529-12-0006 RFP (PDF) - Texas Health and Human Services ...

Texas Health and Human Services
Commission
Thomas Suehs, Executive Commissioner
Request for Proposal for
Texas Integrated Eligibility Redesign System (TIERS) Data Center
Services
RFP No. 529-12-0006
Date of Release:
12/21/2011
Date Proposals are due:
1/31/2012
Time Proposals are due:
2:00 PM CT
CPA Class/Item Codes: 920-29, 920-37, 920-23, 920-45, 920-47, 939-21, 958-23
Direct all inquiries regarding this RFP to:
Abel Martinez, C.T.P.M
Purchaser
Phone: 512‐206‐5524
Email: Abel.Martinez@hhsc.state.tx.us

Texas Health and Human Services Commission
Print Date: December 21, 2011— Page 2
Table of Contents
Attachments.................................................................................................................... viii
Procurement Library......................................................................................................x
1.0 Introduction ......................................................................................................12
1.1 Purpose ...........................................................................................................................12
1.2 Project Description.........................................................................................................12
1.2..1 Introduction ......................................................................................................................12
1.2..2 HHSC Point of Contact ..................................................................................................12
1.3 Provision, Performance and Management by Respondent.....................................13
1.4 Definitions........................................................................................................................13
1.5 HHSC Uniform Contract Terms and Conditions........................................................13
1.6 Supplemental Terms......................................................................................................13
2.0 Procurement Process .....................................................................................14
2.1 HHSC Amendments and Announcements Regarding this RFP.............................14
2.2 RFP Cancellation/Partial Award/Non-Award. ............................................................14
2.3 Right to Reject Proposals or Portions of Proposals..................................................14
2.4 Costs Incurred. ...............................................................................................................14
2.5 Protest Procedures. .......................................................................................................14
2.6 Interpretive Conventions. ..............................................................................................14
2.7 Contact with HHSC Staff...............................................................................................15
2.8 Respondent Questions..................................................................................................15
2.9 Questions and Comments. ...........................................................................................15
2.10 Modification or Withdrawal of Proposal. .....................................................................15
2.11 News Releases. .............................................................................................................16
2.12 Incomplete Proposals....................................................................................................16
2.13 State Use of Ideas. ........................................................................................................16
2.14 Property of HHSC. .........................................................................................................16
2.15 Copyright Restriction. ....................................................................................................16
2.16 Additional Information....................................................................................................16
2.17 Multiple Responses. ......................................................................................................16
2.18 No Joint Proposals.........................................................................................................16
2.19 Use of Subcontractors...................................................................................................17
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Print Date: December 21, 2011— Page 3
2.20 Anticipated Schedule.....................................................................................................17
2.21 Response Deadline and Submission Requirements. ...............................................17
3.0 Instructions for Submitting Proposals ........................................................17
3.1 Detailed Instructions. .....................................................................................................17
3.2 Response. .......................................................................................................................18
4.0 Proposal evaluation ........................................................................................18
4.1 Proposal Evaluation and Award...................................................................................18
4.2 Evaluation Criteria..........................................................................................................18
4.2..1 Initial Compliance Screening. .......................................................................................18
4.2..2 Competitive Field Determinations. ...............................................................................18
4.2..3 Oral Presentations and Site Visits. ..............................................................................18
4.2..4 Best and Final Offer. ......................................................................................................19
4.2..5 Discussions with Respondents.....................................................................................19
5.0 Contract elements ...........................................................................................19
6.0 Term...................................................................................................................19
6.1 Initial Term.......................................................................................................................19
6.2 Extension.........................................................................................................................19
7.0 Services.............................................................................................................20
7.1 Overview..........................................................................................................................20
7.2 Transition Services ........................................................................................................20
7.2..1 Knowledge Transfer. ......................................................................................................20
7.2..2 Transition Phase Deliverables......................................................................................20
7.2..3 Transition Phase Scope. ...............................................................................................20
7.3 Turnover Services..........................................................................................................20
7.4 Turnover assistance ......................................................................................................21
7.5 Turnover Plan .................................................................................................................21
7.6 Transformation Services ...............................................................................................21
8.0 Service Levels..................................................................................................21
8.1 Performance Standards ................................................................................................21
8.1..1 General Performance Standards. ................................................................................21
8.1..2 Service Level Performance Standards........................................................................21
8.2 Problem Analysis............................................................................................................22
8.2..1 Problem Analysis............................................................................................................22
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Print Date: December 21, 2011— Page 4
8.3 Continuous Improvement Reviews..............................................................................22
8.3..1 Perform proactive failure trend analysis......................................................................22
8.3..2 Reports.............................................................................................................................22
8.4 Measurement and Monitoring ......................................................................................22
8.4..1 Performance Measurement, Tuning. ...........................................................................22
8.5 Satisfaction Surveys ......................................................................................................22
8.5..1 HHSC Conducted Surveys............................................................................................22
8.5..2 Survey Follow-up............................................................................................................22
8.6 Notice of Adverse Impact..............................................................................................23
8.6..1 Notice of Adverse Impact. .............................................................................................23
9.0 Service Provider Personnel ..........................................................................23
9.1 Key Service Provider Personnel ..................................................................................23
9.1..1 Provider Personnel Requirements...............................................................................23
9.1..2 Personnel Removal........................................................................................................23
9.2 Service Provider Personnel Are Not State or HHSC Employees ...........................24
9.3 Responsibility for Service Provider Personnel...........................................................24
9.4 Replacement, Qualifications, and Retention of Service Provider Personnel........24
9.4..1 Sufficiency and Suitability of Personnel. .....................................................................24
9.4..2 Responsibility for Service Provider Personnel...........................................................25
9.4..3 Requested Replacement...............................................................................................25
9.5 Conduct of Service Provider Personnel......................................................................25
9.5..1 Conduct and Compliance..............................................................................................25
9.5..2 Identification of Service Provider Personnel...............................................................26
9.5..3 Restriction on Marketing Activity. .................................................................................26
9.6 Substance Abuse ...........................................................................................................26
9.6..1 Substance Abuse Policy................................................................................................26
9.6..2 Employee Removal. .......................................................................................................26
9.7 Union Agreements .........................................................................................................26
10.0 Service Provider Responsibilities ................................................................26
10.1 Operations Manual.........................................................................................................26
10.1..1 Operations Documentation................................................................................26
10.2 Reports, Data Correction, Re-Performance...............................................................27
10.2..1 Reports. ................................................................................................................27
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Print Date: December 21, 2011— Page 5
10.2..2 Back-Up Documentation. ...................................................................................27
10.2..3 Correction of Errors.............................................................................................27
10.3 Financial Support ...........................................................................................................27
10.3..1 Forecasting and Budgeting................................................................................27
10.4 Change Control ..............................................................................................................27
10.4..1 Compliance with Change Control Procedures................................................27
10.4..2 Financial Responsibility For Changes..............................................................28
10.4..3 HHSC Approval – Cost, Adverse Impact.........................................................28
10.4..4 Temporary Emergency Changes......................................................................29
10.4..5 Implementation of Changes...............................................................................29
10.4..6 Planning and Tracking........................................................................................29
10.4..7 Evaluation and Testing.......................................................................................29
10.5 Knowledge Transfer.......................................................................................................30
10.6 HHSC Rules/Employee Safety.....................................................................................30
10.6..1 HHSC Rules and Compliance...........................................................................30
10.6..2 Safety and Health Compliance..........................................................................30
10.7 Access to Specialized Service Provider Skills and Resources...............................31
10.7..1 Specialized Services...........................................................................................31
10.8 Notice of Decommissioning ..........................................................................................31
10.8..1 Notice of Decommissioning. ..............................................................................31
10.9 Subcontractors................................................................................................................31
10.9..1 Subcontractors.....................................................................................................31
10.10 Technology Plan.............................................................................................................32
10.10..1 Scope. ...................................................................................................................32
10.10..2 Technology Plan..................................................................................................32
10.10..3 Transition Plan.....................................................................................................32
10.10..4 Transformation Plan. ..........................................................................................32
10.11 Monitoring Tools.............................................................................................................33
11.0 Financial Approach — Business Terms ......................................................33
11.1 Overview of Financial Approach ..................................................................................33
11.2 Business Objective ........................................................................................................33
11.3 Financial Payment Structure and Provisions .............................................................33
11.3..1 Overview of Financial Payment Structures. ....................................................33
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Print Date: December 21, 2011— Page 6
11.3..2 Efforts to Minimize Financial Payments...........................................................33
11.3..3 Payment for Service and Deliverable Requirements.....................................34
11.3..4 Payment Disputes...............................................................................................34
11.3..5 Changes to Scope of Existing Services...........................................................35
11.3..6 New Services.......................................................................................................35
11.3..7 Extraordinary Events. .........................................................................................36
11.3..8 Unanticipated Change........................................................................................36
11.3..9 Service Provider Labor Rates for Changes to Services and Tasks. ...........36
11.4 Additional Financial Components ................................................................................37
11.4..1 Ownership of all Capital Items. .........................................................................37
11.4..2 Prospective Price Re-determination.................................................................39
11.4..3 Financial Operations Plan..................................................................................44
11.5 Financial: Accounting and Reporting Requirements ................................................44
11.5..1 Overview...............................................................................................................44
11.5..2 Business Objectives. ..........................................................................................44
11.5..3 Financial Accounting Requirements.................................................................45
11.5..4 General Access to Accounting Records..........................................................47
11.5..5 Financial Report Requirements. .......................................................................48
11.5..6 HHSC Responsibilities. ......................................................................................48
12.0 Historically Underutilized Business (HUB) Participation .........................49
12.1 HUB Participation...........................................................................................................49
12.6 CPA Centralized Master Bidders List..........................................................................50
12.7 HUB Subcontracting Procedures – If a Respondent Intends to Subcontract .......50
12.7.1 Identify Subcontracting Areas and Divide Them into Reasonable Lots .................50
12.7.2 Notify Potential HUB Subcontractors...........................................................................51
12.7.3 Method 1: Respondent Intends to Subcontract with only HUBs: ...........................51
12.7.7 Written Justification of the Selection Process.................................................52
12.8 Method 5: Respondent Does Not Intend to Subcontract ........................................52
12.9 Post-award HSP Requirements...................................................................................53
13.0 Security Compliance.......................................................................................54
13.1 Confidentiality .................................................................................................................54
13.1..1 Limits.....................................................................................................................54
13.1..2 Confidential Information. ....................................................................................54
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Print Date: December 21, 2011— Page 7
13.1..3 Disclosure of Confidential Information. ............................................................54
13.1..4 Transfer of HHSC Confidential Information. ...................................................56
13.2 Security Standards.........................................................................................................57
13.2..1 Security Management Plan. ..............................................................................57
13.3 Data Access....................................................................................................................57
13.3..1 Property. ...............................................................................................................57
13.3..2 Security Standards..............................................................................................57
13.3..3 Integrity of Security Measures...........................................................................57
13.3..4 Backup. .................................................................................................................57
13.3..5 Security Breach. ..................................................................................................57
13.4 HHSC Personal Data.....................................................................................................58
13.4..1 Personal Medical Data .......................................................................................59
13.5 File Access......................................................................................................................59
13.6 HHSC Data – Correction and Restoration .................................................................60
13.6..1 Corrections...........................................................................................................60
13.6..2 Re-running of Corrected Data. ..........................................................................60
13.6..3 Restoration of Data. ............................................................................................60
13.6..4 Cardholder Data. .................................................................................................60
13.7 FTI Compliance ..............................................................................................................61
13.8 Malicious Code ...............................................................................................................63
13.9 Disabling Code ...............................................................................................................63
13.10 Compliance with Federal and State Laws..................................................................63
13.10..1 Federal Oversight................................................................................................63
13.10..2 State Oversight....................................................................................................63
13.11 Requirements for Information in Legal Proceedings ................................................63
13.11..1 Preservation of Legal Privilege. ........................................................................63
13.11..2 Service Provider Responsibility for HHSC Information. ................................64
13.11..3 Cost of Compliance.............................................................................................64
14.0 Representations, Warranties And Covenants ............................................64
14.1 Information Furnished to HHSC...................................................................................64
14.1..1 Information Furnished to HHSC........................................................................64
14.2 Completeness of Due Diligence Activities..................................................................64
14.3 Interoperability ................................................................................................................64
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Texas Health and Human Services Commission
Print Date: December 21, 2011— Page 8
15.0 Insurance And Risk Of Loss..........................................................................65
15.1 Insurance.........................................................................................................................65
15.1..1 Requirements.......................................................................................................65
15.1..2 Approved Companies. ........................................................................................65
15.1..3 Endorsements......................................................................................................66
15.1..4 Minimum Amounts, Self-Insurance. .................................................................66
15.1..5 Certificates. ..........................................................................................................66
15.1..6 No Implied Limitation. .........................................................................................66
15.1..7 Waiver of Subrogation........................................................................................66
15.2 Place of Performance ....................................................................................................67
Attachments
Table 1.
Attachments
Attachment
Attachment 1.0
Attachment 1-A
Attachment 1-B
Request For Proposals
Response Instructions
Response Template
Contents
Attachment 2.0
Attachment 3.0
Attachment 4.0
Attachment 5.0
Attachment 5-A
Attachment 5-B
Attachment 5-C
Attachment 5-D
Attachment 6.0
Definitions including Common Terms and Acronyms
Statement of Work
Service Level Agreements – Matrix, Definitions, Tools, Methodologies
Pricing and Financial Provisions
Instructions for Submittal of Pricing Forms
A-1: Transition Pricing Forms
A-2: Operational Pricing Forms
A-3: Proposed Fees
Governance Model
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RFP # 529‐12‐0006

Texas Health and Human Services Commission
Print Date: December 21, 2011— Page 9
Attachment 6-A
Attachment 6-B
Service Management Manual
Functional Organization Chart
Exhibits
Table 2.
Exhibit 1.0
Exhibit 2.0
Exhibit 3.0
Exhibit 4.0
Exhibit 5.0
Exhibit 6.0
Exhibit 7.0
RFP Exhibits
Technology Plan & Assets
Operations Manuals
Respondent Assumptions
Alternate Solution(s)
Transition Plan
Solution Request
Reports
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Texas Health and Human Services Commission
Print Date: December 21, 2011— Page 10
Procurement Library
Table 3.
Procurement Library Contents
Reference Category
HHSC Program Policy
Handbooks
Glossary
Security
Requirements
Electronic State
Business Daily
(ESBD)
HHSC Uniform Terms
and conditions
Electronic and
Information
Resources
Accessibility
Standards, as
Required by Title 1
TAC Chapter 213
Voluntary Product
Accessibility Template
(VPAT)
HHSC Business
Opportunity Web site
Web site for this RFP
HHSC’s Respondent
protest procedures
HUB Subcontracting
Plan
Texas Works Programs
HHSC Policy Handbooks
Reference
http://www.dads.state.tx.us/handbooks/tppg/glossary/index.h
tm
http://hhscx.hhsc.state.tx.us/eit/Security/ESM-
Policies/espsg.doc
http://esbd.cpa.state.tx.us
http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch
/General_TC.pdf
http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTACtac_
view=4&ti=1&pt=10&ch=213
http://www.section508.gov/
http://www.hhsc.state.tx.us/contract/529080208/rfp_home.ht
ml
http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_home.s
html
Texas Administrative Code, Title 1, Part 15, Chapter 392,
Subchapter C
Historically Underutilized Business (HUB) Subcontracting
Plan
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Texas Health and Human Services Commission
Print Date: December 21, 2011— Page 11
Reference Category
Texas Administrative
Code
IT Staffing Services
roles defined by the
Texas Department of
Information
Resources
CPA’s Centralized
Master Bidders List
(CMBL) HUB
Directory
HUB Subcontracting
Procedures
IRS Publication 1075
USDA Automated
Data Processing
(ADP) security
regulations
Computer Security Act
of 1987
Required
Certifications
Reference
1 Texas Administrative Code Chapter 391
http://www.dir.state.tx.us/store/busops/staffing/itsac/fulldesc.
htm
http://www.cpa.state.tx.us/procurement/cmbl/cmblhub.html
http://www.cpa.state.tx.us/procurement/prog/hub/hubsubcontracting-plan/
http://www.irs.gov/pub/irs-pdf/p1075.pdf
http://www.gpoaccess.gov/cfr/retrieve.html
http://www.epic.org/crypto/csa/csa.html
http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch
/attach.shtml
TIERS Re‐procurement
RFP # 529‐12‐0006

Texas Health and Human Services Commission
Print Date: December 21, 2011— Page 12
1.0 INTRODUCTION
1.1 Purpose
The Health and Human Services Commission (HHSC), State of Texas, invites all interested and
qualified vendors to submit proposals to provide Data Center Services for the maintenance and
ongoing support of the Texas Integrated Eligibility Redesign System (“TIERS”) for State health and
human services programs. The successful Respondent shall support the Commission’s philosophy:
Every Texan should be able to access and utilize available health and human services
provided by state agencies in the most integrated, efficient and cost- effective setting
possible. The Texas HHS System is dedicated to developing client-focused program and
policy initiatives that are relevant, timely, and within the means of the taxpayers of the
State of Texas. The HHS System will advocate for client-choice, appropriate funding, and
streamlined service delivery.
1.2 Project Description
HHSC has reviewed options for obtaining ongoing managed services for the TIERS/Eligibility
Supporting Technology (EST) infrastructure. Given the technical complexity of the established
environment exceeding the current Data Center Services (DCS) contract's technical standards and
the current status of the statewide DCS initiative, HHSC has concluded that re-procurement of
managed services provides the best option for obtaining continued services.
1.2..1 Introduction
This document contains instructions and general information to be used by the respondent when
responding to the TIERS Data Center Services Request for Proposal (RFP) issued by the State of
Texas, acting by and through HHSC.
The RFP Instructions will be posted as 529-12-0006 on the Electronic State Business Daily (ESBD),
http://esbd.cpa.state.tx.us.
1.2..2 HHSC Point of Contact
The sole point of contact for inquiries concerning this RFP is:
Abel Martinez, Purchaser
Health and Human Services Commission
Enterprise Contract & Procurement Services
4405 North Lamar Blvd., Bldg. 1
Austin, TX 78756
Phone: 512-206-5524
Fax: 512-206-4605
Email Address: abel.martinez@hhsc.state.tx.us
All communications relating to this RFP shall be directed to the HHSC contact person named above.
All communications between Respondents and other HHSC staff members concerning this RFP are
strictly prohibited. Failure to comply with these requirements may result in proposal disqualification.
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1.3 Provision, Performance and Management by Respondent
HHSC desires that certain services presently provided, performed and managed by or for HHSC be
provided, performed and managed by respondent as described in this Agreement. By submitting a
proposal in response to this RFP, Respondent attests that respondent has carefully reviewed HHSC's
requirements, has performed all due diligence it deems necessary, and desires to deploy, perform
and manage such services for HHSC.
1.4 Definitions
Except as otherwise expressly provided in this Agreement, all capitalized terms used in this
Agreement shall have the meanings ascribed to them in Attachment 2.0 to this RFP (Definitions).
Capitalized terms used in this Agreement but not defined in Attachment 2.0 shall have the meanings
ascribed to them in the current Information Technology Infrastructure Library (ITIL). Words having
well-known technical or trade meanings, but not otherwise defined in Attachment 2.0 or in ITIL, shall
be accorded such meaning. Terms or phrases that are not capitalized are to be given their usual
meaning.
1.5 HHSC Uniform Contract Terms and Conditions
1.6 Supplemental Terms
HHSC’s Uniform Contract Terms and Conditions (UTCs) are incorporated into this RFP and will
become a part of any contract that may result from this solicitation. A copy of the current UTCs may
be retrieved at: http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf
All provisions of Article 16 of the UTCs (Supplemental Conditions) are incorporated into this RFP. In
addition, the following provisions are intended to clarify or elaborate on certain specified provisions in
Article 16. HHSC reserves the right to negotiate different or additional terms and conditions
prior to the award of a contract.
