Michigan.gov/MiProcurement

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Michigan.gov/MiProcurement Schedule a2 – Pull-Tab Tickets statement of work contract activities Request for Proposal (RFP) No. 230000002409 Lottery Pull-Tab Tickets Background The Michigan Bureau of State Lottery (Bureau) is seeking proposals from qualified contractors to provide services, printing, and supplies associated with pull-tab tickets.

The Bureau’s objective is to enter a contract with an experienced contractor who will provide secure gaming products for the Bureau.

Scope The Bureau typically introduces 22-24 Validation Pull-Tab games annually with a total quantity of approximately 40-45 million tickets. Additionally, the quantity of select promotional or seasonal games could result in expanded ticket quantities.

The annual number of tickets is an estimate, and the Bureau is neither committed to nor limited by the estimated quantities when making purchase orders. The Bureau will use its discretion when determining the number of tickets needed in each purchase order.

IGT Corporation will provide the validation system and hardware used at retailer locations under a separate contract.

Any contract awarded will be based on best value to the Bureau. Best value is not limited to the lowest price or highest proposal score. The concept of best value encompasses a wide array of factors, including but not limited to pricing, strength and versatility of the proposal, bidder experience, ease of administration over one or multiple contracts, and/or local economic benefits.

The contractor must respond to each requirement or question and explain how it will fulfill each requirement. Attach any supplemental information and appropriately reference within your response.

1. General Requirements Product specifications for pull-tab tickets are included in the various sections and subsections below.

a. The contractor must be able to provide Deliverables/Services and Staff, and otherwise do all things necessary for or incidental to the performance of work as set forth herein which, dependent on the ticket program, may include but is not limited to:

1. Graphic design, winning ticket randomization, prize structure development, launch schedule coordination, print production, packaging, and shipment of pull-tab tickets;

2. Game specification development;

3. Game design coordination and execution;

4. Production and launch schedule oversight from design to delivery;

5. Production oversight on press when the Program Manager or designee elects not to attend press approvals;

6. Interface with existing Lottery computerized accounting, allocation and validation sub systems as required per ticket type;

7. Control over inventory and security as necessary to protect the integrity of the game;

8. Packaging and shipping; and

9. Marketing, Promotion, and Supplier training.

b. The Bureau will require the contractor to develop game specifications under the direction of the Program Manager or designee for each game. The contractor must use its best efforts to produce specifications (working papers) that accurately reflect each new game.

c. The specifications will include the final art and color keys or digital contract proof for the front and back of the ticket; prize structure; packaging and shipping information; production and delivery schedule for tickets, game data files and other required data; ticket order quantity; any optional products, features, or services requested by the Program Manager or designee, and pricing. The Bureau refers to the game specifications as working papers.

d. The Program Manager or designee must approve these specifications and issue a purchase order before ticket manufacturing begins. The contractor must manufacture and deliver the tickets according to these working papers. The working papers for each game will become part of the contract. For Validation Pull-Tab Tickets the contractor shall also furnish electronic files of approved ticket and flare card art to the Bureau for promotional use.

e. The contractor will generate working papers for the games in PDF format provided by the Bureau. Schedules will be established in cooperation with the Program Manager and working papers executed to facilitate the orderly process for the production and delivery of tickets. The cost of working paper creation and revision shall be included in the base ticket price.

f. Providing Independent third-party focus group testing when requested by the Bureau.

Program Manager – Pull Tabs:

Name TBD, Email: TBD Phone: TBD

1.1. Pull Tab-Specifications

a. Prize Structure

1. Contractors shall produce games using the guaranteed low-end prize structure (GLEPS) method of winning ticket dispersion and randomization, such that each deal of pull-tab tickets produced for a game shall contain the same total value of low-tier and mid-tier winning tickets, but each will have varying numbers of winners of various denominations. The contractor shall incorporate multiple configurations of low-tier and/or mid-tier prizes at random into deals of tickets.

2. Contractor must also propose method(s) of seeding high-tier statewide prizes that will be available for validation at any Lottery Claim Center. Method must ensure game and prize integrity throughout the printing and seeding process.

3. The contractor will furnish to the Bureau a preliminary prize structure for each game prior to receiving final approval to proceed with the manufacture of tickets.

