plan (“ISP”) for every contract. The ISP shall
provide the small business subcontracting goals for that specific contract.

9.7.2 Subcontracting Plan Requirements

Unless otherwise required by the Government Contracting Officer, an ISP and the MSP shall be provided in all
proposals for procurements that exceed the threshold amount defined in FAR Part 19.702, Statutory Requirements,
and that have subcontracting possibilities.

9.7.3 Effort to Meet Small Business Requirements

To effectively implement the Small Business Program to the extent consistent with efficient contract performance,
VMD shall perform the following functions:
 Assist by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery
schedules so as to facilitate the participation by small businesses. Where the VMD lists of potential small
business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small
business, small disadvantaged business, and women-owned small business subcontractors are excessively
long, reasonable effort shall be made to give all such small business concerns an opportunity to compete
over a period of time.
 Provide adequate and timely consideration of the potentialities of small business, veteran-owned small
business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged
business, and women-owned small business concerns in all “make-or-buy” decisions.
 Counsel and discuss subcontracting opportunities with representatives of small business, veteran-owned
small business, service-disabled veteran-owned small business, HUBZone small business, small
disadvantaged business, and women-owned small business firms.
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 Confirm that a subcontractor representing itself as a HUBZone small business concern is identified as a
certified HUBZone small business concern by accessing the System for Award Management database or by
contacting the Small Business Association (“SBA”).
 Provide notice to subcontractors concerning penalties and remedies for misrepresentations of business
status as small business, veteran-owned small business, service-disabled veteran-owned small business,
HUBZone small business, small disadvantaged business, or women-owned small business for the purpose
of obtaining a subcontract that is to be included as part or all of a goal contained in VMD’s subcontracting
plan.

9.7.4 Reporting
The Contracts Department shall be responsible for updating the Government on the progress of VMD Systems’
subcontracting goals on an annual/semiannual basis by submitting Standard Form 294 and Standard Form 295 to the
appropriate Government official.

9.8 Management of Subcontracts

9.8.1 Contract Briefing and Distribution

Upon award, the key requirements, terms and conditions, payment provisions, etc. shall be recorded in the standard
Contract Brief Template. The Contract Brief Template shall be stored in the Contract File and copies shall be sent to
all persons responsible for managing and overseeing the subcontract, including the Project Manager, the Accounting
Department, and the Contracts Department.

9.8.2 Government Consent and Notification

The Government requires that, in certain instances, it be notified when VMD agrees to have subcontractors perform
a portion of the work on a Federal Government contract. It also requires VMD to obtain its consent to certain
contracts. The applicable consent and notification requirements are provided in Sections 8.8.2.1 and 8.8.2.2.

9.8.2.1 Consent
If VMD has an approved purchasing system, consent is required only for subcontracts specifically identified by the
Government in the subcontracts clause of the contract. Currently, VMD does not have an approved purchasing
system, and consent to subcontract is required for:
 Cost-reimbursement, time-and-materials, labor-hour, or letter contracts;
 Unpriced actions (including unpriced modifications and unpriced delivery orders) under fixed-price
contracts that exceed the simplified acquisition threshold; and
 Fixed-price subcontracts that exceed
o For the Department of Defense, the Coast Guard, and the National Aeronautics and Space
Administration, the greater of the simplified acquisition threshold or 5% of the total estimated cost of
the prime contract.
o For civilian agencies other than the Coast Guard and the National Aeronautics and Space
Administration, either the simplified acquisition threshold or 5% of the total estimated cost of the
prime contract.

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9.8.2.2 Notification
Under cost-reimbursement contracts, VMD is required by statute to notify the Government as follows:

 For the Department of Defense, the Coast Guard, and the National Aeronautics and Space Administration,
unless the contractor maintains an approved purchasing system, 10 U.S.C. § 2306 requires notification
before the award of any cost-plus-fixed fee subcontract, or any fixed-price subcontract that exceeds the
greater of the simplified acquisition threshold or 5% of the total estimated cost of the contract.
 For civilian agencies other than the Coast Guard and the National Aeronautics and Space Administration,
even if the contractor has an approved purchasing system, 41 U.S.C. 254(b) requires notification before the
award of any cost-plus-fixed-fee subcontract, or any fixed-price subcontract that exceeds the simplified
acquisition threshold or 5% of the total estimated cost of the contract.
Government Contract Changes
VMD must timely notify the Government if the amount of the subcontract effort is changed after the contract award
in excess of 70% of the total cost of the work to be performed. The notification shall identify the revised cost of the
subcontract effort and shall include verification that the change will provide added value.
Any VMD subcontractor that changes the amount of a lower-tier subcontractor effort after award such that it
exceeds 70% of the total cost of the work to be performed must timely notify VMD. VMD will then notify the
Government of the change and will identify the revised cost of the subcontract effort and include verification that
the subcontractor will provided added value as related to the work to be performed by the lower-tier subcontractor.
Any changes to a subcontract that affect cost or price should be well-documented with written justification and
retained in the Procurement File.
Any VMD subcontractor that changes the amount of a lower-tier subcontractor effort after award such that it
exceeds 70% of the total cost of the work to be performed must timely notify VMD. VMD will then notify the
Government of the change and will identify the revised cost of the subcontract effort and include verification that
the subcontractor will provided added value as related to the work to be performed by the lower-tier subcontractor.
Any changes to a subcontract that affect cost or price should be well-documented with written justification and
retained in the Procurement File.

