Herdt Consulting, Inc

Herdt Consulting, Inc.

Corporate Governance, Social and Environmental Management Guidance for Employees, Suppliers, Vendors, Partners and Sub Contractors (Public)

01 MAY 2011

Revision: ZEROEffective: 01MAY2011

Corporate Governance, Overview

Herdt Consulting, Inc. (Herdt),as a matter of policy,recognizes the importance and necessity of an effective and proactive Environmental Stewardship and Corporate Code of Conduct in addition to our very aggressive Human Resources and Employee Well Being Programs. These programs collectively form our Social and Environmental Management System. We do this in fulfillment of our Corporate Mission, Vision and Guiding Principals first and foremost, but are reflective of our obligations under corporate best practices, Federal Acquisition Regulations (FAR), Occupational Safety and Health Administration (OSHA), Environmental Protection Agency (EPA) and Office of Federal Contract Compliance Programs (OFCCP) obligations which set the minimum standards for Corporate Governance. Exceeding these standards and aggressively monitoring Corporate Governance practices are standard operating procedure at Herdt and the responsibility of our Owners and Directors, as executed through our Corporate Compliance and Program Management Offices (HQ PMO.)

We recognize the importance and value our business partners place on these matters when electing to collaborate with Herdt and we pride ourselves in contributing to our partner’s value proposition and brand. Specifically, we have aligned a number of our Corporate Governance and Stewardship policies with our Partners to achieve synchronicity and strategic alignment of our partner’s mutual goals.

Herdt values our alliances and relationships and with great pride are able to certify full compliance with the Electronic Industry Code of Conduct (EICC) and IBM Supplier Code of Conduct (IBM SCC) as defined in IBM’s Social and Environmental Governance Systems (S&EMS) Program. In addition to similar structural agreements with other partners, Herdt exceeds all mandated regulatory minimum compliance standards for our size and number of employees. Herdt employs a quarterly review and oversight evaluation by our coordinating executive, Herdt President Tom Hefty, in assuring our policies and practices remain forward looking and achieve our next regulatory compliance levels prior to reaching each threshold. Additionally Herdt requires similar commitment and actively mentors our suppliers, business partners and sub-contractors to encourage and understand their Corporate Governance Practices are properly aligned and executed to minimum Federal Regulatory obligations and those required by our Business Partners and Prime Contractors.

While by no means all inclusive, this policy statement formally acknowledges Herdt’s full compliance with the IBM S&EMA Program obligations and has been developed to increase IBM’s visibility into our governance practices, while also allowing our sub-contractors, suppliers and business partners visibility and guidance in establishment and execution of their Governance Programs specific to our S&EMS Program requirements. Herdt’s S&EMS Program is directly managed by our Corporate Compliance Officer Paul Thielen (), with oversight, monitoring and continuing improvement policies supervised by our President, Tom Hefty ().

Established in our Corporate Governance Documents, Employee’s Handbook, and Program Management Guide, these policies establish our Framework of Management for effective Governance and S&EMS compliance. Execution, monitoring, training and continuous improvement are the tools we employ to ensure each member of our team is fully aware of our Governance Policies and best practices, well informed on their personal obligations and contribution to our execution and continuous improvement of same with clearly defined procedures for monitoring, defect identification and corrective actions should short comings be identified. Each and every Governance and Management Practice in place at Herdt is designed to permeate our policies as the fiber of our corporate culture assuring ownership and contribution by all hands. Our Corporate Culture indoctrination starts at the recruiting process and continues throughout tenure, communicated and reinforced through Herdt’s Indoctrinations, Continuous Improvement Training and Leadership Development activities. We strive for each member of our team to “live our principals” in every aspect of their daily conduct and execution within their role as a member of Team Herdt.

Corporate Governance: Sub-Contractors, Suppliers and Partners

Agreements and Task Orders are the tools engaged by Herdt to clearly define our business relationships, roles and responsibilities within those relations and establish the management framework for flow down of FAR, OFCCP and Prime Contractor obligations in Governance and Stewardship practices when Team Herdt extends to other entities. We actively evaluate full compliance with all Governing Law and Regulatory Obligations by our partners, and encourage strong, forward looking Compliance Programs through our example and direct support when issues are identified to be resolved, or mentorship requested by our partners. These are the practices which assure our partners fully under our Governance requirements and their obligations including S&EMS Program compliance activities.

Herdt’s Corporate Compliance Director is fully integrated in and leads the Corporate PMO to facilitate all aspects of this “flow down” practice. Best practices and responsible stewardship by our partners improves Herdt’s Corporate Policies and reinforce the obligations requested of us by our various partners in the Prime Contractor role. Effectiveness of Herdt’s partner compliance is enabled by our Corporate Compliance Director’s role as the Headquarters PMO Lead where all agreements and delivery activities are executed and monitored.

