Instructions for the Development of Regulated Vendors List Engine

Engineering Procedure

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

Document Responsibility: Consulting Services

4 January 2006

Saudi Aramco DeskTop Standards

Table of Contents

2

2 . 2

3 Definitions 2

3

3

6 8

Previous Issue: 29 June 2005 Next Planned Update: 1 July 2010

Revised paragraphs are indicated in the right margin

Copyright©Saudi Aramco 2005. All rights reserved.

Page 1 of 10

Document Responsibility: Consulting Services

Issue Date: 4 January 2006

Next Planned Update: 1 July 2010

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

1 Scope

1.1 This Saudi Aramco Engineering Procedure (SAEP) is mandatory and presents

the minimum criteria and responsibilities for the development and maintenance

of Regulated Vendors Listing (RVL) Engineering Standards, which include all

applicable commodity items (9COMs).

This procedure applies to the development and maintenance of Company-wide

RVL Engineering Standards. Relevant SAP-based RVLs shall be developed and

maintained according to this procedure.

1.2

2 Applicable Document

The following Saudi Aramco document is referenced within this procedure:

GI-0860.000 Approval of National Manufacturers and

Utilization of their Products

3 Definitions and Abbreviations

Terms or abbreviations within this document are defined below:

Alternate Manufacturer: A potential manufacturer that is not in the established RVL

or has previously been granted one-time approval(s).

AOC: Aramco Overseas Company, AOCL for Leiden Office and AOCT for Tokyo

Office

ASC: "Aramco Services Company"

ID: "Inspection Department", Dhahran, Saudi Arabia

National Manufacturers: As defined by GI-0860.000.

PD: "Purchasing Department", Dhahran, Saudi Arabia

Q-Info Record: SAP-based records containing quality specifics about a manufacturer

and its linked 9COM items, e.g., approval status (approved, disapproved, approved with

limitations, on-hold, etc.).

PDM: Project Department Manager

RDM: Responsible Department Manager (e.g. CSD, P&CSD)

RSA: Responsible Standardization Agent

RVL: Regulated Vendors Listing

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

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SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

SCC: Standards Committee Chairman

SAP: Saudi Aramco corporate database that includes approved manufacturers.

SAP QM: Quality Management function of SAP.

SAP QMC20: SAP-based routine for Vendor Plant Evaluation/Administration RVL

Approval Cycle.

ZQ-0025: SAP-based transaction that generates Manufacturing Plants Approval Status

report.

ZQ-0054: SAP-based transaction that generates Cycle time report on RVL listing

revisions (addition or deletion) addressing 9COM(s) and/or vendors.

4 Responsibilities

4.1 The relevant SCC shall be responsible for the overall development and

maintenance of the RVL standard. The SCC is also responsible for

recommencing approval/disapproval of revisions to the RVLs.

The relevant RDM shall approve revisions to the RVL standards and the SAP-based RVLs. The RDM shall also approve manufacturers on a one- time basis.

The ID, PD, relevant RSAs and the relevant SCC shall process RVL workflows

in SAP to execute revisions to the RVLs in accordance with routines defined in

SAP.

ID is responsible to maintain the approval of SAP-based RVLs.

Each January, the Standards Coordinator shall issue a report, utilizing ZQ-0054

transaction, to the Corporate Services Committee (CSRC) summarizing, from

the previous year, the manufacturers' listing addition and deletion revisions for

all the RVLs.

4.2

4.3

4.4

4.5

5 Instructions

5.1 RVL Engineering Standard shall be created for equipment or material where

Saudi Aramco control over the selection is necessary to control issues such as

quality, technology or life-cycle cost.

A manufacturer will be considered for addition to or removal from the SAP-based RVL utilizing SAP QMC20. The party requesting the revision of a RVL

shall initiate the relevant SAP workflow containing proper justification(s) for the

proposed action. The request must be approved by a Division Head or a Project

5.2

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

Next Planned Update: 1 July 2010

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

Manager level employee of the party requesting the revision to be considered for

further processing.