A. The terms “Custom Software” and “Documentation” referenced in Section 16.06 Ownership
and Licenses of the UTCs shall include software and documentation that has been partially
developed by the Contractor under the terms of the contract but have not yet been delivered to
HHSC or formally accepted by HHSC as an approved deliverable.
B. The Parties agree that any Deliverable, including without limitation any Custom Software and
Documentation, developed by Contractor in connection with the Agreement will be the
exclusive property of HHSC immediately upon its creation.
C. ACCESSIBILITY STANDARDS COMPLIANCE: Electronic and Information Resources
Accessibility Standards, as Required by Title 1 TAC Chapter 213
http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTACtac_view=4&ti=1&pt=10&ch=213.
i. Effective September 1, 2006 state agencies and institutions of higher education shall
procure products which comply with the State of Texas Accessibility requirements for
Electronic and Information Resources specified in TAC Chapters 206 and 213 when
such products are available in the commercial marketplace or when such products are
developed in response to a procurement solicitation. Vendor represents and warrants
that technology to be provided to the HHS agency is in compliance with these
requirements.
ii. Respondents shall provide the HHS agency with the URL to its Voluntary Product
Accessibility Template (VPAT) for reviewing compliance with the State of Texas
Accessibility requirements (based on the federal standards established under Section 508
of the Rehabilitation Act), or indicate that the product/service accessibility information is
available from the General Services Administration “Buy Accessible Wizard”
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(http://www.buyaccessible.gov). Prospective service providers not listed with the “Buy
Accessible Wizard” or supplying a URL to their VPAT shall provide the HHS agency with
a report that addresses the same accessibility criteria in substantively the same format.
Additional information regarding the “Buy Accessible Wizard” or obtaining a copy of the
VPAT is located at http://www.section508.gov/.
2.0 Procurement Process
2.1 HHSC Amendments and Announcements Regarding this RFP.
HHSC will post all official communication regarding this RFP on the HHSC Business Opportunity Web
site http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asp and the Electronic State
Business Daily (http://esbd.cpa.state.tx.us/), including the notice of tentative award. HHSC reserves
the right to revise the RFP at any time. Any changes, amendments, or clarifications will be made in
the form of written responses to Respondent questions, amendments, or addendum issued by HHSC
on its Web site and the Electronic State Business Daily (http://esbd.cpa.state.tx.us/). Respondents
should check the Web site frequently for notice of matters affecting the RFP. To access the Web site,
go to the “HHSC Contracting Opportunities“ page and enter a search for this procurement. The web
site for this RFP is http://www.hhsc.state.tx.us/about_hhsc/BusOpp/BO_opportunities.asp.
2.2 RFP Cancellation/Partial Award/Non-Award.
HHSC reserves the right to cancel this RFP, to make a partial award, or to make no award if it
determines that such action is in the best interest of the State of Texas.
2.3 Right to Reject Proposals or Portions of Proposals.
HHSC may, at its discretion, reject any and all proposals or portions thereof.
2.4 Costs Incurred.
Respondents understand that issuance of this RFP in no way constitutes a commitment by HHSC to
award a Contract or to pay any costs incurred by a Respondent in the preparation of a response to this
RFP. HHSC is not liable for any costs incurred by a Respondent prior to issuance of or entering into a
formal agreement, contract, or purchase order. Costs of developing proposals, preparing for or
participating in oral presentations and site visits, or any other similar expenses incurred by a
Respondent are entirely the responsibility of the Respondent, and will not be reimbursed in any
manner by the State of Texas.
2.5 Protest Procedures.
Texas Administrative Code, Title 1, Part 15, Chapter 392, Subchapter C outlines HHSC’s Respondent
protest procedures.
2.6 Interpretive Conventions.
Whenever the terms “shall,” “must,” or “is required” are used in this RFP in conjunction with a
specification or performance requirement, the specification or requirement is mandatory. A
Respondent’s failure to address or meet any mandatory requirement in a proposal may be cause for
HHSC’s rejection of the proposal.
Whenever the terms “can,” “may,” or “should” are used in this RFP in conjunction with a specification
or performance requirement, the specification or performance requirement is a desirable, but not
mandatory, requirement. Accordingly, a Respondent’s failure to address or provide any items so
referred to will not be the cause for rejection of the proposal, but may result in a less favorable
evaluation.
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2.7 Contact with HHSC Staff.
Upon issuance of the RFP, employees and representatives of HHSC other than the Point of Contact
identified in Section 1.2.2 above will not discuss the contents of this RFP with any respondent or its
representatives. Failure of a respondent and any of its representatives to observe this restriction may
result in disqualification of any related response. This restriction does not preclude discussion
between affected parties for the purpose of conducting business unrelated to this procurement.
The respondent shall not provide any form of special incentive to HHSC employees or its
representatives during this RFP process.
2.8 Respondent Questions.
HHSC will hold a vendor conference on January 5, 2012 at 1:30PM in the John H. Winters Building
Room 125W, 701 West 51st Street, Austin, TX 78756. Vendor conference attendance is strongly
recommended, but is not required.
Respondents may e-mail questions for the conference to the HHSC Point of Contact (see Section
1.2.2) no later than four (4) days before 1/13/2012 at 1:00 PM CT. HHSC will also give Respondents
the opportunity to submit written questions at the conference. All questions shall reference the
appropriate RFP page and section number. HHSC will attempt to respond to questions at the
Respondent conference, but responses are not official until posted in final form on the HHSC Web site.
HHSC reserves the right to amend answers prior to the proposal submission deadline.
2.9 Questions and Comments.
All questions and comments regarding this RFP shall be sent to the HHSC Point of Contact (see
Section 1.2.2). Questions shall reference the appropriate RFP page and section number, and must be
submitted by the deadline set forth in Section 2.20. HHSC will not respond to questions received after
the deadline. HHSC’s responses to Respondent questions will be posted to the HHSC Web site.
HHSC reserves the right to amend answers prior to the proposal submission deadline.
Respondents must notify HHSC of any ambiguity, conflict, discrepancy, exclusionary specification,
omission or other error in the RFP by the deadline for submitting questions and comments. If a
Respondent fails to notify HHSC of these issues, it will submit a proposal at its own risk, and if
awarded a contract: (1) shall have waived any claim of error or ambiguity in the RFP or resulting
contract, (2) shall not contest HHSC’s interpretation of such provision(s), and (3) shall not be entitled to
additional compensation, relief or time by reason of the ambiguity, error, or its later correction.
2.10 Modification or Withdrawal of Proposal.
Prior to the proposal submission deadline set forth in Section 2.21, a Respondent may: (1) withdraw its
proposal by submitting a written request to the HHSC Point of Contact, or (2) modify its proposal by
submitting a written amendment to the HHSC Point of Contact. HHSC may request proposal
modifications at any time.
HHSC reserves the right to waive minor informalities in a proposal and award a contract that is in the
best interest of the State of Texas. A “minor informality” is an omission or error that, in HHSC’s
determination, if waived or modified when evaluating proposals, would not give a Respondent an unfair
advantage over other prospective service providers or result in a material change in the proposal or
RFP requirements. When HHSC determines that a proposal contains a minor informality, it may at its
discretion provide the Respondent with the opportunity to correct.
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2.11 News Releases.
Prior to tentative award, a Respondent may not issue a press release or provide any information for
public consumption regarding its participation in the procurement. After tentative award, a Respondent
must receive prior written approval from HHSC before issuing a press release or providing information
for public consumption regarding its participation in the procurement. Requests shall be directed to the
HHSC Point of Contact identified in Section 1.2.2.
This does not preclude business communications necessary for a Respondent to develop a proposal,
or required reporting to shareholders or governmental authorities.
2.12 Incomplete Proposals.
HHSC may reject without further consideration a proposal that does not include a complete,
comprehensive, or total solution as requested by the RFP.
2.13 State Use of Ideas.
HHSC reserves the right to use any and all ideas presented in a proposal unless the Respondent
presents a valid legal case that such ideas are trade secret, confidential, or otherwise protected
information, and identifies the information as such in its proposal (see Article 13). A Respondent may
not object to the use of ideas that are not the Respondent’s intellectual property and so designated in
the proposal that: (1) were known to HHSC before the submission of the proposal, (2) were in the
public domain through no fault of HHSC, or (3) became properly known to HHSC after proposal
submission through other sources or through acceptance of the proposal.
2.14 Property of HHSC.
Except as otherwise provided in this RFP or the resulting contract, all products produced by a
Respondent, including without limitations the proposal, all plans, designs, software, hardware and other
contract deliverables, become the sole property of HHSC upon expiration of the contract unless
otherwise agreed to by HHSC.
2.15 Copyright Restriction.
HHSC will not consider any proposal that bears a copyright.
2.16 Additional Information.
By submitting a proposal, the Respondent grants HHSC the right to obtain information from any lawful
source regarding the Respondent’s and its directors’, officers’, and employees’: (1) past business
history, practices, and conduct, (2) ability to supply the goods and services, and (3) ability to comply
with contract requirements. By submitting a proposal, a Respondent releases from liability and waives
all claims against any party providing HHSC information about the Respondent. HHSC may take such
information into consideration in evaluating proposals.
2.17 Multiple Responses.
A Respondent may only submit one proposal as a prime contractor. If a Respondent submits more
than one proposal, HHSC may reject one or more of the submissions. This requirement does not limit
a subcontractor’s ability to collaborate with one or more Respondents submitting proposals.
2.18 No Joint Proposals.
HHSC will not consider joint or collaborative proposals that require it to contract with more than one
Respondent.
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2.19 Use of Subcontractors.
Subcontractors providing services under the contract shall meet the same requirements and level of
experience as required of the Respondent. No subcontract under the contract shall relieve the
Respondent of the responsibility for ensuring the requested services are provided. Respondents
planning to subcontract all or a portion of the work to be performed shall identify the proposed
subcontractors.
2.20 Anticipated Schedule.
It is HHSC’s intention to comply with the following schedule for this RFP. These dates represent a
tentative schedule of events. HHSC reserves the right to modify these dates at any time, with
appropriate notice to prospective Service Providers.
Procurement Schedule
RFP Release Date 12/21/2011
Vendor Conference
Vendor Questions Due
1/5/2012 at 1:30 PM CT
1/13/2012 at 2:00 PM CT
HHSC Posts Responses to Vendor Questions 1/20/2012
Proposals Due
Deadline for Proposal Withdrawal
1/31/2012 at 2:00 PM CT
1/31/2012 at 2:00 PM CT
Selected Respondent Presentations 2/23/2012
Tentative Award Announcement 3/1/2012
Anticipated Contract Start Date 4/1/2012
Operational Start Date 7/1/2012
Any key date changes that occur during the RFP process shall be posted on the ESBD as an
addendum to this RFP.
2.21 Response Deadline and Submission Requirements.
Respondents are invited to submit responses in accordance with the requirements outlined in this
document. Responses must be received by HHSC on or before 2:00 pm (CT) on January 31, 2012.
No late responses will be reviewed. Responses shall be hand-delivered or mailed to the submittal
address listed in Section 1.2.2 of the RFP Instructions. No facsimile or email responses shall be
accepted.
3.0 Instructions for Submitting Proposals
3.1 Detailed Instructions.
Detailed instructions for responding to this RFP are found in Attachment 1-A, Response Instructions.
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3.2 Response.
The response Template, Attachment 1-B is a comprehensive document to capture acknowledgements
and deliverables required to be considered as a Respondent.
4.0 PROPOSAL EVALUATION
4.1 Proposal Evaluation and Award
HHSC will use a formal evaluation process to select the successful Respondent(s). HHSC will consider
capabilities or advantages that are clearly described in the proposal, which may be confirmed by oral
presentations, site visits, demonstrations, and references contacted by HHSC. HHSC reserves the
right to contact individuals, entities, or organizations that have had dealings with the Respondent or
proposed staff, whether or not identified in the proposal.
HHSC will more favorably evaluate proposals that offer no or few exceptions, reservations, or
limitations to the terms and conditions of the RFP including HHSC’s Uniform Contract Terms and
Conditions http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf.
The evaluation of proposals will be conducted in accordance with 1 Texas Administrative Code
Chapter 391.
4.2 Evaluation Criteria.
HHSC will evaluate proposals based on the following best value criteria, listed in order of precedence:
4.2..1 Initial Compliance Screening.
HHSC will perform an initial screening of all proposals received. Unsigned proposals and proposals
that do not include all required forms and sections are subject to rejection without further evaluation. In
accordance with its rules; HHSC reserves the right to waive minor informalities in a proposal and
award contracts that are in the best interest of the State of Texas.
4.2..2 Competitive Field Determinations.
HHSC may determine that certain proposals are within the field of competition for admission to
discussions. The field of competition consists of the proposals that receive the highest or most
satisfactory evaluations. HHSC may, in the interest of the state, place reasonable limits on the
number of proposals admitted to the field of competition. Respondent’s submittals will be judged on
price, solution set, staff qualifications and Respondent’s experience.
4.2..3 Oral Presentations and Site Visits.
HHSC may, at its sole discretion, request oral presentations, site visits, and/or demonstrations from
one or more respondents admitted to the field of competition. HHSC will notify selected respondents
of the time and location for these activities, and may supply agendas or topics for discussion. HHSC
reserves the right to ask additional questions during oral presentations, site visits, and or
demonstrations to clarify the scope and content of the written proposal.
The respondent’s oral presentation, site visit, and/or demonstration shall substantially represent
material included in the written proposal, and should not introduce new concepts or offers unless
specifically requested by HHSC.
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4.2..4 Best and Final Offer.
HHSC may, but is not required to, permit respondents to prepare one or more revised offers. For this
reason, respondents are encouraged to treat their original proposals, and any revised offers
requested by HHSC, as best and final offers.
4.2..5 Discussions with Respondents.
HHSC may, but is not required to, conduct discussions with all, some, or none of the respondents
admitted to the field of competition for the purpose of obtaining the best value for HHSC. It may
conduct discussions for the purpose of:
obtaining clarification of proposal ambiguities;
requesting modifications to a proposal; and/or
obtaining a best and final offer.
HHSC may make an award prior to the completion of discussions with all respondents admitted to the
field of competition if HHSC determines that the award represents best value to the State of Texas.
5.0 CONTRACT ELEMENTS
The term “contract” means the contract awarded as a result of this RFP. At a minimum, the following
documents will be incorporated into the contract: this RFP and all attachments and exhibits; any
modifications, addendum or amendments issued in conjunction with this RFP; HHSC’s Uniform
Contract Terms and Conditions (UTCs), Version 1.4.1; the successful Respondent’s proposal, any
document formally executed by both parties indicating their assent to the terms of the contract, and
any other documents expressly identified by the parties and incorporated into the final contract as well
as all exhibits or attachments to any such documents.
One or more of the “Special Terms” located in Article 16 of the UTCs may apply to the contract, and
HHSC reserves the right to negotiate additional contract terms and conditions. Respondents are
responsible for reviewing the UTCs and noting any exceptions, reservations, and limitations on the
Respondent Information and Disclosures form. For purposes of this RFP, all of the Special Terms in
Article 16 will apply to any contract that may result from this solicitation.
6.0 TERM
6.1 Initial Term
The initial term of this Agreement shall commence as of 12:00:00 a.m., Central Time on the Effective
Date and continue until 11:59:59 p.m., Central Time, on [Initial Term: 4-years, 2 months], unless this
Agreement is terminated earlier as provided herein, in which case the initial term of this Agreement
shall end at 11:59:59 p.m., Central Time, on the effective date of such termination (the "Initial Term").
6.2 Extension
By giving notice to Service Provider no less than ninety (90) days prior to the expiration date of the
Initial Term or the then-current Renewal Term, HHSC shall have the right to extend the Term for two
(2) extension periods (each, a "Renewal Term") of up to two (2) years each (the exact period of which
shall be specified in HHSC's notice of extension) on the terms and conditions of this Agreement
(including Charges) that are then in effect. No Termination Charge shall be applicable to any
termination on or after the end of the Initial Term.
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7.0 SERVICES
HHSC bases its Service Management practices on the Information Technology Infrastructure Library
(ITIL), a world-wide recognized best-practice framework for the management and delivery of IT
services throughout their full life-cycle. Accordingly, HHSC requires that the prospective service
provider’s Service Management practices, which are used to support the Services, be based on the
ITIL framework and guidance. The primary structure of the requirements in the Statements of Work
is based on an ITIL v2 foundation with ITIL v3 guidance in select functional areas (e.g. Request
Management and Fulfillment).
7.1 Overview
HHSC is not interested in adopting a new methodology. Prospective service providers are asked to
leverage existing tools, processes and methodologies already in use by HHSC, providing
recommendations for updates and changes for HHSC to evaluate and approve. Existing
methodologies and assets are further defined in the Technology Plan, Exhibit 1.0.
7.2 Transition Services
Vendor will provide Transition Services beginning on or before the Effective Date. The transitional
deliverables are defined in Attachment 4 0_SLA Definitions-Tools-Methodologies, Section B.
7.2..1 Knowledge Transfer.
To ensure a successful transition of services from the current TIERS Data Center Maintenance and
Operations service provider, the respondent to this RFP shall have a sound plan for specifying,
tracking, and completing knowledge transfer activities. The respondent shall present in its proposal,
its approach to knowledge transfer and a detailed plan for accomplishing the transfer.
7.2..2 Transition Phase Deliverables.
During the Transition Phase, Service Provider will produce the Critical Deliverables listed in
Attachment 4.0, Section B, Critical Deliverables and Attachment 3.0, E.5, Transitional Deliverables.
7.2..3 Transition Phase Scope.
In addition to the development, approval and implementation of Transition Phase deliverables
specified in Attachment 4.0, Section B( Critical Deliverables), and Attachment 3.0, E.5, Transitional
Deliverables the following key activities will take place during the Transition Phase:
Approval of Key Personnel
Knowledge Transfer
7.3 Turnover Services
The Service Provider will provide Turnover Services in order to facilitate the transfer of responsibilities from
the Service Provider to a successor vendor or to HHSC.
The primary objectives of the Turnover Phase are:
Ensuring a smooth transition of responsibilities;
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Completing knowledge transfer;
Ensuring that strong accountability controls are in place;
Mitigating risk to the State and its citizens and taxpayers.
7.4 Turnover assistance
Upon receipt of notice of termination or expiration of the Agreement by HHSC, Service Provider will provide
any turnover assistance reasonably necessary to enable HHSC or its designee to effectively close out the
Agreement and move the work to another vendor or to perform the work by itself.
7.5 Turnover Plan
Service Provider shall prepare and submit a Turnover Plan which is acceptable to and approved by HHSC
in its sole discretion. In the event of an early termination of the Agreement, the Turnover Plan will be
implemented during the time period specified by HHSC in its notice of termination. If the Agreement is not
terminated early, the Service Provider shall prepare, submit and obtain HHSC approval of the Turnover Plan
no later than 90 days prior to the Expiration Date of the Agreement.
7.6 Transformation Services
The Service Provider will describe its plan to transform the current Service Delivery and Service
support processes from its current state to a Refreshed State that incorporates all the necessary and
desirable technology changes and currency upgrades that are available for existing equipment and
software. Service Provider shall perform and provide the Transformation Services (including provision
of the deliverables) with enhancements as noted in Attachment 4.0, Section B.0 (Critical
Deliverables), and Attachment 3.0, Section E.5, Transitional Deliverables in a manner consistent with
the vision for Transformation expressed in Section 4 of Exhibit 1, the Technology Plan.
Transformation services will also include oversight and project management controls for the
Transformation initiatives. A refresh of equipment to supported levels, the upgrade of operating
software to current levels, the stabilization of service delivery, and critical refresh and upgrades of
technology in production and development environments are among the initiatives included. HHSC’s
disaster recovery requirements and the elimination of workload backlogs are also addressed.
8.0 SERVICE LEVELS
8.1 Performance Standards
8.1..1 General Performance Standards.
