NOTICE OF CONTRACT NO. 071B4300138 between THE …As part of the State’s ERP Project, Contractor will implement the following software functions for the executive, legislative, and

Form No. DTMB-3522 (Rev. 4/2012)

AUTHORITY: Act 431 of 1984 COMPLETION: Required PENALTY: Contract will not be executed unless form is filed

STATE OF MICHIGAN

DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET PROCUREMENT

P.O. BOX 30026, LANSING, MI 48909 OR

525 W. ALLEGAN, LANSING, MI 48933

NOTICE OF

CONTRACT NO. 071B4300138 between

THE STATE OF MICHIGAN and

NAME & ADDRESS OF CONTRACTOR: PRIMARY CONTACT EMAIL

CGI Technologies and Solutions Inc. Jon Jasper [email protected] 2651 Coolidge Road TELEPHONE CONTRACTOR #, MAIL CODE East Lansing, Michigan 48823 (248) 496-4336

STATE CONTACTS AGENCY NAME PHONE EMAIL

CONTRACT COMPLIANCE INSPECTOR: SBO Ruth Schwartz 517-284-7585 [email protected]

BUYER: DTMB Whitnie Zuker 517-284-7030 [email protected]

CONTRACT SUMMARY: ERP Implementation Services Agreement

INITIAL TERM EFFECTIVE DATE

INITIAL EXPIRATION DATE AVAILABLE OPTIONS

3 years, three months and six days June 25, 2014 September 30, 2017 Indefinite Number of Periods PAYMENT TERMS F.O.B SHIPPED SHIPPED FROM

Net 45 N/A N/A N/A ALTERNATE PAYMENT OPTIONS: AVAILABLE TO MiDEAL PARTICIPANTS

P-card Direct Voucher (DV) Other YES NO MINIMUM DELIVERY REQUIREMENTS:

N/A MISCELLANEOUS INFORMATION: * Please see Agreement 071B4300137 that provides extended purchasing program for ERP Hosting, Managed Services, Software License, Maintenance and additional services

ESTIMATED CONTRACT VALUE AT TIME OF EXECUTION: $38,833,928


AUTHORITY: Act 431 of 1984 COMPLETION: Required PENALTY: Contract will not be executed unless form is filed

STATE OF MICHIGAN

DEPARTMENT OF TECHNOLOGY, MANAGEMENT AND BUDGET PROCUREMENT

P.O. BOX 30026, LANSING, MI 48909 OR

525 W. ALLEGAN, LANSING, MI 48933

CONTRACT NO. 071B4300138 between

THE STATE OF MICHIGAN and

NAME & ADDRESS OF CONTRACTOR: PRIMARY CONTACT EMAIL

CGI Technologies and Solutions Inc. Jon Jasper [email protected] 2651 Coolidge Road TELEPHONE CONTRACTOR #, MAIL CODE East Lansing, Michigan 48823 (248) 496-4336

STATE CONTACTS AGENCY NAME PHONE EMAIL

CONTRACT COMPLIANCE INSPECTOR: SBO Ruth Schwartz 517-284-7585 [email protected]

BUYER: DTMB Whitnie Zuker 517-284-7030 [email protected]

CONTRACT SUMMARY: ERP Implementation Services Agreement

INITIAL TERM EFFECTIVE DATE

INITIAL EXPIRATION DATE AVAILABLE OPTIONS

3 years, three months and six days June 25, 2014 September 30, 2017 Indefinite Number of Periods PAYMENT TERMS F.O.B SHIPPED SHIPPED FROM

Net 45 N/A N/A N/A ALTERNATE PAYMENT OPTIONS: AVAILABLE TO MiDEAL PARTICIPANTS

P-card Direct Voucher (DV) Other YES NO MINIMUM DELIVERY REQUIREMENTS:

N/A MISCELLANEOUS INFORMATION: * Please see Agreement 071B4300137 that provides extended purchasing program for ERP Hosting, Managed Services, Software License, Maintenance and additional services

ESTIMATED CONTRACT VALUE AT TIME OF EXECUTION: $38,833,928 THIS IS NOT AN ORDER: This Contract is awarded on the basis of our inquiry bearing the solicitation #084R3200001. Orders for delivery will be issued directly by State Agencies through the issuance of a Purchase Order Form.


Notice of Contract #: 071B4300138

FOR THE CONTRACTOR: FOR THE STATE: CGI Technologies and Solutions Inc.

Firm Name Signature Jeff Brownlee, Chief Procurement Officer

Authorized Agent Signature Name/Title DTMB Procurement

Authorized Agent (Print or Type) Enter Name of Agency

Date Date

CONTRACT 071B4300138

STATE OF MICHIGAN

Department of Technology Management and Budget Purchasing Operations

Contract No. 071B4300138 ERP Implementation Services Agreement

Buyer Name: Whitnie Zuker Telephone Number: 517-284-7030

E-Mail Address: [email protected]


Table of Contents Article 1 – Statement of Work (SOW) ........................................................................................... 8

1.000 Project Identification .................................................................................................... 8 1.001 PROJECT REQUEST ..................................................................................... 8 1.002 BACKGROUND ............................................................................................... 8

1.100 Scope of Work and Deliverables ................................................................................. 8 1.101 SCOPE ............................................................................................................ 8 1.102 OUT OF SCOPE ........................................................................................... 10 1.103 RESERVED .................................................................................................. 10 1.104 WORK AND DELIVERABLES ....................................................................... 10 1.105 RESERVED ................................................................................................... 10 1.106 ERP PROJECT GOVERNANCE ................................................................... 11 1.107 TARGETED IMPROVEMENTS ..................................................................... 11 1.108 ENVIRONMENT ............................................................................................ 15

1.200 Roles and Responsibilities ........................................................................................ 16 1.201 CONTRACTOR STAFF, ROLES, AND RESPONSIBILITIES ....................... 16 1.202 STATE STAFF, ROLES, AND RESPONSIBILITIES ..................................... 18 1.203 PROJECT FACILITY ..................................................................................... 18 1.204 OTHER ROLES AND RESPONSIBILITIES .................................................. 18

1.300 Project Plan ............................................................................................................... 19 1.301 PROJECT PLAN MANAGEMENT ................................................................. 19 1.302 RESERVED ................................................................................................... 19

1.400 RESERVED ............................................................................................................... 19 1.500 RESERVED ............................................................................................................... 19 1.600 Compensation and Payment ..................................................................................... 19

1.601 COMPENSATION AND PAYMENT .............................................................. 19 Article 2 – Terms and Conditions ................................................................................................ 20

2.000 Contract Structure and Term ....................................................................................... 20 2.010 Consents and Approvals .......................................................................................... 21 2.020 Contract Administration ............................................................................................ 21 2.030 General Provisions ................................................................................................... 23 2.040 Financial Provisions ................................................................................................. 24 2.050 Taxes ................................................................................................................ 26 2.060 Contract Management .............................................................................................. 26 2.070 Subcontracting by Contractor ................................................................................... 28 2.080 State Responsibilities ............................................................................................... 29 2.090 State Data, Privacy and Confidentiality .................................................................... 29 2.100 RESERVED .............................................................................................................. 33 2.110 Records and Inspections .......................................................................................... 33 2.120 Warranties ................................................................................................................ 34 2.130 Insurance ................................................................................................................ 36 2.140 Indemnification ......................................................................................................... 39 2.150 Termination/Cancellation .......................................................................................... 41 2.160 Termination by Contractor ........................................................................................ 43 2.170 Transition Responsibilities ........................................................................................ 44 2.180 Stop Work ................................................................................................................ 44 2.190 Dispute Resolution ................................................................................................... 45 2.200 Federal and State Contract Requirements ............................................................... 46 2.210 Governing Law ......................................................................................................... 47 2.220 Limitation of Liability ................................................................................................. 47 2.230 Disclosure Responsibilities ....................................................................................... 47


2.240 Performance ............................................................................................................. 48 2.250 Approval of Deliverables .......................................................................................... 50 2.260 Ownership ................................................................................................................ 51 2.270 State Standards ........................................................................................................ 51 2.280 Extended Purchasing Program ................................................................................ 52 2.290 Environmental Provision ........................................................................................... 52 2.300 RESERVED .............................................................................................................. 53 2.310 RESERVED .............................................................................................................. 53 2.320 RESERVED .............................................................................................................. 53 2.330 RESERVED .............................................................................................................. 53

