4-Attachment 4 Supplement 3.docx

Attachment Supplement 3: Exceptions

Solicitation No. BPM004453 DCS IT Maintenance and Operations Services State of Arizona Department of Child Safety Office of Procurement & Contracts 3003 N. Central Avenue Phoenix, AZ 85012

Exceptions to Contract Terms & Conditions

Special Terms & Conditions

If providing direct services to children or vulnerable adults:

Rationale: The cited Arizona Statute’s parameters for such requirements involve direct services to either children or vulnerable adults.

Not Applicable.

Rationale: Id. Same as Section 3.9 rationale.

b. Include personnel records which contain applications for employment, job titles and descriptions, hire and termination dates, a copy of the fingerprint clearance card, wage rates, and effective dates of personnel actions affecting any of these items.

Rationale: Contractor uses IP for multiple clients and must be able to separate “Project Materials” that are specific to State in this opportunity from existing works used for multiple other clients that will be improved as time goes on.

1. RIGHTS IN WORK PRODUCT. All intellectual property originated or prepared by Contractor pursuant to the Contract, including but not limited to, inventions, discoveries, intellectual copyrights, trademarks, trade names, trade secrets, technical communications, records reports, computer programs and other documentation or improvements thereto, including Contractor’s administrative communications and records relating to the Contract, are considered work product and Contractor’s property, provided that, State has Government Purpose Rights to that work product as and when it was delivered to State.

2. The Contractor shall provide copies of each contract with a subcontractor relating to the provision of contract services to the Department within five (5) calendar days of the request. Such copies may be redacted to exclude exempt information pursuant to applicable non-disclosure agreements or FOIA laws.

Rationale: Contractor enters into NDAs with all its subcontractors thus limiting what information may be disclosed to the public in general. Information exempt from disclosure under AZ Public Records Law Section 39 shall be redacted from any disclosure to the State.

2. The Contractor shall provide copies of each contract with a subcontractor relating to the provision of contract services to the Department within five (5) calendar days of the request.

Rationale: Clarifies Assignment requirements for this Contract The contractor agrees and understands that the contract shall constitute an assignment by the contractor to the State of Arizona of all rights, title and interest in and to all causes of action that the contractor may be under the antitrust laws of the United States or the State of Arizona for which causes of action have accrued or will accrue as the result of or in relation to the goods or services purchases or procured by the contractor in the fulfillment of the contract with the State of Arizona.

In addition to the Uniform Terms and Conditions, the following shall apply:

1. The Department may immediately terminate this contract if the Department determines that the health or welfare or safety of service recipients is endangered.

2. The Contractor may immediately terminate this contract if the State fails to make any payment pursuant to the payment terms herein.

3. The Contractor may terminate this Contract in whole or in part due to the failure of the State to comply with any material term or condition of the Contract.

Rationale: Clarifies that IBM can terminate the Contract if the State does not complete its material contractual obligations or fails to make payment.

In addition to the Uniform Terms and Conditions, the following shall apply:

1. The Department may immediately terminate this contract if the Department determines that the health or welfare or safety of service recipients is endangered.

Rationale: “Materials” is too broadly defined whereas “Project Materials” as defined in Section 3.16 would be applicable to Risk of loss.

Contractor shall bear all risk of loss to Materials while in pre-production, production, storage, transit, staging, assembly, installation, testing, and commissioning, if and as those duties are within the Scope of the Work, until they have been accepted as conforming by State in the particular location and situation specified in the Order, or as specified generally elsewhere in the Contract if the Order does not provide particulars, provided that, risk of loss for nonconforming Materials will remain with Contractor notwithstanding acceptance to the extent the loss stems from the nonconformance.

Rationale: As a multinational technology company headquartered in Armonk, New York, with operations in over 170 countries worldwide, IBM’s Global Risk and Insurance department maintains an extensive portfolio of insurance policies. The changes below endeavor to align the contract language with the protections provided by IBM’s insurance policies.

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

Commercial General Liability (CGL) – Occurrence Form Policy shall include third party bodily injury, third party property damage, and broad form contractual liability coverage in each case arising out of IBM’s negligence.

· General Aggregate $2,000,000

· Products – Completed Operations Aggregate $1,000,000

· Personal and Advertising Injury $1,000,000

· Each Occurrence $1,000,000

a. Reserved

b. Reserved

Rationale:

IBM’s policies include blanket additional insured endorsements on the policies which grant automatic additional insured status to IBM’s customers as per contract. This means that IBM does not issue a separate endorsement specifically naming the customer to the policy.

It is reasonable and equitable for each party to be responsible for its own negligence. IBM should not be held responsible for the whole loss in instances when the customer was also negligent.