Beginning on the Effective Date, Service Provider shall perform the Services at levels of accuracy,
quality, completeness, timeliness, responsiveness, productivity and resource efficiency that are
expected from a tier one provider in the same or similar data center services. This Subsection shall
not be deemed to supersede the Service Levels in Attachment 4.0; Service Provider will determine
how it will present Service Level Measurement (SLA) data, with HHSC input and approval.
8.1..2 Service Level Performance Standards.
Beginning on the Effective Date, Service Provider shall perform the Services so as to meet or exceed
the Service Levels as set forth in or otherwise in accordance with Attachment 4.0, SLA. To the extent
the Parties have established a Service Level for a specific Service, the obligations described in
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Section 9.1.1, General Performance Standards, shall not be construed to alter, expand or supersede
such Service Level.
8.2 Problem Analysis
8.2..1 Problem Analysis.
Investigate incidents and problems that require an in-depth technical understanding per Incident
Management and Problem Management process guidelines as described in Attachment 3.0
Statement of Work.
8.3 Continuous Improvement Reviews
8.3..1 Perform proactive failure trend analysis.
Perform analysis to provide optimal use of production resources and provide feedback to Authorized
Users of those resources. Interface with the Incident Management and Problem Management
processes and liaise with all parties supporting incident and problem resolution.
8.3..2 Reports.
Produce trend reports to highlight production incidents and problems and establish predetermined
action and escalation procedures when incidents and problems are encountered.
8.4 Measurement and Monitoring
8.4..1 Performance Measurement, Tuning.
Monitor, verify, and make appropriate adjustments to support proper and timely performance of Data
Center infrastructure resources. Monitor resource activity to proactively prevent or resolve
performance, degradation or failure where such activities are part of the Service.
8.5 Satisfaction Surveys
8.5..1 HHSC Conducted Surveys.
HHSC may survey satisfaction with Service Provider's performance in connection with and as part of
broader satisfaction surveys periodically conducted by HHSC. At HHSC's request, Service Provider
shall cooperate and assist HHSC with the formulation of the survey questions, protocols and
procedures and the execution and review of such surveys.
8.5..2 Survey Follow-up.
If the results of any satisfaction survey conducted indicate that the level of Service Provider's
performance is less than satisfactory (Attachment 3.0,, Recurring Deliverables, Section E.6.6,
Customer Satisfaction Surveys) Service Provider shall promptly: (i) enter the negative report into the
appropriate Management system, (ii) conduct a Root Cause Analysis as to the cause of such
dissatisfaction; (iii) develop an action plan to address and improve the level of satisfaction; (iv) present
such plan to HHSC for its review, comment and approval; and (v) take action in accordance with the
approved plan and as necessary to improve the level of satisfaction or coordinate actions to improve
the level of satisfaction. HHSC and Service Provider shall establish a schedule for completion of a
Root Cause Analysis and the preparation and approval of the action plan which shall be reasonable
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and consistent with the severity and materiality of the problem; provided, that the time for completion
of such tasks shall not exceed thirty (30) days from the date such survey results are finalized and
reported. Service Provider's action plan developed hereunder shall specify the specific measures to
be taken by Service Provider and the dates by which each such action shall be completed. Within
forty-five (45) days after completion of the measures described in such action plan, Service Provider
shall conduct follow-up surveys with the affected HHSC users and management to confirm that the
cause of any dissatisfaction has been addressed and that the level of satisfaction has improved. The
Parties recognize that Service Provider's failure to take the actions set forth in such action plan by the
agreed upon dates may have an adverse impact on the operations and activities of HHSC.
Accordingly, if Service Provider fails to take the actions set forth in the action plan by the agreed upon
dates, then, the event will be escalated within the appropriate management system as described in
Attachment 3.0, Statement of Work until resolved. In addition to any other remedies available to
HHSC under this Agreement at Law or in equity, Service Provider shall pay to HHSC the applicable
remedies specified in the Agreement for such failure. Remedies are defined in the HHSC Uniform
Contract Terms & Conditions
[http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf] Article 11.
8.6 Notice of Adverse Impact
8.6..1 Notice of Adverse Impact.
If Service Provider becomes aware of any failure by Service Provider to comply with its obligations
under this Agreement or any other situation (a) that has impacted or reasonably could impact the
maintenance of HHSC's financial integrity or internal controls, the accuracy of HHSC's financial,
accounting or other records and reports, or compliance with HHSC Rules, HHSC Standards or
applicable Laws or (b) that has had or reasonably could have any other material adverse impact on
the Services in question or the impacted operations of HHSC, then, Service Provider shall
immediately inform HHSC in writing of such situation and the impact or expected impact and Service
Provider and HHSC shall meet as soon as possible, and, in any event, within five(5) working days
after receipt of Service Provider’s written notification, to formulate an action plan to minimize or
eliminate the impact of such situation.
9.0 SERVICE PROVIDER PERSONNEL
9.1 Key Service Provider Personnel
9.1..1 Provider Personnel Requirements.
Key personnel are required to be allocated 100% to this contract. Additionally, the Respondent shall
provide HHSC with written notice fourteen (14) calendar days prior to any changes in key personnel
during the term of the contract and any extension. It is imperative for HHSC to be informed of all key
personnel changes regardless of the reason. The Respondent must not reduce the agreed upon
staffing levels nor replace any key personnel without HHSC’s prior written approval.
9.1..2 Personnel Removal.
The Respondent shall remove key personnel or any Respondent employee or subcontractor employee
found unacceptable to HHSC immediately upon HHSC’s request. The Respondent shall replace any
key personnel, including non-performers and those who have terminated employment, within thirty (30)
calendar days. Such replacement personnel shall be of equal or greater ability and qualifications. All
replacement personnel are subject to approval by HHSC. The Respondent shall provide resumes and
references for replacement key personnel for HHSC review prior to making a job offer and no later
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than ten (10) calendar days from notification of a resignation or request for removal or within a time
frame agreed to by the HHSC
9.2 Service Provider Personnel Are Not State or HHSC Employees
The Parties intend to create an independent contractor relationship and nothing in this Agreement
shall operate or be construed as making the State, HHSC, and Service Provider partners, joint
ventures, principals, joint employers, agents or employees of or with the other. No officer, director,
employee, agent, affiliate, contractor or subcontractor retained by Service Provider to perform work
hereunder shall be deemed to be an officer, director, employee, agent, affiliate, contractor or
subcontractor of the State, HHSC for any purpose. Service Provider, not the State, or HHSC has the
right, power, authority and duty to supervise and direct the activities of the Service Provider Personnel
and to compensate such Service Provider Personnel for any work performed by them hereunder.
Service Provider, and not the State, or HHSC shall be responsible and therefore solely liable for all
acts and omissions of Service Provider Personnel associated or related in any manner with this
Agreement, the Services, HHSC Facilities, Service Provider Facilities, HHSC Confidential Information,
or Equipment, including acts and omissions constituting negligence, gross negligence, willful
misconduct and/or fraud.
9.3 Responsibility for Service Provider Personnel
A. Under no circumstances will Service Provider's employees, agents and Subcontractors be
considered employees of HHSC or the State, but will be considered Service Provider's
employees, agents or Subcontractors for all purposes.
B. Except as expressly provided in this Agreement, neither Service Provider nor any of Service
Provider's employees, agents or Subcontractors may act in any sense as agents or
representatives of HHSC or the State of Texas.
C. Service Provider's employees, agents or Subcontractors shall be paid exclusively by Service
Provider for all Services performed. Service Provider is responsible for and must comply with all
requirements and obligations related to such employees, agents or Subcontractors under local,
State or Federal law, including minimum wage, social security, unemployment insurance, State
and Federal income tax and workers' compensation obligations.
D. Service Provider assumes sole and full responsibility for its acts and the acts of its employees,
agents and Subcontractors relating to the performance of this Agreement.
E. Service Provider agrees that any claim on behalf of any person arising out of employment,
alleged employment, agency or subcontracts (including, but not limited to, claims of
discrimination against Service Provider, its officers, or its agents or its Subcontractors) are the
sole responsibility of Service Provider and are not the responsibility of HHSC and that Service
Provider will indemnify and hold harmless the State from any and all such claims asserted
against the State, HHSC. Service Provider understands that any person who alleges a claim
arising out of employment, alleged employment, agency, or subcontract by Service Provider
(including, but not limited to, claims of discrimination against Service Provider, its officers, or its
agents or its Subcontractors) will not be entitled to any compensation, rights, or benefits from
HHSC (including, but not limited to, tenure rights, medical and hospital care, sick and
annual/vacation leave, severance pay, or retirement benefits).
9.4 Replacement, Qualifications, and Retention of Service Provider Personnel
9.4..1 Sufficiency and Suitability of Personnel.
As a material obligation hereunder, Service Provider shall assign (or cause to be assigned) sufficient
numbers of Service Provider Personnel to perform the Services in accordance with this Agreement
(including applicable Service Levels, and such Service Provider Personnel shall possess suitable
competence, ability and qualifications and shall be properly educated and trained for the Services
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they are to perform. Service Provider will maintain the organizational and administrative capacity and
capabilities to carry out all Service Provider duties and responsibilities, including providing and
supporting the Services, under this Agreement. Notwithstanding transfer or turnover of its personnel,
or of its agents' or Subcontractors' personnel, Service Provider remains obligated to perform all duties
and responsibilities, including providing and supporting the Services, without degradation and in
accordance with the terms of this Agreement.
9.4..2 Responsibility for Service Provider Personnel.
Service Provider agrees that anyone used by Service Provider to fulfill the terms of this Agreement is
an employee, agent or Subcontractor of Service Provider and remains under Service Provider's sole
direction and control. In addition, Service Provider hereby agrees to be responsible for the following
with respect to its employees, agents or Subcontractors: (i) damages incurred by Service Provider
Personnel or Subcontractors within the scope of their duties under this Agreement; and (ii)
determination of the hours to be worked and the duties to be performed by Service Provider
Personnel or Subcontractors. Service Provider agrees and will inform its employees, agents, and
Subcontractors that there is no right of action against HHSC for any duty owed by Service Provider
pursuant to this Agreement. Service Provider expressly agrees that HHSC assumes no liability for the
actions of, or judgments rendered against, the Service Provider, its employees, agents, or
Subcontractors. HHSC's liability to the Service Provider's employees, agents, and Subcontractors, if
any, will be governed by Chapter 101, Texas Civil Practice & Remedies Code.
9.4..3 Requested Replacement.
In the event that HHSC determines lawfully and in good faith that the continued assignment of any
individual Service Provider Personnel (including Key Service Provider Personnel) to the performance
of the Services is not in the best interest, then HHSC may give Service Provider notice to that effect
requesting that such Service Provider Personnel be replaced. Service Provider shall have ten (10)
Business Days following HHSC 's request for removal of such Service Provider Personnel in which to
investigate the matters forming the basis of such request, correct any deficient performance and
provide HHSC with assurances that such deficient performance shall not recur (provided that, if
requested to do so by HHSC, Service Provider shall immediately remove (or cause to be removed)
the individual in question from all HHSC Facilities pending completion of Service Provider's
investigation and discussions with HHSC). If, following such ten (10) Business Day period, HHSC is
not reasonably satisfied with the results of Service Provider's efforts to correct the deficient
performance and/or to prevent its recurrence, Service Provider shall, as soon as possible, remove
and replace such Service Provider Personnel with an individual of suitable ability and qualifications, at
no additional cost to HHSC. Nothing in this provision shall operate or be construed to limit Service
Provider's responsibility for the acts or omissions of Service Provider Personnel, or be construed as
joint employment of the Service Provider Personnel.
9.5 Conduct of Service Provider Personnel
9.5..1 Conduct and Compliance.
Service Provider Personnel shall (i) comply with applicable Federal rules, HHSC Rules and other
rules and regulations as further described in Section 11.5, (ii) comply with reasonable requests of
HHSC personnel pertaining to personal and professional conduct, (iii) attend workplace training
offered by HHSC at HHSC's request, and (iv) otherwise conduct themselves in a businesslike
manner.
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9.5..2 Identification of Service Provider Personnel.
Except as specifically authorized by HHSC, all Service Provider Personnel shall clearly identify
themselves as Service Provider Personnel and not as employees or representatives of the State or
HHSC. This shall include any and all communications, whether oral, written or electronic, unless and
to the extent authorized by HHSC in connection with the performance of specific Services. Each
Service Provider Personnel shall wear a badge issued by HHSC indicating that he or she is a
"contractor" when at a HHSC Facility.
9.5..3 Restriction on Marketing Activity.
Except for marketing representatives designated in writing by Service Provider to HHSC, none of the
Service Provider Personnel shall conduct any marketing activities to the State or HHSC at HHSC
Facilities (including marketing of any New Services), other than reporting potential marketing
opportunities to Service Provider's designated marketing representatives.
9.6 Substance Abuse
9.6..1 Substance Abuse Policy.
Service Provider represents, warrants and covenants that it has and shall maintain substance abuse
policies, in each case in conformance with HHSC Rules and applicable Laws, and Service Provider
Personnel shall be subject to such policies.
9.6..2 Employee Removal.
To the extent permitted by applicable Laws, Service Provider shall immediately remove (or cause to
be removed) any Service Provider Personnel known to be or reasonably suspected of engaging in
substance abuse while at any HHSC Facility or while performing Services. In the case of reasonable
suspicion, such removal shall be pending completion of the applicable investigation. Substance
abuse includes the sale, attempted sale, possession or use of illegal drugs, drug paraphernalia or
alcohol, or the misuse of prescription or non-prescription drugs.
9.7 Union Agreements
Service Provider shall provide HHSC not less than ninety (90) days notice of the expiration of
any collective bargaining agreement with unionized Service Provider Personnel if the expiration
of such agreement or any resulting labor dispute could potentially interfere with or disrupt the
activities or operations of HHSC or impact Service Provider's ability to timely perform its duties
and obligations under this Agreement.
10.0 SERVICE PROVIDER RESPONSIBILITIES
10.1 Operations Manual
10.1..1 Operations Documentation.
The Service Provider will describe how it will provide the Services to meet the Operations
Documentation requirements; including a description of the maintenance process for key
documentation for daily operations. All documentation maintained by the Service Provider will be
subject to approval by HHSC.
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10.2 Reports, Data Correction, Re-Performance
10.2..1 Reports.
Service Provider shall provide HHSC with (i) reports pertaining to the performance of the Services and
Service Provider's other obligations under this Agreement sufficient to permit HHSC to monitor and
manage Service Provider's performance, (ii) those reports described in Attachment 4.0, Sections B,
Critical Deliverables and Section 3.0, Transitional Deliverables, and others, as may be applicable,
in Exhibit 7.0, Reports, in the form and format and at the frequencies provided therein, (iii) those
reports required elsewhere under the terms of this Agreement, (iv) and those generated by HHSC
prior to the Effective Date, and (v) such additional reports as HHSC may reasonably identify from time
to time to be generated and delivered by Service Provider on an ad hoc or periodic basis (all such
reports, the "Reports").
10.2..2 Back-Up Documentation.
As part of the Services, Service Provider shall provide HHSC with such documentation and other
information available to Service Provider (including original source documentation and data in its
native format or in an alternative industry-standard format as requested by HHSC) as may be
requested by HHSC from time to time in order to verify the accuracy of the Reports provided by
Service Provider. In addition, Service Provider shall provide HHSC with all documentation and other
information reasonably requested by HHSC from time to time to verify that Service Provider's
performance of the Services is in compliance with the Service Levels and this Agreement.
10.2..3 Correction of Errors.
Service Provider shall promptly correct any errors or inaccuracies in or with respect to the Reports as
part of the Services and at no additional cost.
10.3 Financial Support
10.3..1 Forecasting and Budgeting.
To support HHSC's forecasting and budgeting processes, Service Provider shall provide the following
information regarding the costs to be incurred by HHSC in connection with the Services and the
cost/benefit to HHSC associated therewith: (i) actual and forecasted utilization and costs of Services
included in the contract resulting from this RFP; (ii) actual and forecasted changes in the total cost or
resource utilization associated with changes to the environment; and (iii) opportunities to modify or
improve the Services and to reduce the Charges or retained expenses incurred by HHSC. Such
information shall be provided at HHSC's request at no additional cost to HHSC, and in accordance
with the schedule established by HHSC.
10.4 Change Control
10.4..1 Compliance with Change Control Procedures.
In making any change in the standards, processes, procedures and controls or associated
technologies, architectures, standards, products, Materials, Equipment, Systems or services provided,
operated, managed, supported or used in connection with the Services, the Parties shall comply with
the change control procedures they develop and specify in the Service Management Manual (as
outlined in Section 2.6, Contract Management Procedures),. The Service Management Manual shall
contain a procedure that allows HHSC to exercise the approval rights in this Section and complies
with the following requirements:
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a) Impact Assessment. If Service Provider desires to make any change, upgrade, replacement
or addition that may have an adverse impact or require changes as described in Section
8.4.5 or increase the risk of Service Provider not being able to provide the Services in
accordance with this Agreement or violate or be inconsistent with HHSC Standards or
Strategic Plans, then Service Provider shall prepare a written risk assessment and
mitigation plan (1) describing in detail the nature and extent of such adverse impact or risk,
(2) describing any benefits, savings or risks to HHSC associated with such change, and (3)
proposing strategies to mitigate any adverse risks or impacts associated with such change
and, after consultation and agreement with HHSC, implement the plan.
b) Comparison Analysis. Each time that Service Provider makes a material change to the
Materials, Equipment, Systems or Services, Service Provider shall perform a comparison
analysis at a reasonable and mutually agreed level of detail to confirm the change shall not
have an adverse impact on the costs, operations or environment of HHSC or on the
functionality, interoperability, performance, accuracy, speed, legality, responsiveness,
quality or resource efficiency of the Services. In addition, at HHSC's request, Service
Provider shall perform a comparison at a reasonable and mutually agreed level of detail,
between the amount of chargeable resources required to perform a representative sample
of the Services being performed for HHSC immediately prior to the change and immediately
after the change. HHSC shall not be required to pay for increased chargeable resources
usage due to a change except to the extent that such change is requested or approved by
HHSC after notice from Service Provider of such increased chargeable resources usage.
c) Testing. Prior to making any change or using any new (e.g. not tested in or for the HHSC
environment) Software, Equipment or System to provide the Services, Service Provider
shall verify by appropriate testing that the change or item is properly installed, operating in
accordance with its specifications, performing its intended functions in a reliable manner and
compatible with and capable of operating as part of the HHSC environment. This obligation
shall be in addition to Service Provider's other obligations in this Agreement, including
Service Provider's obligation to perform any testing as part of the routine deployment or
installation of Software or Equipment.
10.4..2 Financial Responsibility For Changes.
Without limiting HHSC's right of approval unless otherwise set forth in this Agreement or otherwise
expressly approved by HHSC, Service Provider shall bear all charges, fees and costs associated with
any change desired by Service Provider, including all charges, fees and costs associated with (i) the
design, installation, implementation, testing and rollout of such change, (ii) any modification or
enhancement to, or substitution for, any impacted process or associated Materials, Equipment,
System or Services, and (iii) any increase in the cost to HHSC of operating, maintaining or supporting
any impacted process or associated Materials, Equipment, System or Services resulting from such
change.
10.4..3 HHSC Approval – Cost, Adverse Impact.
Other than as expressly set forth in the Transition and Transformation Plans as approved by HHSC,
Service Provider shall make no change which may
(i) increase HHSC's total cost of receiving the Services;
(ii) require material changes to, or have an adverse impact on, HHSC's operations, facilities,
processes, systems, software, utilities, tools or equipment (including those provided,
managed, operated, supported and/or used on their behalf by HHSC Contractors);
(iii) require HHSC to install, at their cost or expense, a new version, release, Upgrade of or
replacement for any Software or Equipment or to modify any Software or Equipment;
(iv) have an adverse impact on the functionality, interoperability, performance, accuracy, speed,
responsiveness, quality or resource efficiency of the Services;
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(v)
(vi)
(vii)
(viii)
have an adverse impact on the cost, either actual or planned, to HHSC of terminating this
Agreement, in whole or in part, or on HHSC's rights to insource or use third parties;
have an adverse impact on HHSC's environment (including its flexibility to deal with future
changes, interoperability and its stability),
introduce new technology to
a. HHSC's environment or operations or
b. Service Provider's environment, to the extent that such introduction has or may have an
adverse impact on HHSC's environment;
have an adverse impact on the functionality, interoperability, performance, accuracy, speed,
responsiveness, quality, cost or resource efficiency of HHSC's Retained Systems and
Processes, or violate or be inconsistent with HHSC Standards, HHSC Rules, the Technology
Plan or any Strategic Plan in all cases (i) through (viii) without first obtaining HHSC's
approval, which approval HHSC may withhold in its sole discretion. If Service Provider
desires to make such a change, it shall provide to HHSC a written proposal describing in
detail the extent to which the desired change may affect the functionality, performance, price
or resource efficiency of the Services and any benefits, savings or risks to HHSC associated
with such change.