Attachment 2: Implementation Tasks, Services, Deliverables, and Milestones .......................... 65 Attachment 3: Timeline and Scope Clarifications ..................................................................... 126 Attachment 4: Deliverables and Payment Schedule ................................................................. 131 Attachment 5: Key Personnel ................................................................................................... 145 Attachment 6: Interfaces ........................................................................................................... 148 Attachment 7: Systems to Be Replaced ................................................................................... 206 Attachment 8: Functional and Technical Requirements Clarifications ...................................... 213 Attachment 9: Severity Level Definitions .................................................................................. 214 Attachment 10: Functional and Technical Requirements ......................................................... 215


This ERP Implementation Services Agreement (“Agreement”) is made by and between the State of Michigan (hereinafter “State” or “The State”) and CGI Technology and Solutions, Inc. (hereinafter “Contractor” or “The Contractor”). The State and Contractor are each individually referred to herein as “Party” and collectively as “Parties.” The Parties hereby agree, as follows: This Agreement is composed of the following attachments, which are hereby incorporated by reference:

Article 1 – Statement of Work Article 2 – Terms and Conditions Attachment 1: Glossary Attachment 2: Implementation Tasks, Services, Deliverables, and Milestones Attachment 3: Timeline and Scope Clarifications Attachment 4: Deliverables and Payment Schedule Attachment 5: Key Personnel Attachment 6: Interfaces Attachment 7: Systems to Be Replaced Attachment 8: Functional and Technical Requirements Clarifications Attachment 9: Severity Level Definitions Attachment 10: Functional and Technical Requirements


Article 1 – Statement of Work (SOW)

1.000 Project Identification

1.001 PROJECT REQUEST The State of Michigan is contracting to acquire and implement an Enterprise Resource Planning (ERP) System for executive, legislative, and judicial branch organizations. The State is also contracting for Application Maintenance and Support (“Managed Services”), Hosting Services, a Disaster Recovery site, and Disaster Recovery Services as part of the overall effort. Multiple contracts have been created in support of the ERP project. This Agreement addresses the Implementation Services aspects of the project.

1.002 BACKGROUND The following separate contracts support the State’s ERP Implementation Project

This Agreement for Implementation Services that provides for ERP implementation services as well as project technical environment hosting until full hosting services are provided through the separate Managed Services Agreement. This Agreement will be for the duration of the project and post implementation. The project will start on July 1, 2014 and continue through September 30, 2017 (including 12 months of post implementation support). The State is also seeking pricing for three (3) one year renewal options; and reserves the right to seek additional option years.

Software License and Maintenance Agreements for the ERP and for third party application software (if any). Such agreements will include pricing for five (5) years of annual maintenance and support beyond the final implementation date.

A Managed Services Agreement that provides for hosting and disaster recovery facilities and services and includes ERP application maintenance, development, and other services. This agreement is for seven (7) years commencing no later than March 1, 2015 and includes annual renewal pricing options for an additional three (3) years. The State reserves the right to seek additional option years. Services under this agreement commence as indicated below:

Aspect of Service Service Commencement Date Project Hosting No later than March 1, 2015 Production Hosting Phase 1 Implementation Date - August 1, 2015 Operations Services Phase 1 Implementation Date - August 1, 2015 Disaster Recovery Services Phase 1 Implementation Date - August 1, 2015 Post Implementation Production Support and Maintenance

End of each Phase Phase 1 - August 1, 2015 Phase 2 - October 1, 2016

1.100 Scope of Work and Deliverables

1.101 SCOPE As part of the State’s ERP Project, Contractor will implement the following software functions for the executive, legislative, and judicial branches of the State using CGI’s Advantage Release 3.11, and CGI Advantage Toolkit Bundle Release 3.11 (hereinafter collectively referred to as “ERP” or “ERP Software”):

Accounts Payable and Disbursements (including EFT and some electronic vendor invoices) Accounts Receivable and Billing


Asset Management Budget Control Budget Preparation (Advantage 3.10 will be implemented for Phase 1 with a subsequent upgrade to

Advantage 3.11 prior to the completion of Phase 2) Cash Reconciliation Cost Allocation Employee Time and Attendance Employee Travel and Expense Reimbursement Expenditure Tracking Against Debt Issues for IRS Reporting Federal Highway (“FHWA”) Billing General Ledger and Financial Reporting Grants Management (Grantee Side) Grants Management (Grantor Side) Inventory Investment Pool Participation Tracking/Allocation of Investment Earnings to Participating Funds Labor (and Equipment Cost) Distribution Positive Pay Banking (subject to a determination of feasibility) Project Accounting Transparency & Accountability Portal Vendor Accounts Payable Web Inquiry Vendor Payment and EFT Web Registration Vendor Tax Reporting (1099 & 1042) and Backup Withholding

A. Implementation Services and Schedule The Contractor will provide services necessary to conduct the State’s ERP Implementation Project (“ERP Project”) and to design, configure, extend, modify and implement the ERP software and to update MIDB, the State's existing administrative data warehouse. Such services are further elaborated in:

Attachment 2: Implementation Services, Tasks, Deliverables, and Milestones Attachment 3: Timeline and Scope Clarifications Attachment 6: Interfaces Attachment 7: Systems to Be Replaced Attachment 8: Functional and Technical Requirements Clarifications Attachment 9: Severity Level Definitions Attachment 10: Functional and Technical Requirements The ERP Project phasing, implementation and final post implementation support schedule is as follows: Date Project Start Date: July 1, 2014 Phase I Budget Preparation Implementation Begin production use of new Budget Preparation Module on

August 1, 2015 To prepare the budget for the 2016-17 fiscal year which

begins October 1, 2016

August 1, 2015

Phase 2 Core Financial Implementation Phase 2 is expected to start at the beginning of the project

and run concurrently with Phase 1 Begin production use of Core Financials October 1, 2016

October 1, 2016 (first day of new State fiscal year)


Date Accounts Payable and Disbursements (including EFT and

some electronic vendor invoices) Accounts Receivable and Billing Asset Management Budget Control Cash Reconciliation Cost Allocation Employee Time and Attendance (Including Web Portal) Employee Travel and Expense Reimbursement Expenditure Tracking Against Debt Issues for IRS Reporting FHWA Billing General Ledger and Financial Reporting Grants Management (Grantee Side) Grants Management (Grantor Side) Inventory Investment Pool Participation Tracking/Allocation of

Investment Earnings to Participating Funds Labor (and Equipment Cost) Distribution MIDB (for all Phase 1 and 2 ERP Data) Positive Pay Banking (if feasible) Project Accounting Transparency & Accountability Portal Vendor Accounts Payable Web Inquiry Vendor Payment and EFT Web Registration Vendor Tax Reporting (1099 & 1042) and Backup

Withholding

Post Implementation Support From the Phase 1 implementation and

continuing until 12 months after the final implementation

Through September 30, 2017

1.102 OUT OF SCOPE The following items are not included in the scope of the ERP project at this time. However, scope could be added through Section 2.024:

Provision of Hardware, system software, and infrastructure for MIDB Hosting, IT maintenance, operations, or disaster recovery for MIDB Implementation Services for the following modules:

o Procurement o Personnel Administration o Benefits Administration o Employee and Manager Self-Service o Recruiting o Payroll o Facilities Management o Real Estate Management o Fleet Management

1.103 RESERVED

1.104 WORK AND DELIVERABLES The requirements for the ERP Project are listed and described in Attachments 2 through 10.

1.105 RESERVED


1.106 ERP PROJECT GOVERNANCE The project will adhere to governance structure with four key levels to provide project oversight and an issue escalation path for issues and needed decisions.

The State Project Director will provide day-to-day management and guidance for the project

and will approve project deliverables for review with the State Project Executive(s). The project director may name designees in instances where either a dispute requires resolution and the Project Director is not available or for specific instances in regard to particular delegated deliverables or deliverable groups.

The State Project Executives will approve all deliverables on the project, approve key communications, and will be able to resolve issues not involving scope, budget, or timeline changes. The State Project Executives may delegate any of these approvals (or subsets thereof) to the State Project Director.