4. The contractor will, at no additional expense to the Bureau, guarantee:

a. That winning tickets are distributed with no discernible pattern throughout the entire game production.

b. That the total value of prizes will constitute no more than the percentage of gross revenue as determined by the Bureau prior to production.

c. That prizes designated as “guaranteed” in the game prize structure are all present in the delivered tickets within tolerances agreed to in the working papers.

5. The contractor shall furnish to the Bureau reporting for each game that details any omitted tickets, damaged tickets, under-printing of tickets, over-printing of tickets, etc. The report must include the actual number of saleable winning tickets of each prize and total saleable tickets for the game. The contractor and the Bureau will negotiate the format of the ticket production report and will parallel the format presently used in instant game production reporting. The contractor shall produce and deliver the quantity of tickets specified in the approved purchase order and deliver no later than 60 calendar days prior to the start of the game(s).

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

b. Ticket Design

1. Contractor shall be responsible for working with existing and creating new ticket designs/themes.

2. The contractor shall include winning combination patterns, winning and non-winning symbols, ticket front art and ticket back art including opening tab perforations in the working papers.

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Bidder must describe how they comply with the above requirement(s):

1.2. Trademark and Service Mark Searches

Contractor will conduct trademark and service mark searches for all game and/or promotion names not owned by the Contractor no less than 60 calendar days in advance of game production or the promotion and as used during the term of the contract, and provide to the Bureau a written legal opinion as to the permissible use of each game name based upon a search of registrations and any applications for registration filed with the United States Patent and Trademark office, applicable state agencies and other appropriate sources.

New trademarks and service marks developed for the Bureau will be the property of the State of Michigan and the contractor will register the new trademarks and service marks in the name of the State of Michigan at its discretion. Upon approval or denial of trademark, the contractor shall provide the Program Manager or designee with a copy of the signed registration or denial.

For games owned by the contractor, the contractor will provide a letter warranting its ownership and granting the Bureau the right to use the game name.

Where contractor does not own or have licensed use of any game name or artwork, it is understood that: Contractor’s indemnification obligations outlined in the contract apply, the Bureau is under no obligation to undergo an independent inquiry, and agreement to the working papers or any other approval by the Bureau does not waive, diminish, or otherwise limit contractor’s indemnification obligations. The State of Michigan relies on the contractor to perform a diligent inquiry into the permissible use of all artwork associated with a game, even if employees of the State are involved in the general design or review of such artwork, and it is agreed that contractor’s indemnification obligations can only be waived or limited by a written amendment to the contract that is specific to the game, the name or artwork at issue, and signed by both the Program Manager and Program Manager. Anything less, such as emails or statements on working papers are ineffective.

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Bidder must describe how they comply with the above requirement(s):

1.3. Proprietary and Patented Play Styles & Licensed Properties The contractor will make available for use by the Bureau, at no additional cost, all currently held proprietary and/or patented play styles, copyrights, service marks or trademarks owned by the contractor. If the contractor develops or acquires any proprietary and/or patented play styles, copyrights, service marks or trademarks during the term of this contract, then these items also will be made available to the Bureau at no additional cost. The Bureau will also have the right to acquire proprietary and/or patented play styles from other sources for incorporation into games produced by the contractor.

The contractor must list and describe in its response to this RFP any and all currently held exclusive licensing agreements under which the contractor has been granted rights by a third party, or other properties licensed to the contractor that relate to the products and services contemplated by this RFP. Subject to the terms and conditions of the applicable license agreements, all the above must be available for sublicense to the State of Michigan for use in producing pull tab tickets or in any advertising/promotions for the tickets. The required listing of all licensed properties must indicate which properties are available at no additional cost and those that will require an additional fee, if the Bureau chooses to offer a game featuring this property.

The State of Michigan reserves the right to acquire licensed properties from other third-party sources at its own expense for incorporation into pull tab games printed by the contractor during the term of the contract. The contractor agrees that it must print such games and in doing so shall not be deemed to have agreed with or otherwise acquiesced to the legitimacy of the underlying license or ownership claim.

