Duration of Contracts - General

Section 1300 Section 1300.2060  Duration of Contracts − General a)         General 1)         A multi-year contract for a term up to 10 years is authorized when determined by the CPO to be in the best interest of the OAG and the State, inclusive of proposed contract renewals. 2)         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. 3)         A lease for real property or capital improvements shall be in accordance with Sections 1300.4005 through 1300.4045. b)         The contractual obligation of both parties in each fiscal period succeeding the first is subject to the 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 cancelled without penalty to, or further payment being required by, the OAG.  This provision applies to only those contracts that are funded in whole or in part by funds appropriated by the Illinois General Assembly or other governmental entity. c)         Conditions for Use of Multi-Year Contracts A multi-year contract may be used when: 1)         special production of definite quantities or the furnishing of long-term services are required to meet OAG needs; or 2)         a multi-year contract will serve the best interests of the OAG and the State by encouraging effective competition or otherwise promoting economies in OAG 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 those costs during the period of contract performance; B)        lower production costs because of larger quantity of service requirements, and substantial continuity of production or performance over a longer period of time, can be expected to result in lower unit prices; C)        stabilization of the contractor's work force over a longer period of time may promote economy and consistent quality; or D)        the cost and burden of contract solicitation, award, and administration of the procurement may be reduced. d)         Multi-Year Contract Procedure The solicitation shall state: 1)         the proposed term; 2)         the amount of supplies or services required for the proposed contract period; 3)         whether bidders or offerors may submit prices for: A)        the first fiscal period only; B)        the entire time of performance only; or C)        both the first fiscal period and the entire time of performance; and 4)         that a multi-year contract may be awarded and how award will be determined. e)         Renewals 1)         When the original procurement specifically called for an initial term plus renewals, the renewals may be exercised without further procurement activity, provided 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 OAG. 2)         When the original procurement was silent as to renewals, the renewal must be within the guidelines for small, sole source or emergency procurements as set forth in the Code and this Part. 3)         When proposals for renewal or extension involve costs of $250,000 or more, the proposals must be reviewed by the OAG PPCMB.  If the OAG PPCMB raises no objection, the CPO may enter into the renewal or extension.  By August 1 each year, the OAG PPCMB shall file a report with the General Assembly identifying for the previous fiscal year: A)       the proposed extensions or renewals that were filed with the OAG PPCMB and whether the OAG PPCMB objected; and B)        the contracts exempt from this subsection (e)(3).