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STATE OF ARIZONA ARIZONA LOTTERY ARIZONA LOTTERY

4740 E. University Dr. Phoenix, AZ 85034

(480) 921-4400 (480) 921-4512 Fax

Solicitation No.: ADSPO16-00005872 PAGE

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Description: INSTANT TICKET WAREHOUSE, DISTRIBUTION AND SALES SUPPORT SERVICES

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Notice of Request for Proposal

Competitive sealed bids for the Materials or Services specified will be received online by the Arizona Lottery through the State’s e-Procurement system, ProcureAZ (https://procure.az.gov) at the date and time listed below. Proposals received by the correct time and date will be opened and the name of each Offeror will be publically available. Proposals must be in the actual possession of the State on or prior to the time and date indicated in the Notice. Late proposals will not be considered.

To obtain a copy of the Solicitation, go to PROCUREAZ at https://procure.az.gov and click on the open-bid tab. The bid will be listed as Instant Ticket Warehouse, Distribution and Sales Support Services. A PDF of the Solicitation may also be downloaded from www.arizonalottery.gov. To receive any further notices or amendments you must register your interest with Richard Crago, [email protected].

OFFERORS ARE STRONGLY ENCOURAGED TO CAREFULLY READ THE ENTIRE SOLICITATION.

SOLICITATION NUMBER: ADSPO16-00005872

DESCRIPTION: The Arizona Lottery invites sealed bids from qualified firms to provide Instant Ticket Warehouse, Distribution and Sales Support Services.

DUE DATE AND TIME: Offers shall be received until 10:00 a.m. MST, December 29, 2015.

SUBMITTALS: Sealed Offers in response to this Solicitation shall be submitted within the State’s e- Procurement system, ProcureAZ (https:/procure.az.gov). The due date and time are indicated in ProcureAZ as the Bid Opening Date. Late submittals will not be considered. Offers received by the due date and time will be electronically opened. Offers submitted outside of ProcureAZ, or those that are received after the due date and time, shall be rejected.

Bidders shall copy and save ProcureAZ attachments to their own computer, save the information entered, and submit the completed information as a new, appropriately renamed Attachment in ProcureAZ. ProcureAZ will not save information entered directly on the attachments.

Additional information regarding submittal instructions is located within this document in the following sections: Special Instructions to Offerors and Uniform Instructions to Offerors.

QUESTIONS: Inquiries regarding the Solicitation are encouraged to be submitted online through ProcureAZ using the Q&A tab.

Solicitation Contact Person: Richard Crago Procurement Officer Phone/Email: 480-921-4508 / [email protected]

https://procure.az.gov/

STATE OF ARIZONA ARIZONA LOTTERY ARIZONA LOTTERY


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Table of Contents

OFFER AND ACCEPTANCE .....................................................................................................................................3

INTRODUCTION AND BACKGROUND ....................................................................................................................4

SCOPE OF WORK .....................................................................................................................................................8

A. WAREHOUSE AND DISTRIBUTION SERVICES 8 B. SALES STAFFING, MARKETING AND PROMOTIONAL SUPPORT SERVICES 18

SCOPE OF WORK – INVITED OPTIONS .............................................................................................................. 24

SPECIAL TERMS AND CONDITIONS ................................................................................................................... 27

UNIFORM TERMS AND CONDITIONS .................................................................................................................. 48

SPECIAL INSTRUCTIONS ..................................................................................................................................... 57

UNIFORM INSTRUCTIONS TO OFFERORS ......................................................................................................... 64

Exhibit 1: ___________________ ........................................................................................................................ 69

Attachment I – Designation of Confidential, Trade Secret & Proprietary Information ................................... 70

Response Form 1 – Qualifications Questionnaire ............................................................................................. 71

Response Form 2 – Organization Questionnaire ............................................................................................... 72

Response Form 3 – References ........................................................................................................................... 73

Response Form 4 – Pricing .................................................................................................................................. 74

Response Form 5 – Exceptions ........................................................................................................................... 75

Offer and Acceptance ARIZONA LOTTERY 4740 E. University Dr.

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OFFER AND ACCEPTANCE

TO THE STATE OF ARIZONA:

The Undersigned hereby offers and agrees to furnish the material, service or construction in compliance with all terms, conditions, specifications and amendments in the Solicitation and any written exceptions in the Offer. Signature also certifies Small Business status.

Company Name Signature of Person Authorized to Sign Offer

Address Printed Name

City State Zip Title

Phone:

Fax:

Contact Email Address

By signature in the Offer section above, the Offeror certifies: 1. The submission of the Offer did not involve collusion or other anticompetitive practices. 2. The Offeror shall not discriminate against any employee or applicant for employment in violation of Federal Executive Order 11246, State

Executive Order 2009-9 or A.R.S. §§ 41−1461 through 1465. 3. The Offeror has not given, offered to give, nor intends to give at any time hereafter any economic opportunity, future employment, gift, loan,

gratuity, special discount, trip, favor, or service to a public servant in connection with the submitted Offer. Failure to provide a valid signature affirming the stipulations required by this clause shall result in rejection of the Offer. Signing the Offer with a false statement shall void the Offer, any resulting Contract and may be subject to legal remedies provided by law.

4. The Offeror certifies that the above referenced organization ___ IS/ ___ IS NOT a small business with less than 100 employees or has gross

revenues of $4 million or less.

ACCEPTANCE OF OFFER

The Offer is hereby accepted.

The Contractor is now bound to sell the Materials or Services listed by the attached Contract and based upon the Solicitation, including all terms, conditions, specifications, amendments, etc., and the Contractor’s Offer as accepted by the State.

This Contract shall henceforth be referred to as Contract No. ____________________________________________________.

The effective date of the Contract is ____________________________________________________.

The Contractor is cautioned not to commence any billable work or to provide any material or service under this Contract until Contractor receives purchase order, contact release document or written notice to proceed.

Arizona Lottery Awarded this

day of

20

Rick Crago, Lottery Procurement Officer

Introduction and Background ARIZONA LOTTERY 4740 E. University Dr.

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INTRODUCTION AND BACKGROUND

1. Introduction

1.1. This document constitutes a Request for Proposal, via competitive sealed proposals, for the Arizona Lottery to establish a five-year contract with five one-year extension options for the implementation and operation of Instant Ticket Warehouse, Distribution and Sales Support Services. The Scope of Work of this RFP is divided into two (2) sections: Warehouse and Distribution Services and Sales Staffing and Marketing Support Services. There is an additional Scope of Work section for Invited Options. The Lottery has the following objectives for issuing this RFP and entering into a Contract for the implementation and operation of Instant Ticket Warehouse, Distribution, and Sales Support Services:

1.1.1. Provide an automated system for inventory management, warehousing, telemarketing and instant ticket delivery that is effective and efficient.

1.1.2. Provide an effective process for predicting inventory needs to ensure retailers have sufficient product to sell, soliciting orders to maximize ticket sales, handle inbound and outbound calls, and automated orders for targeted games.

1.1.3. Provide prize validation functions for all instant tickets.

1.1.4. Provide the ability to monitor all functions in a real-time environment.

1.1.5. Provide procedures and proactive measures to maintain a constant vigilance against any breach of security.

1.1.6. All processes and data must effectively integrate with the Lottery and the Lottery’s on-line vendor.

1.2. The reference in this RFP to games, instant games, or instant tickets shall refer to all instant games except pull tab games or pull tab tickets.

2. Background

2.1. The mission of the Lottery is to support Arizona programs for the public benefit by maximizing net revenue in a responsible manner. With a Governor-appointed Commission and Executive Director overseeing operations, the Lottery works with a retailer network to provide players with innovative and entertaining games.

2.2. Lottery products compete with other entertainment and consumer products for the discretionary income of the Arizona consumer. The current instant product mix includes: $1, $2, $3, $5, $10, and $20 games.

2.3. The Lottery has an existing product management and distribution contract that ends on Thursday, August 31, 2016. The conversion to a new contract must take place on Sunday, August 28, 2016 or at a later date determined by the Lottery.

2.4. The Lottery has a separate contract for the management of the on-line gaming system and retailer network. Products supported under that contract include the in-state games of The Pick™, Fantasy 5™, Pick 3™, All or Nothing™, and 5 Card Cash™, and the multi-state Powerball

® and Mega Millions

® games.

2.5. Approximately 2,900 retailers make up the Lottery retailer network. The majority of the retailer network is comprised of the convenience store category with 73% of the locations and the grocery category with


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16.2% of the locations. The sales in these two categories combined represent more than 95% of the total Lottery revenues. Maricopa County with 56.1% of the retailers and Pima County with 14.1% account for largest percentage of the retailer network.

2.6. The Lottery currently administers retailer billing for all product lines, prize payments over $599 and general ledger functions and does not intend to outsource these functions. The Lottery relies on information and reports provided by vendors. It is critical that all information is accurate, reliable and in accordance with Lottery requirements.

2.7. The Lottery has been successful in increasing the revenues generated from the instant product line and anticipates even further growth in the coming years. The following table outlines recent sales history by price point.

FY15 FY14 FY13 FY12 FY11

$1 $21,852,857 $20,900,842 $19,945,234 $20,254,733 $20,704,014

$2 $86,110,390 $92,970,362 $92,194,924 $94,078,462 $90,753,504

$3 $17,793,777 $15,624,093 $13,626,693 $12,347,787 $14,963,106

$5 $150,203,925 $153,051,335 $137,111,780 $129,118,785 $107,919,325

$10 $145,784,060 $140,218,320 $122,702,850 $113,263,350 $106,029,980

$20 $120,285,280 $61,130,860 $51,018,120 $40,713,620 $33,082,260

Total $542,030,289 $483,895,812 $436,599,601 $409,776,737 $373,452,189

% Chg 12.0% 10.8% 6.5% 9.7% 10.8%

2.8. Historical Sales Staffing. It is contemplated by this Request for Proposal that the Contractor will assume responsibility for sales staffing, including the addition of a business development manager. Currently, the Lottery’s sales staffing is in-house, and consists of the following:

Positions Number

Approximate Average Salary

Corporate Account Managers 1 $43,000

Sales Supervisors 3 $41,000

Territory Managers 18 $33,500

2.9. Promotions. Title 19, Chapter 3, Article 10 of the Arizona Administrative Code, regulates and limits the types of promotions that can be used. Based on those rules, promotion profiles have been adopted by the Lottery Commission, and are attached and incorporated hereto as Exhibit 1. Promotions are either geared toward rewarding players ("Player Promotions") or rewarding retailers ("Retailer Promotions"). Promotional instant tickets and promotional gifts may be distributed at these events. Promotions are used in coordination to create awareness, interest and trial of Lottery products or to incent retailers to sell more tickets or provide better customer service. Promotion rules will be created for all promotions and shall be drafted by the Lottery. The following is an explanation of typical Lottery events:

2.9.1. Player Promotions utilizing one or more corporate or third-party sponsors (such as grocery stores, sports teams, or concert promoters) to provide a remote event location or promotional items. Promotions involving third-party sponsorships ("Third-Party Events") will be designed,


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created and administered by the Lottery and the Lottery's advertising agency, but will use a Street Team provided by the Contractor for implementation. These events will be governed by individual sets of promotion rules, and typically involve a "buy x, get y free" format and include a spin-to-win prize wheel. Contractor's responsibility with regard to Third-Party Events will be to coordinate with the Lottery or advertising agency to provide Street Team support when needed.

2.9.2. SNAP Promotions (both Player and Retailer Promotions), which are simple promotions, to be designed, created and administered by the Contractor's LSRs and implemented by a Street Team or the LSRs. These promotions are governed by a generic set of SNAP promotion rules, and may involve a spin-to-win component or an event in which a selected retailer will promote its merchandise in conjunction with Lottery ticket sales.

2.9.3. Retailer Promotions will be designed, created and administered by the Contractor. These promotions are governed by individual sets of promotion rules, and typically involve a "sell x, get y free" format.

2.9.4. Event Promotions consist of the promotion of Lottery sales at noteworthy events, such as the Arizona State Fair, the Phoenix International Raceway events, the Phoenix Open, or community or charitable events. These promotions may not be governed by the administrative code or promotional profiles or rules, and involve the sale of Lottery tickets from a vehicle or trailer at the events. These promotions require the use of Lottery or retailer staff, or other entity that is licensed to sell Lottery tickets. A Street Team would be used to transport the vehicle or trailer to the event.

2.10. Data Communications

2.10.1. Communications to and from the instant contractor’s system are routed through the Lottery to the on-line contractor’s system.

2.10.2. The Lottery’s wide area network (“WAN”) provides connectivity via a high-speed broadband communications network to both on-line and instant ticket vendors.

2.10.3. The on-line and instant ticket vendors are expected to maintain its connection to the Lottery by providing the necessary hardware on-site at the Lottery.

3. Proposal Instructions

3.1. The Request for Proposal (RFP) contains the instructions governing the content and format of the proposals to be submitted and the Contract terms and conditions. The RFP provides Offerors with sufficient information to enable them to prepare and submit proposals for consideration by the Lottery to provide the expertise, equipment, services and supplies necessary for instant ticket warehouse, distribution and sales support services.

3.2. The RFP contains the format for submitting the information and the conditions under which the Offeror and the Lottery are expected to operate. The Instructions are broken into the Special Instructions and the Uniform Instructions. The Special Instructions are specific to this RFP. The Special Instructions contain several forms that must be completed as well as specific information that must be provided. The Uniform Instructions are mandatory instructions that are contained in State of Arizona solicitations.

3.3. The Uniform Terms and Conditions and the Special Terms and Conditions, Scope of Work and the Pricing Schedule detail the specifics of the services that will be provided. Offerors are cautioned to read the Uniform Terms and Conditions and the Special Terms and Conditions in their entirety.


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3.4. If you have any questions regarding this RFP, the only person you may contact is: Richard Crago, 480-921-4508, [email protected].

mailto:[email protected]

Scope of Work ARIZONA LOTTERY 4740 E. University Dr.

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SCOPE OF WORK

A. WAREHOUSE AND DISTRIBUTION SERVICES

1. General Requirements

1.1. The Contractor shall provide the Lottery with the expertise, equipment, services and supplies necessary for inventory management, warehousing, telemarketing and distribution of instant game tickets in a manner that is effective and efficient.

1.2. The cost of system hardware/software changes necessary to maintain operations shall be the responsibility of the Contractor. Installation of new, and modifications to, existing software shall be on a time schedule approved by the Lottery.

1.3. The Contractor’s services shall include corrections to all software errors and design defects, improved versions of the software, enhancements and new features, changes to reports and any other software changes required by the Lottery.

2. Warehouse and Distribution Services Staffing

2.1. Arizona-based Staffing Requirements. The Lottery considers all staffing positions to be critical for support of the Contract, and as such, the Contractor’s personnel should have sufficient industry experience in the administrative and technical functions required. These positions must be based full-time at the Contractor’s Arizona facility and must reside in Arizona.

2.2. Current resumes must be submitted for each candidate; the Lottery reserves the right of final approval for each position.

2.3. The Contractor shall receive Lottery approval before any incumbent in the Site Management positions is terminated or reassigned.

2.4. All Key Personnel working directly on the Arizona Warehouse and Distribution Services account will be required to undergo and pass a Lottery security background check.

2.5. The Contractor shall provide sufficient resources, including development and quality assurance personnel, on an as-needed basis. These resources need not be based in Arizona, but should be easily and routinely accessible to Lottery staff and should have a thorough knowledge of the Lottery’s technical environment.

2.6. The Lottery shall have final determination of resource sufficiency and may require the Contractor to provide additional staffing to meet agreed-upon production schedules. In the event the Contractor is unable to provide sufficient resources, the Lottery reserves the right to obtain these services from another source. The Contractor shall be responsible for all costs associated with the Lottery’s acquisition of these services.

3. Project Implementation Plan

3.1. The Contractor shall work closely with the Lottery to provide a comprehensive project implementation plan. The Lottery will determine the implementation schedule that best meets the requirements of the Lottery. The Contractor shall submit a finalized project plan based on these requirements within 45 days of contract award. Specific milestones identified by the Lottery and included in the Contractor’s implementation plan shall be used as periodic measurements of the implementation progress. The plan must address, at a minimum:


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3.1.1. The time allocated to accomplish each step and milestone, including timelines, Program Evaluation and Review Technique (“PERT”) charts or other appropriate analytical tools;

3.1.2. Organizational chart, proposed staffing levels and job descriptions;

3.1.3. Personnel qualifications;

3.1.4. Physical site security features to ensure product integrity and prevention of loss or theft;

3.1.5. Network diagram;

3.1.6. Conversion of the existing inventories and distribution system;

3.1.7. Coordination of responsibilities with the on-line vendor;

3.1.8. Conversion of existing game, pack, validation and retailer files;

3.1.9. Strategies for a telemarketing plan, including the ability to respond to special needs in a dynamic environment;

3.1.10. Quality control/customer service monitoring;

3.1.11. Packing and delivery schematic, including processing, procedures, workflow, equipment and supply issues;

3.1.12. Business recovery plan, including a backup plan in the event the delivery provider is unable to perform its duties (i.e. labor dispute).

3.2. Prior to implementation the Lottery will provide to the Contractor three years of retailer sales history and data on all existing games, including game, pack and validation files.

3.3. All on-hand ticket inventories and scheduled inventories not yet delivered will be transitioned into the Contractor’s control.

3.4. The Lottery and the Contractor shall jointly develop a transition plan that will prevent inconvenience to the Lottery, retailers and players. The plan shall not impact the Lottery’s ability to generate revenue.

4. Physical Site Requirements

4.1. The Contractor shall operate and maintain a secure computer, office and warehouse facility within the State of Arizona and shall be responsible for all associated costs and expenses including leasehold improvements. The facility must be within five miles of the Lottery Phoenix headquarters, unless otherwise approved by the Lottery.

4.2. The physical site must comply with all State and local building codes for facilities of this type, including specifications to meet the ADA (Americans with Disabilities Act) requirements. Proper permits and inspections must be secured by the Contractor.

4.3. The facility(s) in which tickets are to be stored must be equipped with a complete and operating building security system. The Contractor must implement quality control and security procedures requested by the Lottery.

4.4. The entrance to the facility must be secure and limited to personnel authorized by the Lottery’s Director of Security.


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4.4.1. The Contractor shall maintain a signature log of all non-authorized persons entering and leaving the Contractor’s facility.

4.4.2. The signature log must include the date, time in/time out and the reason for access, such as pest control, plumber, etc.

4.5. The Contractor must take reasonable and appropriate measures to ensure all equipment and ticket inventory is protected from man-made and natural damage.

4.6. Locking devices must be installed on all doors or entry points, including doors providing access to receiving and loading platforms.

4.7. All doors, including emergency exit doors must be equipped with audible monitored alarms for burglary and fire. The Contractor shall be responsible for the alarm systems including door access, fire, burglary, maintenance and storage of the alarm systems equipment.

4.8. An automated secure access system shall be installed at entrances and Lottery designated areas (such as computer room, media file library, secure room, etc.). All security systems must be approved in advance by the Lottery and controlled by the Lottery’s Security.

4.9. The Contractor’s access control system shall provide for authorized Lottery personnel to have access to the Contractor’s facility. The degree of access shall be determined by the Director of Security and communicated in writing to the Contractor.

4.10. The facility must be equipped with video cameras positioned at locations approved by the Lottery.

4.11. A digital video recording (“DVR”) or other comparable system must be connected and be capable of recording and storing all activity captured by video cameras in the facility for a period of at least 180 days. Multiple DVR systems may be utilized to facilitate the needs to capture both inside and outside warehouse activity. A secure room must be furnished to the Lottery which shall include equipment and security monitoring system.

4.12. Warehouse facilities must be climate controlled to avoid extreme temperature and humidity levels in the storage area of instant tickets.