Herdt encourages all of our business partners to maintain an open and continuous dialogue via the HQ PMO and provides our S&EMS Program guidance in a fully transparent manner via our website ( from this page our Prime Contract Partners, Vendors and Sub-Contract Partners will find our policies clearly explained and be provided with management and mentoring points of contact. Through our HQ PMO all reasonable assistance will be provided to our partners to assist them in enhancing their Governance and S&EMS practices and clear guideline contained herein will be provided for their use in assuring the meet their minimal obligations. Herdt cannot and will not assume responsibility for any entity’s Corporate Governance Compliance, but will enforce all contractual obligations as they relate either by sub-contractor flow downs provisions, or specific agreement provisions in each related instrument. Herdt is fully committed to “leadership by example” in our aggressive and continuously improving Corporate Governance Practices.

Corporate Governance: Related Policies, Compliance Alert and Grievance Information

Herdt’s Corporate Compliance Director is accountable for an effective and proactive feedback, grievance and conflict resolution process for Herdt Employees, Vendors and Partners. In all cases, each related Governance Policy at Herdt contains a clearly articulated issue escalation and resolution procedure for the covered Team Herdt Members and Business Partner Pont of Contact (POC.) For Partners, this data is clearly available via the instruments (NDA, Teaming Agreements, Contracts, SOW) and is not further addressed in this document.

Initiated from the outset of the recruiting cycle, then through on-boarding indoctrination Herdt Team Members are made aware of each Herdt Policy related to their personal well being, our EEO, Veteran’s Policies, Herdt Code of Conduct and Social & Environmental Program in addition to their specific time Keeping and Contractual/Project responsibilities, rights and obligations for themselves and those of Herdt as their employer. Issue reporting, grievance and complaint procedures are clearly aligned by related business area and contained in their Employee’s Handbook and Corporate SharePoint site allowing a single point of information regarding their rights and responsibilities.

Grievances, issues, concerns and recommendations for improvement are addressed at the lowest responsible level in each individuals management chain, with “Hot Line” access via telephone and email clearly explained and provided by topical area (example Human resources for EEO or Rights and Benefits Issues.) In all cases employees are encouraged to observe, correct, report and escalate as necessary any issue, grievance or concern. Federal Law does not differentiate between verbal expressions and formal written expressions areas of Social Responsibility, Ethics, Whistle Blowers or EEO matters, nor do Herdt Policies and Procedures. In all cases, the minimum response is a Supervisor’s Informal Investigation and Report of Corrective Actions; any case, matter, grievance or issue perceived by the Team Member, their Supervisor or a Witness/Observer to be of a serious nature, or in the opinion of the aforementioned, not effectively addressed is to be immediately escalated by the most convenient means to the proper authority identified by each policy. No matter of Ethics (personal or professional) is ever considered by Herdt to be “minor” in nature and all hands at Herdt have been clearly advised of their obligation to immediately escalate any such matter to any other Corporate Principal by the most convenient and expeditious means.

While this instrument is not the appropriate venue to address how and when every single matter where investigation and resolution (formal or otherwise) shall be addressed, it does provide the structure by which all matters of Corporate Governance, Workplace Rights and Social & Environmental Management are monitored, accounted for and a basis for continuous improvement. Herdt also holdsperiodic Focus and Alignment Workshops for Principals and Leadership as a tool for review, revision and continuous improvement of subject policies and procedures. This continual improvement methodology is directly linked to our Mission, Vision and Guiding Principals review and alignment process as Herdt views these two areas as inseparable and completely codependent.

The remainder of these document contains concise Herdt policy statements relative to Corporate Governance, FAR, OFCCP and S&EMS compliance and is provided as a one-stop resource for our employees, partners and sub-contractors to assist in understanding our policy, their rights and responsibilities, and business obligations to Herdt. Your point of contact for this document is Paul Thielen, Corporate Compliance Director (telephone: 850-878-7621, email: ). Your escalation point for topics contained in this document is Eric Miller (telephone: 757-450-1018, email: ).

Authorized:

Paul E. Thielen

Approved:

Eric S. Miller

Contents

Forced Labor

Child Labor

Wages and Benefits

Working Hours

Working Hours – Supplemental 1

Nondiscrimination

Respect and Dignity

Freedom of Association

Health and Safety

Protection of the Environment

Focus

Goals

Laws, Including Regulations and Other Legal Requirements

Ethical Dealings

Communications

Monitoring and Record Keeping

Forced Labor

Herdt commits to never using forced or involuntary labor of any type in any business operation. Employment is always voluntary and employees are free to leave providing reasonable notice as outlined in Herdt’s Employee Handbook. Our hiring practice policies prohibit forced or bonded labor. Our subcontractors and labor recruiters are governed by the same policy that strictly prohibits forced labor. No restrictions are placed on the movement of employees. Government issued identification, passports, or work permits are not withheld from employees.

Herdt routinely audits its hiring practices and policies annually. As part of this review, sources of labor and terms of hiring are scrutinized to insure EICC and IBM standards compliance. Subcontractor and labor recruiters are reviewed for compliance at the time their services are contracted as well as annually through their Representations and Certifications check conducted by Herdt.

Child Labor

Herdt does not provide employment to anyone under the age of 18. Age is verified during our companies hiring process through contracted background checks and internal I9 verification. All relevant documentation proving age is kept on file. If the need ever arises to hire a person under the age of 18 Herdt will assess:

1)Local child labor laws and regulations.