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

1.4. Randomization

a. The contractor must randomly distribute winning tickets throughout the game and throughout each control unit without any determinable pattern.

b. The contractor must produce each control unit (pool) using a randomization program unique from all other control units produced for a single game.

c. The contractor must specify the number of tickets per control unit in the working papers for each game.

d. The contractor must produce each game using randomization programs unique from another game.

e. Number randomization programs used for printing tickets should be organized such that winning tickets are interspersed among non-winning tickets.

f. The contractor shall not produce winning and non-winning tickets or achieve randomization of winning and non-winning tickets through separate production or manual or mechanical assembly of tickets into deals.

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Bidder must describe how they comply with the above requirement(s):

1.5. Certification

For each game the contractor shall engage the services of an independent laboratory selected by the Bureau to certify to the randomization of winning tickets as specified above in the section entitled Randomization, and to the odds of winning in each prize category as specified in the executed game specifications for each game. The contractor shall deliver the laboratory’s report of observations and findings to the Program Manager or designee within 15 calendar days after completion of ticket production.

The laboratory shall also audit a sufficient sampling of game production files along with a representative sample of deals of actual finished tickets selected at random to ensure compliance with the contract and working papers. The contractor shall deliver the auditor’s report of observations and findings to the Program Manager or designee within 15 calendar days after final shipment but not later than 7 calendar days prior to start of sales.

Testing procedures are geared to ascertain compliance with NAGRA Pull-tab Standards as amended in 2017 along with any additional testing areas specified by the State.

The contractor shall provide the Bureau or designee with a minimum of 2 voided deals from each channel at least 60 calendar days prior to the game launch for testing purposes. The contractor shall be responsible for all costs of the initial testing of each game and for any additional testing necessary as the result of deficiencies identified through the initial test.

The contractor shall provide the third-party lab contracted by the Bureau with a minimum of 4 voided books from each channel at least 60 calendar days prior to the game launch for testing purposes. The contractor shall be responsible for all costs of the initial testing of each game and for any additional testing necessary as the result of deficiencies identified through the initial test.

a. The testing shall ensure all the following:

1. Packaging shall include tamper resistant seal and information required on the outside of packaging (including serial number, barcode, ticket count, ticket price, expiration date).

2. Flares shall contain information required by Michigan Lottery (game name, form number, ticket price, winning symbols & amounts, serial number).

3. Pull-tabs shall include information required by Michigan Lottery (MI Lottery, form number, ticket price, winning symbols & prize amounts, minimum 6-digit serial number).

4. Testing shall include the use of high intensity lamp with focusing lens to discern if any concealed symbols/features can be determined and to mitigate opacity/peaking.

5. Pull-tab construction shall be inspected for cut variations, color variations, tie/tic quality, that each ticket within a deal bears the same serial no., winner protection requirements, symbol visibility and centering, gluing quality, tab perforation requirements.

6. Pull-tabs shall be opened to find the winner locations and ascertain if they meet NAGRA Randomization standards. Graphs are completed for each pull-tab deal and row and sent to Michigan Lottery.

7. A Pull-Tab Standards Report is to be completed and sent on each Form No. tested. Also, a sample of everything enclosed in the Deal box is sent to Michigan Lottery.

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Bidder must describe how they comply with the above requirement(s):

1.6. Game, Deal, Ticket, Validation, Check Digit and Barcode Numbers Each deal of pull-tab tickets will contain a game and deal number which is to appear on each ticket. The Bureau will provide the three-digit game number. The six-digit deal number will be consecutive and begin with 000001. Each ticket will also contain a three-digit ticket sequence number. The first ticket sequence number in a deal will be 001 and the last ticket sequence number will be determined by the deal size ordered.

Each ticket must contain a unique validation number applied by a non-impact imager. The five-digit validation number will be located behind the windows with the exact location specified in the working papers for each game.