4.13. Warehouse facilities must include two dedicated secure office spaces of at least 150 square feet for use by the Lottery. This space will be used by management, auditors, security personnel, and others as necessary to coordinate and monitor warehousing activities and to test tickets, equipment, hardware or software, and for other purposes as determined by the Lottery. Each of the offices must have standard furnishings.

4.14. Warehouse facilities, organization and procedures must be designed to ensure the security and integrity of the tickets. Procedures and controls must be in place to ensure the confidentiality and integrity of game information.

4.15. The Contractor’s warehouse space shall not be used to store any materials other than those approved in writing by the Lottery.

4.16. Tickets for 100 or more games may be required to be stored and segregated at any one time in the warehouse(s).

4.17. The Contractor shall provide a backup warehouse site capable of storing instant tickets in case of an emergency. The backup warehouse site need not be in Arizona.


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5. Ticket Inventory Control and Management

5.1. The Contractor must provide an instant ticket inventory control and management system that provides flexible tools to assist the Lottery in generating instant ticket sales.

5.2. The Contractor shall work closely with the Lottery to ensure that adequate supplies of tickets are always available. The Contractor must monitor inventory quantities and movement and notify the Lottery of potential out-of-stock conditions.

5.3. The ticket management system must provide inventory control and management through the entire life cycle of each game, pack and ticket, which must be capable of being tracked on the Contractor’s system or transmitted for tracking to a separate Lottery contractor.

5.3.1. The system must be capable of identifying inventory in various statuses including, but not limited to: never issued, issued, in shipment, received, activated, settled, stolen, missing, return pending, returned, Security void, unavailable-problem, etc.

5.3.2. The system must have the capability to identify additional statuses.

5.3.3. The system must be capable of tracking and reporting all pack status changes and include the ability for authorized users to add notes and comments.

5.3.4. All changes in status will be entered as history and not be removed as part of a status change.

5.3.5. The Lottery will be solely responsible for determining the final instant pack movement and transaction rules.

5.4. The Contractor shall provide a procedure for notifying the Lottery of any inventory conditions that result in the inability to process retailer orders for a particular game.

5.5. The Contractor shall participate in strategic planning discussions with the Lottery related to ticket inventory control and management.

6. Telemarketing Operations

6.1. The Contractor shall provide a telemarketing program for the Arizona Lottery to meet the Lottery’s ticket distribution needs.

6.2. All ticket orders must be placed by the telemarketing staff. The Contractor’s system must support orders originated by telemarketers contacting retailers; sales staff contacting telemarketers; and retailers contacting telemarketers.

6.3. All calls on the Contractor’s telemarketing system must be recorded on audio/digital media, maintained and made available upon request to the Lottery. Recordings must be retained on a schedule approved by the Lottery.

6.4. If all incoming circuits are busy, a pre-recorded message approved by the Lottery must be played and waiting calls must be queued. Maximum queue time or hold time shall not exceed two minutes per customer call. The caller should be given, at thirty-second (30-second) intervals, an option to leave a message or remain on hold. All messages must be returned within one (1) hour from the time a message was left.

6.5. The Contractor shall provide sufficient telemarketing staffing levels to accommodate a retailer to operator ratio as approved by the Lottery.


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6.6. The Contractor must maintain an appropriate level of Spanish/English bilingual staffing as determined by the Lottery.

6.7. The Contractor shall provide a dedicated customer service line available only to the Lottery sales representatives.

6.8. The Lottery will have final approval over the Contractor’s plans for telemarketing procedures and product promotion.

6.8.1. The Contractor shall make available to the Lottery the call scripts used with retailers, order displays, and reports.

6.8.2. The Contractor must provide a mechanism for the Lottery to monitor live calls and listen to recordings of telemarketer calls. Lottery authorized personnel must be able to access this information from the Lottery.

6.8.3. Lottery authorized personnel must be able to access all telemarketing screens remotely from the Lottery office.

6.9. The Contractor must provide a method for ensuring accuracy in the placement of orders by telemarketers.

6.10. The Contractor’s telemarketing system must provide controls to ensure that retailers are contacted and that orders are fulfilled timely and in accordance with ordering criteria approved by the Lottery. Ordering statistics must be available both as displays and as reports.

6.11. The telemarketing operations must be protected from unauthorized access. Telemarketing operations must be included in the Business Recovery Plan.

7. Automated Ticket Orders

7.1. The Contractor must provide a system capable of generating automatic retailer orders based on sales history and retailer/player game preferences. Automatic orders may, at the direction of the Lottery, be used for the introduction of new games.

8. Ticket Order Packaging

8.1. The Contractor shall be responsible for the packaging of all ticket orders. The procedures used must focus on the need for security, integrity, efficiency and accuracy from warehouse to retailer.

8.2. The Contractor may be required to include additional materials supplied by the Lottery in ticket shipments to be delivered to retailers, such as notices of new games and promotional materials.

8.3. The picking and packaging must include preparation of initial game allocation orders for new games. Initial game orders shall be distinguishable to retailers from ordinary orders and will be issued on a time schedule as determined by the Lottery.

8.4. The Contractor must provide receiving, shipping and other activity reports as required by the Lottery.

8.5. All tickets in a single game shall be packed and distributed in sequential order as nearly as practicable.

9. Delivery to Retailers

9.1. The Contractor shall be responsible for the delivery of instant tickets to retailers throughout Arizona.


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9.2. The Contractor must ensure that the distribution is effective, efficient, and secure, provides a satisfactory level of customer service to retailers, and presents a positive image of the Lottery.

9.3. Orders received by the Contractor by 4:00 p.m., Monday through Friday, must be delivered to the retailers by the end of the next business day.

9.4. Exceptions to the delivery requirement may be granted for geographically remote locations as determined by the Lottery.

9.5. The delivery procedure must include written or electronic documentation to confirm that the retailer accepted delivery of tickets.

9.6. The Contractor must reconcile shipping files with courier files and with Packs in Received Status reports, to ensure that ticket shipments have arrived timely and have been logged in by the retailers. Each shipment must include a delivery confirmation receipt for the retailer. The Contractor must remedy any anomalies in delivery receipt and report to the Lottery on a weekly basis.

10. Returned Tickets

10.1. The Contractor shall be responsible for processing the return of undeliverable, unaccepted or unsold tickets.

10.2. Returned tickets in full unopened packs from active games must be reissued as soon as possible and prior to any other inventory being used.

10.3. Returned partial packs of tickets must not be reissued.

10.4. Unsold tickets from ended games must be stored separately from active games until game reconciliation performed by the Lottery is completed.

11. Ticket Destruction

11.1. After the end of a game and final reconciliation has been conducted, the Contractor shall provide for the destruction of all unsold, returned or unused tickets in a secure method.

11.2. The Contractor shall provide procedures that will ensure that the destruction of tickets and other materials will be performed only with the permission of the Lottery.

12. Instant Ticket Validation System

12.1. The Contractor may be required to provide an instant ticket validation system. If required, the system must operate as a pass-thru from the Lottery’s on-line vendor and the Lottery. Validation criteria shall include, but not limited to:

12.1.1. Pack has been issued and activated for sale by an authorized retailer;

12.1.2. Pack and/or ticket is not in a stolen, missing or returned status;

12.1.3. Ticket is included on the validation file and has not been previously paid;

12.1.4. Appropriate error messaging for unsuccessful validations;

12.1.5. All successful validations must be designated as paid on the validation file.


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13. Computer Requirements

13.1. The Contractor shall have a computer system capable of maintaining all game-related data including inventory and validation data; as well as producing various sales and management reports without impacting any other functions.

13.2. The Contractor’s system shall be capable of operating twenty-three (23) hours per day, seven (7) days per week. Operational hours shall be determined by the Lottery. Operational is defined as being capable of supporting all normal game operations.

13.3. All transactions must be encrypted. A transaction file for each day must be in the possession of the Lottery within sixty (60) minutes after instant gaming systems have closed for the day unless otherwise specified by the Lottery. Every transaction must be time-stamped in hours, minutes and the nearest second or better.

13.4. The Contractor’s computer system must include back-up capability. The Contractor shall provide for the safe, secure off-site storage of all scheduled back-up data and programs.

13.5. The Contractor must provide a remote hot-backup system that is a mirror of the production system and is tested semi-annually for a full successful failover. The hot-backup system must be capable of transferring data from the primary system within two (2) minutes without any loss of data.

13.6. The Contractor shall implement Lottery approved communication standards (TCP/IP) with required firewalls to be used for the transfer of information between the Contractor’s site(s), the Lottery’s on-line vendor’s gaming system and the Lottery’s computer system.

13.7. All changes to the communications network must be preapproved by the Lottery and accompanied by an updated network diagram.

13.8. The Contractor must provide connectivity with the current operating system in use by the Lottery.

13.9. The Contractor shall deposit software source code (programming code) into an account which is held by a mutually agreed-upon offsite third-party escrow agent. The Contractor shall provide for adequate updates to the source code and provide a process for verification to the Lottery of the updates. The Contractor will propose the triggering mechanisms in the escrow contract to protect the Lottery through the end of the contract; final terms to be mutually agreed upon prior to initial implementation.

14. File Integration and Reporting System

14.1. The Contractor must provide to the Lottery a daily data record of each original game transaction. The Lottery will use an unmodified version of the file for ICS processing. The Contractor shall provide a summary report of all daily transactions.

14.2. The Contractor shall incorporate on-line sales information into their system for the purpose of providing a single source of reporting retailer and Lottery sales information. The Lottery will provide the on-line sales data. Data elements and formatting requirements will be mutually agreed upon.

14.3. The Contractor shall incorporate the Lottery’s retailer file into their system. Data elements, formatting requirements, and procedures to update the file will be mutually agreed upon. The retailer file must remain synchronized with the Lottery’s retailer file.

14.4. The Contractor’s system shall contain a game master file for each instant game. All Lottery specified game data must be available on the Lottery PCs via screens and/or reports. The file shall contain all relevant data about the game including, but not limited to, the start and ending dates, the prize redemption period, the pack file information, and the validation file.


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14.5. The Contractor must ensure that packs are not issued to retailers after a game has ended and that prizes cannot be paid after the prize redemption period has expired.

14.6. The Contractor shall integrate information for accounting and internal control purposes and provide this data to the Lottery. Data elements and formatting requirements shall be provided by the Lottery.

14.7. The Contractor shall maintain historical information on its system for a period of not less than one (1) year. Historical information must also exist on alternative media for a period of not less than five (5) years.

14.8. The Contractor should provide a system that is capable of purging all Lottery-approved ended game files from the primary system with no interference of the retailer management function, accounting data and sales reporting.

14.9. The Contractor shall provide the option for the Lottery to receive all data files and reports via electronic file transfers. The format and transmission of this data must conform to the Lottery’s specifications. The Lottery will also consider web-based alternatives.

15. Reporting Requirements

15.1. The Contractor shall develop all reports and formats prior to implementation. Report formats and content must be approved by the Lottery. Subsequent report changes, new reports and/or enhancements must be completed in accordance with Lottery specifications.

15.2. The Contractor must provide an easily modifiable reporting tool available to the Lottery staff on their desktop.

15.3. Reporting tools should require minimal user training. The Contractor will be required to provide sufficient training and user reference guides.

15.4. The Contractor must provide reporting tools that are extensible and compatible with existing and any new products developed.

16. Security and Internal Control Specifications

16.1. The Contractor shall ensure the integrity and security of the computer facility and the distribution and validation systems. The Contractor shall provide the following minimum quality control, internal control and security requirements:

16.1.1. The Contractor shall provide documentation on all software implemented for this contract. As changes are made, the Contractor shall provide documentation listing the changes, reason for changes, personnel instituting the change, Lottery authorization for the change and the date to be installed.

16.1.2. The Contractor shall notify the Lottery of any abnormal system operations and their causes, such as validation problems, communication difficulties, computer downtime, etc. The notification shall be made by phone within fifteen (15) minutes of the occurrence to the Lottery’s Information Technology and/or Security Division. Written notification is to follow within twenty-four (24) hours to the Executive Director.

16.1.3. Each time the system is accessed remotely, an automated notification must be sent to the Lottery Security Department. The system must log this information each time the system is accessed. The acceptability of any such security access will be subject to prior Lottery approval.


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16.2. The Contractor shall ensure the security of the computer system to prevent unauthorized access or tampering with any part of the system. Security procedures shall include, but not limited to, emergency procedures, internal control procedures applicable to the system, user access authority, computer virus detection and prevention.

16.3. The Contractor shall provide an outline of the system file security procedures and a detailed explanation of password control and encryption keys. The Lottery reserves the right to review all system narratives, source program listings, and operational procedures.

16.4. The Contractor shall provide sufficient documentation to the Lottery that the computer system has controls ensuring that all data, including validation files, is secure and reduces the risk of compromise.

17. Acceptance Testing

17.1. Lottery acceptance testing is defined as an extensive verification process to ensure all contractual requirements are in strict compliance.

17.2. The development of programs required in the initial implementation shall meet established milestones set forth by the Lottery.

17.3. New programs and modifications to existing programs shall be provided to the Lottery at least sixty (60) days prior to implementation unless a shorter period is approved by the Lottery.

17.4. The Contractor must successfully meet the Lottery’s acceptance test requirements and schedule of any new software or system enhancement.

17.5. The Contractor must complete quality assurance testing on all software prior to submitting it to the Lottery for acceptance testing.

18. Business Recovery

18.1. The Contractor must provide, and annually update, a business recovery plan. Such plan shall take into account disasters which may impact Arizona operations, whether man-made or natural and regardless of location.

18.2. The plan must include a business impact analysis; risk, threat and vulnerability analysis; and recovery strategy.

18.3. In the event of irreparable damage to the primary site, or of an unplanned extended abandonment of the primary site, the Contractor shall provide within fourteen (14) days, at no additional Lottery cost, host processors, facilities, and other components necessary to resume Lottery instant ticket operations. The proposed secondary facility must meet Lottery-approved environmental and security measures.

18.4. The plan must address the implementation of a hot-backup site. The plan should address, at a minimum, the location, personnel, hardware, software, data and failover procedures for the hot-backup site.

18.5. The Contractor must test and document the Business Recovery Plan prior to system startup and perform continued testing on a schedule approved by the Lottery.

19. Technology Changes

19.1. Recognizing that the lottery industry is dynamic and that technology will change, the Lottery and the Contractor will, on a continuing basis, evaluate the most cost-effective, reliable, and secure operations.


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19.2. During the life of the Contract the Lottery shall have access to the same technology and product options the Contractor may offer to other gaming clients. For any additional new technology or systems required by the Lottery, which are measures beyond the then prevailing standards for lottery products in the United States, the Lottery and the Contractor shall negotiate a just and equitable compensation.


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B. SALES STAFFING, MARKETING AND PROMOTIONAL SUPPORT SERVICES

1. General Requirements

1.1. The Contractor shall perform a variety of sales management and business development activities associated with the development of sales programs, retailer incentive plans, promotions and other merchandising ideas in support of all Lottery products.

1.2. The Contractor shall provide staffing for a full complement of sales and marketing support. This shall include business development managers, corporate/chain account managers, territory sales supervisors, lottery sales representatives (LSRs), and promotional support staff.

1.3. The Contractor shall perform promotional support services to optimize lottery product sales throughout the year. All promotional activity will be coordinated and approved by the Lottery.

2. Sales Force Staffing – General

2.1. All employees hired by Contractor as sales force shall be subject to the same standards and clearances required in Section A(2) of the Scope of Work and shall also be considered “Key Personnel” under Section 37.6 of the Special Terms and Conditions of the Contract, and subject to the requirements stated therein.

2.2. The Lottery considers sales staff positions to be critical for support of the Contract, and as such, the Contractor’s personnel should have sufficient industry experience in the administrative and technical functions required. These positions must be based full-time at the Contractor’s Arizona facility and must reside in Arizona.

2.3. All current Lottery territory management (sales staff) employees shall have first preference to be hired as Contractor’s sales staff, at comparable or better salaries and benefits.

2.4. Contractor shall be responsible for providing service vehicles for use by sales staff (“Sales Staff Vehicles”).

2.5. Transition Plan. The Contractor shall work closely with the Lottery to provide a comprehensive implementation plan to transition sales staff functions from the Lottery to Contractor that will prevent inconvenience to the Lottery, retailers and players. The plan shall not impact the Lottery’s ability to generate revenue. The Lottery will determine the implementation schedule that best meets the requirements of the Lottery. The Contractor shall submit a finalized project plan based on these requirements within forty-five (45) days of the award of the Contract. Specific milestones identified by the Lottery and included in the Contractor’s implementation plan shall be used as periodic measurements of the implementation progress. The plan must address, if applicable:

2.5.1. The time allocated to accomplish each step and milestone, including timelines, PERT charts or other appropriate analytical tools;

2.5.2. Organizational chart, proposed staffing levels and job descriptions;

2.5.3. Personnel qualifications.

3. Sales Management and Business Development

3.1. The Contractor shall perform sales and business development activities as designated by the Lottery.

3.2. The Contractor must identify the sales management and business development staff whose full-time responsibilities are to help the Lottery identify new selling opportunities and new marketing strategies.


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The Contractor must also identify any staff that may assist with these activities, but will not be assigned to the Lottery account on a full-time basis.

3.3. The Contractor’s sales management staff shall work closely with the Lottery’s Products and Marketing Teams to effectively monitor the portfolio of Lottery products available to retailers.

3.4. The Contractor shall perform all functions in a professional manner that will satisfy the needs of all retailers in all geographic areas of the state of Arizona.

3.5. The Contractor must coordinate and conduct face-to-face meetings among the Lottery, the Contractor and retailers to facilitate communications on sales, marketing, general Lottery product information and regulatory matters. Meetings must be scheduled to ensure widespread participation by retailers across the state. The Contractor is responsible for obtaining the meeting facility and all other resources necessary to conduct the meeting.

3.6. The Contractor must produce and distribute a quarterly newsletter to retailers. The Contractor will coordinate with the Lottery for content. The Lottery will have final approval of the newsletter prior to printing.

4. Corporate Account Services

4.1. The Contractor shall provide designated staff who shall specifically be assigned to the marketing and sales support functions for the Lottery’s corporate and chain accounts.

4.2. Upon request by the Lottery, the Contractor must:

4.2.1. provide recommendations for minimum sales levels or performance for corporate and chain retailers;

4.2.2. develop a program to administer the minimum sales requirements or performance levels for corporate and chain retailers;

4.2.3. propose an improvement plan to deal with corporate and chain retailers that do not meet minimum sales or performance measures; and

4.2.4. implement the improvement plan if requested by the Lottery.

4.3. The Contractor shall be responsible for receiving, administering, and submitting to the Lottery marketing suggestions from corporate and chain retailers. The Contractor shall notify the Lottery of any new suggestions submitted corporate and chain retailers for the Lottery’s approval.

4.4. At a minimum, the Corporate Account staff shall conduct annual reviews with each corporate and chain retailer. The Contractor shall provide a copy of all materials to be presented to corporate and chain accounts to the Lottery for review at least five (5) business days prior to the annual review meeting with the account. The Contractor shall provide a written report to the Lottery of the activities and meeting results within five (5) business days after each annual review.

4.5. For any retailer-requested meeting with a corporate or chain retailer, the Contractor shall provide a copy of all materials to be presented to the retailer to the Lottery for review and approval at least twenty-four (24) hours prior to the scheduled meeting. Materials not pre-approved by the Lottery must not be distributed to corporate and chain accounts. The Contractor shall provide a written report to the Lottery of the activities and meeting results within five (5) business days after the meeting.


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5. Territory Sales Supervisors

5.1. Sales Supervisors shall be responsible for oversight of LSRs within their assigned sales regions to ensure appropriate service and training is provided to Lottery retailers. The supervisor is responsible for maintaining the performance of their team and providing excellent service to Lottery retailers.