10.4..4 Temporary Emergency Changes.
Notwithstanding the foregoing, Service Provider may make temporary changes required by an
emergency if it has been unable to contact the HHSC Data Center Services Manager to obtain
approval after making reasonable efforts. Service Provider shall document and report such
emergency changes to HHSC not later than the next Business Day after the change is made. Such
changes shall not be implemented on a permanent basis unless and until approved by HHSC.
10.4..5 Implementation of Changes.
Service Provider shall schedule and implement all changes so as not to (i) disrupt or adversely impact
the operations of HHSC, (ii) degrade the Services then being received by them, or (iii) interfere with
their ability to obtain the full benefit of the Services.
10.4..6 Planning and Tracking.
On a monthly basis, Service Provider shall prepare, with HHSC's participation and approval, a rolling
quarterly "look ahead" schedule for ongoing and planned changes for the next three (3) months. The
status of changes shall be monitored and tracked by Service Provider against the applicable
schedule.
10.4..7 Evaluation and Testing.
Prior to installing a new Upgrade, Major Release or Minor Release, Service Provider shall evaluate
and test such Software to verify that it shall perform in accordance with this Agreement and the HHSC
Standards and Strategic Plans and that it shall not (i) increase HHSC's total cost of receiving the
Services, (ii) have an adverse impact on performance or require changes, or (iii) violate or be
inconsistent with HHSC Standards, Strategic Plans, the Technology Plan or applicable Laws. The
evaluation and testing performed by Service Provider should be comprehensive and thorough to
insure successful implementation of change with absence of negative consequences associated with
the change and shall be at least as rigorous and comprehensive as the evaluation and testing usually
performed by highly qualified service providers under such conditions.
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10.5 Knowledge Transfer
Service Provider will use its best efforts to acquire the practical skill, knowledge and expertise
from the personnel who are providing the Services prior to the Effective Date in relation to the
delivery of the Services, including the knowledge necessary for the Service Provider to perform
the Services. Service Provider will accomplish such knowledge transfer, as appropriate, by
interviewing personnel currently performing the Services as well as reviewing information,
records and documents related to the provision of the Services. Service Provider shall promptly
(within one Business Day) notify HHSC of any lack of cooperation or assistance on the part of
HHSC Contractor or any third party that impedes or hinders Service Provider's efforts to comply
with this obligation.
10.6 HHSC Rules/Employee Safety
10.6..1 HHSC Rules and Compliance.
In performing the Services and using HHSC Facilities, Service Provider shall observe and comply with
all HHSC policies, rules, and regulations applicable at or to HHSC Facilities or the provision of the
Services which have been communicated to Service Provider or Service Provider Personnel in
advance in writing (which may include email communications and notices of information contained on
web sites or conspicuously posted at HHSC Facilities to the extent consistent with the way in which
HHSC disseminates such information to their own employees) or by such means as are generally
used by HHSC to disseminate such information to its employees or contractors and those applicable
to specific HHSC Facilities (collectively, "HHSC Rules"). The Parties acknowledge and agree that, as
of the Effective Date Service Provider is fully informed as to the HHSC Rules that have been
communicated to it consistent with the foregoing. Service Provider shall be responsible for the
promulgation and distribution of HHSC Rules to Service Provider Personnel as and to the extent
necessary and appropriate. Additions or modifications to the HHSC Rules may be (i) disclosed to
Service Provider and Service Provider Personnel in writing (which may include email communications
and notices of information contained on web sites to the extent consistent with the way in which
HHSC disseminates such information to their own employees), (ii) conspicuously posted at a HHSC
Facility, (iii) electronically posted or (iv) communicated to Service Provider or Service Provider
Personnel by means generally used by HHSC to disseminate such information to its employees or
contractors (including oral communications in immediately applicable or emergency situations).
Service Provider and Service Provider Personnel shall observe and comply with such additional or
modified HHSC Rules.
10.6..2 Safety and Health Compliance.
Service Provider and Service Provider Personnel shall familiarize themselves with the premises and
operations at each HHSC Facility at, to or from which Services are rendered and the HHSC Rules
applicable to each such facility. Service Provider and Service Provider Personnel also shall observe
and comply with all HHSC Rules with respect to safety, health, security and the environment and shall
take commercially reasonable precautions to avoid injury, property damage, spills or emissions of
hazardous substances, materials or waste, and other dangers to persons, property or the
environment. To the extent required by HHSC, Service Provider Personnel shall receive prescribed
training prior to entering certain HHSC Facilities.
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10.7 Access to Specialized Service Provider Skills and Resources
10.7..1 Specialized Services.
Upon HHSC's request, Service Provider shall provide HHSC with prompt access to Service Provider's
specialized services, personnel and resources pertaining to standards, processes and procedures
and associated software, equipment and systems on an expedited basis taking into account the
relevant circumstances (the "Specialized Services"). The Parties acknowledge that the provision of
such Specialized Services may, in some cases, constitute New Services for which Service Provider is
entitled to additional compensation, but in no event shall Service Provider be entitled to any additional
compensation for New Services under this Section unless the HHSC Services Manager and Service
Provider Account Manager, or their authorized designees, expressly agree upon such additional
compensation or Service Provider's entitlement to additional compensation is established through the
dispute resolution process. If HHSC authorizes Service Provider to proceed but the Parties disagree
as to whether the authorized work constitutes New Services and HHSC reasonably believes that such
work is material and is required on an urgent basis, Service Provider shall proceed with such work if
directed to do so by HHSC.
10.8 Notice of Decommissioning
10.8..1 Notice of Decommissioning.
Service Provider shall notify HHSC promptly if and to the extent any HHSC-owned Equipment or
HHSC-leased Equipment shall no longer be used to provide the Services. The notification shall
include the identification of the Equipment, and the date it shall no longer be needed by Service
Provider, along with the reason for decommissioning. Upon receipt of any such notice, HHSC may, in
its sole discretion, terminate the lease for such leased Equipment as of the date specified in such
notice and sell or otherwise dispose of or redeploy such HHSC-owned Equipment that is the subject
of such a notice as of the date specified in such notice. Upon Service Provider ceasing to use any
Equipment (or, in the case of leased Equipment, upon the last day HHSC is obligated to make such
leased Equipment available to Service Provider, if earlier), Service Provider shall return the same to
HHSC and/or their designee(s) in condition at least as good as the condition thereof on the Effective
Date, ordinary wear and tear excepted. Service Provider shall, at Service Provider's expense, deliver
such Equipment to the location designated by HHSC and/or their designee(s). The foregoing shall not
limit Service Provider's obligations with respect to the redeployment and disposal of Equipment
pursuant to Exhibit 1.0.
10.9 Subcontractors
10.9..1 Subcontractors.
HHSC will enter into contracts with Service Providers only. Responses shall be submitted by only one
Service Provider. The Service Provider shall be responsible for fulfillment of the contract, but it may
use Subcontractors in the performance of the contract. Subcontractors used by the Service Provider
in performance of the contract are subject to all provisions stated in Section 9.0 Service Provider
Personnel. HHSC will not accept joint venture or general partnership arrangements formed solely for
the purpose of responding to this RFP.
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10.10 Technology Plan
10.10..1 Scope.
As requested by HHSC, and without limiting the obligation of the Parties under this RFP, Service
Provider shall assist HHSC on an on-going basis to develop a yearly technology plan consisting of 2
phases entitled, Transition Technology & Resources and Transformation Technology. The Transition
Technology & Resources phase will accommodate transition services and will clearly outline the
existing infrastructure (reference Exhibit 1.0, Technology Plan Assets), in support of the TIERS
application. The Transformation Technology phase will provide for the adoption of future
technologies. All proposals shall adhere to the RFP guidelines.
10.10..2 Technology Plan.
Service Provider shall develop and implement a technology plan that is consistent with the HHSC
Standards and Strategic Plan and that shows how Service Provider shall provide the Services to
enable HHSC to achieve the Strategic Plan objectives and to implement and support HHSC
objectives and strategies ("Technology Plan"). The development of the Technology Plan shall be an
iterative process that Service Provider shall carry out in consultation with HHSC. The Technology
Plan shall be finalized by February 15 th of each year. The Technology Plan shall be the basis for
generating technology roadmaps which detail schedules, dependencies and requirements for
introducing new technology changes as well as acquiring, supporting, and retiring software and
hardware.
10.10..3 Transition Plan.
Service Provider will describe its plan for taking over the Services from the Incumbent Service
Provider at the Effective Date, including how transition will take place at the Effective Date and what
post-Effective Date activities will be required to fully transfer all components of the Services from the
Incumbent Service Provider (e.g. assets, software licenses, operational documentation, and
personnel). Further transition services include personnel support, adopting policy and procedure,
Information Technology Infrastructure Library (ITIL) base Service Management Practices (to include a
CMDB) as described in Exhibit 1.0 of the Technology Plan. Effective transition will be measured by
the Service Provider’s ability to Transition activities through the point at which the Service Provider
expects it will be delivering predictable, repeatable Service Delivery Results that meet the
requirements.
10.10..4 Transformation Plan.
Service Provider will plan evaluation session(s), with regard to emerging technology, for each Service
Oriented Architecture Layer (Identified in Attachment 1 of Exhibit 1,0 of the Technology plan) in order
to articulate, via presentation and as appropriate, individual technology opportunities. The Service
Provider maintains overall infrastructure operational health and therefore it will be incumbent on the
Service Provider to adequately develop business and/or use cases to ensure the overall environment
architecture adheres to industry standard best practices and procedures before any new technology
offering can be considered for adoption by HHSC. Transformation services should also include
Program Management providing for oversight and project management controls for Transformation
initiatives. These initiatives will address major refresh of equipment to supported levels, upgrade of
operating software to current levels, virtualization, standardization, and stabilization as appropriate.
HHSC is specifically interested in deep analysis and investigation into potential improvements in the
following area of technology; Configuration Management, Virtualization, Standardization &
Optimization, Hardware Technology, Software Technology, Physical & Logical Security.
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10.11 Monitoring Tools
As requested by HHSC, Service Provider will provide HHSC and its designee access for audit or
operational reporting, on-line view and notification components of any measurement and monitoring
tools used by Service Provider in connection with its delivery of the Services. Each such tool shall be
approved by HHSC prior to implementation and full access shall be made available to HHSC.
11.0 Financial Approach — Business Terms
11.1 Overview of Financial Approach
The financial approach described below documents the various HHSC and Respondent
responsibilities required under this RFP. HHSC has chosen to use a Fixed Price/Not to Exceed
approach related to the service delivery requirements included in this TIERS Data Center Services
RFP.
11.2 Business Objective
The objective of the Financial Approach is to describe the financial components that will enable
HHSC to achieve the Mission and Objectives of this RFP and to ensure that all services required of
the Respondent are provided as efficiently and effectively as possible to assist HHSC in its
responsibility for the efficient and effective administration of federal awards through the application
of sound management practices.
11.3 Financial Payment Structure and Provisions
The financial payment structure for the TIERS Data Center contract is provided below.
11.3..1 Overview of Financial Payment Structures.
Payment for the contractual services described in this RFP will be based on several pricing structures,
depending on the specific Service and/or Deliverable required and whether the Respondent
performed the required Service and/or Deliverable correctly and on time. The Respondent will receive
payments monthly as compensation for correctly and appropriately performing the Services and
Deliverables required in the contract resulting from this RFP.
“Services” under the contract resulting from this RFP shall mean the tasks, functions, and
responsibilities assigned and delegated to the vendor, including the Scope of Work, and any
ancillary or incidental tasks, functions or responsibilities not otherwise expressly described in
the contract but which are customary or required for the performance or delivery of the Services
in accordance with the contract.
11.3..2 Efforts to Minimize Financial Payments.
Respondent shall continually seek to identify methods of reducing and minimizing HHSC's total cost
of receiving the Services and Deliverables included in the contract resulting from this RFP and shall
notify HHSC of such methods and the estimated potential savings associated with each such method.
HHSC will review the identified cost saving initiatives and coordinate applicable modifications to the
contractual requirements and associated fees after discussions with the successful vendor and
execution of the necessary amendment(s) to the contract.
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11.3..3 Payment for Service and Deliverable Requirements.
Payment to the successful Respondent for Service and Deliverable requirements will be based on
multiple fixed fee(s) as described in Sections 5 and 6 of the Pricing Workbook Instructions
(Attachment 5-A). The costs for Service and Deliverable requirements will be subject to the
Prospective Price Re-determination provisions documented in Section 11.4.2 of this RFP.
A Respondent must submit one or more monthly invoice(s) following the month in which the
Respondent provides the applicable TIERS Data Center Services. HHSC will process and pay fees in
accordance with Chapter 2251, Texas Government Code. Separate invoices for each specific service
element type shall be submitted by a Respondent to HHSC in the format specified by HHSC. Each
invoice will be processed and paid separately.
A Respondent will supply detailed information with the invoice(s) as directed by HHSC to enable
HHSC to allocate costs for the services according to the various state and federal funding sources
that support the contract for specific segments of the specific service element. Each invoice must
show separate lines for each strategy, risk group, state funding source, federal funding source(s)
and/or Federal Financial Participation (FFP) rate(s). The Respondent must also provide supporting
documentation for service delivery cost invoices, in an electronic format, subject to approval by
HHSC, by state and/or federal funding source, appropriations strategy, risk group, and any applicable
FFP rate(s).
HHSC, at its sole discretion, may choose to process only a portion of a fixed service delivery fee
invoice, if only a portion of the invoice can be verified and validated by the information submitted. If
HHSC decides to process an invoice in this manner, an adjustment will be made by HHSC and only
that portion of the service delivery invoice that can be verified and validated will be paid. To be paid
for the fixed service delivery fees previously denied or not processed by HHSC, the Respondent must
submit supplemental invoice(s) along with any and all necessary corrections. HHSC will process and
pay service delivery fees billed on supplemental invoices in accordance with Chapter 2251, Texas
Government Code. Each invoice will be processed and paid separately.
Any cost or expense incurred by a Respondent after the commencement of the service delivery phase
of any contract resulting from this RFP to complete transition activities or correct any defects from the
Transition Phase will not be considered an allowable cost for the respective contract.
Any cost or expense incurred by a Respondent to re-perform or correct any Services or Deliverables
(including, but not limited to any required backup or restoration of data from scheduled backups or, if
not available on such backups, restoration by other means with HHSC's reasonable cooperation) that
result in incorrect outputs or that are not correctly performed due to an error or breach of the
Agreement by Vendor will not be considered an allowable cost for the respective contract. Expenses
related to re-performing any Services or Deliverables will not be considered allowable expenses for
the Prospective Price Re-determination provisions documented in this RFP.
HHSC reserves the right to eliminate services that are no longer necessary during any contract
resulting from this RFP with 30 days notice to the Respondent. HHSC will reduce the service delivery
payments for such services following 30 days notice to Respondent.
11.3..4 Payment Disputes.
For invoice amounts that have been paid by HHSC that become the subject of a dispute, in addition to
any amounts that Respondent may subsequently credit to HHSC arising from resolution of such
dispute, HHSC may require the Respondent to include interest on the reimbursed amounts accrued
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monthly at the rate specified by the Texas Comptroller of Public Accounts in accordance with Section
2251.025(b), Texas Government Code, calculated from the ninetieth (90th) day following the date of
HHSC’s dispute.
Neither the failure to dispute any Fees or amounts prior to payment nor the failure to withhold any
amount shall constitute, operate or be construed as a waiver of any right HHSC may otherwise have
to dispute any Fees or amount or recover any amount previously paid.
11.3..5 Changes to Scope of Existing Services.
HHSC anticipates that, during the life of any contract resulting from this RFP, implementation of
federal and state mandates and other state initiatives will require additions or changes to the normal
activities performed under the Contract. All such changes will be negotiated between HHSC and the
Respondent. The pricing associated with additional or modified activities will be negotiated between
the Respondent and HHSC after HHSC determines that the Respondent has submitted all the
detailed cost information (including detailed supporting metrics and detailed supporting costs deemed
acceptable by HHSC) necessary to accurately modify the applicable fixed fee formulas. Once a total
cost for the additional or modified activities is agreed upon, HHSC will make the determination as to
which fixed fee formula(s) are modified.
11.3..6 New Services.
If HHSC requests the prospective Vendor to perform any New Services reasonably related to the
Services or other services generally provided by the Vendor, the Vendor shall promptly prepare a
Solution Request (Exhibit 6.0) for HHSC's consideration. Unless otherwise agreed by the Parties,
Vendor shall prepare such New Services proposal at no additional charge to HHSC and shall deliver
such proposal to HHSC within ten (10) days of its receipt of HHSC's request; provided, that Service
Provider shall respond more quickly in the case of a pressing need or an emergency situation. HHSC
shall provide such information as the Vendor reasonably requests in order to prepare such New
Service proposal. New Service proposals shall include, at a minimum, the following information at a
level of detail sufficient to permit HHSC to make an informed business decision: (i) a project plan and
fixed price or price estimate for the New Service; (ii) a breakdown of such price or estimate; (iii) a
description of the service levels to be associated with such New Service; (iv) a schedule for
commencing and completing the New Service; (v) a description of the new hardware or software to be
provided by the Vendor in connection with the New Service; (vi) a description of the software,
hardware and other resources necessary to provide the New Service; (vii) any additional facilities or
labor resources to be provided by HHSC in connection with the proposed New Service; (viii) any risks
associated with the New Service and/or the integration of the New Service into the existing
environment; and (ix) in the case of any developed materials to be created through the provision of
the proposed New Service, any ownership rights therein that differ from the provisions of included in
the contract. The HHSC Services Manager may accept or reject proposals for New Services in his or
her sole discretion. Upon the HHSC Services Manager's acceptance of a Vendor proposal for New
Services, the scope of the Services shall be expanded and the Agreement shall be modified
accordingly to include such New Services. If Vendor is unable to provide such New Services using its
own resources (including resources it procures through a supplier or Subcontractor), HHSC may
require the Vendor to engage (as Vendor's subcontractor) a third party approved or selected by
HHSC to provide such services. Notwithstanding any provision to the contrary, (A) Vendor shall act
reasonably and in good faith in formulating such pricing proposal, (B) Vendor shall use commercially
reasonable efforts to identify potential means of reducing the cost to HHSC, including utilizing
subcontractors as and to the extent appropriate, (C) such pricing proposal shall be no less favorable
to HHSC than the pricing and labor rates set forth herein for comparable Services, and (D) such
pricing proposal shall take into account the existing and future volume of business between HHSC
and the Vendor.
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11.3..7 Extraordinary Events.
Definition. An "Extraordinary Event" means a circumstance in which an event or discrete set of
events has occurred or is planned with respect to the operations of HHSC that results or shall result in
a change in the scope, nature or volume of the Services that HHSC shall require from the Vendor.