A Governing Board has been established that represents control agencies and operating departments of the executive branch and provides guidance on overall strategic direction. It will consist of the State CIO, Chief Deputy State Budget Director and representatives from each of the executive groups. The Governing Board will approve all milestones, review all change requests, and act to clear obstacles to project success. The Governing Board will meet monthly and at milestone boundaries. The Governing Board may delegate any of these approvals to the State Project Executives or the State Project Director.

The Executive Sponsor for the STATE is John S. Roberts, State Budget Director. He will have overall authority over the ERP Project.

The following procedure shall be followed if resolution is required for any dispute between the parties related to this Agreement. The State Project Director shall be notified of the dispute and will meet with the Contractor

Project Director to discuss and resolve the issue. If the issue cannot be resolved within five (5) business days or an alternative time frame agreed to between the parties, the State Project Director will escalate the dispute to the State Project Executives who shall make a determination regarding the dispute within ten (10 ) business days. If the issue remains unresolved, either the State Project Executives or Contractor Project Director may escalate the issue to the State Project Sponsor (or Governing Board if more appropriate) for resolution. The State Project Sponsor shall have 10 business days to make a determination regarding the dispute. If the dispute is still not resolved, then either Party may seek available contractual remedies in accordance with Article 2 of this Agreement.

The State Project Director and the State Project Executives may make reasonable request for additional documentation or analysis be prepared by the Contractor and submitted to them before meeting to discuss the dispute. In addition, the Contractor Project Director may make reasonable request for additional documentation pertinent to the dispute before meeting to discuss the dispute. The Parties shall have two (2) business days or an alternative time frame agreed to between the parties to prepare and provide any needed documentation to the other party. The time frame for resolution at any level will begin at the point that such documentation is submitted.

1.107 TARGETED IMPROVEMENTS In addition to replacing functionality in systems slated for replacement as part of the ERP Project, the State has identified a number of areas in which significant improvements are expected. These are listed and described below:


Objective Description

Automate and Streamline Budget Preparation

The State's current budget process is largely manual and uses Excel Spreadsheets to collect budget requests which must be compiled via a combination of macros and manual work. The ERP system project scope includes automation and streamlining of the budget preparation and budget book creation process. Key requirements for the system include:

Automated loading of prior year budget/'actuals' information to provide a starting point for new year budgeting

Automated tools to increment or decrement budget lines Automated 'What if' analysis Ability to create and save scenarios and alternative scenarios Electronic submission of agency requests Tracking of budget, appropriation level and detailed expense budget

level budgets

Ability to set, control, and manage budget phases (e.g. Guidelines, Agency Requests, Legislative, Final)

Automated loading of ERP with approved budget at the appropriation, agency budget and allotment levels

Ability to integrate text, graphics and budget lines to assist in budget book creation.

Automated publication of Executive Budget and Final Budget Ability to associate statistical targets and actuals with separately

budgeted line items

Ability to support full performance budgeting at a future time. Ability to upload legislative budget information in the initial

implementation but allow for full use of automated budget preparation features by the legislature in the future.

Chart of Accounts Reform/Uniform Coding Block Usage

Michigan has clear objectives for improving both its reporting and the level of transparency in its accounting and financial reporting. The ERP Project will provide the State with an opportunity to:

Standardize use of coding block/ chart of accounts elements used in budgeting

Simplify and streamline fund accounting Standardize expenditure classifications used across agencies Reduce or eliminate the use of ARFs (Administrative Revolving

Funds) and the need to reclassify expenditures in a separate step.

Coordinate legacy interface design and development to provide and post detailed transactions that are consistent with the elimination of ARFS and as needed to provide detail for the new Transparency & Accountability Website.



Transparency & Accountability Portal

The State plans to replace its existing Transparency & Accountability Portal and streamline the process to provide the public with an increased level of information regarding the operation and management of government; demonstrate efficient use of taxpayers' money and to hold agencies accountable for the services that Michigan provides.

Support for Debt Reporting

The Michigan Treasury is responsible for managing and accounting for the State's debt. Part of that responsibility involves tracking expenditures involving debt proceeds for IRS reporting purposes. The ERP project is targeting improvements that will allow expenditures to be automatically identified with the debt issuance to improve this reporting.

Support for Investment Accounting

The Michigan Treasury invests available cash for all agencies in a common investment pool and periodically apportions earnings to participating funds. The ERP project seeks to automate accounting for this process. Note that individual investments will continue to be tracked outside the system.

Management Information Database (MIDB) Data Currency and Reporting

The MIDB is the State's administrative data warehouse and combines data from MAIN (RSTARS and ADPICS), DCDS, and HRMN. MAIN and DCDS updates to MIDB are made once a week (bi-weekly for payroll data) and data within MIDB is made available for reporting in application data formats (with appended descriptions to eliminate some table lookups for those performing ad hoc queries). Going forward, there are three opportunities for improving MIDB as part of the ERP Project:

Increasing the data refresh rate. This will allow ad hoc reporting to use more current data

Data synchronization should improve as MAIN and DCDS are replaced with a single, integrated ERP application using a single database

Chart of accounts improvements and coding block standardization should allow for better reporting particularly when cross agency and statewide level reports are needed.

Project and Grant Reporting/Budgeting/ Processing

The new ERP system is expected to provide improved project and grant budgeting, accounting, billing, and reporting. In combination with improved cost allocation capabilities, this should allow for replacement of many agency systems now devoted to these functions. The ERP system will also consolidate grantor processing for the State.

Cost Allocation

The MAIN cost allocation function was never implemented. As such, cost allocations occur outside of MAIN. Implementation of the new ERP cost allocation function will allow for a greater degree of automation as well as more streamlined reporting and billing using allocated account distributions.



Bank Reconciliation The Michigan Treasury currently does not have automated bank reconciliation functionality available to it in MAIN. The new ERP system is intended to provide this functionality. With Treasury managing approximately 60 bank accounts, this new functionality is expected to provide significant time savings.

Reduction in the Number of Applications Supported and Interfaced

Currently, Michigan administrative processing is fragmented across several systems including RSTARS, DCDS, ADPICS, and numerous agency systems. A number of problems are evident:

Few of these systems are vendor supported or upgradeable Posting lags and timing synchronization issues occur due to batch

interfaces

Data cannot be efficiently aggregated for reporting across the various data stores

IT resources cannot be efficiently deployed across the application set due to technology differences and the need for specialized skill sets.

The new ERP system will be vendor supported, upgradeable, and will consolidate processing onto a single platform and database. While there will still be administrative applications running on different platforms after the ERP system is implemented (e.g. E-Procurement and HRMN), substantial consolidation will nevertheless have been achieved.

Move to Vendor Supported, Upgradeable COTS Solution

Implementation of the new ERP will allow the State to shift much of its critical processing from internally supported applications based on aging technology to vendor supported and upgradeable software that is protected against technological obsolescence and updated based on ongoing vendor research and development.

Automate BAI Interfaces with Banks

The state currently receives a number of Bank Administration Institute (BAI) files from its banks that contain information on warrant clearing, debit and credit advices, NSF checks, and other information. Currently, this information must be heavily manipulated before it can be captured in MAIN. Going forward the plan is to automate BAI based interfaces for capture and processing in the ERP.

Warrant Writing The new ERP will absorb the warrant writing function currently provided by Treasury's Warrant Writing System operating on the UNISYS platform. Inclusion of this function in the ERP will consolidate and simplify interfaces that post warrant requests. Going forward, there will be one set of interfaces for warrants, EFTS, and accounting entries from each feeding system. In the past these required separate interfaces.

Implementation of The Treasury Department currently uses the 'Reverse Positive Pay'



Positive Pay Banking method which requires state personnel to verify each cleared warrant to ensure it matches with the recorded disbursement amount. The State intends to explore the feasibility of implementing 'Positive Pay' Banking. If determined feasible, the State would implement this approach wherein Banks would receive disbursement files from the State and take responsibility for matching recorded disbursements against the warrants presented for payment.

Automate Vendor File Synchronization

The current plan for the E-Procurement (Buy4Michigan) project calls for independently maintained procurement and accounts payable vendor files. The plan is to include automated synchronization of these files when the ERP system is implemented.