5.2. Sales Supervisors shall work closely with Lottery sales staff to identify opportunities to optimize sales and promotional opportunities.

5.3. Sales Supervisor responsibilities shall include, but not limited to, the following:

5.3.1. Train LSRs on new game launches, new retailer recruitment techniques, sales incentives, merchandising and promotional sales techniques, setting up point-of-sale materials and Lottery play areas with stores;

5.3.2. Ensure LSRs in their assigned areas are following established Lottery rules and regulations in regard to the sale and promotion of Lottery products;

5.3.3. Monitor and manage LSR performance to ensure that all LSR visit standards are being met; and

5.3.4. Assist LSRs and retailers to develop in-store merchandising efforts, marketing and sales techniques to promote Lottery products.

6. Lottery Sales Representative Services (LSR)

6.1. The Contractor shall provide sales representative services (LSR) associated with sales support to retailers including the promotion and sale of lottery products.

6.2. Each retailer must receive scheduled visits by a LSR. LSRs play a critical role in promoting Lottery products to retailers. LSR visits are tailored based on the needs of the retailer and guidelines provided by the Lottery.

6.3. Retailer visits serve a variety of purposes, but the functions can be generally categorized as retailer setup and training, supply and inventory management, and sales and marketing. Retailers are provided a wide variety of goods and materials to support and sell lottery products. These include point-of-sale materials, supplies and promotional goods.

6.4. The Contractor must provide sufficient LSR support to service the Lottery’s retailer base. The Contractor must support growth in the retailer base with an appropriate increase in the Contractor’s LSR staffing.

6.5. The Contractor shall develop LSR territory assignments and retailer visit schedule. The Contractor shall maintain, update and change LSR assignments as necessary. The Lottery shall have final approval on all proposed changes.

6.6. The Contractor shall develop, document and maintain standards and procedures for LSRs. The Contractor must monitor and manage LSR performance to ensure that all Lottery standards are met.

6.7. The Lottery expects the Contractor to use sales productivity software in the performance of their duties. If the Lottery has contracted with a separate vendor to acquire such software, the Contractor will be given access to that software; however, Contractor must be responsible for any associated hardware requirements.

6.8. LSR responsibilities shall include, but not limited to, the following:


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6.8.1. Recruit new retailers on an ongoing basis;

6.8.2. Assist retailers with new license applications or the license renewal process when necessary;

6.8.3. Conduct retailer site visit, perform ADA inspection and determine optimal equipment display configurations;

6.8.4. Deliver and install play stations, instant ticket dispensers, signage, point-of-sale materials and other Lottery collateral as authorized and provided by the Lottery;

6.8.5. Assist retailer with the display of promotional material;

6.8.6. Conduct retailer training at both new and existing retailer locations on new products and promotions, ticket procedures and retailer regulatory requirements as directed by the Lottery;

6.8.7. Create merchandising and promotional sales techniques to optimize sales opportunities within assigned territory;

6.8.8. Retrieve unsold Lottery tickets when games are ended or when retailers discontinue selling. Instant tickets may be returned for various reasons during the LSR’s regularly scheduled sales cycle visit or during an emergency visit requested by the Lottery;

6.8.9. Optimize the inventory mix at retail locations in coordination with retailers and the Lottery;

6.8.10. Retrieve lottery equipment, promotional materials and ticket inventory from retailer when a retailer discontinues lottery sales;

6.8.11. LSRs must meet retailer satisfaction targets as set by the Lottery. The Contractor shall provide corrective action plans to the Lottery to address missed retailer satisfaction targets.

6.8.12. LSRs must work with retailers to reduce out-of-stock percentages to the goal set by the Lottery.

6.8.13. LSRs will be responsible for delivery of any retailer prizes or incentives associated with retailer promotional activities.

7. Promotional Support

7.1. Promotions are utilized to optimize Lottery product sales throughout the year. The Lottery determines which Lottery products are to be used in a promotion.

7.2. The Contractor must recommend promotional incentive programs for retailers, including when such programs should be initiated and appropriate analysis reflecting the benefits of such programs in optimizing revenue to the state from sales of Lottery products. The Lottery, at its sole discretion, will establish and be responsible for the funding for any retailer incentive programs.

7.3. The Contractor must recommend promotional activities in an annual plan submitted to the Lottery by May 31 of each year. The promotions plan must include recommendations for specific product promotion events. The plan must be robust, detailed and contain a package of suggested promotional events and programs that take into account the full scope of the Lottery’s advertising and marketing efforts in creating a complete package of support for Lottery products across the state. The plan must contain projected staffing requirements, promotional items and ticket quantity projections, point-of-sale signage needs and related equipment plans. It will be necessary to coordinate creation of the plan with the Lottery and the Lottery’s advertising agency.


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7.4. The Contractor shall provide a dedicated promotions manager/coordinator, responsible for managing and administering the annual promotions plan.

7.5. The Lottery will work with the Contractor to select promotional events that create awareness and interest for Lottery products among adult Arizonans.

7.6. The Contractor must administer the promotion events and provide a list of retailer and/or player winners to the Lottery.

7.7. The Contractor must provide a promotions team (the “Street Team”), staffed by the Contractor or a third-party provider. Staffing of the Street Team by a third-party provider requires approval of the expenditure by the Lottery. Historically, the Street Team has been provided by the Lottery’s advertising agency. It is preferred that the Contractor initially will assume the third-party contract for the Street Team from the advertising agency. The Street Team will be responsible for coordination, production, activation, and staffing of functions at retailers, event promotions, and other promotions, when those functions are not administered solely by the LSRs. The Street Team shall be subject to the same standards and clearances required in Section A(2) of the Scope of Work and all requirements applicable to Key Personnel under Section 37.6 of the Special Terms and Conditions of the Contract. The Street Team may be required to transport and deliver promotional materials and equipment to promotional sites. Such duties include, but are not limited to: driving or towing sales vehicles or trailers; transportation of staff; transportation of promotional materials, equipment and prizes; and installing and de-installing promotional materials. Under the Administrative Code rules, each promotional event must have a specific duration of time and separate promotions may be run concurrently.

7.8. The Contractor shall be responsible for developing protocols to ensure safety and security for the retailer, Contractor staff, Lottery staff and the public at Lottery promotional events.

7.9. The Contractor shall provide Lottery-branded uniforms (hat, shirt, jacket, etc.) for all Contractor and retailer event staff.

7.10. For each promotional event, as specified by the Lottery, the Contractor must:

7.10.1. provide promotions staff to conduct promotional activities throughout the event including nights, weekends and holidays;

7.10.2. ensure that promotion rules are implemented correctly;

7.10.3. protect Lottery promotional materials and equipment from damage or destruction;

7.10.4. provide technical support for the duration of the event; and

7.10.5. ensure that a Lottery-licensed entity is available to sell Lottery tickets.

7.11. The Contractor must be capable of supporting multiple promotions occurring at the same time in the state.

7.12. The Contractor must provide a detailed written report to the Lottery evaluating each promotional event or retailer promotion inclusive of recommendations for future participating in the event/promotion or modifications for enhancing future success. The Contractor must provide the report format required by the Lottery.

7.13. The Contractor’s promotions manager/coordinator must maintain all promotional equipment in clean, good working order, and all promotional equipment must be available for use in meeting the approved promotions plan schedule.


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7.14. The Contractor must provide promotional equipment to support the promotions plan. The Lottery reserves the sole right to approve the promotional equipment and art work recommended by the Contractor.

7.14.1. The Contractor must provide no more than two (2) vehicles to support promotional events (“Promotional Vehicles”). Promotional Vehicles may consist of sales vans or towing vehicles with a trailer (“Trolley”), or another system subject to the approval of the Lottery. Promotional Vehicles must be: (a) maintained at the Contractor’s expense, (b) of a size and type capable of safely transporting staff and promotional materials to promotional sites; and (c) stored at the Contractor’s location. Any Promotional Vehicles must be wrapped with Lottery-branded materials, as approved by the Lottery. A sufficient number of Promotional Vehicles must be provided to support the promotions plan schedule. At a minimum, the Promotional Vehicles must have compatible hookups for Lottery gaming equipment to operate multiple components simultaneously. There must be a method for securing cash and Lottery tickets in the Promotional Vehicle. A Promotional Vehicle’s specifications for customer flow, safety, equipment and electrical needs, security, lighting, signage, storage, and retailer, player and staffing needs must be approved by the Lottery. The Lottery will consider alternative options for Promotional Vehicle system.

7.14.2. General Supplies and Equipment. The Contractor must provide or obtain from the Lottery’s advertising agency all items that are essential to conducting a promotional event or retailer promotion. This will include but is not limited to Spin-to-Win prize wheels, branded tents, banners, signage, generators, first aid kits, safety equipment, tables, portable booths and other promotional equipment as determined and approved by the Lottery.

7.15. The Contractor must maintain and track all promotional equipment inventories.

8. Marketing Support

8.1. The Contractor shall assist the Lottery in long-range game planning. Long-range planning is defined as an unconstrained, comprehensive approach to research, new game design, development of promotions, merchandising options, and other marketing strategies, cost benefit analysis, revenue projections and projected implementation time lines.

8.2. Market research relating to game development, retailer sales and playership issues shall be conducted at the Contractor’s expense up to one hundred thousand dollars ($100,000) annually based on the Contract year. While the Lottery intends to use the funding as part of an annual research strategy, the Lottery reserves the right to carry any unused portion forward into the next Contract year. This research includes, but is not limited to focus groups, panel studies, segmentation studies and information from other states. The research funds may also be used to acquire industry-accepted hardware and/or software tools to facilitate the collection and analysis of research data.

8.3. The Contractor shall provide to the Lottery a five-year plan to maximize instant sales. The plan must be submitted within six months following the contract implementation date.

8.4. The Contractor shall update the plan on an annual basis. The Contractor’s plan must be compatible with the Lottery’s strategic objectives.

8.5. Quarterly meetings shall be conducted to update the Lottery on industry trends, new technology, new products and comparative sales information that will assist the Lottery in increasing instant product sales.

Scope of Work – Invited Options ARIZONA LOTTERY 4740 E. University Dr.

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SCOPE OF WORK – INVITED OPTIONS

1. Invited Options – The following items are highly desirable, but not required. The Lottery may wish to utilize one or more of these during the life of the Contract. Contractors must state their ability to provide these options, and outline their experience in establishing these services in other lottery jurisdictions. The Lottery reserves the right to amend the resulting Contract or issue a new Contract with the items described below.

1.1. Product Vending Machines – The Contractor may be required to provide product vending machines for retailer locations throughout the state. The Lottery is interested in a variety of machine configurations and footprints. Examples of the types of vending machines may include:

1.1.1. Full-function machines that allow players to purchase all Lottery products without retail clerk assistance.

a. Machines must have connectivity and compatibility with the Lottery’s on-line vendor;

b. Machines must be able to accept U.S. currency in $1, $5, $10, $20, $50, and $100 denominations.

c. Machines must provide the ability for the player to select either English or Spanish language for operation and purchase selection.

d. Consideration will be given to machines that are capable of receiving data to process transactions using a debit, credit, gift cards or perform age verification.

1.1.2. Vending machines that allow players to purchase instant tickets without retail clerk assistance.

a. Machines must be capable of providing remote reporting access.

b. Machines must be able to accept U.S. currency in $1, $5, $10, $20, $50 and $100 denominations.

c. Machines must provide the ability for the player to select either English or Spanish language for operation and purchase selection.

d. Consideration will be given to machines that are capable of receiving data to process transactions using a debit, credit, gift cards or perform age verification.

1.1.3. In-counter or on-counter ticket dispensing devices that require retail clerk assistance for players to purchase tickets.

a. Dispensing devices will be used to display lottery tickets in a manner that promote ticket sales.

b. Dispensing devices must be secure with a locking mechanism.

c. Dispensing devices must be convenient to load and dispense tickets.

d. Dispensing devices must be capable of displaying a variety of ticket sizes and quantities.

e. The in-counter dispensing devices must include the glass covers.


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f. The ticket dispensing devices must be maintained in clean, working order and must be replaced as required by the Lottery.

1.1.4. The Contractor may be required to provide other dispensing devices that might compliment or replace the existing devices in use by the Lottery.

1.1.5. Play Centers that provide space for Lottery related materials such as game play slips, brochures, etc. readily available for customers to take and fill out, in addition to displaying current Lottery promotional material.

1.1.6. Neon signage capable of static and/or scrolling messaging display that is remotely programmable by the Lottery. Signs must be capable of being updated via wired or wireless communication through the Lottery sales terminal/gaming system. The Contractor may suggest an alternative signage option.

1.2. Secure Retailer Web-site – The Contractor may be required to provide a dedicated secure website for retailer information. The web-site must be accessible to all retailers and authorized Lottery personnel. Retailer information should include, but not be limited to:

1.2.1. Retailer profile, address, contact information, license renewal dates, etc.;

1.2.2. Individual retailer sales information for all Lottery products, current and historical;

1.2.3. Order and retailer inventory numbers;

1.2.4. Accounting information, billing sweeps;

1.2.5. Game ending dates, and last date to redeem prizes dates;

1.2.6. New game information and distribution dates;

1.2.7. Retailer newsletter and/or Lottery communications;

1.2.8. The web-site should include a help desk support feature;

1.3. Retailer License Portal – The Contractor may be required to expand the retailer website to include interactive functionality that will allow licensees to apply for, renew, and pay for a lottery retailer license.

1.4. Sales Force Productivity Tools

1.4.1. The Contractor may be required to provide productivity tools (software, hardware, or server) intended to enhance the productivity of the Lottery’s sales force. Software tools must include the ability to provide the most current information to all retailers, or for a specific group of retailers. This information should include, but is not limited to, the examples listed below:

a. Retailer information such as location, contact, phone number, etc.

b. Ability to schedule retailer visits and optimize route planning.

c. Ability to access retailer sales, both current and historical.

d. Ability to access retailer’s current instant game inventory.

e. Ability to track retailer point-of-sales placement.


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f. Ability to compare/project retailer performance against all retailers, or specific groups of other retailers.

1.4.2. Software tools must have the capability to transmit the required information to a variety of portable devices. Portable devices could be used in retailer locations, by sales staff in preparation for a retailer visit, or in a more formal group presentation setting.

a. The Contractor shall provide a sufficient number and variety of portable devices, including printers, to support a sales staff of at least 30 people.

b. The Contractor may propose a combination of one or more portable devices which allow any or all sales staff to perform any of the above-stated uses at any time, without restrictions.

1.4.3. Software and hardware must be updated as necessary, on a schedule determined by the Lottery.

1.5. Product Development Support – The Contractor may be required to provide support to the Lottery’s Products team in the planning and development of an annual games plan. This plan is to include recommended number of new games by price point, launch schedules, opportunities to increase instant game sales and revenue transfers.

2. Offered Options – The Lottery will consider any offered options that will serve to enhance sales or management of the instant ticket product line.

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SPECIAL TERMS AND CONDITIONS

1. Definition of Key Words Used in the RFP:

1.1. "A.A.C." means the Arizona Administrative Code.

1.2. "A.R.S." means the Arizona Revised Statutes.

1.3. "Best and Final Offer" means a revision to an Offer submitted as part of negotiations or after negotiations are completed that contains the Offeror's most favorable terms for price, service, and products to be delivered, which is sometimes referred to as the Final Proposal Revision.

1.4. "Contract," as defined in the Uniform Terms and Conditions, also includes any written clarifications included in the Offer or Solicitation.

1.5. "eProcurement (Electronic Procurement)" means conducting all or some of the procurement function over the Internet. Point, click, buy and ship Internet technology is replacing paper-based procurement and supply management business processes. Elements of eProcurement also include Invitation for Bids, Requests for Proposals, and Request for Quotations.

1.6. "Important" indicates the requirement is of great importance to the Lottery's evaluation of the Proposal, but the Lottery does not intend to disqualify a Proposal if the requirement is not met.

1.7. "Key Personnel" means the individuals listed in attachments to Offeror's Response Form 2.

1.8. "Lottery" means the Arizona Lottery Commission and includes the State of Arizona.

1.9. "May" indicates something that is not mandatory but permissible.

1.10. "Offer" means a response to a Solicitation.

1.11. "Offeror" means a person who responds to a Solicitation.

1.12. "Person" means any corporation, business, individual, union, committee, club, or other organization or group of individuals.

1.13. "Shall, Must" indicates a mandatory requirement. Failure to meet these mandatory requirements may result in the rejection of a proposal as non-responsive.

1.14. "Should" indicates something that is recommended but not mandatory. If the Offeror fails to provide recommended information, the Lottery may, at its sole option, ask the Offeror to provide the information or evaluate the proposal without the information.

1.15. "Small business" means a for-profit or not-for-profit organization, including its affiliates, with fewer than 100 fulltime employees or gross annual receipts of less than $4 million for the last complete fiscal year.

1.16. "Solicitation" means an Invitation for Bids ("IFB"), a Request for Technical Offer, a Request for Proposal ("RFP"), a Request for Quotation ("RFQ"), or any other invitation or request issued by the purchasing agency to invite a person to submit an Offer.

1.17. "Solicitation Amendment" means a change to a Solicitation issued by the Procurement Officer.

1.18. “Subcontractor” is any person who, or entity that, has a Subcontract with the State under this Solicitation.


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2. Headings

2.1. Captions and headings used in the Contract are for information and organization purposes and do not, in any way, define or limit the requirements or terms of this Contract.

3. Contract Administration and Operation

3.1. The Contract between Lottery and the Contractor shall consist of the Solicitation as amended, any Contractor requests for clarifications, the proposal submitted by the Contractor, the Contractor's responses to any Lottery requests for clarifications, and the Contractor's Best and Final Offer. In the event of a conflict in language between the documents referenced above, the provisions and requirements set forth and/or referenced in the Solicitation as amended shall govern. However, the Lottery reserves the right to clarify any contractual requirement in writing, and such written clarification shall govern in case of conflict with the applicable requirements stated in the Solicitation as amended or the Contractor's proposal. In all other matters not affected by the written clarification, if any, the Solicitation shall govern.

3.2. Following award, the Contractor shall contact the Procurement Officer for guidance or direction in matters of Contract interpretation or problems regarding the performance, terms, conditions, or scope of the Contract.

4. Arizona Lottery Contacts

4.1. The Lottery Procurement Officer is the Lottery’s authorized representative, empowered to accept and approve or reject the Services furnished by the Contractor.

4.2. The Contractor shall address all notices relative to this Contract to the attention of:

Procurement Officer Arizona Lottery 4740 East University Drive Phoenix, AZ 85034

5. Term of Contract

5.1. The term of any resultant Contract shall commence on the date of award and shall continue for a period of five (5) years thereafter, unless terminated, canceled or extended as otherwise provided herein. The Contract shall not bind nor purport to bind, the Lottery for any contractual commitment in excess of the original Contract period.

6. Offer Acceptance Period

6.1. Proposals shall be irrevocable offers for one hundred eighty (180) days after the proposal due date, or, in the case of a Best and Final Offer, an Offeror shall hold its Offer open for one hundred twenty (120) days from the Best and Final Offer due date.

7. Contract Extensions

7.1. The Lottery shall have the right, in its sole discretion, to renew the Contract for five (5) one-year periods or a portion thereof, such that the supplemental periods with a maximum aggregate including all extensions shall not exceed ten (10) years (“final termination date”). If the Lottery exercises such rights, all terms, conditions and provisions of the original Contract shall remain the same and apply during the renewal period with the exception of price. The Lottery may extend the Contract by written amendment to the Contractor on or before the date of Contract expiration.