Consequence of an Extraordinary Event. If an Extraordinary Event occurs, HHSC may, at its
option, request more favorable pricing with respect to applicable Fees in accordance with the
following:
1. Vendor and HHSC shall mutually determine on a reasonable basis the efficiencies,
economies, savings and resource utilization reductions, if any, resulting from such
Extraordinary Event and, upon HHSC's approval, Vendor shall then proceed to implement
such efficiencies, economies, savings and resource utilization reductions as quickly as
practicable and in accordance with the agreed upon schedule. As the efficiencies,
economies, savings or resource utilization reductions are realized, the applicable Fees
specified in the Agreement shall be promptly and equitably adjusted to pass through to
HHSC the net benefit of such efficiencies, economies, savings and resource utilization
reductions; provided, that HHSC shall reimburse the Vendor for any net costs or
expenses incurred to realize such efficiencies, economies, savings or resource utilization
reductions if and to the extent the Vendor (i) notifies HHSC of such additional costs and
obtains HHSC's approval prior to incurring such costs, (ii) uses commercially reasonable
efforts to identify and consider practical alternatives, and reasonably determines that
there is no other more practical or cost effective way to obtain such savings without
incurring such expenses, and (iii) uses commercially reasonable efforts to minimize the
additional costs to be reimbursed by HHSC.
2. An Extraordinary Event shall not result in Fees to HHSC being higher than such Fees in
the Agreement at the time of the Extraordinary Event. For the avoidance of doubt, upon
the occurrence of an Extraordinary Event, HHSC is entitled to request and receive more
favorable pricing. Upon the HHSC Services Manager's acceptance of a Vendor proposal
related to an Extraordinary Event, the scope of the Services and the Agreement shall be
modified accordingly to include such Extraordinary Event.
11.3..8 Unanticipated Change.
If an Unanticipated Change occurs, and if HHSC requests any modifications to the Services to
incorporate such Unanticipated Change, the Parties shall use the procedures in Sections 11.3..5 and
11.3..6 to equitably adjust the Fees and other relevant provisions of the Agreement to take such
Unanticipated Change into account. An "Unanticipated Change" shall consist of a material change
in the technologies and/or processes available to provide all or any portion of the Services which is
outside the normal evolution of technology experienced by the Services, that was not generally
available as of the Effective Date and that would materially reduce the Vendor's cost of providing the
Services.
11.3..9 Service Provider Labor Rates for Changes to Services and Tasks.
HHSC anticipates that, during the life of the Contract, implementation of state and/or federal
mandates and other state initiatives will require additions or changes to the activities performed under
any contract resulting from this RFP. If applicable, payment for costs associated with changes to
Services and/or Deliverables required after the start date of the Initial four (4) year contract will be
negotiated with the Respondent. The costs for such changes to Services and/or Deliverables will be
based on the explicit fixed hourly rates proposed by a Respondent as described in the instructions for
completion of the pricing proposal forms in Attachment 5.0 of the RFP and actual costs for hardware
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or software necessary to complete the Services and/or Deliverables. The Respondent will develop not
to exceed Delivery Orders based on the performance requirements and/or the specified results
included in any potential change order requested by HHSC.
A Respondent must specify proposed costs for any new hardware or software HHSC may need for
the contract after the Operational Start Date in the form of a “Data Center Services Hardware and
Software Pricing Catalog” that will be submitted with the Respondent’s proposal to this RFP. The
successful vendor will then be required to update the “Data Center Services Hardware and Software
Pricing Catalog” every six months after the Operational Start Date. The “Data Center Services
Hardware and Software Pricing Catalog” will be provided in the format prescribed by HHSC.
A Respondent must specify all-inclusive hourly labor rates for all staff working on this project. For
consistency, the IT Staffing Services roles defined by the Texas Department of Information Resources
are to be utilized for specifying hourly labor rates. Full descriptions of these roles can be found at
http://www.dir.state.tx.us/store/busops/staffing/itsac/fulldesc.htm.
A Respondent will employ the all-inclusive hourly labor rates proposed in developing pricing proposals
for the performance of new or modified Services and Deliverables that are required after the start date
of the contract.
No additional costs will be paid for any other items unless HHSC, in its sole discretion, determines
that any additional cost(s) requested by the successful Respondent are extremely unique to the
specific project and that the successful Respondent should not have otherwise included those
additional costs as part of the required all-inclusive hourly labor rates.
A Respondent will also employ the hardware and software costs included in the proposed “Data
Center Services Hardware and Software Pricing Catalog” in developing pricing proposals for the
performance of new or modified Services and Deliverables that are required after the start date of the
contract.
HHSC intends to process and pay these fee(s) in accordance with Chapter 2251, Texas Government
Code. If any discrepancies are determined in the information provided by the Respondent, HHSC will
notify the Respondent of the discrepancies as soon as is practicable and will not process the invoice
until all information is reconciled.
HHSC, at its sole discretion, may choose to process only a portion of a fee invoice, if only a portion of
the invoice can be verified and validated by the information submitted. If HHSC decides to process an
invoice in this manner, an adjustment will be made by HHSC and only that portion of the service
delivery invoice that can be verified and validated will be paid. To be paid for the fixed service delivery
fees previously denied or not processed by HHSC, the Respondent must submit supplemental
invoice(s) along with any and all necessary corrections. HHSC will process and pay service delivery
fees billed on supplemental invoices in accordance with Chapter 2251, Texas Government Code.
Separate invoices for each specific Service Domain and Service Area must be submitted by a
Respondent to HHSC in the format specified by HHSC. Each invoice will be processed and paid
separately.
11.4 Additional Financial Components
11.4..1 Ownership of all Capital Items.
Ownership of all nonexpendable capital items funded by the Contract resulting from this RFP will pass
to HHSC at the expiration of the Contract. Nonexpendable capital items are defined as tangible and
personal property of a non-consumable nature that have an acquisition cost of $500.00 or more per
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unit and an expected useful life of at least one year. The term nonexpendable capital item includes,
but is not limited to, office furniture, office equipment, telephone equipment, computer furniture,
computer equipment, computer software (including commercially off the shelf (COTS) software) and
computer leases.
All nonexpendable capital items, including nonexpendable capital items that are leased, will be
depreciated / amortized on a monthly basis over the initial term of the Contract, including any
applicable Transition months. The cost of installation (excluding in-house labor) of equipment,
furniture, workstations, and other leasehold improvements required to make the space useable to
meet the requirements of the Contract will also be treated in the same manner as the capital item; the
cost will be depreciated over the initial term of a Contract, including any applicable Transition months.
All capital lease(s) shall include the ability for the vendor to purchase the capital items included in the
lease for $1.00 at the expiration of the initial base term of the Contract.
If the contract terminates before the end of the initial term, HHSC will have the option to take
ownership of all, some, or none of the nonexpendable capital items.
If HHSC chooses to take ownership of a nonexpendable capital item, HHSC will (subject to the other
limitations set forth in the Contract), reimburse the vendor for the remaining months of any
nonexpendable capital item costs (depreciation), amortized capitalized lease costs, amortized
operating lease costs, costs related to lease purchase options and/or installation costs related to
equipment, furniture, workstations, or other leasehold improvements (capital items) acquired under a
resulting Contract. These costs are limited to the initial term of the resulting Contract.
In exercising its options under the foregoing paragraph, HHSC will have the right to offset against any
such reimbursements any remedies and/or damages that HHSC is entitled to assess against the
vendor.
If HHSC chooses to take ownership of any nonexpendable capital items, the vendor will ship all
nonexpendable capital items purchased and Third Party Software licensed pursuant to the Contract,
freight prepaid, FOB HHSC’s destination. The method of shipment will be consistent with the nature
of the nonexpendable capital items and hazards of transportation. Regardless of FOB point, the
vendor shall agree to bear all risks of loss, damage, or destruction of Deliverables, in whole or in part,
ordered hereunder that occurs prior to Acceptance by HHSC, except loss or damage attributable to
HHSC’s fault or negligence; and such loss, damage, or destruction will not release the vendor from
any obligation hereunder. After acceptance by HHSC, the risk of loss or damage will be borne by
HHSC, except loss or damage attributable to the vendor’s fault or negligence.
If HHSC does not choose to take ownership of a nonexpendable capital item, then all costs
associated with that item remain the responsibility of the vendor without any recourse to HHSC.
The vendor is advised not to enter into any leases that extend beyond the initial term of a resulting
Contract. In no event will HHSC reimburse the vendor for the portion of any lease that is allocable
beyond the initial term of the Contract. The vendor will be responsible to pay any costs related to
exercising any purchase option to provide HHSC with a clear title to any capital items HHSC chooses
to retain. The vendor will be responsible to pay any such costs on or before the date the Contract
expires or is terminated.
The funds budgeted for capital equipment cannot be used for any expenditures other than for capital
items (including but not limited to: capital equipment purchases, capital equipment leases or
installation costs related to equipment, furniture, workstations, or other leasehold improvements)
necessary to meet the requirements of a resulting Contract.
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All nonexpendable capital items acquired under a resulting Contract will be recorded and a list will be
provided to HHSC at the end of the Transition period and each state fiscal quarter thereafter. The
vendor shall use an asset tracking system, processes, procedures, and asset tracking software
approved by HHSC to record all nonexpendable capital items on the required asset list. The list of the
nonexpendable capital items will include, at a minimum:
(1) A description of each capital item;
(2) Model number;
(3) Manufacturer’s serial number where applicable;
(4) Funding source;
(5) Information needed to calculate the federal and state share of the acquisition cost;
(6) Date of acquisition;
(7) Unit cost; and
(8) Information on the specific location of the capital item. HHSC reserves the right to modify
the detailed information necessary that is related to this asset listing requirement.
At HHSC’s option and subject to its prior written approval and acceptance, ownership of all
nonexpendable capital items acquired during the term of the Contract will vest in HHSC at the earliest
of:
(1) The date the nonexpendable capital item is no longer needed to fulfill any requirements of
the Contract;
(2) The date the item is turned over to HHSC; or
(3) Upon expiration or termination of the Contract.
At no time will the vendor dispose of nonexpendable capital items purchased for the Contract without
prior approval from HHSC. Within ten (10) business days after the earliest of the events stated
above, the vendor will provide HHSC with all documentation reasonably necessary to evidence
HHSC’s ownership of the items.
The vendor shall obtain prior approval from HHSC before purchasing any nonexpendable capital
equipment items and/or any commercially off the shelf software for the Contract.
11.4..2 Prospective Price Re-determination.
HHSC is procuring a fixed-price re-determinable prospective Contract that will allow the total Fees
paid during a specified time period to be lowered during a succeeding time period if the actual profits
earned by the Respondent during a specified time period are at least 20% greater than the agreedupon
profit percentage included in the negotiated fixed and variable Service Delivery Fees at the
beginning of the Contract. For example: if the agreed upon profit percentage is 10%, then actual
profits of 12% would meet the criteria for the Prospective Price Re-determination provisions.
Specified time periods designated by HHSC for this provision are as follows:
Initial Twenty-six (26) months of Operations
Operational Contract Year 4 and Option Year 1
Initially, modifications, if necessary, would be determined during the third year of the Contract. The
Prospective Price Re-determination audit would include the initial twenty-six (26) months of
operations. Modifications, if necessary, would be applied to the fourth year of the base term of the
contract and each applicable option year during the initial two-year option period (years five and six) if
the Contract is extended.
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A second Prospective Price Re-determination audit would include the fourth year of the base contract
and the initial option year (year 5) during the initial two-year option period. Modifications, if necessary,
would be determined during the second option year (year 6) during the initial two-year option period.
Modifications, if necessary, would be applied to each applicable option year during the second twoyear
option period (years seven and eight) if the Contract is extended beyond the initial two-year
option period.
Any contract resulting from this RFP shall include the Prospective Price Re-determination provisions.
The State will reduce Fixed and Variable Fees payable for each year following the Prospective Price
Re-determination audit if the State determines that the total Fees paid to the Respondent during the
applicable Specified time period produce total profits for the Respondent (during that Specified time
period) that are at least 20% higher than the amount of total profit generated by the percentage of
profit approved by HHSC before the effective date of the Contract.
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The following three (3) Scenarios depict how the State will apply the prospective price redetermination
provisions to hypothetical results attained by a Respondent.
Scenario # 1:
Actual Profit earned is greater than the maximum allowed profit under the Prospective
Price Re-determination provisions.
Budgeted
Expenses and
Profit for Initial
26 Operational
Months
Scenario #1
If Actual
Expenses and
Profit for Initial 26
Operational
Months Equals
Salaries (including Fringe Benefits) $ 28,500,000 $ 25,550,000
Direct Expenses $ 38,894,975 $ 32,000,000
Sub-total: Salaries & Direct Expenses $ 67,394,975 $ 57,550,000
Indirect Expenses: (Overhead and General
& Administrative)
Sub-total: Salaries, Direct Expense and
Indirect Expenses
8.00 % $ 5,391,598 $ 4,604,000
$ 72,786,573 $ 62,154,000
Profit (Mark-up) of 11% 11.00 % $ 8,006,523
Total Fixed and Variable Ceiling Amount $ 80,793,096
Total Fixed and Variable Fees Paid to
Contractor
$ 80,793,096 $ 80,793,096
Budgeted Profits $ 8,006,523
Actual Profits Earned (as a Mark-up %) 29.99 % $ 18,639,096
Allowed Profit (11.00%) X 120% = 13.20% 13.20 % $ 8,204,328
Difference (Excess Profits) $ 10,434,768
Monthly Average of Excess Profits (Amount
/ 26 months)
$ 401,337
Annualized Excess Profits (12 Months) $ 4,816,044
Reduction to Fixed and/or Variable Fees to
be taken starting in Operational Year 4
$ 4,816,044
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Scenario # 2:
Actual Profit earned is less than the maximum allowed profit under the Prospective
Price Re-determination provisions.
Budgeted
Expenses and
Profit for Initial
26 Operational
Months
Scenario #2
If Actual
Expenses and
Profit for Initial 26
Operational
Months Equals
Salaries (including Fringe Benefits) $ 28,500,000 $ 29,200,000
Direct Expenses $ 38,894,975 $ 36,925,000
Sub-total: Salaries & Direct Expenses $ 67,394,975 $ 66,125,000
Indirect Expenses: (Overhead and General
& Administrative)
Sub-total: Salaries, Direct Expense and
Indirect Expenses
8.00 % $ 5,391,598 $ 5,290,000
$ 72,786,573 $ 71,415,000
Profit (Mark-up) of 11% 11.00 % $ 8,006,523
Total Fixed and Variable Ceiling Amount $ 80,793,096
Total Fixed and Variable Fees Paid to
Contractor
$ 80,793,096 $ 80,793,096
Budgeted Profits $ 8,006,523
Actual Profits Earned (as a Mark-up %) 13.13 % $ 9,378,096
Allowed Profit (11.00%) X 120% = 13.20% 13.20 % $ 9,426,780
Difference (Excess Profits)
Monthly Average of Excess Profits (Amount
/ 26 months)
Annualized Excess Profits (12 Months)
Reduction to Fixed and/or Variable Fees to
be taken starting in Operational Year 4
None
N/A
N/A
N/A
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Scenario # 3:
Actual Profit earned is less than the maximum allowed profit under the Prospective
Price Re-determination provisions.
Budgeted
Expenses and
Profit for Initial
26 Operational
Months
Scenario #3
If Actual
Expenses and
Profit for Initial 26
Operational
Months Equals
Salaries (including Fringe Benefits) $ 28,500,000 $ 29,975,000
Direct Expenses $ 38,894,975 $ 37,985,000
Sub-total: Salaries & Direct Expenses $ 67,394,975 $ 67,960,000
Indirect Expenses: (Overhead and General
& Administrative)
Sub-total: Salaries, Direct Expense and
Indirect Expenses
8.00 % $ 5,391,598 $ 5,436,800
$ 72,786,573 $ 73,396,800
Profit (Mark-up) of 11% 11.00 % $ 8,006,523
Total Fixed and Variable Ceiling Amount $ 80,793,096
Total Fixed and Variable Fees Paid to
Contractor
$ 80,793,096 $ 80,793,096
Budgeted Profits $ 8,006,523
Actual Profits Earned (as a Mark-up %) 10.08 % $ 7,396,296
Allowed Profit (11.00%) X 120% = 13.20% 13.20 % $ 9,688,378
Difference (Excess Profits)
Monthly Average of Excess Profits (Amount
/ 26 months)
Annualized Excess Profits (12 Months)
Reduction to Fixed and/or Variable Fees to
be taken starting in Operational Year 4
None
N/A
N/A
N/A
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11.4..3 Financial Operations Plan.
In its Price Proposal, (see Attachment 5.0) the Respondent shall submit a Financial Operations Plan
that shows how the Respondent will fulfill all financial needs and requirements contained in the
contract resulting from this RFP. A Respondent shall include responses to this Financial Operations
Plan requirement with the Respondent’s Price Proposal.
11.5 Financial: Accounting and Reporting Requirements
11.5..1 Overview.
This section presents HHSC and Respondent responsibilities for recording and reporting Contract
transactions.
The need for greater public and financial accountability in the administration of critical taxpayerfunded
programs has led to a demand for more information regarding government programs and
services. Public officials, legislators, and citizens want and need to know whether government funds
are handled properly and in compliance with laws and regulations. They also want and need to know
whether government organizations, programs, services and contractors (including any subcontractors)
retained to provide contracted services are achieving their purposes and whether these organizations,
programs, services and contractors (including any subcontractors) are operating economically and
efficiently.
Any cost or expenses incurred by the Respondent or any of its subcontractors for the completion of
any contractual requirement shall be included in the price proposal submitted by Respondents.
Additional costs or expenses will not be allowed under any contract resulting from this RFP, unless
approved in advance by HHSC.
11.5..2 Business Objectives.
The business objectives relating to Accounting and Reporting requirements include:
a. Accumulating and reporting accounting data in accordance with the following standards (as they may
be amended during the term of the Contract):
a. Generally Accepted Accounting Principles (GAAP);
b. Title 48 CFR, Chapter 1, Parts 30 and 31, and Chapter 99;
c. Federal guidelines, rules and regulations applicable to programs within the scope of the
Contract;
d. HHSC guidelines, rules, regulations and provisions applicable to programs within scope of this
procurement. Where HHSC guidelines, rules, regulations and provisions of this procurement are
in conflict with GAAP, Title 48 CFR Chapter 99, Title 48 CFR, Chapter 1, Part 30 or Title 48 CFR
Chapter 1, Part 31, then HHSC guidelines, rules, regulations and provisions of this procurement
will prevail.
e. Providing authorized governmental representatives of the state and the federal government full
access to all information needed to conduct financial reviews and audits required by law or by
any contract resulting from this RFP in accordance with applicable standards.
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b. Effectively regulating costs. To this end, allowable costs are costs that are:
f. Necessary and reasonable for the proper and efficient performance and administration of
applicable federal awards;
g. Allocable to applicable federal awards under the provisions of the federal standards or any other
accounting provisions included in the contract(s) resulting from this RFP;
h. Authorized or not prohibited under state laws, state regulations or any provision included in the
contract(s) resulting from this RFP;
i. In conformity with any limitations or exclusions set forth in applicable accounting principles,
federal laws, terms and conditions of the federal award(s) to HHSC and/or the Contract;
j. Consistent with policies, regulations and procedures that apply uniformly to federal awards
impacting the Contract;
k. Determined in accordance with GAAP; and
l. Adequately documented.
11.5..3 Financial Accounting Requirements.
The Respondent’s accounting records and procedures are subject to HHSC approval. Accruals of
expenses or liabilities are subject to HHSC review and approval. HHSC will not recognize as valid
costs any accruals that it deems inappropriate. For example, lease agreement costs beyond the
effective date of termination or completion of a resulting contract, or lease cancellation expenses
resulting from termination or completion of a contract, are not valid allowable costs. HHSC will not
recognize as valid costs any excessive charges or fees from the successful Respondent or any of the
successful Respondent’s subcontractors that HHSC deems inappropriate.
Allowable and non-allowable direct and indirect costs, wherever applicable to any payments to the
successful Respondent, will be governed by the principles set forth in the following regulations (as
may be amended during the term of the contract(s)) and documents:
Title 48 CFR, Chapter 1, Part 31, Contract Cost Principles and Procedures.
Title 48 CFR, Chapter 1, Part 30, Cost Accounting Standards Administration.
Title 48 CFR Chapter 99 — Cost Accounting Standards.
