Table of Contents - H&R Block · Page 2 of 15 401 - Sourcing policy.docxSourcing_and_Procurement_Policy.docx July 15, 2015 1. Sourcing and Procurement Policy Overview 1.1 Sourcing

Page 1 of 15 401 - Sourcing policy.docxSourcing_and_Procurement_Policy.docx July 15, 2015

H&R Block Policy

Subject: Sourcing and Procurement

Policy Number:

Scope: All Associates

Effective Date: July 7, 2008

Revision Date: July 15, 2015

Policy Owners:

VP-Productivity and Expenses

Director- Enterprise Strategic

Sourcing

Table of Contents

1. Sourcing and Procurement Policy Overview ......................................................................... 2

1.1 Sourcing and Procurement Policy Document .................................................................... 2

2. Policy Statements – Business Ethics ....................................................................................... 2

2.1 Business Ethics Overview .................................................................................................. 2

3. Policy Statements – Sourcing and Procurement ................................................................... 2

3.1 Supplier Performance Management ................................................................................... 2

3.2 Supplier Opportunity List and Registration ....................................................................... 5

3.3 Sourcing Events .................................................................................................................. 5

3.4 Client Data .......................................................................................................................... 7

3.5 Contracts ............................................................................................................................. 7

3.6 General Procurement Policies ............................................................................................ 9

5. APPENDIX ............................................................................................................................. 11

Procurement Method Matrix .................................................................................................. 11

Exhibit A – Sample Contracts Abstracts example ................................................................. 12

Exhibit B – Sample Sole Source Justification example ......................................................... 13


1. Sourcing and Procurement Policy Overview

1.1 Sourcing and Procurement Policy Document

Scope and Overview

Sourcing and Procurement is a function of the Enterprise Strategic Sourcing department of H&R Block, Inc. (“H&R Block” or “Company”) that supports the business in all functions requiring goods or services from external suppliers. This Sourcing and Procurement Policy (“Policy”) contains a body of policy statements supporting this function, as well as standards for maintaining those policies.

Roles and Responsibilities

Several individuals and teams, in addition to the Policy Owner, are often required to add, edit, delete or approve a policy. For the Sourcing and Procurement Policy, the following roles and responsibilities have been defined:

Role Responsibility

VP – Productivity & Expenses

Director – Enterprise Strategic Sourcing

Policy and Process Owner

Responsible to keep this Policy documentation up-to-date and available for use within the enterprise

Responsible to keep the process documentation supporting this Policy up-to-date and available for use within the enterprise

Responsible for performance reporting and identification of opportunities for improvement based on the performance of the process

2. Policy Statements – Business Ethics

2.1 Business Ethics Overview

Associates interacting in any way with suppliers must comply with all terms included in H&R Block’s Entertainment, Gifts and Gratuities Policy and Code of Business Ethics & Conduct. Please refer to these policies for additional guidance.

3. Policy Statements – Sourcing and Procurement

3.1 Supplier Performance Management

A supplier performance management program is an effective way to ensure the Company is optimizing the value it is receiving from its suppliers. The business review gives both the Company and the supplier a platform to discuss successes


and challenges in the partnership. Utilized effectively, it can set proper performance expectations on both sides as well as help identify challenges that one party may not be aware of, but through the partnership it can identify and implement a resolution.

The following sections will help you determine which suppliers should be under a performance management program, how often a review should be conducted and potential topics that can be addressed during the review cycle. These sections are guidelines to help you through the process and can be altered as necessary depending on the specific profile of the supplier partnership.

Criteria: The following are criteria to help determine the suppliers that should be placed into a supplier performance management program.

Suppliers that receive client data.

Suppliers that provide a critical product/service to the organization.

Suppliers that have had past performance issues that needs to be highly

managed and monitored.

Suppliers that provide a service or product that cannot be obtained

elsewhere

Frequency: The following are suggested frequencies to conduct business reviews with suppliers based on the level of interaction or supplier performance measurements against business objectives.

Quarterly Reviews:

o Suppliers that provide a steady amount of products/services to the

organization consistently throughout the entire year

o Suppliers that have had past performance issues that need to be

managed and monitored more closely

Semiannual Reviews:

o Suppliers that provide seasonally driven product/services to the

organization that require planning and coordination to design,

implement, and deploy the product/service

Annual Reviews:

o Suppliers that provide infrequent products/services to the

organization that are high spend, but low complexity from an

operational perspective

Business Review Discussions: The following are suggested topics to be covered in the business review, and serve as a guide to help formulate an agenda that will make the review as productive as possible. More topics can be added or subtracted based on the needs of the business relationship between the supplier and the Company.


