Section 1400.3510  Duration of Contracts

a)         General

1)         A multi-year contract for a term up to 10 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 10 years.

b)         Each contract is contingent upon and subject to the availability of funds. The Treasurer, at his or her sole option, may terminate or suspend a contract, in whole or in part, without penalty or further payment being required, if the Illinois General Assembly or the federal funding source fails to make an appropriation sufficient to pay that obligation or if funds needed are insufficient for any reason. Each contract payable in whole or in part by any funds appropriated by the Illinois General Assembly shall recite that the contract is subject to termination and cancellation for lack of, or insufficiency in, funding. A vendor will be notified in writing by the Chief Procurement Officer of a failure to receive or a reduction or decrease in any appropriation affecting the contract.  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)         When the original procurement specifically called for an initial term plus renewals, the renewals may be exercised without further procurement activity, provided that both:  the initial term and the exercised renewals may not exceed 10 years and is by mutual agreement or the option is reserved solely to the State.

2)         When the original procurement was silent as to renewals, a renewal without a new procurement must meet the requirements of Section 1400.2020 (small), 1400.2025 (sole source) or 1400.2030 (emergency) procurements.

3)         When a renewal will result in the total term, counting the initial term and any previous renewals, to exceed 10 years, the renewal must be procured using one of the methods of source selection authorized by this Part.  This renewal will start a new term that shall not exceed 10 years.

(Source:  Amended at 40 Ill. Reg. 13847, effective September 23, 2016)