529-12-0006 RFP (PDF) - Texas Health and Human Services ...
529-12-0006 RFP (PDF) - Texas Health and Human Services ...
529-12-0006 RFP (PDF) - Texas Health and Human Services ...
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<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong><br />
Commission<br />
Thomas Suehs, Executive Commissioner<br />
Request for Proposal for<br />
<strong>Texas</strong> Integrated Eligibility Redesign System (TIERS) Data Center<br />
<strong>Services</strong><br />
<strong>RFP</strong> No. <strong>529</strong>-<strong>12</strong>-<strong>0006</strong><br />
Date of Release:<br />
<strong>12</strong>/21/2011<br />
Date Proposals are due:<br />
1/31/20<strong>12</strong><br />
Time Proposals are due:<br />
2:00 PM CT<br />
CPA Class/Item Codes: 920-29, 920-37, 920-23, 920-45, 920-47, 939-21, 958-23<br />
Direct all inquiries regarding this <strong>RFP</strong> to:<br />
Abel Martinez, C.T.P.M<br />
Purchaser<br />
Phone: 5<strong>12</strong>‐206‐5524<br />
Email: Abel.Martinez@hhsc.state.tx.us
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 2<br />
Table of Contents<br />
Attachments.................................................................................................................... viii<br />
Procurement Library......................................................................................................x<br />
1.0 Introduction ......................................................................................................<strong>12</strong><br />
1.1 Purpose ...........................................................................................................................<strong>12</strong><br />
1.2 Project Description.........................................................................................................<strong>12</strong><br />
1.2..1 Introduction ......................................................................................................................<strong>12</strong><br />
1.2..2 HHSC Point of Contact ..................................................................................................<strong>12</strong><br />
1.3 Provision, Performance <strong>and</strong> Management by Respondent.....................................13<br />
1.4 Definitions........................................................................................................................13<br />
1.5 HHSC Uniform Contract Terms <strong>and</strong> Conditions........................................................13<br />
1.6 Supplemental Terms......................................................................................................13<br />
2.0 Procurement Process .....................................................................................14<br />
2.1 HHSC Amendments <strong>and</strong> Announcements Regarding this <strong>RFP</strong>.............................14<br />
2.2 <strong>RFP</strong> Cancellation/Partial Award/Non-Award. ............................................................14<br />
2.3 Right to Reject Proposals or Portions of Proposals..................................................14<br />
2.4 Costs Incurred. ...............................................................................................................14<br />
2.5 Protest Procedures. .......................................................................................................14<br />
2.6 Interpretive Conventions. ..............................................................................................14<br />
2.7 Contact with HHSC Staff...............................................................................................15<br />
2.8 Respondent Questions..................................................................................................15<br />
2.9 Questions <strong>and</strong> Comments. ...........................................................................................15<br />
2.10 Modification or Withdrawal of Proposal. .....................................................................15<br />
2.11 News Releases. .............................................................................................................16<br />
2.<strong>12</strong> Incomplete Proposals....................................................................................................16<br />
2.13 State Use of Ideas. ........................................................................................................16<br />
2.14 Property of HHSC. .........................................................................................................16<br />
2.15 Copyright Restriction. ....................................................................................................16<br />
2.16 Additional Information....................................................................................................16<br />
2.17 Multiple Responses. ......................................................................................................16<br />
2.18 No Joint Proposals.........................................................................................................16<br />
2.19 Use of Subcontractors...................................................................................................17<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 3<br />
2.20 Anticipated Schedule.....................................................................................................17<br />
2.21 Response Deadline <strong>and</strong> Submission Requirements. ...............................................17<br />
3.0 Instructions for Submitting Proposals ........................................................17<br />
3.1 Detailed Instructions. .....................................................................................................17<br />
3.2 Response. .......................................................................................................................18<br />
4.0 Proposal evaluation ........................................................................................18<br />
4.1 Proposal Evaluation <strong>and</strong> Award...................................................................................18<br />
4.2 Evaluation Criteria..........................................................................................................18<br />
4.2..1 Initial Compliance Screening. .......................................................................................18<br />
4.2..2 Competitive Field Determinations. ...............................................................................18<br />
4.2..3 Oral Presentations <strong>and</strong> Site Visits. ..............................................................................18<br />
4.2..4 Best <strong>and</strong> Final Offer. ......................................................................................................19<br />
4.2..5 Discussions with Respondents.....................................................................................19<br />
5.0 Contract elements ...........................................................................................19<br />
6.0 Term...................................................................................................................19<br />
6.1 Initial Term.......................................................................................................................19<br />
6.2 Extension.........................................................................................................................19<br />
7.0 <strong>Services</strong>.............................................................................................................20<br />
7.1 Overview..........................................................................................................................20<br />
7.2 Transition <strong>Services</strong> ........................................................................................................20<br />
7.2..1 Knowledge Transfer. ......................................................................................................20<br />
7.2..2 Transition Phase Deliverables......................................................................................20<br />
7.2..3 Transition Phase Scope. ...............................................................................................20<br />
7.3 Turnover <strong>Services</strong>..........................................................................................................20<br />
7.4 Turnover assistance ......................................................................................................21<br />
7.5 Turnover Plan .................................................................................................................21<br />
7.6 Transformation <strong>Services</strong> ...............................................................................................21<br />
8.0 Service Levels..................................................................................................21<br />
8.1 Performance St<strong>and</strong>ards ................................................................................................21<br />
8.1..1 General Performance St<strong>and</strong>ards. ................................................................................21<br />
8.1..2 Service Level Performance St<strong>and</strong>ards........................................................................21<br />
8.2 Problem Analysis............................................................................................................22<br />
8.2..1 Problem Analysis............................................................................................................22<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 4<br />
8.3 Continuous Improvement Reviews..............................................................................22<br />
8.3..1 Perform proactive failure trend analysis......................................................................22<br />
8.3..2 Reports.............................................................................................................................22<br />
8.4 Measurement <strong>and</strong> Monitoring ......................................................................................22<br />
8.4..1 Performance Measurement, Tuning. ...........................................................................22<br />
8.5 Satisfaction Surveys ......................................................................................................22<br />
8.5..1 HHSC Conducted Surveys............................................................................................22<br />
8.5..2 Survey Follow-up............................................................................................................22<br />
8.6 Notice of Adverse Impact..............................................................................................23<br />
8.6..1 Notice of Adverse Impact. .............................................................................................23<br />
9.0 Service Provider Personnel ..........................................................................23<br />
9.1 Key Service Provider Personnel ..................................................................................23<br />
9.1..1 Provider Personnel Requirements...............................................................................23<br />
9.1..2 Personnel Removal........................................................................................................23<br />
9.2 Service Provider Personnel Are Not State or HHSC Employees ...........................24<br />
9.3 Responsibility for Service Provider Personnel...........................................................24<br />
9.4 Replacement, Qualifications, <strong>and</strong> Retention of Service Provider Personnel........24<br />
9.4..1 Sufficiency <strong>and</strong> Suitability of Personnel. .....................................................................24<br />
9.4..2 Responsibility for Service Provider Personnel...........................................................25<br />
9.4..3 Requested Replacement...............................................................................................25<br />
9.5 Conduct of Service Provider Personnel......................................................................25<br />
9.5..1 Conduct <strong>and</strong> Compliance..............................................................................................25<br />
9.5..2 Identification of Service Provider Personnel...............................................................26<br />
9.5..3 Restriction on Marketing Activity. .................................................................................26<br />
9.6 Substance Abuse ...........................................................................................................26<br />
9.6..1 Substance Abuse Policy................................................................................................26<br />
9.6..2 Employee Removal. .......................................................................................................26<br />
9.7 Union Agreements .........................................................................................................26<br />
10.0 Service Provider Responsibilities ................................................................26<br />
10.1 Operations Manual.........................................................................................................26<br />
10.1..1 Operations Documentation................................................................................26<br />
10.2 Reports, Data Correction, Re-Performance...............................................................27<br />
10.2..1 Reports. ................................................................................................................27<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 5<br />
10.2..2 Back-Up Documentation. ...................................................................................27<br />
10.2..3 Correction of Errors.............................................................................................27<br />
10.3 Financial Support ...........................................................................................................27<br />
10.3..1 Forecasting <strong>and</strong> Budgeting................................................................................27<br />
10.4 Change Control ..............................................................................................................27<br />
10.4..1 Compliance with Change Control Procedures................................................27<br />
10.4..2 Financial Responsibility For Changes..............................................................28<br />
10.4..3 HHSC Approval – Cost, Adverse Impact.........................................................28<br />
10.4..4 Temporary Emergency Changes......................................................................29<br />
10.4..5 Implementation of Changes...............................................................................29<br />
10.4..6 Planning <strong>and</strong> Tracking........................................................................................29<br />
10.4..7 Evaluation <strong>and</strong> Testing.......................................................................................29<br />
10.5 Knowledge Transfer.......................................................................................................30<br />
10.6 HHSC Rules/Employee Safety.....................................................................................30<br />
10.6..1 HHSC Rules <strong>and</strong> Compliance...........................................................................30<br />
10.6..2 Safety <strong>and</strong> <strong>Health</strong> Compliance..........................................................................30<br />
10.7 Access to Specialized Service Provider Skills <strong>and</strong> Resources...............................31<br />
10.7..1 Specialized <strong>Services</strong>...........................................................................................31<br />
10.8 Notice of Decommissioning ..........................................................................................31<br />
10.8..1 Notice of Decommissioning. ..............................................................................31<br />
10.9 Subcontractors................................................................................................................31<br />
10.9..1 Subcontractors.....................................................................................................31<br />
10.10 Technology Plan.............................................................................................................32<br />
10.10..1 Scope. ...................................................................................................................32<br />
10.10..2 Technology Plan..................................................................................................32<br />
10.10..3 Transition Plan.....................................................................................................32<br />
10.10..4 Transformation Plan. ..........................................................................................32<br />
10.11 Monitoring Tools.............................................................................................................33<br />
11.0 Financial Approach — Business Terms ......................................................33<br />
11.1 Overview of Financial Approach ..................................................................................33<br />
11.2 Business Objective ........................................................................................................33<br />
11.3 Financial Payment Structure <strong>and</strong> Provisions .............................................................33<br />
11.3..1 Overview of Financial Payment Structures. ....................................................33<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 6<br />
11.3..2 Efforts to Minimize Financial Payments...........................................................33<br />
11.3..3 Payment for Service <strong>and</strong> Deliverable Requirements.....................................34<br />
11.3..4 Payment Disputes...............................................................................................34<br />
11.3..5 Changes to Scope of Existing <strong>Services</strong>...........................................................35<br />
11.3..6 New <strong>Services</strong>.......................................................................................................35<br />
11.3..7 Extraordinary Events. .........................................................................................36<br />
11.3..8 Unanticipated Change........................................................................................36<br />
11.3..9 Service Provider Labor Rates for Changes to <strong>Services</strong> <strong>and</strong> Tasks. ...........36<br />
11.4 Additional Financial Components ................................................................................37<br />
11.4..1 Ownership of all Capital Items. .........................................................................37<br />
11.4..2 Prospective Price Re-determination.................................................................39<br />
11.4..3 Financial Operations Plan..................................................................................44<br />
11.5 Financial: Accounting <strong>and</strong> Reporting Requirements ................................................44<br />
11.5..1 Overview...............................................................................................................44<br />
11.5..2 Business Objectives. ..........................................................................................44<br />
11.5..3 Financial Accounting Requirements.................................................................45<br />
11.5..4 General Access to Accounting Records..........................................................47<br />
11.5..5 Financial Report Requirements. .......................................................................48<br />
11.5..6 HHSC Responsibilities. ......................................................................................48<br />
<strong>12</strong>.0 Historically Underutilized Business (HUB) Participation .........................49<br />
<strong>12</strong>.1 HUB Participation...........................................................................................................49<br />
<strong>12</strong>.6 CPA Centralized Master Bidders List..........................................................................50<br />
<strong>12</strong>.7 HUB Subcontracting Procedures – If a Respondent Intends to Subcontract .......50<br />
<strong>12</strong>.7.1 Identify Subcontracting Areas <strong>and</strong> Divide Them into Reasonable Lots .................50<br />
<strong>12</strong>.7.2 Notify Potential HUB Subcontractors...........................................................................51<br />
<strong>12</strong>.7.3 Method 1: Respondent Intends to Subcontract with only HUBs: ...........................51<br />
<strong>12</strong>.7.7 Written Justification of the Selection Process.................................................52<br />
<strong>12</strong>.8 Method 5: Respondent Does Not Intend to Subcontract ........................................52<br />
<strong>12</strong>.9 Post-award HSP Requirements...................................................................................53<br />
13.0 Security Compliance.......................................................................................54<br />
13.1 Confidentiality .................................................................................................................54<br />
13.1..1 Limits.....................................................................................................................54<br />
13.1..2 Confidential Information. ....................................................................................54<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 7<br />
13.1..3 Disclosure of Confidential Information. ............................................................54<br />
13.1..4 Transfer of HHSC Confidential Information. ...................................................56<br />
13.2 Security St<strong>and</strong>ards.........................................................................................................57<br />
13.2..1 Security Management Plan. ..............................................................................57<br />
13.3 Data Access....................................................................................................................57<br />
13.3..1 Property. ...............................................................................................................57<br />
13.3..2 Security St<strong>and</strong>ards..............................................................................................57<br />
13.3..3 Integrity of Security Measures...........................................................................57<br />
13.3..4 Backup. .................................................................................................................57<br />
13.3..5 Security Breach. ..................................................................................................57<br />
13.4 HHSC Personal Data.....................................................................................................58<br />
13.4..1 Personal Medical Data .......................................................................................59<br />
13.5 File Access......................................................................................................................59<br />
13.6 HHSC Data – Correction <strong>and</strong> Restoration .................................................................60<br />
13.6..1 Corrections...........................................................................................................60<br />
13.6..2 Re-running of Corrected Data. ..........................................................................60<br />
13.6..3 Restoration of Data. ............................................................................................60<br />
13.6..4 Cardholder Data. .................................................................................................60<br />
13.7 FTI Compliance ..............................................................................................................61<br />
13.8 Malicious Code ...............................................................................................................63<br />
13.9 Disabling Code ...............................................................................................................63<br />
13.10 Compliance with Federal <strong>and</strong> State Laws..................................................................63<br />
13.10..1 Federal Oversight................................................................................................63<br />
13.10..2 State Oversight....................................................................................................63<br />
13.11 Requirements for Information in Legal Proceedings ................................................63<br />
13.11..1 Preservation of Legal Privilege. ........................................................................63<br />
13.11..2 Service Provider Responsibility for HHSC Information. ................................64<br />
13.11..3 Cost of Compliance.............................................................................................64<br />
14.0 Representations, Warranties And Covenants ............................................64<br />
14.1 Information Furnished to HHSC...................................................................................64<br />
14.1..1 Information Furnished to HHSC........................................................................64<br />
14.2 Completeness of Due Diligence Activities..................................................................64<br />
14.3 Interoperability ................................................................................................................64<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 8<br />
15.0 Insurance And Risk Of Loss..........................................................................65<br />
15.1 Insurance.........................................................................................................................65<br />
15.1..1 Requirements.......................................................................................................65<br />
15.1..2 Approved Companies. ........................................................................................65<br />
15.1..3 Endorsements......................................................................................................66<br />
15.1..4 Minimum Amounts, Self-Insurance. .................................................................66<br />
15.1..5 Certificates. ..........................................................................................................66<br />
15.1..6 No Implied Limitation. .........................................................................................66<br />
15.1..7 Waiver of Subrogation........................................................................................66<br />
15.2 Place of Performance ....................................................................................................67<br />
Attachments<br />
Table 1.<br />
Attachments<br />
Attachment<br />
Attachment 1.0<br />
Attachment 1-A<br />
Attachment 1-B<br />
Request For Proposals<br />
Response Instructions<br />
Response Template<br />
Contents<br />
Attachment 2.0<br />
Attachment 3.0<br />
Attachment 4.0<br />
Attachment 5.0<br />
Attachment 5-A<br />
Attachment 5-B<br />
Attachment 5-C<br />
Attachment 5-D<br />
Attachment 6.0<br />
Definitions including Common Terms <strong>and</strong> Acronyms<br />
Statement of Work<br />
Service Level Agreements – Matrix, Definitions, Tools, Methodologies<br />
Pricing <strong>and</strong> Financial Provisions<br />
Instructions for Submittal of Pricing Forms<br />
A-1: Transition Pricing Forms<br />
A-2: Operational Pricing Forms<br />
A-3: Proposed Fees<br />
Governance Model<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 9<br />
Attachment 6-A<br />
Attachment 6-B<br />
Service Management Manual<br />
Functional Organization Chart<br />
Exhibits<br />
Table 2.<br />
Exhibit 1.0<br />
Exhibit 2.0<br />
Exhibit 3.0<br />
Exhibit 4.0<br />
Exhibit 5.0<br />
Exhibit 6.0<br />
Exhibit 7.0<br />
<strong>RFP</strong> Exhibits<br />
Technology Plan & Assets<br />
Operations Manuals<br />
Respondent Assumptions<br />
Alternate Solution(s)<br />
Transition Plan<br />
Solution Request<br />
Reports<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 10<br />
Procurement Library<br />
Table 3.<br />
Procurement Library Contents<br />
Reference Category<br />
HHSC Program Policy<br />
H<strong>and</strong>books<br />
Glossary<br />
Security<br />
Requirements<br />
Electronic State<br />
Business Daily<br />
(ESBD)<br />
HHSC Uniform Terms<br />
<strong>and</strong> conditions<br />
Electronic <strong>and</strong><br />
Information<br />
Resources<br />
Accessibility<br />
St<strong>and</strong>ards, as<br />
Required by Title 1<br />
TAC Chapter 213<br />
Voluntary Product<br />
Accessibility Template<br />
(VPAT)<br />
HHSC Business<br />
Opportunity Web site<br />
Web site for this <strong>RFP</strong><br />
HHSC’s Respondent<br />
protest procedures<br />
HUB Subcontracting<br />
Plan<br />
<strong>Texas</strong> Works Programs<br />
HHSC Policy H<strong>and</strong>books<br />
Reference<br />
http://www.dads.state.tx.us/h<strong>and</strong>books/tppg/glossary/index.h<br />
tm<br />
http://hhscx.hhsc.state.tx.us/eit/Security/ESM-<br />
Policies/espsg.doc<br />
http://esbd.cpa.state.tx.us<br />
http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch<br />
/General_TC.pdf<br />
http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTACtac_<br />
view=4&ti=1&pt=10&ch=213<br />
http://www.section508.gov/<br />
http://www.hhsc.state.tx.us/contract/<strong>529</strong>080208/rfp_home.ht<br />