Analysis of spend with the supplier. Spend analysis can be broken into

several areas as applicable to the relationship.

Spend comparison to the last quarter, the same period from the previous

year, aggregate view of spend for the year to date.

Spend comparison by business unit (CSC, Company, Franchise, etc.) or

Department (IT, Marketing, Digital, etc.).

Spend analysis by product or manufacturer (in the case of a reseller of

product/service).

Service Levels or Key Business Metrics.

Service levels realized and compared against contract (where applicable).

Service level issues that need to be addressed going forward.

Service volume comparison to the last quarter, the same period from the

previous year, aggregate view of volume for the year to date. This data can

be used to spot trends and spur discussions related to ways to improve

processes to reduce the volume of service calls where appropriate.

Project Reviews. Analysis of key projects the supplier worked on for the

Company during the period. What worked well, what didn’t, any lessons

learned, etc.

Performance Review. Discuss any key challenges or supplier expectations

that have not already been addressed by one of the above topics.

Next Steps. Outline the next steps that should be taken by both the

supplier and the organization (where appropriate).

Discuss action plan to improve performance and discuss the measurement

of the improvements to be reported back during the next review period (or

sooner if warranted).

Discussion of the Company’s future needs from the supplier (if future needs

relate to procurement activities and the supplier is not already under

contract for these needs, please discuss approach with the Enterprise

Strategic Sourcing organization prior to discussion with the supplier and

include a member of that organization in the business review)

Ownership/Responsibility: Ownership for the performance and execution of supplier relationships is the responsibility of the business owner that is either managing the relationship or is the recipient of the products or services being supplied. Enterprise Strategic Sourcing is responsible for overseeing the program and for providing guidance on the supplier relationships to be considered for review.

Program oversight will consist of the following:

Twice annually, Enterprise Strategic Sourcing will identify supplier

relationship that should be reviewed based on the criteria defined above.


Enterprise Strategic Sourcing will communicate and work with the related

business owners on their performance of the supplier performance reviews.

Related Business owners will perform the review and provide

documentation that said reviews have occurred and send to the VP – Tax

Services Finance for review, sign-off and archive.

Enterprise Strategic Sourcing will provide on-going monitoring and reporting

of the supplier performance management program to ensure compliance.

3.2 Supplier Opportunity List and Registration

H&R Block will provide a central repository for existing suppliers and potential suppliers expressing interest in providing goods or services for H&R Block. Suppliers can self register at http://hrblock.supplier.ariba.com/ad/register/SSOActions?type=full. H&R Block Enterprise Strategic Sourcing will use the supplier repository as a source of candidates for sourcing events.

3.3 Sourcing Events

Sourcing Event Guidelines

All significant procurement or sourcing actions must be conducted through a sourcing event in partnership with ESS. A significant procurement or sourcing action is defined as any procurement-related action involving expenditures that will exceed or be expected to exceed $100,000 annually.

If an engagement is expected to exceed $100,000, contact ESS to begin the sourcing event process.

Any exception to the above (i.e., sole source supplier relationships) must be pre- approved by a Vice President in the applicable Business Unit along with the VP – Productivity & Expenses or Chief Financial Officer through the submission and approval of a Sole Source Justification (Exhibit B).

A sourcing event may involve a Request for Information (RFI), Request for Proposal (RFP) or Reverse Auction. These are generically referred to as RFx’s throughout this Policy.

Any associate needing to complete a significant sourcing or procurement action should contact the VP – Productivity & Expenses. The VP – Productivity & Expenseswill route the action to the appropriate Enterprise Strategic Sourcing associate to facilitate the sourcing event.

All suppliers will be required to sign H&R Block’s standard Non-Disclosure Agreement before being allowed to participate in any sourcing event. In addition, when warranted, all suppliers will be reviewed for their financial viability in the market space as well as general screening against known terrorist watch-lists and other tools to identify any risk that should be considered during the selection process.

http://hrblock.supplier.ariba.com/ad/register/SSOActions?type=full


Examples of such tools include, but are not limited to, the Office of Foreign Asset control (OFAC), Hoover’s, Dun & Bradstreet, System for Award Management (SAM), and general Internet research.