Commentary Notes 5.2:

Examples of "Proper Justification" for addition would be insufficient number of

current suppliers; supplier is national manufacturer, added-value considerations,

etc.

Examples of "Proper Justification" for removal would be continued

unresponsiveness to Saudi Aramco or its contractors, failure to perform (e.g.,

non-performance of purchase order obligations such as unacceptable delays or

failure to comply with specified requirements.), deterioration of financial condition

or production capability, falsification or forgery of records or documents,

discontinuation of an approved product line, poor after sales service, poor

manufacturing quality, etc.

5.3 The workflow will be forwarded to the SCC for review. The SCC shall respond

to the party requesting the revision within two weeks from the date of receipt of

the request. SCC shall notify the party advising if the request is acceptable or

not.

If the SCC considers the addition, removal or one time approval request to have

sufficient justification, the following evaluation processes shall be completed:

i)

ii)

Technical Review by RSA,

Commercial Review by the designated purchasing office, i.e., PD, ASC,

AOC.

5.4

iii) Quality Review by the designated purchasing office, i.e., ID, ASC, AOC.

Commentary Note 5.4:

GI-0860.000 should be used as a resource when evaluating national

manufacturers.

5.5 Based upon the results of the evaluation, the SCC shall complete the RVL

workflow which will be forwarded automatically to the RDM for review. After

RDM's review, the SAP-based RVL will be automatically updated in accordance

with the approved revisions.

Deviation from the established RVLs for the use of an alternate manufacturer, as

defined in this procedure, may be allowed on a case-by-case basis, i.e., limited

to a specific purchase order. Such business decision shall be established jointly

by the party requesting the deviation (PDM or Proponent) and the RDM in the

best interest of Saudi Aramco, technically and commercially. The party

requesting the deviation and the RDM shall endeavor to act in a timely manner

5.6

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

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SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

on facilitating the evaluation process. For the endorsement of a purchase from

an alternate manufacturer, all of the following requirements shall be fulfilled:

5.6.1 Evaluation process shall be initiated utilizing SAP QMC20 transaction,

upon approval of the Proponent or PDM. Failure to seek approval prior

to placing such an order will result in issuance of an NCR.

5.6.2 The party requesting this deviation (PDM or Proponent) must:

a)

b)

Invite all RVL manufacturers for bidding.

Show sufficient and clear proof that all invited RVL manufactures

would not accommodate Saudi Aramco business needs. All

supporting documents shall be submitted to the RDM for

assessment and consequently determining the validity of the

deviation. Such documentation shall include but not limited to:

i)

ii)

Request for quotation (RFQ) documents.

Written responses to the RFQ from all invited RVL, including

acceptance/ declination to bid with reasons and bid quoted

equipment delivery dates.

iii) Technical and/or commercial bidding-disqualification

documents for RVL manufacturers.

Note: The need for additional requirements shall be determined by the

RSA on a case-by-case basis.

c) Commit to provide, as applicable, all necessary support by

enforcing and monitoring closely the implementation of feasible

control measures established according to paragraph 5.6.3 of this

procedure.

5.6.3 RDM and ID shall jointly establish, as applicable, feasible control

measures to ensure quality acceptance of the item(s) to be produced by

the alternate manufacturer.

5.6.4 All review and approval requirements indicated in paragraphs 5.3

through 5.5 above shall apply in the evaluation of the alternate

manufacturer.

Commentary Notes 5.6:

1) Examples of "Proper Justification" for considering alternate manufacturers would

be insufficient number of current suppliers to meet business needs, declination of

RVL manufacturers; supplier is national manufacturer, added-value

considerations, etc.

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

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2)

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

Previously granted one-time approval(s) of an alternate manufacturer does not

constitute a valid justification for placing further purchase order(s) with the

manufacturer.

5.7 Purchasing RVL item(s) from a manufacturer with an "ON-HOLD" status in the

SAP system is prohibited, unless such a deviation is mandated by a business

decision for a specific purchase order. Such business decision shall be jointly

established by the party requesting the deviation (PDM or Proponent) and the

RDM who all shall endeavor to act in a timely manner on facilitating the

evaluation process. For the endorsement of a purchase from an "ON-HOLD"

manufacturer, all of the following requirements shall be fulfilled:

5.7.1 Evaluation process shall be initiated utilizing SAP QMC20 transaction,

upon approval of the Proponent or PDM. Failure to seek approval prior

to placing such an order will result in issuance of an NCR.