ml<br />
http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_home.s<br />
html<br />
<strong>Texas</strong> Administrative Code, Title 1, Part 15, Chapter 392,<br />
Subchapter C<br />
Historically Underutilized Business (HUB) Subcontracting<br />
Plan<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 11<br />
Reference Category<br />
<strong>Texas</strong> Administrative<br />
Code<br />
IT Staffing <strong>Services</strong><br />
roles defined by the<br />
<strong>Texas</strong> Department of<br />
Information<br />
Resources<br />
CPA’s Centralized<br />
Master Bidders List<br />
(CMBL) HUB<br />
Directory<br />
HUB Subcontracting<br />
Procedures<br />
IRS Publication 1075<br />
USDA Automated<br />
Data Processing<br />
(ADP) security<br />
regulations<br />
Computer Security Act<br />
of 1987<br />
Required<br />
Certifications<br />
Reference<br />
1 <strong>Texas</strong> Administrative Code Chapter 391<br />
http://www.dir.state.tx.us/store/busops/staffing/itsac/fulldesc.<br />
htm<br />
http://www.cpa.state.tx.us/procurement/cmbl/cmblhub.html<br />
http://www.cpa.state.tx.us/procurement/prog/hub/hubsubcontracting-plan/<br />
http://www.irs.gov/pub/irs-pdf/p1075.pdf<br />
http://www.gpoaccess.gov/cfr/retrieve.html<br />
http://www.epic.org/crypto/csa/csa.html<br />
http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch<br />
/attach.shtml<br />
TIERS Re‐procurement<br />
<strong>RFP</strong> # <strong>529</strong>‐<strong>12</strong>‐<strong>0006</strong>
<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page <strong>12</strong><br />
1.0 INTRODUCTION<br />
1.1 Purpose<br />
The <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission (HHSC), State of <strong>Texas</strong>, invites all interested <strong>and</strong><br />
qualified vendors to submit proposals to provide Data Center <strong>Services</strong> for the maintenance <strong>and</strong><br />
ongoing support of the <strong>Texas</strong> Integrated Eligibility Redesign System (“TIERS”) for State health <strong>and</strong><br />
human services programs. The successful Respondent shall support the Commission’s philosophy:<br />
Every Texan should be able to access <strong>and</strong> utilize available health <strong>and</strong> human services<br />
provided by state agencies in the most integrated, efficient <strong>and</strong> cost- effective setting<br />
possible. The <strong>Texas</strong> HHS System is dedicated to developing client-focused program <strong>and</strong><br />
policy initiatives that are relevant, timely, <strong>and</strong> within the means of the taxpayers of the<br />
State of <strong>Texas</strong>. The HHS System will advocate for client-choice, appropriate funding, <strong>and</strong><br />
streamlined service delivery.<br />
1.2 Project Description<br />
HHSC has reviewed options for obtaining ongoing managed services for the TIERS/Eligibility<br />
Supporting Technology (EST) infrastructure. Given the technical complexity of the established<br />
environment exceeding the current Data Center <strong>Services</strong> (DCS) contract's technical st<strong>and</strong>ards <strong>and</strong><br />
the current status of the statewide DCS initiative, HHSC has concluded that re-procurement of<br />
managed services provides the best option for obtaining continued services.<br />
1.2..1 Introduction<br />
This document contains instructions <strong>and</strong> general information to be used by the respondent when<br />
responding to the TIERS Data Center <strong>Services</strong> Request for Proposal (<strong>RFP</strong>) issued by the State of<br />
<strong>Texas</strong>, acting by <strong>and</strong> through HHSC.<br />
The <strong>RFP</strong> Instructions will be posted as <strong>529</strong>-<strong>12</strong>-<strong>0006</strong> on the Electronic State Business Daily (ESBD),<br />
http://esbd.cpa.state.tx.us.<br />
1.2..2 HHSC Point of Contact<br />
The sole point of contact for inquiries concerning this <strong>RFP</strong> is:<br />
Abel Martinez, Purchaser<br />
<strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Enterprise Contract & Procurement <strong>Services</strong><br />
4405 North Lamar Blvd., Bldg. 1<br />
Austin, TX 78756<br />
Phone: 5<strong>12</strong>-206-5524<br />
Fax: 5<strong>12</strong>-206-4605<br />
Email Address: abel.martinez@hhsc.state.tx.us<br />
All communications relating to this <strong>RFP</strong> shall be directed to the HHSC contact person named above.<br />
All communications between Respondents <strong>and</strong> other HHSC staff members concerning this <strong>RFP</strong> are<br />
strictly prohibited. Failure to comply with these requirements may result in proposal disqualification.<br />
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1.3 Provision, Performance <strong>and</strong> Management by Respondent<br />
HHSC desires that certain services presently provided, performed <strong>and</strong> managed by or for HHSC be<br />
provided, performed <strong>and</strong> managed by respondent as described in this Agreement. By submitting a<br />
proposal in response to this <strong>RFP</strong>, Respondent attests that respondent has carefully reviewed HHSC's<br />
requirements, has performed all due diligence it deems necessary, <strong>and</strong> desires to deploy, perform<br />
<strong>and</strong> manage such services for HHSC.<br />
1.4 Definitions<br />
Except as otherwise expressly provided in this Agreement, all capitalized terms used in this<br />
Agreement shall have the meanings ascribed to them in Attachment 2.0 to this <strong>RFP</strong> (Definitions).<br />
Capitalized terms used in this Agreement but not defined in Attachment 2.0 shall have the meanings<br />
ascribed to them in the current Information Technology Infrastructure Library (ITIL). Words having<br />
well-known technical or trade meanings, but not otherwise defined in Attachment 2.0 or in ITIL, shall<br />
be accorded such meaning. Terms or phrases that are not capitalized are to be given their usual<br />
meaning.<br />
1.5 HHSC Uniform Contract Terms <strong>and</strong> Conditions<br />
1.6 Supplemental Terms<br />
HHSC’s Uniform Contract Terms <strong>and</strong> Conditions (UTCs) are incorporated into this <strong>RFP</strong> <strong>and</strong> will<br />
become a part of any contract that may result from this solicitation. A copy of the current UTCs may<br />
be retrieved at: http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf<br />
All provisions of Article 16 of the UTCs (Supplemental Conditions) are incorporated into this <strong>RFP</strong>. In<br />
addition, the following provisions are intended to clarify or elaborate on certain specified provisions in<br />
Article 16. HHSC reserves the right to negotiate different or additional terms <strong>and</strong> conditions<br />
prior to the award of a contract.<br />
A. The terms “Custom Software” <strong>and</strong> “Documentation” referenced in Section 16.06 Ownership<br />
<strong>and</strong> Licenses of the UTCs shall include software <strong>and</strong> documentation that has been partially<br />
developed by the Contractor under the terms of the contract but have not yet been delivered to<br />
HHSC or formally accepted by HHSC as an approved deliverable.<br />
B. The Parties agree that any Deliverable, including without limitation any Custom Software <strong>and</strong><br />
Documentation, developed by Contractor in connection with the Agreement will be the<br />
exclusive property of HHSC immediately upon its creation.<br />
C. ACCESSIBILITY STANDARDS COMPLIANCE: Electronic <strong>and</strong> Information Resources<br />
Accessibility St<strong>and</strong>ards, as Required by Title 1 TAC Chapter 213<br />
http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTACtac_view=4&ti=1&pt=10&ch=213.<br />
i. Effective September 1, 2006 state agencies <strong>and</strong> institutions of higher education shall<br />
procure products which comply with the State of <strong>Texas</strong> Accessibility requirements for<br />
Electronic <strong>and</strong> Information Resources specified in TAC Chapters 206 <strong>and</strong> 213 when<br />
such products are available in the commercial marketplace or when such products are<br />
developed in response to a procurement solicitation. Vendor represents <strong>and</strong> warrants<br />
that technology to be provided to the HHS agency is in compliance with these<br />
requirements.<br />
ii. Respondents shall provide the HHS agency with the URL to its Voluntary Product<br />
Accessibility Template (VPAT) for reviewing compliance with the State of <strong>Texas</strong><br />
Accessibility requirements (based on the federal st<strong>and</strong>ards established under Section 508<br />
of the Rehabilitation Act), or indicate that the product/service accessibility information is<br />
available from the General <strong>Services</strong> Administration “Buy Accessible Wizard”<br />
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(http://www.buyaccessible.gov). Prospective service providers not listed with the “Buy<br />
Accessible Wizard” or supplying a URL to their VPAT shall provide the HHS agency with<br />
a report that addresses the same accessibility criteria in substantively the same format.<br />
Additional information regarding the “Buy Accessible Wizard” or obtaining a copy of the<br />
VPAT is located at http://www.section508.gov/.<br />
2.0 Procurement Process<br />
2.1 HHSC Amendments <strong>and</strong> Announcements Regarding this <strong>RFP</strong>.<br />
HHSC will post all official communication regarding this <strong>RFP</strong> on the HHSC Business Opportunity Web<br />
site http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asp <strong>and</strong> the Electronic State<br />
Business Daily (http://esbd.cpa.state.tx.us/), including the notice of tentative award. HHSC reserves<br />
the right to revise the <strong>RFP</strong> at any time. Any changes, amendments, or clarifications will be made in<br />
the form of written responses to Respondent questions, amendments, or addendum issued by HHSC<br />
on its Web site <strong>and</strong> the Electronic State Business Daily (http://esbd.cpa.state.tx.us/). Respondents<br />
should check the Web site frequently for notice of matters affecting the <strong>RFP</strong>. To access the Web site,<br />
go to the “HHSC Contracting Opportunities“ page <strong>and</strong> enter a search for this procurement. The web<br />
site for this <strong>RFP</strong> is http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asp.<br />
2.2 <strong>RFP</strong> Cancellation/Partial Award/Non-Award.<br />
HHSC reserves the right to cancel this <strong>RFP</strong>, to make a partial award, or to make no award if it<br />
determines that such action is in the best interest of the State of <strong>Texas</strong>.<br />
2.3 Right to Reject Proposals or Portions of Proposals.<br />
HHSC may, at its discretion, reject any <strong>and</strong> all proposals or portions thereof.<br />
2.4 Costs Incurred.<br />
Respondents underst<strong>and</strong> that issuance of this <strong>RFP</strong> in no way constitutes a commitment by HHSC to<br />
award a Contract or to pay any costs incurred by a Respondent in the preparation of a response to this<br />
<strong>RFP</strong>. HHSC is not liable for any costs incurred by a Respondent prior to issuance of or entering into a<br />
formal agreement, contract, or purchase order. Costs of developing proposals, preparing for or<br />
participating in oral presentations <strong>and</strong> site visits, or any other similar expenses incurred by a<br />
Respondent are entirely the responsibility of the Respondent, <strong>and</strong> will not be reimbursed in any<br />
manner by the State of <strong>Texas</strong>.<br />
2.5 Protest Procedures.<br />
<strong>Texas</strong> Administrative Code, Title 1, Part 15, Chapter 392, Subchapter C outlines HHSC’s Respondent<br />
protest procedures.<br />
2.6 Interpretive Conventions.<br />
Whenever the terms “shall,” “must,” or “is required” are used in this <strong>RFP</strong> in conjunction with a<br />
specification or performance requirement, the specification or requirement is m<strong>and</strong>atory. A<br />
Respondent’s failure to address or meet any m<strong>and</strong>atory requirement in a proposal may be cause for<br />
HHSC’s rejection of the proposal.<br />
Whenever the terms “can,” “may,” or “should” are used in this <strong>RFP</strong> in conjunction with a specification<br />
or performance requirement, the specification or performance requirement is a desirable, but not<br />
m<strong>and</strong>atory, requirement. Accordingly, a Respondent’s failure to address or provide any items so<br />
referred to will not be the cause for rejection of the proposal, but may result in a less favorable<br />
evaluation.<br />
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2.7 Contact with HHSC Staff.<br />
Upon issuance of the <strong>RFP</strong>, employees <strong>and</strong> representatives of HHSC other than the Point of Contact<br />
identified in Section 1.2.2 above will not discuss the contents of this <strong>RFP</strong> with any respondent or its<br />
representatives. Failure of a respondent <strong>and</strong> any of its representatives to observe this restriction may<br />
result in disqualification of any related response. This restriction does not preclude discussion<br />
between affected parties for the purpose of conducting business unrelated to this procurement.<br />
The respondent shall not provide any form of special incentive to HHSC employees or its<br />
representatives during this <strong>RFP</strong> process.<br />
2.8 Respondent Questions.<br />
HHSC will hold a vendor conference on January 5, 20<strong>12</strong> at 1:30PM in the John H. Winters Building<br />
Room <strong>12</strong>5W, 701 West 51st Street, Austin, TX 78756. Vendor conference attendance is strongly<br />
recommended, but is not required.<br />
Respondents may e-mail questions for the conference to the HHSC Point of Contact (see Section<br />
1.2.2) no later than four (4) days before 1/13/20<strong>12</strong> at 1:00 PM CT. HHSC will also give Respondents<br />
the opportunity to submit written questions at the conference. All questions shall reference the<br />
appropriate <strong>RFP</strong> page <strong>and</strong> section number. HHSC will attempt to respond to questions at the<br />
Respondent conference, but responses are not official until posted in final form on the HHSC Web site.<br />
HHSC reserves the right to amend answers prior to the proposal submission deadline.<br />
2.9 Questions <strong>and</strong> Comments.<br />
All questions <strong>and</strong> comments regarding this <strong>RFP</strong> shall be sent to the HHSC Point of Contact (see<br />
Section 1.2.2). Questions shall reference the appropriate <strong>RFP</strong> page <strong>and</strong> section number, <strong>and</strong> must be<br />
submitted by the deadline set forth in Section 2.20. HHSC will not respond to questions received after<br />
the deadline. HHSC’s responses to Respondent questions will be posted to the HHSC Web site.<br />
HHSC reserves the right to amend answers prior to the proposal submission deadline.<br />
Respondents must notify HHSC of any ambiguity, conflict, discrepancy, exclusionary specification,<br />
omission or other error in the <strong>RFP</strong> by the deadline for submitting questions <strong>and</strong> comments. If a<br />
Respondent fails to notify HHSC of these issues, it will submit a proposal at its own risk, <strong>and</strong> if<br />
awarded a contract: (1) shall have waived any claim of error or ambiguity in the <strong>RFP</strong> or resulting<br />
contract, (2) shall not contest HHSC’s interpretation of such provision(s), <strong>and</strong> (3) shall not be entitled to<br />
additional compensation, relief or time by reason of the ambiguity, error, or its later correction.<br />
2.10 Modification or Withdrawal of Proposal.<br />
Prior to the proposal submission deadline set forth in Section 2.21, a Respondent may: (1) withdraw its<br />
proposal by submitting a written request to the HHSC Point of Contact, or (2) modify its proposal by<br />
submitting a written amendment to the HHSC Point of Contact. HHSC may request proposal<br />
modifications at any time.<br />
HHSC reserves the right to waive minor informalities in a proposal <strong>and</strong> award a contract that is in the<br />
best interest of the State of <strong>Texas</strong>. A “minor informality” is an omission or error that, in HHSC’s<br />
determination, if waived or modified when evaluating proposals, would not give a Respondent an unfair<br />
advantage over other prospective service providers or result in a material change in the proposal or<br />
<strong>RFP</strong> requirements. When HHSC determines that a proposal contains a minor informality, it may at its<br />
discretion provide the Respondent with the opportunity to correct.<br />
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2.11 News Releases.<br />
Prior to tentative award, a Respondent may not issue a press release or provide any information for<br />
public consumption regarding its participation in the procurement. After tentative award, a Respondent<br />
must receive prior written approval from HHSC before issuing a press release or providing information<br />
for public consumption regarding its participation in the procurement. Requests shall be directed to the<br />
HHSC Point of Contact identified in Section 1.2.2.<br />
This does not preclude business communications necessary for a Respondent to develop a proposal,<br />
or required reporting to shareholders or governmental authorities.<br />
2.<strong>12</strong> Incomplete Proposals.<br />
HHSC may reject without further consideration a proposal that does not include a complete,<br />
comprehensive, or total solution as requested by the <strong>RFP</strong>.<br />
2.13 State Use of Ideas.<br />
HHSC reserves the right to use any <strong>and</strong> all ideas presented in a proposal unless the Respondent<br />
presents a valid legal case that such ideas are trade secret, confidential, or otherwise protected<br />
information, <strong>and</strong> identifies the information as such in its proposal (see Article 13). A Respondent may<br />
not object to the use of ideas that are not the Respondent’s intellectual property <strong>and</strong> so designated in<br />
the proposal that: (1) were known to HHSC before the submission of the proposal, (2) were in the<br />
public domain through no fault of HHSC, or (3) became properly known to HHSC after proposal<br />
submission through other sources or through acceptance of the proposal.<br />
2.14 Property of HHSC.<br />
Except as otherwise provided in this <strong>RFP</strong> or the resulting contract, all products produced by a<br />
Respondent, including without limitations the proposal, all plans, designs, software, hardware <strong>and</strong> other<br />
contract deliverables, become the sole property of HHSC upon expiration of the contract unless<br />
otherwise agreed to by HHSC.<br />
2.15 Copyright Restriction.<br />
HHSC will not consider any proposal that bears a copyright.<br />
2.16 Additional Information.<br />
By submitting a proposal, the Respondent grants HHSC the right to obtain information from any lawful<br />
source regarding the Respondent’s <strong>and</strong> its directors’, officers’, <strong>and</strong> employees’: (1) past business<br />
history, practices, <strong>and</strong> conduct, (2) ability to supply the goods <strong>and</strong> services, <strong>and</strong> (3) ability to comply<br />
with contract requirements. By submitting a proposal, a Respondent releases from liability <strong>and</strong> waives<br />
all claims against any party providing HHSC information about the Respondent. HHSC may take such<br />
information into consideration in evaluating proposals.<br />
2.17 Multiple Responses.<br />
A Respondent may only submit one proposal as a prime contractor. If a Respondent submits more<br />
than one proposal, HHSC may reject one or more of the submissions. This requirement does not limit<br />
a subcontractor’s ability to collaborate with one or more Respondents submitting proposals.<br />
2.18 No Joint Proposals.<br />
HHSC will not consider joint or collaborative proposals that require it to contract with more than one<br />
Respondent.<br />
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2.19 Use of Subcontractors.<br />
Subcontractors providing services under the contract shall meet the same requirements <strong>and</strong> level of<br />
experience as required of the Respondent. No subcontract under the contract shall relieve the<br />
Respondent of the responsibility for ensuring the requested services are provided. Respondents<br />
planning to subcontract all or a portion of the work to be performed shall identify the proposed<br />
subcontractors.<br />
2.20 Anticipated Schedule.<br />
It is HHSC’s intention to comply with the following schedule for this <strong>RFP</strong>. These dates represent a<br />
tentative schedule of events. HHSC reserves the right to modify these dates at any time, with<br />
appropriate notice to prospective Service Providers.<br />
Procurement Schedule<br />
<strong>RFP</strong> Release Date <strong>12</strong>/21/2011<br />
Vendor Conference<br />
Vendor Questions Due<br />
1/5/20<strong>12</strong> at 1:30 PM CT<br />
1/13/20<strong>12</strong> at 2:00 PM CT<br />
HHSC Posts Responses to Vendor Questions 1/20/20<strong>12</strong><br />
Proposals Due<br />
Deadline for Proposal Withdrawal<br />
1/31/20<strong>12</strong> at 2:00 PM CT<br />
1/31/20<strong>12</strong> at 2:00 PM CT<br />
Selected Respondent Presentations 2/23/20<strong>12</strong><br />
Tentative Award Announcement 3/1/20<strong>12</strong><br />
Anticipated Contract Start Date 4/1/20<strong>12</strong><br />
Operational Start Date 7/1/20<strong>12</strong><br />
Any key date changes that occur during the <strong>RFP</strong> process shall be posted on the ESBD as an<br />
addendum to this <strong>RFP</strong>.<br />
2.21 Response Deadline <strong>and</strong> Submission Requirements.<br />
Respondents are invited to submit responses in accordance with the requirements outlined in this<br />
document. Responses must be received by HHSC on or before 2:00 pm (CT) on January 31, 20<strong>12</strong>.<br />
No late responses will be reviewed. Responses shall be h<strong>and</strong>-delivered or mailed to the submittal<br />
address listed in Section 1.2.2 of the <strong>RFP</strong> Instructions. No facsimile or email responses shall be<br />
accepted.<br />
3.0 Instructions for Submitting Proposals<br />
3.1 Detailed Instructions.<br />
Detailed instructions for responding to this <strong>RFP</strong> are found in Attachment 1-A, Response Instructions.<br />
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3.2 Response.<br />
The response Template, Attachment 1-B is a comprehensive document to capture acknowledgements<br />
<strong>and</strong> deliverables required to be considered as a Respondent.<br />
4.0 PROPOSAL EVALUATION<br />
4.1 Proposal Evaluation <strong>and</strong> Award<br />
HHSC will use a formal evaluation process to select the successful Respondent(s). HHSC will consider<br />
capabilities or advantages that are clearly described in the proposal, which may be confirmed by oral<br />
presentations, site visits, demonstrations, <strong>and</strong> references contacted by HHSC. HHSC reserves the<br />
right to contact individuals, entities, or organizations that have had dealings with the Respondent or<br />
proposed staff, whether or not identified in the proposal.<br />
HHSC will more favorably evaluate proposals that offer no or few exceptions, reservations, or<br />
limitations to the terms <strong>and</strong> conditions of the <strong>RFP</strong> including HHSC’s Uniform Contract Terms <strong>and</strong><br />
Conditions http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf.<br />
The evaluation of proposals will be conducted in accordance with 1 <strong>Texas</strong> Administrative Code<br />
Chapter 391.<br />
4.2 Evaluation Criteria.<br />
HHSC will evaluate proposals based on the following best value criteria, listed in order of precedence:<br />
4.2..1 Initial Compliance Screening.<br />
HHSC will perform an initial screening of all proposals received. Unsigned proposals <strong>and</strong> proposals<br />
that do not include all required forms <strong>and</strong> sections are subject to rejection without further evaluation. In<br />
accordance with its rules; HHSC reserves the right to waive minor informalities in a proposal <strong>and</strong><br />
award contracts that are in the best interest of the State of <strong>Texas</strong>.<br />
4.2..2 Competitive Field Determinations.<br />
HHSC may determine that certain proposals are within the field of competition for admission to<br />
discussions. The field of competition consists of the proposals that receive the highest or most<br />
satisfactory evaluations. HHSC may, in the interest of the state, place reasonable limits on the<br />
number of proposals admitted to the field of competition. Respondent’s submittals will be judged on<br />
price, solution set, staff qualifications <strong>and</strong> Respondent’s experience.<br />
4.2..3 Oral Presentations <strong>and</strong> Site Visits.<br />
HHSC may, at its sole discretion, request oral presentations, site visits, <strong>and</strong>/or demonstrations from<br />
one or more respondents admitted to the field of competition. HHSC will notify selected respondents<br />
of the time <strong>and</strong> location for these activities, <strong>and</strong> may supply agendas or topics for discussion. HHSC<br />
reserves the right to ask additional questions during oral presentations, site visits, <strong>and</strong> or<br />
demonstrations to clarify the scope <strong>and</strong> content of the written proposal.<br />
The respondent’s oral presentation, site visit, <strong>and</strong>/or demonstration shall substantially represent<br />
material included in the written proposal, <strong>and</strong> should not introduce new concepts or offers unless<br />
specifically requested by HHSC.<br />
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4.2..4 Best <strong>and</strong> Final Offer.<br />
HHSC may, but is not required to, permit respondents to prepare one or more revised offers. For this<br />
reason, respondents are encouraged to treat their original proposals, <strong>and</strong> any revised offers<br />
requested by HHSC, as best <strong>and</strong> final offers.<br />
4.2..5 Discussions with Respondents.<br />
HHSC may, but is not required to, conduct discussions with all, some, or none of the respondents<br />
admitted to the field of competition for the purpose of obtaining the best value for HHSC. It may<br />
conduct discussions for the purpose of:<br />
obtaining clarification of proposal ambiguities;<br />
requesting modifications to a proposal; <strong>and</strong>/or<br />
obtaining a best <strong>and</strong> final offer.<br />
HHSC may make an award prior to the completion of discussions with all respondents admitted to the<br />
field of competition if HHSC determines that the award represents best value to the State of <strong>Texas</strong>.<br />
5.0 CONTRACT ELEMENTS<br />
The term “contract” means the contract awarded as a result of this <strong>RFP</strong>. At a minimum, the following<br />
documents will be incorporated into the contract: this <strong>RFP</strong> <strong>and</strong> all attachments <strong>and</strong> exhibits; any<br />
modifications, addendum or amendments issued in conjunction with this <strong>RFP</strong>; HHSC’s Uniform<br />
Contract Terms <strong>and</strong> Conditions (UTCs), Version 1.4.1; the successful Respondent’s proposal, any<br />
document formally executed by both parties indicating their assent to the terms of the contract, <strong>and</strong><br />
any other documents expressly identified by the parties <strong>and</strong> incorporated into the final contract as well<br />
as all exhibits or attachments to any such documents.<br />
One or more of the “Special Terms” located in Article 16 of the UTCs may apply to the contract, <strong>and</strong><br />
HHSC reserves the right to negotiate additional contract terms <strong>and</strong> conditions. Respondents are<br />
responsible for reviewing the UTCs <strong>and</strong> noting any exceptions, reservations, <strong>and</strong> limitations on the<br />
Respondent Information <strong>and</strong> Disclosures form. For purposes of this <strong>RFP</strong>, all of the Special Terms in<br />
Article 16 will apply to any contract that may result from this solicitation.<br />
6.0 TERM<br />
6.1 Initial Term<br />
The initial term of this Agreement shall commence as of <strong>12</strong>:00:00 a.m., Central Time on the Effective<br />
Date <strong>and</strong> continue until 11:59:59 p.m., Central Time, on [Initial Term: 4-years, 2 months], unless this<br />
Agreement is terminated earlier as provided herein, in which case the initial term of this Agreement<br />
shall end at 11:59:59 p.m., Central Time, on the effective date of such termination (the "Initial Term").<br />
6.2 Extension<br />
By giving notice to Service Provider no less than ninety (90) days prior to the expiration date of the<br />
Initial Term or the then-current Renewal Term, HHSC shall have the right to extend the Term for two<br />
(2) extension periods (each, a "Renewal Term") of up to two (2) years each (the exact period of which<br />
shall be specified in HHSC's notice of extension) on the terms <strong>and</strong> conditions of this Agreement<br />
(including Charges) that are then in effect. No Termination Charge shall be applicable to any<br />
termination on or after the end of the Initial Term.<br />
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7.0 SERVICES<br />
HHSC bases its Service Management practices on the Information Technology Infrastructure Library<br />
(ITIL), a world-wide recognized best-practice framework for the management <strong>and</strong> delivery of IT<br />
services throughout their full life-cycle. Accordingly, HHSC requires that the prospective service<br />
provider’s Service Management practices, which are used to support the <strong>Services</strong>, be based on the<br />
ITIL framework <strong>and</strong> guidance. The primary structure of the requirements in the Statements of Work<br />
is based on an ITIL v2 foundation with ITIL v3 guidance in select functional areas (e.g. Request<br />
Management <strong>and</strong> Fulfillment).<br />
7.1 Overview<br />
HHSC is not interested in adopting a new methodology. Prospective service providers are asked to<br />