In addition to costs that are unallowable pursuant to the above accounting principles, HHSC has
deemed certain items within the allowable costs to be specifically unallowable for any contract
resulting from this RFP. The list of additional unallowable costs is as follows:
a. Local and state taxes paid to local or state governments outside of Texas (other than hotel, airline
and sales taxes expended specifically for any contract resulting from this RFP);
b. Federal taxes (other than hotel and airline taxes expended specifically for any contract resulting
from this RFP);
c. Bid and Proposal costs of any type;
d. Employee bonuses in excess of 10% of the employee’s base pay (in other words, the first 10% of
bonuses is allowable, but anything above the first 10% is not allowable);
e. Subcontractor’s employee bonuses in excess of 10% of the subcontractor’s employee’s base pay
(in other words, the first 10% of bonuses is allowable, but anything above the first 10% is not
allowable);
f. Public Relations and Selling costs;
g. Actual costs, remedies and/or damages due to HHSC for the Respondent not meeting HHSC
performance requirements;
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h. Actual costs related to work to correct deficiencies introduced by the Respondent as a result of
system modifications made by the Respondent;
i. Any monies owed to the federal government due to the Respondent not meeting federal
performance requirements;
j. Dispute resolution and arbitration costs;
k. Contingency funding costs;
l. Pre-contract costs; and
m. Inter-company profits and margins related to all transactions with any parent, affiliate, or
subsidiary organization, including inter-company profits and margins related to all transactions the
Respondent or the Respondent’s subsidiary has with any parent, affiliate, or subsidiary
organization.
In addition to the requirements stated above, the Respondent shall:
TFR 01
Establish and maintain an accounting system in accordance with the following standards (as
they may be amended during the term of the contract):
TFR 02
TFR 03
TFR 04
TFR 05
1. Title 48 CFR, Chapter 1, Parts 30 and 31 and Chapter 99;
2. Applicable federal guidelines, rules, and regulations;
3. HHSC guidelines, rules, regulations and provisions of this procurement; and
4. GAAP. Where HHSC guidelines, rules, regulations and provisions of this procurement
are in conflict with GAAP, Title 48 CFR, Chapter 1, Part 30, Title 48 CFR, Chapter 1, Part
31 and/or Title 48 CFR, Chapter 99, then HHSC guidelines, rules, regulations and
provisions of this procurement will prevail.
5. The Respondent’s accounting system must (1) maintain accounting records related
directly to the performance of any contract resulting from this RFP and (2) maintain
accounting records related to any contract resulting from this RFP separate and apart
from other corporate accounting records.
6. Part 9904.401 relates to cost accounting standards regarding the consistency in
estimating, accumulating and reporting costs. The Respondent’s methods used in
estimating costs must be consistent with the cost accounting practices used in
accumulating and reporting actual costs.
Maintain separate financial records for the following service domains of the Contract(s)
resulting from this RFP:
1. Transition;
2. TIERS Data Center Services.
Maintain an accounting system that provides an audit trail containing sufficient financial
documentation to allow for the reconciliation of billings, reports, and financial statements with
all general ledger accounts.
Maintain, document, and submit operations cost data in accordance with HHSC requirements
and federal manuals and directives. As required by federal regulations or as may be required
by state guidelines, documentation must differentiate between information technology and
non-information technology, and will include the reimbursable federal matching rates for each
type. Such cost allocation reports must be in a format and content approved by the State.
The format of these reports must allow the State to comply with federal reporting
requirements.
Submit an initial accounting policy manual with the Respondent’s price proposal that includes
all proposed accounting policies and procedures (including cost allocations) the Respondent
utilized to calculate the Respondent’s Fixed Prices and Time and Material (hourly) Rates that
are included in the Respondent’s price proposal.
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TFR 06
Submit a Final Accounting Policy Manual and Disclosure Statement (Cost Accounting
Practices Statement — FAR 9903) within 45 days of contract execution which includes any
modifications necessary due to contract negotiations and all the proposed accounting policies
and procedures the Respondent must follow during the duration of any contract resulting
from the RFP. Any modifications included in the final accounting policy manual submitted
within 45 days of contract execution must be approved in writing by HHSC prior to
implementation of any change. Any modifications to the final accounting policy manual
approved by HHSC must be approved in writing by HHSC prior to implementation of any
change.
11.5..4 General Access to Accounting Records.
The successful Respondent must provide authorized governmental representatives of HHSC and the
federal government full access to all financial and accounting records related to the performance of
any contract resulting from this RFP, including all requested subcontractor financial and accounting
records. The financial and accounting records shall be provided to the authorized governmental
representatives of HHSC and the federal government in an electronic format when requested.
In addition to the requirements stated above, the Respondent and its subcontractors must:
TFR 07
TFR 08
TFR 09
TFR 10
Cooperate with HHSC, HHSC auditors, Texas State Auditor’s Office (SAO) and the federal
government in their inspections, audits, and/or reviews, and provide all necessary records
and information. As required by Title 48 CFR, Chapter 1, Part 30, Title 48 CFR, Chapter 1,
Part 31 and Title 48 CFR, Chapter 99, it is the responsibility of any successful Respondent to
provide adequate documentation and justification to the authorized representatives of HHSC,
HHSC auditors, Texas State Auditor’s Office (SAO) and the federal government during the
inspection, audit and/or review process for all expenses included in the successful
Respondent’s accounting records.
Permit authorized governmental representatives of HHSC and the federal government full
access, both on-line (on a read-only basis) and in person, during normal business hours, to
the accounting records that HHSC, HHSC auditors, Texas State Auditor’s Office (SAO)
and/or the federal government determine are relevant to any contract resulting from this RFP.
Such access is guaranteed at all times during the performance and retention period of any
contract resulting from this RFP, and will include both announced and unannounced
inspections, on-site audits, and the review, analysis, and/or reproduction of reports produced
by the Respondent.
Make accounting records or supporting documentation relevant to the resulting contract(s)
available to HHSC or its agents within 10 business days of receiving a written request from
HHSC for specified records or information. At the request of HHSC or its agents, provide
copies of any accounting records or supporting documentation HHSC determines is relevant
to a resulting contract(s) within 10 business days of receiving a written request from HHSC
for copies of the specified records or information. If such documentation is not made
available as requested, the successful Respondent agrees to reimburse HHSC for all costs
incurred by HHSC including, but not limited to wages, fringe benefits, payroll taxes,
transportation, lodging, and subsistence for all HHSC representatives, or their agents, to
carry out their inspection, audit, review, analysis, and/or reproduction functions at the
location(s) of such accounting records.
Pay any and all additional costs, including any applicable professional fees, incurred by
HHSC resulting from the successful Respondent’s failure to provide the requested
accounting records or financial information within the specified 10 business days of receiving
a written request from HHSC for specified accounting records or information.
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TFR 11
Deliver to HHSC any reports or records that cannot be accessed on-line by HHSC personnel.
11.5..5 Financial Report Requirements.
HHSC will require the successful Respondent to provide financial reports to support contract
monitoring and support any HHSC and federal reporting requirements. In addition to the requirements
stated above, the Respondent must:
TFR 12
TFR 13
Provide an Annual Financial Statement, including, but not limited to an Income Statement,
depicting the Respondent’s operation under any contract resulting from this RFP no later
than 90 days after the end of each contract year or after the termination of any contract
resulting from this RFP. HHSC reserves the right to request financial information in a format
that will allow HHSC to most efficiently comply with its state and federal financial reporting
requirements. HHSC will consider this financial statement (report of Allowable Costs) as
“FINAL” for the applicable operational contract period and will not recognize any additional
direct expense(s) not included in the financial report as allowable for the Prospective Price
Re-determination provision of the contract.
Provide a separate expense summary detailing operations under any contract resulting from
this RFP no later than 90 days after the end of each contract year or after the termination of
the contract resulting from this RFP. Each summary will include accounts in conformance
with GAAP and any applicable provisions included in this RFP. The Respondent must
identify and eliminate any expenses not allowed by State or Federal laws and regulations and
any applicable provisions included in this RFP. HHSC reserves the right to request
modifications to annual financial reports if, in HHSC’s sole determination, such changes are
in HHSC’s best interest.
Requested modifications to annual financial reports will be completed by the Respondent
with no additional fees due from HHSC.
The expense summary will fully disclose the financial impact of all transactions with any
parent, affiliated, or subsidiary organization either under a formal or informal arrangement
that relates to the performance under the contract(s). These transactions must be reported in
a manner such that inter-company profits and margins are eliminated. The methodologies
and assumptions supporting cost allocations must be disclosed, including cost allocations
from home and/or central offices; and must follow the prescribed methodologies included in
the accounting policy manual approved by HHSC.
11.5..6 HHSC Responsibilities.
At its discretion, HHSC may monitor Respondent performance and compliance with the Financial
Accounting Requirements.
m. Monitor Respondent compliance for providing the specified financial reports on or before the
specified times.
n. Review financial report deliverables provided by the Respondent for accuracy and completeness.
o. Assess applicable remedies/liquidated damages for any late financial reports and/or incorrect
financial reports.
p. Assess applicable remedies/liquidated damages for additional expenses incurred by HHSC
and/or its authorized representatives or agents.
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12.0 Historically Underutilized Business (HUB) Participation
12.1 HUB Participation.
In accordance with Texas Government Code §2161.252, a proposal that does not contain a HUB
Subcontracting Plan (HSP) is non-responsive and will be rejected without further evaluation. In
addition, if HHSC determines that the HSP was not developed in good faith, it will reject the proposal
for failing to comply with material RFP specifications.
12.2 Introduction
HHSC is committed to promoting full and equal business opportunities for businesses in state
contracting in accordance with the goals specified in the State of Texas Disparity Study. HHSC
encourages the use of Historically Underutilized Businesses (HUBs) through race, ethnic and genderneutral
means. HHSC has adopted administrative rules relating to HUBs, and a Policy on the
Utilization of HUBs, which is located on HHSC’s website.
Pursuant to Texas Government Code §2161.181 and §2161.182, and HHSC’s HUB policy and rules,
HHSC is required to make a good faith effort to increase HUB participation in its contracts. HHSC may
accomplish the goal of increased HUB participation by contracting directly with HUBs or indirectly
through subcontracting opportunities.
12.3 HHSC’s Administrative Rules
HHSC has adopted the CPA’s HUB rules as its own. HHSC’s rules are located in Title 1, Part 15,
Chapter 392, Subchapter J of the Texas Administrative Code, and the CPA rules are located in Title
34, Part 1, Chapter 20, Subchapter B. If there are any discrepancies between HHSC’s administrative
rules and this RFP, the rules shall take priority.
12.4 Statewide Annual HUB Utilization Goal
The CPA has established statewide annual HUB utilization goals for different categories of
contracts in 34 T.A.C. §20.13 of the HUB Rules. In order to meet or exceed the statewide annual
HUB utilization goals, HHSC encourages outreach to certified HUBs. Contractors shall make a good
faith effort to include certified HUBs in the procurement process.
This contract is classified as an All Other Services contract under the CPA rule, and therefore has a
statewide annual HUB utilization goal of 24.6% per fiscal year.
12.5 Required HUB Subcontracting Plan
In accordance with Government Code, Chapter 2161, Subchapter F, each state agency that
considers entering into a contract with an expected value of $100,000 or more over the life of the
contract (including any renewals) shall, before the agency solicits bids, proposals, offers, or other
applicable expressions of interest, determine whether subcontracting opportunities are probable under
the contract.
In accordance with 34 T.A.C. §20.14(a) (1) (C) of the HUB Rules, State agencies may determine that
subcontracting is probable for only a subset of the work expected to be performed or the funds to be
expended under the contract. If an agency determines that subcontracting is probable on only a
portion of a contract, it shall document its reasons in writing for the procurement file.
HHSC has determined that subcontracting opportunities are probable for this RFP. As a result, the
respondent must submit an HSP with its proposal. The HSP is required whether a respondent intends
to subcontract or not.
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In the HSP, a respondent must indicate whether it is a Texas certified HUB. Being a certified HUB
does not exempt a respondent from completing the HSP requirement.
HHSC shall review the documentation submitted by the respondent to determine if a good faith effort
has been made in accordance with solicitation and HSP requirements. During the good faith effort
evaluation, HHSC may, at its discretion allow revisions necessary to clarify and enhance information
submitted in the original HSP.
If HHSC determines that the respondent’s HSP was not developed in good faith, the HSP will be
considered non-responsive and will be rejected as a material failure to comply with advertised
specifications. The reasons for rejection shall be recorded in the procurement file.
12.6 CPA Centralized Master Bidders List
Respondents may search for HUB subcontractors in the CPA’s Centralized Master Bidders List
(CMBL) HUB Directory, which is located on the CPA’s website at
http://www2.cpa.state.tx.us/cmbl/cmblhub.html. For this procurement, HHSC has identified the
following class and item codes for potential subcontracting opportunities:
• NIGP Class/Item Code:
920-29 Computer Facilities Management Services
920-37 Networking Services (Including Installation, Security, and Maintenance)
920-23 Data Recovery Services
920-45 Software Maintenance/Support
920-47 Computer Support Services
939-21 Computers, Data Processing Equipment and Accessories Maintenance and Repair
Services
958-23 Computer Management Services
Respondents are not required to use, nor limited to using, the class and item codes identified above,
and may identify other areas for subcontracting.
HHSC does not endorse, recommend nor attest to the capabilities of any company or individual listed
on the CPA’s CMBL. The list of certified HUBs is subject to change, so respondents are encouraged
to refer to the CMBL often to find the most current listing of HUBs.
12.7 HUB Subcontracting Procedures – If a Respondent Intends to Subcontract
An HSP must demonstrate that the respondent made a good faith effort to comply with HHSC’s HUB
policies and procedures. The following subparts outline the items that HHSC will review in determining
whether an HSP meets the good faith effort standard. A respondent that intends to subcontract must
complete the HSP to document its good faith efforts.
12.7.1 Identify Subcontracting Areas and Divide Them into Reasonable Lots
A respondent should first identify each area of the contract work it intends to subcontract. Then, to
maximize HUB participation, it should divide the contract work into reasonable lots or portions, to the
extent consistent with prudent industry practices.
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12.7.2 Notify Potential HUB Subcontractors
The HSP must demonstrate that the respondent made a good faith effort to subcontract with HUBs.
The respondent’s good faith efforts shall be shown through utilization of all methods in conformance
with the development and submission of the HSP and by complying with the following steps:
12.7.2.1. Divide the contract work into reasonable lots or portions to the extent consistent with
prudent industry practices. The respondent must determine which portions of work,
including goods and services, will be subcontracted.
12.7.2.2. Use the appropriate method(s) to demonstrate good faith effort. The respondent can
use either method(s) 1, 2, 3, or 4:
12.7.3 Method 1: Respondent Intends to Subcontract with only HUBs:
The respondent must identify in the HSP the HUBs that will be utilized and submit written
documentation that confirms 100% of all available subcontracting opportunities will be performed by
one or more HUBs; or,
12.7.4 Method 2: Respondent Intends to Subcontract with HUB Protégé(s):
The respondent must identify in the HSP the HUB protégé(s) that will be utilized and should:
Include a fully executed copy of the Mentor Protégé Agreement, which must be registered with the
CPA prior to submission to HHSC, and
Identify areas of the HSP that will be performed by the protégé.
HHSC will accept a Mentor Protégé Agreement that has been entered into by a respondent (mentor)
and a certified HUB (protégé) in accordance with Texas Government Code §2161.065. When a
respondent proposes to subcontract with a protégé(s), it does not need to provide notice to three (3)
HUB vendors for that subcontracted area.
Participation in the Mentor Protégé Program, along with the submission of a protégé as a
subcontractor in an HSP, constitutes a good faith effort for the particular area subcontracted to the
protégé; or,
12.7.5 Method 3: Respondent Intends to Subcontract with HUBs and Non-HUBs (Meet or
Exceed the Goal):
The respondent must identify in the HSP and submit written documentation that one or more HUB
subcontractors will be utilized; and that the aggregate expected percentage of subcontracts with HUBs
will meet or exceed the goal specified in this solicitation. When utilizing this method, only HUB
subcontractors that has existing contracts with the respondent for five years or less may be used to
comply with the good faith effort requirements.
When the aggregate expected percentage of subcontracts with HUBs meets or exceeds the goal
specified in this solicitation, respondents may also use non-HUB subcontractors; or,
12.7.6 Method 4: Respondent Intends to Subcontract with HUBs and Non-HUBs (Does Not
Meet or Exceed the Goal):
The respondent must identify in the HSP and submit documentation regarding both of the following
requirements:
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written notification to minority or women trade organizations or development centers to assist in
identifying potential HUBs of the subcontracting opportunities the respondent intends to
subcontract.
Respondents must give minority or women trade organizations or development centers at least
seven (7) working days prior to submission of the respondent's response for dissemination of the
subcontracting opportunities to their members. A list of minority and women trade organizations is
located on HHSC’s website under the Minority and Women Organization link.
written notification to at least three (3) HUB businesses of the subcontracting opportunities that the
respondent intends to subcontract. The written notice must be sent to potential HUB
subcontractors prior to submitting proposals and must include:
a description of the scope of work to be subcontracted;
information regarding the location to review project plans or specifications;
information about bonding and insurance requirements;
required qualifications and other contract requirements; and
a description of how the subcontractor can contact the respondent.
Respondents must give potential HUB subcontractors a reasonable amount of time to respond to the
notice, at least seven (7) working days prior to submission of the respondent's response unless
circumstances require a different time period, which is determined by the agency and documented in
the contract file;
Respondents must also use the CMBL, the HUB Directory, and Internet resources when searching for
HUB subcontractors. Respondents may rely on the services of contractor groups; local, state and
federal business assistance offices; and other organizations that provide assistance in identifying
qualified applicants for the HUB program.
12.7.7 Written Justification of the Selection Process
HHSC will make a determination if a good faith effort was made by the respondent in the development
of the required HSP. One or more of the methods identified in the previous sections may be
applicable to the respondent’s good faith efforts in developing and submission of the HSP. HHSC may
require the respondent to submit additional documentation explaining how the respondent made a
good faith effort in accordance with the solicitation.
A respondent must provide written justification of its selection process if it chooses a non-HUB
subcontractor. The justification should demonstrate that the respondent negotiated in good faith with
qualified HUB bidders, and did not reject qualified HUBs who were the best value responsive bidders.
12.8 Method 5: Respondent Does Not Intend to Subcontract
When the respondent plans to complete all contract requirements with its own equipment, supplies,
materials and/or employees, it is still required to complete an HSP.
The respondent must complete the “Self Performance Justification” portion of the HSP, and attest that
it does not intend to subcontract for any goods or services, including the class and item codes
identified in Section 4.5. In addition, the respondent must identify the sections of the proposal that
describe how it will complete the Scope of Work using its own resources or provide a statement
explaining how it will complete the Scope of Work using its own resources. The respondent must
agree to comply with the following if requested by HHSC:
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provide evidence of sufficient respondent staffing to meet the RFP requirements;
provide monthly payroll records showing the respondent staff fully dedicated to the contract;
allow HHSC to conduct an on site review of company headquarters or work site where services are
to be performed and,
provide documentation proving employment of qualified personnel holding the necessary licenses
and certificates required to perform the Scope of Work.
12.9 Post-award HSP Requirements
The HSP shall be reviewed and evaluated prior to contract award and, if accepted, the finalized HSP
will become part of the contract with the successful respondent(s).
After contract award, HHSC will coordinate a post-award meeting with the successful respondent to
discuss HSP reporting requirements. The contractor must maintain business records documenting
compliance with the HSP, and must submit monthly subcontract reports to HHSC by completing the
HUB “Prime Contractor Progress Assessment Report.” This monthly report is required as a condition
for payment to report to the agency the identity and the amount paid to all subcontractors.
As a condition of award the Contractor is required to send notification to all selected subcontractors as
identified in the accepted/approved HSP. In addition, a copy of the notification must be provided to the
agency’s Contract Manager and/or HUB Program Office within 10 days of the contract award.