Automate and Streamline CAFR Production

The State currently has a substantially manual process for Comprehensive Annual Financial Report (“CAFR”) production that uses a combination of mainframe reports, Excel Spreadsheets, Microsoft Word, and PDF files to create and publish its CAFR reports. The State intends to automate and streamline the CAFR process as part of the ERP project. The intent is to perform all elimination and reclassification entries within the ERP, and to then produce camera ready CAFR reports directly from the new system or from a CAFR tool that imports data from the ERP.

Increase Accounting Detail Posted From Agency Systems

Currently, many agency systems post summarized accounting information in the State's financial system via automated interface. Going forward, the intent is to capture detailed postings to improve reporting and level of detail available to the public on the Transparency & Accountability Website.

1.108 ENVIRONMENT The links below provide the State’s enterprise information technology (“IT”) policies, standards and procedures which includes security policy and procedures, IT strategic plan, eMichigan web development and the State Unified Information Technology Environment (“SUITE”). Contractor shall provide all services and products in a manner compliant with all applicable State IT policies and standards. Enterprise IT Policies, Standards and Procedures: The Contractor must adhere to all existing standards as described within the comprehensive listing of the State’s existing Enterprise IT Policies, Standards and Procedures at: http://michigan.gov/dtmb/0,4568,7-150-56355_56579_56755---,00.html for all State-Specific IT Resources, and for IT Resources that are not State-Specific if it does not affect Contractor’s ability to service its other clients. All software and hardware items provided by the Contractor must run on and be compatible with the DTMB Standard Information Technology Environment. Additionally, the State must be able to maintain software and other items produced as the result of the Agreement. Therefore, non-standard development tools may not be used unless approved by DTMB. The Contractor must request, in


writing, approval to use non-standard software development tools specific to the project, providing justification for the requested change and all costs associated with any change. DTMB must approve any tools, in writing, before use on any information technology project. It is recognized that technology changes rapidly. The Contractor may request, in writing, a change in the standard environment, providing justification for the requested change and all costs associated with any change. DTMB must approve any changes, in writing, before work may proceed based on the changed environment. Enterprise IT Security Policy and Procedures: http://www.michigan.gov/documents/dmb/1310_183772_7.pdf http://www.michigan.gov/documents/dmb/1325_193160_7.pdf http://www.michigan.gov/documents/dmb/1335_193161_7.pdf http://www.michigan.gov/documents/dmb/1340_193162_7.pdf The State’s security environment includes:

DTMB Single Login. DTMB provided SQL security database. Secured Socket Layers. SecureID (State Security Standard for external network access and high risk Web systems)

IT Strategic Plan: http://www.michigan.gov/itstrategicplan IT eMichigan Web Development Standard Tools: http://www.michigan.gov/documents/som/Look_and_Feel_Standards_302051_7.pdf The State Unified Information Technology Environment (“SUITE”): SUITE includes standards for project management, systems engineering, and associated forms and templates. Use of SUITE is mandatory, but the State may consider Contractor proposals to “crosswalk” other methodologies to SUITE. Information regarding SUITE can be found at: http://www.michigan.gov/suite

1.200 Roles and Responsibilities

1.201 CONTRACTOR STAFF, ROLES, AND RESPONSIBILITIES A. Contractor Staff

The Contractor will provide a list of staff, including subcontractors, who will be assigned to the statement of work, indicating the duties/responsibilities. The Contractor will commit that staff identified in its proposal will actually perform the assigned work in accordance with Section 2.062.

Key Personnel are identified in Attachment 5.

B. On Site Work Requirements 1. Location of Work

All implementation work performed by the Contractor shall be performed, completed, and managed in Lansing, Michigan at the designated Project Facility. However, the State may allow isolated implementation activities to be executed from an offsite location within the USA, subject to the explicit approval of the State Project Director. With regard to vendor proprietary assets, the State has a strong preference for such work to take place onsite, however the State would be willing to consider circumstances where that is not a practical alternative. “Vendor proprietary assets” refers to software products, tools or other assets that belong to the Contractor or software vendor. The State may confirm that work is performed at the agreed upon locations through the State’s project management oversight of the implementation team.


Contractor plans to perform the following off-site work at the identified locations: Description of Work Location of Work Percent of

Described Work performed at off-site location

Baselined Development

CGI's Advantage product development headquarters is in Fairfax, Virginia. Baseline product software development for CGI Advantage occurs in Fairfax, Virginia; Dallas, Texas; Athens, Ohio; and our Global Delivery Centers including Mumbai, Bangalore, and Hyderabad, India.

85%

Michigan-Specific Development

Michigan specific development will be completed on-shore, with a significant portion of the work conducted onsite in Lansing. Project development work may also be conducted at one of CGI’s on-shore delivery centers of excellence in Troy, Alabama, Belton & Dallas Texas or Athens, Ohio as well as various other locations in the US where CGI has Advantage technical staff living or supporting other Advantage projects.

20%

Interfaces, Conversion and Reporting

The on-site Technical Services, Interface, Conversion, and Reporting Team members will lead the requirements analysis, design, configuration, and system and recovery testing activities. The proposed off-site work for these teams will be completed on-shore and will primarily consist of development and unit testing activities. Off-site team members, including Advantage Product Management members and Product Subject Matter Experts, will travel on-site as required to meet in-person with the on-site team members throughout the duration of the project.

17%

2. Hours of Operation:

a. Normal State working hours are 8:00 a.m. to 5:00 p.m. EST/EDT, Monday through Friday, with work performed as necessary after those hours to meet project deadlines.

b. The State is not obligated to provide State management of assigned work outside of normal

State working hours. The State reserves the right to modify the work hours in the best interest of the project.

c. Contractor shall observe the same standard holidays as State employees. The State does

not compensate Contractors for holiday pay. A list of State holidays can be found at the following site: http://www.michigan.gov/documents/SPDOC_05-03_Reg_5_120538_7.08.pdf

3. Travel:

a. No travel or expenses will be reimbursed. This includes travel costs related to training provided to the State by Contractor.

b. Travel time will not be reimbursed.


4. Additional Security and Background Check Requirements: See Section 2.094 Background Checks

Contractor will pay for all costs associated with ensuring their staff meets all requirements of Background Checks required under Section 2.094.

1.202 STATE STAFF, ROLES, AND RESPONSIBILITIES The named State resources will consist of a Project Director and a DTMB Business Relationship Manager (“BRM”).

State Project Director and BRM The State’s Project Director and BRM will provide the following services:

Provide State facilities, as needed Coordinate the State resources necessary for the project Facilitate coordination between various external contractors Facilitate communication between different State departments/divisions Provide acceptance and sign-off of deliverable/milestone Review and sign-off of timesheets and invoices Resolve project issues Escalate outstanding/high priority issues Utilize change control procedures Conduct regular and ongoing review of the project to confirm that it meets original objectives

and requirements Document and archive all important project decisions Arrange, schedule and facilitate State staff attendance at all project meetings.

State Project Director and BRM/Deputy Project Director

Name Agency/Division Title Ruth Schwartz DTMB – SBO Project Director Lisa Evani DTMB – Customer Services Business Relationship Manager /

Deputy Project Director

1.203 PROJECT FACILITY The State will provide the following resources for the Contractor’s use on this project:

Work station Telephone PC and office automation software Network connections Email Printer Conference and meeting rooms Access to copiers and fax machine

1.204 OTHER ROLES AND RESPONSIBILITIES The Contractor shall provide all required cooperation and support needed including sharing of all plans, work products, status reports, deliverables, analysis, and presentations; providing access to software and technical environments; and answering questions that the Quality Assurance or PMO vendor(s) may have.


1.300 Project Plan

1.301 PROJECT PLAN MANAGEMENT The Contractor will manage the project plan as specified in Task 1: Project Management of Attachment 2: Implementation Services, Tasks, Deliverables, and Milestones.

1.302 RESERVED

1.400 RESERVED

1.500 RESERVED

1.600 Compensation and Payment

1.601 COMPENSATION AND PAYMENT This is a firm, fixed price Agreement for $38,833,928. Additional services may be provided using rate cards as provided in Attachment 4, Section 4.3 and following the contract change order process defined in Article 2, Exhibit 2-1. Method of Payment The Contractor will be paid based on completion and State acceptance of deliverables and milestones as specified in Attachment 2: Implementation Service, Tasks, Deliverables, and Milestones using the Payment Criteria and Payment Amounts listed in Attachment 4: .Deliverables and Payment Schedule. Travel The State will not pay for any travel expenses, including hotel, mileage, meals, parking, etc. Travel time will not be reimbursed. Invoicing Contractor will submit properly itemized invoices to

DTMB – Financial Services Accounts Payable P.O. Box 30026 Lansing, MI 48909 or [email protected]

Additionally, a copy of the invoice should be submitted to the State Project Director.

