Section 1.2060  Duration of Contracts − General

a)         General

1)         Except in an emergency, or where immediate performance is necessary to protect the programmatic interest of the agency and all required approvals have been obtained, the vendor selected for award shall not begin any billable work or charge expenses prior to final execution of the contract by the State.  The procuring agency's SPO must approve any pre-contract work and shall report the circumstances to the Chief Procurement Officer.  Each solicitation and contract shall contain a provision alerting vendors that they will not be eligible for reimbursement for work performed prior to execution of the contract by the State, except as provided in this subsection (a)(1).  Only the SPO, the CPO or designee of the CPO, may authorize work prior to execution.

2)         A multi-term contract for a term up to 10 years is authorized when determined by the Procurement Officer to be in the best interest of the State.

3)         The length of the payment term of bonds issued by or on behalf of a State agency shall be limited as provided in the statute authorizing the issuance of the bonds.

4)         A software license may have a term longer than 10 years, including for a perpetual term, provided the payment term is limited to no more than 10 years.

b)         The contractual obligation of both parties in each fiscal period succeeding the first is subject to appropriation and availability of funds.  The contract shall provide that, in the event that funds are not available for any succeeding fiscal period, the remainder of the contract shall be canceled without penalty to, or further payment being required by, the State.  This provision applies to only those contracts that are funded in whole or in part by funds appropriated by the Illinois General Assembly or other governmental entity.

c)         Conditions for Use of Multi-Term Contracts

            A multi-term contract may be used when:

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

2)         a multi-term contract will serve the best interests of the State by encouraging effective competition or otherwise promoting economies in State procurement.  The following factors are among those relevant to such a determination:

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

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

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

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

d)         Multi-Term Contract Procedure

            The solicitation shall state:

1)         the proposed term;

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

3)         the type of pricing requested (e.g., firm for term);

4)         how award will be determined.

e)         Renewals

1)         When the original procurement specifically called for an initial term plus renewals, the renewals may be exercised without further procurement activity, provided the initial term and the exercised renewals may not exceed 10 years, the terms and conditions do not change except as provided in the contract (such as price escalations tied to an index) and the option is reserved solely to the State or is by mutual agreement.  A renewal option that requires modification to a material term or condition of the contract shall be treated as a new contract and shall be subject to competitive procurement procedures established by the Code and this Part.

2)         When the original procurement was silent as to renewals, the renewal must be procured using one of the methods of source selection authorized by the Code and this Part.  This renewal shall start a new term not to exceed 10 years.

3)         A contract may contain a renewal provision that binds the vendor, but not the State, for a term beyond the maximum 10-year term of a contract.  Where a renewal will result in the total term, counting the initial term and any previous renewals, to exceed 10 years, the renewal must be exercised using one of the methods of source selection authorized by the Code and this Part.  This renewal will start a new term that shall not exceed 10 years.

(Source:  Amended at 30 Ill. Reg. 17305, effective October 20, 2006)