210000001676 - Schedule A - Statement of Work V2.docx

Request for Proposal (RFP) No. 210000001676 WIC Infant Formula Rebate Program

Definitions. For the purposes of this Contract, the following terms have the following meanings:

Authorized WIC Vendor means any vendor contractually authorized to accept Michigan WIC EBT Cards from WIC clients for reimbursement by the State of Michigan.

Business Day means any day other than a Saturday, Sunday or State-recognized legal holiday from 8:00am EST through 5:00pm EST unless otherwise stated.

Benefit Start Date means the day of the month the client’s WIC food benefits start.

CFR means Code of Federal Regulations.

Contract Brand Infant Formula means all infant formulas (except exempt infant formulas) produced by the manufacturer awarded the infant formula cost containment Contract. If under a single solicitation the manufacturer subcontracts for soy-based infant formulas, then all soy-based infant formulas covered by the subcontract are also considered Contract brand infant formulas. Contract brand infant formulas also include all infant formulas (except exempt infant formulas) introduced after the Contract is awarded.

Days means calendar days unless otherwise specified.

Deliverable means physical goods and/or services required or identified in a Statement of Work.

Department means the Michigan Department of Health and Human Services (MDHHS).

DHHS means U.S. Department of Health and Human Services.

DTMB means the Michigan Department of Technology Management and Budget.

Eastern Time means either Eastern Standard Time (EST) or Eastern Daylight Time (EDT), whichever is prevailing in Lansing, Michigan.

EBT (Electronic Benefits Transfer) means the method that permits electronic access to WIC food benefits using the Michigan WIC EBT Card.

EBT Contractor means the Company responsible for processing EBT transactions and payments and request for payments to Authorized WIC Vendors.

Effective Date means the date the contract is fully executed, anticipated around July 14, 2021.

Exempt Infant Formula means an infant formula intended for commercial or charitable distribution that is represented and labeled for use by infants who have inborn errors of metabolism or low birth weight or who otherwise have unusual medical or dietary problems (21 CFR 107.3). Infant formulas are classified as exempt infant formulas by the United States Food and Drug Administration.

FDA means United States Food and Drug Administration.

FTP (File Transfer Protocol) means the standard network protocol used to transfer computer files from one host to another host over a TCP-based network, such as the Internet.

Infant Formula means a food that meets the definition of an infant formula in section 201(z) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(z)) and that meets the requirements for an infant formula under section 412 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 350a) and the regulations at 21 CFR parts 106 and 107.

Manufacturer means a bidder that possesses the manufacturing and marketing capabilities necessary to fulfill all requirements specified in the RFP.

Michigan WIC EBT Card means the card used by Michigan WIC clients to redeem WIC food benefits.

Net Price means the difference between an infant formula manufacturer’s lowest national wholesale price per unit for a full truckload of infant formula and the rebate level or the discount offered or provided by the manufacturer under an infant formula cost containment Contract.

Non-Contract Brand Infant Formula means all infant formula, including exempt infant formula, that is not covered by an infant formula cost containment Contract awarded by the State agency.

Non-Contract Non-Exempt Infant Formula means infant formulas which are designed for healthy infants but manufactured by a company other than the Contract manufacturer.

Primary Contract Brand Infant Formula means the specific infant formula for which manufacturers submit a bid to a State agency in response to a rebate solicitation and for which a Contract is awarded by the State agency as a result of that bid.

Program Manager means the staff member who will monitor and coordinate the day-to-day activities of the Contract.

Rebate means the amount of money refunded under cost containment procedures to the State agency from the manufacturer of the particular food product as the result of the purchase of the supplemental food with a voucher or other purchase instrument (EBT card) by a client in the State agency’s program. Such rebates must be payments made subsequent to the exchange of a food instrument (Michigan WIC EBT Card) for food.

Retail Food Delivery System means system in which WIC clients, parents or caretakers of infant and child clients, and proxies obtain authorized supplemental foods by submitting a food instrument (Michigan WIC EBT Card) to an authorized vendor.

RFP means a Request for Proposal designed to solicit proposals for services.

Services Begin Date means the commencement of all services on November 1, 2021.

Settled Date is the date the WIC Program makes an electronic payment to an authorized WIC vendor.

State means the State of Michigan.

State Agency means the Michigan Special Supplemental Nutrition Program for Women, Infants, and Children, also referred to as the “WIC Program.”

Statement of Work (SOW) means the statement of work attached as Schedule A to this Contract, including all attachments and exhibits thereto.

Subcontractor means a company selected by the Contractor to perform a portion of the Services, but does not include independent Contractors engaged by Contractor solely in a staff augmentation role.

