(a) Contracts entered into by a county under Section 12302 shall be for terms not exceeding three years. In the event of a three-year contract, the county, at the end of the first contract term, may renew the contract for a second term not exceeding one year. The rate of reimbursement shall be negotiated consistent with regulations promulgated by the State Department of Social Services. For any extended contract, the rate shall reflect, but is not limited to, the following financial considerations:

1. (1) Actual expenditures by the contractor as documented during the first contract term and approved by the state.
2. (2) Changes in federal, state, or county program requirements.
3. (3) Federal and state minimum wage and contractual step merit increases.
4. (4) Statutory taxes.
5. (5) Insurance costs.
6. (6) Reasonable costs which have been approved by the county department of social services, as long as those costs do not increase unreimbursed county expenditures or lead to a reduction in client services, and those costs can be funded within the maximum allowable rates set by the department for in-home supportive services contracts and the county’s state allocation for in-home supportive services.
7. (7) Other reasonable costs over which the contracting parties have no control.

(b)

1. (1) Except as provided in paragraph (2), the purchase of services regulations adopted by the department that govern county welfare departments shall also govern acceptable in-home supportive services contracting, including the methods used to advertise, procure, select, and award the contracts, and the procedures used to amend, renew, or extend an existing contract with the same contractor, including, in addition to rate changes, any other change in other terms of the contract. In no case shall the department’s regulations governing in-home supportive services contracting procedures differ from the contract procedures specified in the department’s purchase of service regulations for other services purchased by county welfare departments, except as required by federal law.
2. (2) The department may, through regulation, require until July 1, 2000, the prior review of all bid and contract documents for managed care contracts under Section 12302.7.