5.7.2 The party requesting this deviation (PDM or Proponent) must:

a)

b)

Invite all RVL and alternate manufacturers, as defined in Section 3

of this procedure, for bidding.

Show sufficient and clear proof that all invited RVL and alternate

manufacturers would not accommodate Saudi Aramco business

needs. All supporting documents shall be submitted to the RDM

for assessment and consequently determining the validity of the

deviation. Such documentation shall include but not limited to:

i)

ii)

Request for quotation (RFQ) documents.

Written responses to the RFQ from all invited RVL and

alternate manufacturers, including acceptance/declination to

bid with reasons and bid quoted equipment delivery dates.

iii) Technical and/or commercial bidding-disqualification

documents from all invited RVL manufacturers and potential

alternate manufacturers.

Note: The need for additional requirements shall be determined by the

RSA on a case-by-case basis.

c) Commit to provide all necessary support by enforcing and

monitoring closely the implementation of feasible control measures

established according to paragraph 5.7.3 of this procedure.

5.7.3 RDM and ID shall jointly establish readily feasible control measures to

ensure quality acceptance of the item(s) to be produced by the "ON-HOLD" manufacturer.

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

Next Planned Update: 1 July 2010

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

5.7.4 All review and approval requirements indicated in paragraphs 5.3

through 5.5 above shall apply in the evaluation of the "ON-HOLD"

manufacturer under consideration.

Commentary Notes 5.7:

1) "ON-HOLD" status is assigned to a manufacture, which has been originally

approved, but whose technical or manufacturing capabilities and/or quality

system have/ has deteriorated to an extent that would jeopardize the reliability of

the item(s) produced by the manufacturer. Therefore, consideration of such

manufacturer for a purchase should be pursued, only if deemed absolutely

necessary, diligently.

Previously granted approval(s) of an "ON-HOLD" manufacturer does not

constitute a valid justification for placing further purchase order(s) with the

manufacturer.

2)

5.8

5.9

5.10

RVL Manufacturing Plants Approval Status reports can be generated through

SAP transaction ZQ0025.

A report identifying approved RVL(s) based on SAP data base shall be issued to

Saudi Aramco contractors by down loading it onto a CD ROM.

Local manufacturers shall always be considered for evaluation as potential RVL

manufacturers regardless of the number of current RVL listed vendors.

Evaluation cycle for local manufacturers shall be in accordance with chart 1 of

this document.

Sufficient number of vendors with strategic geographical distribution for RVL-based commodities shall be maintained to ensure availability of reliable and

competitive vendors. Following guidelines shall be employed to achieve this

objective:

5.11.1

5.11.2

Maintain a minimum of two (2) approved manufacturers per

commodity per location (ASC, AOCL & AOCT).

To the extent possible, the two (2) approved manufacturers are

preferred not to be from the same country or belong to the same parent

company.

Exceptions will be evaluated and possibly made on a case-by-case

basis in agreement with RSA for considerations related to:

a)

b)

Commodities with no potential manufactures available.

Commodities that require a lot of spare parts and/or extensive

after-sale service.

5.11

5.11.3

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

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SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

c) Commodities with a number of local manufactures where

adequate competition is maintained.

6 Style Guideline

6.1

6.2

The title of the Standard shall be "Regulated Vendors List for [discipline

specific] Equipment".

To provide consistency, the standard shall be written and sectioned as indicated

below: The italicized words within the square brackets are discipline specific

instructions for the writer of the standard.

============================================================

1 Scope

This standard identifies acceptable manufacturers for SAMSS Class [insert

discipline specific numbers] materials.