Successful Bidder means the bidder who is awarded a Contract as the result of solicitation.

UPC means Universal Product Code, a number and barcode that identifies an individual product for purchase.

USDA means United States Department of Agriculture.

WIC means the Special Supplemental Nutrition Program for Women, Infants and Children.

WIC State Plan means a plan of Program operation and administration that describes the manner in which the State agency intends to implement and operate all aspects of WIC Program administration within its jurisdiction in accordance with Federal Regulation (CFR 246.4), and as approved by the United States Department of Agriculture.

Request for Proposal (RFP) No. 210000001676 WIC Infant Formula Rebate Program This schedule identifies the anticipated requirements of any Contract resulting from this RFP. The term “Contractor” in this document refers to a bidder responding to this RFP, as well as the Contractor who is awarded the contract. The term “bidder” is used to identify where specific responses to the RFP are required.

The Contractor must respond to the specific Schedule A requirements, as indicated below.

The purpose of this RFP is to establish a Contract for a rebate program on infant formula purchased by the WIC Program through the WIC Retail Food Delivery System for a period of November 1, 2021 through October 31, 2026. The terms of this Contract will not extend after October 31, 2026.

The Transitional Implementation Period will be the time period between the anticipated Effective Date and the Services Begin Date on November 1, 2021. Contractor must commence performance of all services, without interruption, on November 1, 2021. No Rebate payment from the Contractor will be expected during the Transitional Implementation Period.

Terms are not to be negotiated with respect to the following: rebate amounts that will apply to the contract, or the method by which the rebates will be calculated. (USDA Policy Memo 94-6).

As stated in the Federal Register (CFR 246.16a(c)(5)), the “State agency must award the Contract(s) to the responsive and responsible bidder(s) offering the lowest total monthly net price for infant formula or the highest monthly rebate for a standardized number of units of infant formula. The State agency must calculate the lowest net price using the lowest national wholesale cost per unit for a full truckload of the infant formula on the date of the bid opening.”

The State is seeking quotations from manufacturers of infant formula to supply and provide a rebate on all infant formulas it produces that the State chooses to issue, except exempt infant formulas. Rebates will be paid by the Contractor to the State on a per unit basis. The State intends to award a contract to a single manufacturer whose proposal offers the lowest total monthly net price for iron-fortified milk-based infant formula that is suitable for routine issuance to the majority of healthy, full-term infants. The same percentage discounts applied to the wholesale truckload prices of the iron-fortified milk-based infant formula as bid, will apply to all other Contract Brand Infant Formulas, including new infant formula authorized for issuance by the WIC Program.

Over the course of the 60-month Contract period, the WIC Program is estimated to purchase 17,302,845 units of Contract Brand Infant Formula. The State is not obligated to purchase in this or any specific quantity.

Any awarded Contract between the State and any awarded Contractor is a separate document, whose terms are limited by Standard Contract Terms.

BACKGROUND

In accordance with the “Child Nutrition Act of 1966, as amended through the “Healthy, Hunger-Free Kids Act of 2010” P.L. 111-296, Dec. 13, 2010, the State of Michigan, Department of Health and Human Services, (herein referred to as the “Department”), Michigan Special Supplemental Nutrition Program for Women, Infants, and Children (herein referred to as the “WIC Program”), is seeking infant formula cost-containment systems which will produce the maximum savings and thus allow for the greatest number of clients to benefit from WIC Program services.

The WIC Program is administered by the United States Department of Agriculture (USDA) through its Food and Nutrition Service Division which has promulgated regulations governing the program at 7 CFR 246.1, et seq. USDA has contracted with the State of Michigan to implement the program through the Department in accordance with these regulations. As required by federal regulations, Michigan has adopted a WIC State Plan of program operation and administration that was submitted to and approved by the USDA. The WIC State Plan, as approved by USDA, establishes and governs the specifics as to how Michigan implements all aspects of the WIC program, including the administration and implementation of the WIC Infant Formula Rebate Program and this Contract.

The Department is the recipient of federal funds and is responsible for administering the WIC Program in Michigan in accordance with the Michigan WIC State Plan through a network of 47 local agencies, 213 local clinics and approximately 1,571 Authorized WIC Vendors, retail food stores and pharmacies throughout the State. Eligible WIC clients redeem WIC food benefits via Electronic Benefit Transfer (EBT) cards known as Michigan WIC EBT Cards, which can be used at any of the Authorized WIC Vendors throughout the State.