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1.7. Bar Coding

Each ticket must contain a bar code containing eighteen (18) numeric characters consisting of the format code, game number, deal number, ticket number, the first three digits of the validation number, and the two-digit MOD 100 check formula.

a. The barcode will have a minimum quiet zone of .25” plus or minus (+/-) .125”. Contractor bar codes must be compatible with the Bureau’s current and future gaming systems operations.

b. The numbers described above will be displayed on the tickets in the following manner:

1. Bar coded information – FGGGBBBBBBEEEEEEMM – printed on the front of the ticket, where:

2. Numerically displayed below the bar code on the front of the ticket, and as indicated in the Working Papers on the front of the ticket:

F-GGG-BBBBBB-EEEEEE

3. Printed under the windows will be a Five Digit Retailer Validation Number. This number will be required to complete a barcode decryption and will ensure ticket integrity and that the ticket has been opened/player prior to validation. Its format is as follows: PPPPP where PPPPP is the PIN number which must be underlined. The PIN will also be printed under the pull tab in PDF417 barcode format. The information encoded into the PDF417 under the pull tabs will be the same 5 digits described previously as the PIN of Five Digit Retailer Validation Number.

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1.8. Data Processing Requirements

The minimum data processing requirements which the vendor must furnish to the State for each individual pull-tab game at no additional cost include, but are not limited to, the items listed below. All load files should be delivered on the SFTP server, ASCII format.

a. Serialized inventory file An electronic file containing data required for the pull-tab game tracking and distribution activities of the Bureau and its designated vendors. Each data record will contain information pertaining to a single deal of pull-tab tickets including, but not limited to, the deal number, the carton number, and the disposition of the deal at the end of the printing process. The Bureau requires this file three weeks prior to the beginning of public sales for an instant game.

b. High-tier winner validation file An electronic file containing validation data for all winning tickets in a game with prize amounts greater than $25.00 or other threshold determined by the Bureau. Each individual data record contains, but is not limited to, the winning validation number and prize level for a single high-tier ticket. The data records will be sorted in validation number order. The Bureau requires this file three weeks prior to the beginning of public sales for an instant game. Both winning and non-winning tickets shall display unique validation numbers.

c. Low-tier winner validation file An electronic file containing validation data for all winning tickets within a game naming prize amounts of $25.00 or below, or other threshold determined by the Bureau. Each individual record contains, but is not limited to, the low-tier winning validation numbers and prizes for a single deal of tickets. The data records are sorted in deal number order. The Bureau requires this file three weeks prior to the beginning of public sales for an instant game. Both winning and non-winning tickets shall display unique validation numbers.

d. End-of-production prize structure A document containing the breakdown of winning tickets, by prize amount, which is used by the Bureau to verify the validation data on both winning validation files. The prize structure will list the number of winners for every possible combination of an individual prize (i.e. when a $4 prize could be won as $1 X 4, $2 X 2, or $4 X 1, each of the three combinations would have a line in the breakdown) by pool and game, along with dollar totals and percentages of the total prize payout. Should the Bureau choose to receive additional shipments of a game, the vendor will supply two versions of the EOP Prize Structure: the first document will show the breakdown of the new shipment while the second prize structure will detail the entire game. This document should accompany, if possible, or closely follow the winner validation files.

e. End-of-distribution void validation file An electronic file containing all winning validation numbers (both high and low-tier) from pull-tab ticket deals which the Program Manager or designee has deemed to be void and no longer available for sale. The Program Manager or designee will supply an electronic file of voided deal; numbers from a single game to the vendor. Each record on the resulting file will contain only the game number and the validation number for a single void ticket – no connection should be made to the deal number. The file will be sorted in validation number order.

f. Encrypted Validation Code File An encrypted electronic file containing the 8-digit validation number (VIRN) for all non-winning tickets will be required. The file will be encrypted using an algorithm of the Bureau’s choosing. The file will be used to facilitate promotions that require players to submit non-winning tickets over the internet and will enable the Bureau to verify proof of purchase in real time and as a consequence alleviates players from having to mail-in entries. The Bureau requires this file three weeks prior to the beginning of public sales for a pull tabs game.

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

1.9. Test files

Should the need arise – for application changes, file format changes, QA, etc. – the Program Manager or designee may request any or all the above items for the purposes of testing. Program Manager or designee may request a specific production game to be used or request the vendor to provide a test game using parameters set forth by the Bureau. Test materials will be delivered by the vendor within 14 calendar days of receipt of the request.