2)Implement a program to verify that employees under the age of 18 are only working the legally specified number of hours.

3)Local laws on trainees and apprentices.

4)Legally specified durations that employees can be kept on trainee wages.

Wages and Benefits

Herdt complies with all applicable wage and hour laws and regulations, including those relating to minimum wagessuch as overtime hours, piece rates, and other elements of compensation. Herdtprovides all legally mandated benefits. In compliance with local laws, employees shall be compensated at pay rates greater than minimum hourly rates. Deductions from wages as a disciplinary measure are not permitted under any circumstances. Employees receive all statutory benefits mandated by law, including but not limited to pension benefits, annual leave, and holidays.

Note: Unless specified otherwise by local legal requirements, provisions may not apply to exempt employees including those in executive, managerial, or provisional positions.

Employee time is reviewed and approved weekly through our Web Time and Expense System. Audits are conducted weekly to ensure compliance with our timekeeping standards. Herdt conducts a comprehensive compensation review annually as part of its EEOC filing. Required insurance, social security, and other legally mandated contributions are managed and tracked in our electronic payroll system through Paychex. Payroll reports produced by the system are reviewed twice a month to ensure the proper deductions are being taken. Employee payroll receipts that indicate compensation, including overtime hours and overtime compensation levels, are produced automatically by our Payroll System and provided to all employees during each pay period.

Working Hours

Herdt employees are not allowed to exceed prevailing local work hours and are appropriately compensated for overtime. No employees are scheduled or authorized to exceed 60 work hours in any consecutive 7 day period, including overtime, except in extraordinary business circumstances with their consent. Employees are prohibited from working seven consecutive days in a row.

Herdt employees follow a set weekly work schedule. All schedules are verified to meet local legal limits on regular working hours. Employees are provided advance notice that overtime hours may be necessary through their immediate supervisor/time approver.

Note: Unless specified otherwise by local legal requirements this provision may not apply to exempt employees, including those in executive, managerial, or professional positions.

Herdt work schedules are created based on set project deliverables. Every effort is made to reduce or eliminate overtime during the schedule creation. During schedule creation, capacity constraints in meeting project deliverables are evaluated and action taken to secure additional resources where capacity is inadequate to meet demand. Herdt’s Time and Expense System is the system of record for time entries. Entries are classified as regular or overtime and the system is used to ensure compliance in reporting, monitoring, and generating accurate payroll records. The time system is available to all employees through a secure Internet link. All employees are given the means necessary to enter time into the system daily. During emergencies or where extraordinary circumstances do not allow the direct entry of time into the system an alternate phone reporting of time worked to the employee’s supervisor is required. The supervisor will make the required entry in the Time and Expense System to later be verified as accurate by the employee.

Working Hours – Supplemental 1

Employee Interview Audit form (to be completed by the HR manager sampling a random 5% of the workforce annual). Records are to be submitted to the Corporate Compliance Officer and Vice President of Operations annually for review).

Herdt Working Hours and Compensation Audit

Employee Inteviewed:

Date:

Question 1: How is time recorded and with what frequency?

Question 2: Please describe Herdt’s overtime policy?

Question 3: How many consecutive days are you permitted to work before a day off is required?

Question 4: How many maximum hours are you allowed to work in a consecutive seven day period?

Interview Conducted by: / Results Reviewed by:
Rosie Herdt – Human Resources Manager / Paul Thielen – Director, Corporate Compliance
Results Verified and Approved by:
Tom Hefty – President

Nondiscrimination

Herdt is committed to a workforce free of harassment and unlawful discrimination. Herdt does not engage in discrimination based on race, religion, age, nationality, social or ethnic origin, sexual orientation, gender, gender identity or expression, marital status, pregnancy, political affiliation, or disability. All job candidates and/or employees are judged solely based on their ability to perform the job they are applying for or currently engaged in and applies to all employment decisions, including recruitment, hiring, training, promotion, and termination.

Hiring practices are reviewed annually in conjunction with our annual EEO audit. All wage evaluations are done annually during the same period and are reviewed to ensure fair compensation practices. Wage evaluations are conducted by the Human Resources Manager and approved by the Vice President of Operations. Recruiting opportunities and sources are evaluated constantly to take affirmative action to hire and promote a diverse workforce. Results are reviewed quarterly and filed annually with the EEOC.

Each Herdt employee is provided a written job description. Job Descriptions at Herdt focus on occupational qualifications. All hiring agents, internal and external to Herdt, are trained in nondiscrimination and applicable nondiscrimination laws prior to performing any recruiting tasks.

Management communicates its written policies on nondiscrimination to its employees through several means. Verbally at employee events and in electronic form via the Herdt employee Intranet as well as our learning management system where access and confirmation of the receipt of information is logged. Employees also have direct access to report concerns to all levels of management, up to and including the CEO through several means. The first of which is a corporate compliance 800 number where employees can report concerns (anonymously if they so choose). Phone numbers for managers are available in the company e-mail directory as well as manager e-mail addresses.