2 Conflicts and Deviations

2.1 Any conflicts between this standard and other applicable Saudi Aramco

Engineering Standards (SAESs), Materials System Specifications

(SAMSSs), Standard Drawings (SASDs), or industry standards, codes,

and forms shall be resolved in writing by the company or buyer

representative through the [RDM] Saudi Aramco, Dhahran, Saudi

Arabia.

Direct all requests to deviate from this standard in writing to the

Company or Buyer representative, who shall forward such requests to

the [RDM], Saudi Aramco, Dhahran. The [RDM] shall follow internal

Company procedure SAEP-133 to process the request.

2.2

3 References

The following is a summary of the Saudi Aramco documents and industrial

standards that have been mentioned within this standard:

Saudi Aramco Engineering Procedure

SAEP-133 Instructions for the Development of a "Regulated

Vendors List" Engineering Standard

Saudi Aramco Materials System Specifications

[Insert discipline specific specifications]

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

Next Planned Update: 1 July 2010

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

4 Definitions

Terms shown in bold font within this document are defined below:

Acceptable: Approval is not required to place a purchase order for the product.

After the order has been placed, the supplier of this product must ensure

compliance with all aspects of the purchasing contract (e.g., must meet the Saudi

Aramco Materials System Specification).

Approval: Written authorization by the [RDM] Saudi Aramco, Dhahran, Saudi

Arabia.

9COM: "Commodity Number".

License Agreement: A contract between a supplier and an owner of rights to an

equipment design, allowing a supplier to either (1) assemble the equipment

using all the pieces provided by the design owner or (2) assemble the equipment

using a combination of pieces provided by the design owner and pieces

manufactured by the licensee to the design owner's detailed drawings /

specifications. The contract between the licensor and licensee would (1)

required the licensee to follow the licensor manufacturing procedures and be

routinely audited by the licensor for compliance and (2) require the equipment to

be marketed and labeled using the licensor's brand name.

Made: Created from raw materials and/or assembled by the manufacturer.

Manufacturer: Can be either (1) the owner of the brand name of the equipment

or (2) a licensee that has a license agreement.

RVL: Regulated Vendors Listing

SAMSS: "Saudi Aramco Materials System Specification".

Supplier: The person/company, etc., who is responsible to provide the

equipment to Saudi Aramco.

5 General

5.1 Procurement of a product made by a manufacturer not listed in the RVL

Manufacturing Plants Approval Status report is not allowed without

approval. Requests for approval of an alternate manufacturer must be

supported by documentation identifying how the alternate manufacturer

would better serve Saudi Aramco over the manufacturers listed in this

standard.

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Document Responsibility: Consulting Services

Issue Date: 4 January 2006

Next Planned Update: 1 July 2010

Commentary Note:

SAEP-133

Instructions for the Development

of "Regulated Vendors List" Engineering Standards

If the request to procure from an alternate manufacturer is not approved,

the approval authority is under no obligation to present the reasons for

the refusal.

5.2 RVLs are SAP-based and can be accessed through SAP transaction

ZQ0025. "RVL Manufacturing Plants Approval Status" report that can

be generated by the same transaction includes:

5.2.1 RVL-based products, linked to the manufacturer in the given

category, including 9COM number(s), description(s), etc.

5.2.2 Q-Info limitations addressing approval coverage,

manufacturing aspects, item(s) being manufactured under

License Agreement, etc.

5.2.3 Address by specific location, i.e., "City" and "Country": Only

products made in the specific plant location(s) or area(s) are

listed.

6 Applicable 9COM Listing

[The list of applicable 9COMs should be presented within this section.

Reference shall be made to acceptable SAP-based manufacturers' listing. The

key information that must be included with each listing is the following:

Equipment Description: Description addressing equipment general

function with applicable specifics such as

dimensional limitations, material of

construction, configuration, etc.

9COM: The 9COM number.

Specification: Applicable material specification.

The following is an example of a listing containing the key information

described above.]

Equipment Description: Pressure Vessel; Carbon Steel and Low Alloy,

wall thickness greater than 76mm (3 in)

9COM: 6000002521

Specification: 32-SAMSS-004

Revision Summary

30 September 2001 Major revision.

30 June 2005 Minor revision.

4 January 2006 Minor revision.

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