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8. Price Increase

8.1. The Lottery may review a fully documented request for a price increase only after the Contract has been in effect for five (5) years. The request shall be submitted from ninety (90) to one hundred twenty (120) days prior to the anniversary or Contract renewal date of the Contract and shall be a factor in the extension review process. A price increase shall only be considered at the time of a Contract extension and shall be a factor in the extension review process. The request shall be based on factors that were clearly unpredictable at the time of the Offer and is directly correlated to the price. The Procurement Officer shall determine whether the requested price increase or an alternate option, is in the best interest of the state.

9. Eligible Agencies

9.1. This Contract shall be for the exclusive use of the Lottery.

10. Non-Exclusive Contract

10.1. A Contract will be awarded with the understanding and agreement that it is for the sole convenience of the Lottery. The Lottery reserves the right to obtain like goods or Services from another source when necessary. Off-Contract purchase authorization(s) may be approved by either the Lottery (within its delegated authority) or by the State Procurement Office. Approvals shall be at the exclusive discretion of the Lottery and shall be final. Off-Contract procurement shall be consistent with the Arizona Procurement Code or the Lottery Procurement Code.

10.2. Contractor shall fully cooperate and carefully coordinate its work with the work of other contractors. The Contractor shall not commit or permit any act which will interfere with the performance of work by any other contractor.

11. Contract Type

11.1. This shall be a Firm Fixed-Price Contract.

12. Multiple Awards

12.1. In order to ensure adequate coverage of the requirements of Lottery, multiple awards may be made.

13. Negotiation

13.1. The Lottery reserves the right to enter into negotiations prior to final award.

14. Contract Modifications/Amendments

14.1. Any change in the Contract, including but not limited to the Scope of Work described herein, whether by modification or supplementation, must be accomplished by a formal contact amendment signed and approved by and between the dully authorized representatives of the Contractor and the Lottery. The Contractor expressly and explicitly understands and agrees that no other method nor other document, including correspondence, acts, and oral communications by or from any person, shall be used or construed as an amendment, modification, or supplementation to the Contract.

14.2. Contractor agrees to make changes in a timely manner in such instance where the State of Arizona or federal legislature enacts legislation that impacts Lottery and require such changes.

14.3. The Procurement Officer may modify at any time, by written order, and without notice to the sureties, the general scope of this Contract in any one or more of the following ways:


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14.3.1. Description of Services to be performed as it relates to Instant Ticket Warehouse, Distribution and Sales Support Services;

14.3.2. Time of performance (i.e., hours of the day, days of the week);

14.3.3. Place of performance of the Services;

14.3.4. Drawings, designs or specifications, if supplies to be furnished are to be specially manufactured for the Lottery in accordance with the drawings, designs or specifications;

14.3.5. Method of shipment or packing of supplies; and

14.3.6. Place of delivery.

14.4. If any such modification causes an increase or decrease in the cost of, or the time required for the performance of any part of the work under this Contract, whether changed or not changed by the order, the Procurement Officer shall consider an equitable adjustment in the Contract price, the delivery schedule, or both.

14.4.1. The Contractor must assert its right to a price adjustment under this clause within thirty (30) days from the date of receipt of the written order.

14.5. The Lottery may clarify the Contract following award. This clarification shall not substantially alter the contents of the Contract, but shall only edit and reformat the Contract in a manner that will facilitate ease of use, Contract administration, and performance of the parties.

14.6. Any Contract Amendment shall specify an effective date, any increases or decreases in the amount of the Contractor’s compensation, if applicable, and shall be signed by the Contractor and the Procurement Officer.

15. Good Faith Cooperation With The Lottery

15.1. The Contractor shall cooperate fully, in good faith, with the Lottery as may be required in the performance of this Contract. This shall include attendance at meetings, discussion, and hearings, as may be required; presentation of data, as may be requested from time to time by the Lottery to effect such cooperation; and compliance with all directives issued by the Lottery. The Contractor shall not commit or permit any act which will interfere with the performance of work by State employees, unless approved by the Lottery.

15.2. The Contractor shall fully coordinate his or her activities in the performance of the Contract with the Lottery needs. As the work of the Contractor progresses, advice and information on matters covered by the Contract shall be made available by the Contractor to the Lottery throughout the effective period of the Contract.

16. Termination/Suspension

16.1. In addition to the termination rights listed in the Uniform Terms and Conditions, termination may occur in one of the following ways:

16.1.1. The Contract may be terminated at any time by the Contractor with mutual consent of both the Contractor and the Lottery. However, the Contractor must provide the Lottery with at least a one (1) year’s written notice of said termination.

16.1.2. The Contract may be terminated by the Lottery if the Contractor engages in any action that might create or result in the appearance of impropriety, such as (a) inappropriately using or


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divulging of information gathered or discovered pursuant to the performance of its duties under the Contract; (b) acting on behalf of the Lottery without appropriate authorization; (c) treating anyone with unfair preference or disfavor; (d) exercising discretion in a way that shows partiality, or that could have a political consequence for the Lottery; (e) taking any action that could affect the public confidence regarding the integrity of the Lottery.

16.1.3. The Contractor fails to carry out any term, promise, or condition of the Contract. The Lottery will issue a written ten (10) day notice of default to the Contractor for acting or failing to act as in any of the following:

a. The Contractor provides products that do not meet the requirements of the Contract or are of unacceptable quality to the Lottery,

b. The Contractor fails to perform adequately the Services required in the Contract,

c. The Contractor attempts to impose personnel on the Lottery, who are of unacceptable quality or who do not meet the requirements of the Contract,

d. The Contractor fails to furnish the required product or Services within the time stipulated in the Contract,

e. The Contractor fails to furnish the required product or services within the time stipulated in the Contract,

f. The Contractor fails to make progress in the performance of the requirements of the Contract and/or gives the Lottery a positive indication that they will not or cannot perform the requirements of the Contract,

g. If the Contractor does not correct the above problem(s) within ten (10) days after receiving the notice of default, the Lottery may cancel the Contract. If the Lottery cancels the Contract pursuant to this clause, the Lottery reserves all rights or claims to damages arising from breach of the Contract.

16.2. The time of completion of performance may be extended due to a force majeure event under the Uniform Terms and Condition, but the final termination date of the Contract will not be changed by a delay caused by a force majeure incident.

17. Subcontracts

17.1. The Contractor may, with the consent of the Lottery, enter into written Subcontract(s) for performance of certain of its functions under the Contract. Such Subcontracts must be approved by the Procurement Officer prior to the effective date of any Subcontract.

17.2. In hiring subcontractors, the Contractor shall publish a request for proposal on the Contractor’s website for all subcontractor work including aggregate purchases from the same vendor that would amount to $5,000 or more in a year. The posting of the request for proposal shall be available on the Contractor’s website for a period not less than seven (7) business days and the deadline for submission shall not be shorter than seven (7) business days from the date of the first posting. The Contractor shall determine other rules regarding submission and consideration of all bids received, but shall be guided by the principle that the process should provide the best competition practicable for the Lottery. Such rules, deadlines, and other criteria shall also be posted on the Contractor’s website contemporaneously with the posting of the request for proposal.

17.2.1. Any vendor from which aggregate purchases from that vendor would amount to $50,000 or more in a year shall be defined as a “Large Vendor.” The Contractor must provide to the


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Lottery a written explanation justifying to the Lottery why it is more competitive and in the Lottery’s best interest to make purchases from an out-of-state Large Vendor instead of an in-state Large Vendor, prior to concluding any agreement with that Large Vendor. If a vendor is domiciled in Arizona, that vendor may be considered to be an “in-state” vendor.

17.2.2. For each Large Vendor, the Contractor must reinitiate the procedures set forth in this section on an annual basis. The Lottery’s approval of the selection of a vendor will only be valid for the current fiscal year in which the approval was received by the Contractor.

17.3. No Subcontract that the Contractor enters into with respect to performance under the Contract shall in any way relieve the Contractor of any responsibility for performance of its duties.

17.4. The Contractor shall give the Procurement Officer immediate notice in writing by certified mail of any action or suit filed and prompt notice of any claim made against the Contractor by any subcontractor or vendor which in the opinion of the Contractor may result in litigation related in any way to the Contract with the Lottery.

18. Inclusive Offerors

18.1. Offeror(s) are encouraged to make every effort to utilize Subcontractors that are small business enterprises for aggregate purchases under one hundred thousand dollars ($100,000.00). Offerors who are committing a portion of their work to such Subcontractors shall do so by identifying the type of service and work to be performed by providing detail concerning your organization's utilization of small business enterprises. Emphasis should be placed on specific areas that are subcontracted and percentage of Contract utilization and how this effort will be administered and managed, including reporting requirements.

19. Waiver of Defects/Rejection of Offers

19.1. Notwithstanding any other provision of the Solicitation, the Lottery reserves the right to waive any immaterial defect or informality; reject any and all Offers or portions thereof; or cancel a Solicitation. The Procurement Officer shall file a written determination specifying the reasons for the decision.

20. Accuracy of Work

20.1. The Contractor shall be responsible for the accuracy of the work and shall promptly make all necessary revisions or corrections resulting from errors and omissions on the part of the Contractor without additional compensation. Acceptance of the work by the Lottery will not relieve the Contractor of the responsibility for subsequent correction of any such errors and the clarification of any ambiguities.

21. New Equipment

21.1. All equipment, Materials, parts and other components incorporated into the work, or into an item covered by this Contract, shall be new, of the latest model and of the most suitable grade for the purpose intended.

21.2. Current Product (Software). All products or software offered in this Solicitation shall be in current and ongoing production, shall have been formally announced for general marketing purposes; shall be a version currently functioning in a user (pay customer) environment and capable of meeting or exceeding all specifications and requirements set forth in this Solicitation at the time of Offer submission. Contractor must use software that is and will continue to be compatible with existing Lottery computer and network operations.


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22. Electronic or Information Technology Products/Services

22.1. Unless specifically authorized in the Contract, any electronic or information technology offered to the Lottery under this Solicitation shall comply with A.R.S. § 41-3531 and § 41-3532 and Section 508 of the Rehabilitation Act of 1973, which requires that employees and members of the public shall have access to and use of information technology that is comparable to the access and use by employees and members of the public who are not individuals with disabilities.

23. Technology Changes

23.1. Recognizing that the lottery industry is dynamic and that technology will change; the Lottery and the Contractor will, on a continuing basis, evaluate the most cost-effective, reliable, and secure operations.

23.2. During the life of the Contract the Lottery shall have access to the same technology and product options the Contractor may offer to other gaming clients. For any additional new technology or systems required by the Lottery, which are measures beyond the then prevailing standards for lottery products in the United States, the Lottery and the Contractor shall negotiate a just and equitable compensation.

24. Inspection and Acceptance

24.1. All Services or Materials are subject to final inspection, review, evaluation and acceptance by the Lottery. Services or Materials failing to conform to the specifications or requirements of this Contract shall be held at the Contractor's risk and may be returned to the Contractor. If so returned, all costs are the responsibility of the Contractor. The Lottery may withhold payment for Services or Materials that do not meet Contract standards or Scope of Work requirements as determined by the Lottery.

25. Descriptive Literature

25.1. All offers must include complete manufacturers’ descriptive literature regarding the equipment they propose to furnish. Literature shall be sufficient in detail in order to allow full and fair evaluation of the offer submitted. Failure to include this information may result in the proposal being rejected.

26. Protection of Facilities and Grounds

26.1. The Contractor shall provide the Services contained herein in such a manner that does not result in damage to Lottery facilities, grounds, landscaping, equipment, utilities, or structures. In the event that damage does occur during the performance of this Contract, the Contractor shall repair or replace the damage at no cost to the Lottery as specified by the Procurement Officer.

26.1.1. Should the Contractor fail or refuse to make proper repairs or replacements, the Contractor shall be liable for the cost thereof which may be deducted from unpaid invoices or by any other means provided by law. Any and all equipment supplied by the Contractor(s) for use by the Lottery shall remain the property of the Contractor.

26.2. The Lottery shall be under no obligation to the Contractor in regards to any restoration or rehabilitation of the Contractor's premises or property during the Contract term or after the final Contract expiration date.

26.3. Supplier shall be responsible for the removal of all materials, debris, litter, and residue resulting from the performance of any Services at the Lottery or third-party locations. All work areas shall be maintained in a clean and orderly manner throughout each work day.


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27. Safety Standards

27.1. All items supplied under this Contract must comply with the current applicable occupational safety and health standards of the State of Arizona Industrial Commission, applicable building and electrical codes, and The National Fire Protection Association Standards.

28. Confidentiality of Records

28.1. The Contractor shall establish and maintain procedures and controls that are acceptable to the Lottery for the purpose of ensuring that no information contained in its records or obtained from the Lottery or from others in carrying out its functions under the Contract shall be used or disclosed by it, or Key Personnel (as defined in section 37.6, Key Personnel), except as required to efficiently perform duties under the Contract. Persons requesting such information should be referred to the Lottery. The Contractor also agrees that any information pertaining to individual persons shall not be divulged other than to Key Personnel as needed for the performance of duties under the Contract, unless otherwise agreed to in writing by the Lottery.

28.2. Contractor shall keep confidential all information concerning individual end-users. Contractor shall not, under any conditions, resell, transfer or convey information about end-users to any third party. Contractor shall not retain or reuse information about the end-users in their own operations.

29. Records Retention

29.1. In addition to the Records Retention obligations stated in the Uniform Terms and Conditions, the Contractor must abide by the following requirements:

29.2. Cost Records. The Contractor shall maintain books, records, documents, and other evidence pertaining to the costs and expenses of the Contract, hereinafter collectively called the "cost records," to the extent and in such detail as shall properly reflect all net costs, direct or indirect, of labor, Materials, equipment, supplies, and Services, and other costs and expenses of whatever nature for which payment is made under the Contract, including records of in-kind or financial benefits received by Contractor for transactions conducted with a third-party vendor. The Contractor shall agree to make available at the office of the Contractor at all reasonable times during the period, as set forth below, any of the cost records for inspection, audit or reproduction by any authorized representative of the State. The Contractor shall preserve and make available the records for a period of five (5) years from the date of final payment under the Contract and for such period, if any, as is required by applicable statute, by any other paragraph of the Contract as stated below:

29.2.1. If the Contract is completely or partially terminated, the cost records relating to the work terminated shall be preserved and made available for a period of five (5) years from the date of any resulting final settlement.

29.3. Litigation Records. "Litigation records," which relate to appeals, litigation, or the settlement of claims arising out of the performance of the Contract, or cost and expenses of the Contract as to which exception has been taken by the Lottery, shall be retained by the Contractor until such appeals, litigation, claims or exceptions have been resolved, or the statute of limitations on such actions has expired on any potential claims.

29.4. The provisions of this Section shall be applicable to and included in each Subcontract hereunder.

30. Ownership of Intellectual Property

30.1. To the extent any work created by Contractor does not qualify as a "work for hire," under the Ownership of Intellectual Property section of the Uniform Terms and Conditions, Contractor hereby assigns, transfers, releases, and conveys to the State all rights, title, and interest to such Intellectual Property,


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including but not limited to all copyright, invention, trademark, trade name and trade secret rights, and United States patent rights or other patent rights recognized by a treaty to which the United States is a signatory.

30.2. Notwithstanding anything to the contrary in this Contract, if the State elects, in its sole and absolute discretion, to relinquish its ownership interest in any or all of the Intellectual Property, the State shall have the rights to use, modify, reproduce, release, perform, display, sublicense or disclose such Intellectual Property within State government and operations without restriction for any activity in which the State is a party (collectively, "Government Purpose Rights").

31. Transition Periods

31.1. Transitioning from the Previous Contractor. Upon award, in addition to any meetings required under the Scope of Work, the Contractor may be required to participate in meetings for the successful implementation of the Contract and to facilitate a transition from the previous contractor to the Contractor, if necessary. The meetings will be at the discretion of the Lottery. The Contractor will be notified in advance of the meeting(s) time, frequency, and locations to ensure all appropriate Contract staff and representatives attend. The Lottery reserves the right to decline conference call attendance or participation.

31.1.1. The Lottery reserves the right to permit the previous contractor to complete necessary work or tasks currently in progress to aid in the transition process.

31.1.2. The Contractor will be required to assume an assignment of ongoing contractual obligations incurred by the previous contractor to allow continuity of all goods and Services currently in place.

31.2. Transitioning Upon Turnover to a New Contractor. Upon the termination of this Contract, if the Lottery anticipates a continued need for the Contract Services specified herein and a Contract is awarded to a new contractor, there shall be a transition of service period. During this period, the existing Contractor shall work closely with a new contractor’s personnel and/or staff to ensure a smooth and complete transfer of duties and responsibilities.

31.2.1. All transition activities will be coordinated by the Lottery’s authorized representative. A transition plan as approved by the Lottery will be developed in conjunction with the Contractor to assist the new contractor and/or staff to implement the transfer of duties. The transition plan may include, but is not limited to the following:

a. Prior to the expiration of the Contract term, the Lottery will award a new contract. Commencing at least six (6) months prior to termination and continuing through the effective date of termination, Contractor shall provide the Lottery with termination assistance. In addition, Contractor shall provide, upon the Lottery's request, termination assistance for up to six (6) months following the date of termination.

b. In the event of turnover, the Contractor shall prepare at no cost, in a format that is acceptable to the Lottery, all data for transfer to a new contractor. All historical data shall be available for transfer no later than two (2) months prior to the termination of the Contract.

31.3. The Lottery shall have the right to extend offers of employment to any Contractor employees to protect the continuance of service to the Lottery. All non-competition agreements for such employees shall be disregarded in this case. Contractor shall provide reasonable access to these employees and will not interfere with the Lottery's efforts to hire them.


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31.4. Contractor will transition all dedicated equipment, furniture and fixtures produced specifically for the Lottery at the end of the Contract. Contractor will agree to leave said equipment certified for maintenance by the Contractor prior to transfer.

31.5. The Lottery shall have the option to assume contracts for any Services provided by third parties to the Contractor and used by the Contractor to provide Services to the Lottery, and the contracts between the Contractor and any third parties or Subcontractors shall be written so that they are assumable by the Lottery or new contractor assuming responsibility for any Services, at the sole option of the Lottery or that new contractor.

31.6. If the Contractor has incorporated the Lottery's network into a Contractor proprietary network, the Contractor will provide up to two (2) years continued network Services at the then current Contract rates for such service. This will permit the Lottery to establish a replacement capability in an orderly manner.

32. Vendor Performance Reports

32.1. Program management shall document Contractor performance, whether exemplary or needing improvement where corrective action is needed or desired. The Procurement Officer may contact the Contractor upon receipt of a performance report and may request corrective action. The Contractor shall provide a suggested corrective action plan to the Procurement Officer for approval.

33. Notices

33.1. Notices, requests, demands, consents, approvals, and other communications which may or are required to be served or given hereunder (for the purposes of this provisions collectively called 'Notices'), shall be in writing and shall be sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the party or parties to receive such notice as follows:

33.1.1. If intended for the Lottery, to: Procurement Officer Arizona Lottery 4740 East University Drive Phoenix, AZ 85034

33.1.2. If intended for the Contractor, to that information listed in the Offer, in the format below: The Contractor Company Name Attention: Contractor Contact Address City, State, Zip

33.1.3. Or to such other address as either party may from time to time furnish in writing to the other by notice hereunder. Any notice so mailed shall be deemed to have been given as of the date such notice is received as shown on the return receipt. Furthermore, such notice may be given by delivering personally such notice, if intended for the Lottery, to Procurement Officer and, if intended for the Contractor, to the Contract Officer named on the Offer & Contract Award of this Contract, or to such other person as either party may from time to time furnish in writing to the other by notice hereunder. Any notice so delivered shall be deemed to have been given as of the date such notice is personally delivered to the other party.