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1.10. Validation Information and Records

The contractor shall provide the Program Manager or designee with electronic data files containing winning ticket validation data as specified in subsection 1.8 Data Processing Requirements.

a. The contractor will maintain complete records of the contents of every deal of tickets, page by page, ticket by ticket, and spot by spot for fifteen (15) months from the announced end of sale to retailers or will have computer programs capable of reconstructing such records.

b. The contractor shall only reconstruct tickets manufactured for the Bureau which have been requested by the Michigan Lottery Commissioner or the Director of Security.

c. The contractor’s capability to reconstruct tickets shall be kept secure. The Bureau will review the contractor’s reconstruction security to determine acceptability to the State.

d. The contractor shall deliver to the Program Manager or designee a written response to all requests for ticket reconstruction no later than 3 working days from receipt of such request. The Bureau may require expedited responses in certain cases and the contractor shall answer no later than the next working day.

e. The contractor shall maintain a log of all requests for ticket or deal reconstruction indicating, at minimum, the date of request, the requestor’s name, and a reference number that will identify the specific data requested.

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Bidder must describe how they comply with the above requirement(s):

1.11. Disposition of Data Files

All computer data files created by the contractor containing game information must be held by the contractor in a secure storage area for a period of 3 years after the expiration date of the game or until notified in writing by the State that these data files may be destroyed sooner. The Contractor must certify that the method of storing active game files and the process used to destroy obsolete game files will prevent the accidental or malicious release of any game information during and after the life cycle of a game.

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Bidder must describe how they comply with the above requirement(s):

1.12. Quality Assurance

a. Ticket Production Standards The contractor must provide computer imaged, individual boxed tickets in serial number sequential order.

1. Ticket Form and Stock Tickets must consist of top sheet glued to a bottom sheet. The black side of the bottom sheet will face inward. Overall ticket thickness will be .024. The top sheet will be cardstock .012 and bottom sheet will be card stock .012. Domino black back index stock or equivalent manufactured from 100% recycled paper fibers. Tickets must be coated on both sides with a clear coating to prevent penetration of moisture and lessen friction during the use in ticket vending machines.

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2. Recycled Content and Recyclability Deliverables: Without compromising performance or quality, the Bureau prefers deliverable(s) containing higher percentages of recycled materials. The contractor must indicate an estimate of the percentage of recycled materials, if any, contained in each deliverable:

Bidders Response (If no recycled content indicate 0%):

Total estimated percentage of recovered materials:

Estimated percentage of post-consumer materials:

Estimate percentage of post-industrial materials:

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3. Printing Methods Printing methods are at the discretion of the contractor. All printing must be crisp and legible and meet the approved quality standards specified in the working papers.

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4. Ticket Size The contractor shall have the ability to produce a variety of ticket sizes within and beyond the below approximate range. The exact size of tickets to be produced for each game will be specified in the working papers.

*Above measurements (+ / - 1/16”)

a. For any given game, die-cut openings for all tickets shall not vary in size, from deal to deal, or from shipment to shipment.

b. The opening tabs shall be centered top to bottom and side to side on each ticket.

c. Perforations and die-cutting shall allow easy opening while not permitting tickets to be accidentally opened during normal handling.

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5. Ticket Colors The contractor shall ensure color consistency from ticket to ticket and from deal to deal so that it is impossible to identify winning tickets due to a difference in color, the appearance, or extraneous marks on the tickets or any other distinguishing characteristics.

a. The face of the ticket (the side opposite the tabs) and the game play area (symbols and captions under the tabs) shall be multicolored using up to a 5-color process.

b. The tab side of the ticket shall be multicolored using up to a 5-color process.

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6. Play Symbols Play symbols/numbers should appear on individual tickets comprising the game and any computer work necessary to generate the numbers and symbols and must be included in the price quoted in the pricing pages. Play symbols shall be as follows:

a. Colors and symbols on the play area should correspond to the same colors and symbols on the front of the ticket. The contractor shall use a four or five color process and specify the number of colors involved.

b. Uniformly positioned and aligned on the tickets so that no part of a symbol or number remains covered when the tab is removed.

c. Symbols or numbers must not be able to be viewed or winning numbers determined from the outside of the ticket using high Intensity lamp of 500 watts or more.

d. Protection shall be provided by using opaque paper.

e. Sufficiently legible to be readily discernible to a person with normal vision under normal lighting conditions.

f. Printed with fonts approved by the Bureau. Special fonts and play symbols for specific games shall be included in the ticket price.

g. No ticket shall contain more play symbols than authorized by the working papers and will be accompanied by appropriate captions to provide redundancy for security reasons and to prevent consumer disputes.

