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PG&E Prime Supplier ProgramMonthly Webinar TrainingFirst Tuesday of the Month, 10:00 a.m. PTBob [email protected] (415) 973-6176

2Prime Supplier Program (PSP)Prime SupplierProgramOverviewSupplier DiversityResultsPSP Program CriteriaReportingRequirements /TrainingDemo on reportingin the SupplierDiversityManagementSystem (SDMS)Prime SupplierProgramSubcontractingAuditReporting Best PracticesAudit Background /HistorySubcontracting ResultsDocumentationRequiredComplianceKey LearningsResourcesTraining Opportunities

3PG&E’s Supplier DiversityCommitmentChristopher P. JohnsPresident, PG&E“Diversity is one of the cornerstones of PG&E’ssuccess in our mission to provide safe, reliable andaffordable energy to the nearly 16 million people weserve. At the heart of our commitment to diversity isour Supplier Diversity program, which helps providevital opportunities for a growing number ofbusinesses owned by women, minorities, servicedisabled veterans and LGBT individuals. By helpingthese companies thrive, PG&E is not only reflectingthe diversity of our customers, we are strengtheningour service, and we are investing in our communitiesand California’s economy at the same time.”

410-Year Performance Trend40.9%PG&EMillions 2,11225.6%18.5%% 928 29620042009 DBE2014% DBE

5Prime Supplier ProgramPrime Suppliers are key contributors to PG&E’ssupplier diversity goal achievement and to expandingopportunities for diverse businessesPrime Suppliers Responsibilities:1. Supplier Diversity Plan submitted and updated annually2. Documented subcontracting goal3. Monthly Diversity results tracked and reportedTracked through the Prime Supplier BusinessCompliance Program.

6Prime Supplier Program Major components of PG&E’s Prime Supplier Program:1.2.Prime Supplier SubcontractingBusiness Solution Partnerships (such as Value AddedResellers, Distributors, Joint Ventures, etc.) The Prime Supplier Program was responsible for over40% of PG&E’s 2014 total diverse spend.2014 PG&E Supplier Diversity SpendOver 40%Over 2.1Baccomplished throughour prime suppliersPrime Supplier ProgramOther Direct

7SD Plan ComponentsA written Supplier Diversity Plan details how yourcompany will ensure that diverse suppliers have themaximum opportunity to participate in your provisioningof goods and services to PG&E.This multi-page document should include:1. Internal Roles & Responsibilities2. Internal policies, systems and programs3. Value chain analysis and opportunities4. Goals for overall diverse spend for the year5. Supplier engagement and outreach6. Subcontracting management7. Mentorship selection and tracking

8Resources PG&E Prime Supplier Program ContactBob LeFave California Public Utilities Commission(CPUC) Supplier Clearinghousewww.suppliernetwork.net Department of General Services (DGS)www.pd.dgs.ca.gov National Minority Supplier DevelopmentCouncil (NMSDC) Women’s Business Enterprise NationalCouncil (WBENC) National Gay & Lesbian Chamber ofCommerce (NGLCC) Local Chambers of nglcc.org National Association of Women Business OwnersCA Asian Pacific Chamber of CommerceCA Black Chamber of CommerceAmerican Indian Chamber of CommerceCA Hispanic Chamber of CommerceWestern Regional Minority Supplier DevelopmentCouncil CA Disabled Veteran Business Alliance Elite SDVOB Network Golden Gate Business Association

PG&E Prime Supplier ProgramReporting

fault.aspPrimeSupplierGuide Supplier Diversity Management System (SDMS) is open between the 1st andthe 10th of each month Subcontractors must be CPUC certified (DVBEs must be DGS certified) Reported dollars must be associated with specific PG&E work Entries are included in PG&Es annual prime supplier subcontracting audit If you miss a reporting period, add that month to your next reporting period

Prime Supplier Reporting: Getting Started www.pge.com/supplierdiversity Select “How to Become Certified” Then select “Register and create a supplier profile with PG&E”Link to accessSubcontractingReporting site11

Prime Supplier Reporting: Login12 Obtaining a password Supplier contacts Perry Bumanlag at 415-973-1225 / [email protected] to request login name and password Perry replies via email Supplier logs into reporting system, creates new passwordLogin toreport monthlysubcontracting

Prime Supplier Reporting: Click on “Begin Reporting” to select subs and enter dollar amounts for the current reporting periodSelect “BeginReporting”13

Prime Supplier Reporting: Step 1 Select “Edit” to go to the reporting screen for this reporting period Direct Purchases: Purchase made by you, through your subcontractor, for PG&E specifically Prior to reporting, it may be helpful to develop a spreadsheet with the company name of each diversesubcontractor and amount paid during the reporting period.Current reportingperiodSelect “Edit”to entersubcontractingdollars14

Prime Supplier Reporting: Step 2 Use search function to locate suppliers If you cannot find a supplier contact Perry Bumanlag at (415) 973-1225. Select “Remove” to no longer report a supplier Select “Add” to add a new supplier to report Only have to do this step once unless you are adding or removing a supplier. Periodically check to be sure you are choosing the correct suppliersSearch for andselect suppliers,then “add” or“remove”Click to continueDo not use. CallPerry to add anew supplier.15