Invoices must provide and itemize, as applicable: Contract number; Purchase Order number Contractor name, address, phone number, and Federal Tax Identification Number; Date(s) of delivery and/or date(s) of installation and set up; Deliverable Name and IDs (from Attachment 4) Included for each applicable Payment ID Milestone Name (if invoicing for a completed Milestone) Payment ID (from Attachment 4) Net invoice price for each Deliverable or Milestone Total for each Payment ID Overall invoice price Payment terms

Incorrect or incomplete invoices will be returned to Contractor for correction and reissue.


Article 2 – Terms and Conditions

2.000 Contract Structure and Term Terms and Conditions in Article 2 are applicable to the Implementation Contract ("Agreement"). License and maintenance terms and conditions for the ERP Solution will be contained directly in the applicable Proprietary Software License Agreement and Proprietary Software Maintenance Agreement at Attachments 9 and 10, respectively, of the Managed Services Agreement.

2.001 Contract Term This Agreement shall begin on June 25, 2014 and continues through September 30, 2017. All outstanding Purchase Orders must also expire upon the termination for any of the reasons listed in Section 2.150 of the Agreement, unless otherwise extended under the Agreement. Absent an early termination for any reason, Purchase Orders issued but not expired, by the end of the Agreement’s stated term, shall remain in effect for the balance of the fiscal year for which they were issued.

2.002 Options to Renew This Agreement may be renewed in writing by mutual agreement of the parties prior its expiration for an indefinite number of periods.

2.003 Legal Effect Contractor accepts this Agreement by signing two copies of the Agreement and returning them to the DTMB-Procurement. The Contractor shall not proceed with the performance of the work to be done under the Agreement, including the purchase of necessary materials, until both parties have signed the Agreement to show acceptance of its terms, and the Contractor receives a contract release/purchase order that authorizes and defines specific performance requirements.

Except as otherwise agreed in writing by the parties, the State shall not be liable for costs incurred by Contractor or payment under this Agreement, until Contractor is notified in writing that this Agreement or Change Order has been approved by the State Administrative Board (if required), signed by all the parties and a Purchase Order against the Agreement has been issued.

2.004 Attachments, Appendices, & Exhibits All Attachments, Appendices, and Exhibits affixed to any and all Statement(s) of Work, or appended to or referencing this Agreement, are incorporated in their entirety and form part of this Agreement.

2.005 Ordering The State must issue an approved written Purchase Order, Blanket Purchase Order, Direct Voucher or Procurement Card Order to order any Services/Deliverables under this Agreement. All orders are subject to the terms and conditions of this Agreement. No additional terms and conditions contained on either a Purchase Order or Blanket Purchase Order apply unless they are specifically contained in that Purchase Order or Blanket Purchase Order's accompanying mutually agreed Statement of Work. Exact quantities to be purchased are unknown; however, subject to agreement upon appropriate Change Orders pursuant to Section 2.024, the Contractor will be required to furnish all such materials and services as may be ordered during the Contract period.

2.006 Order of Precedence The Agreement, including any Statements of Work and Exhibits, to the extent not contrary to the Agreement, each of which is incorporated for all purposes, constitutes the entire agreement between the parties with respect to the subject matter and supersedes all prior agreements, whether written or oral, with respect to the subject matter and as additional terms and conditions on the purchase order must apply as limited by Section 2.005.


In the event of any inconsistency between the terms of the Agreement and a Statement of Work, the terms of the Statement of Work shall take precedence (as to that Statement of Work only); provided, however, that a Statement of Work may not modify or amend the terms of the Agreement. The Agreement may be modified or amended only by a formal Agreement amendment.

2.007 Headings Captions and headings used in the Agreement are for information and organization purposes. Captions and headings, including inaccurate references, do not, in any way, define or limit the requirements or terms and conditions of the Agreement.

2.008 Form, Function & Utility If the Agreement is for use of more than one State agency and if the Deliverable/Service does not the meet the form, function, and utility required by that State agency, that agency may, subject to State purchasing policies, procure the Deliverable/Service from another source.

2.009 Reformation and Severability Each provision of the Agreement is severable from all other provisions of the Agreement and, if one or more of the provisions of the Agreement is declared invalid, the remaining provisions of the Agreement remain in full force and effect.

2.010 Consents and Approvals Except as expressly provided otherwise in the Agreement, if either party requires the consent or approval of the other party for the taking of any action under the Agreement, the consent or approval must be in writing and must not be unreasonably withheld or delayed.

2.011 No Waiver of Default If a party fails to insist upon strict adherence to any term of the Agreement then the party has not waived the right to later insist upon strict adherence to that term, or any other term, of the Agreement.

2.012 Survival Any provisions of the Agreement that impose continuing obligations on the parties, including without limitation the parties’ respective warranty, indemnity and confidentiality obligations, survive the expiration or termination of the Agreement for any reason. Specific references to survival in the Agreement are solely for identification purposes and not meant to limit or prevent the survival of any other section.

2.020 Contract Administration

2.021 Issuing Office This Agreement is issued by the Department of Technology, Management and Budget, Procurement in collaboration with the State Budget Office (collectively, including all other relevant State of Michigan departments and agencies, the “State”). DTMB-Procurement is the sole point of contact in the State with regard to all procurement and contractual matters relating to the Agreement. The DTMB-Procurement Contract Administrator for this Agreement is: Whitnie Zuker State of Michigan Department of Technology, Management and Budget Procurement 1st Floor, Constitution Hall 525 West Allegan Street

Lansing, Michigan 48909

Email: [email protected] Phone: 517-284-7030


2.022 Contract Compliance Inspector The Director of DTMB-Procurement directs the person named below, or his or her designee, to monitor and coordinate the activities for the Agreement on a day-to-day basis during its term. Monitoring Agreement activities does not imply the authority to change, modify, clarify, amend, or otherwise alter the prices, terms, conditions and specifications of the Agreement. DTMB-Procurement is the only State office authorized to change, modify, amend, alter or clarify the prices, specifications, terms and conditions of this Agreement. The Contract Compliance Inspector for this Agreement is: See Section 2.023 State Project Director

2.023 State Project Director The following individual will oversee the project: Ruth Schwartz State of Michigan State Budget Office The Victor Center, 7th Floor 201 N Washington Sq Lansing, MI 48909 Email: [email protected] Phone: 517-284-7585

2.024 Contract Change Management Process Article 2, Exhibit 2-1 Contract Change Management Process, sets out the framework, processes, and procedures for the submission and handling of requests for Changes (as defined in Article 2, Exhibit 2-1) under this Agreement (collectively, the “Contract Change Management Process”). Contractor is not authorized to undertake any work to implement a Change until the request for the Change and all relevant details have been mutually agreed upon, documented and authorized in a duly executed Change Order issued by DTMB Procurement (a “Change Order”).

2.025 Notices Any notice given to a party under the Agreement must be deemed effective, if addressed to the party as addressed below, upon: (i) delivery, if hand delivered; (ii) receipt of a confirmed transmission by facsimile if a copy of the notice is sent by another means specified in this Section; (iii) the third Business Day after being sent by U.S. mail, postage pre-paid, return receipt requested; or (iv) the next Business Day after being sent by a nationally recognized overnight express courier with a reliable tracking system. State: See Buyer identified on cover page of Agreement. Contractor: See Contractor’s Primary Contact identified on cover page of Agreement. Either party may change its address where notices are to be sent by giving notice according to this Section.

2.026 Binding Commitments Representatives of Contractor must have the authority to make binding commitments on Contractor’s behalf within the bounds set forth in the Agreement. Contractor may change the representatives from time to time upon giving written notice.

2.027 Relationship of the Parties The relationship between the State and Contractor is that of client and independent contractor. No agent, employee, or servant of Contractor or any of its Subcontractors shall be deemed to be an employee, agent or servant of the State for any reason. Contractor shall be solely and entirely responsible for its acts and the acts of its agents, employees, servants and Subcontractors during the performance of the Agreement.