1. Captions must spell out or abbreviate the play symbols in type smaller than the play symbols themselves in a different but recognizable form.

2. The caption on each symbol throughout the game will appear in black.

3. The captions that will be used in each game shall be specified in the working papers and agreed to by the Bureau.

h. No ticket shall contain more play symbols or validation codes than authorized by the working papers. If more symbols appear other than authorized and cause a ticket to be an apparent winner, the contractor shall be responsible for payment of the prize indicated on the ticket.

i. Individual tickets must be printed such that there is never more than one winning combination of numbers or symbols within a single game play area unless specifically designated to win more than one prize.

1. Individual tickets including non-winning tickets should contain unique patterns of numbers or symbols to maintain the image of randomness in each game.

2. There must be as little duplication within a deal of non-winning ticket patterns of numbers or symbols as possible.

3. Consecutive non-winning patterns should not appear.

j. Number/symbol patterns, plate layouts and plans for guillotine cutting are required to be developed by the Contractor so that when organized into deals, winning tickets will be totally random, but tickets will be in sequential order for inventory management purposes.

1. Randomization of winning tickets must be organized to ensure that it will not be possible to pick out winning tickets from a deal on the basis of variations in printing color.

2. It must not be possible to detect or pick out winning from non-winning tickets through variations in printing graphics or colors.

3. The contractor should be prepared to offer printing/cutting/packaging solutions to meet these criteria.

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7. Ticket Perforations and/or Die-Cut Openings For any given game, die-cut openings for all tickets shall not vary in size, from deal to deal, or from shipment to shipment. The opening tabs shall be centered top to bottom and side to side on each ticket. Perforations and die-cutting shall allow easy opening while not permitting tickets to be accidentally opened during normal handling.

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8. Ticket Sealing/Gluing Sealing or gluing the two plies of paper stock required for the construction of the ticket shall occur securely on all four edges of the ticket and between the individual game ticket tabs.

a. It must not be possible to separate the top and bottom layers of the tickets without destroying the ticket validity.

b. Glue must be applied in the register and must not cause interference or difficulty in opening the tabs.

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9. Ticket Finish The front of all tickets shall be finished with an overcoat of glossy clear varnish to provide a crisp shiny finished appearance. Varnish may be applied using an offset process. The cost of varnish is included in the base price.

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10. Sample Tickets

a. The contractor shall deliver to the Bureau, with the first delivery of tickets for a game but no later than three weeks prior to the beginning of sales, 1,000-1,500 (dependent on deal size) samples of the tickets for each respective game for distribution by the State to sales agents.

b. Each of the standard size samples shall have VOID printed on the ticket. The location of the word VOID shall be defined in the working papers.

c. The cost of sample tickets shall be included in the price per thousand saleable tickets. The Contractor will not invoice, and the State will not pay, for sample tickets.

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11. Ticket Order Quantity

a. The contractor will deliver the order quantity with an allowance of plus or minus 5 percent of the order quantity of tickets ordered for each game. If production is above the tolerances listed here, the contractor shall provide to the Bureau an under/over printing report for its review.

b. If tickets in excess of the above delivery tolerance are produced, the Bureau may, at its sole option, elect to accept delivery of such tickets and attempt to sell them. The Lottery will not be obligated to pay for any such excess tickets if not sold.

c. If the tickets are under the -5% tolerance, the contractor at no additional cost to the Lottery will print additional tickets to meet the threshold outlined in the games working papers.

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12. Flare Cards One flare card printed with a 4-color process shall be inserted in each deal.

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13. Deals

a. The number of tickets to be included in each deal will be specified in the working papers and will remain constant within each game. With the implementation of barcode pull-tabs, the standard deal size will be changing. The typical deal size will range from 156-756 tickets and will vary by price point.

b. Packing size of deals of non-standard ticket or deal size will be as mutually agreed upon for the specific game and specified in the working papers.