HHSC’s UTCs outline the procedures for changing the HSP, as well as the HSP compliance and
reporting requirements. All changes to the approved HSP require prior HHSC approval. In general, if
the contractor decides to subcontract any part of the contract after the award, it must follow the good
faith effort procedures outlined in Section 4.6 of this RFP (e.g., divide work into reasonable lots, notify
at least three (3) vendors per subcontracted area, provide written justification of the selection process,
or participate in the Mentor Protégé Program).
For this reason, HHSC encourages respondents to identify, as part of their HSP, multiple
subcontractors who are able to perform the work in each area the respondent plans to subcontract.
Selecting additional subcontractors may help the selected contractor make changes to its original
HSP, when needed, and will allow HHSC to approve any necessary changes expeditiously.
Failure to meet the HSP and post-award requirements will constitute a breach of contract, and will be
subject to remedial actions. HHSC may also report noncompliance to the CPA in accordance with the
CPA’s Rules, §20.105 (relating to Debarment) and §20.106 (relating to Procedures for Investigations
and Debarment).
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13.0 SECURITY COMPLIANCE
13.1 Confidentiality
13.1..1 Limits.
Nothing in this Section 13.1.1 is intended to limit the obligations of Service Provider under Sections
13.1.2 and 13.1.3 of this Agreement with respect to the HHSC Data addressed in such Sections and,
to the extent the provisions of Sections 13.1.2 or 13.1.3 conflict with the provisions of this Section
13.1.1 as they pertain to HHSC Data, the provisions of Sections 13.1.2 or 13.1.3 shall control over the
provisions of this Section 13.1.1, as applicable.
13.1..2 Confidential Information.
Service Provider and HHSC each acknowledge that the other possesses and shall continue to
possess information that has been developed or received by it, has commercial, proprietary or other
value in its or its constituents' or customers' activities or operations and is not generally available to
the public, subject, however to the applicability of the Public Information Act and other applicable Law.
Except as otherwise specifically agreed in writing by the Parties, "Confidential Information" means
(i) all information marked confidential, restricted or proprietary by either Party and (ii) any other
information that is treated as confidential by the disclosing Party and would reasonably be understood
to be confidential, whether or not so marked. In the case of HHSC, Confidential Information also shall
include Developed Materials, HHSC Data, HHSC Personal Data, Work Product, Authorized User
information, attorney-client privileged materials, attorney work product, research information,
information that contains trade secrets, human resources and personnel information, or other
information or data obtained, received, transmitted, processed, stored, archived or maintained by
Service Provider under this Agreement. Service Provider's Confidential Information shall not include
Confidential Information of HHSC, however characterization of information as Confidential Information
of Service Provider shall not limit or restrict the rights of HHSC to exercise their rights (including rights
related to auditing and benchmarking) provided for under this Agreement.
13.1..3 Disclosure of Confidential Information.
The Disclosing Party represents and warrants that it has the right to disclose its Confidential
Information to the Receiving Party, subject to the confidentiality obligations contained in this Section
13.1.
i. During the term of this Agreement and at all times thereafter, each Receiving Party (A) shall
hold Confidential Information received from a Disclosing Party in confidence and shall use
such Confidential Information only for the purposes of fulfilling its obligations or exercising its
rights under this Agreement and for no other purposes, (B) shall follow all applicable security
requirements, protocols, and procedures for accessing and handling such Confidential
Information, and (C) shall not disclose, provide, disseminate or otherwise make available
any Confidential Information of the Disclosing Party to any third party without the express
written permission of the Disclosing Party, unless expressly permitted by Sections 13.1.3(ii)
and 13.1.3(iii) below or elsewhere in this Agreement. Each Receiving Party shall use at least
the same degree of care to prevent disclosure, dissemination, and misuse of the Disclosing
Party's Confidential Information to third parties as the Receiving Party employs to avoid
unauthorized disclosure, publication, dissemination, destruction, loss or alteration of its own
information (or information of its customers) of a similar nature, but not less than reasonable
care.
ii. The Receiving Party may disclose Confidential Information of the Disclosing Party to its
employees, directors, attorneys, financial advisors, contractors and agents (including HHSC
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iii.
iv.
Auditors in the case of HHSC) provided that (A) such person or Entity has a need to know
the Confidential Information for purposes of performing his or her obligations under or with
respect to this Agreement or as otherwise naturally occurs in such person's scope of
responsibility, (B) such disclosure is made pursuant to an obligation of confidentiality upon
such person or Entity that is no less stringent than that set forth in this Section 13.1 and (C)
such disclosure is not in violation of Law, the Service Management Manual or applicable
HHSC Standards. The Receiving Party assumes full responsibility for the acts or omissions
of any person or Entity to whom it discloses Confidential Information of the Disclosing Party
regarding their use of such Confidential Information and must take commercially reasonable
measures to protect the Confidential Information from disclosure or use in contravention of
this Agreement.
The Receiving Party may disclose Confidential Information of the Disclosing Party as required
to satisfy any legal requirement of a competent government body, provided that, promptly
upon receiving any such request, the Receiving Party, to the extent it may legally do so,
gives notice to the Disclosing Party of the Confidential Information to be disclosed and the
identity of the third party requiring such disclosure prior to the making such disclosure in
order that the Disclosing Party may interpose an objection to such disclosure, take action to
assure confidential handling of the Confidential Information, or take such other action as it
deems appropriate to protect the Confidential Information. The Receiving Party shall use
reasonable efforts to cooperate with the Disclosing Party in its efforts to seek a protective
order or other appropriate remedy or, in the event such protective order or other remedy is
not obtained, to obtain assurance that confidential treatment shall be accorded such
Confidential Information.
Unless expressly permitted by this Agreement, neither Party shall (A) make any use or copies
of the Confidential Information of the other Party except as expressly contemplated by this
Agreement, (B) possess or acquire any right in or assert any lien against the Confidential
Information of the other Party, (C) sell, assign, transfer, lease, encumber or otherwise
dispose of or disclose the Confidential Information of the other Party to third parties or
commercially exploit, or permit a third party to commercially exploit, such information,
including through Derivative Works, or (D) refuse for any reason (including a default or
material breach of this Agreement by the other Party) to promptly provide the other Party's
Confidential Information (including any copies thereof) to the other Party if requested to do
so.
v. Notwithstanding the provisions of this Section 13.1.3, HHSC may disclose Confidential
Information relating to the financial or operational terms of this Agreement and/or Service
Provider's performance hereunder (e.g. applicable Service Levels and measurements of
Service Provider's performance with respect to such Service Levels) in connection with
solicitation of proposals for or the procurement of the same or similar services from
prospective HHSC Contractors.
vi.
vii.
viii.
Notwithstanding the provisions of this Section 13.1.3, the Parties acknowledge and agree that
each Party may be required to disclose Confidential Information pursuant to Chapter 552,
Texas Government Code (the "Public Information Act"), that HHSC shall be required to and
may disclose this Agreement and the terms hereof pursuant to the Public Information Act
and that the Parties shall comply with the Public Information Act and with all applicable
opinions of the Office of the Texas Attorney General concerning the Public Information Act.
Each Party shall take all necessary steps to cause its employees, contractors and
subcontractors to comply with the provisions of Article 13.
Exclusions. Notwithstanding the above, Section 13.1.3 shall not apply to any particular
information which the receiving Party can demonstrate: (i) is, at the time of disclosure to it,
generally available to the public other than through a breach of the Receiving Party's or a
third party's confidentiality obligations; (ii) after disclosure to it, is published by the Disclosing
Party or otherwise becomes generally available to the public other than through a breach of
the Receiving Party's or a third party's confidentiality obligations; (iii) was lawfully in the
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possession of the Receiving Party immediately prior to the time of disclosure to it; (iv) is
received from a third party having a lawful right to disclose such information; or (v) is
independently developed by the Receiving Party without reference to the Disclosing Party's
Confidential Information. The exclusions in this Section 13.1.3 (viii) shall not apply to HHSC
Personal Data.
ix.
Loss of Confidential Information. Each Party shall (i) immediately notify the other Party of
any possession, use, knowledge, disclosure, or loss of such other Party's Confidential
Information in contravention of this Agreement, (ii) promptly furnish to the other Party all
known details and assist such other Party in investigating and/or preventing the reoccurrence
of such possession, use, knowledge, disclosure, or loss, (iii) cooperate with the other Party in
any investigation or litigation deemed necessary by such other Party to protect its rights and
(iv) promptly use appropriate efforts to prevent further possession, use, knowledge,
disclosure, or loss of Confidential Information in contravention of this Agreement. Each Party
shall bear any costs it incurs in complying with this Section 13.1.3 (ix).
x. No Implied Rights. Nothing contained in this Section 13.1 shall be construed as obligating a
Party to disclose its Confidential Information to the other Party, or as granting to or conferring
on a Party, expressly or impliedly, any rights or license to any Confidential Information of the
other Party.
xi.
Return or Destruction of Confidential Information. Each Party shall securely store the
other Party's Confidential Information until such Confidential Information is returned or
destroyed as described in this Section. Except as provided below with respect to Contract
Records, each Party shall destroy all documentation in any medium that contains, refers to
or relates to the other Party's Confidential Information (or the portion of such Confidential
Information specified by the other Party) or shall return such documentation to the other
Party or its designee, in the format and on the media reasonably prescribed by the other
Party, as follows: (i) within thirty (30) days of the expiration or termination of this Agreement
and completion of each Party's obligations hereunder, including, with respect to Service
Provider, all periods of Termination Assistance Services requested by HHSC; and (ii) with
respect to HHSC Confidential Information, at any time HHSC requests such Confidential
Information or, with respect to particular Confidential Information, within thirty (30) days of
the date that such Confidential Information is no longer required by Service Provider to
perform its obligations under this Agreement as identified by HHSC or pursuant to the
Service Management Manual. Such documentation shall include all copies of a Party's
Confidential Information in the other Party's possession or under the other Party's control.
The Party returning or destroying the other Party's Confidential Information shall deliver to
the other Party written certification of its compliance with this paragraph signed by an
authorized representative of such Party. Notwithstanding the foregoing, either Party may
retain one copy of the other Party's Confidential Information in its legal department as and to
the extent required to comply with applicable Laws or enforce its rights under this
Agreement; provided that such Confidential Information shall be returned or destroyed in
accordance with this provision upon the expiration of the period specified in the applicable
Law, the expiration of the applicable statute of limitations and the final resolution of any
pending dispute. Contract Records shall be retained by Service Provider for the duration of
the Audit Period unless and to the extent Service Provider is directed by HHSC to deliver
such Contract Records to HHSC prior to the expiration of the Audit Period. In no event shall
a party withhold any Confidential Information of the other party as a means of resolving any
dispute.
13.1..4 Transfer of HHSC Confidential Information.
Service Provider shall not transfer HHSC Confidential Information to any other locations, nor change
the locations for storage and processing of such HHSC Confidential Information, except with the
express written consent of HHSC, which HHSC may withhold in its sole discretion.
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13.2 Security Standards
13.2..1 Security Management Plan.
The Security Management Plan shall comply with HHSC security requirements specified in the HHS
Enterprise Information Security Standards and Guidelines (EISSG) Version 4.01 dated May 4, 2011.
The Security Management Plan shall also comply with the current USDA Automated Data Processing
(ADP) security regulations found at 7 CFR 277.18(p).
EISSG Version 4.01 can be retrieved online at
http://hhscx.hhsc.state.tx.us/eit/Security/ESM-Policies/espsg.doc
USDA Automated Data Processing (ADP) security regulations can be retrieved online at
http://www.gpoaccess.gov/cfr/retrieve.html
13.3 Data Access
13.3..1 Property.
HHSC Data is the property of HHSC. Service Provider shall not commercially exploit, or permit a third
party to commercially exploit, HHSC Data.
13.3..2 Security Standards.
Service Provider shall maintain a comprehensive data security program no less rigorous than
accepted security standards in the industry, and compliant with all applicable HHSC Rules and HHSC
Standards, including the privacy, security and records retention guidelines contained within IRS
Publication 1075 (found at http://www.irs.gov/pub/irs-pdf/p1075.pdf) and the rules pertaining to
information technology security standards found at 1 Texas Administrative Code, Chapter 202. The
data security program and associated technical, organizational and security measures shall be fully
documented by Service Provider in the Service Management Manual, At least twice per Contract
Year, Service Provider shall evaluate security practices and proactively provide technical information
regarding security best practices in the industry. Upon HHSC’s approval, Service Provider shall
implement any changes it recommends through Change Control.
13.3..3 Integrity of Security Measures.
Under no circumstances shall Service Provider make any changes that materially weaken any
technical, organizational or security measures in place to safeguard HHSC Data nor shall Service
Provider or Service Provider Personnel attempt to access or allow access to HHSC Data that is not
required for the performance of Service Provider's obligations or otherwise permitted under this
Agreement.
13.3..4 Backup.
HHSC shall have the right to establish backup security for any HSSC Data and to keep backup and
files for such Data in its possession if it chooses. Service Provider shall provide HHSC with
downloads of HHSC Data, as requested and directed by HHSC to enable HHSC to maintain such
backup copies.
13.3..5 Security Breach.
In the event Service Provider discovers or is notified of a breach or potential breach of HHSC data
security Service Provider shall expeditiously (A) notify HHSC of such breach or potential breach, (B)
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investigate (with HHSC’s participation if so desired by HHSC) such breach or potential breach and
perform a risk assessment, Root Cause Analysis and corrective action plan thereon, (C) provide a
written report to HHSC of such risk assessment, Root Cause Analysis and action plan, (D) remediate
the effects of such breach or potential breach of security as soon as practicable or coordinate such
remediation if Service Provider does not have responsibility for the matters which are the source of
the breach or potential breach, and (E) provide HHSC with reasonable assurances that such breach
or potential breach shall not recur. To the extent Service Provider removes Data from any media that
is taken out of service that is under Service Provider's control, Service Provider shall destroy or
securely erase such media in accordance with the Service Management Manual. Under no
circumstances shall Service Provider use or re-use media on which Data has been stored to store
data of any other customer of Service Provider or to deliver data to a third party, including another
Service Provider customer, unless such Data has been securely erased in accordance with the
Service Management Manual.
13.4 HHSC Personal Data
In addition to the provisions of Sections 13.1 and 13.2, the following privacy and data protection
provisions shall apply to HHSC Personal Data.
Service Provider shall hold any HHSC Personal Data that it receives in confidence and in compliance with (i)
Service Provider's obligations under this Agreement, the Exhibits and Attachments hereto and the Service
Management Manual and (ii) subject to all Laws regarding its use of and access to such HHSC Personal
Data.
Service Provider agrees that Service Provider and Service Provider Personnel shall not use any HHSC
Personal Data for any purpose other than the fulfillment of the terms and conditions of this Agreement.
Service Provider shall not process or disseminate HHSC Personal Data to any third party or transfer HHSC
Personal Data without the approval of HHSC unless expressly provided for in this Agreement.
Service Provider shall be responsible for any failure of Service Provider Personnel to comply with the terms
and conditions regarding HHSC Personal Data set forth in this Section 13.4.
With respect to Personal Medical Data, Service Provider shall not need to obtain authorizations from the
persons to whom such Personal Medical Data pertains unless HHSC determines that such authorizations are
necessary and advises Service Provider to obtain such authorization. The authorization form to be used for
this purpose shall be provided by HHSC.
A person may request to inspect, copy, amend and restrict disclosure of his or her Personal Medical Data
when and as permitted by Law. Any such requests that are received by Service Provider shall be directed to,
and any actions required shall be determined by, HHSC.
If Service Provider has knowledge of any unauthorized disclosure of or access to HHSC Personal Data,
Service Provider shall:
1. Expeditiously report such unauthorized disclosure or access to HHSC,
2. Mitigate, to the extent practicable, any harmful effect of such disclosure or access that is known to
Service Provider or its agents, and
3. Cooperate with HHSC in providing any notices regarding impermissible disclosures caused by
such disclosure or access which HHSC deems appropriate.
To the extent such unauthorized disclosure or access is attributable to a breach by Service Provider or
Service Provider Personnel of Service Provider's obligations under this Agreement with respect to HHSC
Personal Data, Service Provider shall bear (A) the costs incurred by Service Provider in complying with its
legal obligations relating to such breach and (B) in addition to any other damages for which Service Provider
may be liable for under this Agreement (except to the extent such disclosure is due to HHSC's failing to
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provide (including through authorization to provide as part of the Services) the level of encryption required
under applicable Law to protect such Data), the following costs incurred by HHSC in complying with their legal
obligations relating to such breach, to the extent applicable, (1) the cost of providing notice to affected
individuals, (2) the cost of providing such affected individuals with credit monitoring services for twelve (12)
months, (3) the cost of providing such affected individuals with $50,000 of identity theft insurance, and (4) call
center support for such affected individuals for thirty (30) days and (5) any other Losses for which Service
Provider would be liable under Sections 5.02, 11.10, 11.12 and 14.01 of the Uniform Terms and Conditions
http://www.hhsc.state.tx.us/about_hhsc/Contracting/rfp_attch/General_TC.pdf.
13.4..1 Personal Medical Data
With respect to Personal Medical Data constituting "protected health information" ("PHI"), as such
term is defined by the HIPAA Privacy Rule, Service Provider shall:
i. Subject to Section 13.11, implement the technical, organizational and security measures, including
administrative, physical and technical safeguards, to protect the confidentiality, integrity and
availability of Personal Medical Data constituting electronic PHI ("ePHI") created, received,
maintained or transmitted by Service Provider or Service Provider Personnel in compliance with the
HIPAA Security Rule. Service Provider shall cause any Service Provider Personnel who have access
to ePHI to agree in writing to protect the confidentiality, integrity and availability of ePHI as required by
the HIPAA Security Rule. Service Provider shall expeditiously report to HHSC any successful
unauthorized access, use, disclosure, modification or destruction of ePHI or interference with system
operations in an information system containing PHI of which Service Provider becomes aware.
ii. Subject to Section 13.11, at HHSC's request, Service Provider shall provide access to Personal
Medical Data contained in a "designated record set" (as such terms are defined by the HIPAA Privacy
Rule) of a person currently or formerly covered by a HHSC benefit plan subject to HIPAA (the "Plan")
to HHSC or the person currently or formerly covered by the Plan who is requesting such Data.
Service Provider also shall amend Personal Medical Data in its possession as directed by HHSC.
Subject to Section 13.11, such access and amendment shall be provided at a time and in a format
permitted by the HIPAA Privacy Rule.
iii. Subject to Section 13.11, Service Provider shall document all disclosures of Personal Medical Data to
provide a person currently or formerly covered by the Plan with an accounting of disclosures as
required by the HIPAA Privacy Rule. Service Provider shall, upon HHSC's request, provide such an
accounting to HHSC or the person currently or formerly covered by the Plan who requested such Data
at a time and in a format permitted by the HIPAA Privacy Rule.
iv. In addition to permitting audits by HHSC as described above, Service Provider shall permit the
Secretary of the United States Department of Health and Human Services to conduct audits of
Personal Medical Data to determine compliance with the HIPAA Privacy Rule and/or the HIPAA
Security Rule. If the Secretary contacts the Service Provider directly regarding such an audit, Service
Provider shall provide HHSC with written notice of the audit as soon as possible after Service Provider
received its audit notice from the Secretary.
13.5 File Access
HHSC shall have secure access to, and the right to review and retain the entirety of, all HHSC Confidential
Information in the possession or control of Service Provider. Such access shall be provided to HHSC in nearreal
time and by the means and in the format reasonably requested by HHSC. At no time shall any of such
files or other materials or information be stored or held in a form or manner not readily accessible to HHSC in
this manner. Service Provider shall provide to the HHSC Data Center Services Manager or his or her
designee all passwords, codes, comments, keys, documentation and the locations of any such files and other
materials promptly upon his or her request, including Equipment and Software keys and such information as
to format, encryption (if any) and any other specification or information necessary for HHSC to retrieve, read,
revise and/or maintain such files and information. Upon the request of the HHSC Data Center Services
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Manager or his or her designee, Service Provider shall confirm that, to the best of its knowledge, all files and
other information provided to HHSC are complete and that no material element, amount, or other fraction of
such files or other information to which HHSC may request access or review has been deleted, withheld,
disguised or encoded in a manner inconsistent with the purposes and intent of providing full and complete
access to HHSC as contemplated by this Agreement.