2.028 Approval Unless stated otherwise in the Agreement, the parties shall not unreasonably delay, condition or withhold the giving of any consent, decision or approval that is either requested or reasonably required of them in order for the other party to perform its responsibilities under the Agreement.

2.029 Assignments Neither party may assign the Agreement, or assign or delegate any of its duties or obligations under the Agreement, to any other party (whether by operation of law or otherwise), without the prior written consent of the other party; provided, however, that the State may assign the Agreement to any other State agency, department, division or department without the prior consent of Contractor and Contractor may assign the Agreement to an affiliate so long as the affiliate is adequately capitalized and can provide adequate assurances that the affiliate can perform the Agreement. The State may withhold consent from proposed assignments, subcontracts, or novations when the transfer of responsibility would operate to decrease the State’s likelihood of receiving performance on the Agreement or the State’s ability to recover damages. Contractor may not, without the prior written approval of the State, assign its right to receive payments due under the Agreement. If the State permits an assignment, the Contractor is not relieved of its responsibility to perform any of its contractual duties and the requirement under the Agreement that all payments must be made to one entity continues. If the Contractor intends to assign the Agreement or any of Contractor's rights or duties under the Agreement, the Contractor must notify the State in writing at least 90 days before the assignment. The Contractor also must provide the State with adequate information about the assignee within a reasonable amount of time before the assignment for the State to determine whether to approve the assignment.

2.030 General Provisions

2.031 RESERVED

2.032 Media Releases News releases (including promotional literature and commercial advertisements) pertaining to the RFP and Agreement or project to which it relates shall not be made without prior written State approval, and then only in accordance with the explicit written instructions from the State. No results of the activities associated with the RFP and Agreement are to be released without prior written approval of the State and then only to persons designated.

2.033 Contract Distribution DTMB-Procurement retains the sole right of Agreement distribution to all State agencies and local units of government unless other arrangements are authorized by DTMB-Procurement.

2.034 Permits Contractor must obtain and pay any associated costs for all required governmental permits, licenses and approvals for the delivery, installation and performance of the Services. The State shall pay for all costs and expenses incurred in obtaining and maintaining any necessary easements or right of way.

2.035 Website Incorporation The State is not bound by any content on the Contractor’s website, even if the Contractor’s Documentation specifically referenced that content and attempts to incorporate it into any other communication, unless the State has actual knowledge of the content and has expressly agreed to be bound by it in a writing that has been manually signed by an authorized representative of the State.

2.036 Future Bidding Preclusion Contractor acknowledges that, to the extent this Agreement involves the creation, research, investigation or generation of a future RFP; it may be precluded from bidding on the subsequent RFP. The State reserves the right to disqualify any Bidder if the State determines that the Bidder has used its position (whether as an


incumbent Contractor, or as a Contractor hired to assist with the RFP development, or as a Vendor offering free assistance) to gain a competitive advantage on the RFP

2.037 Freedom of Information All information in any proposal submitted to the State by Contractor and this Agreement is subject to the provisions of the Michigan Freedom of Information Act, 1976 Public Act No. 442, as amended, MCL 15.231, et seq (the “FOIA”).

2.038 Disaster Recovery Contractor and the State recognize that the State provides essential services in times of natural or man-made disasters. Therefore, except as so mandated by Federal disaster response requirements, Contractor personnel dedicated to providing Services/Deliverables under this Agreement shall provide the State with priority service for repair and work around in the event of a natural or man-made disaster.

2.040 Financial Provisions

2.041 Fixed Prices for Services/Deliverables Each Statement of Work or Purchase Order issued under this Agreement shall specify (or indicate by reference to the appropriate Agreement Exhibit) the firm, fixed prices for all Services/Deliverables, and the associated payment milestones and payment amounts. The State may make progress payments to the Contractor when requested as work progresses, but not more frequently than monthly, in amounts approved by the Contract Administrator, after negotiation. Contractor shall show verification of measurable progress at the time of requesting progress payments.

2.042 Adjustments for Reductions in Scope of Services/Deliverables If the scope of the Services/Deliverables under any Statement of Work issued under this Agreement is subsequently reduced by the State, the parties shall negotiate, in accordance with the Change Order process specified in Section 2.024, an equitable reduction in Contractor’s charges under such Statement of Work commensurate with the reduction in scope.

2.043 Services/Deliverables Covered Except as otherwise agreed through the Change Order process specified in 2.024,the State shall not be obligated to pay any amounts in addition to the charges specified in this Agreement for all Services/Deliverables to be provided by Contractor and its Subcontractors, if any, under this Agreement.

2.044 Invoicing and Payment – In General (a) Each Statement of Work issued under this Agreement shall list (or indicate by reference to the appropriate

Agreement Exhibit) the prices for all Services/Deliverables, equipment and commodities to be provided, and the associated payment milestones and payment amounts.

(b) Each Contractor invoice shall show details as to charges by Service/Deliverable component and location

at a level of detail reasonably necessary to satisfy the State’s accounting and charge-back requirements. Invoices for Services performed on a time and materials basis shall show, for each individual, the number of hours of Services performed during the billing period, the billable skill/labor category for such person and the applicable hourly billing rate. Prompt payment by the State is contingent on the Contractor’s invoices showing the amount owed by the State minus any holdback amount to be retained by the State in accordance Article 1.

(c) Correct invoices shall be due and payable by the State, in accordance with the State’s standard payment

procedure as specified in 1984 Public Act No. 279, MCL 17.51 et seq., within 45 days after receipt, provided the State determines that the invoice was properly rendered.

(d) All invoices should reflect actual work done. Specific details of invoices and payments shall be agreed

upon between the Contract Administrator and the Contractor after the proposed Agreement has been


signed and accepted by both the Contractor and the Director of Procurement, Department of Management & Budget. This activity shall occur only upon the specific written direction from DTMB-Procurement.

The specific payment schedule for any Statement(s) of Work entered into, as the State and the

Contractor(s) shall mutually agree upon, shall be as set forth in the Statement(s) of Work. The schedule should show payment amount and should reflect actual work done by the payment dates. As a general policy statements shall be forwarded to the designated representative by the 15th day of the following month.

The State may make progress payments to the Contractor when requested as work progresses, but not

more frequently than monthly, in amounts approved by the Agreement Administrator, after negotiation. Contractor must show verification of measurable progress at the time of requesting progress payments.

2.045 Pro-ration To the extent there are Services that are to be paid for on a monthly basis, the cost of such Services shall be pro-rated for any partial month.

2.046 Antitrust Assignment The Contractor assigns to the State any claim for overcharges resulting from antitrust violations to the extent that those violations concern materials or services supplied by third parties to the Contractor, toward fulfillment of this Agreement.

2.047 Final Payment The making of final payment by the State to Contractor does not constitute a waiver by either party of any rights or other claims as to the other party’s continuing obligations under the Agreement, nor shall it constitute a waiver of any claims by one party against the other arising from unsettled claims or failure by a party to comply with this Agreement, including claims for Services and Deliverables not reasonably known until after acceptance to be defective or substandard. Contractor’s acceptance of final payment by the State under this Agreement shall constitute a waiver of all claims by Contractor against the State for payment under this Agreement, other than those claims previously filed in writing on a timely basis and still unsettled.

2.048 Electronic Payment Requirement Electronic transfer of funds is required for payments on State contracts. Contractors are required to register with the State electronically at http://www.cpexpress.state.mi.us. As stated in Public Act 431 of 1984, all contracts that the State enters into for the purchase of goods and services shall provide that payment shall be made by electronic fund transfer (EFT).

2.049 Additional Financial Provisions 2.049 (A) WITHHOLD REMEDY In addition and cumulative to all other remedies in law, at equity and under this Agreement, if Contractor is in material default of its performance or other obligations under this Agreement or any Statement of Work and fails to cure the default within thirty (30) days after receipt of the State’s written notice of default, the State may, without waiving any other rights under this Agreement, elect to withhold from the payments due to Contractor under this Agreement with respect to the Services and/or Deliverables giving rise to the alleged material default during the period beginning with the thirty-first (31st) day after Contractor’s receipt of such notice of default, and ending on the date that the default has been cured to the reasonable satisfaction of the State, an amount that, in the State’s reasonable judgment, is in proportion to the magnitude of the default or the Service that Contractor is not providing. Upon Contractor's cure of the default, the State will cause the withheld payments to be paid to Contractor, without interest. Upon a final and binding legal determination that the State has withheld any payment in bad faith, such payment shall promptly be paid to Contractor, plus interest at the maximum legal rate.