9.8.2.3 Government Contract Repricing

Repricing clauses included in subcontracts or purchase orders will be timely implemented when necessary. The
repricing procedure requires:

 Revised contract prices are negotiated or arrived at as provided by contractual requirements;

 Certified cost or pricing data which was used as the basis for repricing is current, accurate, and complete;
and
 Results of the repricing action are in the best interests of the Government

9.8.3 Financial and Technical Performance Monitoring

After award of a subcontract the Project Manager shall develop a subcontractor monitoring plan. This plan should
include relevant timelines, key deliverables, quality control testing procedures and parameters, financial
performance measurements, and anything else deemed appropriate. The monitoring plan shall require reports to the
Director of Compliance on at least a quarterly basis, but more frequently where appropriate. Any significant and

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relevant issues included additional funding actions and status of physical progress in relation to costs incurred
should be reported timely to the Director of Compliance.
VMD must notify the Government in a timely manner of potential subcontract problems that may impact delivery,
quantity, or price.
Subcontractor financial reports should be adequately supported and include trip reports indicating persons visited
and subjects discussed, minutes of meetings, and collateral memoranda and reports, when applicable.

9.8.4 Change Orders and Modifications

Should change orders or modifications to existing purchase orders or subcontracts be implemented, the Project
Manager will perform the following:
 Evaluate the delivery schedules when engineering changes have been introduced
 Timely notify the subcontractor when modifications are introduced into production
 Perform and document an updated cost analysis when change orders or modification notices affect costs
All subcontract changes should be well-documented and included justification for the changes which affect cost or
price.

10 Records Retention and Contract File Contents

10.1 Related Forms

 Procurement File Checklist

10.2 Documents
For all subcontracts or purchases, the following documents shall be maintained in an indexed and organized manner
in the purchasing file:
 Purchase Request Form
 Market Research Form
 Independent Cost Estimate (ICE) for Subcontracting
 Acquisition Plan for Subcontracting
 Simplified Acquisition Plan for Subcontracting
 Justification for Other Than Full and Open Competition for Subcontracting
 Performance Work Statement (PWS)
 Technical Specification
 Quality Assurance Surveillance Plan (QASP)
 Contract Data Requirements List (CDRL)
 Data Item Description
 Security Requirements Checklist
 Best Value Evaluation Factors Form
 Purchase Order (PO)

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 Request for Quotation (RFQ)

 Copies of Vendor’s Quotes
 Bid Tabulation Sheet Summarizing and Comparing Vendor Quotations
 Certificates for Rent-Free Use of Government Facilities
 Vendor Surveys or Capability Reports
 Source Selection Explanation
 Price or Cost Analysis Data
 Negotiation Summary
 Basis for Selection of Contract Type for Subcontracting
 Copies of Technical Data
 Price Redetermination or Termination Data
 Correspondence Between Procurement Personnel and the Bidders
 Evidence of Small and Disadvantaged Business Enterprise Consideration
 Information Concerning the Use of Special Terms and Conditions and Approve Thereof
 Departmental and Management Approvals, if required
 Administrative Contractive Officer Notification and Consent
 Certificate of Current Cost or Pricing Data If Procurement Meets Requirements
VMD’s employees must follow Federal contracting rules pertaining to records retention found in FAR Part 4.7 –
Contractor Records Retention.

11 Audit and Internal Controls

11.1 Standard Audit Program

The Director of Compliance shall be responsible for administering a standard audit program of VMD’s overall
compliance with all provisions of this Policy.
The audit shall at least include an inspection of the following areas:

 Adequacy of written procedures

 Employee knowledge and compliance with procedures
 IT interface with the procurement system
 Consistency with which the policies and procedures are applied
 Timely follow-up action with deficiencies
These areas shall be audited at least on an annual basis and more frequently if problems are suspected. All findings
and corrective actions shall be thoroughly documented and retained for a minimum of six years.

11.2 Subcontractor Audits

The Director of Compliance will lead all subcontractor audits and will coordinate with the relevant Project
Managers, the Accounting Department, Human Resources, and the Contracts Department, as necessary. The

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Director of Compliance should be prudent in his/her decision to perform a subcontractor audit and ensure the
independence and qualifications of the auditors are acceptable. Procedures should be implemented to ensure that
adequate controls are maintained for early identification of auditable subcontracts.
VMD must notify the Government of the award of all subcontracts that contain the FAR and Department of Defense
Supplement to the FAR (DFARS) flow-down clauses that allow for Government audit of those subcontracts, and
ensure the performance of audits of those subcontracts. The Government shall be timely notified when access to
subcontractor records is denied to VMD.