In the event a risk is identified in the review process, it will be escalated to the VP – Productivity & Expenses who, in consultation with other applicable business and legal associates, will assess the risk and either approve or disapprove utilization of such supplier for the services being considered.

In addition to the review process for new suppliers, Enterprise Strategic Sourcing will reevaluate each existing supplier during the contract renewal process of that supplier.

RFx Guidelines

H&R Block must provide the same information and instructions to each competing supplier for an RFx.

Information will not be shared solely between H&R Block and established suppliers if sharing of that information may provide an undue advantage to an established supplier in future sourcing actions or if the withholding of such information may create a disadvantage to other potential suppliers in future sourcing actions.

Supplier Selection

All supplier selection processes will be conducted in an ethical and legal manner and in the strategic and economic best interest of H&R Block. In working with suppliers, all associates must be aware of their actions to avoid actual conflict of interest or the appearance of a conflict of interest. If an associate has a personal or family relationship with any supplier being considered for business with the company, that associate must disclose that relationship to the Supplier Selection team (as defined below) and excuse him or herself from the specific selection process involving that supplier.

Each RFx should have a Supplier Selection team that provides cross-functional expertise across all internal stakeholders of the goods or services being sourced. The Supplier Selection team will recommend the supplier selection to the business owner of the sourcing event. The business owner is responsible for the final supplier selection.

A bid analysis process will be used to obtain goods and services at the lowest possible life cycle cost considering quality, service, price, inventory carrying costs, payment terms, etc.

Bid analysis guidelines:


The Supplier Selection team selects the supplier that offers the best long-term advantage to the company. The ability to enter into long-term, mutually beneficial relationship with a supplier is a significant factor in each bid analysis. The Company will enter into business agreement only with those suppliers who share the Company’s commitment to the highest ethical business standards.

3.4 Client Data

For any supplier relationship where Client Data (as defined below) will be disclosed, regardless of source (tax return, bank data, etc.), Enterprise Strategic Sourcing must be involved to ensure that the supplier has been vetted through compliance and proper contractual language is in place to protect the Company.

Client Data includes any individual data including, but not limited to name, address, SSN, and aggregate or anonymous data (example: average client income, client segments, etc.).

3.5 Contracts

Contract Review and Signature

All Sourcing & Procurement related contracts and agreements entered into between H&R Block and any outside party must undergo a contract review by Enterprise Strategic Sourcing. Guidelines in this Policy are specific to contracts related to sourcing or procurement actions. Contact H&R Block’s Legal Department for additional guidelines and guidelines for contracts not related to sourcing or procurement actions.

Contracts for sourcing and procurement actions will be reviewed and approved by H&R Block’s Legal Department before execution.

All contracts or agreements entered into between H&R Block and any outside party must undergo a review to determine the appropriate financial approval level. Financial approval levels are established in the Fiscal Authority Policy.

All contracts will be accompanied by a Contracts Abstract (Exhibit A), which summarizes the contractual relationship between H&R Block and the supplier. The abstract will include but not be limited to Project Initiator, ESS Lead, Scope, Cost of engagement, and a measure of the complexity and risk of the engagement. Each abstract will be reviewed and approved by (at a minimum) the following individuals or departments: Legal, Enterprise Strategic Sourcing, and the business owner possessing the proper fiscal authority as it relates to the financial commitment of the contract (see Financial Commitment below).


Financial Commitment

A financial commitment is measured by the total amount of the funds for which the Company becomes obligated to disburse during the life of a transaction or series of related transactions. There are agreements that do not have a financial commitment, but are of significant value to the Company. Examples of "significant value" can be any of the following: (i) the Company anticipates a certain amount of spend, (ii) there is a commitment to the vendor as the sole providers of such services / exclusivity, or (iii) historical spend patterns show a high likelihood of continued spend of similar amounts. In such circumstances, the potential value of the agreement should be noted.

For contracts involving a financial commitment in excess of $1 million, VP -Productivity & Expenses approval is required as part of the Contract Abstract process to ensure funding availability, classification of spend and budget alignment.

Unless expressly stated within this policy or within the Company’s Fiscal Authority Policy, all contracts must be signed by an officer of the appropriate H&R Block legal entity who possesses the required level of fiscal authority for the financial commitment. This requirement does not apply to contracts for the settlement of matters approved in accordance with Section 607.0 of the Company’s Fiscal Authority Policy, which may be executed by the individuals described in such Section 607.0.

