Section 3-122-149 - Multi-term contract(a) The objective of the multi-term contract is to encourage effective competition or otherwise promote economies in the procurement of goods and services.(b) A multi-term contract extends over more than one fiscal period but funds are available for only the initial fiscal period, and the contractual obligation of both parties in each fiscal period succeeding the first is subject to the appropriation and availability of funds.(c) When funds are not appropriated or otherwise made available to support continuation of performance in a subsequent fiscal period, the contract shall be canceled and the contractor shall be reimbursed for the reasonable value of any non-recurring costs incurred but not amortized in the price of the good or service delivered under the contract.(d) A multi-term contract may be considered: (1) When it is in the best interest of the State to provide uninterrupted service over more than one fiscal period and where the contract will result in significantly more favorable contract terms and prices compared to a series of shorter term contracts for the same good or service due to: (A) High start-up costs; for example, a student bus transportation contractor would incur high start-up costs for buses and other equipment solely to meet the State's requirements but the equipment would have useful life in excess of one year; or(B) A changeover of service contractors with both high phase-in and high phase-out costs during a transition period;(2) When special production, involving alteration in the contractor's facilities or high startup costs, for definite quantities of goods for more than one fiscal period is necessary to best meet the needs of the State and funds are available only for the initial fiscal period;(3) When firms, otherwise not willing or able to compete because of high start-up costs or capital investment in facility expansion, will be encouraged to participate in the competition because of assurance of recouping the costs during the period of contract performance;(4) When lower production costs because of larger quantity or service requirements, and substantial continuity of production or performance over a longer period of time, can be expected to result in lower unit prices;(5) When stabilization of the contractor's work force over a longer period of time may promote economy and consistent quality; or(6) When the cost and burden of contract solicitation, award, and administration of the procurement may be reduced.(e) A multi-term contract may be entered into for any period of time deemed to be in the best interest of the State, provided the head of the purchasing agency determines in writing that: (1) The contract will serve the best interest of the State by encouraging effective competition or otherwise promoting economies in procurement; and(2) Sufficient funds to pay for the initial term of the contract are available.(f) The solicitation for a multi-term contract shall state: (1) The term of the contract and conditions for renewal or extension, if any;(2) That funds are available for only the initial term of the contract, and the contractual obligation of both parties in each fiscal period succeeding the first is subject to the appropriation and availability of funds;(3) The amount of goods or services required for the proposed contract period;(4) That a unit price shall be given for each good or service, and that the unit prices shall be the same throughout the contract, except to the extent price adjustment is allowed;(5) That the contract will be cancelled only if funds are not appropriated or otherwise made available to support continuation of performance in any fiscal period succeeding the initial term of the contract; however, this does not affect either the State's rights or the contractor's rights under any termination clause of the contract;(6) That the head of the purchasing agency must notify the contractor on a timely basis that the funds are, or are not, available for the continuation of the contract for each succeeding fiscal period; and(7) That, in the event of cancellation as provided in paragraph (5), the contractor will be reimbursed the unamortized, reasonably incurred, nonrecurring costs.(g) A cancellation, as used in multi-term contracting, means the cancellation of the total requirements for the remaining portion of the contract because funds were not appropriated or otherwise made available. (1) Cancellation of a multi-term contract shall result when the head of the purchasing agency: (A) Notifies the contractor of nonavailability of funds for contract performance for any fiscal period subsequent to the first; or(B) Fails to notify the contractor that funds are available for the succeeding fiscal period or that funds which may be used for the contract have not been appropriated or otherwise made available, by the date set forth in the contract, unless the parties agree to extend the date;(2) This subsection does not limit the rights of the State or the contractor under any termination clause of the contract if the contract is terminated pursuant to that clause rather than cancelled as provided in this subsection.[Eff 12/15/95; am and comp 11/17/97; am and comp MAR 21 2008] (Auth: HRS § 103D-202) (Imp: HRS § 103D-315)