34. Indemnification

34.1. Contractor shall defend, indemnify, and hold harmless the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees (hereinafter


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referred to as “Indemnitee”) from and against any and all claims, actions, liabilities, damages, losses, or expenses (including court costs, attorneys’ fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for bodily injury or personal injury (including death), or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of Contractor or any of its owners, officers, directors, agents, employees or Subcontractors. This indemnity includes any claim or amount arising out of, or recovered under, the Workers’ Compensation Law or arising out of the failure of such Contractor to conform to any federal, state or local law, statute, ordinance, rule, regulation or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by Contractor from and against any and all claims. It is agreed that Contractor will be responsible for primary loss investigation, defense and judgment costs where this indemnification is applicable. In consideration of the award of this Contract, the Contractor agrees to waive all rights of subrogation against the State of Arizona, its officers, officials, agents and employees for losses arising from the work performed by the Contractor for the State of Arizona.

34.2. The indemnification obligations listed in this Contract include the provisions that, as an independent contractor, the Contractor shall assume all legal and financial responsibility relating to Contractor’s employees for salaries, wages, bonuses, retirement, minimum wage requirements, overtime, withholdings, taxes, FICA, employee fringe benefits, workmen's compensation, occupational disease compensation, unemployment compensation, employee insurance, and premiums appurtenant thereto, and the Contractor agrees to indemnify, save, and hold the Indemnitee, harmless from and against, any and all loss; cost (including attorney fees); and damage of any kind related to such matters.

35. Insurance Requirements

35.1. Contractor and Subcontractors shall procure and maintain until all of their obligations have been discharged, including any warranty periods under this Contract are satisfied, insurance against claims for injury to persons or damage to property which may arise from or in connection with the performance of the work hereunder by the Contractor, his agents, representatives, employees or Subcontractors.

35.2. The insurance requirements herein are minimum requirements for this Contract and in no way limit the indemnity covenants contained in this Contract. The State of Arizona in no way warrants that the minimum limits contained herein are sufficient to protect the Contractor from liabilities that might arise out of the performance of the work under this Contract by the Contractor, its agents, representatives, employees or Subcontractors, and Contractor is free to purchase additional insurance.

35.3. Minimum Scope and Limits of Insurance: Contractor shall provide coverage with limits of liability not less than those stated below.

35.3.1. Commercial General Liability – Occurrence Form

Policy shall include bodily injury, property damage, personal and advertising injury and products and completed operations.

General Aggregate $2,000,000

Products – Completed Operations Aggregate $1,000,000

Personal and Advertising Injury $1,000,000

Damage to Rented Premises $ 50,000

Each Occurrence $1,000,000

The policy shall be endorsed, as required by this written agreement to include: “The State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as additional insureds with respect to liability arising out of the activities performed by or on behalf of the Contractor.”


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Policy shall contain a waiver of subrogation endorsement as required by this written agreement in favor of the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees” for losses arising from work performed by or on behalf of the Contractor.

35.3.2. Umbrella/Excess Liability

Policy shall be in the minimum amount of ten million dollars ($10,000,000) in excess of Commercial General Liability, Automobile Liability and Employers’ Liability.

The policy shall be endorsed, as required by this written agreement to include: “The State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as additional insureds with respect to liability arising out of the activities performed by or on behalf of the Contractor.”

The policy shall contain a waiver of subrogation endorsement as required by this written agreement in favor of the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees” for losses arising from work performed by or on behalf of the Contractor.

35.3.3. Business Automobile Liability

Bodily Injury and Property Damage for any owned, hired, and/or non-owned vehicles used in the performance of this Contract.

Combined Single Limit (CSL) $1,000,000

The policy shall be endorsed as required by this written agreement to include “The State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as additional insureds with respect to liability arising out of the activities performed by or on behalf of the Contractor, involving automobiles owned, leased, hired or borrowed by the Contractor.”

Policy shall contain a waiver of subrogation endorsement as required by this written agreement in favor of “The State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees” for losses arising from work performed by or on behalf of the Contractor.

35.3.4. Worker's Compensation and Employers' Liability

Workers' Compensation Statutory

Employers' Liability o Each Accident $1,000,000 o Disease – Each Employee $1,000,000 o Disease – Policy Limit $1,000,000

Policy shall contain a waiver of subrogation endorsement as required by written agreement in favor of “The State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees” for losses arising from work performed by or on behalf of the Contractor.

This requirement shall not apply to: Separately, EACH Contractor or Subcontractor exempt under A.R.S. § 23-901, AND when such Contractor or Subcontractor executes the appropriate waiver (Sole Proprietor/Independent Contractor) form.


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35.3.5. Professional Liability

Each Claim $5,000,000

Annual Aggregate $5,000,000

In the event that the professional liability insurance required by this Contract is written on a claims-made basis, Contractor warrants that any retroactive date under the policy shall precede the effective date of this Contract; and that either continuous coverage will be maintained or an extended discovery period will be exercised for a period of two (2) years beginning at the time work under this Contract is completed.

The policy shall cover professional misconduct or negligent acts for those positions defined in the Scope of Work of this Contract.

35.3.6. Network Security (Cyber) and Privacy Liability

Each Claim $2,000,000

Annual Aggregate $2,000,000

Such insurance shall include but not be limited to coverage for third party claims and losses with respect to network risks (such as data breaches, unauthorized access or use, ID theft, theft of data) and invasion of privacy regardless of the type of media involved in the loss of private information, crisis management and identity theft response costs - includes breach notification costs, credit remediation and credit monitoring, defense and claims expenses, regulatory defense costs plus fines and penalties, cyber extortion, computer program and electronic data restoration expenses coverage (data asset protection), network business interruption, computer fraud coverage, and funds transfer loss.

In the event that the Network Security and Privacy Liability insurance required by this Contract is written on a claims-made basis, Contractor warrants that any retroactive date under the policy shall precede the effective date of this Contract; and that either continuous coverage will be maintained or an extended discovery period will be exercised for a period of two (2) years beginning at the time work under this Contract is completed.

35.4. FIDELITY BOND

35.4.1. The limit required should be adjusted based on the amount of cash or securities being handled by the Contractor subject to a minimum of five million dollars ($5,000,000). The contract number and contract performance dates must be specified in the guarantee instrument and the guarantee must be kept in effect throughout the full contract performance period.

a. Coverage amount is five million dollars ($5,000,000).

b. Coverage should include but is not limited to:

i. Employee Dishonesty (to include coverage for theft and mysterious disappearance and inventory storage).

ii. Money & Securities Inside/Outside

iii. Computer Fraud

iv. Funds Transferred (if applicable)

v. Forgery or Alteration

c. The policy shall be endorsed to include the State of Arizona (and the respective agency) as Loss Payee.


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35.5. Performance Bond: Within thirty (30) days of Contract award, the Contractor must provide a performance bond in an amount not less than five million dollars ($5,000,000) for the duration of the Contract term and conditioned on the Contractor’s faithful performance.

35.6. Additional Insurance Requirements: The policies shall include, or be endorsed as required by written agreement to include, the following provisions:

35.6.1. The Contractor's policies shall stipulate that the insurance afforded the Contractor shall be primary insurance and that any insurance carried by the Department, its agents, officials, employees or the State of Arizona shall be excess and not contributory insurance, as provided by A.R.S. § 41-621(E).

35.6.2. Insurance provided by the Contractor shall not limit the Contractor’s liability assumed under the indemnification provisions of this Contract.

35.7. Notice of Cancellation: For each insurance policy required by the insurance provisions of this Contract, the Contractor must provide to the Lottery, within two (2) business days of receipt, a notice if a policy is suspended, voided or cancelled for any reason. Such notice shall be mailed, emailed, hand delivered or sent by facsimile transmission to the Procurement Officer.

35.8. Acceptability of Insurers: Contractors insurance shall be placed with companies duly licensed in the State of Arizona or hold approved non-admitted status on the Arizona Department of Insurance List of Qualified Unauthorized Insurers. Insurers shall have an “A.M. Best” rating of not less than A- VII or duly authorized to transact Workers’ Compensation insurance in the State of Arizona. The State of Arizona in no way warrants that the above-required minimum insurer rating is sufficient to protect the Contractor from potential insurer insolvency.

35.9. Verification of Coverage: Contractor shall send certificates of insurance valid (ACORD form or equivalent approved by the State of Arizona) as required by this Contract to Richard Crago, Arizona Lottery, and 4740 East University Drive, Phoenix AZ 85034. The certificates for each insurance policy are to be signed by an authorized representative. The project/Contract number and project description shall be noted on the certificate of insurance. The Lottery reserves the right to require complete, certified copies of all insurance policies required by this Contract at any time. DO NOT SEND CERTIFICATES OF INSURANCE TO THE RISK MANAGEMENT DIVISION OF THE STATE OF ARIZONA.

35.9.1. All certificates and endorsements as required by this written agreement are to be received and approved by the Lottery before work commences. Each insurance policy required by this Contract must be in effect at or prior to commencement of work under this Contract. Failure to maintain the insurance policies as required by this Contract, or to provide evidence of renewal, is a material breach of this Contract.

35.10. Contractors/Subcontractors: Contractors’ certificate(s) shall include all Subcontractors as insureds under its policies or Contractor shall be responsible for ensuring and/or verifying that all Subcontractors have collectable insurance as evidenced by the certificate of insurance and endorsements for each Subcontractor. All coverages for Subcontractors shall be subject to the minimum insurance requirements identified above. The Department reserves the right to require, at any time, proof from the Contractor that its Subcontractors have the required coverage.

35.11. Approval and Modifications: The Contracting agency in consultation with the Department of Administration, Risk Management Division reserves the right to review, or make modifications to the insurance limits, required coverages or endorsements throughout the life of this Contract as deemed necessary. In such event, the Lottery shall provide the Contractor with written notice of such and Contractor shall comply within thirty (30) days of receipt thereof. Such action will not require a formal Contract amendment, but may be made by administrative action.


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35.12. Exceptions: In the event the Contractor or Subcontractor(s) is/are a public entity, then the Insurance Requirements shall not apply. Such public entity shall provide a Certificate of Self-Insurance. If the Contractor or Subcontractor(s) is/are a State of Arizona agency, board, commission, or university, none of section 35 shall apply.

36. Audit Requirements

36.1. If the Contractor does not desire to retain the audit documentation in its entirety for a period of five (5) years from the date of the audit report as required by the Audit section of the Uniform Terms and Conditions, the documentation shall be given to the Auditor General for safekeeping.

36.2. Arizona Revised Statute, Title V, requires an annual audit of the Lottery fund. An independent verification and review of the existence and reliability of the Contractor’s policies, procedures, and controls may be included in this annual audit. The scope of the Lottery’s financial audit and the Contractor’s portion, if any, shall be determined annually. The cost of the Contractor’s portion of the audit shall be the responsibility of the Contractor. In the event the independent third party makes recommendations for change and the Lottery concurs, the Contractor shall be required to comply with the recommendations. All costs for implementing such recommendations shall be the responsibility of the Contractor.

36.3. If the Contractor is a publically traded company, the Contractor shall provide the Lottery with Securities and Exchange Commission (“SEC”) 10-K reports (or the appropriate non-U.S. equivalent) as they are issued, together with any reports required pursuant to Section 13 of the Securities and Exchange Act of 1934, as amended.

36.4. Contractor Internal Audit

36.4.1. Any security or performance audits conducted regarding the Contractor's site will be provided to the Lottery within thirty (30) days of receipt by Contractor.

36.4.2. The Contractor must respond in writing to any non-compliance issues or findings and must provide to the Lottery a plan for corrective action within a reasonable time frame.

37. Contractor Qualifications/Requirements/Warranties

37.1. Financial Soundness. The Contractor must be financially stable and able to substantiate the financial stability of its company. If requested, current financial statements or other financial information deemed appropriate documenting financial soundness must be provided within five (5) business days of request. The Lottery reserves the right to request additional documentation from the Contractor, regarding financial stability or reports on financial stability from independent financial rating services. The Lottery reserves the right to reject Contractor if it does not demonstrate financial stability sufficient for the scope of this Contract. The Lottery must be notified in writing of any substantial change in the Contractor's financial condition during the term of the Contract. Failure to notify the Lottery of such a substantial change in financial condition will be sufficient grounds for terminating the Contract.

37.2. Licenses. Contractor shall maintain in current status all federal, state, and local licenses and permits required for the operation of the business conducted by the Contractor. The Contractor must be authorized to do business in Arizona.

37.3. Vendor Registration. Prior to issuance of a Purchase Order or Invoice and subsequent payment and/or formal award, the Contractor shall have a completed STATE OF ARIZONA SUBSTITUTE W-9 FORM on file with the State. No payments shall be made until the form is on file. The STATE OF ARIZONA SUBSTITUTE W-9 FORM will be provided to the Contractor at the time of Award and must be completely filled out and returned prior to the start of any project for the Lottery.

37.4. Minimum Qualifications. All Services performed under this Contract shall conform to the requirements of


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this Contract and shall be performed by qualified personnel in accordance with the highest professional standards. The Contractor shall assign specific individuals to Key Personnel positions.

37.5. Local Maintenance. In order to assure that any ensuing Contract will provide the necessary maintenance support required for the equipment specified, each potential Contractor must have local maintenance facilities or have specific agreements in force with a third party to provide local maintenance. Each maintenance facility must be staffed by trained technicians and have sufficient inventory parts in order to provide quality service on the equipment specified. The Lottery may inspect the maintenance facilities to determine adequacy.

37.6. Key Personnel. The Contractor agrees and understands that the Lottery's agreement to the Contract is predicated, in part and among other considerations, on the utilization of the specific individual(s) and/or personnel qualification(s) as identified and/or described in the Contractor's proposal ("Key Personnel"). The Contractor agrees to reveal its staffing levels by function, including resumes, before award of the Contract and, upon request by the Lottery, at any time after award of the Contract. The Lottery reserves the right to require the Contractor to reassign or otherwise remove any Key Personnel assigned to the Lottery who are found unacceptable. Contractor agrees that no substitution of such specified individuals and/or personnel qualifications shall be made without the prior written approval of the Lottery. The Contractor further agrees that any substitution made pursuant to this paragraph must be equal or better than originally proposed and that the Lottery's approval of a substitution shall not be construed as an acceptance of the substitution's performance potential.

37.6.1. If Key Personnel are not available for work under this Contract for a continuous period exceeding thirty (30) calendar days, or are expected to devote substantially less effort to the work than initially anticipated, the Contractor shall immediately notify the Lottery, and shall, subject to the concurrence of the Lottery, replace such personnel in accordance with the requirements herein.

37.6.2. A Contractor’s request for the removal or diversion of Key Personnel from the Contract shall be submitted fourteen (14) calendar days in advance of the anticipated change, and include the name of the proposed replacement employee, a work history, and a completed OFFEROR’S PERSONNEL QUALIFICATIONS QUESTIONNAIRE. Before the Contractor’s personnel are assigned to tasks specified herein, the Lottery shall have the right to review the qualifications and experience of all personnel and to conduct personnel interviews. Notwithstanding anything contained in this Contract to the contrary, the Contractor shall have the right to remove Key Personnel for cause immediately. The removal for cause and the grounds therefore will be reported to the Lottery within twenty-four (24) hours of removal. The Lottery agrees that an approval of a substitution will not be unreasonably withheld.

37.6.3. The Contractor shall provide mentally alert, physically fit, adequately trained, experienced, responsible, and qualified adult personnel to perform the required contracted Services in a safe, orderly, and timely manner.

37.6.4. Employees, while on duty, shall be appropriately dressed in clothing/uniform and may be required to wear an identification-patch.

37.6.5. Only employees of the Contractor designated with an identification patch/uniform will be allowed in the work locations during working hours. Visitors, wives, husbands, or children of the Contractor or Contractor's employees will not be allowed in the work location.

37.6.6. Security Clearance. A security clearance shall be required of all Key Personnel who will have access to the facilities or operations of the Lottery and/or of the Contractor's site serving this Contract as described in the Scope of Work. Over the life of the Contract, information on new Key Personnel must be submitted as soon as possible, but prior to Key Personnel beginning work at the site(s). Access to Key Personnel is to be denied until those individuals have been security-cleared by the Lottery. The Lottery reserves the right to review all


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security clearances and to disapprove any Key Personnel. The Lottery may reject the assignment of any Key Personnel (or any Subcontractor or consultant who is an officer, partner, or is Key Personnel under this Contract), who has been convicted of any felony, or a misdemeanor involving moral turpitude within seven (7) years of the date of this Contract or during the term of this Contract.

37.6.7. The Contractor shall actively and directly supervise all staff consistent with the terms of the Contract.

37.6.8. The Lottery shall have final determination of resource sufficiency and may require the Contractor to provide additional staffing to meet agreed-upon production schedules. In the event the Contractor is unable to provide sufficient resources, the Lottery reserves the right to obtain these Services from another source. The Contractor shall be responsible for all costs associated with the Lottery's acquisition of these Services.

37.6.9. Key Personnel, including partners, temporary employees, Subcontractors, and consultants involved in the performance of this Contract shall be prohibited from (a) purchasing any AZ Lottery tickets, including draw games offered by another state lottery which are also offered by the AZ Lottery (such as Powerball); (b) playing any AZ Lottery games; and/or (c) entering any AZ Lottery promotions during the period of this Contract. This prohibition shall include any spouse, child, sibling, or parent residing as a member of the primary household of such Key Personnel. No AZ Lottery prize shall be paid to any of the above persons. The Contractor shall ensure that this requirement is made known to all Key Personnel involved in the performance of this Contract.

37.7. Warranty. The Contractor guarantees the work against all defects in Materials and workmanship which develop or are discovered within one year from the date of repair, including after final termination of the Contract.

37.7.1. Warranty Work. When a warranty is provided, repairs or replacements shall not be delayed while the Contractor determines warranty coverage for equipment or Services.

37.7.2. Replacement. All parts, components, devices and equipment related to the listed equipment that are worn or not in operational condition shall be repaired or replaced with new parts at no additional cost.

38. Payments / Method Of Compensation

38.1. The Contractor will be reimbursed based on the rates established by the approved Pricing Schedule contained herein. Upon receipt of a valid invoice and any required reporting documents, the Lottery shall reimburse the Contractor in accordance with the Contract Uniform Terms and Conditions, Paragraph 4. Costs and Payments, for actual, allowable costs incurred in the delivery of services identified in the Scope of Work during the term of this Contract.

38.1.1. In addition to the base contract rate established on the Price Sheets, Contractor may have the opportunity to earn a bonus if fund transfers to the state increase year-over-year. The structure, basis, and amount of the bonus will be determined by the Lottery, in its sole discretion, from year to year.

38.2. Prompt payment discounts of thirty (30) days or more set forth in an Offer shall be deducted from the offer for the purposes of evaluating that price.

38.3. Under no circumstances shall the Lottery authorize payment to the Contractor that exceeds the amount specified in this Contract without an approved written amendment to this Contract.


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39. Adjustments to Payment

39.1. Work will be completed in a responsible and professional manner in accordance with the requirements incorporated in the assignment. Determination of acceptability of work will be made by the Lottery. If the Contractor is in any manner in default in the performance of any obligation under this Contract, the Lottery may, at its option and in addition to other remedies, adjust or withhold payment until satisfactory resolution of the default. The Contractor shall have the right to written notice of the Lottery’s action in adjusting or withholding payment. Under no circumstances shall the Lottery authorize payment to the Contractor that exceeds the amount specified in this Contract without an approved written amendment to this Contract. The Lottery may, at its option, withhold all payment for any task order under this Contract until it has received all final reports and deliverables required by the task order.

