44 Ill. Adm. Code 500.800
Duration of Contracts
Section 500
Section 500.800 Duration of
Contracts
a) General
1) A multi-term contract for a term up to 10 years, inclusive of
proposed contract renewals, is authorized when determined by the Procurement
Officer to be in the best interest of the State.
2) A software license designated as a perpetual license is not
considered a multi-term contract; it is instead a one-time purchase.
b) Subject
to Appropriation
Each contract
is contingent upon and subject to the availability of funds. The State, at its
sole option, may terminate or suspend a contract, in whole or in part, without
penalty or further payment being required if the Illinois General Assembly or
the federal funding source fails to make an appropriation sufficient to pay
that obligation or if funds needed are insufficient for any reason. Each
contract payable in whole or in part by any funds appropriated by the Illinois
General Assembly shall recite that the contract is subject to termination and
cancellation for lack of, or insufficiency in, funding. A vendor will be
notified in writing by the OAG of a failure to receive or a reduction or
decrease in any appropriation or insufficiency of funds affecting the contract.
This provision applies to only those contracts that are funded in whole or in
part by funds appropriated by the Illinois General Assembly or other
governmental entity.
c) Conditions for Use of Multi-Year Contracts
A multi-year contract
may be used when:
1) special production of definite quantities or the furnishing of
long-term services is required to meet OAG needs; or
2) a multi-year contract will serve the best interests of 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 such 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) the type of pricing requested (e.g., firm for term); and
4) how award will be determined.
e) Renewals
1) 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 and the option is reserved solely to the OAG or is by mutual
agreement.
2) 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
procured using one of the methods of source selection authorized by this Part. This
renewal will start a new term that shall not exceed 10 years.
3) Notice of renewal shall be published in the Auditor General
Bulletin no later than 14 calendar days after the contract is awarded.
f) Cancellation of
Contracts
1) In
any of the following cases, the OAG shall have the right to terminate or
rescind any contract entered into under this Part without penalty:
A) The
successful vendor fails to furnish a satisfactory performance bond within the
time specified;
B) The
vendor fails to make delivery at the place or within the time specified in the
contract or as ordered by the OAG;
C) Any
supplies or services provided under the contract are rejected (for not meeting
specification, not conforming to sample, or not being in good condition when
delivered) and are not promptly replaced by the vendor. If there are repeated
rejections of the vendor's supplies or services, this shall be grounds for
termination or rescission, even though the vendor offers to replace the
supplies or services promptly;
D) The
vendor is guilty of misrepresentation (e.g., misbranding of food or drugs) in
connection with another contract for the sale of supplies or services to the
State such that the vendor cannot reasonably be depended upon to fulfill
obligations as a responsible vendor under other contracts with the State;
E) The
vendor is adjudged bankrupt; enters into receivership or makes a general
assignment for the benefit of creditors due to insolvency; disregards laws,
rules or instructions of the OAG; or acts in violation of any provision of the
contract;
F) Any
other breach of contract or other unlawful act by the vendor;
G) The
contract was obtained by fraud, collusion, conspiracy or other unlawful means;
or
H) The
contract conflicts with any statutory or constitutional provision of the State
of Illinois or of the United States.
2) Damages
The damages for which the OAG may
be compensated as provided in this Section or by a suit on the vendor's
performance bond or by other legal remedy shall include, but are not limited
to, the following:
A) the
additional cost of supplies or services bought elsewhere;
B) cost
of repeating the procurement procedure;
C) any
expenses incurred because of delay in receipt of supplies or services; and
D) any
other damages caused by the vendor's breach of contract or unlawful act.
3) Withholding
Money to Compensate OAG for Damages
If a contract
is terminated or rescinded under this subsection (f), the OAG may deduct from
whatever is owed the vendor on that or any other contract an amount sufficient
to compensate the OAG for any damage resulting from termination or rescission.