Approved Signatories

Contracts involving a Financial Commitment – Must be signed by an officer of the legal entity engaging in relationship who possesses the required level of fiscal authority for the financial commitment.

Contracts (Signature Delegation) – If an appropriate officer of the legal entity engaging in relationship who possesses the required level of fiscal authority for the financial commitment provides documented approval for contract execution, the Director of Enterprise Strategic Sourcing can sign the contract on the entity’s behalf as long as his or her fiscal authority exceeds the financial commitment of the contract.

Contracts not involving a Financial Commitment (NDA, MSA, etc.) – Must be signed by an appropriate officer of the legal entity engaging in relationship or a Director of Enterprise Strategic Sourcing.

A contract is not enforceable against either party until authorized signatures by both parties are applied.


Contract Repository

Enterprise Strategic Sourcing will ensure all sourcing and procurement contracts are stored in an electronic document repository and originals sent to H&R Block’s Legal Department.

3.6 General Procurement Policies

Procurement Matrix

All requisitioning or purchasing must be conducted in compliance with the Procurement Method Matrix. The latest version of the Procurement Method Matrix can be found in Appendix Section 5.1.

If there is a purchasing category not currently included in the Procurement Method Matrix, contact the VP - Productivity & Expenses for guidance on the most appropriate procurement method.

eProcurement (ePro)

Requisitions

H&R Block Enterprise associates with access to the eProcurement system are empowered to act as requisitioners on behalf of the organization. As such, they are responsible to utilize strict fiscal responsibility when ordering goods or services.

For goods or services not found in the eProcurement item catalog or on supplier sites linked on the Web tab, the requester should enter a Special Request in eProcurement. The request will route to Enterprise Strategic Sourcing to source the good or service on behalf of the requester.

All requisitions are systematically reviewed for compliance with approved fiscal authorization limits as outlined in the Fiscal Authority Policy. Any requisition requiring additional approvals will automatically route to the appropriate approver for action.

eProcurement users are not allowed to split up requisitions to avoid fiscal review by an approver. This behavior may lead to removal of eProcurement access and other punishment up to and including job termination.

The requisition’s approver has the ultimate responsibility to ensure that a requisition is approved based on business need. Approvers may delegate approval authority during absences, but are still ultimately responsible for purchases authorized with their fiscal authority.


Purchase Orders

Purchase orders will be generated for all goods or services purchased utilizing the eProcurement Procurement Method.

The following categories of associates have been given authority per the fiscal authorization policy to act as company buying agents to place requisitions on behalf of other users:

ePro Full Authority Access

Associates and/or contractors considered “buying agents” for the company, have authority to place a pull or push requisition on behalf of any associates, franchisee or location within the e-Procurement system, up to $10,000 per transaction or additional fiscal authorizations triggered

ePro Limited Authority Access

District Operations Coordinators (DOC) and Seasonal Admin Staff that role up to the DOC have authority to place requisition on behalf of designated district and its offices. Up to $1,000 per transaction or additional fiscal authorizations triggered.

FSM and Acquisition & Development associates that directly support franchisee have authority to place a requisition on behalf of designated franchisees. Up to $1,000 per transaction or additional fiscal authorizations triggered.

Individual associated granted authority to place a requisition on behalf of another associate have fiscal authority up to $10,000 per transaction or additional fiscal authorizations triggered.

Staff Augmentation

For general short term staff augmentation, contact HR representative or submit requisitions through Beeline.

Compliance

Regardless of their position in the Company, associates who violate this Policy are subject to discipline up to and including termination of employment as detailed in H&R Block’s Code of Business Ethics and Conduct.

Violations of the Sourcing and Procurement Policy will be reported on a quarterly basis to the VP - Productivity & Expenses and a Vice President of the applicable business unit for review and associate communication. Any systemic occurrences will be reported to Human Resources as a direct violation of the Code of Business Ethics and Conduct.


Procurement Method Matrix

Category ePro VMS

(Beeline) Invoice One Card Comments

Dues and Subscriptions X X ePro preferred, One Card allowed when required by supplier.

Equipment - Copier, Fax, Printer, Lease, Rental, Telephone, etc. X

Equipment – Repairs, Maintenance, Safety, Security, Other X X

Facilities – Construction, Rent X

Furniture X

Hardware - Purchase Lease/Rental, Maintenance X

X

ePro preferred, invoice allowed when required by supplier.