40. Liquidated Damages

40.1. Liquidated Damages, General. The parties to this Contract understand and agree that:

40.1.1. The equipment and services provided under this contract must be extremely reliable as described in the scope of work;

40.1.2. Any contract delay or breach by the Contractor will disrupt the Lottery's operations and may lead to damages;

40.1.3. Proving those damages will be extremely impractical and difficult and the goods and services under this contract are not readily available on the open market;

40.1.4. The parties will use established liquidated damages formulae to resolve issues that arise under certain specified damages categories;

40.1.5. The parties agree that actions that are attributable to subcontractors' performance will not excuse liability for liquidated damages; and

40.1.6. The parties agree that the liquidated damages established by this section are fair and reasonable.

40.2. Rights Reserved to the Lottery. The Lottery reserves the right, at its sole discretion:

40.2.1. To determine the existence of any factors relevant to the assessment of liquidated damages (such as the fact or length of downtime, degraded performance, or number of affected employees);

40.2.2. To assess liquidated damages under each section applicable to any given incident, and to calculate any liquidated damages assessment based on the cumulative effect of two or more damages categories;

40.2.3. To offset the contractual liquidated damages owed to the Arizona Lottery with specialized services or equipment offered by the Contractor of equal value;

40.2.4. To waive any liquidated damages as determined by the Lottery, but the waiver of any liquidated damages due the Lottery shall constitute a waiver only as to such liquidated damages and not a waiver of any future liquidated damages;

40.3. The assessment of liquidated damages will be in addition to, and not in lieu of, such other remedies as may be available to the Lottery.

40.4. Notification of Liquidated Damages. Upon determination that liquidated damages are to be assessed, the


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Lottery shall notify the Contractor of the assessment in writing.

40.5. Severability of Liquidated Damages Clauses. If any clause of this provision is determined to be unenforceable, the remainder of the provision will remain in effect.

40.6. Assessment of Liquidated Damages - Categories and Standards. Liquidated damages may be assessed as described in the following categories:

40.6.1. Initial Startup. Contractor fails to have all systems, hardware, software, equipment, staffing for territory managers, inventory management, telemarketing, validation, reports, security and accepted invited options tested, accepted, installed, and integrated with the online gaming system contractor as provided in the written timeline submitted by Contractor and approved by the Lottery completely operational at the start of business on August 28, 2016, or the date determined by the Lottery.

40.6.2. Operational Interruption. During the new contract configuration phase-in period, before initial startup, the Contractor performs activity that results in interruption of the normal operation of the Lottery's game management system or on-line system.

40.6.3. Network Changes. Contractor fails to receive approval from the Lottery prior to making any network changes.

40.6.4. Unauthorized Modification. The Contractor shall not modify any software or suppress any system functions or features, replace a program or implement a software version that is different from the approved final test version without the Lottery's prior written consent.

40.6.5. System Degraded Performance. Degraded Performance occurs when one or more of the following take place: The system cannot perform all game functions including validations, pack/ticket functions and reports as specified in the Contract. During the daily operational sales period, the system degraded performance may not exceed 2 minutes per day.

40.6.6. Production System Failover Failure. Contractor fails to transfer without loss of data from the primary system to the secondary system within two (2) minutes.

40.6.7. Delayed Project Implementation. Contractor fails to perform an error free and timely project implementation according to the approved plan, or Contractor fails to obtain an agreed upon alternate schedule in writing prior to the date of implementation.

40.6.8. Essential Files/Reports. The Contractor fails to produce and deliver timely, sufficient, accurate and unaltered reports, including data transmissions, within the timeframes and descriptions agreed to by the Lottery and the Contractor. A specific list of essential files/reports will be provided during the startup period. As required by lottery operational needs, the initial essential files/reports may be supplemented, modified or deleted.

40.6.9. Availability of Recorded Calls. The Contractor fails to record telemarketing calls or make the recorded calls available to the Lottery within twenty-four (24) hours of request.

40.6.10. Access Failure. Contractor fails to ensure authorized Lottery personnel are allowed facility access.

40.6.11. Approved Security System. Contractor fails to provide security for the computer room, warehouse, office, and service facilities in accord with instructions specified by the Lottery.

40.6.12. Security Reporting Requirements. Contractor fails to abide by the contract's security reporting requirements.


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40.6.13. Unauthorized Access to Restricted Areas. The Contractor fails to limit or control unauthorized persons from accessing the facility or restricted areas within the facility. The Contractor fails to ensure that only persons who have written clearance from the Lottery Director of Security have access.

40.6.14. Unauthorized Access to Computer Systems. The Contractor allows unauthorized personnel access to any computer system without prior written approval from the Lottery Director of Security.

40.6.15. Access to Production Computer System. The Contractor fails to obtain a verbal or signed approval for access to the production computer systems from the IT Director. Automated e-mail notification of all access must be sent the Lottery designated personnel.

40.6.16. Contract Transition. The Contractor fails to cooperate fully with the Lottery throughout the contract transition and provide the contract services without interruption and without disrupting any other Lottery contractor during transition.

40.6.17. Corporate or Chain Account Presentation Materials – Contractor fails to provide to the Lottery copies of the corporate or chain account presentation materials five (5) days before the annual corporate accounts meeting.

40.6.18. Corporate or Chain Account Response Presentation Materials - Contractor fails to provide to the Lottery copies of the corporate or chain account response presentation materials twenty-four (24) hours prior to a meeting set in response to a corporate or chain retailer request.

40.6.19. Train new retailers – Contractor fails to train new retailers on products, promotions, ticket procedures, and regulatory requirements on the schedule defined by the Lottery.

40.6.20. Retailer visit – Contractor fails to visit each retailer on the schedule defined by the Lottery.

40.6.21. Return Tickets – Contractor fails to remove inventory from retailers of closed games within forty-five (45) days of game ending date.

40.6.22. Promotional Events – Contractor fails to support a scheduled promotional event as directed by the Lottery.

40.6.23. Out-of-stocks – Contractor fails to maintain the out-of-stock percentage goal as set by the Lottery.

40.7. Payment of Liquidated Damages

40.7.1. The Contractor shall pay the balance to the AZ Lottery within thirty (30) calendar days of written demand for payment from the AZ Lottery

40.7.2. If the amount due is not paid in full, the balance will be deducted from subsequent payments to the Contractor. At the Lottery's sole option, the Lottery may obtain payment of assessed liquidated damages through one or more claims upon the Performance Bond or by acceptance of materials or services of an amount equal in value to the assessed liquidated damages.

40.8. Assessment of Liquidated Damages Amounts and Formulae. The Lottery may assess liquidated damages in the following damages categories, in maximum amounts that are calculated consistent with the following formulae:


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Section Damages Category Damages Assessment Formula & Maximum Damages

40.6.1 Initial Start Up Staff Productivity Formula applied.

40.6.2 Operation Interruption Average hourly sales as calculated by the Lottery.

40.6.3 Network Changes Staff Productivity Formula applied.

40.6.4 Unauthorized Modification Staff Productivity Formula applied.

40.6.5 System Degraded Performance Average sales lost per minute for each minute of downtime after 5-minute grace period, or Retailer Productivity Formula for each minute after 5-minute grace period.

40.6.6 Production System Failover Failure Average sales lost per minute for each minute of downtime after 5-minute grace period.

40.6.7 Delayed Project Implementation Staff Productivity Formula applied.

40.6.8 Essential Files/Reports $100 per hour per file/report for any delay until the file/report is provided.

40.6.9 Availability of Recorded Calls $100 if calls not recorded. $100 per day for each day not provided after the first 24 hours.

40.6.10 Access Failure $1,000 per each occurrence, until access is provided.

40.6.11 Approved Security System $1,000 per day.

40.6.12 Security Reporting Requirements $2,000 per occurrence.

40.6.13 Unauthorized Access to Restricted Areas

$2,000 per occurrence.

40.6.14 Unauthorized Access to Computer Systems


40.6.15 Access to Production Computer System


40.6.16 Contract Transition The applicable Retailer Productivity Formula or Staff Productivity Formula applied.

40.6.17 Corporate or Chain Account Presentation Materials

$3,000 per incident

40.6.18 Corporate or Chain Account Response Presentation Materials

$3,000 per incident

40.6.19 Train New Retailers Average retailer sales per day for every day training is delayed

40.6.20 Retailer Visit $100 per incident

40.6.21 Return Tickets $1,500 for each day of delay beyond the 45-day deadline

40.6.22 Promotional Events $5,000 per incident related to Third-Party Events or Event Promotions, $500 per incident related to SNAP or in-store promotions

40.6.23 Out-of-Stocks $3,000 per every 0.1% that the average out-of-stock percentage exceeds the out-of-stock percentage goal within a measurement period, with a maximum of $60,000 per Contract year

Uniform Terms and Conditions ARIZONA LOTTERY 4740 E. University Dr.

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UNIFORM TERMS AND CONDITIONS

1. Definition of Terms

1.1. As used in this Solicitation and any resulting Contract, the terms listed below are defined as follows:

1.1.1. “Attachment” means any item the Solicitation requires the Offeror to submit as part of the Offer.

1.1.2. “Contract” means the combination of the Solicitation, including the Uniform and Special Instructions to Offerors, the Uniform and Special Terms and Conditions, and the Specifications and Statement or Scope of Work; the Offer and any Best and Final Offers; and any Solicitation Amendments or Contract Amendments.

1.1.3. "Contract Amendment" means a written document signed by the Procurement Officer that is issued for the purpose of making changes in the Contract.

1.1.4. “Contractor” means any person who has a Contract with the State.

1.1.5. “Days” means calendar days unless otherwise specified.

1.1.6. “Exhibit” means any item labeled as an Exhibit in the Solicitation or placed in the Exhibits section of the Solicitation.

1.1.7. “Gratuity” means a payment, loan, subscription, advance, deposit of money, services, or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value is received.

1.1.8. “Materials” means all property, including equipment, supplies, printing, insurance and leases of property but does not include land, a permanent interest in land or real property or leasing space.

1.1.9. “Procurement Officer” means the person, or his or her designee, duly authorized by the State to enter into and administer Contracts and make written determinations with respect to the Contract.

1.1.10. “Services” means the furnishing of labor, time or effort by a Contractor or Subcontractor which does not involve the delivery of a specific end product other than required reports and performance, but does not include employment agreements or collective bargaining agreements.

1.1.11. “Subcontract” means any contract, express or implied, between the Contractor and another party or between a Subcontractor and another party delegating or assigning, in whole or in part, the making or furnishing of any material or any service required for the performance of the Contract.

1.1.12. “State” means the State of Arizona and Department or Agency of the State that executes the Contract.

1.1.13. “State Fiscal Year” means the period beginning with July 1 and ending June 30.

2. Contract Interpretation

2.1. Arizona Law. The Arizona law applies to this Contract including, where applicable, the Uniform


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Commercial Code as adopted by the State of Arizona, the Lottery Procurement Code, A.A.C. §19-3-501, et seq., and, when incorporated by reference, the Arizona Procurement Code, A.R.S. Title 41, Chapter 23, and it’s implementing rules, A.A.C. Title 2, Chapter 7.

2.2. Implied Contract Terms. Each provision of law and any terms required by law to be in this Contract are a part of this Contract as if fully stated in it.

2.3. Contract Order of Precedence. In the event of a conflict in the provisions of the Contract, as accepted by the State and as they may be amended, the following shall prevail in the order set forth below:

2.3.1. Special Terms and Conditions;

2.3.2. Uniform Terms and Conditions;

2.3.3. Statement or Scope of Work;

2.3.4. Specifications;

2.3.5. Attachments;

2.3.6. Exhibits;

2.3.7. Documents referenced or included in the Solicitation.

2.4. Relationship of Parties. The Contractor under this Contract is an independent Contractor. Neither party to this Contract shall be deemed to be the employee or agent of the other party to the Contract.

2.5. Severability. The provisions of this Contract are severable. Any term or condition deemed illegal or invalid shall not affect any other term or condition of the Contract.

2.6. No Parole Evidence. This Contract is intended by the parties as a final and complete expression of their agreement. No course of prior dealings between the parties and no usage of the trade shall supplement or explain any terms used in this document and no other understanding either oral or in writing shall be binding.

2.7. No Waiver. Either party’s failure to insist on strict performance of any term or condition of the Contract shall not be deemed a waiver of that term or condition even if the party accepting or acquiescing in the nonconforming performance knows of the nature of the performance and fails to object to it.

3. Contract Administration and Operation

3.1. Records. Under A.R.S. § 35-214 and § 35-215, the Contractor shall retain and shall contractually require each Subcontractor to retain all data and other “records” relating to the acquisition and performance of the Contract for a period of five years after the completion of the Contract. All records shall be subject to inspection and audit by the State at reasonable times. Upon request, the Contractor shall produce a legible copy of any or all such records.

3.2. Non-Discrimination. The Contractor shall comply with State Executive Order No. 2009-09 and all other applicable Federal and State laws, rules and regulations, including the Americans with Disabilities Act.

3.3. Audit. Pursuant to ARS § 35-214, at any time during the term of this Contract and five (5) years thereafter, the Contractor’s or any Subcontractor’s books and records shall be subject to audit by the State and, where applicable, the Federal Government, to the extent that the books and records relate to the performance of the Contract or Subcontract.


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3.4. Facilities Inspection and Materials Testing. The Contractor agrees to permit access to its facilities, Subcontractor facilities and the Contractor’s processes or Services, at reasonable times for inspection of the facilities or Materials covered under this Contract. The State shall also have the right to test, at its own cost, the Materials to be supplied under this Contract. Neither inspection of the Contractor’s facilities nor Materials testing shall constitute final acceptance of the Materials or Services. If the State determines non-compliance of the Materials, the Contractor shall be responsible for the payment of all costs incurred by the State for testing and inspection.

3.5. Notices. Notices to the Contractor required by this Contract shall be made by the State to the person indicated on the Offer and Acceptance form submitted by the Contractor unless otherwise stated in the Contract. Notices to the State required by the Contract shall be made by the Contractor to the Solicitation Contact Person indicated on the Solicitation cover sheet, unless otherwise stated in the Contract. An authorized Procurement Officer and an authorized Contractor representative may change their respective person to whom notice shall be given by written notice to the other and an amendment to the Contract shall not be necessary.

3.6. Advertising, Publishing and Promotion of Contract. The Contractor shall not use, advertise or promote information for commercial benefit concerning this Contract without the prior written approval of the Procurement Officer.

3.7. Property of the State. Any Materials, including reports, computer programs and other deliverables, created under this Contract are the sole property of the State. The Contractor is not entitled to a patent or copyright on those Materials and may not transfer the patent or copyright to anyone else. The Contractor shall not use or release these Materials without the prior written consent of the State.

3.8. Ownership of Intellectual Property. Any and all intellectual property, including but not limited to copyright, invention, trademark, trade name, service mark, and/or trade secrets created or conceived pursuant to or as a result of this Contract and any related Subcontract (“Intellectual Property”), shall be work made for hire and the State shall be considered the creator of such Intellectual Property. The agency, department, division, board or commission of the State of Arizona requesting the issuance of this Contract shall own (for and on behalf of the State) the entire right, title and interest to the Intellectual Property throughout the world. Contractor shall notify the State, within thirty (30) days, of the creation of any Intellectual Property by it or its Subcontractor(s). Contractor, on behalf of itself and any Subcontractor(s), agrees to execute any and all document(s) necessary to assure ownership of the Intellectual Property vests in the State and shall take no affirmative actions that might have the effect of vesting all or part of the Intellectual Property in any entity other than the State. The Intellectual Property shall not be disclosed by Contractor or its Subcontractor(s) to any entity not the State without the express written authorization of the agency, department, division, board or commission of the State of Arizona requesting the issuance of this Contract.

3.9. Federal Immigration and Nationality Act. The Contractor shall comply with all federal, state and local immigration laws and regulations relating to the immigration status of their employees during the term of the Contract. Further, the Contractor shall flow down this requirement to all Subcontractors utilized during the term of the Contract. The State shall retain the right to perform random audits of Contractor and Subcontractor records or to inspect papers of any employee thereof to ensure compliance. Should the State determine that the Contractor and/or any Subcontractors be found noncompliant, the State may pursue all remedies allowed by law, including, but not limited to; suspension of work, termination of the Contract for default and suspension and/or debarment of the Contractor.

3.10. E-Verify Requirements. In accordance with A.R.S. § 41-4401, Contractor warrants compliance with all Federal immigration laws and regulations relating to employees and warrants its compliance with A.R.S. § 23-214, Subsection A.

3.11. Offshore Performance of Work Prohibited.

3.11.1. Any Services that are described in the specifications or scope of work that directly serve the


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State of Arizona or its clients and involve access to secure or sensitive data or personal client data shall be performed within the defined territories of the United States. Unless specifically stated otherwise in the specifications, this paragraph does not apply to indirect or 'overhead' Services, redundant back-up Services or Services that are incidental to the performance of the Contract. This provision applies to work performed by Subcontractors at all tiers.

4. Costs and Payments

4.1. Payments. Payments shall comply with the requirements of A.R.S. Titles 35 and 41, Net 30 days. Upon receipt and acceptance of goods or Services, the Contractor shall submit a complete and accurate invoice for payment from the State within thirty (30) days.

4.2. Delivery. Unless stated otherwise in the Contract, all prices shall be F.O.B. Destination and shall include all freight delivery and unloading at the destination.

4.3. Applicable Taxes.

4.3.1. Payment of Taxes. The Contractor shall be responsible for paying all applicable taxes.

4.3.2. State and Local Transaction Privilege Taxes. The State of Arizona is subject to all applicable state and local transaction privilege taxes. Transaction privilege taxes apply to the sale and are the responsibility of the seller to remit. Failure to collect such taxes from the buyer does not relieve the seller from its obligation to remit taxes.

4.3.3. Tax Indemnification. Contractor and all Subcontractors shall pay all Federal, state and local taxes applicable to its operation and any persons employed by the Contractor. Contractor shall, and require all Subcontractors to hold the State harmless from any responsibility for taxes, damages and interest, if applicable, contributions required under Federal, and/or state and local laws and regulations and any other costs including transaction privilege taxes, unemployment compensation insurance, Social Security and Worker’s Compensation.

4.3.4. IRS W9 Form. In order to receive payment the Contractor shall have a current I.R.S. W9 Form on file with the State of Arizona, unless not required by law.

4.4. Availability of Funds for the Next State fiscal year. Funds may not presently be available for performance under this Contract beyond the current state fiscal year. No legal liability on the part of the State for any payment may arise under this Contract beyond the current state fiscal year until funds are made available for performance of this Contract.

4.5. Availability of Funds for the current State fiscal year. Should the State Legislature enter back into session and reduce the appropriations or for any reason and these goods or Services are not funded, the State may take any of the following actions:

4.5.1. Accept a decrease in price offered by the Contractor;

4.5.2. Cancel the Contract; or

4.5.3. Cancel the Contract and re-solicit the requirements.

5. Contract Changes

5.1. Amendments. This Contract is issued under the authority of the Procurement Officer who signed this Contract. The Contract may be modified only through a Contract Amendment within the scope of the Contract. Changes to the Contract, including the addition of work or Materials, the revision of payment terms, or the substitution of work or Materials, directed by a person who is not specifically authorized by


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the procurement officer in writing or made unilaterally by the Contractor are violations of the Contract and of applicable law. Such changes, including unauthorized written Contract Amendments shall be void and without effect, and the Contractor shall not be entitled to any claim under this Contract based on those changes.

5.2. Subcontracts. The Contractor shall not enter into any Subcontract under this Contract for the performance of this Contract without the advance written approval of the Procurement Officer. The Contractor shall clearly list any proposed Subcontractors and the Subcontractor’s proposed responsibilities. The Subcontract shall incorporate by reference the terms and conditions of this Contract.

5.3. Assignment and Delegation. The Contractor shall not assign any right nor delegate any duty under this Contract without the prior written approval of the Procurement Officer. The State shall not unreasonably withhold approval.

6. Risk and Liability

6.1. Risk of Loss: The Contractor shall bear all loss of conforming material covered under this Contract until received by authorized personnel at the location designated in the purchase order or Contract. Mere receipt does not constitute final acceptance. The risk of loss for nonconforming Materials shall remain with the Contractor regardless of receipt.