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14. Packaging, Wrapping and Labeling Packaging must be optimized to permit the lowest freight rate.

a. The Bureau and the contractor will agree upon a number of game tickets packaged in each deal as specified in the working papers and will not include void tickets.

b. The deals of tickets shall be wrapped with a heat shrink process in a clear poly wrap material of sufficient gauge to prevent bursting while being handled or while in shipment or storage.

1. The shrink wrap will be sufficiently tight around the deal of tickets to permit the bar code to be easily scanned through the shrink wrap and to prevent the shrink wrap from catching or pinching in conveyors, rollers, pointed edges as might be encountered in the packaging, warehousing, and distribution processes.

2. All shrink wrapped deals of tickets will include a vending decal or sample ticket and a flare card. Each shrink-wrapped package will be placed in a deal carton or package. Deal carton/package dimensions to be determined.

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15. Cartons

a. If the contractor is going to use cardboard cartons they must be 275 lb. test. The top and bottom of the carton must be sealed with a fabric or fiber reinforced tape. No staples or glue will be used. The tape must not obscure labels or other markings on the carton. There will be no printing on the carton or sealing tape other than as specified in the contract.

b. Carton/package size will be as required to hold the number of deals required to be packed in the carton with minimal horizontal or vertical play.

c. Packing size of deals of non-standard ticket or deal size will be as mutually agreed upon for the specific game.

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16. Carton Labeling

a. A contractor must affix each carton with a computer-generated label that displays, in clearly readable type:

1. The game name

2. The carton number

3. The ‘from-through’ deal numbers contained therein

4. The total number of deals in the carton

5. The statement ‘This carton contains registered materials which will be voided if stolen’ or similar approved language must appear on the bottom of each label.

b. Each carton/package label will contain a unique (to that game) carton number clearly printed and visible. A colored sticker will be applied to each carton next to the carton label. A different color will be used for each game and will be identified in the executed specifications.

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17. Promotion and Merchandising

a. Game concept and design for lottery online and focus group research;

b. Analysis of pull-tab strategies or techniques employed in the industry;

c. For the life of the contract and any extensions, the contractor shall provide technical and marketing support, at no additional cost to the State, in the form of consultation, answering questions, assistance in the diagnosis of problems, and developing new features requested by the Bureau.

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18. Marketing Services, Promotions, and Merchandising

a. At no additional cost, Contractor shall provide high-resolution images of all pull tab games and associated artwork in any file format designated by the Bureau for display and promotional uses.

b. Where merchandise, travel, or other non-cash prizes are part of a pull-tab game, contractor shall obtain and facilitate fulfillment of such merchandise, travel, or other prizing for the Bureau without markup or additional charge.

c. Contractor shall prepare and provide market research and analysis at no additional cost for review by the Bureau including:

1. Monthly sales analysis including game indexes and comparison to similar price points;

2. Quarterly review of sales in Michigan as compared to other jurisdictions;

3. Annual review of pull tab sales including comparison of price points over a five year period;

4. Regular updates on strategies and techniques being used in the industry; and

5. Other sales data and comparisons.

d. If requested, contractor shall retain a third-party research company or companies to conduct qualitative and quantitative research such as focus groups and online surveys.

1. Retention of third-party researchers is subject to approval by the Bureau;

2. Costs of third-party research must be passed to the Bureau without any additional markup or charge;

3. Third-party research agreements must be between contractor and the third party and must not include any minimum number of projects or work orders.

e. If requested, contractor shall retain one or more third party consultants to review and advise game design and structure.

1. All third-party consultants are subject to Bureau approval.

2. All contracts with third-party consultants must be between contractor and the third party.

3. Contractor shall pass the costs of all third-party consultants to the Bureau without any markup or additional charge.

f. Where a pull-tab game ordered by the Bureau includes a second chance drawing or other second chance game, contractor shall at no additional cost to the Bureau:

1. Work with the Bureau to integrate such second-chance games onto any website or mobile applications.

2. Secure and provide all necessary licenses and permissions for use in connection with the game;

3. Provide high-resolution images in any file format designated for use with the second chance game or promotion.

g. It is presumed that all second chance games will be offered on websites and mobile applications.