leverage existing tools, processes <strong>and</strong> methodologies already in use by HHSC, providing<br />
recommendations for updates <strong>and</strong> changes for HHSC to evaluate <strong>and</strong> approve. Existing<br />
methodologies <strong>and</strong> assets are further defined in the Technology Plan, Exhibit 1.0.<br />
7.2 Transition <strong>Services</strong><br />
Vendor will provide Transition <strong>Services</strong> beginning on or before the Effective Date. The transitional<br />
deliverables are defined in Attachment 4 0_SLA Definitions-Tools-Methodologies, Section B.<br />
7.2..1 Knowledge Transfer.<br />
To ensure a successful transition of services from the current TIERS Data Center Maintenance <strong>and</strong><br />
Operations service provider, the respondent to this <strong>RFP</strong> shall have a sound plan for specifying,<br />
tracking, <strong>and</strong> completing knowledge transfer activities. The respondent shall present in its proposal,<br />
its approach to knowledge transfer <strong>and</strong> a detailed plan for accomplishing the transfer.<br />
7.2..2 Transition Phase Deliverables.<br />
During the Transition Phase, Service Provider will produce the Critical Deliverables listed in<br />
Attachment 4.0, Section B, Critical Deliverables <strong>and</strong> Attachment 3.0, E.5, Transitional Deliverables.<br />
7.2..3 Transition Phase Scope.<br />
In addition to the development, approval <strong>and</strong> implementation of Transition Phase deliverables<br />
specified in Attachment 4.0, Section B( Critical Deliverables), <strong>and</strong> Attachment 3.0, E.5, Transitional<br />
Deliverables the following key activities will take place during the Transition Phase:<br />
<br />
<br />
Approval of Key Personnel<br />
Knowledge Transfer<br />
7.3 Turnover <strong>Services</strong><br />
The Service Provider will provide Turnover <strong>Services</strong> in order to facilitate the transfer of responsibilities from<br />
the Service Provider to a successor vendor or to HHSC.<br />
The primary objectives of the Turnover Phase are:<br />
<br />
Ensuring a smooth transition of responsibilities;<br />
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<br />
<br />
<br />
Completing knowledge transfer;<br />
Ensuring that strong accountability controls are in place;<br />
Mitigating risk to the State <strong>and</strong> its citizens <strong>and</strong> taxpayers.<br />
7.4 Turnover assistance<br />
Upon receipt of notice of termination or expiration of the Agreement by HHSC, Service Provider will provide<br />
any turnover assistance reasonably necessary to enable HHSC or its designee to effectively close out the<br />
Agreement <strong>and</strong> move the work to another vendor or to perform the work by itself.<br />
7.5 Turnover Plan<br />
Service Provider shall prepare <strong>and</strong> submit a Turnover Plan which is acceptable to <strong>and</strong> approved by HHSC<br />
in its sole discretion. In the event of an early termination of the Agreement, the Turnover Plan will be<br />
implemented during the time period specified by HHSC in its notice of termination. If the Agreement is not<br />
terminated early, the Service Provider shall prepare, submit <strong>and</strong> obtain HHSC approval of the Turnover Plan<br />
no later than 90 days prior to the Expiration Date of the Agreement.<br />
7.6 Transformation <strong>Services</strong><br />
The Service Provider will describe its plan to transform the current Service Delivery <strong>and</strong> Service<br />
support processes from its current state to a Refreshed State that incorporates all the necessary <strong>and</strong><br />
desirable technology changes <strong>and</strong> currency upgrades that are available for existing equipment <strong>and</strong><br />
software. Service Provider shall perform <strong>and</strong> provide the Transformation <strong>Services</strong> (including provision<br />
of the deliverables) with enhancements as noted in Attachment 4.0, Section B.0 (Critical<br />
Deliverables), <strong>and</strong> Attachment 3.0, Section E.5, Transitional Deliverables in a manner consistent with<br />
the vision for Transformation expressed in Section 4 of Exhibit 1, the Technology Plan.<br />
Transformation services will also include oversight <strong>and</strong> project management controls for the<br />
Transformation initiatives. A refresh of equipment to supported levels, the upgrade of operating<br />
software to current levels, the stabilization of service delivery, <strong>and</strong> critical refresh <strong>and</strong> upgrades of<br />
technology in production <strong>and</strong> development environments are among the initiatives included. HHSC’s<br />
disaster recovery requirements <strong>and</strong> the elimination of workload backlogs are also addressed.<br />
8.0 SERVICE LEVELS<br />
8.1 Performance St<strong>and</strong>ards<br />
8.1..1 General Performance St<strong>and</strong>ards.<br />
Beginning on the Effective Date, Service Provider shall perform the <strong>Services</strong> at levels of accuracy,<br />
quality, completeness, timeliness, responsiveness, productivity <strong>and</strong> resource efficiency that are<br />
expected from a tier one provider in the same or similar data center services. This Subsection shall<br />
not be deemed to supersede the Service Levels in Attachment 4.0; Service Provider will determine<br />
how it will present Service Level Measurement (SLA) data, with HHSC input <strong>and</strong> approval.<br />
8.1..2 Service Level Performance St<strong>and</strong>ards.<br />
Beginning on the Effective Date, Service Provider shall perform the <strong>Services</strong> so as to meet or exceed<br />
the Service Levels as set forth in or otherwise in accordance with Attachment 4.0, SLA. To the extent<br />
the Parties have established a Service Level for a specific Service, the obligations described in<br />
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Section 9.1.1, General Performance St<strong>and</strong>ards, shall not be construed to alter, exp<strong>and</strong> or supersede<br />
such Service Level.<br />
8.2 Problem Analysis<br />
8.2..1 Problem Analysis.<br />
Investigate incidents <strong>and</strong> problems that require an in-depth technical underst<strong>and</strong>ing per Incident<br />
Management <strong>and</strong> Problem Management process guidelines as described in Attachment 3.0<br />
Statement of Work.<br />
8.3 Continuous Improvement Reviews<br />
8.3..1 Perform proactive failure trend analysis.<br />
Perform analysis to provide optimal use of production resources <strong>and</strong> provide feedback to Authorized<br />
Users of those resources. Interface with the Incident Management <strong>and</strong> Problem Management<br />
processes <strong>and</strong> liaise with all parties supporting incident <strong>and</strong> problem resolution.<br />
8.3..2 Reports.<br />
Produce trend reports to highlight production incidents <strong>and</strong> problems <strong>and</strong> establish predetermined<br />
action <strong>and</strong> escalation procedures when incidents <strong>and</strong> problems are encountered.<br />
8.4 Measurement <strong>and</strong> Monitoring<br />
8.4..1 Performance Measurement, Tuning.<br />
Monitor, verify, <strong>and</strong> make appropriate adjustments to support proper <strong>and</strong> timely performance of Data<br />
Center infrastructure resources. Monitor resource activity to proactively prevent or resolve<br />
performance, degradation or failure where such activities are part of the Service.<br />
8.5 Satisfaction Surveys<br />
8.5..1 HHSC Conducted Surveys.<br />
HHSC may survey satisfaction with Service Provider's performance in connection with <strong>and</strong> as part of<br />
broader satisfaction surveys periodically conducted by HHSC. At HHSC's request, Service Provider<br />
shall cooperate <strong>and</strong> assist HHSC with the formulation of the survey questions, protocols <strong>and</strong><br />
procedures <strong>and</strong> the execution <strong>and</strong> review of such surveys.<br />
8.5..2 Survey Follow-up.<br />
If the results of any satisfaction survey conducted indicate that the level of Service Provider's<br />
performance is less than satisfactory (Attachment 3.0,, Recurring Deliverables, Section E.6.6,<br />
Customer Satisfaction Surveys) Service Provider shall promptly: (i) enter the negative report into the<br />
appropriate Management system, (ii) conduct a Root Cause Analysis as to the cause of such<br />
dissatisfaction; (iii) develop an action plan to address <strong>and</strong> improve the level of satisfaction; (iv) present<br />
such plan to HHSC for its review, comment <strong>and</strong> approval; <strong>and</strong> (v) take action in accordance with the<br />
approved plan <strong>and</strong> as necessary to improve the level of satisfaction or coordinate actions to improve<br />
the level of satisfaction. HHSC <strong>and</strong> Service Provider shall establish a schedule for completion of a<br />
Root Cause Analysis <strong>and</strong> the preparation <strong>and</strong> approval of the action plan which shall be reasonable<br />
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<strong>and</strong> consistent with the severity <strong>and</strong> materiality of the problem; provided, that the time for completion<br />
of such tasks shall not exceed thirty (30) days from the date such survey results are finalized <strong>and</strong><br />
reported. Service Provider's action plan developed hereunder shall specify the specific measures to<br />
be taken by Service Provider <strong>and</strong> the dates by which each such action shall be completed. Within<br />
forty-five (45) days after completion of the measures described in such action plan, Service Provider<br />
shall conduct follow-up surveys with the affected HHSC users <strong>and</strong> management to confirm that the<br />
cause of any dissatisfaction has been addressed <strong>and</strong> that the level of satisfaction has improved. The<br />
Parties recognize that Service Provider's failure to take the actions set forth in such action plan by the<br />
agreed upon dates may have an adverse impact on the operations <strong>and</strong> activities of HHSC.<br />
Accordingly, if Service Provider fails to take the actions set forth in the action plan by the agreed upon<br />
dates, then, the event will be escalated within the appropriate management system as described in<br />
Attachment 3.0, Statement of Work until resolved. In addition to any other remedies available to<br />
HHSC under this Agreement at Law or in equity, Service Provider shall pay to HHSC the applicable<br />
remedies specified in the Agreement for such failure. Remedies are defined in the HHSC Uniform<br />
Contract Terms & Conditions<br />
[http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf] Article 11.<br />
8.6 Notice of Adverse Impact<br />
8.6..1 Notice of Adverse Impact.<br />
If Service Provider becomes aware of any failure by Service Provider to comply with its obligations<br />
under this Agreement or any other situation (a) that has impacted or reasonably could impact the<br />
maintenance of HHSC's financial integrity or internal controls, the accuracy of HHSC's financial,<br />
accounting or other records <strong>and</strong> reports, or compliance with HHSC Rules, HHSC St<strong>and</strong>ards or<br />
applicable Laws or (b) that has had or reasonably could have any other material adverse impact on<br />
the <strong>Services</strong> in question or the impacted operations of HHSC, then, Service Provider shall<br />
immediately inform HHSC in writing of such situation <strong>and</strong> the impact or expected impact <strong>and</strong> Service<br />
Provider <strong>and</strong> HHSC shall meet as soon as possible, <strong>and</strong>, in any event, within five(5) working days<br />
after receipt of Service Provider’s written notification, to formulate an action plan to minimize or<br />
eliminate the impact of such situation.<br />
9.0 SERVICE PROVIDER PERSONNEL<br />
9.1 Key Service Provider Personnel<br />
9.1..1 Provider Personnel Requirements.<br />
Key personnel are required to be allocated 100% to this contract. Additionally, the Respondent shall<br />
provide HHSC with written notice fourteen (14) calendar days prior to any changes in key personnel<br />
during the term of the contract <strong>and</strong> any extension. It is imperative for HHSC to be informed of all key<br />
personnel changes regardless of the reason. The Respondent must not reduce the agreed upon<br />
staffing levels nor replace any key personnel without HHSC’s prior written approval.<br />
9.1..2 Personnel Removal.<br />
The Respondent shall remove key personnel or any Respondent employee or subcontractor employee<br />
found unacceptable to HHSC immediately upon HHSC’s request. The Respondent shall replace any<br />
key personnel, including non-performers <strong>and</strong> those who have terminated employment, within thirty (30)<br />
calendar days. Such replacement personnel shall be of equal or greater ability <strong>and</strong> qualifications. All<br />
replacement personnel are subject to approval by HHSC. The Respondent shall provide resumes <strong>and</strong><br />
references for replacement key personnel for HHSC review prior to making a job offer <strong>and</strong> no later<br />
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than ten (10) calendar days from notification of a resignation or request for removal or within a time<br />
frame agreed to by the HHSC<br />
9.2 Service Provider Personnel Are Not State or HHSC Employees<br />
The Parties intend to create an independent contractor relationship <strong>and</strong> nothing in this Agreement<br />
shall operate or be construed as making the State, HHSC, <strong>and</strong> Service Provider partners, joint<br />
ventures, principals, joint employers, agents or employees of or with the other. No officer, director,<br />
employee, agent, affiliate, contractor or subcontractor retained by Service Provider to perform work<br />
hereunder shall be deemed to be an officer, director, employee, agent, affiliate, contractor or<br />
subcontractor of the State, HHSC for any purpose. Service Provider, not the State, or HHSC has the<br />
right, power, authority <strong>and</strong> duty to supervise <strong>and</strong> direct the activities of the Service Provider Personnel<br />
<strong>and</strong> to compensate such Service Provider Personnel for any work performed by them hereunder.<br />
Service Provider, <strong>and</strong> not the State, or HHSC shall be responsible <strong>and</strong> therefore solely liable for all<br />
acts <strong>and</strong> omissions of Service Provider Personnel associated or related in any manner with this<br />
Agreement, the <strong>Services</strong>, HHSC Facilities, Service Provider Facilities, HHSC Confidential Information,<br />
or Equipment, including acts <strong>and</strong> omissions constituting negligence, gross negligence, willful<br />
misconduct <strong>and</strong>/or fraud.<br />
9.3 Responsibility for Service Provider Personnel<br />
A. Under no circumstances will Service Provider's employees, agents <strong>and</strong> Subcontractors be<br />
considered employees of HHSC or the State, but will be considered Service Provider's<br />
employees, agents or Subcontractors for all purposes.<br />
B. Except as expressly provided in this Agreement, neither Service Provider nor any of Service<br />
Provider's employees, agents or Subcontractors may act in any sense as agents or<br />
representatives of HHSC or the State of <strong>Texas</strong>.<br />
C. Service Provider's employees, agents or Subcontractors shall be paid exclusively by Service<br />
Provider for all <strong>Services</strong> performed. Service Provider is responsible for <strong>and</strong> must comply with all<br />
requirements <strong>and</strong> obligations related to such employees, agents or Subcontractors under local,<br />
State or Federal law, including minimum wage, social security, unemployment insurance, State<br />
<strong>and</strong> Federal income tax <strong>and</strong> workers' compensation obligations.<br />
D. Service Provider assumes sole <strong>and</strong> full responsibility for its acts <strong>and</strong> the acts of its employees,<br />
agents <strong>and</strong> Subcontractors relating to the performance of this Agreement.<br />
E. Service Provider agrees that any claim on behalf of any person arising out of employment,<br />
alleged employment, agency or subcontracts (including, but not limited to, claims of<br />
discrimination against Service Provider, its officers, or its agents or its Subcontractors) are the<br />
sole responsibility of Service Provider <strong>and</strong> are not the responsibility of HHSC <strong>and</strong> that Service<br />
Provider will indemnify <strong>and</strong> hold harmless the State from any <strong>and</strong> all such claims asserted<br />
against the State, HHSC. Service Provider underst<strong>and</strong>s that any person who alleges a claim<br />
arising out of employment, alleged employment, agency, or subcontract by Service Provider<br />
(including, but not limited to, claims of discrimination against Service Provider, its officers, or its<br />
agents or its Subcontractors) will not be entitled to any compensation, rights, or benefits from<br />
HHSC (including, but not limited to, tenure rights, medical <strong>and</strong> hospital care, sick <strong>and</strong><br />
annual/vacation leave, severance pay, or retirement benefits).<br />
9.4 Replacement, Qualifications, <strong>and</strong> Retention of Service Provider Personnel<br />
9.4..1 Sufficiency <strong>and</strong> Suitability of Personnel.<br />
As a material obligation hereunder, Service Provider shall assign (or cause to be assigned) sufficient<br />
numbers of Service Provider Personnel to perform the <strong>Services</strong> in accordance with this Agreement<br />
(including applicable Service Levels, <strong>and</strong> such Service Provider Personnel shall possess suitable<br />
competence, ability <strong>and</strong> qualifications <strong>and</strong> shall be properly educated <strong>and</strong> trained for the <strong>Services</strong><br />
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they are to perform. Service Provider will maintain the organizational <strong>and</strong> administrative capacity <strong>and</strong><br />
capabilities to carry out all Service Provider duties <strong>and</strong> responsibilities, including providing <strong>and</strong><br />
supporting the <strong>Services</strong>, under this Agreement. Notwithst<strong>and</strong>ing transfer or turnover of its personnel,<br />
or of its agents' or Subcontractors' personnel, Service Provider remains obligated to perform all duties<br />
<strong>and</strong> responsibilities, including providing <strong>and</strong> supporting the <strong>Services</strong>, without degradation <strong>and</strong> in<br />
accordance with the terms of this Agreement.<br />
9.4..2 Responsibility for Service Provider Personnel.<br />
Service Provider agrees that anyone used by Service Provider to fulfill the terms of this Agreement is<br />
an employee, agent or Subcontractor of Service Provider <strong>and</strong> remains under Service Provider's sole<br />
direction <strong>and</strong> control. In addition, Service Provider hereby agrees to be responsible for the following<br />
with respect to its employees, agents or Subcontractors: (i) damages incurred by Service Provider<br />
Personnel or Subcontractors within the scope of their duties under this Agreement; <strong>and</strong> (ii)<br />
determination of the hours to be worked <strong>and</strong> the duties to be performed by Service Provider<br />
Personnel or Subcontractors. Service Provider agrees <strong>and</strong> will inform its employees, agents, <strong>and</strong><br />
Subcontractors that there is no right of action against HHSC for any duty owed by Service Provider<br />
pursuant to this Agreement. Service Provider expressly agrees that HHSC assumes no liability for the<br />
actions of, or judgments rendered against, the Service Provider, its employees, agents, or<br />
Subcontractors. HHSC's liability to the Service Provider's employees, agents, <strong>and</strong> Subcontractors, if<br />
any, will be governed by Chapter 101, <strong>Texas</strong> Civil Practice & Remedies Code.<br />
9.4..3 Requested Replacement.<br />
In the event that HHSC determines lawfully <strong>and</strong> in good faith that the continued assignment of any<br />
individual Service Provider Personnel (including Key Service Provider Personnel) to the performance<br />
of the <strong>Services</strong> is not in the best interest, then HHSC may give Service Provider notice to that effect<br />
requesting that such Service Provider Personnel be replaced. Service Provider shall have ten (10)<br />
Business Days following HHSC 's request for removal of such Service Provider Personnel in which to<br />
investigate the matters forming the basis of such request, correct any deficient performance <strong>and</strong><br />
provide HHSC with assurances that such deficient performance shall not recur (provided that, if<br />
requested to do so by HHSC, Service Provider shall immediately remove (or cause to be removed)<br />
the individual in question from all HHSC Facilities pending completion of Service Provider's<br />
investigation <strong>and</strong> discussions with HHSC). If, following such ten (10) Business Day period, HHSC is<br />
not reasonably satisfied with the results of Service Provider's efforts to correct the deficient<br />
performance <strong>and</strong>/or to prevent its recurrence, Service Provider shall, as soon as possible, remove<br />
<strong>and</strong> replace such Service Provider Personnel with an individual of suitable ability <strong>and</strong> qualifications, at<br />
no additional cost to HHSC. Nothing in this provision shall operate or be construed to limit Service<br />
Provider's responsibility for the acts or omissions of Service Provider Personnel, or be construed as<br />
joint employment of the Service Provider Personnel.<br />
9.5 Conduct of Service Provider Personnel<br />
9.5..1 Conduct <strong>and</strong> Compliance.<br />
Service Provider Personnel shall (i) comply with applicable Federal rules, HHSC Rules <strong>and</strong> other<br />
rules <strong>and</strong> regulations as further described in Section 11.5, (ii) comply with reasonable requests of<br />
HHSC personnel pertaining to personal <strong>and</strong> professional conduct, (iii) attend workplace training<br />
offered by HHSC at HHSC's request, <strong>and</strong> (iv) otherwise conduct themselves in a businesslike<br />
manner.<br />
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9.5..2 Identification of Service Provider Personnel.<br />
Except as specifically authorized by HHSC, all Service Provider Personnel shall clearly identify<br />
themselves as Service Provider Personnel <strong>and</strong> not as employees or representatives of the State or<br />
HHSC. This shall include any <strong>and</strong> all communications, whether oral, written or electronic, unless <strong>and</strong><br />
to the extent authorized by HHSC in connection with the performance of specific <strong>Services</strong>. Each<br />
Service Provider Personnel shall wear a badge issued by HHSC indicating that he or she is a<br />
"contractor" when at a HHSC Facility.<br />
9.5..3 Restriction on Marketing Activity.<br />
Except for marketing representatives designated in writing by Service Provider to HHSC, none of the<br />
Service Provider Personnel shall conduct any marketing activities to the State or HHSC at HHSC<br />
Facilities (including marketing of any New <strong>Services</strong>), other than reporting potential marketing<br />
opportunities to Service Provider's designated marketing representatives.<br />
9.6 Substance Abuse<br />
9.6..1 Substance Abuse Policy.<br />
Service Provider represents, warrants <strong>and</strong> covenants that it has <strong>and</strong> shall maintain substance abuse<br />
policies, in each case in conformance with HHSC Rules <strong>and</strong> applicable Laws, <strong>and</strong> Service Provider<br />
Personnel shall be subject to such policies.<br />
9.6..2 Employee Removal.<br />
To the extent permitted by applicable Laws, Service Provider shall immediately remove (or cause to<br />
be removed) any Service Provider Personnel known to be or reasonably suspected of engaging in<br />
substance abuse while at any HHSC Facility or while performing <strong>Services</strong>. In the case of reasonable<br />
suspicion, such removal shall be pending completion of the applicable investigation. Substance<br />
abuse includes the sale, attempted sale, possession or use of illegal drugs, drug paraphernalia or<br />
alcohol, or the misuse of prescription or non-prescription drugs.<br />
9.7 Union Agreements<br />
Service Provider shall provide HHSC not less than ninety (90) days notice of the expiration of<br />
any collective bargaining agreement with unionized Service Provider Personnel if the expiration<br />
of such agreement or any resulting labor dispute could potentially interfere with or disrupt the<br />
activities or operations of HHSC or impact Service Provider's ability to timely perform its duties<br />
<strong>and</strong> obligations under this Agreement.<br />
10.0 SERVICE PROVIDER RESPONSIBILITIES<br />
10.1 Operations Manual<br />
10.1..1 Operations Documentation.<br />
The Service Provider will describe how it will provide the <strong>Services</strong> to meet the Operations<br />
Documentation requirements; including a description of the maintenance process for key<br />
documentation for daily operations. All documentation maintained by the Service Provider will be<br />
subject to approval by HHSC.<br />
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10.2 Reports, Data Correction, Re-Performance<br />
10.2..1 Reports.<br />
Service Provider shall provide HHSC with (i) reports pertaining to the performance of the <strong>Services</strong> <strong>and</strong><br />
Service Provider's other obligations under this Agreement sufficient to permit HHSC to monitor <strong>and</strong><br />
manage Service Provider's performance, (ii) those reports described in Attachment 4.0, Sections B,<br />
Critical Deliverables <strong>and</strong> Section 3.0, Transitional Deliverables, <strong>and</strong> others, as may be applicable,<br />
in Exhibit 7.0, Reports, in the form <strong>and</strong> format <strong>and</strong> at the frequencies provided therein, (iii) those<br />
reports required elsewhere under the terms of this Agreement, (iv) <strong>and</strong> those generated by HHSC<br />
prior to the Effective Date, <strong>and</strong> (v) such additional reports as HHSC may reasonably identify from time<br />
to time to be generated <strong>and</strong> delivered by Service Provider on an ad hoc or periodic basis (all such<br />
reports, the "Reports").<br />
10.2..2 Back-Up Documentation.<br />
As part of the <strong>Services</strong>, Service Provider shall provide HHSC with such documentation <strong>and</strong> other<br />
information available to Service Provider (including original source documentation <strong>and</strong> data in its<br />
native format or in an alternative industry-st<strong>and</strong>ard format as requested by HHSC) as may be<br />
requested by HHSC from time to time in order to verify the accuracy of the Reports provided by<br />
Service Provider. In addition, Service Provider shall provide HHSC with all documentation <strong>and</strong> other<br />
information reasonably requested by HHSC from time to time to verify that Service Provider's<br />
performance of the <strong>Services</strong> is in compliance with the Service Levels <strong>and</strong> this Agreement.<br />
10.2..3 Correction of Errors.<br />
Service Provider shall promptly correct any errors or inaccuracies in or with respect to the Reports as<br />
part of the <strong>Services</strong> <strong>and</strong> at no additional cost.<br />
10.3 Financial Support<br />
10.3..1 Forecasting <strong>and</strong> Budgeting.<br />
To support HHSC's forecasting <strong>and</strong> budgeting processes, Service Provider shall provide the following<br />
information regarding the costs to be incurred by HHSC in connection with the <strong>Services</strong> <strong>and</strong> the<br />
cost/benefit to HHSC associated therewith: (i) actual <strong>and</strong> forecasted utilization <strong>and</strong> costs of <strong>Services</strong><br />
included in the contract resulting from this <strong>RFP</strong>; (ii) actual <strong>and</strong> forecasted changes in the total cost or<br />
resource utilization associated with changes to the environment; <strong>and</strong> (iii) opportunities to modify or<br />
improve the <strong>Services</strong> <strong>and</strong> to reduce the Charges or retained expenses incurred by HHSC. Such<br />
information shall be provided at HHSC's request at no additional cost to HHSC, <strong>and</strong> in accordance<br />
with the schedule established by HHSC.<br />
10.4 Change Control<br />
10.4..1 Compliance with Change Control Procedures.<br />
In making any change in the st<strong>and</strong>ards, processes, procedures <strong>and</strong> controls or associated<br />
technologies, architectures, st<strong>and</strong>ards, products, Materials, Equipment, Systems or services provided,<br />
operated, managed, supported or used in connection with the <strong>Services</strong>, the Parties shall comply with<br />
the change control procedures they develop <strong>and</strong> specify in the Service Management Manual (as<br />
outlined in Section 2.6, Contract Management Procedures),. The Service Management Manual shall<br />
contain a procedure that allows HHSC to exercise the approval rights in this Section <strong>and</strong> complies<br />
with the following requirements:<br />
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a) Impact Assessment. If Service Provider desires to make any change, upgrade, replacement<br />
or addition that may have an adverse impact or require changes as described in Section<br />
8.4.5 or increase the risk of Service Provider not being able to provide the <strong>Services</strong> in<br />
accordance with this Agreement or violate or be inconsistent with HHSC St<strong>and</strong>ards or<br />
Strategic Plans, then Service Provider shall prepare a written risk assessment <strong>and</strong><br />
mitigation plan (1) describing in detail the nature <strong>and</strong> extent of such adverse impact or risk,<br />