2.049 (B) RIGHT OF SET-OFF Without prejudice to any other right or remedy it may have, the State reserves the right to set off at any time any amount then due and owing to it by Contractor against any amount payable by the State to Contractor under this Agreement or otherwise, including without limitation, any amounts owing to the State as liquidated damages.

2.049 (C) SUPPORT NOT TO BE WITHHELD OR DELAYED Contractor shall not withhold or delay any Services or Deliverables or fail to perform any other obligations hereunder by reason of: (a) the State’s good faith withholding of any payment or amount in accordance with this Section 2.049; or (b) any dispute whatsoever between the parties that is raised by a party for resolution pursuant to Section 2.190, including any payment or other dispute arising under or concerning this Agreement or any other agreement between the parties.

2.050 Taxes

2.051 Employment Taxes Contractor shall collect and pay all applicable federal, state, and local employment taxes.

2.052 Sales and Use Taxes Contractor shall register and remit sales and use taxes on taxable sales of tangible personal property or services delivered into the State. Contractors that lack sufficient presence in Michigan to be required to register and pay tax must do so as a volunteer. This requirement extends to: (1) all members of any controlled group as defined in § 1563(a) of the Internal Revenue Code and applicable regulations of which the company is a member, and (2) all organizations under common control as defined in § 414(c) of the Internal Revenue Code and applicable regulations of which the company is a member that make sales at retail for delivery into the State are registered with the State for the collection and remittance of sales and use taxes. In applying treasury regulations defining “two or more trades or businesses under common control” the term “organization” means sole proprietorship, a partnership (as defined in § 701(a) (2) of the Internal Revenue Code), a trust, an estate, a corporation, or a limited liability company.

2.060 Contract Management

2.061 Contractor Personnel Qualifications All persons assigned by Contractor to the performance of Services under this Agreement must be employees of Contractor or its majority-owned (directly or indirectly, at any tier) subsidiaries (or a State-approved Subcontractor) and must be fully qualified to perform the work assigned to them. Contractor must include a similar provision in any subcontract entered into with a Subcontractor. For the purposes of this Agreement, independent contractors engaged by Contractor solely in a staff augmentation role must be treated by the State as if they were employees of Contractor for this Agreement only; however, the State understands that the relationship between Contractor and Subcontractor is an independent contractor relationship.

2.062 Contractor Key Personnel (a) The Contractor must provide the Contract Compliance Inspector with the names of the Key Personnel. (b) Key Personnel must be dedicated to the project as defined in the Statement of Work. (c) The State shall have the right to recommend and approve in writing the initial assignment, as well as any

proposed reassignment or replacement, of any Key Personnel. Before assigning an individual to any Key Personnel position, Contractor shall notify the State of the proposed assignment, shall introduce the individual to the appropriate State representatives, and shall provide the State with a resume and any other information about the individual reasonably requested by the State. The State reserves the right to interview the individual before granting written approval. In the event the State finds a proposed individual unacceptable, the State shall provide a written explanation including reasonable detail outlining the reasons for the rejection.


(d) Contractor must not remove any Key Personnel from their assigned roles on the Agreement without the prior written consent of the State. The Contractor’s removal of Key Personnel without the prior written consent of the State is an unauthorized removal (“Unauthorized Removal”). Unauthorized Removals does not include replacing Key Personnel for reasons beyond the reasonable control of Contractor, The Contractor must review with the State any Key Personnel replacements, and appropriate transition planning will be established. Any Unauthorized Removal may be considered by the State to be a material breach of the Agreement, in respect of which the State may elect to exercise its termination and cancellation rights.

(e) The Contractor must notify the Contract Compliance Inspector and the Contract Administrator at least 10 business days before redeploying non-Key Personnel, who are dedicated primarily to this Project, to other projects.

2.063 Re-assignment of Personnel at the State’s Request The State reserves the right to require the removal from the Project of Contractor personnel found, in the judgment of the State, to be unacceptable. The State’s request must be written with reasonable detail outlining the reasons for the removal request. Additionally, the State’s request must be based on legitimate, good faith reasons. Contractor will have an opportunity to discuss the State’s reasons prior to the removal. Replacement personnel for the removed person must be fully qualified for the position. If the State exercises this right, and the Contractor cannot immediately replace the removed personnel, the State agrees to an equitable adjustment in schedule or other terms that may be affected by the State’s required removal. If any incident with removed personnel results in delay not reasonably anticipatable under the circumstances and which is attributable to the State, the applicable SLAs for the affected Service shall not be counted for a time as agreed to by the parties.

2.064 Contractor Personnel Location The Contractor shall work on-site as indicated in the Statement of Work, Article 1. Subject to availability, selected Contractor personnel may be assigned office space to be shared with State personnel.

2.065 Contractor Identification Contractor employees must be clearly identifiable while on State property by wearing a State-issued badge, as required. Contractor employees are required to clearly identify themselves and the company they work for whenever making contact with State personnel by telephone or other means.

2.066 Cooperation with Third Parties Contractor agrees to cause its personnel and the personnel of any Subcontractors to cooperate with the State and its agents and other contractors including the State’s Quality Assurance and Project Management Office personnel. As reasonably requested by the State in writing, the Contractor shall provide to the State’s agents and other contractors reasonable access to Contractor’s Project personnel systems and facilities to the extent (i) the access relates to activities specifically associated with this Agreement; (ii) the State and its agents and other contractors agree to comply with Contractor's policies and procedures; and (iii) such access shall not interfere with or jeopardize the safety, security, or operation of the systems or facilities or the security of the data of Contractor's customers other than the State. The State acknowledges that Contractor’s time schedule for the Agreement is very specific and agrees not to unnecessarily or unreasonably interfere with, delay or otherwise impeded Contractor’s performance under this Agreement with the requests for access.

2.067 Contract Management Responsibilities Contractor shall be responsible for all acts and omissions of its employees, as well as the acts and omissions of any other personnel furnished by Contractor to perform the Services. Contractor shall have overall responsibility for managing and successfully performing and completing the Services/Deliverables, subject to the overall direction and supervision of the State and with the participation and support of the State as specified in this Agreement. Contractor’s duties shall include monitoring and reporting the State’s performance of its participation and support responsibilities (as well as Contractor’s own responsibilities) and providing timely notice to the State if in Contractor’s reasonable opinion the State’s failure to perform its responsibilities in accordance with the Project Plan is likely to delay the timely achievement of any Agreement tasks.


The Contractor shall provide the Services/Deliverables directly or through its affiliates, subsidiaries, subcontractors or resellers. Regardless of the entity providing the Service/Deliverable, the Contractor shall act as a single point of contact coordinating these entities to meet the State’s need for Services/Deliverables. Nothing in this Agreement, however, shall be construed to authorize or require any party to violate any applicable law or regulation in its performance of this Agreement.

2.068 Contractor Return of State Equipment/Resources The Contractor shall return to the State any State-furnished equipment, facilities and other resources when no longer required for the Agreement in the same condition as when provided by the State, reasonable wear and tear excepted.

2.070 Subcontracting by Contractor

2.071 Contractor full Responsibility Contractor shall have full responsibility for the successful performance and completion of all of the Services and Deliverables. The State shall consider Contractor to be the sole point of contact with regard to all contractual matters under this Agreement, including payment of any and all charges for Services and Deliverables.

2.072 State Consent to delegation Contractor shall not delegate any duties under this Agreement to a Subcontractor unless the Department of Technology, Management and Budget, Procurement has given written consent to such delegation. The State shall have the right of prior written approval of all Subcontractors and to require Contractor to replace any Subcontractors found, in the reasonable judgment of the State, to be unacceptable. The State’s request shall be written with reasonable detail outlining the reasons for the removal request. Additionally, the State’s request shall be based on legitimate, good faith reasons. Replacement Subcontractor(s) for the removed Subcontractor shall be fully qualified for the position. If the State exercises this right, and the Contractor cannot immediately replace the removed Subcontractor, the State shall agree to an equitable adjustment in schedule or other terms that may be affected by the State’s required removal. If any such incident with a removed Subcontractor results in delay not reasonable anticipatable under the circumstances and which is attributable to the State, the applicable SLA for the affected Work shall not be counted for a time agreed upon by the parties.