Michigan WIC EBT Cards are issued throughout the State to certified pregnant and postpartum (non-breastfeeding and breastfeeding) women, parents or caretakers of infant and child clients, and proxies. The WIC food benefits are specific in quantity and type (by UPC code) of nutritious foods, which may be purchased at an Authorized WIC Vendor. When benefits are redeemed by a WIC participant or proxy at an Authorized WIC Vendor, a WIC EBT transaction is completed. A WIC EBT transaction consists of several steps and begins with a pre-purchase authorization from the WIC Authorized Vendor to the EBT processor to ensure benefit availability and redemption requirements are met. Upon confirmation of benefit availability and redemption requirements, the WIC EBT transaction is approved and processed resulting in electronic payment to the Authorized WIC Vendor’s bank account. Additionally, the Michigan WIC program determines a not-to-exceed (NTE) value for each UPC and for each WIC Vendor Peer Group. If an Authorized WIC Vendor requests a purchase price exceeding the NTE value, they will only be reimbursed the NTE dollar amount set forth.

The average monthly participation for Federal Fiscal Year 2020 was 214,556, including approximately 50,000 infants, of which 6720 were exclusively breastfed. The average monthly number of infants issued Contract Brand Infant Formula was 38,645 and the average monthly number of infants issued exempt infant formula was 4,225.

Participation and infant formula data do not necessarily reflect actual issuance and redemption that will occur under the contract resulting from this RFP.

SCOPE

The State intends to Contract with one manufacturer whose iron-fortified, milk-based liquid concentrate, powder, and ready-to-feed iron-fortified infant formula meets the requirements under CFR 246.10(e)(1)(iii) & (2)(iii), and is suitable for routine issuance to the majority of generally healthy, full-term infants. The Contractor must rebate to the State a fixed amount per container of any infant formula in the manufacturer’s product line that meets the definition of a Contract Brand Infant Formula.

Based on milk and soy-based formula issuance numbers, it is anticipated that approximately 258,480 units of liquid concentrate, 16,762,740 units of powder and 280,500 units of ready-to-feed iron-fortified infant formula will be issued by the WIC Program during the 60-month Contract period. It is also anticipated that approximately 95% of the Contract formula issued will be milk-based, and approximately 5% will be soy-based. Except for the issuance of the Primary Contract Brand Infant Formula as formula of first choice, the State provides no guarantee of the quantity, type, or physical forms that will be used under a new Contract. Refer to Exhibit A, Attachment 1 for State of WIC Program Contract Brand Infant Formula issuance data between March 1, 2020 and February 28, 2021.

The Primary Contract Brand Infant Formula will be the first choice of formula for issuance to infants, with all other formulas issued as an alternative to the Primary Contract Brand Infant Formula. As stated in the Federal Register (CFR 246.16a(c)(7),(8)), the WIC Program reserves the right to approve for issuance some, none, or all of the winning bidder’s other infant formula(s). The WIC Program requires medical documentation before issuing infant formula covered by 7 C.F.R. 246.10(d)(1). The WIC Program currently does not authorize Non-Contract Non-Exempt Infant Formulas.

The WIC Program will issue infant formula in accordance with CFR 246.10(e)(1) through (e)(3) and (e)(9) of the WIC Program Regulations as described in the WIC State Plan. However, the WIC Program, in its sole discretion, reserves the right to utilize either the “Monthly Maximum” (CFR 246.10(e)(9) Table 1, Footnote 6) or the “Round Up” (CFR 246.10(h)) methodology for calculating maximum allowable infant formula quantities.

OUT OF SCOPE

Exempt infant formulas and WIC-eligible nutritionals issued by the WIC Program will not be subject to rebate billings. The WIC Program reserves the right to approve for issuance some, none, or all of the winning bidder’s exempt infant formulas after the bidding process has been completed.

REQUIREMENTS

1. General Requirements

1.1. Product Specifications

The Contractor must provide Deliverables/Services and staff, and otherwise do all things necessary for or incidental to the performance of work, as set forth below:

1. The Contractor must demonstrate the capability to make available for redemption supplies of the Contractor’s iron-fortified milk and soy-based liquid concentrate, powder, and ready-to-feed infant formula in sufficient quantities to serve the WIC Program caseload. By November 1, 2021, the Contractor must be able to adequately provide Contract infant formulas to supply approximately 50,441 infants at 1,571 Authorized WIC Vendors in 83 counties statewide on a monthly basis for 60 months.

2. The Contractor must demonstrate the capability to remit to the State a rebate per container in accordance with the reporting, billing and payment procedures described in Section 6. Invoice and Payment.

3. A minimum of one iron-fortified milk-based infant formula and one soy based infant formula in liquid concentrate, powder and ready-to-feed must be available.

4. Bidders that do not produce a soy-based infant formula must be required to subcontract with another manufacturer to supply a soy-based infant formula under the Contract. Refer to Section 3.3. Subcontractor.