(2) describing any benefits, savings or risks to HHSC associated with such change, <strong>and</strong> (3)<br />
proposing strategies to mitigate any adverse risks or impacts associated with such change<br />
<strong>and</strong>, after consultation <strong>and</strong> agreement with HHSC, implement the plan.<br />
b) Comparison Analysis. Each time that Service Provider makes a material change to the<br />
Materials, Equipment, Systems or <strong>Services</strong>, Service Provider shall perform a comparison<br />
analysis at a reasonable <strong>and</strong> mutually agreed level of detail to confirm the change shall not<br />
have an adverse impact on the costs, operations or environment of HHSC or on the<br />
functionality, interoperability, performance, accuracy, speed, legality, responsiveness,<br />
quality or resource efficiency of the <strong>Services</strong>. In addition, at HHSC's request, Service<br />
Provider shall perform a comparison at a reasonable <strong>and</strong> mutually agreed level of detail,<br />
between the amount of chargeable resources required to perform a representative sample<br />
of the <strong>Services</strong> being performed for HHSC immediately prior to the change <strong>and</strong> immediately<br />
after the change. HHSC shall not be required to pay for increased chargeable resources<br />
usage due to a change except to the extent that such change is requested or approved by<br />
HHSC after notice from Service Provider of such increased chargeable resources usage.<br />
c) Testing. Prior to making any change or using any new (e.g. not tested in or for the HHSC<br />
environment) Software, Equipment or System to provide the <strong>Services</strong>, Service Provider<br />
shall verify by appropriate testing that the change or item is properly installed, operating in<br />
accordance with its specifications, performing its intended functions in a reliable manner <strong>and</strong><br />
compatible with <strong>and</strong> capable of operating as part of the HHSC environment. This obligation<br />
shall be in addition to Service Provider's other obligations in this Agreement, including<br />
Service Provider's obligation to perform any testing as part of the routine deployment or<br />
installation of Software or Equipment.<br />
10.4..2 Financial Responsibility For Changes.<br />
Without limiting HHSC's right of approval unless otherwise set forth in this Agreement or otherwise<br />
expressly approved by HHSC, Service Provider shall bear all charges, fees <strong>and</strong> costs associated with<br />
any change desired by Service Provider, including all charges, fees <strong>and</strong> costs associated with (i) the<br />
design, installation, implementation, testing <strong>and</strong> rollout of such change, (ii) any modification or<br />
enhancement to, or substitution for, any impacted process or associated Materials, Equipment,<br />
System or <strong>Services</strong>, <strong>and</strong> (iii) any increase in the cost to HHSC of operating, maintaining or supporting<br />
any impacted process or associated Materials, Equipment, System or <strong>Services</strong> resulting from such<br />
change.<br />
10.4..3 HHSC Approval – Cost, Adverse Impact.<br />
Other than as expressly set forth in the Transition <strong>and</strong> Transformation Plans as approved by HHSC,<br />
Service Provider shall make no change which may<br />
(i) increase HHSC's total cost of receiving the <strong>Services</strong>;<br />
(ii) require material changes to, or have an adverse impact on, HHSC's operations, facilities,<br />
processes, systems, software, utilities, tools or equipment (including those provided,<br />
managed, operated, supported <strong>and</strong>/or used on their behalf by HHSC Contractors);<br />
(iii) require HHSC to install, at their cost or expense, a new version, release, Upgrade of or<br />
replacement for any Software or Equipment or to modify any Software or Equipment;<br />
(iv) have an adverse impact on the functionality, interoperability, performance, accuracy, speed,<br />
responsiveness, quality or resource efficiency of the <strong>Services</strong>;<br />
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(v)<br />
(vi)<br />
(vii)<br />
(viii)<br />
have an adverse impact on the cost, either actual or planned, to HHSC of terminating this<br />
Agreement, in whole or in part, or on HHSC's rights to insource or use third parties;<br />
have an adverse impact on HHSC's environment (including its flexibility to deal with future<br />
changes, interoperability <strong>and</strong> its stability),<br />
introduce new technology to<br />
a. HHSC's environment or operations or<br />
b. Service Provider's environment, to the extent that such introduction has or may have an<br />
adverse impact on HHSC's environment;<br />
have an adverse impact on the functionality, interoperability, performance, accuracy, speed,<br />
responsiveness, quality, cost or resource efficiency of HHSC's Retained Systems <strong>and</strong><br />
Processes, or violate or be inconsistent with HHSC St<strong>and</strong>ards, HHSC Rules, the Technology<br />
Plan or any Strategic Plan in all cases (i) through (viii) without first obtaining HHSC's<br />
approval, which approval HHSC may withhold in its sole discretion. If Service Provider<br />
desires to make such a change, it shall provide to HHSC a written proposal describing in<br />
detail the extent to which the desired change may affect the functionality, performance, price<br />
or resource efficiency of the <strong>Services</strong> <strong>and</strong> any benefits, savings or risks to HHSC associated<br />
with such change.<br />
10.4..4 Temporary Emergency Changes.<br />
Notwithst<strong>and</strong>ing the foregoing, Service Provider may make temporary changes required by an<br />
emergency if it has been unable to contact the HHSC Data Center <strong>Services</strong> Manager to obtain<br />
approval after making reasonable efforts. Service Provider shall document <strong>and</strong> report such<br />
emergency changes to HHSC not later than the next Business Day after the change is made. Such<br />
changes shall not be implemented on a permanent basis unless <strong>and</strong> until approved by HHSC.<br />
10.4..5 Implementation of Changes.<br />
Service Provider shall schedule <strong>and</strong> implement all changes so as not to (i) disrupt or adversely impact<br />
the operations of HHSC, (ii) degrade the <strong>Services</strong> then being received by them, or (iii) interfere with<br />
their ability to obtain the full benefit of the <strong>Services</strong>.<br />
10.4..6 Planning <strong>and</strong> Tracking.<br />
On a monthly basis, Service Provider shall prepare, with HHSC's participation <strong>and</strong> approval, a rolling<br />
quarterly "look ahead" schedule for ongoing <strong>and</strong> planned changes for the next three (3) months. The<br />
status of changes shall be monitored <strong>and</strong> tracked by Service Provider against the applicable<br />
schedule.<br />
10.4..7 Evaluation <strong>and</strong> Testing.<br />
Prior to installing a new Upgrade, Major Release or Minor Release, Service Provider shall evaluate<br />
<strong>and</strong> test such Software to verify that it shall perform in accordance with this Agreement <strong>and</strong> the HHSC<br />
St<strong>and</strong>ards <strong>and</strong> Strategic Plans <strong>and</strong> that it shall not (i) increase HHSC's total cost of receiving the<br />
<strong>Services</strong>, (ii) have an adverse impact on performance or require changes, or (iii) violate or be<br />
inconsistent with HHSC St<strong>and</strong>ards, Strategic Plans, the Technology Plan or applicable Laws. The<br />
evaluation <strong>and</strong> testing performed by Service Provider should be comprehensive <strong>and</strong> thorough to<br />
insure successful implementation of change with absence of negative consequences associated with<br />
the change <strong>and</strong> shall be at least as rigorous <strong>and</strong> comprehensive as the evaluation <strong>and</strong> testing usually<br />
performed by highly qualified service providers under such conditions.<br />
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10.5 Knowledge Transfer<br />
Service Provider will use its best efforts to acquire the practical skill, knowledge <strong>and</strong> expertise<br />
from the personnel who are providing the <strong>Services</strong> prior to the Effective Date in relation to the<br />
delivery of the <strong>Services</strong>, including the knowledge necessary for the Service Provider to perform<br />
the <strong>Services</strong>. Service Provider will accomplish such knowledge transfer, as appropriate, by<br />
interviewing personnel currently performing the <strong>Services</strong> as well as reviewing information,<br />
records <strong>and</strong> documents related to the provision of the <strong>Services</strong>. Service Provider shall promptly<br />
(within one Business Day) notify HHSC of any lack of cooperation or assistance on the part of<br />
HHSC Contractor or any third party that impedes or hinders Service Provider's efforts to comply<br />
with this obligation.<br />
10.6 HHSC Rules/Employee Safety<br />
10.6..1 HHSC Rules <strong>and</strong> Compliance.<br />
In performing the <strong>Services</strong> <strong>and</strong> using HHSC Facilities, Service Provider shall observe <strong>and</strong> comply with<br />
all HHSC policies, rules, <strong>and</strong> regulations applicable at or to HHSC Facilities or the provision of the<br />
<strong>Services</strong> which have been communicated to Service Provider or Service Provider Personnel in<br />
advance in writing (which may include email communications <strong>and</strong> notices of information contained on<br />
web sites or conspicuously posted at HHSC Facilities to the extent consistent with the way in which<br />
HHSC disseminates such information to their own employees) or by such means as are generally<br />
used by HHSC to disseminate such information to its employees or contractors <strong>and</strong> those applicable<br />
to specific HHSC Facilities (collectively, "HHSC Rules"). The Parties acknowledge <strong>and</strong> agree that, as<br />
of the Effective Date Service Provider is fully informed as to the HHSC Rules that have been<br />
communicated to it consistent with the foregoing. Service Provider shall be responsible for the<br />
promulgation <strong>and</strong> distribution of HHSC Rules to Service Provider Personnel as <strong>and</strong> to the extent<br />
necessary <strong>and</strong> appropriate. Additions or modifications to the HHSC Rules may be (i) disclosed to<br />
Service Provider <strong>and</strong> Service Provider Personnel in writing (which may include email communications<br />
<strong>and</strong> notices of information contained on web sites to the extent consistent with the way in which<br />
HHSC disseminates such information to their own employees), (ii) conspicuously posted at a HHSC<br />
Facility, (iii) electronically posted or (iv) communicated to Service Provider or Service Provider<br />
Personnel by means generally used by HHSC to disseminate such information to its employees or<br />
contractors (including oral communications in immediately applicable or emergency situations).<br />
Service Provider <strong>and</strong> Service Provider Personnel shall observe <strong>and</strong> comply with such additional or<br />
modified HHSC Rules.<br />
10.6..2 Safety <strong>and</strong> <strong>Health</strong> Compliance.<br />
Service Provider <strong>and</strong> Service Provider Personnel shall familiarize themselves with the premises <strong>and</strong><br />
operations at each HHSC Facility at, to or from which <strong>Services</strong> are rendered <strong>and</strong> the HHSC Rules<br />
applicable to each such facility. Service Provider <strong>and</strong> Service Provider Personnel also shall observe<br />
<strong>and</strong> comply with all HHSC Rules with respect to safety, health, security <strong>and</strong> the environment <strong>and</strong> shall<br />
take commercially reasonable precautions to avoid injury, property damage, spills or emissions of<br />
hazardous substances, materials or waste, <strong>and</strong> other dangers to persons, property or the<br />
environment. To the extent required by HHSC, Service Provider Personnel shall receive prescribed<br />
training prior to entering certain HHSC Facilities.<br />
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10.7 Access to Specialized Service Provider Skills <strong>and</strong> Resources<br />
10.7..1 Specialized <strong>Services</strong>.<br />
Upon HHSC's request, Service Provider shall provide HHSC with prompt access to Service Provider's<br />
specialized services, personnel <strong>and</strong> resources pertaining to st<strong>and</strong>ards, processes <strong>and</strong> procedures<br />
<strong>and</strong> associated software, equipment <strong>and</strong> systems on an expedited basis taking into account the<br />
relevant circumstances (the "Specialized <strong>Services</strong>"). The Parties acknowledge that the provision of<br />
such Specialized <strong>Services</strong> may, in some cases, constitute New <strong>Services</strong> for which Service Provider is<br />
entitled to additional compensation, but in no event shall Service Provider be entitled to any additional<br />
compensation for New <strong>Services</strong> under this Section unless the HHSC <strong>Services</strong> Manager <strong>and</strong> Service<br />
Provider Account Manager, or their authorized designees, expressly agree upon such additional<br />
compensation or Service Provider's entitlement to additional compensation is established through the<br />
dispute resolution process. If HHSC authorizes Service Provider to proceed but the Parties disagree<br />
as to whether the authorized work constitutes New <strong>Services</strong> <strong>and</strong> HHSC reasonably believes that such<br />
work is material <strong>and</strong> is required on an urgent basis, Service Provider shall proceed with such work if<br />
directed to do so by HHSC.<br />
10.8 Notice of Decommissioning<br />
10.8..1 Notice of Decommissioning.<br />
Service Provider shall notify HHSC promptly if <strong>and</strong> to the extent any HHSC-owned Equipment or<br />
HHSC-leased Equipment shall no longer be used to provide the <strong>Services</strong>. The notification shall<br />
include the identification of the Equipment, <strong>and</strong> the date it shall no longer be needed by Service<br />
Provider, along with the reason for decommissioning. Upon receipt of any such notice, HHSC may, in<br />
its sole discretion, terminate the lease for such leased Equipment as of the date specified in such<br />
notice <strong>and</strong> sell or otherwise dispose of or redeploy such HHSC-owned Equipment that is the subject<br />
of such a notice as of the date specified in such notice. Upon Service Provider ceasing to use any<br />
Equipment (or, in the case of leased Equipment, upon the last day HHSC is obligated to make such<br />
leased Equipment available to Service Provider, if earlier), Service Provider shall return the same to<br />
HHSC <strong>and</strong>/or their designee(s) in condition at least as good as the condition thereof on the Effective<br />
Date, ordinary wear <strong>and</strong> tear excepted. Service Provider shall, at Service Provider's expense, deliver<br />
such Equipment to the location designated by HHSC <strong>and</strong>/or their designee(s). The foregoing shall not<br />
limit Service Provider's obligations with respect to the redeployment <strong>and</strong> disposal of Equipment<br />
pursuant to Exhibit 1.0.<br />
10.9 Subcontractors<br />
10.9..1 Subcontractors.<br />
HHSC will enter into contracts with Service Providers only. Responses shall be submitted by only one<br />
Service Provider. The Service Provider shall be responsible for fulfillment of the contract, but it may<br />
use Subcontractors in the performance of the contract. Subcontractors used by the Service Provider<br />
in performance of the contract are subject to all provisions stated in Section 9.0 Service Provider<br />
Personnel. HHSC will not accept joint venture or general partnership arrangements formed solely for<br />
the purpose of responding to this <strong>RFP</strong>.<br />
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10.10 Technology Plan<br />
10.10..1 Scope.<br />
As requested by HHSC, <strong>and</strong> without limiting the obligation of the Parties under this <strong>RFP</strong>, Service<br />
Provider shall assist HHSC on an on-going basis to develop a yearly technology plan consisting of 2<br />
phases entitled, Transition Technology & Resources <strong>and</strong> Transformation Technology. The Transition<br />
Technology & Resources phase will accommodate transition services <strong>and</strong> will clearly outline the<br />
existing infrastructure (reference Exhibit 1.0, Technology Plan Assets), in support of the TIERS<br />
application. The Transformation Technology phase will provide for the adoption of future<br />
technologies. All proposals shall adhere to the <strong>RFP</strong> guidelines.<br />
10.10..2 Technology Plan.<br />
Service Provider shall develop <strong>and</strong> implement a technology plan that is consistent with the HHSC<br />
St<strong>and</strong>ards <strong>and</strong> Strategic Plan <strong>and</strong> that shows how Service Provider shall provide the <strong>Services</strong> to<br />
enable HHSC to achieve the Strategic Plan objectives <strong>and</strong> to implement <strong>and</strong> support HHSC<br />
objectives <strong>and</strong> strategies ("Technology Plan"). The development of the Technology Plan shall be an<br />
iterative process that Service Provider shall carry out in consultation with HHSC. The Technology<br />
Plan shall be finalized by February 15 th of each year. The Technology Plan shall be the basis for<br />
generating technology roadmaps which detail schedules, dependencies <strong>and</strong> requirements for<br />
introducing new technology changes as well as acquiring, supporting, <strong>and</strong> retiring software <strong>and</strong><br />
hardware.<br />
10.10..3 Transition Plan.<br />
Service Provider will describe its plan for taking over the <strong>Services</strong> from the Incumbent Service<br />
Provider at the Effective Date, including how transition will take place at the Effective Date <strong>and</strong> what<br />
post-Effective Date activities will be required to fully transfer all components of the <strong>Services</strong> from the<br />
Incumbent Service Provider (e.g. assets, software licenses, operational documentation, <strong>and</strong><br />
personnel). Further transition services include personnel support, adopting policy <strong>and</strong> procedure,<br />
Information Technology Infrastructure Library (ITIL) base Service Management Practices (to include a<br />
CMDB) as described in Exhibit 1.0 of the Technology Plan. Effective transition will be measured by<br />
the Service Provider’s ability to Transition activities through the point at which the Service Provider<br />
expects it will be delivering predictable, repeatable Service Delivery Results that meet the<br />
requirements.<br />
10.10..4 Transformation Plan.<br />
Service Provider will plan evaluation session(s), with regard to emerging technology, for each Service<br />
Oriented Architecture Layer (Identified in Attachment 1 of Exhibit 1,0 of the Technology plan) in order<br />
to articulate, via presentation <strong>and</strong> as appropriate, individual technology opportunities. The Service<br />
Provider maintains overall infrastructure operational health <strong>and</strong> therefore it will be incumbent on the<br />
Service Provider to adequately develop business <strong>and</strong>/or use cases to ensure the overall environment<br />
architecture adheres to industry st<strong>and</strong>ard best practices <strong>and</strong> procedures before any new technology<br />
offering can be considered for adoption by HHSC. Transformation services should also include<br />
Program Management providing for oversight <strong>and</strong> project management controls for Transformation<br />
initiatives. These initiatives will address major refresh of equipment to supported levels, upgrade of<br />
operating software to current levels, virtualization, st<strong>and</strong>ardization, <strong>and</strong> stabilization as appropriate.<br />
HHSC is specifically interested in deep analysis <strong>and</strong> investigation into potential improvements in the<br />
following area of technology; Configuration Management, Virtualization, St<strong>and</strong>ardization &<br />
Optimization, Hardware Technology, Software Technology, Physical & Logical Security.<br />
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10.11 Monitoring Tools<br />
As requested by HHSC, Service Provider will provide HHSC <strong>and</strong> its designee access for audit or<br />
operational reporting, on-line view <strong>and</strong> notification components of any measurement <strong>and</strong> monitoring<br />
tools used by Service Provider in connection with its delivery of the <strong>Services</strong>. Each such tool shall be<br />
approved by HHSC prior to implementation <strong>and</strong> full access shall be made available to HHSC.<br />
11.0 Financial Approach — Business Terms<br />
11.1 Overview of Financial Approach<br />
The financial approach described below documents the various HHSC <strong>and</strong> Respondent<br />
responsibilities required under this <strong>RFP</strong>. HHSC has chosen to use a Fixed Price/Not to Exceed<br />
approach related to the service delivery requirements included in this TIERS Data Center <strong>Services</strong><br />
<strong>RFP</strong>.<br />
11.2 Business Objective<br />
The objective of the Financial Approach is to describe the financial components that will enable<br />
HHSC to achieve the Mission <strong>and</strong> Objectives of this <strong>RFP</strong> <strong>and</strong> to ensure that all services required of<br />
the Respondent are provided as efficiently <strong>and</strong> effectively as possible to assist HHSC in its<br />
responsibility for the efficient <strong>and</strong> effective administration of federal awards through the application<br />
of sound management practices.<br />
11.3 Financial Payment Structure <strong>and</strong> Provisions<br />
The financial payment structure for the TIERS Data Center contract is provided below.<br />
11.3..1 Overview of Financial Payment Structures.<br />
Payment for the contractual services described in this <strong>RFP</strong> will be based on several pricing structures,<br />
depending on the specific Service <strong>and</strong>/or Deliverable required <strong>and</strong> whether the Respondent<br />
performed the required Service <strong>and</strong>/or Deliverable correctly <strong>and</strong> on time. The Respondent will receive<br />
payments monthly as compensation for correctly <strong>and</strong> appropriately performing the <strong>Services</strong> <strong>and</strong><br />
Deliverables required in the contract resulting from this <strong>RFP</strong>.<br />
“<strong>Services</strong>” under the contract resulting from this <strong>RFP</strong> shall mean the tasks, functions, <strong>and</strong><br />
responsibilities assigned <strong>and</strong> delegated to the vendor, including the Scope of Work, <strong>and</strong> any<br />
ancillary or incidental tasks, functions or responsibilities not otherwise expressly described in<br />
the contract but which are customary or required for the performance or delivery of the <strong>Services</strong><br />
in accordance with the contract.<br />
11.3..2 Efforts to Minimize Financial Payments.<br />
Respondent shall continually seek to identify methods of reducing <strong>and</strong> minimizing HHSC's total cost<br />
of receiving the <strong>Services</strong> <strong>and</strong> Deliverables included in the contract resulting from this <strong>RFP</strong> <strong>and</strong> shall<br />
notify HHSC of such methods <strong>and</strong> the estimated potential savings associated with each such method.<br />
HHSC will review the identified cost saving initiatives <strong>and</strong> coordinate applicable modifications to the<br />
contractual requirements <strong>and</strong> associated fees after discussions with the successful vendor <strong>and</strong><br />
execution of the necessary amendment(s) to the contract.<br />
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11.3..3 Payment for Service <strong>and</strong> Deliverable Requirements.<br />
Payment to the successful Respondent for Service <strong>and</strong> Deliverable requirements will be based on<br />
multiple fixed fee(s) as described in Sections 5 <strong>and</strong> 6 of the Pricing Workbook Instructions<br />
(Attachment 5-A). The costs for Service <strong>and</strong> Deliverable requirements will be subject to the<br />
Prospective Price Re-determination provisions documented in Section 11.4.2 of this <strong>RFP</strong>.<br />
A Respondent must submit one or more monthly invoice(s) following the month in which the<br />
Respondent provides the applicable TIERS Data Center <strong>Services</strong>. HHSC will process <strong>and</strong> pay fees in<br />
accordance with Chapter 2251, <strong>Texas</strong> Government Code. Separate invoices for each specific service<br />
element type shall be submitted by a Respondent to HHSC in the format specified by HHSC. Each<br />
invoice will be processed <strong>and</strong> paid separately.<br />
A Respondent will supply detailed information with the invoice(s) as directed by HHSC to enable<br />
HHSC to allocate costs for the services according to the various state <strong>and</strong> federal funding sources<br />
that support the contract for specific segments of the specific service element. Each invoice must<br />
show separate lines for each strategy, risk group, state funding source, federal funding source(s)<br />
<strong>and</strong>/or Federal Financial Participation (FFP) rate(s). The Respondent must also provide supporting<br />
documentation for service delivery cost invoices, in an electronic format, subject to approval by<br />
HHSC, by state <strong>and</strong>/or federal funding source, appropriations strategy, risk group, <strong>and</strong> any applicable<br />
FFP rate(s).<br />
HHSC, at its sole discretion, may choose to process only a portion of a fixed service delivery fee<br />
invoice, if only a portion of the invoice can be verified <strong>and</strong> validated by the information submitted. If<br />
HHSC decides to process an invoice in this manner, an adjustment will be made by HHSC <strong>and</strong> only<br />
that portion of the service delivery invoice that can be verified <strong>and</strong> validated will be paid. To be paid<br />
for the fixed service delivery fees previously denied or not processed by HHSC, the Respondent must<br />
submit supplemental invoice(s) along with any <strong>and</strong> all necessary corrections. HHSC will process <strong>and</strong><br />
pay service delivery fees billed on supplemental invoices in accordance with Chapter 2251, <strong>Texas</strong><br />
Government Code. Each invoice will be processed <strong>and</strong> paid separately.<br />
Any cost or expense incurred by a Respondent after the commencement of the service delivery phase<br />
of any contract resulting from this <strong>RFP</strong> to complete transition activities or correct any defects from the<br />
Transition Phase will not be considered an allowable cost for the respective contract.<br />
Any cost or expense incurred by a Respondent to re-perform or correct any <strong>Services</strong> or Deliverables<br />
(including, but not limited to any required backup or restoration of data from scheduled backups or, if<br />
not available on such backups, restoration by other means with HHSC's reasonable cooperation) that<br />
result in incorrect outputs or that are not correctly performed due to an error or breach of the<br />
Agreement by Vendor will not be considered an allowable cost for the respective contract. Expenses<br />
related to re-performing any <strong>Services</strong> or Deliverables will not be considered allowable expenses for<br />
the Prospective Price Re-determination provisions documented in this <strong>RFP</strong>.<br />
HHSC reserves the right to eliminate services that are no longer necessary during any contract<br />
resulting from this <strong>RFP</strong> with 30 days notice to the Respondent. HHSC will reduce the service delivery<br />
payments for such services following 30 days notice to Respondent.<br />
11.3..4 Payment Disputes.<br />
For invoice amounts that have been paid by HHSC that become the subject of a dispute, in addition to<br />
any amounts that Respondent may subsequently credit to HHSC arising from resolution of such<br />
dispute, HHSC may require the Respondent to include interest on the reimbursed amounts accrued<br />
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monthly at the rate specified by the <strong>Texas</strong> Comptroller of Public Accounts in accordance with Section<br />
2251.025(b), <strong>Texas</strong> Government Code, calculated from the ninetieth (90th) day following the date of<br />
HHSC’s dispute.<br />
Neither the failure to dispute any Fees or amounts prior to payment nor the failure to withhold any<br />
amount shall constitute, operate or be construed as a waiver of any right HHSC may otherwise have<br />
to dispute any Fees or amount or recover any amount previously paid.<br />
11.3..5 Changes to Scope of Existing <strong>Services</strong>.<br />
HHSC anticipates that, during the life of any contract resulting from this <strong>RFP</strong>, implementation of<br />
federal <strong>and</strong> state m<strong>and</strong>ates <strong>and</strong> other state initiatives will require additions or changes to the normal<br />
activities performed under the Contract. All such changes will be negotiated between HHSC <strong>and</strong> the<br />
Respondent. The pricing associated with additional or modified activities will be negotiated between<br />
the Respondent <strong>and</strong> HHSC after HHSC determines that the Respondent has submitted all the<br />
detailed cost information (including detailed supporting metrics <strong>and</strong> detailed supporting costs deemed<br />
acceptable by HHSC) necessary to accurately modify the applicable fixed fee formulas. Once a total<br />
cost for the additional or modified activities is agreed upon, HHSC will make the determination as to<br />
which fixed fee formula(s) are modified.<br />
