1. These Procurement Guidelines establish procedures for the procurement of goods and services in connection with the operation of Watergate East, Inc. ("WEI").

2. The Board of Directors has the ultimate authority to approve or disapprove expenditures for contracts.

3. The General Manager is authorized to execute contracts and make payments for budgeted and recurring contracted goods and services such as utilities and mortgage payments without prior Board approval unless the expenditure would cause the associated budget item to exceed its budgeted amount. In such case, the General Manager must obtain approval of the Board before executing said contract.

Procurement Involving Expenditures of $20,000 or More:

Budgeted Expenditures

4. The General Manager will propose purchasing goods or services (the “Procurement”) to WEI's Committee involved in the relevant areas of activities and/or the Board in the absence of such Committee. The proposal will include a cost estimate and ancillary requirements such as insurance, licenses, experience, and/or quality. The General Manager will also provide his assessment of the ability of WEI's in-house labor to perform all or part of the work related thereto.

5. When the Board and Committee endorse the proposed Procurement, the General Manager, in collaboration with that Committee, will prepare a request for proposals (“RFP”) based on standard RFP components containing information sufficient for vendors or service providers (“Contractors”) to prepare responsible proposals (i.e., detailed description of the Procurement, quality requirements, delivery schedule, invoicing instructions, due date for receipt of proposals, etc.). For complicated procurements, upon Board approval, the General Manager may seek expert outside assistance (in line with these procurement guidelines) to prepare the RFP.

6. The President of the Board will review and then authorize release of the RFP for bid.

7. Solicitation packages for contracts with an estimated value over $100,000 shall be reviewed by the Corporation's attorneys prior to distribution to prospective bidders.

8. The General Manager, in consultation with the relevant Committee, will establish a list of qualified bidders for the Procurement. At least three qualified bidders will be invited to respond to the RFP. Copies of the RFP will be made available to the Board and the relevant Committee.

9. All bidder responses will be addressed to the President of the Board. The General Manager, the President of the Board, and the Chair of the relevant Committee (or their designees) will meet and unseal the bids for initial review. The General Manager will further analyze the bids and make an initial recommendation to the relevant Committee taking into account the price of bid, but also other criteria such as expertise, ability to deliver quality work and complete the project on time, etc. After resolution of outstanding issues, the General Manager will make a recommendation to the Board. The recommendation will include the views of the Committee.

10. Upon Board approval, the President of the Board will execute the contract award.

Unbudgeted Expenditures:

11. Procurements not included in the annual budget will follow the procedures established for budgeted Procurements with the following exception: Before the proposed Procurement is submitted to the Board, the Finance Committee will evaluate the effect of the unbudgeted procurement upon the budget and the resources that may be made available to finance the Procurement. The Finance Committee Chair will report to the Board the results of the Committee's evaluation and recommendations.

Procurements Involving Expenditures of Less than $20,000

Budgeted Procurements of $5,000-20,000

12. For Procurement of budgeted items estimated to cost between $5,000 and $20,000 and for the Procurement of commercial “off-the-shelf” items, a simplified Procurement procedure is used as described below;

13. The General Manager will obtain bids for the Procurement either by telephone or by e-mail from a minimum of three qualified vendors or Contractors from a list of Contractors maintained by the Management Office.

14. The General Manager will select the Contractor providing the bid that in his judgment is most advantageous to WEI, taking into consideration cost and such ancillary matters as quality, delivery schedule, and warranties. After a review of the General Manager's recommendation by the President of the Board, the General Manager will execute a contract award or a purchase order, as is appropriate for the Procurement.

15. The General Manager will maintain a record of the bids received in a Procurement File, documenting, as applicable, justification for selection. This record will be available to the Board for review.
Unbudgeted Procurements of $5,000-20,000

16. For Procurements of unbudgeted items estimated to cost between $5,000 and $20,000, the procedure is the same as that employed for budgeted Procurements in that range. However, before the bid is selected by the General Manager, it is first submitted to the Finance Committee for review and recommendation to the Board. After having evaluated the recommendation of the Finance Committee, the Board will vote on whether or not to authorize the General Manager to execute a contract award or purchase order for the Procurement.

Procurements Involving Expenditures of Less than $5,000;

17. The General Manager will select a Contractor and will effect the Procurement by executing either a purchase order or a contract, as is appropriate. If the proposed expenditure would result in an increase in the relevant line item expense beyond the budgeted amount, the General Manager must obtain the approval of the President of the Board or his/her designate for an increase in that line item to accommodate the proposed expenditure.

Contract Monitoring

18. For all Procurements, the General Manager will monitor Contractor performance and the quality of commercial “off-the-shelf Procurement to assure performance and delivery in accordance with the terms and conditions stipulated in the RFP/Contract or purchase order, as the case may be. The General Manager will report to the President of the Board whether or not the contract has been honored as per RFP stipulations before payment for the work is authorized.

19. For Procurements in excess of $20,000, the Chair of the relevant Committee and one other Committee member will inspect and evaluate delivery of the Procurement as per the terms and conditions stipulated in the RFP/Contract or purchase order. Before payment is authorized, the General Manager and the Chair of that Committee will certify that the work has been satisfactorily completed.

Approved by the Board of Directors/June 22, 2005