Prime Supplier Reporting: Step 2 (cont.) Select appropriate listed contract or “NULL CONTRACT” for this spend Select “Save & Next” to continueSelect contract ,then “Save & Next”.16

Prime Supplier Reporting: Step 3 Enter ‘Net’ dollar amounts (or 0) for each listed subcontractor Only enter amounts directly attributable to a specific PG&E contract, project, or site Click “Save & Next” to go to the next screenEnter ‘direct’ dollaramounts, net ofany discounts17

Prime Supplier Reporting: Step 4 Select “Preview” to verify names and dollar amounts entered, and accepted as ‘Verified’ NOTE: Once the report is ‘submitted’ the names and dollar amounts cannot be alteredPreview beforesubmitting report18

Prime Supplier Reporting: Step 5 Check that “Verified Spend” equals “Total Reported Spend”, if there’s a variance, the Sub mayno longer be certified as diverse by CPUC Clearinghouse (or CVM) – contact Perry Bumanlag Select “Submit” to report results, only after ensuring all data is correct Other Tips Assign a designated person to report subcontractingEnsure knowledge transfer if duties are reassignedIf a reporting period is missed, report dollars during the next reporting periodQuarterly check to ensure diverse subcontractors are CPUC certifiedConfirm suppliersand amounts beforesubmittingOnce submitted, nochanges can be made19

Prime Supplier Reporting: Completed Verify ‘Green’ background in “Preview” box Log outGreen backgroundindicates successfulsubmission20

PG&E Prime Supplier ProgramSubcontracting Audit

22Subcontracting AuditThe primary goal of auditing is to increase reportingaccuracy through the promotion of best practices.PG&E Internal AuditPG&E 3rd Party Audit PG&E conducts formalinternal audits of its diversesubcontracting program PG&E hires third party to conduct its annualsubcontracting audit of suppliers PG&E audited by CPUC in 20122008 2009201020152012CPUC AuditSubcontracting Audit ProcessRandom sampling of:100 subcontractors60 prime suppliersAug-SepOct-FebMar-MaySend audit notificationletters and selectsuppliers and subsConduct audit withthird party auditorsusing PowerAdvocateHold post-auditdebriefs andtrainings

23Audit Notification and PreparationEmphasis on content and reporting accuracyMajority of PG&E Prime Suppliers notified ofgeneral audit requirements: Reported subcontracting dollars must be directlyrelated to PG&E work. Invoices must referencePG&E contract, project or site. Reported subcontracting dollars must reflect actualpayments made to suppliers, net of any voidedtransactions, estimates, early payment discounts,markups, etc. Records to document your subcontracting dollarsmust be kept for a period of three years. Theserecords should clearly document that the workperformed was for PG&E and that payment wasmade to the subcontractor.

24Audit RequirementsEmphasis on paperwork required from PrimesSelected suppliers notified of specific auditrequirements: Contracts or Purchase Orders between theprime supplier and specified subcontractor(s)Invoices from Subcontractor to the prime supplierfor PG&E work. The invoice must clearly state thework was performed, or material was purchased,for PG&E. Invoice data in an Excel file is notacceptable audit documentation.Payments to Subcontractor. Payments must linkdirectly back to the invoice and must show it waspaid in the current year. Valid paymentdocumentation includes front and back copy of acheck or an electronic funds transfer payment suchas an ACH debit document.Signed Letter from Company Officer confirmingaccuracy of the subcontracting documentation.

25Key Learnings From Previous Audits Make sure documentation is available and references specificPG&E contracts, locations or project names Spreadsheets and handwritten forms do not constituteacceptable audit documentation, but may be supplemental Report subcontracting dollars based on “paid”, not on“accrued”, in the reporting year Make sure sufficient linkage exists between POs,subcontractor invoices and payments Develop and maintain a detailed accounting of bulk materialallocations to PG&E work, locations or projects Be prepared to submit soft copies of all required documents,including contract or purchase orders, invoices and payments

26Training Available Debrief audited prime suppliers-Individual meetings with primes with high spend values, significantaudit exceptions and/or over 500K disallowed due to auditWebinars for remaining prime suppliers that took place in the audit Additional webinars for the general prime supplier community Monthly Prime Supplier Program webinars-First Tuesday of each month, 10:00am PTContact Bob LeFave at [email protected] for invitation

27Concluding Points Understand that PG&E is committed to supplier diversity –Prime supplier support is critical Increasing business with diverse firms is a businessimperative – supplier diversity is inherent in our values andcritical to PG&E becoming the leading utility in the U.S. Utilize the tools and resources available to help increase yourcompany’s diversity contribution – leave no stone unturned We are interested in innovative solutions to achieving supplierdiversity goals and objectives – Creativity is welcomed Consistent, accurate and timely reporting is critical Audits are a fact of life. Consider structuring your internalaccounting and payment systems to support audit documentrequests. Use descriptive labels to link POs, invoices, checks When in doubt, ask us - we’re here to assist you

PG&E Prime Supplier ProgramQ&A