11.3..6 New <strong>Services</strong>.<br />
If HHSC requests the prospective Vendor to perform any New <strong>Services</strong> reasonably related to the<br />
<strong>Services</strong> or other services generally provided by the Vendor, the Vendor shall promptly prepare a<br />
Solution Request (Exhibit 6.0) for HHSC's consideration. Unless otherwise agreed by the Parties,<br />
Vendor shall prepare such New <strong>Services</strong> proposal at no additional charge to HHSC <strong>and</strong> shall deliver<br />
such proposal to HHSC within ten (10) days of its receipt of HHSC's request; provided, that Service<br />
Provider shall respond more quickly in the case of a pressing need or an emergency situation. HHSC<br />
shall provide such information as the Vendor reasonably requests in order to prepare such New<br />
Service proposal. New Service proposals shall include, at a minimum, the following information at a<br />
level of detail sufficient to permit HHSC to make an informed business decision: (i) a project plan <strong>and</strong><br />
fixed price or price estimate for the New Service; (ii) a breakdown of such price or estimate; (iii) a<br />
description of the service levels to be associated with such New Service; (iv) a schedule for<br />
commencing <strong>and</strong> completing the New Service; (v) a description of the new hardware or software to be<br />
provided by the Vendor in connection with the New Service; (vi) a description of the software,<br />
hardware <strong>and</strong> other resources necessary to provide the New Service; (vii) any additional facilities or<br />
labor resources to be provided by HHSC in connection with the proposed New Service; (viii) any risks<br />
associated with the New Service <strong>and</strong>/or the integration of the New Service into the existing<br />
environment; <strong>and</strong> (ix) in the case of any developed materials to be created through the provision of<br />
the proposed New Service, any ownership rights therein that differ from the provisions of included in<br />
the contract. The HHSC <strong>Services</strong> Manager may accept or reject proposals for New <strong>Services</strong> in his or<br />
her sole discretion. Upon the HHSC <strong>Services</strong> Manager's acceptance of a Vendor proposal for New<br />
<strong>Services</strong>, the scope of the <strong>Services</strong> shall be exp<strong>and</strong>ed <strong>and</strong> the Agreement shall be modified<br />
accordingly to include such New <strong>Services</strong>. If Vendor is unable to provide such New <strong>Services</strong> using its<br />
own resources (including resources it procures through a supplier or Subcontractor), HHSC may<br />
require the Vendor to engage (as Vendor's subcontractor) a third party approved or selected by<br />
HHSC to provide such services. Notwithst<strong>and</strong>ing any provision to the contrary, (A) Vendor shall act<br />
reasonably <strong>and</strong> in good faith in formulating such pricing proposal, (B) Vendor shall use commercially<br />
reasonable efforts to identify potential means of reducing the cost to HHSC, including utilizing<br />
subcontractors as <strong>and</strong> to the extent appropriate, (C) such pricing proposal shall be no less favorable<br />
to HHSC than the pricing <strong>and</strong> labor rates set forth herein for comparable <strong>Services</strong>, <strong>and</strong> (D) such<br />
pricing proposal shall take into account the existing <strong>and</strong> future volume of business between HHSC<br />
<strong>and</strong> the Vendor.<br />
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11.3..7 Extraordinary Events.<br />
Definition. An "Extraordinary Event" means a circumstance in which an event or discrete set of<br />
events has occurred or is planned with respect to the operations of HHSC that results or shall result in<br />
a change in the scope, nature or volume of the <strong>Services</strong> that HHSC shall require from the Vendor.<br />
Consequence of an Extraordinary Event. If an Extraordinary Event occurs, HHSC may, at its<br />
option, request more favorable pricing with respect to applicable Fees in accordance with the<br />
following:<br />
1. Vendor <strong>and</strong> HHSC shall mutually determine on a reasonable basis the efficiencies,<br />
economies, savings <strong>and</strong> resource utilization reductions, if any, resulting from such<br />
Extraordinary Event <strong>and</strong>, upon HHSC's approval, Vendor shall then proceed to implement<br />
such efficiencies, economies, savings <strong>and</strong> resource utilization reductions as quickly as<br />
practicable <strong>and</strong> in accordance with the agreed upon schedule. As the efficiencies,<br />
economies, savings or resource utilization reductions are realized, the applicable Fees<br />
specified in the Agreement shall be promptly <strong>and</strong> equitably adjusted to pass through to<br />
HHSC the net benefit of such efficiencies, economies, savings <strong>and</strong> resource utilization<br />
reductions; provided, that HHSC shall reimburse the Vendor for any net costs or<br />
expenses incurred to realize such efficiencies, economies, savings or resource utilization<br />
reductions if <strong>and</strong> to the extent the Vendor (i) notifies HHSC of such additional costs <strong>and</strong><br />
obtains HHSC's approval prior to incurring such costs, (ii) uses commercially reasonable<br />
efforts to identify <strong>and</strong> consider practical alternatives, <strong>and</strong> reasonably determines that<br />
there is no other more practical or cost effective way to obtain such savings without<br />
incurring such expenses, <strong>and</strong> (iii) uses commercially reasonable efforts to minimize the<br />
additional costs to be reimbursed by HHSC.<br />
2. An Extraordinary Event shall not result in Fees to HHSC being higher than such Fees in<br />
the Agreement at the time of the Extraordinary Event. For the avoidance of doubt, upon<br />
the occurrence of an Extraordinary Event, HHSC is entitled to request <strong>and</strong> receive more<br />
favorable pricing. Upon the HHSC <strong>Services</strong> Manager's acceptance of a Vendor proposal<br />
related to an Extraordinary Event, the scope of the <strong>Services</strong> <strong>and</strong> the Agreement shall be<br />
modified accordingly to include such Extraordinary Event.<br />
11.3..8 Unanticipated Change.<br />
If an Unanticipated Change occurs, <strong>and</strong> if HHSC requests any modifications to the <strong>Services</strong> to<br />
incorporate such Unanticipated Change, the Parties shall use the procedures in Sections 11.3..5 <strong>and</strong><br />
11.3..6 to equitably adjust the Fees <strong>and</strong> other relevant provisions of the Agreement to take such<br />
Unanticipated Change into account. An "Unanticipated Change" shall consist of a material change<br />
in the technologies <strong>and</strong>/or processes available to provide all or any portion of the <strong>Services</strong> which is<br />
outside the normal evolution of technology experienced by the <strong>Services</strong>, that was not generally<br />
available as of the Effective Date <strong>and</strong> that would materially reduce the Vendor's cost of providing the<br />
<strong>Services</strong>.<br />
11.3..9 Service Provider Labor Rates for Changes to <strong>Services</strong> <strong>and</strong> Tasks.<br />
HHSC anticipates that, during the life of the Contract, implementation of state <strong>and</strong>/or federal<br />
m<strong>and</strong>ates <strong>and</strong> other state initiatives will require additions or changes to the activities performed under<br />
any contract resulting from this <strong>RFP</strong>. If applicable, payment for costs associated with changes to<br />
<strong>Services</strong> <strong>and</strong>/or Deliverables required after the start date of the Initial four (4) year contract will be<br />
negotiated with the Respondent. The costs for such changes to <strong>Services</strong> <strong>and</strong>/or Deliverables will be<br />
based on the explicit fixed hourly rates proposed by a Respondent as described in the instructions for<br />
completion of the pricing proposal forms in Attachment 5.0 of the <strong>RFP</strong> <strong>and</strong> actual costs for hardware<br />
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or software necessary to complete the <strong>Services</strong> <strong>and</strong>/or Deliverables. The Respondent will develop not<br />
to exceed Delivery Orders based on the performance requirements <strong>and</strong>/or the specified results<br />
included in any potential change order requested by HHSC.<br />
A Respondent must specify proposed costs for any new hardware or software HHSC may need for<br />
the contract after the Operational Start Date in the form of a “Data Center <strong>Services</strong> Hardware <strong>and</strong><br />
Software Pricing Catalog” that will be submitted with the Respondent’s proposal to this <strong>RFP</strong>. The<br />
successful vendor will then be required to update the “Data Center <strong>Services</strong> Hardware <strong>and</strong> Software<br />
Pricing Catalog” every six months after the Operational Start Date. The “Data Center <strong>Services</strong><br />
Hardware <strong>and</strong> Software Pricing Catalog” will be provided in the format prescribed by HHSC.<br />
A Respondent must specify all-inclusive hourly labor rates for all staff working on this project. For<br />
consistency, the IT Staffing <strong>Services</strong> roles defined by the <strong>Texas</strong> Department of Information Resources<br />
are to be utilized for specifying hourly labor rates. Full descriptions of these roles can be found at<br />
http://www.dir.state.tx.us/store/busops/staffing/itsac/fulldesc.htm.<br />
A Respondent will employ the all-inclusive hourly labor rates proposed in developing pricing proposals<br />
for the performance of new or modified <strong>Services</strong> <strong>and</strong> Deliverables that are required after the start date<br />
of the contract.<br />
No additional costs will be paid for any other items unless HHSC, in its sole discretion, determines<br />
that any additional cost(s) requested by the successful Respondent are extremely unique to the<br />
specific project <strong>and</strong> that the successful Respondent should not have otherwise included those<br />
additional costs as part of the required all-inclusive hourly labor rates.<br />
A Respondent will also employ the hardware <strong>and</strong> software costs included in the proposed “Data<br />
Center <strong>Services</strong> Hardware <strong>and</strong> Software Pricing Catalog” in developing pricing proposals for the<br />
performance of new or modified <strong>Services</strong> <strong>and</strong> Deliverables that are required after the start date of the<br />
contract.<br />
HHSC intends to process <strong>and</strong> pay these fee(s) in accordance with Chapter 2251, <strong>Texas</strong> Government<br />
Code. If any discrepancies are determined in the information provided by the Respondent, HHSC will<br />
notify the Respondent of the discrepancies as soon as is practicable <strong>and</strong> will not process the invoice<br />
until all information is reconciled.<br />
HHSC, at its sole discretion, may choose to process only a portion of a fee invoice, if only a portion of<br />
the invoice can be verified <strong>and</strong> validated by the information submitted. If HHSC decides to process an<br />
invoice in this manner, an adjustment will be made by HHSC <strong>and</strong> only that portion of the service<br />
delivery invoice that can be verified <strong>and</strong> validated will be paid. To be paid for the fixed service delivery<br />
fees previously denied or not processed by HHSC, the Respondent must submit supplemental<br />
invoice(s) along with any <strong>and</strong> all necessary corrections. HHSC will process <strong>and</strong> pay service delivery<br />
fees billed on supplemental invoices in accordance with Chapter 2251, <strong>Texas</strong> Government Code.<br />
Separate invoices for each specific Service Domain <strong>and</strong> Service Area must be submitted by a<br />
Respondent to HHSC in the format specified by HHSC. Each invoice will be processed <strong>and</strong> paid<br />
separately.<br />
11.4 Additional Financial Components<br />
11.4..1 Ownership of all Capital Items.<br />
Ownership of all nonexpendable capital items funded by the Contract resulting from this <strong>RFP</strong> will pass<br />
to HHSC at the expiration of the Contract. Nonexpendable capital items are defined as tangible <strong>and</strong><br />
personal property of a non-consumable nature that have an acquisition cost of $500.00 or more per<br />
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unit <strong>and</strong> an expected useful life of at least one year. The term nonexpendable capital item includes,<br />
but is not limited to, office furniture, office equipment, telephone equipment, computer furniture,<br />
computer equipment, computer software (including commercially off the shelf (COTS) software) <strong>and</strong><br />
computer leases.<br />
All nonexpendable capital items, including nonexpendable capital items that are leased, will be<br />
depreciated / amortized on a monthly basis over the initial term of the Contract, including any<br />
applicable Transition months. The cost of installation (excluding in-house labor) of equipment,<br />
furniture, workstations, <strong>and</strong> other leasehold improvements required to make the space useable to<br />
meet the requirements of the Contract will also be treated in the same manner as the capital item; the<br />
cost will be depreciated over the initial term of a Contract, including any applicable Transition months.<br />
All capital lease(s) shall include the ability for the vendor to purchase the capital items included in the<br />
lease for $1.00 at the expiration of the initial base term of the Contract.<br />
If the contract terminates before the end of the initial term, HHSC will have the option to take<br />
ownership of all, some, or none of the nonexpendable capital items.<br />
If HHSC chooses to take ownership of a nonexpendable capital item, HHSC will (subject to the other<br />
limitations set forth in the Contract), reimburse the vendor for the remaining months of any<br />
nonexpendable capital item costs (depreciation), amortized capitalized lease costs, amortized<br />
operating lease costs, costs related to lease purchase options <strong>and</strong>/or installation costs related to<br />
equipment, furniture, workstations, or other leasehold improvements (capital items) acquired under a<br />
resulting Contract. These costs are limited to the initial term of the resulting Contract.<br />
In exercising its options under the foregoing paragraph, HHSC will have the right to offset against any<br />
such reimbursements any remedies <strong>and</strong>/or damages that HHSC is entitled to assess against the<br />
vendor.<br />
If HHSC chooses to take ownership of any nonexpendable capital items, the vendor will ship all<br />
nonexpendable capital items purchased <strong>and</strong> Third Party Software licensed pursuant to the Contract,<br />
freight prepaid, FOB HHSC’s destination. The method of shipment will be consistent with the nature<br />
of the nonexpendable capital items <strong>and</strong> hazards of transportation. Regardless of FOB point, the<br />
vendor shall agree to bear all risks of loss, damage, or destruction of Deliverables, in whole or in part,<br />
ordered hereunder that occurs prior to Acceptance by HHSC, except loss or damage attributable to<br />
HHSC’s fault or negligence; <strong>and</strong> such loss, damage, or destruction will not release the vendor from<br />
any obligation hereunder. After acceptance by HHSC, the risk of loss or damage will be borne by<br />
HHSC, except loss or damage attributable to the vendor’s fault or negligence.<br />
If HHSC does not choose to take ownership of a nonexpendable capital item, then all costs<br />
associated with that item remain the responsibility of the vendor without any recourse to HHSC.<br />
The vendor is advised not to enter into any leases that extend beyond the initial term of a resulting<br />
Contract. In no event will HHSC reimburse the vendor for the portion of any lease that is allocable<br />
beyond the initial term of the Contract. The vendor will be responsible to pay any costs related to<br />
exercising any purchase option to provide HHSC with a clear title to any capital items HHSC chooses<br />
to retain. The vendor will be responsible to pay any such costs on or before the date the Contract<br />
expires or is terminated.<br />
The funds budgeted for capital equipment cannot be used for any expenditures other than for capital<br />
items (including but not limited to: capital equipment purchases, capital equipment leases or<br />
installation costs related to equipment, furniture, workstations, or other leasehold improvements)<br />
necessary to meet the requirements of a resulting Contract.<br />
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All nonexpendable capital items acquired under a resulting Contract will be recorded <strong>and</strong> a list will be<br />
provided to HHSC at the end of the Transition period <strong>and</strong> each state fiscal quarter thereafter. The<br />
vendor shall use an asset tracking system, processes, procedures, <strong>and</strong> asset tracking software<br />
approved by HHSC to record all nonexpendable capital items on the required asset list. The list of the<br />
nonexpendable capital items will include, at a minimum:<br />
(1) A description of each capital item;<br />
(2) Model number;<br />
(3) Manufacturer’s serial number where applicable;<br />
(4) Funding source;<br />
(5) Information needed to calculate the federal <strong>and</strong> state share of the acquisition cost;<br />
(6) Date of acquisition;<br />
(7) Unit cost; <strong>and</strong><br />
(8) Information on the specific location of the capital item. HHSC reserves the right to modify<br />
the detailed information necessary that is related to this asset listing requirement.<br />
At HHSC’s option <strong>and</strong> subject to its prior written approval <strong>and</strong> acceptance, ownership of all<br />
nonexpendable capital items acquired during the term of the Contract will vest in HHSC at the earliest<br />
of:<br />
(1) The date the nonexpendable capital item is no longer needed to fulfill any requirements of<br />
the Contract;<br />
(2) The date the item is turned over to HHSC; or<br />
(3) Upon expiration or termination of the Contract.<br />
At no time will the vendor dispose of nonexpendable capital items purchased for the Contract without<br />
prior approval from HHSC. Within ten (10) business days after the earliest of the events stated<br />
above, the vendor will provide HHSC with all documentation reasonably necessary to evidence<br />
HHSC’s ownership of the items.<br />
The vendor shall obtain prior approval from HHSC before purchasing any nonexpendable capital<br />
equipment items <strong>and</strong>/or any commercially off the shelf software for the Contract.<br />
11.4..2 Prospective Price Re-determination.<br />
HHSC is procuring a fixed-price re-determinable prospective Contract that will allow the total Fees<br />
paid during a specified time period to be lowered during a succeeding time period if the actual profits<br />
earned by the Respondent during a specified time period are at least 20% greater than the agreedupon<br />
profit percentage included in the negotiated fixed <strong>and</strong> variable Service Delivery Fees at the<br />
beginning of the Contract. For example: if the agreed upon profit percentage is 10%, then actual<br />
profits of <strong>12</strong>% would meet the criteria for the Prospective Price Re-determination provisions.<br />
Specified time periods designated by HHSC for this provision are as follows:<br />
Initial Twenty-six (26) months of Operations<br />
Operational Contract Year 4 <strong>and</strong> Option Year 1<br />
Initially, modifications, if necessary, would be determined during the third year of the Contract. The<br />
Prospective Price Re-determination audit would include the initial twenty-six (26) months of<br />
operations. Modifications, if necessary, would be applied to the fourth year of the base term of the<br />
contract <strong>and</strong> each applicable option year during the initial two-year option period (years five <strong>and</strong> six) if<br />
the Contract is extended.<br />
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A second Prospective Price Re-determination audit would include the fourth year of the base contract<br />
<strong>and</strong> the initial option year (year 5) during the initial two-year option period. Modifications, if necessary,<br />
would be determined during the second option year (year 6) during the initial two-year option period.<br />
Modifications, if necessary, would be applied to each applicable option year during the second twoyear<br />
option period (years seven <strong>and</strong> eight) if the Contract is extended beyond the initial two-year<br />
option period.<br />
Any contract resulting from this <strong>RFP</strong> shall include the Prospective Price Re-determination provisions.<br />
The State will reduce Fixed <strong>and</strong> Variable Fees payable for each year following the Prospective Price<br />
Re-determination audit if the State determines that the total Fees paid to the Respondent during the<br />
applicable Specified time period produce total profits for the Respondent (during that Specified time<br />
period) that are at least 20% higher than the amount of total profit generated by the percentage of<br />
profit approved by HHSC before the effective date of the Contract.<br />
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The following three (3) Scenarios depict how the State will apply the prospective price redetermination<br />
provisions to hypothetical results attained by a Respondent.<br />
Scenario # 1:<br />
Actual Profit earned is greater than the maximum allowed profit under the Prospective<br />
Price Re-determination provisions.<br />
Budgeted<br />
Expenses <strong>and</strong><br />
Profit for Initial<br />
26 Operational<br />
Months<br />
Scenario #1<br />
If Actual<br />
Expenses <strong>and</strong><br />
Profit for Initial 26<br />
Operational<br />
Months Equals<br />
Salaries (including Fringe Benefits) $ 28,500,000 $ 25,550,000<br />
Direct Expenses $ 38,894,975 $ 32,000,000<br />
Sub-total: Salaries & Direct Expenses $ 67,394,975 $ 57,550,000<br />
Indirect Expenses: (Overhead <strong>and</strong> General<br />
& Administrative)<br />
Sub-total: Salaries, Direct Expense <strong>and</strong><br />
Indirect Expenses<br />
8.00 % $ 5,391,598 $ 4,604,000<br />
$ 72,786,573 $ 62,154,000<br />
Profit (Mark-up) of 11% 11.00 % $ 8,006,523<br />
Total Fixed <strong>and</strong> Variable Ceiling Amount $ 80,793,096<br />
Total Fixed <strong>and</strong> Variable Fees Paid to<br />
Contractor<br />
$ 80,793,096 $ 80,793,096<br />
Budgeted Profits $ 8,006,523<br />
Actual Profits Earned (as a Mark-up %) 29.99 % $ 18,639,096<br />
Allowed Profit (11.00%) X <strong>12</strong>0% = 13.20% 13.20 % $ 8,204,328<br />
Difference (Excess Profits) $ 10,434,768<br />
Monthly Average of Excess Profits (Amount<br />
/ 26 months)<br />
$ 401,337<br />
Annualized Excess Profits (<strong>12</strong> Months) $ 4,816,044<br />
Reduction to Fixed <strong>and</strong>/or Variable Fees to<br />
be taken starting in Operational Year 4<br />
$ 4,816,044<br />
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Scenario # 2:<br />
Actual Profit earned is less than the maximum allowed profit under the Prospective<br />
Price Re-determination provisions.<br />
Budgeted<br />
Expenses <strong>and</strong><br />
Profit for Initial<br />
26 Operational<br />
Months<br />
Scenario #2<br />
If Actual<br />
Expenses <strong>and</strong><br />
Profit for Initial 26<br />
Operational<br />
Months Equals<br />
Salaries (including Fringe Benefits) $ 28,500,000 $ 29,200,000<br />
Direct Expenses $ 38,894,975 $ 36,925,000<br />
Sub-total: Salaries & Direct Expenses $ 67,394,975 $ 66,<strong>12</strong>5,000<br />
Indirect Expenses: (Overhead <strong>and</strong> General<br />
& Administrative)<br />
Sub-total: Salaries, Direct Expense <strong>and</strong><br />
Indirect Expenses<br />
8.00 % $ 5,391,598 $ 5,290,000<br />
$ 72,786,573 $ 71,415,000<br />
Profit (Mark-up) of 11% 11.00 % $ 8,006,523<br />
Total Fixed <strong>and</strong> Variable Ceiling Amount $ 80,793,096<br />
Total Fixed <strong>and</strong> Variable Fees Paid to<br />
Contractor<br />
$ 80,793,096 $ 80,793,096<br />
Budgeted Profits $ 8,006,523<br />
Actual Profits Earned (as a Mark-up %) 13.13 % $ 9,378,096<br />
Allowed Profit (11.00%) X <strong>12</strong>0% = 13.20% 13.20 % $ 9,426,780<br />
Difference (Excess Profits)<br />
Monthly Average of Excess Profits (Amount<br />
/ 26 months)<br />
Annualized Excess Profits (<strong>12</strong> Months)<br />
Reduction to Fixed <strong>and</strong>/or Variable Fees to<br />
be taken starting in Operational Year 4<br />
None<br />
N/A<br />
N/A<br />
N/A<br />
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Scenario # 3:<br />
Actual Profit earned is less than the maximum allowed profit under the Prospective<br />
Price Re-determination provisions.<br />
Budgeted<br />
Expenses <strong>and</strong><br />
Profit for Initial<br />
26 Operational<br />
Months<br />
Scenario #3<br />
If Actual<br />
Expenses <strong>and</strong><br />
Profit for Initial 26<br />
Operational<br />
Months Equals<br />
Salaries (including Fringe Benefits) $ 28,500,000 $ 29,975,000<br />
Direct Expenses $ 38,894,975 $ 37,985,000<br />
Sub-total: Salaries & Direct Expenses $ 67,394,975 $ 67,960,000<br />
Indirect Expenses: (Overhead <strong>and</strong> General<br />
& Administrative)<br />
Sub-total: Salaries, Direct Expense <strong>and</strong><br />
Indirect Expenses<br />
8.00 % $ 5,391,598 $ 5,436,800<br />
$ 72,786,573 $ 73,396,800<br />
Profit (Mark-up) of 11% 11.00 % $ 8,006,523<br />
Total Fixed <strong>and</strong> Variable Ceiling Amount $ 80,793,096<br />
Total Fixed <strong>and</strong> Variable Fees Paid to<br />
Contractor<br />
$ 80,793,096 $ 80,793,096<br />
Budgeted Profits $ 8,006,523<br />
Actual Profits Earned (as a Mark-up %) 10.08 % $ 7,396,296<br />
Allowed Profit (11.00%) X <strong>12</strong>0% = 13.20% 13.20 % $ 9,688,378<br />
Difference (Excess Profits)<br />
Monthly Average of Excess Profits (Amount<br />
/ 26 months)<br />
Annualized Excess Profits (<strong>12</strong> Months)<br />
Reduction to Fixed <strong>and</strong>/or Variable Fees to<br />
be taken starting in Operational Year 4<br />
None<br />
N/A<br />
N/A<br />
N/A<br />
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11.4..3 Financial Operations Plan.<br />
In its Price Proposal, (see Attachment 5.0) the Respondent shall submit a Financial Operations Plan<br />
that shows how the Respondent will fulfill all financial needs <strong>and</strong> requirements contained in the<br />
contract resulting from this <strong>RFP</strong>. A Respondent shall include responses to this Financial Operations<br />
Plan requirement with the Respondent’s Price Proposal.<br />
11.5 Financial: Accounting <strong>and</strong> Reporting Requirements<br />
11.5..1 Overview.<br />
This section presents HHSC <strong>and</strong> Respondent responsibilities for recording <strong>and</strong> reporting Contract<br />
transactions.<br />
The need for greater public <strong>and</strong> financial accountability in the administration of critical taxpayerfunded<br />
programs has led to a dem<strong>and</strong> for more information regarding government programs <strong>and</strong><br />
services. Public officials, legislators, <strong>and</strong> citizens want <strong>and</strong> need to know whether government funds<br />
are h<strong>and</strong>led properly <strong>and</strong> in compliance with laws <strong>and</strong> regulations. They also want <strong>and</strong> need to know<br />
whether government organizations, programs, services <strong>and</strong> contractors (including any subcontractors)<br />
retained to provide contracted services are achieving their purposes <strong>and</strong> whether these organizations,<br />
programs, services <strong>and</strong> contractors (including any subcontractors) are operating economically <strong>and</strong><br />
efficiently.<br />
Any cost or expenses incurred by the Respondent or any of its subcontractors for the completion of<br />
any contractual requirement shall be included in the price proposal submitted by Respondents.<br />
Additional costs or expenses will not be allowed under any contract resulting from this <strong>RFP</strong>, unless<br />
approved in advance by HHSC.<br />
11.5..2 Business Objectives.<br />
The business objectives relating to Accounting <strong>and</strong> Reporting requirements include:<br />
a. Accumulating <strong>and</strong> reporting accounting data in accordance with the following st<strong>and</strong>ards (as they may<br />
be amended during the term of the Contract):<br />
a. Generally Accepted Accounting Principles (GAAP);<br />
b. Title 48 CFR, Chapter 1, Parts 30 <strong>and</strong> 31, <strong>and</strong> Chapter 99;<br />
c. Federal guidelines, rules <strong>and</strong> regulations applicable to programs within the scope of the<br />
Contract;<br />
d. HHSC guidelines, rules, regulations <strong>and</strong> provisions applicable to programs within scope of this<br />
procurement. Where HHSC guidelines, rules, regulations <strong>and</strong> provisions of this procurement are<br />
in conflict with GAAP, Title 48 CFR Chapter 99, Title 48 CFR, Chapter 1, Part 30 or Title 48 CFR<br />
Chapter 1, Part 31, then HHSC guidelines, rules, regulations <strong>and</strong> provisions of this procurement<br />
will prevail.<br />
e. Providing authorized governmental representatives of the state <strong>and</strong> the federal government full<br />
access to all information needed to conduct financial reviews <strong>and</strong> audits required by law or by<br />
any contract resulting from this <strong>RFP</strong> in accordance with applicable st<strong>and</strong>ards.<br />
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b. Effectively regulating costs. To this end, allowable costs are costs that are:<br />
f. Necessary <strong>and</strong> reasonable for the proper <strong>and</strong> efficient performance <strong>and</strong> administration of<br />
applicable federal awards;<br />
g. Allocable to applicable federal awards under the provisions of the federal st<strong>and</strong>ards or any other<br />
