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General guidelines for procurement

Approved by the Board of Directors on 24/10/2019

1. Purpose and extent

The purpose of these guidelines is to establish principles in order to ensure that KBN acts responsibly and with integrity when carrying out procurement processes and that procurement at KBN promotes efficient use of KBN's resources in accordance with the relevant regulations and is consistent with KBN's risk appetite.

2. Scope

These guidelines apply to all procurement carried out by KBN with the exception of purchases of financial instruments. The guidelines do not apply to employment contracts or types of procurement that are excluded in accordance with the provisions of other guidelines. Everyone who carries out procurement on behalf of KBN, including employees, temporary staff, hired-in consultants and any other parties carrying out assignments for KBN, must comply with these guidelines.

3. Roles and responsibilities

Board of Directors: The Board is responsible for determining the general guidelines for procurement.

Chief Executive Officer: The CEO is responsible for determining supplementary detailed guidelines for procurement within the framework established by the Board's general guidelines. The CEO is responsible for allocating procurement mandates and determining the operational procedures for procurement.

4. Governing principles

4.1 Introduction

All procurement processes at KBN must be carried out in accordance with the governing principles set out in these guidelines. The principles are intended to help ensure that KBN achieves the purpose of the guidelines and apply in general to all procurement regardless of the value involved while taking into account the principle of proportionality. The content and scope of the governing principles are put into operation by means of supplementary detailed guidelines and administrative procedures for carrying out procurement.

4.2 The governing principles

Competition

Procurement shall as a general rule be based on competition to the extent that this is possible in practical terms. This principle means that a final agreement for procurement should as a general rule not be entered into until KBN is in possession of genuine and comparable offers from a reasonable number of alternative suppliers.

Equal treatment and consistency

KBN's procurement processes must give relevant suppliers the opportunity to compete on equal terms, and procurement processes must therefore take into account the need for consistency in relation to suppliers. One consequence of the principle of equal treatment and consistency is that the award of procurement contracts should be based on objective and non-discriminatory criteria, which should be predetermined to the greatest extent possible.

The practical application of the principle of equal treatment and consistency must be based on a factual commercial appraisal, but for the sake of good order it should be noted that as a general rule KBN considers that its commercial objectives are best served by promoting its reputation as a professional, reliable and long-term business partner, and it therefore seeks in its procurement processes to avoid operating in an opportunistic manner in the pursuit of short-term gains.

Verifiable

Procurement processes must be documented in order to facilitate sound financial management and contract management. This includes ensuring that procurement is supported by the necessary legal documentation to protect KBN's interests in the event of any dispute and that the records are sufficient to permit verification of compliance with internal procedures.

Proportionate

Procurement shall be carried out in a manner that is reasonably proportionate to the nature and value of the purchase in question and the risk exposure involved. The other governing principles shall be applied with regard to the principle of proportionality. In the event that a procurement decision does not fully apply the governing principles as a result of applying proportionality, the decision must be documented with a record of the assessment carried out in this respect.

Avoiding conflicts of interest

No-one may participate in procurement processes at KBN where they have a conflict of interest. Everyone who has a role in KBN's procurement processes must continually evaluate whether their participation involves a personal conflict of interest and must abstain from further participation in the process if they do have a conflict of interest, for example if the procurement may involve advantages or disadvantages for them personally or for their close associates, or if there are any other special circumstances that may be liable to weaken confidence in whether they are free of any conflict of interest.

Social responsibility

Procurement processes must be designed so that they help to promote KBN's environmental, social and governance objectives (ESG). This means that procurement must contribute to reducing damaging environmental impacts and to promoting climate-friendly solutions where relevant. Procurement must promote respect for fundamental human rights and employment rights, equality and diversity, ethical conduct and social responsibility. KBN will not use suppliers that are involved in corruption or money laundering. Procurement must be carried out in such a way as to ensure that KBN has reasonable oversight into the use of subcontractors by suppliers and their subcontractors, and that KBN's ESG objectives are promoted throughout the supplier chain.

5. Entry into force

These guidelines enter into force from the date they are approved.