Marketing – Advertising, Agency, Direct Mail, Research, Other X

Marketing - Trade Shows X X

Meetings/Events

X X Invoice preferred, One Card allowed when required to secure event.

Office Supplies X

Postage X

Printed Materials, Business Cards, Stationery, Signage X

Professional Services – Accounting X X

Professional Services – Consulting, Legal X

Professional Services – IT X X

Professional Services – Contractor, Temporaries X Beeline, Supplier Management System

Promotional Merchandise, Service Awards X

Services - Other X

Use ePro for fixed deliverable based engagements, BeeLine for hourly based engagements.

Small Parcel X

Software – Purchase, Maintenance X

Telecom Service / Teleconferencing, Voice, Data

X

Training – Materials X

Training – Seminars X

X ePro preferred, One Card allowed when required by supplier.

Travel & Entertainment

X

Utilities X


EXHIBIT A

SAMPLE CONTRACT ABSTRACT

Vendor and Title of Document:

Abstract Initiator: Project Initiator:

Work Phone: Work Phone:

Department: Department:

Sourcing Now:

Scope: [brief description of services]

General Information:

Agreement Type Tax Return Info (“TRI”) Y/N

Effective Date

End Date Maintenance/Support

Contract Value Volume Commitment

Dept ID / Account Code BDM Approved (IT content)

Evergreen Term Planned Budget

Termination for Conv. Project Name

Assessment of Risk/Complexity: [justification of the scoring of both risk & complexity]

Reviewers of Document: [fiscal authority policy approval as required]

Legal: Date: Type Name Here

ESS: Date: Type Name Here

VP: Date:

Type Name Here

Cxx: Date:

Type Name Here

Risk

Complexity

INSERT VENDOR NAME


Exhibit B

SAMPLE SOLE SOURCE JUSTIFICATION

Ver. 1.2

In conjunction with section 3.2 of the Sourcing and Procurement Policy, this form must be submitted and approved by both the VP - Productivity & Expenses along with the Business Unit VP prior to supplier/supplier engagement. Complete the form and submit to Enterprise Strategic Sourcing for review & approval.

Initiator:

Work Phone:

Department:

1. Estimated Amount of Purchase (per year/month/transaction, etc.):

2. Recommended Supplier name, address and contact information:

Supplier Name:

Supplier Contact:

Address:

City, State, Zip:

Phone:

Email:

3. Has this Supplier provided services within the HRB environment prior to this transaction:

Yes No

4. Is there an existing Master Services Agreement? Yes No

If yes, please attach.

5. Do you have a draft statement of work, proposal or some other document outlining the services or purchase? Yes No

If yes, please attach.

6. Will the Supplier have access to Client data? Yes No

7. Is there an IT component to this purchase? Yes No

(IT component= internal IT resources required, access to HRB IT system (file sharing, supplier hosting, etc)

8. What is the reason for the sole source engagement?


( ) a. Unique capability, expertise facilities, or equipment that no other source can provide to satisfy the requirements.

( ) b. Standardization of parts and/or compatibility with existing equipment or services.

i.e. Services: Supplier being sole sourced has legacy/historical knowledge or processes and/or services

i.e. Product: HRB environment contain products that has certain and purchasing dissimilar products could create an increase in cost for support, maintenance or other financial impact.

9. Equipment and/or Software; or services

a. List the equipment, software, or services (or attach a list). If equipment or software, describe the functional purpose for which it is being acquired.

b. List the minimum requirement or features for the equipment, software, or contractor’s capabilities to perform the work, the potential systems, and their suppliers in the matrix below. Indicate whether the system met the requirements that are listed in the first column.

10. Analysis: Answer each question. (Attach separate sheets where necessary in order to fully and adequately answer questions.)

a. Sourcing Analysis: If no alternatives are listed in the grid above, describe the process that you used to determine that there are no other potential suppliers. How were these other sources evaluated and why were they rejected?

b. Justification: State why the recommended system or contractor is uniquely qualified. Why is this source the only one that can meet the minimum programmatic requirements?


c. Follow-on Work: What is the potential for follow-on work or purchase of additional equipment from the same supplier for this project?

Authorized Signature:

VP – Productivity & Expenses Approval

Authorized Representative

Signature

Date

Name: Print Name Title: Signatory Title

Business Unit VP Approval

Authorized Representative

Signature

Date

Name: Print Name Title: Signatory Title

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