· General Aggregate $2,000,000

· Products – Completed Operations Aggregate $1,000,000

· Personal and Advertising Injury $1,000,000

· Damage to Rented Premises $50,000

· Each Occurrence $1,000,000

Third party bodily injury and third-party Property Damage caused by an automobile accident involving IBM owned, long term leased and/or non-owned vehicles used in the performance of this Contract Combined Single Limit (CSL) $1,000,000

a. Reserved

b. Reserved

Rationale:

a. IBM’s policies include blanket additional insured endorsements on the policies which grant automatic additional insured status to IBM’s customers as per contract. This means that IBM does not issue a separate endorsement specifically naming the customer to the policy.

It is reasonable and equitable for each party to be responsible for its own negligence. IBM should not be held responsible for the whole loss in instances when the customer was also negligent.

2. BUSINESS AUTOMOBILE LIABILITY

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

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

a. The policy shall be endorsed to include the following additional insured language: “The State of Arizona, its departments, agencies, boards, commissions, universities and its officers, officials, agents, and employees shall be named as additional insureds with respect to liability arising out of the activities performed by or on behalf of the Contractor, involving automobiles owned, leased, hired or borrowed by the Contractor".

Policy shall contain a waiver of subrogation against the State of Arizona, its departments, agencies, boards, commissions, universities and its officers, officials, agents, and employees for losses arising from work performed by or on behalf of the Contractor.

Workers’ Compensation Statutory Employers’ Liability

· Each Accident $ 1,000,000

· Disease – Each Employee $ 1,000,000

· Disease – Policy Limit $ 1,000,000

a. Reserved

b. Reserved

Rationale:

It is reasonable and equitable for each party to be responsible for its own negligence. IBM should not be held responsible for the whole loss in instances when the customer was also negligent.

3. WORKER’S COMPENSATION AND EMPLOYERS’ LIABILITY

Workers’ Compensation Statutory Employers’ Liability

· Each Accident $ 1,000,000

· Disease – Each Employee $ 1,000,000

· Disease – Policy Limit $ 1,000,000

a. Policy shall contain a waiver of subrogation against the State of Arizona, its departments, agencies, boards, commissions, universities and its officers, officials, agents, and employees for losses arising from work performed by or on behalf of the Contractor.

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

· Each Claim $2,000,000

· Annual Aggregate $2,000,000

a. Such insurance shall cover actual or alleged breach of duty, errors, omissions, or negligent acts solely for acts or omissions committed by IBM; all due to IBM’s negligence in providing professional services under this contract.

b. Reserved

c. Reserved

Rationale: This coverage includes cyber liability.

4. Technology Errors & Omissions Insurance

· Each Claim $2,000,000

· Annual Aggregate $2,000,000

a. Such insurance shall cover any, and all errors, omissions, or negligent acts in the delivery of products, services, and/or licensed programs under this contract.

b. Coverage shall include copyright infringement, infringement of trade dress, domain name, title, or slogan.

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

· Reserved

· Reserved

· Coverage provided by the Contractor shall not be limited to the liability assumed under the indemnification provisions of this Contract

Rationale: IBM’s policies include blanket additional insured endorsements on the policies which grant automatic additional insured status to IBM’s customers as per contract. This means that IBM does not issue a separate endorsement specifically naming the customer to the policy.

It is reasonable and equitable for each party to be responsible for its own negligence. IBM should not be held responsible for the whole loss in instances when the customer was also negligent.

5. ADDITIONAL INSURANCE REQUIREMENTS: The policies shall include, or be endorsed to include the following provisions:

a. The State of Arizona, its departments, agencies, boards, commissions, universities and its officers, officials, agents, and employees wherever additional insured status is required. Such additional insured shall be covered to the full limits of liability purchased by the Contractor, even if those limits of liability are more than those required by this Contract.

b. The Contractor's insurance coverage shall be primary insurance with respect to all other available sources.

c. Coverage provided by the Contractor shall not be limited to the liability assumed under the indemnification provisions of this Contract.

Rationale: Clarifies that notification will be provided in accordance with the terms of the insurance policy.

6. NOTICE OF CANCELLATION: Applicable to all insurance policies required within the Insurance Requirements of this Contract, Contractor’s insurance shall not be permitted to expire, be suspended, be canceled, or be materially changed for any reason without thirty (30) days prior written notice to the State of Arizona. Within two (2) business days of receipt, Contractor must provide notice to the State of Arizona if they receive notice of a policy that has been or will be suspended, canceled, materially changed for any reason, has expired, or will be expiring. Such notice shall be sent directly to the Department and shall be mailed, sent via secure email; hand delivered or sent by facsimile transmission to Arizona Department of Child Safety, Office of Contracts, 3003 N. Central, Suite 2000, Site Code C010-20, Phoenix, AZ 85012.

