General

The purpose of the RFP process is to collect information and pricing from Approved 3^rd Party Auditors to conduct audits at Sumerra’s client’s suppliers.  If a 3^rd Party Auditor wishes to bid on multiple projects, they must submit a separate bid for each project.  All pricing submitted by the 3^rd Party Auditor/Auditing Company during the bid process is final.  Therefore, the 3^rd Party Auditor/Auditing Company must include ALL possible expenditures (including travel) within the RFP response.  After the bid has been awarded, at no time will Sumerra or the Factory/Licensee be responsible for providing additional money to the 3^rd Party Auditor/Auditing Company, including if expenditures exceed the original estimated amount by the 3^rd Party.

Sumerra will use the information submitted to make business decisions, including but not limited to choosing auditors and companies for the audits listed.  However, depending on the information received, Sumerra may choose to take no action whatsoever.  Any award of business will be at Sumerra’s sole discretion based on the following criteria:

• 3^rd Party Auditors ability to conduct the audits – Approved auditors in the specified program
• Audit Cost
• Auditor knowledge of program standards, local laws, language, culture and customs
• Previous Auditing Experience – Auditors submitting high-quality audits have an increased opportunity for future audits

Scope of Work

The scope of each RFP is limited to the audits identified in the RFP.  There may be instances when the scope of work expands after the project has been awarded; this will only be done with agreement between Sumerra and the Third Party Auditing Company.

Program Details

Bid Process

• Bids are confidential and will not be shared with anyone outside of Sumerra or their clients
• Bids should include the costs for the following items:

1. 1. Audit Labor (inclusive of all preparatory work, on-site audit, report writing, etc., through the verification process)
   2. Travel (inclusive of all associated travel expenses)
   3. Any other expenditures

• The pricing submitted in the RFP is final.  At no time will Sumerra or the Factory/Licensee be responsible for providing additional money to the Auditor or Auditing Company, including when expenditures exceed the original estimated amount
• Only Bids submitted using Sumerra’s online bidding portal will be accepted
• Bid winners will be chosen and notified after the ‘Bid Due Date’ has passed.
• A contract between Sumerra and the chosen Third Party Auditing Company will be signed (this will be a master contract, with individual work orders to be conducted under the master agreement)
• By submitting a response to the RFP, the Third Party Auditor/Auditing Company agrees to finish the Factory Audit once a bid has been awarded, if an Auditor is unable to complete the audit, then fees may be assessed

Auditors

• Only Approved Auditors may conduct Sumerra Audits; this means the Approved Auditor must be on-site when the audit is taking place
• The audit report must be compiled by the Approved Auditor
•  A non-approved Auditor can be present during an audit, if the Third Party Chooses.  Non-approved auditors must work under the supervision of approved auditors.
• Non-approved Auditors do not count towards the number of man days required for an audit
• On the Bid form, there is a place to list up to 5 Approved Auditors that may perform the Audit(s).  After the Bid is awarded and your company is in the scheduling phase of the Audit, you must communicate with Sumerra who the Approved Auditor will be.  If this changes prior to the audit taking place, the company must communicate this to Sumerra prior to the audit.
• Nike audits: For any Nike audits, an auditor may not visit the same factory more than twice consecutively.  In other words, you may not conduct an audit at the same facility three consecutive times (after the first two a new auditor must conduct the audit before you can audit the facility again).

Audit Type

• 3^rd Party Auditors will complete audits based on the audit request:
  • Nike audits generally consist of a Labor Audit and an HSE Audit; these audits will be conducted during the same visit by the 3^rd Party Auditor
  • All other program audits consist of a combination of labor, health & safety, and environmental sustainability as defined by the program.
• Audits will be conducted using the program specific tools – It is the Auditor’s responsibility to have the technical capability to utilize the current tools (using Microsoft Excel technology)
• The number of interviews are determined by the program and will be specified on the Project RFP

Audit Report Submittal

The table below summarizes the report requirements/submittal for each Sumerra program.

 

*All audit reports and associated information must be submitted in English

Critical Incident Reporting

As an Approved Auditor/Auditing Company for Sumerra Compliance Management Programs, you are responsible for reporting any potentially significant issues that are found in a factory.  If you discover any of the situations listed below while auditing factory, please contact Sumerra as soon as the issue is discovered using the program specific Incident Notification Form.  Sumerra will then be responsible for communicating the situation to the client.  After verbally reporting the issue to Sumerra, please still provide the details in the audit report as well.