accounting provisions included in the contract(s) resulting from this <strong>RFP</strong>;<br />
h. Authorized or not prohibited under state laws, state regulations or any provision included in the<br />
contract(s) resulting from this <strong>RFP</strong>;<br />
i. In conformity with any limitations or exclusions set forth in applicable accounting principles,<br />
federal laws, terms <strong>and</strong> conditions of the federal award(s) to HHSC <strong>and</strong>/or the Contract;<br />
j. Consistent with policies, regulations <strong>and</strong> procedures that apply uniformly to federal awards<br />
impacting the Contract;<br />
k. Determined in accordance with GAAP; <strong>and</strong><br />
l. Adequately documented.<br />
11.5..3 Financial Accounting Requirements.<br />
The Respondent’s accounting records <strong>and</strong> procedures are subject to HHSC approval. Accruals of<br />
expenses or liabilities are subject to HHSC review <strong>and</strong> approval. HHSC will not recognize as valid<br />
costs any accruals that it deems inappropriate. For example, lease agreement costs beyond the<br />
effective date of termination or completion of a resulting contract, or lease cancellation expenses<br />
resulting from termination or completion of a contract, are not valid allowable costs. HHSC will not<br />
recognize as valid costs any excessive charges or fees from the successful Respondent or any of the<br />
successful Respondent’s subcontractors that HHSC deems inappropriate.<br />
Allowable <strong>and</strong> non-allowable direct <strong>and</strong> indirect costs, wherever applicable to any payments to the<br />
successful Respondent, will be governed by the principles set forth in the following regulations (as<br />
may be amended during the term of the contract(s)) <strong>and</strong> documents:<br />
<br />
<br />
<br />
Title 48 CFR, Chapter 1, Part 31, Contract Cost Principles <strong>and</strong> Procedures.<br />
Title 48 CFR, Chapter 1, Part 30, Cost Accounting St<strong>and</strong>ards Administration.<br />
Title 48 CFR Chapter 99 — Cost Accounting St<strong>and</strong>ards.<br />
In addition to costs that are unallowable pursuant to the above accounting principles, HHSC has<br />
deemed certain items within the allowable costs to be specifically unallowable for any contract<br />
resulting from this <strong>RFP</strong>. The list of additional unallowable costs is as follows:<br />
a. Local <strong>and</strong> state taxes paid to local or state governments outside of <strong>Texas</strong> (other than hotel, airline<br />
<strong>and</strong> sales taxes expended specifically for any contract resulting from this <strong>RFP</strong>);<br />
b. Federal taxes (other than hotel <strong>and</strong> airline taxes expended specifically for any contract resulting<br />
from this <strong>RFP</strong>);<br />
c. Bid <strong>and</strong> Proposal costs of any type;<br />
d. Employee bonuses in excess of 10% of the employee’s base pay (in other words, the first 10% of<br />
bonuses is allowable, but anything above the first 10% is not allowable);<br />
e. Subcontractor’s employee bonuses in excess of 10% of the subcontractor’s employee’s base pay<br />
(in other words, the first 10% of bonuses is allowable, but anything above the first 10% is not<br />
allowable);<br />
f. Public Relations <strong>and</strong> Selling costs;<br />
g. Actual costs, remedies <strong>and</strong>/or damages due to HHSC for the Respondent not meeting HHSC<br />
performance requirements;<br />
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h. Actual costs related to work to correct deficiencies introduced by the Respondent as a result of<br />
system modifications made by the Respondent;<br />
i. Any monies owed to the federal government due to the Respondent not meeting federal<br />
performance requirements;<br />
j. Dispute resolution <strong>and</strong> arbitration costs;<br />
k. Contingency funding costs;<br />
l. Pre-contract costs; <strong>and</strong><br />
m. Inter-company profits <strong>and</strong> margins related to all transactions with any parent, affiliate, or<br />
subsidiary organization, including inter-company profits <strong>and</strong> margins related to all transactions the<br />
Respondent or the Respondent’s subsidiary has with any parent, affiliate, or subsidiary<br />
organization.<br />
In addition to the requirements stated above, the Respondent shall:<br />
TFR 01<br />
Establish <strong>and</strong> maintain an accounting system in accordance with the following st<strong>and</strong>ards (as<br />
they may be amended during the term of the contract):<br />
TFR 02<br />
TFR 03<br />
TFR 04<br />
TFR 05<br />
1. Title 48 CFR, Chapter 1, Parts 30 <strong>and</strong> 31 <strong>and</strong> Chapter 99;<br />
2. Applicable federal guidelines, rules, <strong>and</strong> regulations;<br />
3. HHSC guidelines, rules, regulations <strong>and</strong> provisions of this procurement; <strong>and</strong><br />
4. GAAP. Where HHSC guidelines, rules, regulations <strong>and</strong> provisions of this procurement<br />
are in conflict with GAAP, Title 48 CFR, Chapter 1, Part 30, Title 48 CFR, Chapter 1, Part<br />
31 <strong>and</strong>/or Title 48 CFR, Chapter 99, then HHSC guidelines, rules, regulations <strong>and</strong><br />
provisions of this procurement will prevail.<br />
5. The Respondent’s accounting system must (1) maintain accounting records related<br />
directly to the performance of any contract resulting from this <strong>RFP</strong> <strong>and</strong> (2) maintain<br />
accounting records related to any contract resulting from this <strong>RFP</strong> separate <strong>and</strong> apart<br />
from other corporate accounting records.<br />
6. Part 9904.401 relates to cost accounting st<strong>and</strong>ards regarding the consistency in<br />
estimating, accumulating <strong>and</strong> reporting costs. The Respondent’s methods used in<br />
estimating costs must be consistent with the cost accounting practices used in<br />
accumulating <strong>and</strong> reporting actual costs.<br />
Maintain separate financial records for the following service domains of the Contract(s)<br />
resulting from this <strong>RFP</strong>:<br />
1. Transition;<br />
2. TIERS Data Center <strong>Services</strong>.<br />
Maintain an accounting system that provides an audit trail containing sufficient financial<br />
documentation to allow for the reconciliation of billings, reports, <strong>and</strong> financial statements with<br />
all general ledger accounts.<br />
Maintain, document, <strong>and</strong> submit operations cost data in accordance with HHSC requirements<br />
<strong>and</strong> federal manuals <strong>and</strong> directives. As required by federal regulations or as may be required<br />
by state guidelines, documentation must differentiate between information technology <strong>and</strong><br />
non-information technology, <strong>and</strong> will include the reimbursable federal matching rates for each<br />
type. Such cost allocation reports must be in a format <strong>and</strong> content approved by the State.<br />
The format of these reports must allow the State to comply with federal reporting<br />
requirements.<br />
Submit an initial accounting policy manual with the Respondent’s price proposal that includes<br />
all proposed accounting policies <strong>and</strong> procedures (including cost allocations) the Respondent<br />
utilized to calculate the Respondent’s Fixed Prices <strong>and</strong> Time <strong>and</strong> Material (hourly) Rates that<br />
are included in the Respondent’s price proposal.<br />
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TFR 06<br />
Submit a Final Accounting Policy Manual <strong>and</strong> Disclosure Statement (Cost Accounting<br />
Practices Statement — FAR 9903) within 45 days of contract execution which includes any<br />
modifications necessary due to contract negotiations <strong>and</strong> all the proposed accounting policies<br />
<strong>and</strong> procedures the Respondent must follow during the duration of any contract resulting<br />
from the <strong>RFP</strong>. Any modifications included in the final accounting policy manual submitted<br />
within 45 days of contract execution must be approved in writing by HHSC prior to<br />
implementation of any change. Any modifications to the final accounting policy manual<br />
approved by HHSC must be approved in writing by HHSC prior to implementation of any<br />
change.<br />
11.5..4 General Access to Accounting Records.<br />
The successful Respondent must provide authorized governmental representatives of HHSC <strong>and</strong> the<br />
federal government full access to all financial <strong>and</strong> accounting records related to the performance of<br />
any contract resulting from this <strong>RFP</strong>, including all requested subcontractor financial <strong>and</strong> accounting<br />
records. The financial <strong>and</strong> accounting records shall be provided to the authorized governmental<br />
representatives of HHSC <strong>and</strong> the federal government in an electronic format when requested.<br />
In addition to the requirements stated above, the Respondent <strong>and</strong> its subcontractors must:<br />
TFR 07<br />
TFR 08<br />
TFR 09<br />
TFR 10<br />
Cooperate with HHSC, HHSC auditors, <strong>Texas</strong> State Auditor’s Office (SAO) <strong>and</strong> the federal<br />
government in their inspections, audits, <strong>and</strong>/or reviews, <strong>and</strong> provide all necessary records<br />
<strong>and</strong> information. As required by Title 48 CFR, Chapter 1, Part 30, Title 48 CFR, Chapter 1,<br />
Part 31 <strong>and</strong> Title 48 CFR, Chapter 99, it is the responsibility of any successful Respondent to<br />
provide adequate documentation <strong>and</strong> justification to the authorized representatives of HHSC,<br />
HHSC auditors, <strong>Texas</strong> State Auditor’s Office (SAO) <strong>and</strong> the federal government during the<br />
inspection, audit <strong>and</strong>/or review process for all expenses included in the successful<br />
Respondent’s accounting records.<br />
Permit authorized governmental representatives of HHSC <strong>and</strong> the federal government full<br />
access, both on-line (on a read-only basis) <strong>and</strong> in person, during normal business hours, to<br />
the accounting records that HHSC, HHSC auditors, <strong>Texas</strong> State Auditor’s Office (SAO)<br />
<strong>and</strong>/or the federal government determine are relevant to any contract resulting from this <strong>RFP</strong>.<br />
Such access is guaranteed at all times during the performance <strong>and</strong> retention period of any<br />
contract resulting from this <strong>RFP</strong>, <strong>and</strong> will include both announced <strong>and</strong> unannounced<br />
inspections, on-site audits, <strong>and</strong> the review, analysis, <strong>and</strong>/or reproduction of reports produced<br />
by the Respondent.<br />
Make accounting records or supporting documentation relevant to the resulting contract(s)<br />
available to HHSC or its agents within 10 business days of receiving a written request from<br />
HHSC for specified records or information. At the request of HHSC or its agents, provide<br />
copies of any accounting records or supporting documentation HHSC determines is relevant<br />
to a resulting contract(s) within 10 business days of receiving a written request from HHSC<br />
for copies of the specified records or information. If such documentation is not made<br />
available as requested, the successful Respondent agrees to reimburse HHSC for all costs<br />
incurred by HHSC including, but not limited to wages, fringe benefits, payroll taxes,<br />
transportation, lodging, <strong>and</strong> subsistence for all HHSC representatives, or their agents, to<br />
carry out their inspection, audit, review, analysis, <strong>and</strong>/or reproduction functions at the<br />
location(s) of such accounting records.<br />
Pay any <strong>and</strong> all additional costs, including any applicable professional fees, incurred by<br />
HHSC resulting from the successful Respondent’s failure to provide the requested<br />
accounting records or financial information within the specified 10 business days of receiving<br />
a written request from HHSC for specified accounting records or information.<br />
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TFR 11<br />
Deliver to HHSC any reports or records that cannot be accessed on-line by HHSC personnel.<br />
11.5..5 Financial Report Requirements.<br />
HHSC will require the successful Respondent to provide financial reports to support contract<br />
monitoring <strong>and</strong> support any HHSC <strong>and</strong> federal reporting requirements. In addition to the requirements<br />
stated above, the Respondent must:<br />
TFR <strong>12</strong><br />
TFR 13<br />
Provide an Annual Financial Statement, including, but not limited to an Income Statement,<br />
depicting the Respondent’s operation under any contract resulting from this <strong>RFP</strong> no later<br />
than 90 days after the end of each contract year or after the termination of any contract<br />
resulting from this <strong>RFP</strong>. HHSC reserves the right to request financial information in a format<br />
that will allow HHSC to most efficiently comply with its state <strong>and</strong> federal financial reporting<br />
requirements. HHSC will consider this financial statement (report of Allowable Costs) as<br />
“FINAL” for the applicable operational contract period <strong>and</strong> will not recognize any additional<br />
direct expense(s) not included in the financial report as allowable for the Prospective Price<br />
Re-determination provision of the contract.<br />
Provide a separate expense summary detailing operations under any contract resulting from<br />
this <strong>RFP</strong> no later than 90 days after the end of each contract year or after the termination of<br />
the contract resulting from this <strong>RFP</strong>. Each summary will include accounts in conformance<br />
with GAAP <strong>and</strong> any applicable provisions included in this <strong>RFP</strong>. The Respondent must<br />
identify <strong>and</strong> eliminate any expenses not allowed by State or Federal laws <strong>and</strong> regulations <strong>and</strong><br />
any applicable provisions included in this <strong>RFP</strong>. HHSC reserves the right to request<br />
modifications to annual financial reports if, in HHSC’s sole determination, such changes are<br />
in HHSC’s best interest.<br />
Requested modifications to annual financial reports will be completed by the Respondent<br />
with no additional fees due from HHSC.<br />
The expense summary will fully disclose the financial impact of all transactions with any<br />
parent, affiliated, or subsidiary organization either under a formal or informal arrangement<br />
that relates to the performance under the contract(s). These transactions must be reported in<br />
a manner such that inter-company profits <strong>and</strong> margins are eliminated. The methodologies<br />
<strong>and</strong> assumptions supporting cost allocations must be disclosed, including cost allocations<br />
from home <strong>and</strong>/or central offices; <strong>and</strong> must follow the prescribed methodologies included in<br />
the accounting policy manual approved by HHSC.<br />
11.5..6 HHSC Responsibilities.<br />
At its discretion, HHSC may monitor Respondent performance <strong>and</strong> compliance with the Financial<br />
Accounting Requirements.<br />
m. Monitor Respondent compliance for providing the specified financial reports on or before the<br />
specified times.<br />
n. Review financial report deliverables provided by the Respondent for accuracy <strong>and</strong> completeness.<br />
o. Assess applicable remedies/liquidated damages for any late financial reports <strong>and</strong>/or incorrect<br />
financial reports.<br />
p. Assess applicable remedies/liquidated damages for additional expenses incurred by HHSC<br />
<strong>and</strong>/or its authorized representatives or agents.<br />
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<strong>12</strong>.0 Historically Underutilized Business (HUB) Participation<br />
<strong>12</strong>.1 HUB Participation.<br />
In accordance with <strong>Texas</strong> Government Code §2161.252, a proposal that does not contain a HUB<br />
Subcontracting Plan (HSP) is non-responsive <strong>and</strong> will be rejected without further evaluation. In<br />
addition, if HHSC determines that the HSP was not developed in good faith, it will reject the proposal<br />
for failing to comply with material <strong>RFP</strong> specifications.<br />
<strong>12</strong>.2 Introduction<br />
HHSC is committed to promoting full <strong>and</strong> equal business opportunities for businesses in state<br />
contracting in accordance with the goals specified in the State of <strong>Texas</strong> Disparity Study. HHSC<br />
encourages the use of Historically Underutilized Businesses (HUBs) through race, ethnic <strong>and</strong> genderneutral<br />
means. HHSC has adopted administrative rules relating to HUBs, <strong>and</strong> a Policy on the<br />
Utilization of HUBs, which is located on HHSC’s website.<br />
Pursuant to <strong>Texas</strong> Government Code §2161.181 <strong>and</strong> §2161.182, <strong>and</strong> HHSC’s HUB policy <strong>and</strong> rules,<br />
HHSC is required to make a good faith effort to increase HUB participation in its contracts. HHSC may<br />
accomplish the goal of increased HUB participation by contracting directly with HUBs or indirectly<br />
through subcontracting opportunities.<br />
<strong>12</strong>.3 HHSC’s Administrative Rules<br />
HHSC has adopted the CPA’s HUB rules as its own. HHSC’s rules are located in Title 1, Part 15,<br />
Chapter 392, Subchapter J of the <strong>Texas</strong> Administrative Code, <strong>and</strong> the CPA rules are located in Title<br />
34, Part 1, Chapter 20, Subchapter B. If there are any discrepancies between HHSC’s administrative<br />
rules <strong>and</strong> this <strong>RFP</strong>, the rules shall take priority.<br />
<strong>12</strong>.4 Statewide Annual HUB Utilization Goal<br />
The CPA has established statewide annual HUB utilization goals for different categories of<br />
contracts in 34 T.A.C. §20.13 of the HUB Rules. In order to meet or exceed the statewide annual<br />
HUB utilization goals, HHSC encourages outreach to certified HUBs. Contractors shall make a good<br />
faith effort to include certified HUBs in the procurement process.<br />
This contract is classified as an All Other <strong>Services</strong> contract under the CPA rule, <strong>and</strong> therefore has a<br />
statewide annual HUB utilization goal of 24.6% per fiscal year.<br />
<strong>12</strong>.5 Required HUB Subcontracting Plan<br />
In accordance with Government Code, Chapter 2161, Subchapter F, each state agency that<br />
considers entering into a contract with an expected value of $100,000 or more over the life of the<br />
contract (including any renewals) shall, before the agency solicits bids, proposals, offers, or other<br />
applicable expressions of interest, determine whether subcontracting opportunities are probable under<br />
the contract.<br />
In accordance with 34 T.A.C. §20.14(a) (1) (C) of the HUB Rules, State agencies may determine that<br />
subcontracting is probable for only a subset of the work expected to be performed or the funds to be<br />
expended under the contract. If an agency determines that subcontracting is probable on only a<br />
portion of a contract, it shall document its reasons in writing for the procurement file.<br />
HHSC has determined that subcontracting opportunities are probable for this <strong>RFP</strong>. As a result, the<br />
respondent must submit an HSP with its proposal. The HSP is required whether a respondent intends<br />
to subcontract or not.<br />
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In the HSP, a respondent must indicate whether it is a <strong>Texas</strong> certified HUB. Being a certified HUB<br />
does not exempt a respondent from completing the HSP requirement.<br />
HHSC shall review the documentation submitted by the respondent to determine if a good faith effort<br />
has been made in accordance with solicitation <strong>and</strong> HSP requirements. During the good faith effort<br />
evaluation, HHSC may, at its discretion allow revisions necessary to clarify <strong>and</strong> enhance information<br />
submitted in the original HSP.<br />
If HHSC determines that the respondent’s HSP was not developed in good faith, the HSP will be<br />
considered non-responsive <strong>and</strong> will be rejected as a material failure to comply with advertised<br />
specifications. The reasons for rejection shall be recorded in the procurement file.<br />
<strong>12</strong>.6 CPA Centralized Master Bidders List<br />
Respondents may search for HUB subcontractors in the CPA’s Centralized Master Bidders List<br />
(CMBL) HUB Directory, which is located on the CPA’s website at<br />
http://www2.cpa.state.tx.us/cmbl/cmblhub.html. For this procurement, HHSC has identified the<br />
following class <strong>and</strong> item codes for potential subcontracting opportunities:<br />
• NIGP Class/Item Code:<br />
920-29 Computer Facilities Management <strong>Services</strong><br />
920-37 Networking <strong>Services</strong> (Including Installation, Security, <strong>and</strong> Maintenance)<br />
920-23 Data Recovery <strong>Services</strong><br />
920-45 Software Maintenance/Support<br />
920-47 Computer Support <strong>Services</strong><br />
939-21 Computers, Data Processing Equipment <strong>and</strong> Accessories Maintenance <strong>and</strong> Repair<br />
<strong>Services</strong><br />
958-23 Computer Management <strong>Services</strong><br />
Respondents are not required to use, nor limited to using, the class <strong>and</strong> item codes identified above,<br />
<strong>and</strong> may identify other areas for subcontracting.<br />
HHSC does not endorse, recommend nor attest to the capabilities of any company or individual listed<br />
on the CPA’s CMBL. The list of certified HUBs is subject to change, so respondents are encouraged<br />
to refer to the CMBL often to find the most current listing of HUBs.<br />
<strong>12</strong>.7 HUB Subcontracting Procedures – If a Respondent Intends to Subcontract<br />
An HSP must demonstrate that the respondent made a good faith effort to comply with HHSC’s HUB<br />
policies <strong>and</strong> procedures. The following subparts outline the items that HHSC will review in determining<br />
whether an HSP meets the good faith effort st<strong>and</strong>ard. A respondent that intends to subcontract must<br />
complete the HSP to document its good faith efforts.<br />
<strong>12</strong>.7.1 Identify Subcontracting Areas <strong>and</strong> Divide Them into Reasonable Lots<br />
A respondent should first identify each area of the contract work it intends to subcontract. Then, to<br />
maximize HUB participation, it should divide the contract work into reasonable lots or portions, to the<br />
extent consistent with prudent industry practices.<br />
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<strong>12</strong>.7.2 Notify Potential HUB Subcontractors<br />
The HSP must demonstrate that the respondent made a good faith effort to subcontract with HUBs.<br />
The respondent’s good faith efforts shall be shown through utilization of all methods in conformance<br />
with the development <strong>and</strong> submission of the HSP <strong>and</strong> by complying with the following steps:<br />
<strong>12</strong>.7.2.1. Divide the contract work into reasonable lots or portions to the extent consistent with<br />
prudent industry practices. The respondent must determine which portions of work,<br />
including goods <strong>and</strong> services, will be subcontracted.<br />
<strong>12</strong>.7.2.2. Use the appropriate method(s) to demonstrate good faith effort. The respondent can<br />
use either method(s) 1, 2, 3, or 4:<br />
<strong>12</strong>.7.3 Method 1: Respondent Intends to Subcontract with only HUBs:<br />
The respondent must identify in the HSP the HUBs that will be utilized <strong>and</strong> submit written<br />
documentation that confirms 100% of all available subcontracting opportunities will be performed by<br />
one or more HUBs; or,<br />
<strong>12</strong>.7.4 Method 2: Respondent Intends to Subcontract with HUB Protégé(s):<br />
The respondent must identify in the HSP the HUB protégé(s) that will be utilized <strong>and</strong> should:<br />
<br />
<br />
Include a fully executed copy of the Mentor Protégé Agreement, which must be registered with the<br />
CPA prior to submission to HHSC, <strong>and</strong><br />
Identify areas of the HSP that will be performed by the protégé.<br />
HHSC will accept a Mentor Protégé Agreement that has been entered into by a respondent (mentor)<br />
<strong>and</strong> a certified HUB (protégé) in accordance with <strong>Texas</strong> Government Code §2161.065. When a<br />
respondent proposes to subcontract with a protégé(s), it does not need to provide notice to three (3)<br />
HUB vendors for that subcontracted area.<br />
Participation in the Mentor Protégé Program, along with the submission of a protégé as a<br />
subcontractor in an HSP, constitutes a good faith effort for the particular area subcontracted to the<br />
protégé; or,<br />
<strong>12</strong>.7.5 Method 3: Respondent Intends to Subcontract with HUBs <strong>and</strong> Non-HUBs (Meet or<br />
Exceed the Goal):<br />
The respondent must identify in the HSP <strong>and</strong> submit written documentation that one or more HUB<br />
subcontractors will be utilized; <strong>and</strong> that the aggregate expected percentage of subcontracts with HUBs<br />
will meet or exceed the goal specified in this solicitation. When utilizing this method, only HUB<br />
subcontractors that has existing contracts with the respondent for five years or less may be used to<br />
comply with the good faith effort requirements.<br />
When the aggregate expected percentage of subcontracts with HUBs meets or exceeds the goal<br />
specified in this solicitation, respondents may also use non-HUB subcontractors; or,<br />
<strong>12</strong>.7.6 Method 4: Respondent Intends to Subcontract with HUBs <strong>and</strong> Non-HUBs (Does Not<br />
Meet or Exceed the Goal):<br />
The respondent must identify in the HSP <strong>and</strong> submit documentation regarding both of the following<br />
requirements:<br />
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<br />
written notification to minority or women trade organizations or development centers to assist in<br />
identifying potential HUBs of the subcontracting opportunities the respondent intends to<br />
subcontract.<br />
Respondents must give minority or women trade organizations or development centers at least<br />
seven (7) working days prior to submission of the respondent's response for dissemination of the<br />
subcontracting opportunities to their members. A list of minority <strong>and</strong> women trade organizations is<br />
located on HHSC’s website under the Minority <strong>and</strong> Women Organization link.<br />
<br />
written notification to at least three (3) HUB businesses of the subcontracting opportunities that the<br />
respondent intends to subcontract. The written notice must be sent to potential HUB<br />
subcontractors prior to submitting proposals <strong>and</strong> must include:<br />
<br />
<br />
<br />
<br />
<br />
a description of the scope of work to be subcontracted;<br />
information regarding the location to review project plans or specifications;<br />
information about bonding <strong>and</strong> insurance requirements;<br />
required qualifications <strong>and</strong> other contract requirements; <strong>and</strong><br />
a description of how the subcontractor can contact the respondent.<br />
Respondents must give potential HUB subcontractors a reasonable amount of time to respond to the<br />
notice, at least seven (7) working days prior to submission of the respondent's response unless<br />
circumstances require a different time period, which is determined by the agency <strong>and</strong> documented in<br />
the contract file;<br />
Respondents must also use the CMBL, the HUB Directory, <strong>and</strong> Internet resources when searching for<br />
HUB subcontractors. Respondents may rely on the services of contractor groups; local, state <strong>and</strong><br />
federal business assistance offices; <strong>and</strong> other organizations that provide assistance in identifying<br />
qualified applicants for the HUB program.<br />
<strong>12</strong>.7.7 Written Justification of the Selection Process<br />
HHSC will make a determination if a good faith effort was made by the respondent in the development<br />
of the required HSP. One or more of the methods identified in the previous sections may be<br />
applicable to the respondent’s good faith efforts in developing <strong>and</strong> submission of the HSP. HHSC may<br />
require the respondent to submit additional documentation explaining how the respondent made a<br />
good faith effort in accordance with the solicitation.<br />
A respondent must provide written justification of its selection process if it chooses a non-HUB<br />
subcontractor. The justification should demonstrate that the respondent negotiated in good faith with<br />
qualified HUB bidders, <strong>and</strong> did not reject qualified HUBs who were the best value responsive bidders.<br />
<strong>12</strong>.8 Method 5: Respondent Does Not Intend to Subcontract<br />
When the respondent plans to complete all contract requirements with its own equipment, supplies,<br />
materials <strong>and</strong>/or employees, it is still required to complete an HSP.<br />
The respondent must complete the “Self Performance Justification” portion of the HSP, <strong>and</strong> attest that<br />
it does not intend to subcontract for any goods or services, including the class <strong>and</strong> item codes<br />
identified in Section 4.5. In addition, the respondent must identify the sections of the proposal that<br />
describe how it will complete the Scope of Work using its own resources or provide a statement<br />
explaining how it will complete the Scope of Work using its own resources. The respondent must<br />
agree to comply with the following if requested by HHSC:<br />
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<br />
<br />
<br />
<br />