5. The Contractor must pay the State a rebate on the soy-based infant formula supplied by the subcontractor. The rebate must yield the same percentage discount on lowest wholesale price per unit for a full truckload as the same physical form of the iron-fortified milk-based infant formula.

6. Contract Brand Infant Formulas must contain at least 10 milligrams of iron per liter (at least 1.5 mg iron/100 kilocalories) at standard dilution, provide 67 kilocalories per 100 milliliters (approximately 20 kilocalories per fluid ounce) at standard dilution, and not require the addition of any ingredients other than water prior to being served in a liquid state.

7. The bidder must certify it is registered with the Secretary of Health and Human Services under the Federal Food, Drug and Cosmetic Act (21 USC 301 et seq) and must certify that their formulas comply with the Federal Food, Drug, and Cosmetic Act and regulations issued pursuant to the Act. (CFR 246.10 (g)).

8. The Contractor must adhere to provisions set forth in FNS Instruction 800-2, dated 6/21/92 and GAO 06-282, Feb. 2006 (Policy Memo 2009-1):

Use of WIC Service Marks Manufacturer acknowledges that the WIC Acronym and the WIC Logo are service marks owned by the USDA, and that all rights therein and goodwill pertaining thereto belong exclusively to USDA.

Manufacturer must not use these service marks in any manner on its goods or their containers or packaging or on tags or labels affixed thereto. Manufacturer also must not use the WIC Logo in advertising or other promotional materials (collectively: “advertising”).

Manufacturer must not use the WIC Acronym in advertising in any manner that is likely to cause confusion, mistake, or deception as to the affiliation, connection, or association of Manufacturer with the WIC Program, or as to the sponsorship or approval of Manufacturer’s goods, services, advertising, or commercial activities, including nutritional message(s), by the WIC Program, USDA, or the State agency.

Manufacturer must include the following statement with any use of the WIC Acronym in Advertising: “WIC is a registered service mark of the U.S. Department of Agriculture for USDA’s Special Supplemental Nutrition Program for Women, Infants and Children.”

9. The Contractor must agree to supply and provide a rebate on all physical forms of infant formula it produces that the WIC Program chooses to issue, except exempt infant formula. This includes any new infant formula products introduced during the Contract term that meet the FDA definition of an “infant formula,” as defined in the Infant Formula Act of 1980.

10. As stated in Federal Register (CFR 246.16a(c)(4), “The bid solicitation must require bidders to specify a rebate for each of the types and physical forms of infant formulas specified in the following chart. These rebates apply proportionally to other infant formulas produced by the winning bidder(s).” For purposes of this section, the infant formula on which bids are solicited is the Primary Contract Brand Infant Formula.

11. During the Contract period, the Contractor must provide to the WIC Program, for any manufacturer increase or decrease in lowest national wholesale truckload prices, a cent-for-cent increase or decrease in the rebate amount effective on the first day of the month following the increase or decrease. The increase or decrease must apply to all of the EBT benefits issued with the Contractor’s brands that are redeemed in the billing month following the increase or decrease. Therefore the net wholesale price for each physical form may not be higher than the initial net wholesale price per container quoted in the Contractor’s bid sheet.

12. The Contractor will provide price increase or decrease notification to the Program Manager and designees, in writing via email, at least 90 days in advance of the effective date of the price change.

13. Any written communication from the Contractor to local WIC agencies or Authorized WIC Vendors regarding WIC Program policy or guidance will require prior written approval by the WIC Program. In addition, refer to Standard Contract Terms, Section 48. Media Releases.

Bidder Response to Section 1.1 Product Specifications, including subsection 7.

Bidder must provide response in Schedule C, Bidder Response.

1.2. Warranties

Refer to Standard Contract Terms, Section 37. Warranties and Representations.

1.3. Recall Requirements and Procedures

The WIC Program Manager and designees and Contractor must maintain immediate communication regarding issues of infant formula production, distribution, quality control issues, recalls, or rebates.

The Contractor must notify the Contract Administrator and Program Manager and designees via email and phone call or message within one (1) business day of any recall or safety notices relating to any and all infant formulas provided under the Rebate Contract. In addition, a hard copy of this notice must be received within two (2) business days, as specified in Standard Contract Terms, Section 2. Notices.

The Contractor is responsible for picking up and replacing or issuing credit for all products that are subject to recall at no additional charge to the State.

1.4. Quality Assurance Program

By tendering any Deliverable to the State, the Contractor certifies to the State that (a) it has performed reasonable quality assurance activities; (b) it has performed any reasonable testing; and (c) it has corrected all material deficiencies discovered during the quality assurance activities and testing.