11.3 Discipline
The Human Resources Department shall develop and enforce a disciplinary system for employees who fail to
comply with this Policy. Employees will be subject to disciplinary action up to and including termination of
employment.

11.4 Training
The Director of Compliance is responsible for developing training material and administering training. The Project
Managers, managers within the Operations Department, Accounting Department employees, Contracts Department
employees, and others designated by the Director of Compliance shall be trained in the following areas upon hiring
and be required to attend annual updates during their employment.
 Government procurement regulations
 Contract clauses
 Written policies and procedures
 Procurement File Requirements and Standard Forms
 Ethics (e.g., conflicts of interest, gifts, gratuities, kickbacks)
 Review and Approval Process

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Appendices

Appendix A: Acronyms and Key Terms

The following tables present the definitions for acronyms and key terms used in this document.

Table 3: Acronyms

Acronym Definition
CEO Chief Executive Officer
COO Chief Operating Officer
ICE Independent Cost Estimate
IP Intellectual Property
OCI Organizational Conflicts of Interest
PCI Personal Conflict of Interest
PM Project Manager
PO Purchase Order
PWS Performance Work Statement
QASP Quality Assurance Surveillance Plan
RFP Request for Proposal
RFQ Request for Quotation
SOW Statement of Work
VMD VMD Corp.

Table 4: Key Terms

Key Term Definition

Buy / Outsource Item A “buy/outsource” item is any item or work effort to be purchased by VMD that is not produced
or performed by VMD or its affiliates, subsidiaries, or divisions.
Contract A binding written agreement between VMD and a third party which sets forth the terms and
conditions of a business relationship. Contracts include, but are not limited to contracts,
agreements, amendments to existing contracts or agreements, contract supplements (e.g., exhibits,
statements of work, performance standards, riders, addenda, attachments), letters of
understanding, letter agreements, confidentiality agreements, non-disclosure agreements, binding
term sheets, and the like executed on behalf of, or for the benefit of VMD.
Flow-down Clause Any contractual clause that is required by terms of the contract to be included in any subcontracts
agreed to as part of the performance of the contract.
Kickback Micro-purchase Threshold – See FAR Part 2.101 for the most up-to-date micro-purchase
threshold amount and FAR Part 13.2, Actions at or Below the Micro-Purchase Threshold, for
further information.
Organizational Conflict of An OCI occurs where, because of other activities or relationships, VMD is unable (or potentially
Interest (OCI) unable) to render impartial assistance or advice to the Government; VMD’s objectivity in
performing the contract work is impaired; or VMD has an unfair competitive advantage.

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Personal Conflict of Anything that might cause an individual’s private interest to interfere in any way – or even appear
Interest (PCI) to interfere – with the interests of VMD.
RFP Request for Proposals; a solicitation for bids
Simplified Acquisition See FAR Part 2.101 for the most up-to-date simplified acquisition threshold amount and FAR
Threshold Part 13, Simplified Acquisition Procedures, for further information.
Small Business Small business shall include all certified small businesses, veteran-owned small business, service-
disabled veteran-owned small business, HUBZone small business, small disadvantaged.

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Appendix B: Roles and Responsibilities

The following table presents the specific roles and responsibilities for this policy.

Table 5: Roles and Responsibilities

Role Responsibilities
 Ensures that the business is operated in compliance with applicable laws and
Chief Executive Officer (CEO)
regulations.
 Creates and fosters a culture of ethical business practices, encouraging open
communication, and instilling an awareness of and commitment to the policies and
procedures provided in this Policy
 Sets company-wide procurement policy.
Chief Operating Officer (COO)
 Conducts all competitive procurements.
Project Manager (PM)
 Provides documented support for all purchases greater than $25.00 and less than the
micro-purchase threshold.
 Approves a purchase requisition from Managers within the Operations Department for
all purchases exceeding the micro-purchase threshold.
 Obtains approval from the Accounting Department for all purchases (non-
subcontracting) above the micro-purchase threshold.
 Obtains approval from the Contracts Department for all subcontracts or purchase
agreements entered by VMD.
 Completes purchase requisitions for all requested purchases above the micro-purchase
Operations Department
threshold, obtaining approval from the Project Manager for such requisitions.
Managers
 Reviews goods received to ensure conformity with the purchase order (PO) when
purchases occur.
 Ensures that internal audits are conducted, and that purchasing policies and procedures
Director of Compliance
are being followed.
 Reports to the CEO and COO on the effectiveness and operability of the purchasing
function.
 Prepares, maintains, and effectively communicates the contents of this Policy to all
VMD personnel with roles in the procurement process.
 Serves as the company liaison in the event of a Government audit.
 Supervises the management for all subcontractor relationships.
Contracts Department
 Creates purchase orders for approved purchase requisitions.
 Ensures purchases are in conformance with contractual terms and conditions.
 Administers subcontracts and purchase agreements.
 Reviews and approves all purchases exceeding the micro-purchase threshold (both
Accounting Department
purchase requisitions and purchase orders).
 Ensures that purchases are within budgetary limits.

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