ESEP/Antigua Critical Incident Reporting: https://fs26.formsite.com/Sumerra/ESEPCIRForm/index.html

• Denied Access
• Lack of valid business license
• Abuse (Verbal, Sexual, Physical)
• Child Labor
• Forced Labor, Prison Labor and Human trafficking
• Use of Homework
• Unauthorized subcontracting
• Serious risks to worker health and safety
• Lack of Freedom of Association
• Bribery

 FJATA Critical Incident Reporting: https://fs26.formsite.com/Sumerra/FJATACIForm/index.html

• Denied Access
• Abuse (Verbal, Sexual, Physical)
• Child Labor
• Forced Labor
• Failure to pay wages (back wages)
• Obstruction of Freedom of Association  (including union busting)
• Human Trafficking
• Unauthorized subcontracting
• Worker Fatalities/Suicides
• Prison or Bonded Labor
• Significant Environmental Release (impacting local community)
• Bribery

Nike Factory Incident Reporting: https://fs26.formsite.com/Sumerra/NikeFIN/index.html

ZT – General

• Undermining of the audit Process (e.g.: denied access, audit refusal…)

ZT- Labor

• Bribery
• Falsification of records / misrepresent information / double books
• Failure to pay minimum wages
• Forced labor risks for domestic workers (fraudulent recruitment, holding worker personal documents, requirements to post deposits/bonds, forced savings, other practices to force or compel work or prevent quitting, locking in work space or dormitories)
• Worker under age 15 or local legal age – critical any time
• Prison Labor
• Homework
• Unauthorized Subcontracting

ZT – Health, Safety & Environment

• Release of untreated wastewater directly into environment
• Improper use of high risk hazardous materials with confirmed exposure to workers
• Inappropriate disposal of hazardous waste directly into environment
• HSE noncompliance resulting in Permanent disease/Disability/Amputation or environmental release

PopSockets Critical Incident Reporting: https://fs26.formsite.com/Sumerra/PopsocketsCIN/index.html

• Child Labor
• Denied Access (Full or partial denial of access to records, workers for interviews or facility)
• Bribery
• Harassment/Abuse
• Forced/Prison Labor
• Human Trafficking
• Discrimination
• Unauthorized Subcontracting
• Critical ESH (posing immediate health risk to employees)
• Suspected or confirmed presence of a North Korean foreign migrant/internal migrant worker(s)
• Retaliation against whistleblowers
• Lack of valid business registration or license to operate business

 Audit Report Submittal Timeline and Penalties

• All audits are expected to be completed by the established date set in the RFP (and confirmed when the bid is awarded); changes to this date must be agreed upon by Sumerra prior to the audit taking place
• Audits are to be submitted to Sumerra within 5 business days of the last date of the audit
• In all instances, the time used to determine ‘late’ is Midnight (24:00) on the required day, using current Pacific time
• Reports submitted after 5 business days of on-site audit completion will incur a late fee, using the following guidelines:
  • 3-6 days after the due date with no response: $50 USD late fee
  • 7-13 days after the due date with no response: $100 USD late fee
  • 14 or more days after the due date with no response: $200 USD late fee

Man Days

The approximate number of man-days needed to complete each audit (based on the factory size/number of workers) varies per program and will be specified in the RFP. Please consider this information when pricing your bids.  Sumerra will be following up with the factories after each audit.  If Sumerra determines that an Auditor is not spending enough time at a factory to gather the required information, Sumerra may ask the Auditor to re-audit the factory (at the Auditor’s cost) and could potentially ban that Auditor from receiving audits in the future.

Payments

• At no time should an Auditor or Auditing Company receive money from a Factory
• The Factory/Licensee will have 20 business days to pay after receiving the initial invoice; no audit will take place prior to the 20 business days payment window unless all payments have been received by Sumerra
• Sumerra will notify the Auditing Company once the auditing can begin
• Payment to the Auditing Company will occur after completion of all audits in the project through the verification process. Payment will be made within 45 days of receipt of the invoice and the completion of the verification
• All invoices must be sent to cm_ap@sumerra.com in order for them to be processed accordingly
• Invoices will also need to include the following: banking information, Sumerra project number (AM-XXXX), factory name, and total amount owed (must not exceed what is listed on the bid document)