provide evidence of sufficient respondent staffing to meet the <strong>RFP</strong> requirements;<br />
provide monthly payroll records showing the respondent staff fully dedicated to the contract;<br />
allow HHSC to conduct an on site review of company headquarters or work site where services are<br />
to be performed <strong>and</strong>,<br />
provide documentation proving employment of qualified personnel holding the necessary licenses<br />
<strong>and</strong> certificates required to perform the Scope of Work.<br />
<strong>12</strong>.9 Post-award HSP Requirements<br />
The HSP shall be reviewed <strong>and</strong> evaluated prior to contract award <strong>and</strong>, if accepted, the finalized HSP<br />
will become part of the contract with the successful respondent(s).<br />
After contract award, HHSC will coordinate a post-award meeting with the successful respondent to<br />
discuss HSP reporting requirements. The contractor must maintain business records documenting<br />
compliance with the HSP, <strong>and</strong> must submit monthly subcontract reports to HHSC by completing the<br />
HUB “Prime Contractor Progress Assessment Report.” This monthly report is required as a condition<br />
for payment to report to the agency the identity <strong>and</strong> the amount paid to all subcontractors.<br />
As a condition of award the Contractor is required to send notification to all selected subcontractors as<br />
identified in the accepted/approved HSP. In addition, a copy of the notification must be provided to the<br />
agency’s Contract Manager <strong>and</strong>/or HUB Program Office within 10 days of the contract award.<br />
HHSC’s UTCs outline the procedures for changing the HSP, as well as the HSP compliance <strong>and</strong><br />
reporting requirements. All changes to the approved HSP require prior HHSC approval. In general, if<br />
the contractor decides to subcontract any part of the contract after the award, it must follow the good<br />
faith effort procedures outlined in Section 4.6 of this <strong>RFP</strong> (e.g., divide work into reasonable lots, notify<br />
at least three (3) vendors per subcontracted area, provide written justification of the selection process,<br />
or participate in the Mentor Protégé Program).<br />
For this reason, HHSC encourages respondents to identify, as part of their HSP, multiple<br />
subcontractors who are able to perform the work in each area the respondent plans to subcontract.<br />
Selecting additional subcontractors may help the selected contractor make changes to its original<br />
HSP, when needed, <strong>and</strong> will allow HHSC to approve any necessary changes expeditiously.<br />
Failure to meet the HSP <strong>and</strong> post-award requirements will constitute a breach of contract, <strong>and</strong> will be<br />
subject to remedial actions. HHSC may also report noncompliance to the CPA in accordance with the<br />
CPA’s Rules, §20.105 (relating to Debarment) <strong>and</strong> §20.106 (relating to Procedures for Investigations<br />
<strong>and</strong> Debarment).<br />
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13.0 SECURITY COMPLIANCE<br />
13.1 Confidentiality<br />
13.1..1 Limits.<br />
Nothing in this Section 13.1.1 is intended to limit the obligations of Service Provider under Sections<br />
13.1.2 <strong>and</strong> 13.1.3 of this Agreement with respect to the HHSC Data addressed in such Sections <strong>and</strong>,<br />
to the extent the provisions of Sections 13.1.2 or 13.1.3 conflict with the provisions of this Section<br />
13.1.1 as they pertain to HHSC Data, the provisions of Sections 13.1.2 or 13.1.3 shall control over the<br />
provisions of this Section 13.1.1, as applicable.<br />
13.1..2 Confidential Information.<br />
Service Provider <strong>and</strong> HHSC each acknowledge that the other possesses <strong>and</strong> shall continue to<br />
possess information that has been developed or received by it, has commercial, proprietary or other<br />
value in its or its constituents' or customers' activities or operations <strong>and</strong> is not generally available to<br />
the public, subject, however to the applicability of the Public Information Act <strong>and</strong> other applicable Law.<br />
Except as otherwise specifically agreed in writing by the Parties, "Confidential Information" means<br />
(i) all information marked confidential, restricted or proprietary by either Party <strong>and</strong> (ii) any other<br />
information that is treated as confidential by the disclosing Party <strong>and</strong> would reasonably be understood<br />
to be confidential, whether or not so marked. In the case of HHSC, Confidential Information also shall<br />
include Developed Materials, HHSC Data, HHSC Personal Data, Work Product, Authorized User<br />
information, attorney-client privileged materials, attorney work product, research information,<br />
information that contains trade secrets, human resources <strong>and</strong> personnel information, or other<br />
information or data obtained, received, transmitted, processed, stored, archived or maintained by<br />
Service Provider under this Agreement. Service Provider's Confidential Information shall not include<br />
Confidential Information of HHSC, however characterization of information as Confidential Information<br />
of Service Provider shall not limit or restrict the rights of HHSC to exercise their rights (including rights<br />
related to auditing <strong>and</strong> benchmarking) provided for under this Agreement.<br />
13.1..3 Disclosure of Confidential Information.<br />
The Disclosing Party represents <strong>and</strong> warrants that it has the right to disclose its Confidential<br />
Information to the Receiving Party, subject to the confidentiality obligations contained in this Section<br />
13.1.<br />
i. During the term of this Agreement <strong>and</strong> at all times thereafter, each Receiving Party (A) shall<br />
hold Confidential Information received from a Disclosing Party in confidence <strong>and</strong> shall use<br />
such Confidential Information only for the purposes of fulfilling its obligations or exercising its<br />
rights under this Agreement <strong>and</strong> for no other purposes, (B) shall follow all applicable security<br />
requirements, protocols, <strong>and</strong> procedures for accessing <strong>and</strong> h<strong>and</strong>ling such Confidential<br />
Information, <strong>and</strong> (C) shall not disclose, provide, disseminate or otherwise make available<br />
any Confidential Information of the Disclosing Party to any third party without the express<br />
written permission of the Disclosing Party, unless expressly permitted by Sections 13.1.3(ii)<br />
<strong>and</strong> 13.1.3(iii) below or elsewhere in this Agreement. Each Receiving Party shall use at least<br />
the same degree of care to prevent disclosure, dissemination, <strong>and</strong> misuse of the Disclosing<br />
Party's Confidential Information to third parties as the Receiving Party employs to avoid<br />
unauthorized disclosure, publication, dissemination, destruction, loss or alteration of its own<br />
information (or information of its customers) of a similar nature, but not less than reasonable<br />
care.<br />
ii. The Receiving Party may disclose Confidential Information of the Disclosing Party to its<br />
employees, directors, attorneys, financial advisors, contractors <strong>and</strong> agents (including HHSC<br />
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iii.<br />
iv.<br />
Auditors in the case of HHSC) provided that (A) such person or Entity has a need to know<br />
the Confidential Information for purposes of performing his or her obligations under or with<br />
respect to this Agreement or as otherwise naturally occurs in such person's scope of<br />
responsibility, (B) such disclosure is made pursuant to an obligation of confidentiality upon<br />
such person or Entity that is no less stringent than that set forth in this Section 13.1 <strong>and</strong> (C)<br />
such disclosure is not in violation of Law, the Service Management Manual or applicable<br />
HHSC St<strong>and</strong>ards. The Receiving Party assumes full responsibility for the acts or omissions<br />
of any person or Entity to whom it discloses Confidential Information of the Disclosing Party<br />
regarding their use of such Confidential Information <strong>and</strong> must take commercially reasonable<br />
measures to protect the Confidential Information from disclosure or use in contravention of<br />
this Agreement.<br />
The Receiving Party may disclose Confidential Information of the Disclosing Party as required<br />
to satisfy any legal requirement of a competent government body, provided that, promptly<br />
upon receiving any such request, the Receiving Party, to the extent it may legally do so,<br />
gives notice to the Disclosing Party of the Confidential Information to be disclosed <strong>and</strong> the<br />
identity of the third party requiring such disclosure prior to the making such disclosure in<br />
order that the Disclosing Party may interpose an objection to such disclosure, take action to<br />
assure confidential h<strong>and</strong>ling of the Confidential Information, or take such other action as it<br />
deems appropriate to protect the Confidential Information. The Receiving Party shall use<br />
reasonable efforts to cooperate with the Disclosing Party in its efforts to seek a protective<br />
order or other appropriate remedy or, in the event such protective order or other remedy is<br />
not obtained, to obtain assurance that confidential treatment shall be accorded such<br />
Confidential Information.<br />
Unless expressly permitted by this Agreement, neither Party shall (A) make any use or copies<br />
of the Confidential Information of the other Party except as expressly contemplated by this<br />
Agreement, (B) possess or acquire any right in or assert any lien against the Confidential<br />
Information of the other Party, (C) sell, assign, transfer, lease, encumber or otherwise<br />
dispose of or disclose the Confidential Information of the other Party to third parties or<br />
commercially exploit, or permit a third party to commercially exploit, such information,<br />
including through Derivative Works, or (D) refuse for any reason (including a default or<br />
material breach of this Agreement by the other Party) to promptly provide the other Party's<br />
Confidential Information (including any copies thereof) to the other Party if requested to do<br />
so.<br />
v. Notwithst<strong>and</strong>ing the provisions of this Section 13.1.3, HHSC may disclose Confidential<br />
Information relating to the financial or operational terms of this Agreement <strong>and</strong>/or Service<br />
Provider's performance hereunder (e.g. applicable Service Levels <strong>and</strong> measurements of<br />
Service Provider's performance with respect to such Service Levels) in connection with<br />
solicitation of proposals for or the procurement of the same or similar services from<br />
prospective HHSC Contractors.<br />
vi.<br />
vii.<br />
viii.<br />
Notwithst<strong>and</strong>ing the provisions of this Section 13.1.3, the Parties acknowledge <strong>and</strong> agree that<br />
each Party may be required to disclose Confidential Information pursuant to Chapter 552,<br />
<strong>Texas</strong> Government Code (the "Public Information Act"), that HHSC shall be required to <strong>and</strong><br />
may disclose this Agreement <strong>and</strong> the terms hereof pursuant to the Public Information Act<br />
<strong>and</strong> that the Parties shall comply with the Public Information Act <strong>and</strong> with all applicable<br />
opinions of the Office of the <strong>Texas</strong> Attorney General concerning the Public Information Act.<br />
Each Party shall take all necessary steps to cause its employees, contractors <strong>and</strong><br />
subcontractors to comply with the provisions of Article 13.<br />
Exclusions. Notwithst<strong>and</strong>ing the above, Section 13.1.3 shall not apply to any particular<br />
information which the receiving Party can demonstrate: (i) is, at the time of disclosure to it,<br />
generally available to the public other than through a breach of the Receiving Party's or a<br />
third party's confidentiality obligations; (ii) after disclosure to it, is published by the Disclosing<br />
Party or otherwise becomes generally available to the public other than through a breach of<br />
the Receiving Party's or a third party's confidentiality obligations; (iii) was lawfully in the<br />
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possession of the Receiving Party immediately prior to the time of disclosure to it; (iv) is<br />
received from a third party having a lawful right to disclose such information; or (v) is<br />
independently developed by the Receiving Party without reference to the Disclosing Party's<br />
Confidential Information. The exclusions in this Section 13.1.3 (viii) shall not apply to HHSC<br />
Personal Data.<br />
ix.<br />
Loss of Confidential Information. Each Party shall (i) immediately notify the other Party of<br />
any possession, use, knowledge, disclosure, or loss of such other Party's Confidential<br />
Information in contravention of this Agreement, (ii) promptly furnish to the other Party all<br />
known details <strong>and</strong> assist such other Party in investigating <strong>and</strong>/or preventing the reoccurrence<br />
of such possession, use, knowledge, disclosure, or loss, (iii) cooperate with the other Party in<br />
any investigation or litigation deemed necessary by such other Party to protect its rights <strong>and</strong><br />
(iv) promptly use appropriate efforts to prevent further possession, use, knowledge,<br />
disclosure, or loss of Confidential Information in contravention of this Agreement. Each Party<br />
shall bear any costs it incurs in complying with this Section 13.1.3 (ix).<br />
x. No Implied Rights. Nothing contained in this Section 13.1 shall be construed as obligating a<br />
Party to disclose its Confidential Information to the other Party, or as granting to or conferring<br />
on a Party, expressly or impliedly, any rights or license to any Confidential Information of the<br />
other Party.<br />
xi.<br />
Return or Destruction of Confidential Information. Each Party shall securely store the<br />
other Party's Confidential Information until such Confidential Information is returned or<br />
destroyed as described in this Section. Except as provided below with respect to Contract<br />
Records, each Party shall destroy all documentation in any medium that contains, refers to<br />
or relates to the other Party's Confidential Information (or the portion of such Confidential<br />
Information specified by the other Party) or shall return such documentation to the other<br />
Party or its designee, in the format <strong>and</strong> on the media reasonably prescribed by the other<br />
Party, as follows: (i) within thirty (30) days of the expiration or termination of this Agreement<br />
<strong>and</strong> completion of each Party's obligations hereunder, including, with respect to Service<br />
Provider, all periods of Termination Assistance <strong>Services</strong> requested by HHSC; <strong>and</strong> (ii) with<br />
respect to HHSC Confidential Information, at any time HHSC requests such Confidential<br />
Information or, with respect to particular Confidential Information, within thirty (30) days of<br />
the date that such Confidential Information is no longer required by Service Provider to<br />
perform its obligations under this Agreement as identified by HHSC or pursuant to the<br />
Service Management Manual. Such documentation shall include all copies of a Party's<br />
Confidential Information in the other Party's possession or under the other Party's control.<br />
The Party returning or destroying the other Party's Confidential Information shall deliver to<br />
the other Party written certification of its compliance with this paragraph signed by an<br />
authorized representative of such Party. Notwithst<strong>and</strong>ing the foregoing, either Party may<br />
retain one copy of the other Party's Confidential Information in its legal department as <strong>and</strong> to<br />
the extent required to comply with applicable Laws or enforce its rights under this<br />
Agreement; provided that such Confidential Information shall be returned or destroyed in<br />
accordance with this provision upon the expiration of the period specified in the applicable<br />
Law, the expiration of the applicable statute of limitations <strong>and</strong> the final resolution of any<br />
pending dispute. Contract Records shall be retained by Service Provider for the duration of<br />
the Audit Period unless <strong>and</strong> to the extent Service Provider is directed by HHSC to deliver<br />
such Contract Records to HHSC prior to the expiration of the Audit Period. In no event shall<br />
a party withhold any Confidential Information of the other party as a means of resolving any<br />
dispute.<br />
13.1..4 Transfer of HHSC Confidential Information.<br />
Service Provider shall not transfer HHSC Confidential Information to any other locations, nor change<br />
the locations for storage <strong>and</strong> processing of such HHSC Confidential Information, except with the<br />
express written consent of HHSC, which HHSC may withhold in its sole discretion.<br />
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13.2 Security St<strong>and</strong>ards<br />
13.2..1 Security Management Plan.<br />
The Security Management Plan shall comply with HHSC security requirements specified in the HHS<br />
Enterprise Information Security St<strong>and</strong>ards <strong>and</strong> Guidelines (EISSG) Version 4.01 dated May 4, 2011.<br />
The Security Management Plan shall also comply with the current USDA Automated Data Processing<br />
(ADP) security regulations found at 7 CFR 277.18(p).<br />
EISSG Version 4.01 can be retrieved online at<br />
http://hhscx.hhsc.state.tx.us/eit/Security/ESM-Policies/espsg.doc<br />
USDA Automated Data Processing (ADP) security regulations can be retrieved online at<br />
http://www.gpoaccess.gov/cfr/retrieve.html<br />
13.3 Data Access<br />
13.3..1 Property.<br />
HHSC Data is the property of HHSC. Service Provider shall not commercially exploit, or permit a third<br />
party to commercially exploit, HHSC Data.<br />
13.3..2 Security St<strong>and</strong>ards.<br />
Service Provider shall maintain a comprehensive data security program no less rigorous than<br />
accepted security st<strong>and</strong>ards in the industry, <strong>and</strong> compliant with all applicable HHSC Rules <strong>and</strong> HHSC<br />
St<strong>and</strong>ards, including the privacy, security <strong>and</strong> records retention guidelines contained within IRS<br />
Publication 1075 (found at http://www.irs.gov/pub/irs-pdf/p1075.pdf) <strong>and</strong> the rules pertaining to<br />
information technology security st<strong>and</strong>ards found at 1 <strong>Texas</strong> Administrative Code, Chapter 202. The<br />
data security program <strong>and</strong> associated technical, organizational <strong>and</strong> security measures shall be fully<br />
documented by Service Provider in the Service Management Manual, At least twice per Contract<br />
Year, Service Provider shall evaluate security practices <strong>and</strong> proactively provide technical information<br />
regarding security best practices in the industry. Upon HHSC’s approval, Service Provider shall<br />
implement any changes it recommends through Change Control.<br />
13.3..3 Integrity of Security Measures.<br />
Under no circumstances shall Service Provider make any changes that materially weaken any<br />
technical, organizational or security measures in place to safeguard HHSC Data nor shall Service<br />
Provider or Service Provider Personnel attempt to access or allow access to HHSC Data that is not<br />
required for the performance of Service Provider's obligations or otherwise permitted under this<br />
Agreement.<br />
13.3..4 Backup.<br />
HHSC shall have the right to establish backup security for any HSSC Data <strong>and</strong> to keep backup <strong>and</strong><br />
files for such Data in its possession if it chooses. Service Provider shall provide HHSC with<br />
downloads of HHSC Data, as requested <strong>and</strong> directed by HHSC to enable HHSC to maintain such<br />
backup copies.<br />
13.3..5 Security Breach.<br />
In the event Service Provider discovers or is notified of a breach or potential breach of HHSC data<br />
security Service Provider shall expeditiously (A) notify HHSC of such breach or potential breach, (B)<br />
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investigate (with HHSC’s participation if so desired by HHSC) such breach or potential breach <strong>and</strong><br />
perform a risk assessment, Root Cause Analysis <strong>and</strong> corrective action plan thereon, (C) provide a<br />
written report to HHSC of such risk assessment, Root Cause Analysis <strong>and</strong> action plan, (D) remediate<br />
the effects of such breach or potential breach of security as soon as practicable or coordinate such<br />
remediation if Service Provider does not have responsibility for the matters which are the source of<br />
the breach or potential breach, <strong>and</strong> (E) provide HHSC with reasonable assurances that such breach<br />
or potential breach shall not recur. To the extent Service Provider removes Data from any media that<br />
is taken out of service that is under Service Provider's control, Service Provider shall destroy or<br />
securely erase such media in accordance with the Service Management Manual. Under no<br />
circumstances shall Service Provider use or re-use media on which Data has been stored to store<br />
data of any other customer of Service Provider or to deliver data to a third party, including another<br />
Service Provider customer, unless such Data has been securely erased in accordance with the<br />
Service Management Manual.<br />
13.4 HHSC Personal Data<br />
In addition to the provisions of Sections 13.1 <strong>and</strong> 13.2, the following privacy <strong>and</strong> data protection<br />
provisions shall apply to HHSC Personal Data.<br />
Service Provider shall hold any HHSC Personal Data that it receives in confidence <strong>and</strong> in compliance with (i)<br />
Service Provider's obligations under this Agreement, the Exhibits <strong>and</strong> Attachments hereto <strong>and</strong> the Service<br />
Management Manual <strong>and</strong> (ii) subject to all Laws regarding its use of <strong>and</strong> access to such HHSC Personal<br />
Data.<br />
Service Provider agrees that Service Provider <strong>and</strong> Service Provider Personnel shall not use any HHSC<br />
Personal Data for any purpose other than the fulfillment of the terms <strong>and</strong> conditions of this Agreement.<br />
Service Provider shall not process or disseminate HHSC Personal Data to any third party or transfer HHSC<br />
Personal Data without the approval of HHSC unless expressly provided for in this Agreement.<br />
Service Provider shall be responsible for any failure of Service Provider Personnel to comply with the terms<br />
<strong>and</strong> conditions regarding HHSC Personal Data set forth in this Section 13.4.<br />
With respect to Personal Medical Data, Service Provider shall not need to obtain authorizations from the<br />
persons to whom such Personal Medical Data pertains unless HHSC determines that such authorizations are<br />
necessary <strong>and</strong> advises Service Provider to obtain such authorization. The authorization form to be used for<br />
this purpose shall be provided by HHSC.<br />
A person may request to inspect, copy, amend <strong>and</strong> restrict disclosure of his or her Personal Medical Data<br />
when <strong>and</strong> as permitted by Law. Any such requests that are received by Service Provider shall be directed to,<br />
<strong>and</strong> any actions required shall be determined by, HHSC.<br />
If Service Provider has knowledge of any unauthorized disclosure of or access to HHSC Personal Data,<br />
Service Provider shall:<br />
1. Expeditiously report such unauthorized disclosure or access to HHSC,<br />
2. Mitigate, to the extent practicable, any harmful effect of such disclosure or access that is known to<br />
Service Provider or its agents, <strong>and</strong><br />
3. Cooperate with HHSC in providing any notices regarding impermissible disclosures caused by<br />
such disclosure or access which HHSC deems appropriate.<br />
To the extent such unauthorized disclosure or access is attributable to a breach by Service Provider or<br />
Service Provider Personnel of Service Provider's obligations under this Agreement with respect to HHSC<br />
Personal Data, Service Provider shall bear (A) the costs incurred by Service Provider in complying with its<br />
legal obligations relating to such breach <strong>and</strong> (B) in addition to any other damages for which Service Provider<br />
may be liable for under this Agreement (except to the extent such disclosure is due to HHSC's failing to<br />
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provide (including through authorization to provide as part of the <strong>Services</strong>) the level of encryption required<br />
under applicable Law to protect such Data), the following costs incurred by HHSC in complying with their legal<br />
obligations relating to such breach, to the extent applicable, (1) the cost of providing notice to affected<br />
individuals, (2) the cost of providing such affected individuals with credit monitoring services for twelve (<strong>12</strong>)<br />
months, (3) the cost of providing such affected individuals with $50,000 of identity theft insurance, <strong>and</strong> (4) call<br />
center support for such affected individuals for thirty (30) days <strong>and</strong> (5) any other Losses for which Service<br />
Provider would be liable under Sections 5.02, 11.10, 11.<strong>12</strong> <strong>and</strong> 14.01 of the Uniform Terms <strong>and</strong> Conditions<br />
http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf.<br />
13.4..1 Personal Medical Data<br />
With respect to Personal Medical Data constituting "protected health information" ("PHI"), as such<br />
term is defined by the HIPAA Privacy Rule, Service Provider shall:<br />
i. Subject to Section 13.11, implement the technical, organizational <strong>and</strong> security measures, including<br />
administrative, physical <strong>and</strong> technical safeguards, to protect the confidentiality, integrity <strong>and</strong><br />
availability of Personal Medical Data constituting electronic PHI ("ePHI") created, received,<br />
maintained or transmitted by Service Provider or Service Provider Personnel in compliance with the<br />
HIPAA Security Rule. Service Provider shall cause any Service Provider Personnel who have access<br />
to ePHI to agree in writing to protect the confidentiality, integrity <strong>and</strong> availability of ePHI as required by<br />
the HIPAA Security Rule. Service Provider shall expeditiously report to HHSC any successful<br />
unauthorized access, use, disclosure, modification or destruction of ePHI or interference with system<br />
operations in an information system containing PHI of which Service Provider becomes aware.<br />
ii. Subject to Section 13.11, at HHSC's request, Service Provider shall provide access to Personal<br />
Medical Data contained in a "designated record set" (as such terms are defined by the HIPAA Privacy<br />
Rule) of a person currently or formerly covered by a HHSC benefit plan subject to HIPAA (the "Plan")<br />
to HHSC or the person currently or formerly covered by the Plan who is requesting such Data.<br />
Service Provider also shall amend Personal Medical Data in its possession as directed by HHSC.<br />
Subject to Section 13.11, such access <strong>and</strong> amendment shall be provided at a time <strong>and</strong> in a format<br />
permitted by the HIPAA Privacy Rule.<br />
iii. Subject to Section 13.11, Service Provider shall document all disclosures of Personal Medical Data to<br />
provide a person currently or formerly covered by the Plan with an accounting of disclosures as<br />
required by the HIPAA Privacy Rule. Service Provider shall, upon HHSC's request, provide such an<br />
accounting to HHSC or the person currently or formerly covered by the Plan who requested such Data<br />
at a time <strong>and</strong> in a format permitted by the HIPAA Privacy Rule.<br />
iv. In addition to permitting audits by HHSC as described above, Service Provider shall permit the<br />
Secretary of the United States Department of <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> to conduct audits of<br />
Personal Medical Data to determine compliance with the HIPAA Privacy Rule <strong>and</strong>/or the HIPAA<br />
Security Rule. If the Secretary contacts the Service Provider directly regarding such an audit, Service<br />
Provider shall provide HHSC with written notice of the audit as soon as possible after Service Provider<br />
received its audit notice from the Secretary.<br />
13.5 File Access<br />
HHSC shall have secure access to, <strong>and</strong> the right to review <strong>and</strong> retain the entirety of, all HHSC Confidential<br />
Information in the possession or control of Service Provider. Such access shall be provided to HHSC in nearreal<br />
time <strong>and</strong> by the means <strong>and</strong> in the format reasonably requested by HHSC. At no time shall any of such<br />
files or other materials or information be stored or held in a form or manner not readily accessible to HHSC in<br />
this manner. Service Provider shall provide to the HHSC Data Center <strong>Services</strong> Manager or his or her<br />
designee all passwords, codes, comments, keys, documentation <strong>and</strong> the locations of any such files <strong>and</strong> other<br />
materials promptly upon his or her request, including Equipment <strong>and</strong> Software keys <strong>and</strong> such information as<br />
to format, encryption (if any) <strong>and</strong> any other specification or information necessary for HHSC to retrieve, read,<br />
revise <strong>and</strong>/or maintain such files <strong>and</strong> information. Upon the request of the HHSC Data Center <strong>Services</strong><br />
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Manager or his or her designee, Service Provider shall confirm that, to the best of its knowledge, all files <strong>and</strong><br />
