Section 25 IAC 1.1-1-16 - Types of contracts; prohibited contractsAuthority: IC 4-13-1.3-4
Affected: IC 5-22-17
Sec. 16.
(a) Any type of contract not otherwise prohibited by law, except a cost plus a percentage of cost contract, may be used; however, a firm fixed price contract is preferred. Any other type of contract may be used only when the department or commissioner determines that its use is in Indiana's best interest. Any solicitation shall include notice of the contract terms and conditions.(b) The following are among the factors that may be considered in selecting a contract type: (1) The type or complexity of the supply or service being procured.(2) The difficulty of estimating performance costs, such as the inability of Indiana to do any of the following:(A) Develop definitive specifications.(B) Identify the risks to the contractor inherent in the nature of the work to be performed.(C) Otherwise establish clearly the requirements of the contract.(3) The administrative costs to both parties.(4) The degree to which Indiana must provide technical coordination during the performance of the contract.(5) The effect of the choice type on the amount of compensation to be expected.(6) The stability of material or commodity market prices or wage levels.(7) The urgency of the requirement.(8) The length of contract performance.(9) Federal requirements.(c) A contract may contain an option for renewal or extension of its terms, without modification, for a specified period of time. However:(1) exercise of the option is:(A) at the sole discretion of Indiana; and(B) not subject to agreement or acceptance by the contractor;(2) notice of the provision must be included in any solicitation; and(3) the renewal or extension must be approved by the commissioner and the state budget director.(d) A contract for rental or lease may contain an option to purchase. However: (1) exercise of the option is: (A) at the sole discretion of Indiana; and(B) not subject to agreement or acceptance by the contractor;(2) provision of the option must be part of any solicitation;(3) a means of computing the cost of the item to Indiana at fixed intervals, should it exercise its option, that is not more than the actual resale or fair market value of the item at the time of exercising the option must be part of the agreement;(4) Indiana must have the right to cancel the lease or rental agreement, at fixed intervals, without penalty; and(5) exercise of the option to purchase must be subject to the approval of the commissioner and the state budget director.(e) A using agency may not enter into an installment sales contract unless the contract contains the following: (1) A contract clause that permits the department to cancel the contract if the budget director makes a written determination that funds are not appropriated or otherwise available to support continuation of the contract.(2) Other contract terms that the commissioner may require.(f) As used in this section, "quantity purchase agreement" includes a contract for the following: (1) An indefinite amount of specific supplies or services.(2) Supplies or services to furnish:(A) all the actual requirements of a designated using agency or agencies; or(B) a determinable part of the actual requirements, such as a percentage; during a specified period of time.(g) Indiana may enter into an indefinite quantity contract if: (1) the department determines it appropriate;(2) an approximate quantity or the best information available as to quantity is stated in the solicitation; and(3) the term of the contract is specified.(h) Indiana may enter into a requirements contract if:(1) the department determines it appropriate;(2) an approximate quantity or the best information available as to quantity is stated in the solicitation;(3) the term of the contract is specified; and(4) use of this type of contract is limited to instances where actual requirements can be reasonably estimated.(i) A solicitation for an indefinite quantity contract or a requirements contract and the resultant contract may reserve the right to Indiana to separately meet requirements of the using agency or agencies.(j) The vendor for a quantity purchase agreement may be selected as follows: (1) By means of: (A) an invitation for bids; or(B) a request for proposals.(2) In any other manner not prohibited by law.(k) Price adjustments in quantity purchase agreements will be permitted only as follows:(1) Under the terms and conditions specified in the solicitation.(2) If the adjustment is computed by a rule, method, or formula specified in the agreement.(l) Upon the termination of a quantity purchase agreement, the department may award the agreement to the vendor quarterly, semiannually, or annually, without further competition, if the vendor consents to the same prices as the original award. A quantity purchase agreement may not be extended unless notice of it was part of the solicitation. No award may extend the total period of the agreement with the vendor beyond a two (2) year term.(m) The department shall make every effort to ensure that no more quantity purchase orders than are reasonably necessary for the efficient operation of the governmental bodies affected thereby are in effect at any one (1) time. Although this does not preclude the issuance of more than one (1) quantity purchase order for any specific item, effort shall be made to specify the governmental agency, geographic location, etc. for which each is applicable so that there is little or no overlap. Indiana Department of Administration; 25 IAC 1.1-1-16; filed Dec 15, 1981, 1:45 p.m.: 5 IR 244; filed Jul 5, 1983, 3:22 p.m.: 6 IR 1371; filed May 13, 1987, 11:55 a.m.: 10 IR 2262; filed Jul 26, 1988, 4:10 p.m.: 11 IR 4070; filed Apr 17, 1991, 3:00 p.m.: 14 IR 1710; readopted filed Nov 20, 2001, 9:30 a.m.: 25 IR 1265; filed Jul 31, 2006, 9:09 a.m.: 20060830-IR-025060004FRA; readopted filed Aug 26, 2008, 8:31 a.m.: 20080910-IR-025080549RFAReadopted filed 10/31/2014, 1:19 p.m.: 20141126-IR-025140349RFAErrata filed 9/9/2020, 11:02 a.m.: 20200923-IR-025200469ACAReadopted filed 10/20/2020, 1:55 p.m.: 20201118-IR-025200463RFA