Rationale: IBM’s insurance policies are IBM Confidential and are not distributed outside of the company.

Rationale: IBM’s subcontractors are contractually required to maintain their own insurance.

9. SUBCONTRACTORS: Contractors’ certificate(s) shall include all subcontractors as insured under its policies or Contractor shall be responsible for ensuring and/or verifying that all subcontractors have valid and collectable insurance as evidenced by the certificates of insurance and endorsements for each subcontractor. All coverages for subcontractors shall be subject to the minimum Insurance Requirements identified above. The Department reserves the right to require, at any time throughout the life of the Contract, proof from the Contractor that its subcontractors have the required coverage.

Rationale: Clarifies that changes to this Contract will managed via the mutually approved Project Change Control Procedure.

10. APPROVAL: The Contracting Agency, in consultation with State Risk, reserves the right to review or make modifications to the insurance limits, required coverage, or endorsements throughout the life of this contract, as deemed necessary. Such action will not require a formal Contract amendment but may be made by administrative action.

2. To the fullest extent permitted by law, Contractor shall defend and indemnify the State of Arizona, and its departments, agencies, boards, commissions, universities, and any jurisdiction or agency issuing permits for any work included in the project, and their respective directors, officers, officials, agents and employees (hereinafter referred to as "Indemnitee") from and against any and all third-party claims, actions, liabilities, costs, losses, or expenses, (including reasonable attorney's fees), (hereinafter collectively referred to as "Claims") arising out of actual or alleged bodily injury or personal injury of any person (including death) or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of Contractor or any of Contractor's directors, officers, agents, employees, volunteers or subcontractors. This indemnity includes any claim or amount arising or recovered under the Workers' Compensation Law or arising out of the failure of Contractor to conform to any federal, state, or local law, statute, ordinance, rule, regulation, or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by Contractor from and against any and all Claims. It is agreed that Contractor will be responsible for primary loss investigation, defense, and judgment costs where this indemnification is applicable where such costs have been actually paid to the third-party claimant after final award by a court or inclusion in a settlement approved by Contractor. Contractor’s obligations are subject to State’s prompt notice of any such Claims, supplying information reasonably requested by Contractor; and tendering to Contractor the right to control, and reasonably cooperating in, the defense and settlement, including mitigation efforts. This indemnification will survive the termination of the above listed contract with the Contractor.

Rationale: 1. AZ courts have held indemnity and hold harmless the same. 1800 Ocotillo, LLC v. WLB Grp., Inc. 219 Ariz. 200, 203, 196 P.3d 222, 225 (2008). 2. Clarifies when payment is due and what the parties’ obligations are in order to achieve payments..

2. To the fullest extent permitted by law, Contractor shall defend, indemnify, and hold harmless the State of Arizona, and its departments, agencies, boards, commissions, universities, and any jurisdiction or agency issuing permits for any work included in the project, and their respective directors, officers, officials, agents and employees (hereinafter referred to as "Indemnitee") from and against any and all claims, actions, liabilities, costs, losses, or expenses, (including reasonable attorney's fees), (hereinafter, collectively referred to as "Claims") arising out of actual or alleged bodily injury or personal injury of any person (including death) or loss or damage to tangible or intangible property caused, or alleged to be caused, in whole or in part, by the negligent or willful acts or omissions of Contractor or any of Contractor's directors, officers, agents, employees, volunteers or subcontractors. This indemnity includes any claim or amount arising or recovered under the Workers' Compensation Law or arising out of the failure of Contractor to conform to any federal, state, or local law, statute, ordinance, rule, regulation, or court decree. It is the specific intention of the parties that the Indemnitee shall, in all instances, except for Claims arising solely from the negligent or willful acts or omissions of the Indemnitee, be indemnified by Contractor from and against any and all Claims. It is agreed that Contractor will be responsible for primary loss investigation, defense, and judgment costs where this indemnification is applicable. This indemnification will survive the termination of the above listed contract with the Contractor.

CONTRACTOR/VENDOR (NOT PUBLIC AGENCY). With respect to Project Materials or Services provided or proposed by a Contractor Indemnitor for performance under the Contract, Contractor shall indemnify and defend State Indemnitees against any third-party claims for liability, costs, and expenses, including, but not limited to reasonable attorneys' fees, for infringement or violation of any patent or copyright by the Project Materials and the Services. With respect to the defense and payment of claims under this subparagraph:

Rationale: 1. Id. Same as Section 6.3 (2) above.