1. Contractor shall clearly identify any second chance game that must be hosted on a website or application other than those designated by the State;

2. Contractor shall cover all costs associated with either:

a. moving a second chance game functionality to the website and applications, or

b. operating a second chance game that must be hosted on a website or application other than those identified by the Bureau.

h. Provide or subcontract for the provision of other marketing and sales support as agreed upon by the parties.

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

19. New Game Capabilities The contractor shall describe its capabilities to design and produce games which are different from standard pull-tab games. Examples include games developed for specific target markets, games with unusual tickets, shapes or play formats, games with out of the ordinary prizes or any other characteristics which set them apart. The information provided should include: the target market(s) for the games and reasons why they have been (would be) successful; suggested retail price; contractors unique manufacturing capabilities and security features. For any games which have been marketed, expected and achieved sales results should also be included.

List all exception(s):

20. Vending

a. All tickets must be compatible with the ticket dispensing systems currently in the Michigan pull tab market (American Games, Technik, and Arrow) and any reasonable vending device used in the future.

b. The contractor may modify the ticket stock within reason, at the Bureau’s discretion, during the term of the contract.

c. Proper vending in varying humidity levels is required. Contractors should take into consideration a seasonal 100% relative humidity level in Michigan.

List all exception(s):

21. Ticket Testing

a. At vendors expense, the Bureau shall arrange for security and bar code quality testing of tickets by an independent laboratory at the time of the initial production of tickets and as deemed necessary by the Bureau.

b. The contractor shall provide the Program Manager or designee with a minimum of 4 voided deals at least 60 calendar days prior to the game launch for testing purposes. The contractor shall be responsible for all costs of the initial testing of each game and for any additional testing necessary as the result of deficiencies identified through the initial test.

c. See Certification Section above for other testing requirements.

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

22. Omitted / Defective Ticket

a. Omitted deals are: (1) those not printed; or (2) those rejected by the contractor or the Program Manager and removed from the contractor’s shipment due to inadequate quality. Omitted deals may not be made-up without the express written approval of the Program Manager.

b. All tickets which are rejected and removed from production due to inadequate quality will be immediately removed from the production line area, placed in sealed cartons and stored in a locked area within the contractor’s premises.

c. The contractor will destroy all rejected tickets and ticket stock by shredding, pulverizing, burning, or dissolving such rejected tickets.

d. The contractor must destroy rejected tickets at the end of each day’s ticket production, provided the finished saleable deals of tickets, carton labels and all related production documents affected by the rejected deals have been reconciled to accurately account for each omitted or rejected deal of tickets. In the event such reconciliation cannot be completed during the production day that the rejected tickets are removed from production, such rejected tickets must remain in a secure locked area, accessible only to the Contractor’s plant supervisor, and destroyed immediately upon the completion of the necessary reconciliation.

e. The contractor will prepare a list of omitted deals for each ticket shipment to Lottery. The contractor will deliver the list with the shipment from which the omitted deals occurred. A list of destroyed tickets shall also accompany the ticket shipment. This list will describe the method of destruction and will contain the signatures of the persons performing the destruction, the dates of destruction and the signature of the plant supervisor attesting to the destruction.

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

1.13. Incentives

Explain any special incentives or services including, but not limited to, return policies, trade-in programs, quantity discounts, etc.

Bidder must provide detailed information as requested in the above requirement(s). If none, enter N/A.

2. Service Requirements

2.1. Time Frames

Contractor will adhere to the following game delivery schedule:

a. Within 2 weeks of receiving notification that the prize structure, play style, and artwork for a particular game have been approved, the contractor will deliver a set of draft working papers to the Program Manager or designee for review and comment.

b. Within 1 week after receipt of comments from the Program Manager, the contractor will deliver to the Program Manager the final working papers for signature (execution). Final ticket art will accompany the final Working Papers.

c. Within 60 calendar days validation pull tab tickets after receipt of executed working papers and approved purchase order, the contractor shall produce and deliver the quantity of tickets specified in the approved purchase order.

List all exception(s):

Bidder must describe how they comply with the above requirement(s):

2.2. Delivery

The contractor will make deliveries based on the date executed in the working papers. Ticket delivery will be on a per call basis. Tickets are not to be shipped by the contractor unless prior authorization to ship is given by the Program Manager or designee.

List all exception(s):

Bidder must describe how they comply with the above…