The following article was prepared by Mike Taylor, C.P.M. for distribution to NAPM affiliate newsletters. 

Due Diligence: A measure of prudence that is to be ordinarily expected from a reasonable person under particular circumstances depending on the relative facts.

Purchasing people spend thousands of company dollars every day. Many buyers exercise a considerable amount of authority on behalf of their company. In return for granting that responsibility, the company expects buyers to write legal contracts and get the right products from reputable dealers. [Otherwise the company would just let the engineers buy what they want and wouldn't need buyers]

When signing a contract, a buyer is essentially making several important determinations. Among them: · The price is reasonable · The vendor is responsible and can reasonably be expected to perform · The product will meet requirements · The contract is legally binding

These are all reasonable actions expected from a person in a "buyer" position. They could collectively be referred to as exercising "Due Diligence".

How do you determine a new supplier is responsible and reputable before entering into a valuable contact or how do you select an export agent you can trust? In our global economy, a new supplier or partner could be thousands of miles away.

Sometimes, for a critical deal, it pays to get help. That's the service provided by companies like the National Fraud Center (NFC; www.nationalfraud.com). I spoke with Tim Kear of the NFC recently and asked him to elaborate a little on the type of services offered.

He explained; customers will contract with the NFC for one or more Due Diligence searches. Representatives from the NFC will conduct an investigation and provide a background report on the subject. When requested investigations could even include legwork done in foreign countries. Prices start at a few hundred dollars and up and investigations take from a few days to many weeks. It depends on the depth of research requested, and is more expensive in some foreign countries. However, when very valuable or sensitive contracts are under consideration, this seems like inexpensive insurance.

Tim also explained that their customers are carefully confirmed to be legitimate before beginning an investigation. Customers use a secure log in when requesting a quotation and submitting a case for investigation. Reports are held strictly confidential.

Contact Tim Kear and ask for a copy of the PowerPoint presentation that explains more about the NFC and its service (National Fraud Center, Inc. 800-999-5658 ext. 255).

I haven't used the NFC, and I'm sure competing services are available. However, if you need a place to start…this sounds like a resource that each buyer should have in their Toolbox.