6.2. Indemnification

6.2.1. Contractor/Vendor Indemnification (Not Public Agency). The parties to this Contract agree that the State of Arizona, its departments, agencies, boards and commissions shall be indemnified and held harmless by the Contractor for the vicarious liability of the State as a result of entering into this Contract. However, the parties further agree that the State of Arizona, its departments, agencies, boards and commissions shall be responsible for its own negligence. Each party to this Contract is responsible for its own negligence.

6.2.2. Indemnification - Patent and Copyright. The Contractor shall indemnify and hold harmless the State against any liability, including costs and expenses, for infringement of any patent, trademark or copyright arising out of Contract performance or use by the State of Materials furnished or work performed under this Contract. The State shall reasonably notify the Contractor of any claim for which it may be liable under this paragraph. If the Contractor is insured pursuant to A.R.S. § 41-621 and § 35-154, this section shall not apply.

6.3. Force Majeure

6.3.1. Except for payment of sums due, neither party shall be liable to the other nor deemed in default under this Contract if and to the extent that such party’s performance of this Contract is prevented by reason of force majeure. The term “force majeure” means an occurrence that is beyond the control of the party affected and occurs without its fault or negligence. Without limiting the foregoing, force majeure includes acts of God; acts of the public enemy; war; riots; strikes; mobilization; labor disputes; civil disorders; fire; flood; lockouts; injunctions-intervention-acts; or failures or refusals to act by government authority; and other similar occurrences beyond the control of the party declaring force majeure which such party is unable to prevent by exercising reasonable diligence.

6.3.2. Force Majeure shall not include the following occurrences:

a. Late delivery of equipment or Materials caused by congestion at a manufacturer’s plant or elsewhere, or an oversold condition of the market;

b. Late performance by a Subcontractor unless the delay arises out of a force majeure


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occurrence in accordance with this force majeure term and condition; or

c. Inability of either the Contractor or any Subcontractor to acquire or maintain any required insurance, bonds, licenses or permits.

6.3.3. If either party is delayed at any time in the progress of the work by force majeure, the delayed party shall notify the other party in writing of such delay, as soon as is practicable and no later than the following working day, of the commencement thereof and shall specify the causes of such delay in such notice. Such notice shall be delivered or mailed certified-return receipt and shall make a specific reference to this article, thereby invoking its provisions. The delayed party shall cause such delay to cease as soon as practicable and shall notify the other party in writing when it has done so. The time of completion shall be extended by Contract Amendment for a period of time equal to the time that results or effects of such delay prevent the delayed party from performing in accordance with this Contract.

6.3.4. Any delay or failure in performance by either party hereto shall not constitute default hereunder or give rise to any claim for damages or loss of anticipated profits if, and to the extent that such delay or failure is caused by force majeure.

6.4. Third Party Antitrust Violations. 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 Contract.

7. Warranties

7.1. Liens. The Contractor warrants that the Materials supplied under this Contract are free of liens and shall remain free of liens.

7.2. Quality. Unless otherwise modified elsewhere in these terms and conditions, the Contractor warrants that, for one year after acceptance by the State of the Materials, they shall be:

7.2.1. Of a quality to pass without objection in the trade under the Contract description;

7.2.2. Fit for the intended purposes for which the Materials are used;

7.2.3. Within the variations permitted by the Contract and are of even kind, quantity, and quality within each unit and among all units;

7.2.4. Adequately contained, packaged and marked as the Contract may require; and

7.2.5. Conform to the written promises or affirmations of fact made by the Contractor.

7.3. Fitness. The Contractor warrants that any material supplied to the State shall fully conform to all requirements of the Contract and all representations of the Contractor, and shall be fit for all purposes and uses required by the Contract.

7.4. Inspection/Testing. The warranties set forth in subparagraphs 7.1 through 7.3 of this paragraph are not affected by inspection or testing of or payment for the Materials by the State.

7.5. Compliance with Applicable Laws. The Materials and Services supplied under this Contract shall comply with all applicable Federal, state and local laws, and the Contractor shall maintain all applicable licenses and permit requirements.

7.6. Survival of Rights and Obligations after Contract Expiration or Termination.


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7.6.1. Contractor's Representations and Warranties. All representations and warranties made by the Contractor under this Contract shall survive the expiration or termination hereof. In addition, the parties hereto acknowledge that pursuant to A.R.S. § 12-510, except as provided in A.R.S. § 12-529, the State is not subject to or barred by any limitations of actions prescribed in A.R.S. Title 12, Chapter 5.

7.6.2. Purchase Orders. The Contractor shall, in accordance with all terms and conditions of the Contract, fully perform and shall be obligated to comply with all purchase orders received by the Contractor prior to the expiration or termination hereof, unless otherwise directed in writing by the Procurement Officer, including, without limitation, all purchase orders received prior to but not fully performed and satisfied at the expiration or termination of this Contract.

8. State's Contractual Remedies

8.1. Right to Assurance. If the State in good faith has reason to believe that the Contractor does not intend to, or is unable to perform or continue performing under this Contract, the Procurement Officer may demand in writing that the Contractor give a written assurance of intent to perform. Failure by the Contractor to provide written assurance within the number of Days specified in the demand may, at the State’s option, be the basis for terminating the Contract under the Uniform Terms and Conditions or other rights and remedies available by law or provided by the Contract.

8.2. Stop Work Order.

8.2.1. The State may, at any time, by written order to the Contractor, require the Contractor to stop all or any part, of the work called for by this Contract for period(s) of days indicated by the State after the order is delivered to the Contractor. The order shall be specifically identified as a stop work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage.

8.2.2. If a stop work order issued under this clause is canceled or the period of the order or any extension expires, the Contractor shall resume work. The Procurement Officer shall make an equitable adjustment in the delivery schedule or Contract price, or both, and the Contract shall be amended in writing accordingly.

8.3. Non-exclusive Remedies. The rights and the remedies of the State under this Contract are not exclusive.

8.4. Nonconforming Tender. Materials or Services supplied under this Contract shall fully comply with the Contract. The delivery of Materials or Services or a portion of the Materials or Services that do not fully comply constitutes a breach of contract. On delivery of nonconforming Materials or Services, the State may terminate the Contract for default under applicable termination clauses in the Contract, exercise any of its rights and remedies under the Uniform Commercial Code, or pursue any other right or remedy available to it.

8.5. Right of Offset. The State shall be entitled to offset against any sums due the Contractor, any expenses or costs incurred by the State, or damages assessed by the State concerning the Contractor’s non-conforming performance or failure to perform the Contract, including expenses, costs and damages described in the Uniform Terms and Conditions.

9. Contract Termination

9.1. Cancellation for Conflict of Interest. Pursuant to A.R.S. § 38-511, the State may cancel this Contract within three (3) years after Contract execution without penalty or further obligation if any person significantly involved in initiating, negotiating, securing, drafting or creating the Contract on behalf of the State is or becomes at any time while the Contract or an extension of the Contract is in effect an


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employee of or a consultant to any other party to this Contract with respect to the subject matter of the Contract. The cancellation shall be effective when the Contractor receives written notice of the cancellation unless the notice specifies a later time. If the Contractor is a political subdivision of the State, it may also cancel this Contract as provided in A.R.S. § 38-511.

9.2. Gratuities. The State may, by written notice, terminate this Contract, in whole or in part, if the State determines that employment or a Gratuity was offered or made by the Contractor or a representative of the Contractor to any officer or employee of the State for the purpose of influencing the outcome of the procurement or securing the Contract, an amendment to the Contract, or favorable treatment concerning the Contract, including the making of any determination or decision about Contract performance. The State, in addition to any other rights or remedies, shall be entitled to recover exemplary damages in the amount of three times the value of the Gratuity offered by the Contractor.

9.3. Suspension or Debarment. The State may, by written notice to the Contractor, immediately terminate this Contract if the State determines that the Contractor has been debarred, suspended or otherwise lawfully prohibited from participating in any public procurement activity, including but not limited to, being disapproved as a subcontractor of any public procurement unit or other governmental body. Submittal of an offer or execution of a Contract shall attest that the Contractor is not currently suspended or debarred. If the Contractor becomes suspended or debarred, the Contractor shall immediately notify the State.

9.4. Termination for Convenience. The State reserves the right to terminate the Contract, in whole or in part at any time when in the best interest of the State, without penalty or recourse. Upon receipt of the written notice, the Contractor shall stop all work, as directed in the notice, notify all Subcontractors of the effective date of the termination and minimize all further costs to the State. In the event of termination under this paragraph, all documents, data and reports prepared by the Contractor under the Contract shall become the property of and be delivered to the State upon demand. The Contractor shall be entitled to receive just and equitable compensation for work in progress, work completed and Materials accepted before the effective date of the termination. The cost principles and procedures provided in A.A.C. § R19-3-501, et seq. shall apply.

9.5. Termination for Default.

9.5.1. In addition to the rights reserved in the Contract, the State may terminate the Contract in whole or in part due to the failure of the Contractor to comply with any term or condition of the Contract, to acquire and maintain all required insurance policies, bonds, licenses and permits, or to make satisfactory progress in performing the Contract. The Procurement Officer shall provide written notice of the termination and the reasons for it to the Contractor.

9.5.2. Upon termination under this paragraph, all goods, Materials, documents, data and reports prepared by the Contractor under the Contract shall become the property of and be delivered to the State on demand.

9.5.3. The State may, upon termination of this Contract, procure, on terms and in the manner that it deems appropriate, Materials or Services to replace those under this Contract. The Contractor shall be liable to the State for any excess costs incurred by the State in procuring Materials or Services in substitution for those due from the Contractor.

9.6. Continuation of Performance through Termination. The Contractor shall continue to perform, in accordance with the requirements of the Contract, up to the date of termination, as directed in the termination notice.

10. Contract Claims

10.1. All contract claims or controversies under this Contract shall be resolved according to A.R.S. § 41-2534(G), A.A.C. § R19-3-501, et seq., and, when not inconsistent, A.R.S. Title 41, Chapter 23, Article 9,


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and rules adopted thereunder.

11. Arbitration

11.1. The parties to this Contract agree to resolve all disputes arising out of or relating to this Contract through arbitration, after exhausting applicable administrative review, to the extent required by A.R.S. § 12-1518, except as may be required by other applicable statutes (Title 41).

12. Comments Welcome

12.1. The State Procurement Office periodically reviews the Uniform Terms and Conditions and welcomes any comments you may have. Please submit your comments to: State Procurement Administrator, State Procurement Office, 100 North 15

th Avenue, Suite 201, Phoenix, Arizona, 85007.

Special Instructions to Offerors ARIZONA LOTTERY 4740 E. University Dr.

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SPECIAL INSTRUCTIONS

1. Questions

1.1. All questions related to this Request for Proposal shall be in writing and shall be directed through the State’s E-Procurement System, ProcureAZ using the Q&A tab. Questions will be answered via ProcureAZ and are due no less than ten (10) calendar days prior to the Solicitation due date and time. Any other contact shall be directed to Rick Crago at [email protected]. Questions related to a Solicitation should refer to the appropriate Solicitation number, page and paragraph number.

1.2. Offerors shall not contact the employees or officers of the Lottery concerning this procurement while the proposal and evaluation are in process.

2. Confidential Information

2.1. If a person believes that any portion of a proposal, bid, Offer, specification, protest or correspondence contains information that should be withheld, then the Procurement Officer shall be so advised in writing (price is not confidential and will not be withheld). Such material shall be identified as confidential wherever it appears. The Procurement Officer, pursuant to A.A.C. § R19-3-503, shall review all requests for confidentiality and provide a written determination. If the confidential request is denied, such information shall be disclosed as public information, unless the person utilizes the review provisions as outlined in A.A.C. § R19-3-503, and, by reference, A.R.S. Title 41, Chapter 6, Article 10.

3. Submission of Offer

3.1. Electronic Documents. The Solicitation document is provided in an electronic format. Any unidentified alteration or modification to any Solicitation documents, to any attachments, exhibits, forms, charts or illustrations contained herein shall be null and void. In those instances where modifications are identified, the original document published by the State shall take precedence. As provided in the Solicitation Instructions, Offerors are responsible for clearly identifying any and all changes or modifications to any Solicitation documents upon submission to the State.

3.2. Acceptable Formats. Offer electronic files shall be submitted in a format acceptable to the State. Acceptable formats include .DOC and .DOCX (Microsoft Word), .XLS and .XLSX (Microsoft Excel), .PPT and .PPTX (Microsoft PowerPoint) and .PDF (Adobe Acrobat). Other file formats may also be acceptable, including .ZIP (not ZIPx), .MDB, .MDBX, .MPP, MPPX, .VSD, .JPG, .GIF, and .BMP. Offerors wishing to submit files in these or other formats shall submit an inquiry to the Procurement Officer.

3.3. Each proposal should be prepared simply and economically, providing a straightforward, concise description of the Offeror’s ability to meet the requirements of the Solicitation. Emphasis should be on completeness and clarity of content. Proposals that are of excessive length or contain a preponderance of boilerplate text are discouraged.

3.4. The Lottery will not provide any reimbursement for the cost of developing or presenting proposals in response to this RFP.

4. Submission Required in ProcureAZ

4.1. Offers in response to this Solicitation shall be submitted within the State’s eProcurement system, PROCUREAZ (https://procure.az.gov). Please be advised that utilizing ProcureAZ requires a certain level of technical competency that should be considered when selecting staff to work the system. The successful submission of your Offer in ProcureAZ is critical in order for the Lottery to receive and


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evaluate your Offer. Therefore, particular focus should be placed on the selection of staff given the responsibility for submitting your Offer in ProcureAZ. Offers shall be received before the date/time listed in the Solicitation’s ‘Bid Opening Date’ field. Offers submitted outside PROCUREAZ, or those that are received after the date/time stated in the ‘Bid Opening Date’ field, shall be rejected. Questions in this regard shall be directed to the Procurement Officer.

4.1.1. To submit an Offer, Offerors must register in the ProcureAZ system.

4.1.2. To assist Offerors in the submission of a quote/Offer, ProcureAZ offers a Help Desk with email ([email protected]) and telephone support (602) 542-7600, and a Quick Reference Guide – Responding to Solicitations, http://www.spo.az/ProcureAZ/Vendors/default.asp. Offerors are encouraged to submit any requests for assistance in a timely manner in order to meet the bid due date and time identified on the Notice Page.

5. Preparation of Bid Package

5.1. Only the “required information” (see section 6, below) shall be returned with the bid package. Failure to provide all of the items and the information requested may result in a bid being rejected.

5.2. The Offeror is cautioned that it is the Offeror’s sole responsibility to submit the required information which relates to the evaluation categories and that the Lottery is under no obligation to solicit such information if it is not included with the Offer. Failure to include and complete, as prescribed, the below information may cause a negative impact on the evaluation of the Offer. Lack of care in preparing an Offer shall not be grounds for a Contract claim.

6. Required Information

6.1. The Offer shall include the following and should be presented in the order in which they appear. FAILURE TO PROVIDE ALL OF THE REQUIRED INFORMATION MAY RESULT IN REJECTION OF THE PROPOSAL.

6.1.1. Offer and Acceptance. Offers shall include a signed Offer and Acceptance form (Page 3 of this Solicitation). The Offer and Acceptance Form shall be signed with an original signature by the person executing the Offer, and shall be submitted electronically with the submitted bid no later than the Offer due date and time. Failure to return an Offer and Acceptance Form may result in rejection of the Offer.

6.1.2. Acknowledgement of Solicitation Amendments. All Solicitation Amendments shall be acknowledged electronically prior to the Offer due date and time. Failure to acknowledge all Solicitation Amendments may result in rejection of the Offer.

6.2. Bid Content. Offers shall include the following completed documents in their proposal. Failure to follow Proposal Content Instructions may result in rejection of Offer. The Response Forms to be filled out are available as separate attachments within ProcureAZ.

6.2.1. Response Form 1 – Qualifications Questionnaire

6.2.2. Response Form 2 – Organization Questionnaire

6.2.3. Response Form 3 – References

6.2.4. Response Form 4 – Pricing


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6.2.5. Response Form 5 – Exceptions

6.3. Instructions for Providing the Required Information – Proposal Content

6.3.1. The Scope of Work defines the Services that the Contractor shall provide. Response Form 1 will contain instructions for providing information regarding the qualifications of the Offeror.

6.3.2. Response Form 2 will contain instructions for providing information regarding the Offeror’s organization. Offerors shall include in this section attachments for each of the following items.

a. Identity and Organization. Offerors shall describe their total organization, including any parent companies, subsidiaries, affiliates, and other related entities. Offerors shall describe the ownership structure including any significant or controlling equity holders. Offerors shall provide an organizational chart for their overall organization showing each entity within the organization. Offerors comprised of multiple organizations or alliances shall identify all entities to be providing supplies and/or Services to the Lottery - see also the State's prohibition on offshore work performance cited hereunder. Offerors shall clarify the respective duties and roles of all associated organizations that would support the Lottery, with percentages and areas of responsibilities allocated across all such organizations. Offerors composed of multiple organizations shall identify a single or lead organization, including a contact person therein, who will be responsible for all communications with the Lottery throughout the Solicitation process.

b. Key Personnel. Offerors shall provide the names of all Contractor personnel that would be providing Services to the Lottery under any resulting Contract. Information provided on such individuals shall include: (a) name; (b) proposed responsibilities; (c) telephone number; (d) e-mail Address; (e) qualifications (i.e., a resume and certifications); (f) experience (previous work assignments as may relate to this RFP); and (g) an organizational chart detailing where all such individuals relate to each other organizationally and to the Lottery with regard to the Services proposed. Offeror shall cite their percent of turnover for the last three (3) years of those positions listed as Key Personnel and all other relevant staff that would be responsible for performing Services to the Lottery under any resulting Contract. Offerors shall describe their customary selection and replacement procedures for all Key Personnel and relevant staff. Offerors shall clarify their intent to maintain the quantities and quality of all such Key Personnel and relevant staff positions throughout the term of any resulting Contract.

c. Experience. Offerors shall describe the scope of Services for which they have been responsible; their experience, including number of years in business; qualifications and membership in professional associations, societies or boards; and the number of years of experience acting as a prime contractor providing services similar to the Services described in their proposal.

d. Offerors shall provide the names and contact information of all previous customers over the last three (3) years for whom services were provided but were discontinued for whatever reason. The Lottery shall have the option to contact these customers at its discretion. Offerors shall fully disclose their involvement in any legal proceedings, lawsuits or governmental regulatory actions, taken or pending, and any contractual demands for assurance regarding their provision of similar services.


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e. Subcontractors. In the event that Subcontractors are utilized to provide any Service outlined in this Solicitation, the Offeror should include the following information regarding Subcontractors:

i. Justification for the use of the Subcontractors;

ii. Copies of existing contracts or sample contracts it will use;

iii. Subcontractor’s area of responsibilities under a resultant Contract;

iv. Name of the firm and individual(s) who will provide direct Services, and a description of the selection process;

v. A commitment statement from the firm and designated individual(s) who will provide the Services.

f. Financial Soundness. Offeror shall demonstrate their financial stability. Offeror’s proposals which do not include or do not include sufficient information regarding their financial stability may be negatively impacted.

i. The Offeror shall provide a business credit profile from Experian. No other documentation is acceptable. Offeror can obtain the business credit profile at http://www.smartbusinessreports.com/ or by calling 1-888-211-0728, option #1. At smartbusinessreports.com search for your company to find what is available. It should be the “ProfilePlusReport”.

ii. The Offeror shall at a minimum submit a copy of their independently audited financial statements from the last three (3) years and any other financial description that will adequately provide factual documentation of the financial stability of the Offeror. The Offeror must provide the Lottery with adequate information to permit an evaluation of its financial capabilities to undertake and satisfactorily perform any Contract pursuant to the RFP, which shall include statement of income; balance sheet; statement of cash flows, all footnotes pertaining to the financial statements presented; and an independent accountant's report.

iii. If the Offeror is a subsidiary of another corporation, the above information must also be supplied for the parent corporation. The Lottery reserves the right to require any additional information necessary to determine the financial integrity and responsibility of the Offeror.

iv. If the Offeror experiences substantial change in its financial condition during the period prior to the award of any Contract pursuant to this RFP, or if any Offeror experiences a substantial change during the term of the Contract, the Lottery must be notified of the change in writing at the time the change occurs or is identified.

g. Authority to do Business in Arizona. The Offeror shall submit copies of professional and business licenses that authorize the Offeror to perform the Services required in this Solicitation.

h. Contractor’s Licenses. The Offeror shall submit copies of all applicable contractor licenses required to service this account.