Timeline Extensions

• The timeline may be extended during the bid negotiation process if there are legitimate reasons to do so, as long as the extension is not excessive; this discussion and agreement must occur during RFP submittal process and is at the sole discretion of Sumerra
• Once the timeline is agreed upon, it is set and cannot be changed unless:
  • The Third Party and Sumerra agree in advance of the project completion date, as early as an extension is known to be needed
  • There are extenuating circumstances that require an extension, such as:
  1. • Natural disasters
     • Circumstances with the factories requiring a delay
     • Political unrest or situations that are otherwise unsafe for auditors
     • Other situations that are out of the control of the Auditing Company and/or Factories
     • The extension does not create a hardship for the factories involved
• Sumerra may provide reasonable extensions to Auditors/Auditing Companies who are diligently working towards audit completion; in instances where the Auditors/Auditing Companies are not working actively towards audit completion, Late Fees will be assessed

Scheduling

• The Auditors/Auditing Companies will be responsible for scheduling the audits with the factories
  • Note that some programs require unannounced or semi-announced audits.  Please be sure to note this detail on the RFP
• Once the 3^rd Party Auditing Company has scheduled a date for the audit, the 3^rd Party Auditing company must communicate the date to Sumerra
• All audits must be completed within the established timelines listed in the RFP, both the on-site audits as well as the verification process

Day(s) of Audit Process

• The audit process will generally be as follows
  1. Opening Meeting: Discuss the purpose of the audit, audit flow, get general information about the factory, etc.
  2. Factory Walk-Through: Observe workers, conduct in-line interviews, tour the factory, etc.
  3. Worker Interviews (for Labor)
  4. Documentation Review
  5. Closing Meeting

Questions or Concerns during Audit

If Auditors have issues or questions prior to or during the Audit, Sumerra is their first contact for assistance; Sumerra will respond as quickly as possible to all questions.  Contact information, including phone numbers and emails, will be provided to the Auditors/Auditing Companies during the bid award/contract process.

Quality Assurance Process

• Sumerra will begin to review all audits within five business days of receipt.  Auditors must respond to Sumerra’s QA team within 72 hours of receiving feedback or 48 hours for Nike audits.  This is to ensure an efficient verification process.  If an auditor takes more than 72-48 hours to acknowledge a QA team’s comments, the following fees may apply:
  • 3-6 days no response: $50 USD late fee
  • 7-13 days no response: $100 USD late fee
  • 14 or more days no response: $200 USD late fee

• Sumerra will verify the following information:
  • That Approved Auditors conducted the audits
  • The forms are fully and accurately completed
  • The audit is complete
  • Significant issues are identified
  • Risk is rated accurately
  • The information is accurate
  • Enough time was spent at each factory to make the appropriate decisions
• Audit QA time varies dependent upon the quantity and severity of issues found during the QA review process, as well as the responsiveness of the Auditor.  Generally, the process will take anywhere from 1-4 weeks

There are three categories of audit QA:

Category 1 – Minor changes needed: this is when audits are very close to accurate, but need minor adjustments to be complete; when audits require adjustments:

• Sumerra will adjust the report
• The auditor will be notified of the adjustments (including why the adjustment(s) occurred)

Category 2 – Calibration Needed: this is when audits can be corrected through training and/or explanation

• Audits will require Audit Corrections for the following reasons:
  • Ratings are not accurate
  • Information is not complete, but can be gathered without returning to the factory
  • Minor gaps in the audit or ratings
• When audits require correcting, the audit will be returned to the auditor for adjustment; this is done with:
  • No additional monies being exchanged
  • Minor interruptions to the factory as possible
  • A due date assigned, generally to be completed with 2-4 days
  • the goal to complete the work prior to the overall due date
• Sumerra or the Auditor will adjust the report; anytime the report is adjusted by Sumerra the auditor will be notified of the adjustments (and why the adjustments occurred)

Category 3 – Audit Refusal: this is when audits cannot be accepted; audits will be refused for the following reasons:

• Improper person doing the audit (un-approved auditors)
• Extensive inaccuracies in the audit
• Extensive gaps in the audit, showing that not enough information was gathered to make an accurate score (for example, not enough people were interviewed, the factory walk-through was not complete, not enough time was spent at the factory, etc.)
• Unethical behaviors, lack of honesty or transparency, or any other actions that question the validity of the audit information

When audits are refused, the auditor must gather the appropriate information (including visiting the factory again, if necessary) to appropriately complete the audit.  This must be done with:

1. No additional monies exchanged (late fees may be assigned if this extends past the agreed upon due date)
2. Minor interruptions to the factory as possible
3. A due date assigned, generally to be completed within 10-14 days

Additional QA

• At any time, Sumerra or their client’s employees may attend the audit and observe the auditor
• Sumerra may choose to select factories to conduct a follow-up audit to confirm the audit results
• Sumerra will contact each factory after each audit to confirm the audit details

Insurance Requirements

To become an Approved 3P Auditing Company in the program, you must meet the following qualifications:

• Auditors/Auditing Companies conducting Audits in the Sumerra Compliance Management Programs must meet the following insurance requirements:
  • Workers Compensation or equivalent with statutory limits, as required by applicable local laws
  • Employers Liability limits of $1,000,000 each accident / $1,000,000 disease – each person / $1,000,000 disease – policy limit
  • General Liability Coverage:
    • $1,000,000 USD per occurrence
    • $2,000,000 USD general Aggregate (total)
    • Name Sumerra as an additional insured
  • Professional Liability (Errors & Omissions) Insurance:  $5,000,000 USD
  • Auto Liability Coverage:  $1,000,000 USD combined single limit covering all owned, hired and non-owned autos
  • General Liability, Auto Liability and Workers Compensation coverage noted above shall contain a waiver of subrogation in favor of the certificate holder
  • Cyber and Network Liability Insurance:  $2,000,000 per occurrence
  • The above insurance requirements must be met for all countries an Auditor/Auditng Company will perform audits in for a Sumerra Managed Program

Auditor Ethics

• Audit firm (Contractor) represents, warrants and covenants that any and all individual employee resources either direct or contracted utilized to manage, conduct, process, verify or otherwise come into contact with sensitive client data & systems as outlined here, will be appropriately screened for fitness as permitted by applicable law (e.g. local laws but not laws in jurisdictions that are not applicable to Contractor). Without limiting the generality of the foregoing, Contractor will use commercially reasonable efforts, at a minimum and as permitted by applicable law, to conduct a criminal background check (including but not limited to a search of court records and using Social Security number or Social Insurance number) to verify the identity of Contractor Resources that provide certain services to Sumerra as follows: (a) a Contractor Resource who has access to or Handles Sumerra/Sumerra Client Data or computer networks, information systems, databases, or secure applications will not have been convicted of any criminal offense involving dishonesty, breach of trust or money laundering, and will not have participated in a pre-trial diversion program in relation to the same offenses; and (b) a Contractor Resource who provides services in non-public areas of a facility will not have been convicted of a felony or certain repeated misdemeanors involving violence or harassment.  The background check and assessment shall be conducted minimally upon hire.
• If the auditor has a prior business relationship with the factory, including but not limited to, educational or training consulting work, the auditor may not conduct a Sumerra audit at the factory for 2 years after the business relationship ends. If there has been a prior relationship with the factory and you are unsure if the auditor is eligible to conduct the audit, please contact Sumerra before bidding. In the event of a conflict, failure to obtain approval from Sumerra will result in the rejection of the audit and forfeiture of any payment due
• Audit firms who also provide additional services including activities such as consulting, training or other related supplier improvement offerings must have in place a robust conflict of interest protocol including detailed separation of duty policies and controls.  Access to program audit data including report files, contents, findings or any other audit related detail, documented or otherwise is deemed fully confidential and restricted to only approved auditor individuals and other required personnel operating within the auditing oversight capacity.
• There is a ‘zero tolerance policy’ for auditors who are dishonest in any way (including accepting bribes, manipulating audit results or scores, or otherwise providing information that is knowingly inaccurate)
• Auditors who are discovered to be dishonest on any audits will be banned from future Sumerra audits
• If Auditors who are discovered to be dishonest during audits, the audits (along with any audit monies due to them) will be forfeited by the auditing company
• If an auditing company has multiple instances of hiring/using dishonest auditors, the company may lose the approval for conducting Sumerra audits
• There is an expectation of transparency and partnership between our clients, Sumerra and the Auditor during the course of the audit(s); this allows for open dialog and communication through the entire auditing effort

Conflict of Interest

• This Code of Ethics prohibits auditors that may have any type of Conflict of Interests to work on audits, with factories in which the conflict may be perceived as creating distrust or providing unduly biased information; examples include (but are not limited to):
  • Auditors that have a personal or close relationship with the factory
  • Auditors that have a built in bias towards a certain factory
• Auditors may not have a business, personal, or other relationship with factories that they will be auditing that may result in creating an undo bias or create difficulties in providing accurate information

Other Information

• The auditor and Auditing Company are responsible for his/her safety in the factory, including any fees or costs associated with any incident that may be associated with these audits
• The audit data and information is exclusively owned by our clients, the Factories/Licensees and Sumerra.  At no time will the 3^rd Party Auditing Company be allowed to disclose the audit results found to anyone besides Sumerra
• The Auditor and Auditing companies are required to keep all information learned while conducting the audit confidential to all parties other than our clients, the Factory/Licensee and Sumerra, including refraining from posting any information about the audit or the factory on social media sites