1.5. Transition

A. Contract Execution: Refer to Section 7. Project Plan. The Contractor must have the Project Plan in place no later than 30 days following the Effective Date of this Contract.

B. Post-Contract Transition: Refer to the Standard Contract Terms, Section 25. Transition Responsibilities. Based on the rolling month Benefit Start Date method, rebate eligible redemptions may fall outside of the contract period up to one month, as mentioned below in Section 6.3. Procedure.

Bidder Response to Section 1.5 Transition:

Bidder must provide response in Schedule C, Bidder Response.

2. Service Levels

2.1. Delivery

Unless otherwise specified by the State in Standard Contract Terms, Section 16. Acceptance, the following are applicable to all deliveries:

(a) The Contractor is responsible for delivering the Deliverable(s) by the applicable delivery date to the ordering location(s).

(b) The Contractor must ship the Deliverable(s) "F.O.B. Destination."

Bidder Response to Section 2.1 Delivery:

Bidder must provide response in Schedule C, Bidder Response.

2.2. Meetings

The Contractor must participate in an initial Contract kick-off meeting with the State within 30 days of the Effective Date.

The State may request other meetings as it deems appropriate.

2.3. Confidential Information

The Contractor must not have access to any records identifying WIC Program applicant, participant, and/or family member(s), per WIC regulations at 7 CFR 246.26(d)(1)(i). The Contractor must not have access to Authorized WIC Vendor information other than Authorized WIC Vendor’s name, address, phone number, website, email address, store type, and authorization status. See also Standard Contract Terms, Section 32. Non-Disclosure of Confidential Information.

2.4. Errors

1. The Contractor may be entitled to recoupment of funds paid due to an over-billing error, after demonstration that the billing error has been verified by the Department. The Contractor may only recoup funds in this instance.

1. The Contractor must notify the Department of any dispute or error on rebate invoice in writing within 45 days of receipt.

1. All disputes must be settled by closeout of the fiscal year in which the dispute occurred. If the State has over-billed the Contractor, funds will be reimbursed within 45 days of the final resolution of the dispute.

1. Any review of WIC redemption data by the Contractor must be for the sole purpose of recoupment in resolving discrepancies of over-billing or for validating infant formula redemption.

1. The Contractor must not withhold any rebate payment due the State under any circumstances.

1. The Contractor must reimburse the State for any funds owed the Department for under-billing due to billing errors or adjustments within 45 days.

3. Staffing

3.1. Contractor Representative

The Contractor must appoint one or more individuals who will be directly responsible for the day to day operations of the Contract, that will respond to State inquiries regarding the Contract Activities, answering questions related to ordering and delivery, etc. (“the Contractor Representatives”).

Contractor Representatives must be specifically assigned to the State account, be knowledgeable on the contractual requirements, and respond to State inquires within 48 hours.

The Contractor must notify the Program Manager and designees in writing by email at least 30 days before removing or assigning a new Contractor Representative.

Bidder Response to Section 3.1. Contractor Representative:

Bidder must provide response in Schedule C, Bidder Response.

3.2. Technical Support

The Contractor must be available for calls and service on business days during normal business hours.

3.3. Disclosure of Subcontractors

If the Contractor intends to utilize subcontractors, the Contractor must disclose the following:

The legal business name; address; telephone number; a description of subcontractor’s organization and the services it will provide; and information concerning subcontractor’s ability to provide the Contract Activities.

The relationship of the subcontractor to the Contractor. Of the total bid, the price of the subcontractor’s work. Whether the Contractor has a previous working experience with the subcontractor. If yes, provide the details of that previous relationship.

A complete description of the Contract Activities that will be performed or provided by the subcontractor.

Bidder must provide detailed information as requested in the requirement(s):

The legal business name, address, telephone number of the subcontractor(s):

A description of subcontractor’s organization and the services it will provide and information concerning subcontractor’s ability to provide the Contract Activities:

The relationship of the subcontractor to the Bidder:

Whether the Bidder has a previous working experience with the subcontractor.

If yes, provide the details of that previous relationship:

A complete description of the Contract Activities that will be performed or provided by the subcontractor:

Of the total bid, the price of the subcontractor’s work:

4. Pricing

4.1. Price Term

The bidder must provide pricing details in Schedule B, Pricing. In addition, bidders must submit with their proposal response their nationally published wholesale price list effective on the day of bid opening for each type and form of infant formula in its product line.

Price level increases and decreases in the successful bidder’s wholesale truckload prices after the bid has been received, and before the Services Begin Date will result in an automatic rebate increase or decrease on a cent-for-cent basis. The rebate amount per can will increase or decrease effective on the Services Begin Date.

