Section 1400.3510  Duration of Contracts

a)         General

1)         A multi-year contract for a term up to ten years is authorized when it is in the best interest of the State.

2)         A license agreement or other agreement may have a term longer than 10 years, including a perpetual term, provided the payment term is limited to no more than ten years.

b)         The contractual obligation of the Treasurer's office in each fiscal period after the period in which a contract is executed is subject to appropriation and availability of funds for the obligation.  Every contract that extends beyond the fiscal year that the contract is awarded must provide that, in the event that funds are not available for any subsequent fiscal period, the remainder of the contract may be cancelled by the State without penalty to or further payment being required by the State.  This provision applies to only those contracts that are funded in whole or in part by funds appropriated by the Illinois General Assembly or other governmental entity.

c)         Conditions for Use of Multi-year Contracts

A multi-year contract may be used when:

1)         special production of definite quantities or the furnishing of long-term services are required to meet State needs; or

2)         it is determined by the Chief Procurement Officer that a multi-year contract will serve the best interest of the State by encouraging effective competition or otherwise promoting economies in State procurement.  The following factors must be considered by the Chief Procurement Officer before making the determination:

A)        firms that are not willing or able to compete because of high start-up costs or capital investment in facility expansion and will be encouraged to participate in the competition when they are assured of recouping the costs during the period of contract performance;

B)        lower production costs because of larger quantity of service requirements, and substantial continuity of production or performance over a longer period of time, can be expected to result in lower unit prices;

C)        stabilization of the contractor's work force over a longer period of time may promote economy and consistent quality; or

D)        the cost and burden of contract solicitation, award, and administration of the procurement may be reduced.

d)         Multi-year Contract Procedure

The solicitation must state:

1)         the proposed term;

2)         the amount of supplies or services required for the proposed contract period;

3)         whether offerors may submit prices for:

A)        the first fiscal period only;

B)        the entire time of performance only; or

C)        both the first fiscal period and the entire time of performance.

4)         that a multi-year contract may be awarded and how award will be determined.

e)         Renewals

1)         Where the original procurement specifically called for an initial term plus renewals, the renewals may be exercised without further procurement activity, provided the initial term and the exercised renewals may not exceed 10 years and the option is reserved solely to the State.

2)         Where the original procurement was silent as to renewals, further procurement activity is required.