1. A. General.

   A multi-term contract is a contract for the acquisition of supplies, services, or information technology for more than one year. A contract is not a multi-term contract if no single term exceeds one year and each term beyond the first requires the governmental body to exercise an option to extend or renew. A multi-term contract is appropriate when it is in the best interest of the State to obtain uninterrupted services for a period in excess of one year, where the performance of such services involves high start up costs, or when a changeover of service contracts involves high phase in/phase out costs during a transition period. The multi-term method of contracting is also appropriate when special production of definite quantities of supplies for more than one year is necessary to best meet state needs but funds are available only for the initial fiscal period. Special production refers to production for contract performance when it requires alteration in the contractor’s facilities or operations involving high start up costs.

2. B. Objective.

   The objective of the multi-term contract is to promote economy and efficiency in procurement by obtaining the benefits of sustained volume production and consequent low prices, and by increasing competitive participation in procurements which involve special production with consequent high start-up costs and in the procurement of services which involve high start-up costs or high phase-in/phase-out costs during changeover of service contracts.

3. C. Exceptions.

   This Regulation 19-445.2135 applies only to contracts for supplies, services, or information technology and does not apply to contracts for construction.

4. D. Conditions for Use.

   1. (1) A multi-term contract may be used if, prior to issuance of the solicitation, the Procurement Officer determines in writing that:

      1. (a) Special production of definite quantities or the furnishing of long term services are required to meet state needs; or
      2. (b) a multi-term contract will serve the best interests of the state by encouraging effective competition or otherwise promoting economies in state procurement.

   2. (2) The following factors are among those relevant to such a determination:

      1. (a) firms which are not willing or able to compete because of high start up costs or capital investment in facility expansion will be encouraged to participate in the competition when they are assured of recouping such costs during the period of contract performance;
      2. (b) lower production cost because of larger quantity or service requirements, and substantial continuity of production or performance over a longer period of time, can be expected to result in lower unit prices;
      3. (c) stabilization of the contractor’s work force over a longer period of time may promote economy and consistent quality;
      4. (d) the cost and burden of contract solicitation, award, and administration of the procurement may be reduced.
   3. (3) The determination must contain sufficient factual grounds and reasoning to provide an informed, objective explanation for the decision.

5. E. Solicitation.

   1. (1) the estimated amount of supplies or services required for the proposed contract period;
   2. (2) that a unit price shall be given for each supply or service, and that such unit prices shall be the same throughout the contract (except to the extent price adjustments may be provided in the solicitation and resulting contract);
   3. (3) that the multi-term contract will be cancelled only if funds are not appropriated or otherwise made available to support continuation of performance in any fiscal period succeeding the first; however, this does not affect either the state’s rights or the contractor’s rights under any termination clause in the contract;
   4. (4) that the procurement officer of the governmental body must notify the contractor on a timely basis that the funds are, or are not, available for the continuation of the contract for each succeeding fiscal period;

   5. (5) whether bidders or offerors may submit prices for:

      1. (a) the first fiscal period only;
      2. (b) the entire time of performance only; or
      3. (c) both the first fiscal period and the entire time of performance;
   6. (6) that a multi-term contract may be awarded and how award will be determined including, if prices for the first fiscal period and entire time of performance are submitted, how such prices will be compared; and,
   7. (7) that, in the event of cancellation as provided in (E) (3) of this subsection, the contractor will be reimbursed the unamortized, reasonably incurred, nonrecurring costs.

   The solicitation shall state:

6. F. Award.

   Award shall be made as stated in the solicitation and permitted under the source selection method utilized. Care should be taken when evaluating multi-term prices against prices for the first fiscal period that award on the basis of prices for the first period does not permit the successful bidder or offerer to “buy in”, that is give such bidder or offeror an undue competitive advantage in subsequent procurements.

7. G. Maximum Contract Periods

   Every contract with a total potential duration in excess of five years must be approved as required by Section 11-35-2030(4) or Section 11-35-2030(5). No solicitation shall be issued for a contract with a total potential duration in excess of five years, nor shall any contract with a total potential duration in excess of five years be awarded pursuant to Section 11-35-1560, until such approval is granted.

HISTORY: Added by State Register Volume 6, Issue No. 7, eff May 7, 1982. Amended by State Register Volume 23, Issue No. 5, eff May 28, 1999; State Register Volume 31, Issue No. 5, eff May 25, 2007; SCSR 43-8 Doc. No. 4895, eff August 23, 2019 (interim); SCSR 44-6 Doc. No. 4894, eff June 26, 2020.