13.6 HHSC Data – Correction and Restoration
13.6..1 Corrections.
The correction of any errors or inaccuracies in or with respect to HHSC Data shall be performed by
the Party that has operational responsibility for inputting such HHSC Data into the applicable System.
To the extent (i) Service Provider is operationally responsible for inputting such data or (ii) such errors
or inaccuracies are attributable to the failure of Service Provider or Service Provider Personnel to
comply with Service Provider's obligations under this Agreement, Service Provider shall bear the cost
of correcting such errors or inaccuracies.
13.6..2 Re-running of Corrected Data.
If the correction of errors or inaccuracies as described above necessitates the re-running of corrected
HHSC Data and thereby results in the usage of additional resources, HHSC will discuss the
applicability of additional fees according to the provisions included in Section 11, Financial Approach
– Business Terms , unless the underlying errors or inaccuracies are attributable to the failure of
Service Provider or Service Provider Personnel to comply with Service Provider's obligations under
this Agreement (including the failure of Service Provider or Service Provider Personnel to adhere to
applicable processes and controls that, if adhered to, would have enabled Service Provider or Service
Provider Personnel to identify and make timely corrections such errors or inaccuracies, even if caused
by HHSC), in which case Service Provider shall be financially responsible for any additional required
resources and expenses resulting from the re-running of corrected data.
13.6..3 Restoration of Data.
The restoration of any destroyed, lost or altered HHSC Data shall be performed through generally
accepted data restoration techniques by the Party that has operational responsibility under
Attachment 5-C for maintaining the System on which such HHSC Data resides and for creating and
maintaining backup copies of such HHSC Data. To the extent (i) Service Provider is operationally
responsible for performing such restoration or (ii) such destruction, loss or alteration is attributable to
the failure of Service Provider or Service Provider Personnel to comply with Service Provider's
obligations under this Agreement, Service Provider shall bear the cost of restoring such data to the
most recent required back-up.
13.6..4 Cardholder Data.
Service Provider shall comply with the Payment Card Industry Data Security Standard ("PCI DSS")
with respect to Cardholder Data as defined therein. With respect to Services provided from a
Consolidated Data Center or that support a Consolidated Data Center, Service Provider shall have
access to Cardholder Data only for the limited purpose of performing the Services or as specifically
agreed to by Visa, MasterCard, American Express, and/or Discover (collectively, the "Issuers"),
HHSC, or as required by applicable law. In the event of a breach or intrusion of or otherwise
unauthorized access to Cardholder Data stored by or for Service Provider, Service Provider shall
immediately notify HHSC, in the manner required, and provide HHSC or its designee, the Issuers, and
the acquiring financial institution and their respective designees access to Service Provider's facilities
and all pertinent records to conduct a review of Service Provider's compliance with these
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requirements. Service Provider shall maintain appropriate business continuity procedures and
systems to ensure security of Cardholder Data in the event of a disruption, disaster or failure of
Service Provider's primary data systems which involve a risk to Cardholder Data. Service Provider
shall provide access to its security systems and procedures, as reasonably requested by HHSC or its
designee. Service Provider shall cooperate fully with any reviews of their facilities and records
provided for in this Section. Service Provider will comply with any assessment, validation, or
verification of PCI DSS rules and regulations.
13.7 FTI Compliance
The following provisions are included in accordance with IRS Publication 1075 ("Pub 1075"). For purposes of
this section only, all words in this section shall have the meaning provided in Pub 1075, notwithstanding any
other definition that may be provided elsewhere in this Agreement. The following terms and conditions shall
apply to Service Provider's performance of the Services to the extent provided by Pub 1075. HHSC and
Service Provider will amend this section from time to time as needed to maintain currency with the thencurrent
requirements of Pub 1075.
In performance of this Agreement, Service Provider agrees to comply with and assume responsibility for
compliance by his or her employees with the following requirements:
(1) All work will be done under the supervision of Service Provider or Service Provider's employees.
(2) Any return or return information made available in any format shall be used only for the purpose of carrying
out the provisions of this Agreement. Information contained in such material will be treated as confidential and
will not be divulged or made known in any manner to any person except as may be necessary in the
performance of this Agreement. Disclosure to anyone other than an officer or employee of Service Provider
will be prohibited.
(3) All returns and return information will be accounted for upon receipt and properly stored before, during,
and after processing. In addition, all related output will be given the same level of protection as required for
the source material.
(4) Service Provider certifies that the data processed during the performance of this Agreement will be
completely purged from all data storage components of his or her computer facility, and no output will be
retained by Service Provider at the time the work is completed. If immediate purging of all data storage
components is not possible, Service Provider certifies that any IRS data remaining in any storage component
will be safeguarded to prevent unauthorized disclosures.
(5) Any spoilage or any intermediate hard-copy printout that may result during the processing of IRS data will
be given to HHSC or its designee. When this is not possible, Service Provider will be responsible for the
destruction of the spoilage or any intermediate hard-copy printouts, and will provide HHSC or its designee
with a statement containing the date of destruction, description of material destroyed, and the method used.
(6) All computer systems receiving, processing, storing, or transmitting Federal tax information shall meet the
requirements defined in Pub 1075. To meet functional and assurance requirements, the security features of
the environment shall provide for the managerial, operational, and technical controls. All security features
shall be available and activated to protect against unauthorized use of and access to Federal tax information.
(7) No work involving FTI furnished under this Agreement will be subcontracted without prior written approval
of the IRS.
(8) Service Provider will maintain a list of employees with authorized access. Such list will be provided to
HHSC and, upon request, to the IRS reviewing office.
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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
safeguards described above.
Each officer or employee of any person to whom returns or return information is or may be disclosed will be
notified in writing by such person that returns or return information disclosed to such officer or employee can
be used only for a purpose and to the extent authorized herein, and that further disclosure of any such returns
or return information for a purpose or to an extent unauthorized herein constitutes a felony punishable upon
conviction by a fine of as much as $5,000 or imprisonment for as long as five (5) years, or both, together with
the costs of prosecution. Such person shall also notify each such officer and employee that any such
unauthorized further disclosure of returns or return information may also result in an award of civil damages
against the officer or employee in an amount not less than $1,000 with respect to each instance of
unauthorized disclosure. These penalties are prescribed by IRC sections 7213 and 7431 and set forth at 26
CFR 301.6103(n)-1.
Each officer or employee of any person to whom returns or return information is or may be disclosed shall be
notified in writing by such person that any return or return information made available in any format shall be
used only for the purpose of carrying out the provisions of this Agreement. Information contained in such
material shall be treated as confidential and shall not be divulged or made known in any manner to any
person except as may be necessary in the performance of the Agreement. Inspection by or disclosure to
anyone without an official need to know constitutes a criminal misdemeanor punishable upon conviction by a
fine of as much as $1,000 or imprisonment for as long as one (1) year, or both, together with the costs of
prosecution. Such person shall also notify each such officer and employee that any such unauthorized
inspection or disclosure of returns or return information may also result in an award of civil damages against
the officer or employee United States for Federal employees in an amount equal to the sum of the greater of
$1,000 for each act of unauthorized inspection or disclosure with respect to which such defendant is found
liable or the sum of the actual damages sustained by the plaintiff as a result of such unauthorized inspection
or disclosure plus in the case of a willful inspection or disclosure which is the result of gross negligence,
punitive damages, plus the costs of the action. These penalties are prescribed by IRC section 7213A and
7431.
Additionally, it is incumbent upon Service Provider to inform its officers and employees of the penalties for
improper disclosure imposed by the Privacy Act of 1974, 5 U.S.C. 552a. Specifically, 5 U.S.C. 552a(i)(1),
which is made applicable to contractors by 5 U.S.C. 552a(m)(1), provides that any officer or employee of a
contractor, who by virtue of his/her employment or official position, has possession of or access to agency
records which contain individually identifiable information, the disclosure of which is prohibited by the Privacy
Act or regulations established thereunder, and who knowing that disclosure of the specific material is
prohibited, willfully discloses the material in any manner to any person or agency not entitled to receive it,
shall be guilty of a misdemeanor and fined not more than $5,000.
Granting a contractor access to FTI shall be preceded by certifying that each individual understands the
affected HHSC security policy and procedures for safeguarding IRS information. Contractors shall maintain
their authorization to access FTI through annual recertification. The initial certification and recertification shall
be documented and placed in the affected HHSC files for review. As part of the certification and at least
annually afterwards, contractors should be advised of the provisions of IRC Sections 7431, 7213, and 7213A.
The training provided before the initial certification and annually thereafter shall also cover the incident
response policy and procedure for reporting unauthorized disclosures and data breaches. For both the initial
certification and the annual certification, Service Provider should sign, either with ink or electronic signature, a
confidentiality statement certifying their understanding of the security requirements.
The IRS and HHSC shall have the right to send its officers and employees into the offices and plants of
Service Provider for inspection of the facilities and operations provided for the performance of any work under
this Agreement. On the basis of such inspection, specific measures may be required in cases where Service
Provider is found to be noncompliant with Agreement safeguards.
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13.8 Malicious Code
Successfully awarded vendor shall take commercially reasonable actions and precautions consistent
with Attachment 3.0 to prevent the introduction and proliferation of Malicious Code into HHSC's
environment or any System used to provide the Services and to notify the other Party expeditiously of
any Malicious Code in any such environment or System of which it become aware. Without limiting
Service Provider's other obligations under this Agreement, in the event Malicious Code is found in
Equipment, Software or Systems managed or supported by Service Provider or used by Service
Provider to provide the Services, Service Provider shall, at no additional charge to HHSC, eliminate or
permanently quarantine such Malicious Code and reduce the effects of such Malicious Code and, if
the Malicious Code causes a loss of operational efficiency or loss of data, mitigate such losses and
restore such data with generally accepted data restoration techniques.
13.9 Disabling Code
Service Provider represents, warrants and covenants that, without the prior written consent of HHSC,
Service Provider shall not insert into the Software any code that could be invoked to disable or
otherwise shut down all or any portion of the Software, Equipment and/or Systems. Service Provider
further represents, warrants and covenants that, with respect to any disabling code that may be part
of the Software, Service Provider shall not invoke or cause to be invoked such disabling code at any
time, including upon expiration or any termination of this Agreement, without HHSC's prior written
consent. Service Provider also represents, warrants and covenants that it shall use commercially
reasonable efforts to not use Third Party Materials consisting of Software containing disabling code
without the prior approval of HHSC. For purposes of this provision, code that serves the function of
ensuring software license compliance (including passwords) shall not be deemed disabling code,
provided that Service Provider will use commercially reasonable efforts to attempt to learn from third
parties whether such code is included in third party products and will notify HHSC accordingly and
obtain HHSC's approval prior to installing such code in any Software, Equipment or System.
13.10 Compliance with Federal and State Laws
13.10..1 Federal Oversight.
The two primary federal oversight agencies are the U.S. Department of Health & Human Services,
Center for Medicare and Medicaid (CMS) and the U.S. Department of Agriculture, Food & Nutrition
Services (FNS). These agencies monitor accomplishments, expenditures, status and changes to the
project.
13.10..2 State Oversight.
There are several organizations involved in State Oversight of TIERS and Enhanced Eligibility Systems.
13.11 Requirements for Information in Legal Proceedings
13.11..1 Preservation of Legal Privilege.
If HHSC notifies Service Provider, or Service Provider is otherwise aware, that particular HHSC
Confidential Information may be within HHSC attorney-client or work-product privileges of HHSC, then
regardless of any applicable exclusions, Service Provider (i) shall not disclose such HHSC
Confidential Information or take any other action that would result in waiver of such privileges and (ii)
shall instruct all Service Provider Personnel who may have access to such communications to
maintain privileged material as strictly confidential and otherwise protect HHSC privileges.
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13.11..2 Service Provider Responsibility for HHSC Information.
To the extent requested by HHSC, Service Provider shall comply with HHSC litigation response plan,
including policies and procedures to prepare for and respond to discovery requests, subpoenas,
investigatory demands, and other requirements for information related to legal and regulatory
proceedings, as such plan may be revised from time to time, including preparing for and complying
with requirements for preservation and production of data in connection with legal and regulatory
proceedings and government investigations. Upon receipt of any request, demand, notice, subpoena,
order or other legal information request relating to legal proceedings or investigations by third parties
relating to any Materials, HHSC Confidential Information or related Systems in Service Provider's
possession, Service Provider shall immediately notify HHSC and provide HHSC with a copy of all
documentation of such legal information request, to the extent Service Provider legally may do so and
shall cooperate with HHSC in responding to such request, demand, notice, subpoena, order or other
legal information request.
13.11..3 Cost of Compliance.
Service Provider's cost of complying with this Section 13 shall be at no additional charge to HHSC.
14.0 REPRESENTATIONS, WARRANTIES AND COVENANTS
14.1 Information Furnished to HHSC
14.1..1 Information Furnished to HHSC.
Service Provider represents that, based on the knowledge of the undersigned after reasonable due
diligence, all written information made a part of this Agreement is true, accurate and complete, and
contains no untrue statement of a material fact or omits any material fact necessary to make such
information not misleading. Service Provider hereby agrees to provide HHSC with notice within two
(2) Business Days in the event it discovers that any information that has been provided to HHSC
becomes or turns out not to be true and correct. Such notice shall identify the information as
incorrectly provided and shall set forth the correct information.
14.2 Completeness of Due Diligence Activities
Service Provider acknowledges that it has been provided with sufficient access to HHSC Facilities,
information and personnel, and has had sufficient time in which to conduct and perform a thorough
due diligence of HHSC's operations and business requirements and assets currently used by HHSC
in providing the Services. Accordingly, Service Provider shall not seek any adjustment in the Charges
based on any incorrect assumptions made by Service Provider in arriving at the Charges.
14.3 Interoperability
Service Provider represents, warrants and covenants that the Software, Equipment and Systems
provided by Service Provider and/or used to provide the Services shall be interoperable with the
software, equipment and systems used by HHSC to the extent necessary to provide the same or
similar services and/or to deliver records to, receive records from or otherwise interact with the
Software, Equipment and Systems to receive the Services.
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15.0 INSURANCE AND RISK OF LOSS
15.1 Insurance
15.1..1 Requirements.
Service Provider agrees to keep in full force and effect and maintain at its sole cost and expense the
following policies of insurance with the specified minimum limits of liability during the Term of the
Agreement:
i. Workers’ Compensation and Employer’s Liability Insurance in full compliance with the
applicable Laws of the State and, as applicable, such other state in which the work is to be
performed. Each such policy shall contain a waiver of subrogation endorsement against the
State, HHSC and their respective officers, directors, employees, agents, successors and
assigns.
The limits of liability of Workers' Compensation Insurance shall be not less than the limits
required by applicable Law.
The limits of liability of Employer’s Liability Insurance shall not be less than $1,000,000 per
employee by accident / $1,000,000 per employee by disease / $1,000,000 policy limit by
disease (or, if higher, the policy limits required by applicable Law).
ii. Commercial General Liability Insurance (including coverage for Contractual Liability assumed
by Service Provider under this Agreement, Premises-Operations, Completed Operations-
Products and Independent Contractors and, to the extent commercially reasonable, coverage
for explosion, collapse, and underground property damage hazards) providing coverage for
bodily injury, personal injury and property damage with limits of not less than $1,000,000 per
occurrence. This coverage may be provided with a combination of primary and excess
insurance policies.
iii. Commercial Business Automobile Liability Insurance including coverage for all owned, nonowned,
leased, and hired vehicles providing coverage for bodily injury and property damage
liability with combined single limits of not less than $1,000,000 per occurrence, except as may
otherwise be required by Law.
iv. Professional Liability (also known as Errors and Omissions Liability) and, as and to the extent
becoming commercially available, Cyber Risk Insurance covering acts, errors and omissions
arising out of Service Provider’s operations or Services in an amount not less than
$1,000,000 per occurrence.
v. Comprehensive Crime Insurance including Employee Dishonesty Insurance and Computer
Fraud Insurance, covering the loss of money, securities, and other property belonging to
HHSC resulting from any fraudulent or dishonest acts committed by Service Provider
employees, acting alone or with others, in an amount not less than $1,000,000 per
occurrence.
15.1..2 Approved Companies.
All such insurance shall be procured with reputable insurance companies and in such form as is usual
and customary to Service Provider’s business. Such insurance companies shall maintain a rating at
least “A-” and be at least a Financial Size Category VIII as both criteria are defined in the most current
publication of Best’s Policyholder Guide or comparable rating agency equivalent where applicable.
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15.1..3 Endorsements.
Service Provider shall obtain the following endorsements to its policy or policies of insurance (or so
reflect in appropriate policy certificate(s)) as are necessary to cause the policy or policies to comply
with the requirements stated herein.
i. Service Provider’s insurance policies as required herein under HHSC Uniform Terms and
conditions (UTCs) shall name HHSC and their respective officers, directors and employees as
Additional Insureds thereunder for liability (subject to the terms of this Agreement) arising at
any time in connection with the performance of Service Provider or Service Provider
Personnel under this Agreement. The policy required under UTCs shall have no cross-suits
exclusion, or any similar exclusion that excludes coverage for claims brought by one insured
under the policy against another insured under the policy.
ii. The Service Provider insurance policies required under UTCs shall provide coverage on a per
occurrence basis (i.e. not claims-based).
iii. The Service Provider insurance policy required under UTCs shall name HHSC and their
respective officers, directors and employees as loss payees as their interests may appear.
iv. Each policy shall provide that it shall not be canceled or materially altered except after at least
thirty (30) days advance written notice to HHSC that any such policy is canceled or materially
altered (or, to the extent such policy does not so provide, Service Provider shall cause the
applicable insurance company to agree to provide such notice). Should any policy expire or
be canceled during the Term and should Service Provider thereafter fail to immediately
procure replacement insurance as specified, HHSC reserves the right (but not the obligation)
to procure such insurance and to deduct the cost thereof from any sums due Service Provider
under this Agreement.
v. All insurance required under the UTCs shall be primary insurance and any other valid
insurance existing for HHSC’s benefit shall be excess of such primary insurance as respects
the scope of this Agreement and as respects Service Provider’s liability.
15.1..4 Minimum Amounts, Self-Insurance.
These insurance provisions set forth the minimum amounts and scopes of coverage to be maintained
by Service Provider and are not to be construed in any way as a limitation on Service Provider’s
liability under this Agreement. Service Provider shall not self-insure any of its obligations under this
Agreement. Any and all deductibles in the above-referenced insurance policies shall be assumed by,
for the account of, and at the sole risk of the Service Provider.
15.1..5 Certificates.
Service Provider shall provide HHSC with certificates of insurance evidencing compliance (including
evidence of renewal of insurance) signed by authorized representatives of the respective carriers for
each year that this Agreement is in effect.
15.1..6 No Implied Limitation.
The obligation of Service Provider to provide the insurance specified herein shall not limit or expand in
any way any obligation or liability of Service Provider provided elsewhere in this Agreement. The
rights of HHSC to insurance coverage under policies issued to or for the benefit of one or more of
them are independent of this Agreement shall not be limited by this Agreement.
15.1..7 Waiver of Subrogation.
With respect to insurance coverage to be provided by Service Provider pursuant to UTCs, the
insurance policies shall provide that the insurance companies waive all rights of subrogation against
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Service Provider, the State, HHSC and their respective Affiliates, officers, directors and employees.
Service Provider waives its rights to recover against HHSC and their respective officers, directors,
employees, agents, successors and assigns in subrogation or as subrogee for another party and
shall, to the extent available on a commercially reasonable basis, similarly arrange for such waiver
with respect to the coverage provided by Service Provider pursuant to the UTCs.
15.2 Place of Performance
Unless otherwise agreed to in writing, all Services performed by Service Provider, its Subcontractors
and agents shall be performed in the United States.
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