All prices/rates quoted in the bidder’s response to this RFP will be firm for the duration of the Contract, except as noted under Section 4.2. Price and Product Changes, for any increase or decrease in the manufacturer’s lowest national wholesale prices for a full truckload of infant formula.

As stated in federal register (CFR 246.16a(c)(7)(i-iv)) “All bids must specify the rebates offered by each bidder for the Primary Contract Brand Infant Formula(s). After the Contract is awarded, the State agency must calculate the percentage discount for all other Contract Brand Infant Formulas (i.e., all other infant formulas produced by the bidder other than exempt infant formulas) approved for issuance by the State agency. The State agency must use the following method in calculating the rebates:”

1. “Rebates for Contract Brand Infant Formulas, other than the primary Contract infant formula(s) for which bids were received, must be calculated by first determining the percentage discount for each physical form (e.g., concentrated liquid, powdered, and ready-to-feed) of the primary Contract infant formula(s). The percentage discount must be calculated by dividing the rebate for the primary Contract infant formula by the manufacturer’s lowest national wholesale price per unit, as of the date of the bid opening, for a full truckload of the primary Contract infant formula. The percentage discounts must be used to determine the rebate for all other Contract Brand Infant Formulas approved for issuance by the State agency.”

1. “The rebate for each type and form of all other Contract Brand Infant Formulas must be calculated by multiplying the percentage discount by the manufacturer’s lowest national wholesale price per unit, as of the date of the bid opening, for a full truckload of the other Contract Brand Infant Formula. The percentage discount used for each of the other Contract Brand Infant Formulas depends on the physical form of the infant formula. For example, if the percentage discount provided for the primary Contract brand powdered infant formula is 80 percent of its wholesale price, the same percentage discount must be applied to all other Contract brand powdered infant formulas. The rebate for any types or forms of Contract Brand Infant Formulas that are introduced during the Contract period must be calculated using the wholesale truckload prices of these new Contract Brand Infant Formulas at the time the infant formulas are approved for issuance by the State agency.” Approval for issuance of a new Contract Brand Infant Formula or a new size of Contract Brand Infant Formula occurs on the effective date of the revised State WIC Authorized Formulas list, which is coordinated with the effective date of the UPC in the WIC database, which allows clients to begin redeeming said formula. The same percentage discount bid for each authorized form of the Primary Contract Brand Infant Formula (concentrate, powder, and ready-to-feed) will be applied to all other Contract Brand Infant Formulas approved for issuance by the WIC Program. Future rebates on all other infant formula including new formula and changed can sizes will be based on the same percentage as the corresponding physical form of the primary Contract formula.

1. “The rebates resulting from the application of the percentage discount must remain the same throughout the Contract period except for the cent-for-cent rebate adjustments required in paragraph (c)(6) (iv) of this section.”

1. “Bid solicitations must require the manufacturer to adjust rebates for price changes subsequent to the bid opening. Price adjustments must reflect any increase and decrease, on a cent-for-cent basis, in the manufacturer’s lowest national wholesale prices for a full truckload of infant formula.”

1. If production of the Primary Contract Brand Infant Formula is discontinued, Contractor must provide a rebate that yields the same net cost per ounce for the

4.2. Price and Product Changes

A. Price Changes

1. The Contractor must notify the Program Manager and designees in writing via email by submitting their revised price sheet with any State-specific price increases or decreases at least 90 days in advance.

2. The Program Manager and designees will verify the price increase or decrease and rebate amount, as specified above. The State will revise the pricing and rebate amount in its database accordingly.

B. Product Changes

1. The Contractor must notify the Program Manager and designees in writing by email of any product changes, at least 90 days in advance of the effective date of the product change. In addition, the Contractor must submit their revised price sheet with the product change to the Program Manager and designees.

2. The WIC Program reserves the right to approve or reject for issuance any ‘new and improved’ infant formula introduced by the Contractor or any substitution for a similar existing product subsequent to the signing of this Contract. If the Contractor desires to substitute the new infant formula product for any of the Contract Brand Infant Formula products, the Contractor must pay a rebate that yields the same percentage discount on wholesale cost as the same physical form of the iron-fortified milk-based infant formula when used as a substitute. Refer to Section 4.1 (ii) for additional information regarding price terms.

3. If the Contractor replaces the Contract Brand Infant Formula with a ‘new and improved’ formulation of the Contract Brand Infant Formula, the manufacturer must either make the original Contract brand formulas available for the remainder of the Contract period (at the same rebate), or provide a rebate on the newly formulated product that yields the same net cost per can (net wholesale cost per reconstituted ounce of formula if change in can size). In the event that the Contract Brand Infant Formula described in the Contract is no longer available, the State may terminate the Contract without further liability and solicit new bids.