2. Trademarks and Trade Secrets will not be supplied.

CONTRACTOR/VENDOR (NOT PUBLIC AGENCY). With respect to Materials or Services provided or proposed by a Contractor Indemnitor for performance under the Contract, Contractor shall indemnify, defend, and hold harmless State Indemnitees against any third-party claims for liability, costs, and expenses, including, but not limited to reasonable attorneys' fees, for infringement or violation of any patent, trademark, copyright, or trade secret by the Materials and the Services. With respect to the defense and payment of claims under this subparagraph:

The Contractor warrants that all services provided under this contract shall conform to the requirements stated herein and any amendments hereto. The Department’s acceptance of services provided by the Contractor shall not relieve the Contractor from its obligations under this warranty. In addition to its other remedies, the Department Procurement Officer may, at the Contractor’s expense, require prompt correction of any services failing to meet the Contractor’s warranty herein. Services corrected by the Contractor shall be subject to all the provisions of this contract in the manner and to the same extent as the services originally furnished.

Contractor does not warrant uninterrupted or error-free operation of a Contractor product or Service, that Contractor will correct all defects or prevent third party disruptions or unauthorized third-party access to a Contractor product or Service. These warranties are the exclusive warranties from Contractor and replace all other warranties, including the implied warranties or conditions of satisfactory quality, merchantability, non-infringement, and fitness for a particular purpose. Contractor warranties will not apply if there has been misuse, modification, damage not caused by Contractor, failure to comply with instructions provided by Contractor, or if otherwise stated in the Statement or Scope of Work. Non-Contractor products, if any, are sold under this Contract as-is, without warranties of any kind. Third parties may provide their own warranties to the Department.

Rationale: Clarifies the Services warranty that IBM provides under this Contract.

The Contractor warrants that all services provided under this contract shall conform to the requirements stated herein and any amendments hereto. The Department’s acceptance of services provided by the Contractor shall not relieve the Contractor from its obligations under this warranty. In addition to its other remedies, the Department Procurement Officer may, at the Contractor’s expense, require prompt correction of any services failing to meet the Contractor’s warranty herein. Services corrected by the Contractor shall be subject to all the provisions of this contract in the manner and to the same extent as the services originally furnished.

Rationale: Clarifies that IBM agrees to comply with laws applicable to IBM

5. The Contractor shall comply with all applicable state and federal statutes and regulations. This shall include A.R.S. § 23-722.01 as may be amended relating to new hire reporting, A.R.S. § 23-722.02 as may be amended relating to wage assignment orders to provide child support, and A.R.S. § 25-535 as may be amended relating to administrative or court-ordered health insurance coverage for children

Rationale: Fixes a typo.

Notwithstanding any law to the contrary, all contract claims or controversies under the Contract are to be resolved according to Arizona Revised Statutes Title 41, Chapter 23, Article 9, and rules adopted thereunder, including judicial review under A.R.S. § 12-1518

Rationale: Under A.R.S. § 12-1518 A. this is discretionary and not mandatory In compliance with A.R.S. § 12-1518, the parties agree to comply in a judicial review proceeding with any applicable, mandatory arbitration requirements.

Contractors and/or subcontractor's facilities, services and individuals served, books and records pertaining to the contract shall, subject to applicable law and agreements in place between Contractor/Subcontractor/State or third parties, be available for visitation, inspection and copying by the Department and any other appropriate agent of the State or Federal Government. At the discretion of the Department, visitation, inspection, and copying may be at any time during regular business hours. If the Department deems it to be an emergency, it may at any time visit and inspect the Contractor's or subcontractor's facilities, services and individuals served, as well as inspect and copy their contract-related books and records.

The Department’s or any third-party’s access to Contractor’s books and records, or those of its subcontractors, shall not include access to personnel, profit, or internal cost data. In addition, the parties shall mutually agree to what documents and records.

The Department or any third-party shall gain access within a reasonable time prior to the Department or any third-party accessing such records and/or data.

The Department or any third-party shall bear all costs associated with all audit activity. Such audit activity shall be conducted in a manner that is not disruptive to the Contractor’s normal business activities.

Rationale: 1. IBM has NDAs already in place with subcontractors that may require permission, redaction, etc.

2. Clarifies the State’s or any third party’s access to IBM’s records under this Contract.

Contractors and/or subcontractor's facilities, services and individuals served, books and records pertaining to the contract shall be available for visitation, inspection and copying by the Department and any other appropriate agent of the State or Federal Government. At the discretion of the Department, visitation, inspection, and copying may be at any time during regular business hours, announced or unannounced. If the Department deems it to be an emergency, it may at any time visit and inspect the Contractor's or subcontractor's facilities, services and individuals served, as well as inspect and copy their contract-related books and records.