other information provided to HHSC are complete <strong>and</strong> that no material element, amount, or other fraction of<br />
such files or other information to which HHSC may request access or review has been deleted, withheld,<br />
disguised or encoded in a manner inconsistent with the purposes <strong>and</strong> intent of providing full <strong>and</strong> complete<br />
access to HHSC as contemplated by this Agreement.<br />
13.6 HHSC Data – Correction <strong>and</strong> Restoration<br />
13.6..1 Corrections.<br />
The correction of any errors or inaccuracies in or with respect to HHSC Data shall be performed by<br />
the Party that has operational responsibility for inputting such HHSC Data into the applicable System.<br />
To the extent (i) Service Provider is operationally responsible for inputting such data or (ii) such errors<br />
or inaccuracies are attributable to the failure of Service Provider or Service Provider Personnel to<br />
comply with Service Provider's obligations under this Agreement, Service Provider shall bear the cost<br />
of correcting such errors or inaccuracies.<br />
13.6..2 Re-running of Corrected Data.<br />
If the correction of errors or inaccuracies as described above necessitates the re-running of corrected<br />
HHSC Data <strong>and</strong> thereby results in the usage of additional resources, HHSC will discuss the<br />
applicability of additional fees according to the provisions included in Section 11, Financial Approach<br />
– Business Terms , unless the underlying errors or inaccuracies are attributable to the failure of<br />
Service Provider or Service Provider Personnel to comply with Service Provider's obligations under<br />
this Agreement (including the failure of Service Provider or Service Provider Personnel to adhere to<br />
applicable processes <strong>and</strong> controls that, if adhered to, would have enabled Service Provider or Service<br />
Provider Personnel to identify <strong>and</strong> make timely corrections such errors or inaccuracies, even if caused<br />
by HHSC), in which case Service Provider shall be financially responsible for any additional required<br />
resources <strong>and</strong> expenses resulting from the re-running of corrected data.<br />
13.6..3 Restoration of Data.<br />
The restoration of any destroyed, lost or altered HHSC Data shall be performed through generally<br />
accepted data restoration techniques by the Party that has operational responsibility under<br />
Attachment 5-C for maintaining the System on which such HHSC Data resides <strong>and</strong> for creating <strong>and</strong><br />
maintaining backup copies of such HHSC Data. To the extent (i) Service Provider is operationally<br />
responsible for performing such restoration or (ii) such destruction, loss or alteration is attributable to<br />
the failure of Service Provider or Service Provider Personnel to comply with Service Provider's<br />
obligations under this Agreement, Service Provider shall bear the cost of restoring such data to the<br />
most recent required back-up.<br />
13.6..4 Cardholder Data.<br />
Service Provider shall comply with the Payment Card Industry Data Security St<strong>and</strong>ard ("PCI DSS")<br />
with respect to Cardholder Data as defined therein. With respect to <strong>Services</strong> provided from a<br />
Consolidated Data Center or that support a Consolidated Data Center, Service Provider shall have<br />
access to Cardholder Data only for the limited purpose of performing the <strong>Services</strong> or as specifically<br />
agreed to by Visa, MasterCard, American Express, <strong>and</strong>/or Discover (collectively, the "Issuers"),<br />
HHSC, or as required by applicable law. In the event of a breach or intrusion of or otherwise<br />
unauthorized access to Cardholder Data stored by or for Service Provider, Service Provider shall<br />
immediately notify HHSC, in the manner required, <strong>and</strong> provide HHSC or its designee, the Issuers, <strong>and</strong><br />
the acquiring financial institution <strong>and</strong> their respective designees access to Service Provider's facilities<br />
<strong>and</strong> all pertinent records to conduct a review of Service Provider's compliance with these<br />
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requirements. Service Provider shall maintain appropriate business continuity procedures <strong>and</strong><br />
systems to ensure security of Cardholder Data in the event of a disruption, disaster or failure of<br />
Service Provider's primary data systems which involve a risk to Cardholder Data. Service Provider<br />
shall provide access to its security systems <strong>and</strong> procedures, as reasonably requested by HHSC or its<br />
designee. Service Provider shall cooperate fully with any reviews of their facilities <strong>and</strong> records<br />
provided for in this Section. Service Provider will comply with any assessment, validation, or<br />
verification of PCI DSS rules <strong>and</strong> regulations.<br />
13.7 FTI Compliance<br />
The following provisions are included in accordance with IRS Publication 1075 ("Pub 1075"). For purposes of<br />
this section only, all words in this section shall have the meaning provided in Pub 1075, notwithst<strong>and</strong>ing any<br />
other definition that may be provided elsewhere in this Agreement. The following terms <strong>and</strong> conditions shall<br />
apply to Service Provider's performance of the <strong>Services</strong> to the extent provided by Pub 1075. HHSC <strong>and</strong><br />
Service Provider will amend this section from time to time as needed to maintain currency with the thencurrent<br />
requirements of Pub 1075.<br />
In performance of this Agreement, Service Provider agrees to comply with <strong>and</strong> assume responsibility for<br />
compliance by his or her employees with the following requirements:<br />
(1) All work will be done under the supervision of Service Provider or Service Provider's employees.<br />
(2) Any return or return information made available in any format shall be used only for the purpose of carrying<br />
out the provisions of this Agreement. Information contained in such material will be treated as confidential <strong>and</strong><br />
will not be divulged or made known in any manner to any person except as may be necessary in the<br />
performance of this Agreement. Disclosure to anyone other than an officer or employee of Service Provider<br />
will be prohibited.<br />
(3) All returns <strong>and</strong> return information will be accounted for upon receipt <strong>and</strong> properly stored before, during,<br />
<strong>and</strong> after processing. In addition, all related output will be given the same level of protection as required for<br />
the source material.<br />
(4) Service Provider certifies that the data processed during the performance of this Agreement will be<br />
completely purged from all data storage components of his or her computer facility, <strong>and</strong> no output will be<br />
retained by Service Provider at the time the work is completed. If immediate purging of all data storage<br />
components is not possible, Service Provider certifies that any IRS data remaining in any storage component<br />
will be safeguarded to prevent unauthorized disclosures.<br />
(5) Any spoilage or any intermediate hard-copy printout that may result during the processing of IRS data will<br />
be given to HHSC or its designee. When this is not possible, Service Provider will be responsible for the<br />
destruction of the spoilage or any intermediate hard-copy printouts, <strong>and</strong> will provide HHSC or its designee<br />
with a statement containing the date of destruction, description of material destroyed, <strong>and</strong> the method used.<br />
(6) All computer systems receiving, processing, storing, or transmitting Federal tax information shall meet the<br />
requirements defined in Pub 1075. To meet functional <strong>and</strong> assurance requirements, the security features of<br />
the environment shall provide for the managerial, operational, <strong>and</strong> technical controls. All security features<br />
shall be available <strong>and</strong> activated to protect against unauthorized use of <strong>and</strong> access to Federal tax information.<br />
(7) No work involving FTI furnished under this Agreement will be subcontracted without prior written approval<br />
of the IRS.<br />
(8) Service Provider will maintain a list of employees with authorized access. Such list will be provided to<br />
HHSC <strong>and</strong>, upon request, to the IRS reviewing office.<br />
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(9) HHSC will have the right to void the Agreement, whole or in part, if Service Provider fails to provide the<br />
safeguards described above.<br />
Each officer or employee of any person to whom returns or return information is or may be disclosed will be<br />
notified in writing by such person that returns or return information disclosed to such officer or employee can<br />
be used only for a purpose <strong>and</strong> to the extent authorized herein, <strong>and</strong> that further disclosure of any such returns<br />
or return information for a purpose or to an extent unauthorized herein constitutes a felony punishable upon<br />
conviction by a fine of as much as $5,000 or imprisonment for as long as five (5) years, or both, together with<br />
the costs of prosecution. Such person shall also notify each such officer <strong>and</strong> employee that any such<br />
unauthorized further disclosure of returns or return information may also result in an award of civil damages<br />
against the officer or employee in an amount not less than $1,000 with respect to each instance of<br />
unauthorized disclosure. These penalties are prescribed by IRC sections 7213 <strong>and</strong> 7431 <strong>and</strong> set forth at 26<br />
CFR 301.6103(n)-1.<br />
Each officer or employee of any person to whom returns or return information is or may be disclosed shall be<br />
notified in writing by such person that any return or return information made available in any format shall be<br />
used only for the purpose of carrying out the provisions of this Agreement. Information contained in such<br />
material shall be treated as confidential <strong>and</strong> shall not be divulged or made known in any manner to any<br />
person except as may be necessary in the performance of the Agreement. Inspection by or disclosure to<br />
anyone without an official need to know constitutes a criminal misdemeanor punishable upon conviction by a<br />
fine of as much as $1,000 or imprisonment for as long as one (1) year, or both, together with the costs of<br />
prosecution. Such person shall also notify each such officer <strong>and</strong> employee that any such unauthorized<br />
inspection or disclosure of returns or return information may also result in an award of civil damages against<br />
the officer or employee United States for Federal employees in an amount equal to the sum of the greater of<br />
$1,000 for each act of unauthorized inspection or disclosure with respect to which such defendant is found<br />
liable or the sum of the actual damages sustained by the plaintiff as a result of such unauthorized inspection<br />
or disclosure plus in the case of a willful inspection or disclosure which is the result of gross negligence,<br />
punitive damages, plus the costs of the action. These penalties are prescribed by IRC section 7213A <strong>and</strong><br />
7431.<br />
Additionally, it is incumbent upon Service Provider to inform its officers <strong>and</strong> employees of the penalties for<br />
improper disclosure imposed by the Privacy Act of 1974, 5 U.S.C. 552a. Specifically, 5 U.S.C. 552a(i)(1),<br />
which is made applicable to contractors by 5 U.S.C. 552a(m)(1), provides that any officer or employee of a<br />
contractor, who by virtue of his/her employment or official position, has possession of or access to agency<br />
records which contain individually identifiable information, the disclosure of which is prohibited by the Privacy<br />
Act or regulations established thereunder, <strong>and</strong> who knowing that disclosure of the specific material is<br />
prohibited, willfully discloses the material in any manner to any person or agency not entitled to receive it,<br />
shall be guilty of a misdemeanor <strong>and</strong> fined not more than $5,000.<br />
Granting a contractor access to FTI shall be preceded by certifying that each individual underst<strong>and</strong>s the<br />
affected HHSC security policy <strong>and</strong> procedures for safeguarding IRS information. Contractors shall maintain<br />
their authorization to access FTI through annual recertification. The initial certification <strong>and</strong> recertification shall<br />
be documented <strong>and</strong> placed in the affected HHSC files for review. As part of the certification <strong>and</strong> at least<br />
annually afterwards, contractors should be advised of the provisions of IRC Sections 7431, 7213, <strong>and</strong> 7213A.<br />
The training provided before the initial certification <strong>and</strong> annually thereafter shall also cover the incident<br />
response policy <strong>and</strong> procedure for reporting unauthorized disclosures <strong>and</strong> data breaches. For both the initial<br />
certification <strong>and</strong> the annual certification, Service Provider should sign, either with ink or electronic signature, a<br />
confidentiality statement certifying their underst<strong>and</strong>ing of the security requirements.<br />
The IRS <strong>and</strong> HHSC shall have the right to send its officers <strong>and</strong> employees into the offices <strong>and</strong> plants of<br />
Service Provider for inspection of the facilities <strong>and</strong> operations provided for the performance of any work under<br />
this Agreement. On the basis of such inspection, specific measures may be required in cases where Service<br />
Provider is found to be noncompliant with Agreement safeguards.<br />
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13.8 Malicious Code<br />
Successfully awarded vendor shall take commercially reasonable actions <strong>and</strong> precautions consistent<br />
with Attachment 3.0 to prevent the introduction <strong>and</strong> proliferation of Malicious Code into HHSC's<br />
environment or any System used to provide the <strong>Services</strong> <strong>and</strong> to notify the other Party expeditiously of<br />
any Malicious Code in any such environment or System of which it become aware. Without limiting<br />
Service Provider's other obligations under this Agreement, in the event Malicious Code is found in<br />
Equipment, Software or Systems managed or supported by Service Provider or used by Service<br />
Provider to provide the <strong>Services</strong>, Service Provider shall, at no additional charge to HHSC, eliminate or<br />
permanently quarantine such Malicious Code <strong>and</strong> reduce the effects of such Malicious Code <strong>and</strong>, if<br />
the Malicious Code causes a loss of operational efficiency or loss of data, mitigate such losses <strong>and</strong><br />
restore such data with generally accepted data restoration techniques.<br />
13.9 Disabling Code<br />
Service Provider represents, warrants <strong>and</strong> covenants that, without the prior written consent of HHSC,<br />
Service Provider shall not insert into the Software any code that could be invoked to disable or<br />
otherwise shut down all or any portion of the Software, Equipment <strong>and</strong>/or Systems. Service Provider<br />
further represents, warrants <strong>and</strong> covenants that, with respect to any disabling code that may be part<br />
of the Software, Service Provider shall not invoke or cause to be invoked such disabling code at any<br />
time, including upon expiration or any termination of this Agreement, without HHSC's prior written<br />
consent. Service Provider also represents, warrants <strong>and</strong> covenants that it shall use commercially<br />
reasonable efforts to not use Third Party Materials consisting of Software containing disabling code<br />
without the prior approval of HHSC. For purposes of this provision, code that serves the function of<br />
ensuring software license compliance (including passwords) shall not be deemed disabling code,<br />
provided that Service Provider will use commercially reasonable efforts to attempt to learn from third<br />
parties whether such code is included in third party products <strong>and</strong> will notify HHSC accordingly <strong>and</strong><br />
obtain HHSC's approval prior to installing such code in any Software, Equipment or System.<br />
13.10 Compliance with Federal <strong>and</strong> State Laws<br />
13.10..1 Federal Oversight.<br />
The two primary federal oversight agencies are the U.S. Department of <strong>Health</strong> & <strong>Human</strong> <strong>Services</strong>,<br />
Center for Medicare <strong>and</strong> Medicaid (CMS) <strong>and</strong> the U.S. Department of Agriculture, Food & Nutrition<br />
<strong>Services</strong> (FNS). These agencies monitor accomplishments, expenditures, status <strong>and</strong> changes to the<br />
project.<br />
13.10..2 State Oversight.<br />
There are several organizations involved in State Oversight of TIERS <strong>and</strong> Enhanced Eligibility Systems.<br />
13.11 Requirements for Information in Legal Proceedings<br />
13.11..1 Preservation of Legal Privilege.<br />
If HHSC notifies Service Provider, or Service Provider is otherwise aware, that particular HHSC<br />
Confidential Information may be within HHSC attorney-client or work-product privileges of HHSC, then<br />
regardless of any applicable exclusions, Service Provider (i) shall not disclose such HHSC<br />
Confidential Information or take any other action that would result in waiver of such privileges <strong>and</strong> (ii)<br />
shall instruct all Service Provider Personnel who may have access to such communications to<br />
maintain privileged material as strictly confidential <strong>and</strong> otherwise protect HHSC privileges.<br />
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13.11..2 Service Provider Responsibility for HHSC Information.<br />
To the extent requested by HHSC, Service Provider shall comply with HHSC litigation response plan,<br />
including policies <strong>and</strong> procedures to prepare for <strong>and</strong> respond to discovery requests, subpoenas,<br />
investigatory dem<strong>and</strong>s, <strong>and</strong> other requirements for information related to legal <strong>and</strong> regulatory<br />
proceedings, as such plan may be revised from time to time, including preparing for <strong>and</strong> complying<br />
with requirements for preservation <strong>and</strong> production of data in connection with legal <strong>and</strong> regulatory<br />
proceedings <strong>and</strong> government investigations. Upon receipt of any request, dem<strong>and</strong>, notice, subpoena,<br />
order or other legal information request relating to legal proceedings or investigations by third parties<br />
relating to any Materials, HHSC Confidential Information or related Systems in Service Provider's<br />
possession, Service Provider shall immediately notify HHSC <strong>and</strong> provide HHSC with a copy of all<br />
documentation of such legal information request, to the extent Service Provider legally may do so <strong>and</strong><br />
shall cooperate with HHSC in responding to such request, dem<strong>and</strong>, notice, subpoena, order or other<br />
legal information request.<br />
13.11..3 Cost of Compliance.<br />
Service Provider's cost of complying with this Section 13 shall be at no additional charge to HHSC.<br />
14.0 REPRESENTATIONS, WARRANTIES AND COVENANTS<br />
14.1 Information Furnished to HHSC<br />
14.1..1 Information Furnished to HHSC.<br />
Service Provider represents that, based on the knowledge of the undersigned after reasonable due<br />
diligence, all written information made a part of this Agreement is true, accurate <strong>and</strong> complete, <strong>and</strong><br />
contains no untrue statement of a material fact or omits any material fact necessary to make such<br />
information not misleading. Service Provider hereby agrees to provide HHSC with notice within two<br />
(2) Business Days in the event it discovers that any information that has been provided to HHSC<br />
becomes or turns out not to be true <strong>and</strong> correct. Such notice shall identify the information as<br />
incorrectly provided <strong>and</strong> shall set forth the correct information.<br />
14.2 Completeness of Due Diligence Activities<br />
Service Provider acknowledges that it has been provided with sufficient access to HHSC Facilities,<br />
information <strong>and</strong> personnel, <strong>and</strong> has had sufficient time in which to conduct <strong>and</strong> perform a thorough<br />
due diligence of HHSC's operations <strong>and</strong> business requirements <strong>and</strong> assets currently used by HHSC<br />
in providing the <strong>Services</strong>. Accordingly, Service Provider shall not seek any adjustment in the Charges<br />
based on any incorrect assumptions made by Service Provider in arriving at the Charges.<br />
14.3 Interoperability<br />
Service Provider represents, warrants <strong>and</strong> covenants that the Software, Equipment <strong>and</strong> Systems<br />
provided by Service Provider <strong>and</strong>/or used to provide the <strong>Services</strong> shall be interoperable with the<br />
software, equipment <strong>and</strong> systems used by HHSC to the extent necessary to provide the same or<br />
similar services <strong>and</strong>/or to deliver records to, receive records from or otherwise interact with the<br />
Software, Equipment <strong>and</strong> Systems to receive the <strong>Services</strong>.<br />
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15.0 INSURANCE AND RISK OF LOSS<br />
15.1 Insurance<br />
15.1..1 Requirements.<br />
Service Provider agrees to keep in full force <strong>and</strong> effect <strong>and</strong> maintain at its sole cost <strong>and</strong> expense the<br />
following policies of insurance with the specified minimum limits of liability during the Term of the<br />
Agreement:<br />
i. Workers’ Compensation <strong>and</strong> Employer’s Liability Insurance in full compliance with the<br />
applicable Laws of the State <strong>and</strong>, as applicable, such other state in which the work is to be<br />
performed. Each such policy shall contain a waiver of subrogation endorsement against the<br />
State, HHSC <strong>and</strong> their respective officers, directors, employees, agents, successors <strong>and</strong><br />
assigns.<br />
The limits of liability of Workers' Compensation Insurance shall be not less than the limits<br />
required by applicable Law.<br />
The limits of liability of Employer’s Liability Insurance shall not be less than $1,000,000 per<br />
employee by accident / $1,000,000 per employee by disease / $1,000,000 policy limit by<br />
disease (or, if higher, the policy limits required by applicable Law).<br />
ii. Commercial General Liability Insurance (including coverage for Contractual Liability assumed<br />
by Service Provider under this Agreement, Premises-Operations, Completed Operations-<br />
Products <strong>and</strong> Independent Contractors <strong>and</strong>, to the extent commercially reasonable, coverage<br />
for explosion, collapse, <strong>and</strong> underground property damage hazards) providing coverage for<br />
bodily injury, personal injury <strong>and</strong> property damage with limits of not less than $1,000,000 per<br />
occurrence. This coverage may be provided with a combination of primary <strong>and</strong> excess<br />
insurance policies.<br />
iii. Commercial Business Automobile Liability Insurance including coverage for all owned, nonowned,<br />
leased, <strong>and</strong> hired vehicles providing coverage for bodily injury <strong>and</strong> property damage<br />
liability with combined single limits of not less than $1,000,000 per occurrence, except as may<br />
otherwise be required by Law.<br />
iv. Professional Liability (also known as Errors <strong>and</strong> Omissions Liability) <strong>and</strong>, as <strong>and</strong> to the extent<br />
becoming commercially available, Cyber Risk Insurance covering acts, errors <strong>and</strong> omissions<br />
arising out of Service Provider’s operations or <strong>Services</strong> in an amount not less than<br />
$1,000,000 per occurrence.<br />
v. Comprehensive Crime Insurance including Employee Dishonesty Insurance <strong>and</strong> Computer<br />
Fraud Insurance, covering the loss of money, securities, <strong>and</strong> other property belonging to<br />
HHSC resulting from any fraudulent or dishonest acts committed by Service Provider<br />
employees, acting alone or with others, in an amount not less than $1,000,000 per<br />
occurrence.<br />
15.1..2 Approved Companies.<br />
All such insurance shall be procured with reputable insurance companies <strong>and</strong> in such form as is usual<br />
<strong>and</strong> customary to Service Provider’s business. Such insurance companies shall maintain a rating at<br />
least “A-” <strong>and</strong> be at least a Financial Size Category VIII as both criteria are defined in the most current<br />
publication of Best’s Policyholder Guide or comparable rating agency equivalent where applicable.<br />
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15.1..3 Endorsements.<br />
Service Provider shall obtain the following endorsements to its policy or policies of insurance (or so<br />
reflect in appropriate policy certificate(s)) as are necessary to cause the policy or policies to comply<br />
with the requirements stated herein.<br />
i. Service Provider’s insurance policies as required herein under HHSC Uniform Terms <strong>and</strong><br />
conditions (UTCs) shall name HHSC <strong>and</strong> their respective officers, directors <strong>and</strong> employees as<br />
Additional Insureds thereunder for liability (subject to the terms of this Agreement) arising at<br />
any time in connection with the performance of Service Provider or Service Provider<br />
Personnel under this Agreement. The policy required under UTCs shall have no cross-suits<br />
exclusion, or any similar exclusion that excludes coverage for claims brought by one insured<br />
under the policy against another insured under the policy.<br />
ii. The Service Provider insurance policies required under UTCs shall provide coverage on a per<br />
occurrence basis (i.e. not claims-based).<br />
iii. The Service Provider insurance policy required under UTCs shall name HHSC <strong>and</strong> their<br />
respective officers, directors <strong>and</strong> employees as loss payees as their interests may appear.<br />
iv. Each policy shall provide that it shall not be canceled or materially altered except after at least<br />
thirty (30) days advance written notice to HHSC that any such policy is canceled or materially<br />
altered (or, to the extent such policy does not so provide, Service Provider shall cause the<br />
applicable insurance company to agree to provide such notice). Should any policy expire or<br />
be canceled during the Term <strong>and</strong> should Service Provider thereafter fail to immediately<br />
procure replacement insurance as specified, HHSC reserves the right (but not the obligation)<br />
to procure such insurance <strong>and</strong> to deduct the cost thereof from any sums due Service Provider<br />
under this Agreement.<br />
v. All insurance required under the UTCs shall be primary insurance <strong>and</strong> any other valid<br />
insurance existing for HHSC’s benefit shall be excess of such primary insurance as respects<br />
the scope of this Agreement <strong>and</strong> as respects Service Provider’s liability.<br />
15.1..4 Minimum Amounts, Self-Insurance.<br />
These insurance provisions set forth the minimum amounts <strong>and</strong> scopes of coverage to be maintained<br />
by Service Provider <strong>and</strong> are not to be construed in any way as a limitation on Service Provider’s<br />
liability under this Agreement. Service Provider shall not self-insure any of its obligations under this<br />
Agreement. Any <strong>and</strong> all deductibles in the above-referenced insurance policies shall be assumed by,<br />
for the account of, <strong>and</strong> at the sole risk of the Service Provider.<br />
15.1..5 Certificates.<br />
Service Provider shall provide HHSC with certificates of insurance evidencing compliance (including<br />
evidence of renewal of insurance) signed by authorized representatives of the respective carriers for<br />
each year that this Agreement is in effect.<br />
15.1..6 No Implied Limitation.<br />
The obligation of Service Provider to provide the insurance specified herein shall not limit or exp<strong>and</strong> in<br />
any way any obligation or liability of Service Provider provided elsewhere in this Agreement. The<br />
rights of HHSC to insurance coverage under policies issued to or for the benefit of one or more of<br />
them are independent of this Agreement shall not be limited by this Agreement.<br />
15.1..7 Waiver of Subrogation.<br />
With respect to insurance coverage to be provided by Service Provider pursuant to UTCs, the<br />
insurance policies shall provide that the insurance companies waive all rights of subrogation against<br />
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<strong>Texas</strong> <strong>Health</strong> <strong>and</strong> <strong>Human</strong> <strong>Services</strong> Commission<br />
Print Date: December 21, 2011— Page 67<br />
Service Provider, the State, HHSC <strong>and</strong> their respective Affiliates, officers, directors <strong>and</strong> employees.<br />
Service Provider waives its rights to recover against HHSC <strong>and</strong> their respective officers, directors,<br />
employees, agents, successors <strong>and</strong> assigns in subrogation or as subrogee for another party <strong>and</strong><br />
shall, to the extent available on a commercially reasonable basis, similarly arrange for such waiver<br />
with respect to the coverage provided by Service Provider pursuant to the UTCs.<br />
15.2 Place of Performance<br />
Unless otherwise agreed to in writing, all <strong>Services</strong> performed by Service Provider, its Subcontractors<br />
<strong>and</strong> agents shall be performed in the United States.<br />
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