4. If the Contractor desires to change the label or packaging (including color or shape), UPC, container size, reconstitution amount or reformulation of the Contract Brand Infant Formulas during the Contract period these anticipated changes must be reported to the Program Manager and designees no later than 90 days in advance of changes and/or when reported to customers, wholesalers or hospitals.

5. The Program Manager and designees will approve the product change. Approval for issuance of a product change occurs on the effective date of the revised State WIC Authorized Formulas list, which is coordinated with the effective date of the UPC in the WIC database, which allows clients to begin redeeming said formula. The same percentage discount bid for each authorized form of the primary Contract infant formula (concentrate, powder, and ready-to-feed) will be applied to all other Contract Brand Infant Formulas approved for issuance by the WIC Program. Future rebates on all other infant formula including new formula and changed can sizes will be based on the same percentage as the corresponding physical form of the primary Contract formula.

Accepted modifications due to price changes and product changes specified in Section 4.2. Price and Product Changes, will not be documented in a “Contract Change Notice” as specified in Standard Contract Terms, Section 55. Contract Modification.

5. Ordering

5.1. Authorizing Document

The appropriate authorizing document for the Contract will be a signed Master Agreement. The Contractor must begin planning activities as specified in Section 7. Project Plan, after receipt of an executed Contract and in advance of commencement of the contract term (Services Begin Date).

6. Invoice and Payment

6.1. Invoice Requirements

Within forty-five (45) days of the end of each Contract period calendar month, the Department will produce a report specifying the number of units of Contract Brand Infant Formula issued by the Department during the Contract period, for which it has paid various retailers under the WIC Program account in the respective billing month. The Department must provide the number of units of Contract Brand Infant Formula indicated in the report to the Contractor.

See Exhibit A, Attachment 2 for examples of rebate billing invoices.

6.2. Payment Methods

The Contractor must make payment in full to the State within 30 days of the date of the invoice.

6.3. Procedure

1. The number of Contract Brand Infant Formula units reported for rebate billing purposes must be equal to the total number of Contract Brand Infant Formula units issued during the Contract period and redeemed according to State and Federal guidelines in the respective billing month. EBT transactions included in the billing month are based on the date payment was made to the Authorized WIC Vendor, also known as the Settled Date. Michigan WIC uses a rolling month method for issuing WIC food benefits, therefore WIC clients may redeem benefits during the issuance month or subsequent month, and thus rebate-eligible redemptions may fall outside the Contract period.

2. The number of units, using actual number of units purchased by WIC participants including infants and children, for each product and physical form (powder, concentrate or ready-to-feed) of the Contract Brand Infant Formula must then be multiplied by the Contract Rebate per Unit dollar amount to determine the total dollar amount due to the Department.

3. Any errors in calculation by the Department must be rectified as expediently as possible by submitting an adjusted bill to the Contractor no later than forty-five (45) days from the date the error was fixed. Note that data system fixes may require coordination with the WIC Program data system release/update schedule.

4. The Department will provide to the Contractor monthly invoices and supporting documentation consisting of an electronic file to be transmitted via FTP on a monthly basis, and only contains information directly related to monthly billings. This file will contain information associated with EBT redemptions during the billing month. Each record will contain at a minimum: Authorization Number (the unique ID attached to each EBT card swipe), Benefit Start Date, Redeemed Date, Redeemed Price, Product UPC, and Redeemed Quantity. The Contractor will not have access to any records identifying WIC Program applicant, participant, and/or family member(s), per WIC regulations at 7 CFR 246.26(d)(1)(i).

7. Project Plan Upon Contract Award: Within thirty (30) business days of the Effective Date, the Contractor will submit to the WIC Division Program Manager for final approval of a work plan. This final implementation plan must be in agreement with Schedule A, Statement of Work and accepted by the Program Manager, and must include the following:

1. Identification of timelines, methods, tools, and processes proposed to oversee the project, respond to issues/changes as they may arise, and keep appropriate parties apprised of progress.

2. List of product information including Contract product names, images, sizes and unit UPCs.

3. The Contractor's organizational chart with names and title of personnel assigned to the project.

4. The Contractor’s plan to assist the WIC Program in notifying affected parties of Contract Brand Infant Formula changes, including wholesalers, retail food vendors, hospitals and physicians.

5. The Contractor’s plan to assist Authorized WIC Vendors to change their stocking patterns for infant formula if a new brand is selected.

6. The Contractor’s plan to supply Authorized WIC Vendors with sufficient quantities of the formulas included in the bid before the Services Begin Date of November 1, 2021.