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i. Proof of Fleet. The Offeror shall provide a description of the Sales Staff and Promotional Vehicles proposed for use in the performance of Services under this Contract.

6.3.3. References. Offerors shall provide at a minimum five (5) customer references, at least two (2) of which should be for government clients in Response Form 3. Reference information should include the following data: (a) client name; (b) contract title or contract reference number; (c) primary contact, title and telephone number; (d) contract dates; (e) contract amount; (f) type of contract - public or private sector; (g) length of relationship with Client; and (h) description of innovative solutions implemented to meet customer needs related to the Service required under this Contract.

6.3.4. Pricing. Pricing shall be provided in Response Form 4.

6.3.5. Exceptions. Any exceptions to the Scope of Work, Terms and Conditions, or any other part of this Solicitation must be delineated in Response Form 5. Exceptions may impact an Offeror’s susceptibility for award.

7. Evaluation

7.1. Evaluation. In accordance with the A.A.C. Title 19, Chapter 3, Article 5, awards shall be made to the responsible Offeror(s) whose proposal is determined in writing to be the most advantageous to the Lottery based on the evaluation criteria listed below. The evaluation will utilize a “Qualitative Statement Ranking System” method of evaluation which uses qualitative terms that have generally accepted meanings such as “not acceptable”, “barely acceptable”, and “fully acceptable” in regards to the response for each item requested by the RFP. These qualitative statements will be used to draft a consensus statement of each of the proposal’s strengths and weaknesses. An evaluation committee will evaluate the Offer(s) based on the factors listed below in their relative order of importance.

7.1.1. Experience, expertise, reliability and qualifications;

7.1.2. Methodology; and

7.1.3. Pricing.

7.2. Any noted deficiency may be considered relevant to more than one evaluation factor. In addition to the evaluation criteria, exceptions to terms and conditions, as stated in the Uniform Instruction section 2.3, may impact an Offeror’s susceptibility for award.

7.3. Interviews/Discussions. The Lottery may conduct interviews with all eligible offerors prior to initial evaluation or discussions with those Offerors whose Offers are determined by the Lottery to be reasonably susceptible of being selected for award during evaluation. Discussions may be in writing or in person and may include presentations, site visits or demonstrations.

7.3.1. The Lottery may issue a written request for a Best and Final Offer, and, in the event discussions are conducted with Offerors, the Lottery shall issue a written request for a Best and Final Offer. The request for a Best and Final Offer will inform the Offerors that, if an Offeror does not submit a Best and Final Offer, the Offeror’s immediate previous written proposal will be considered as the Offeror’s Best and Final Offer.


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8. Responsibility, Responsiveness and Susceptibility

8.1. In accordance with A.R.S. § 41-2534(G) and A.A.C. § R19-3-526, the Procurement Officer shall consider, at a minimum, the following criteria when determining Offeror’s responsibility, as well, as the proposal’s responsiveness and susceptibility for Contract award.

8.1.1. Whether the Offeror has had a contract within the last five (5) years that was terminated for cause due to breach or similar failure to comply with the terms of the contract;

8.1.2. Whether the Offeror’s record of performance includes factual evidence of failure to satisfy the terms of the Offeror’s agreements with any party to a contract (factual evidence may consist of documented vendor performance reports, customer complaints and/or negative references);

8.1.3. Whether the Offeror is legally qualified to contract with the Lottery and the Offeror’s financial, business, personnel, or other resources, including Subcontractors (the term “legally qualified” includes if the Contractor or Key Personnel of the Contractor have been debarred, suspended or otherwise lawfully prohibited from participating in any public procurement activity, including but not limited to, being disapproved as a subcontractor of any public procurement unit or other governmental body);

8.1.4. Whether the Offeror promptly supplied all requested information concerning its responsibility;

8.1.5. Whether the Offer was sufficient to permit evaluation by the Lottery, in accordance with the evaluation criteria identified in this Solicitation or other necessary Offer components (necessary Offer components include: attachments, documents or forms to be submitted with the Offer, an indication of the intent to be bound, reasonable or acceptable approach to perform the Scope of Work, acknowledged Solicitation Amendments, references to include experience verification, adequacy, and stability of financial, business, personal, or other resources, including Subcontractors, and any other data specifically requested in the Solicitation);

8.1.6. Whether the Offer was in conformance with the requirements contained in the Scope of Work, Terms and Conditions, and Instructions for the Solicitation including its Amendments and all documents incorporated by reference;

8.1.7. Whether the Offer limits the rights of the Lottery;

8.1.8. Whether the Offer includes or is subject to unreasonable conditions, to include conditions upon the Lottery necessary for successful Contract performance, with the Lottery as the sole determiner as to the reasonableness of a condition;

8.1.9. Whether the Offer materially changes the contents set forth in the Solicitation, which includes the Scope of Work, Terms and Conditions, or Instructions; and,

8.1.10. Whether the Offeror provides misleading or inaccurate information.

9. Award

9.1. Contract Document Consolidation. At its sole option, following any Contract award(s) the Lottery may consolidate the resulting Contract documents. Examples of such consolidation would include (i) reorganizing Solicitation documents and those components of the Contractor’s Offer not pertaining to the Contract’s operations; (ii) revising the Scope of Work to incorporate the Contractor’s response, (iii) revising any terms and conditions to incorporate any changes in the Contractor’s Offer; (iv) excluding


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any components of the Contractor’s Offer that were not awarded. Contract document consolidation shall not materially change the Contract.

Uniform Instructions ARIZONA LOTTERY 4740 E. University Dr.

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UNIFORM INSTRUCTIONS TO OFFERORS

1. Inquiries

1.1. Duty to Examine. It is the responsibility of each Offeror to examine the entire Solicitation, seek clarification in writing (inquiries), and examine its Offer for accuracy before submitting an Offer. Lack of care in preparing an Offer shall not be grounds for modifying or withdrawing the Offer after the Offer due date and time, nor shall it give rise to any Contract claim.

1.2. Solicitation Contact Person. Any inquiry related to a Solicitation, including any requests for or inquiries regarding standards referenced in the Solicitation shall be directed solely to the Procurement Officer.

1.3. Submission of Inquiries. All inquiries related to the Solicitation are required to be submitted in the State’s eProcurement system. All responses to inquiries will be answered in the State’s eProcurement system. Any inquiry related to the Solicitation should reference the appropriate Solicitation page and paragraph number. Offerors are prohibited from contacting any State or Lottery employee or officer other than the Procurement Officer concerning the procurement while the Solicitation and evaluation are in process.

1.4. Timeliness. Any inquiry or exception to the Solicitation shall be submitted as soon as possible and should be submitted at least seven days before the Offer due date and time for review and determination by the Lottery. Failure to do so may result in the inquiry not being considered for a Solicitation Amendment.

1.5. No Right to Rely on Verbal or Electronic Mail Responses. An Offeror shall not rely on verbal or electronic mail responses to inquiries. A verbal or electronic mail reply to an inquiry does not constitute a modification of the Solicitation.

1.6. Solicitation Amendments. The Solicitation shall only be modified by a Solicitation Amendment.

1.7. Pre-Offer Conference. If a pre-Offer conference has been scheduled under the Solicitation, the date, time and location shall appear in the State’s eProcurement system. Offerors should raise any questions about the Solicitation at that time. An Offeror may not rely on any verbal responses to questions at the conference. Material issues raised at the conference that result in changes to the Solicitation shall be answered solely through a Solicitation Amendment.

1.8. Persons with Disabilities. Persons with a disability may request a reasonable accommodation, such as a sign language interpreter, by contacting the Procurement Officer. Requests shall be made as early as possible to allow time to arrange the accommodation.

2. Offer Preparation

2.1. Electronic Documents. The Solicitation is provided in an electronic format. Offerors are responsible for clearly identifying any and all changes or modifications to any Solicitation documents upon submission to the State’s eProcurement system. Any unidentified alteration or modification to any Solicitation, attachments, exhibits, forms, charts or illustrations contained herein shall be null and void. Offeror’s electronic files shall be submitted in a format acceptable to the State. Acceptable formats include .doc and .docx (Microsoft Word), .xls and .xlsx (Microsoft Excel), .ppt and .pptx (Microsoft PowerPoint) and .pdf (Adobe Acrobat). Offerors wishing to submit files in any other format shall submit an inquiry to the Procurement Officer.

2.2. Evidence of Intent to be Bound. The Offer and Acceptance form within the Solicitation shall be submitted with the Offer in the State’s eProcurement system and shall include a signature by a person authorized to sign the Offer. The signature shall signify the Offeror’s intent to be bound by the Offer and the terms of the Solicitation and that the information provided is true, accurate and complete. Failure to submit verifiable evidence of intent to be bound, such as a signature, shall result in rejection of the Offer.


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2.3. Exceptions to Terms and Conditions. All exceptions included with the Offer shall be submitted in the State’s eProcurement system in a clearly identified separate section of the Offer in which the Offeror clearly identifies the specific paragraphs of the Solicitation where the exceptions occur. Any exceptions not included in such a section shall be without force and effect in any resulting Contract unless such exception is specifically accepted by the Procurement Officer in a written statement. The Offeror’s preprinted or standard terms will not be considered by the Lottery as a part of any resulting Contract.

2.3.1. Invitation for Bids. An Offer that takes exception to a material requirement of any part of the Solicitation, including terms and conditions, shall be rejected.

2.3.2. Request for Proposals. All exceptions that are contained in the Offer may negatively impact an Offeror’s susceptibility for award. An Offer that takes exception to any material requirement of the Solicitation may be rejected.

2.4. Subcontracts. Offeror shall clearly list any proposed Subcontractors and the Subcontractor’s proposed responsibilities in the Offer.

2.5. Cost of Offer Preparation. The State will not reimburse any Offeror the cost of responding to a Solicitation.

2.6. Federal Excise Tax. The State is exempt from certain Federal Excise Tax on manufactured goods. Exemption Certificates will be provided by the State.

2.7. Provision of Tax Identification Numbers. Offerors are required to provide their Arizona Transaction Privilege Tax Number and/or Federal Tax Identification number in the space provided on the Offer and Acceptance form.

2.7.1. Employee Identification. Offeror agrees to provide an employee identification number or social security number to the State for the purposes of reporting to appropriate taxing authorities, monies paid by the State under this Contract. If the federal identifier of the Offeror is a social security number, this number is being requested solely for tax reporting purposes and will be shared only with appropriate state and federal officials. This submission is mandatory under 26 U.S.C. § 6041A.

2.8. Identification of Taxes in Offer. The State is subject to all applicable state and local transaction privilege taxes. All applicable taxes shall be identified as a separate item offered in the Solicitation. When applicable, the tax rate and amount shall be identified on the price sheet.

2.9. Disclosure. If the person submitting this Offer has been debarred, suspended or otherwise lawfully precluded from participating in any public procurement activity, including being disapproved as a subcontractor with any federal, state or local government, or if any such preclusion from participation from any public procurement activity is currently pending, the Offeror shall fully explain the circumstances relating to the preclusion or proposed preclusion in the Offer. The Offeror shall set forth the name and address of the governmental unit, the effective date of the suspension or debarment, the duration of the suspension or debarment, and the relevant circumstances relating to the suspension or debarment. If suspension or debarment is currently pending, a detailed description of all relevant circumstances including the details enumerated above shall be provided.

2.10. Delivery. Unless stated otherwise in the Solicitation, all prices shall be F.O.B. Destination and shall include all freight, delivery and unloading at the destination(s).

2.11. Federal Immigration and Nationality Act. By signing of the Offer, the Offeror warrants that both it and all proposed Subcontractors are in compliance with federal immigration laws and regulations relating to the immigration status of their employees. The State may, at its sole discretion require evidence of compliance during the evaluation process. Should the State request evidence of compliance, the Offeror


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shall have five days from receipt of the request to supply adequate information. Failure to comply with this instruction or failure to supply requested information within the timeframe specified shall result in the Offer not being considered for Contract award.

2.12. Declaration of Offshore Performance of Work. Offerors shall declare in the Offer all anticipated offshore Services as defined by section 3.11 of the Uniform Terms and Conditions.

3. Submission of Offer

3.1. Offer Submission, Due Date and Time. Offerors responding to a Solicitation must submit the Offer electronically through the State’s eProcurement system. Offers shall be received before the due date and time stated in the Solicitation. Offers submitted outside of the State’s eProcurement system or those that are received after the due date and time shall be rejected.

3.2. Offer and Acceptance. Offers shall include a signed Offer and Acceptance form. The Offer and Acceptance form shall be signed with a signature by the person authorized to sign the Offer, and shall be submitted in the State’s eProcurement system with the Offer no later than the Solicitation due date and time. Failure to return an Offer and Acceptance form may result in rejection of the Offer.

3.3. Solicitation Amendments. A Solicitation Amendment shall be acknowledged in the State’s eProcurement system no later than the Offer due date and time. Failure to acknowledge a Solicitation Amendment may result in rejection of the Offer.

3.4. Offer Amendment or Withdrawal. An Offer may not be amended or withdrawn after the Offer due date and time except as otherwise provided under applicable law.

3.5. Confidential Information. If an Offeror believes that any portion of an Offer, protest, or correspondence contains a trade secret or other proprietary information, the Offeror shall clearly designate the trade secret and other proprietary information, using the term “confidential.” An Offeror shall provide a statement detailing the reasons why the information should not be disclosed including the specific harm or prejudice that may arise upon disclosure. The Procurement Officer shall review all requests for confidentiality and provide a written determination. Until a written determination is made, a Procurement Officer shall not disclose information designated as confidential except to those individuals deemed to have a legitimate State interest. In the event the Procurement Officer denies the request for confidentiality, the Offeror may appeal the determination to the Lottery Executive Director within the time specified in the written determination. Contract terms and conditions, pricing, and information generally available to the public are not considered confidential information.

3.6. Public Record. All Offers submitted and opened are public records and must be retained by the State for six years. Offers shall be open and available to public inspection through the State’s eProcurement system after Contract award, except for such Offers deemed to be confidential by the State.

3.7. Non-collusion, Employment, and Services. By signing the Offer and Acceptance form or other official Contract form, the Offeror certifies that:

3.7.1. The Offeror did not engage in collusion or other anti-competitive practices in connection with the preparation or submission of its Offer; and

3.7.2. The Offeror does not discriminate against any employee or applicant for employment or person to whom it provides services because of race, color, religion, sex, national origin, or disability, and that it complies with an applicable federal, state and local laws and executive orders regarding employment.


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4. Evaluation

4.1. Unit Price Prevails. In the case of discrepancy between the unit price or rate and the extension of that unit price or rate, the unit price or rate shall govern.

4.2. Taxes. If the products and/or Services specified require transaction privilege or use taxes, they shall be described and itemized separately on the Offer. Arizona transaction privilege and use taxes shall not be considered for evaluation.

4.3. Prompt Payment Discount. Prompt payment discounts of thirty (30) days or more set forth in an Offer shall be deducted from the Offer for the purpose of evaluating that price.

4.4. Late Offers. An Offer submitted after the exact Offer due date and time shall be rejected.

4.5. Disqualifications. An Offeror (including each of its principals) who is currently debarred, suspended or otherwise lawfully prohibited from any public procurement activity shall have its Offer rejected.

4.6. Offer Acceptance Period. An Offeror submitting an Offer under the Solicitation shall hold its Offer open for the number of days from the Offer due date that is stated in the Solicitation. If the Solicitation does not specifically state a number of days for Offer acceptance, the number of days shall be one hundred twenty (120). If a Best and Final Offer is requested pursuant to a Request for Proposals, an Offeror shall hold its Offer open for one hundred twenty (120) days from the Best and Final Offer due date.

4.7. Waiver and Rejection Rights. Notwithstanding any other provision of the Solicitation, the Lottery reserves the right to:

4.7.1. Waive any minor informality;

4.7.2. Reject any and all Offers or portions thereof; or

4.7.3. Cancel the Solicitation.

5. Award

5.1. Number of Types of Awards. The Lottery reserves the right to make multiple awards or to award a Contract by individual line items or alternatives, by group of line items or alternatives, or to make an aggregate award, or regional awards, whichever is most advantageous to the Lottery.

5.2. Contract Inception. An Offer does not constitute a Contract nor does it confer any rights on the Offeror to the award of a Contract. A Contract is not created until the Offer is accepted in writing by the Procurement Officer’s signature on the Offer and Acceptance form. A notice of award or of the intent to award shall not constitute acceptance of the Offer.

5.3. Effective Date. The effective date of the Contract shall be the date that the Procurement Officer signs the Offer and Acceptance form or other official Contract form, unless another date is specifically stated in the Contract.

6. Protests

6.1. A protest shall comply with and be resolved according to A.R.S. § 41-2534(G), A.A.C. § R19-3-501, et seq., and, by reference, A.R.S. Title 41, Chapter 23, Article 9 and rules adopted thereunder. Protests shall be in writing and be filed with the Procurement Officer of the Lottery. A protest of the Solicitation shall be received by the Procurement Officer before the Offer due date. A protest of a proposed award or of an award shall be filed within ten (10) days after the Procurement Officer makes the procurement file available for public inspection. A protest shall include:


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6.1.1. The name, address, email address and telephone number of the interested party;

6.1.2. The signature of the interested party or its representative;

6.1.3. Identification of the purchasing agency and the Solicitation or Contract number;

6.1.4. A detailed statement of the legal and factual grounds of the protest including copies of relevant documents; and

6.1.5. The form of relief requested.

7. Comments Welcome

7.1. The State Procurement Office periodically reviews the Uniform Instructions to Offerors and welcomes any comments you may have. Please submit your comments to: State Procurement Administrator, State Procurement Office, 100 North 15th Avenue, Suite 201, Phoenix, Arizona, 85007.

Exhibit 1: _____________ ARIZONA LOTTERY 4740 E. University Dr.

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Exhibit 1: ___________________

Attachment I – Designation of Confidential, Trade Secret & Proprietary

Information ARIZONA LOTTERY 4740 E. University Dr.

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Attachment I – Designation of Confidential, Trade Secret & Proprietary Information

(Available in ProcureAZ to be filled out by the Offeror)

Response Form 1 – Qualifications Questionnaire ARIZONA LOTTERY


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Response Form 1 – Qualifications Questionnaire (Available in ProcureAZ to be filled out by the Offeror)

Response Form 2 – Organization Questionnaire ARIZONA LOTTERY


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Response Form 2 – Organization Questionnaire


Response Form 3 – References ARIZONA LOTTERY 4740 E. University Dr.

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Response Form 3 – References


Response Form 4 – Pricing ARIZONA LOTTERY 4740 E. University Dr.

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Response Form 4 – Pricing


Response Form 5 – Exceptions ARIZONA LOTTERY 4740 E. University Dr.

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Response Form 5 – Exceptions Any exceptions to the Scope of Work, Terms and Conditions, or any other part of this Solicitation must be delineated in a separate attachment

labeled Exceptions.