2.073 Subcontractor bound to Agreement In any subcontracts entered into by Contractor for the performance of the Services, Contractor shall require the Subcontractor, to the extent of the Services to be performed by the Subcontractor, to be bound to Contractor by the terms of this Agreement and to assume toward Contractor all of the obligations and responsibilities that Contractor, by this Agreement, assumes toward the State. The State reserves the right to receive copies of and review all subcontracts, although Contractor may delete or mask any proprietary information, including pricing, contained in such subcontracts before providing them to the State. The management of any Subcontractor shall be the responsibility of Contractor, and Contractor shall remain responsible for the performance of its Subcontractors to the same extent as if Contractor had not subcontracted such performance. Contractor shall make all payments to Subcontractors or suppliers of Contractor. Except as otherwise agreed in writing by the State and Contractor, the State shall not be obligated to direct payments for the Services other than to Contractor. The State’s written approval of any Subcontractor engaged by Contractor to perform any obligation under this Agreement shall not relieve Contractor of any obligations or performance required under this Agreement. A list of the Subcontractors, if any, approved by the State as of the execution of this Agreement, together with a copy of the applicable subcontract is attached.

2.074 Flow Down Except where specifically approved in writing by the State on a case-by-case basis, Contractor shall flow down the obligations in Sections 2.060, 2.110, 2.120, 2.130, and 2.200 in all of its agreements with any Subcontractors.


2.075 Competitive Selection The Contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the Agreement.

2.080 State Responsibilities

2.081 Equipment The State shall provide only the equipment and resources identified in the Statement of Work and other Agreement Exhibits.

2.082 Facilities The State must designate space as long as it is available and as provided in the Statement of Work, to house the Contractor’s personnel whom the parties agree will perform the Services/Deliverables at State facilities (collectively, the “State Facilities”). The Contractor shall have reasonable access to, and unless agreed otherwise by the parties in writing must observe and comply with all rules and regulations relating to each of the State Facilities (including hours of operation) used by the Contractor in the course of providing the Services. Contractor agrees that it shall not, without the prior written consent of the State, use any State Facilities or access any State information systems provided for the Contractor’s use, or to which the Contractor otherwise gains access in the course of performing the Services, for any purpose other than providing the Services to the State.

2.090 State Data, Privacy and Confidentiality

2.091 State Data (a) Ownership. The State’s data (“State Data,” which shall also be known and treated by Contractor as

Confidential Information) shall include: (a) the State’s data collected, used, processed, stored, or generated as the result of the Services; (b) personally identifiable information (“PII”) collected, used, processed, stored, or generated as the result of the Services, including, without limitation, any information that identifies an individual, such as an individual’s social security number or other government-issued identification number, date of birth, address, telephone number, biometric data, mother’s maiden name, email address, credit card information, or an individual’s name in combination with any other of the elements listed herein; and (c) protected health information (“PHI”) as that term is defined under the Privacy Rule, 45 CFR §160.103. State Data is and shall remain the sole and exclusive property of the State and all right, title, and interest in the same is reserved by the State. This Section shall survive the termination of this Agreement.

(b) Contractor Use of State Data. Contractor is provided a limited license to State Data for the sole and

exclusive purpose of providing the Services, including a license to collect, process, store, generate, and display State Data only to the extent necessary in the provision of the Services. Contractor shall: (a) keep and maintain State Data in strict confidence, using such degree of care as is appropriate and consistent with its obligations as further described in this Agreement and applicable law to avoid unauthorized access, use, disclosure, or loss; (b) use and disclose State Data solely and exclusively for the purpose of providing the Services, such use and disclosure being in accordance with this Agreement, any applicable Statement of Work, and applicable law; and, (c) not use, sell, rent, transfer, distribute, or otherwise disclose or make available State Data for Contractor’s own purposes or for the benefit of anyone other than the State without the State’s prior written consent. This Section shall survive the termination of this Agreement.

(c) Extraction of State Data. Contractor shall, within one (1) business day of the State’s request, provide the

State, without charge and without any conditions or contingencies whatsoever (including but not limited to the payment of any fees due to Contractor), an extract of the State Data in the format specified by the State.


(d) Backup and Recovery of State Data. Unless otherwise described in the Statement of Work, as a part of the Services, Contractor is responsible for maintaining a backup of State Data and for an orderly and timely recovery of such data in the event that the Services may be interrupted.

(e) Loss of Data. In the event of any negligent act, error or omission, misconduct, or breach of contract on the

part of Contractor or its subcontractors that compromises or is suspected to compromise the security, confidentiality, or integrity of State Data or the physical, technical, administrative, or organizational safeguards put in place by Contractor that relate to the protection of the security, confidentiality, or integrity of State Data, Contractor shall, as applicable: (a) notify the State as soon as practicable but no later than twenty-four (24) hours of becoming aware of such occurrence; (b) cooperate with the State in investigating the occurrence, including making available all relevant records, logs, files, data reporting, and other materials required to comply with applicable law or as otherwise required by the State; (c) in the case of PII and PHI, at the State’s sole election, (i) notify the affected individuals who comprise the PII and PHI as soon as practicable but no later than is required to comply with applicable law, or, in the absence of any legally required notification period, within five (5) calendar days of the occurrence; or, (ii) reimburse the State for reasonable costs in notifying the affected individuals; (d) in the case of PII, provide third-party credit and identity monitoring services to each of the affected individuals who comprise the PII for the period required to comply with applicable law, or, in the absence of any legally required monitoring services, for no less than twenty-four (24) months following the date of notification to such individuals; (e) perform or take any other actions required to comply with applicable law as a result of the occurrence; (f) without limiting the Contractor's obligations of indemnification as further described in this Agreement, indemnify, defend, and hold harmless the State for any and all claims, including reasonable attorneys’ fees, costs, and expenses incidental thereto, which may be suffered by, accrued against, charged to, or recoverable from the State in connection with the occurrence; (g) use commercially reasonable efforts to recreate lost State Data in the manner and on the schedule reasonably set by the State without cost to the State, provided any files, data, programs or other information that may be necessary to accomplish such reconstruction, but which are not in Contractor's possession or control, are promptly furnished to Contractor by the State upon request; and, (h) provide to the State a detailed plan within ten (10) calendar days of the occurrence describing the measures Contractor will undertake to prevent a future occurrence. Notification to affected individuals, as described above, shall comply with applicable law, be written in plain language, and contain, at a minimum: name and contact information of Contractor’s representative; a description of the nature of the loss; a list of the types of data involved; the known or approximate date of the loss; how such loss may affect the affected individual; what steps Contractor has taken to protect the affected individual; what steps the affected individual can take to protect himself or herself; contact information for major credit card reporting agencies; and, information regarding the credit and identity monitoring services to be provided by Contractor. This Section shall survive the termination of this Agreement.

2.092 Non-Disclosure of Confidential Information The parties acknowledge that each party may be exposed to or acquire communication or data of the other party that is confidential, privileged, or not intended to be disclosed to third parties. The provisions of this Section shall survive the expiration or termination of this Agreement. (a) Meaning of Confidential Information. For the purposes of this Agreement, the term “Confidential

Information” shall mean all information and documentation of a party that: (a) has been marked “confidential” or with words of similar meaning, at the time of disclosure by such party; (b) if disclosed orally or not marked “confidential” or with words of similar meaning, was subsequently summarized in writing by the disclosing party and marked “confidential” or with words of similar meaning; or, (c) should reasonably be recognized as confidential information of the disclosing party. The term “Confidential Information” does not include any information or documentation that is or was: (a) subject to disclosure under the Michigan Freedom Of Information Act (FOIA); (b) already in the possession of the receiving party without an obligation of confidentiality; (b) developed independently by the receiving party, as demonstrated by the receiving party, without violating the disclosing party’s proprietary rights; (c) obtained from a source other than the disclosing party without an obligation of confidentiality; or, (d) publicly available when received, or thereafter became publicly available (ot

Documents

NOTICE OF CONTRACT NO. 071B4300138 between THE …As part of the State’s ERP Project, Contractor will implement the following software functions for the executive, legislative, and