Md. Code Regs. 21.06.03.09

Current through Register Vol. 51, No. 24, December 2, 2024

Section 21.06.03.09 - Multi-Year Contracts

A. Application. A multi-year contract is appropriate when it is in the best interest of the State to obtain uninterrupted services extending over more than one fiscal period, when the performance of the services involves high start-up costs, or when a changeover of services contractors involves high phase-in/phase-out costs during a transition period. The multi-year method of contracting is also appropriate when special production of definite quantities of supplies for more than one fiscal period is necessary to best meet the State needs but funds are available only for the initial fiscal period.

B. Objective. The objective of the multi-year contract is to promote economy and efficiency in procurement by obtaining the benefits of sustained volume production and consequent low prices, and by increasing competitive participation in procurements which involve special production or high phase-in/phase-out costs during changeover of service contractors.

C. Conditions for Use of Multi-year Contracts. A multi-year contract may be used when it is determined by the procurement officer that:

(1) Special production of definite quantities or the furnishing of long-term services are required to meet State needs;

(2) Estimated requirements cover the period of the contract and are reasonably firm and continuing; and

(3) A multi-year contract shall serve the best interests of the State by encouraging effective competition or otherwise promoting economies in State procurement. The following factors are among those relevant to this determination:

(a) Firms which are not willing or able to compete because of high start-up costs or capital investment in facility expansion shall be encouraged to participate in the competition when they are assured of recouping these costs during the period of contract performance;

(b) Lower production costs because of larger quantity or 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.

(1) Solicitation. The solicitation shall state:

(a) The amount of supplies or services required for the proposed contract period;

(b) That a unit price shall be given for each supply or service, and that these unit prices shall be the same throughout the contract (except to the extent price adjustments may be provided in the solicitation and resulting contract);

(c) That the multi-year contract shall be cancelled automatically if funds are not appropriated or otherwise made available to support continuation of performance in any fiscal period succeeding the first; however, this does not affect either the State's rights or the contractor's rights under any termination clause in the contract;

(d) That the procurement officer shall notify the contractor on a timely basis that the funds are, or are not, available for the continuation of the contract for each succeeding fiscal period;

(e) Whether bidders or offerors may submit prices for:

(i) The first fiscal period only,

(ii) The entire time of performance only, or

(iii) Both the first fiscal period and the entire time of performance;

(f) That a multi-year contract may be awarded and how prices shall be determined, if prices for the first fiscal period and entire time of performance are submitted;

(g) That the effect of termination is to discharge both parties from future performance of the contract, but not from their existing obligations. The contractor shall be reimbursed for the reasonable value of any nonrecurring costs incurred but not amortized in the price of the supplies or services delivered under the contract.

(2) Award. Award shall be made as stated in the solicitation and permitted under the procurement method utilized.

Md. Code Regs. 21.06.03.09