Note: Any written communication from the Contractor to local WIC agencies or Authorized WIC Vendors regarding WIC Program policy or guidance will require prior written approval by the WIC Program.

Bidder Response to Section 7. Project Plan:

Bidder must provide response in Schedule C, Bidder Response.

8. Rebate Invoice Billing Credits The parties acknowledge that widespread unavailability of Contract Brand Infant Formula exceeding 7 calendar days and affecting 5% or more of WIC participating infants will interfere with the timely and proper completion of the Contract, to the loss and damage of the Department, and that it would be impracticable and extremely difficult to fix the actual loss sustained by the Department as a result of any such delay. Therefore, the Contractor and the Department agree that in the case of any such unavailability in respect of which the Department does not elect to exercise its rights under Standard Contract Terms, Section 26. General Indemnification, the Department may assess a Rebate Invoice Billing Credit to the Contractor as specified in this section.

If widespread unavailability of Contract Brand Infant Formula exceeding 7 calendar days and affecting 5% or more of WIC participating infants occurs (for example, formula manufacturer inventory shortage prevents distribution centers and thus WIC authorized vendors from procuring infant formula), then the Department must be entitled to collect a Rebate Invoice Billing Credit for each day Contractor fails to remedy the unavailability equal to the daily projected lost rebate amount.

The parties acknowledge that non-payment of infant formula rebate on a monthly basis will interfere with the timely and proper completion of the Contract, to the loss and damage of the Department, and that it would be impracticable and extremely difficult to fix the actual loss sustained by the Department as a result of any such delay. Therefore, Contractor and the Department agree that in the case of any such non-payment of infant formula rebate in respect of which the Department does not elect to exercise its rights under Standard Contract Terms, Section 26. General Indemnification, the Department may assess a credit to the Contractor as specified in this section.

If unavailability of the infant formula or non-payment of infant formula rebate occurs, then the Department must be entitled to a Rebate Invoice Billing Credit in the amount of $5,000.00 for each day the Contractor fails to remedy either the unavailability of infant formula or non-payment of infant formula rebate. The $5,000.00 per day charge will be invoiced to the Contractor, and the Contractor must remit payment in accordance with the requirements of this Section 8. Rebate Invoice Billing Credits.

Bidder Response to Section 8. Rebate Invoice Billing Credits:

Bidder must provide response in Schedule C, Bidder Response.

9. Risk Management The Contractor must have a risk mitigation plan that assures a high quality product, and consistent availability of formula.

The WIC Program reserves the right to allow client redemption of alternative formulas if there are Contract Brand Infant Formula shortages or outages, or availability/access issues for Authorized WIC Vendors. In the event of a shortage/outage, the first option the State would pursue is to authorize redemption of the same Contract Brand Infant Formula in a different physical form (liquid concentrate, powder, ready to feed) for the duration of the shortage/outage. If no forms of the Contract brand formula are readily accessible, alternative formula choices for WIC clients may include a different size of the same formula, or a different brand of formula, including a nutritionally comparable formula from another manufacturer (non-contract brand, non-exempt formula). If implementation of any of the alternatives noted in this paragraph are required due to Contract Brand Infant Formula shortages or outages, the Contractor will be responsible for providing a rebate on the alternative product that yields the same net cost per can (net wholesale cost per reconstituted ounce of formula if change in can size), even if it is a different physical form of the same Contract brand of formula. In the event that Contract Brand Infant Formulas are not readily available due to a shortage/outage, the Department may terminate the Contract without further liability and solicit new bids and may hold the Contractor responsible for any excess costs occasioned thereby.

The Contractor must assist the State with providing Contract Brand Infant Formula to WIC participants on an emergency basis if normal distribution channels are disrupted by such events as acts of God, acts of terrorism or war, epidemics, communication line failures, power failures, earthquakes, contamination of water supplies or other disasters or events.

Michigan.gov/MiProcurement

SCHEDULE A – STATEMENT OF WORK CONTRACT ACTIVITIES

Contractor must enter company name here.

Michigan.gov/MiProcurement Schedule A - Statement of work contract activities

Version 4 (10/2020) 2

Version 4 (10/2020) 14

Exhibit A, Attachment 1: Michigan WIC Number of Formula Units Issued by Form and Type: 3/1/2020 to 2/28/2021 Form

April May June July Aug

Nov

Dec

Jan Feb

Monthly Average

Exhibit A, Attachment 2: Rebate Billing Report February 2021

to Be Billed

Exhibit A, Attachment 2: Rebate Billing Report January 2021

to Be Billed

Exhibit A, Attachment 2: Rebate Billing Report December 2020

to Be Billed

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