If a person believes that any portion of a proposal, bid, offer, specification, protest, or correspondence contains information that should be withheld, then the Procurement Officer shall be so advised in writing (Price is not confidential and will not be withheld). Such material shall be identified as confidential wherever it appears. The State, pursuant to A.R.S. § 41-2533(D) or A.R.S. § 41- 2534(D), shall review all requests for confidentiality and provide a written determination. If the confidential request is denied, such information shall be disclosed as public information, unless the person utilizes the 'Protest' provision as noted in § 41-2611 through § 41-2616 IBM's Data Processing Addendum (DPA) at http://ibm.com/dpa and the DPA Exhibit at https://www.ibm.com/mysupport/s/article/support-privacy apply to Client personal data, if and to the extent:

i) the European General Data Protection Regulation (EU/2016/679); and ii) other data protection laws identified at www.ibm.com/dpa/dpl apply.

Rationale: The GDPR will apply to certain data provided under this Contract.

If a person believes that any portion of a proposal, bid, offer, specification, protest, or correspondence contains information that should be withheld, then the Procurement Officer shall be so advised in writing (Price is not confidential and will not be withheld). Such material shall be identified as confidential wherever it appears. The State, pursuant to A.R.S. § 41-2533(D) or A.R.S. § 41- 2534(D), shall review all requests for confidentiality and provide a written determination. If the confidential request is denied, such information shall be disclosed as public information, unless the person utilizes the 'Protest' provision as noted in § 41-2611 through § 41-2616

Each of Contractor’s personnel who is an applicant for full-time information technology positions at State locations must undergo the security clearance and background check procedure, which includes fingerprinting, as required by A.R.S § 41-710. Contractor shall obtain and pay for the security clearance and background check. Contractor personnel who will have administrator privileges on a State network must additionally provide identify and address verification and undergo State-specified training for unescorted access, confidentiality, privacy, and data security.

Rationale: Same as Section 3.9 rationale.

Each of Contractor’s personnel who is an applicant for an information technology position must undergo the security clearance and background check procedure, which includes fingerprinting, as required by A.R.S § 41-710. Contractor shall obtain and pay for the security clearance and background check. Contractor personnel who will have administrator privileges on a State network must additionally provide identify and address verification and undergo State-specified training for unescorted access, confidentiality, privacy, and data security.

11.4 Pass-Through

Indemnity Deletion and inclusion of additional language in the initial paragraph:

1. INDEMNITY FROM THIRD PARTY. For computer hardware or software included in the Work as discrete units that were manufactured or developed solely by a third party, Contractor may satisfy its indemnification obligations under the Contract by, to the extent permissible by law, passing through to State such indemnity as it receives from the third-party source (each a “Pass-Through Indemnity”) and cooperating with State in enforcing that indemnity. If the third party fails to honor its Pass-Through Indemnity, or if a Pass-Through Indemnity is insufficient to indemnify State Indemnitees to the extent and degree Contractor is required to do by the Uniform Terms and Conditions, then Contractor shall indemnify and defend State Indemnitees to the extent the Pass-Through Indemnity does not.

Rationale: Same as Section 6.3 (1) above.

1. INDEMNITY FROM THIRD PARTY. For computer hardware or software included in the Work as discrete units that were manufactured or developed solely by a third party, Contractor may satisfy its indemnification obligations under the Contract by, to the extent permissible by law, passing through to State such indemnity as it receives from the third-party source (each a “Pass-Through Indemnity”) and cooperating with State in enforcing that indemnity. If the third party fails to honor its Pass-Through Indemnity, or if a Pass-Through Indemnity is insufficient to indemnify State Indemnitees to the extent and degree Contractor is required to do by the Uniform Terms and Conditions, then Contractor shall indemnify, defend, and hold harmless State Indemnitees to the extent the Pass-Through Indemnity does not.

1. LIMIT. …or 3 (three) times the purchase price (limited to 12-months of purchases) of the specific Materials or Services giving rise to the claim.

2. PROVISOS. This paragraph 11.7 limits liability for first party direct damages. Neither party shall be liable for indirect, incidental, special, punitive, and consequential damages relating to the Work regardless of the legal theory under which the liability is asserted.

Rationale: 1. Contractor’s solution and pricing assumes the redlined limits. 2. Contractor’s solution and pricing assumes only direct damages for either party.

1. LIMIT. Subject to the provisos that follow below and unless stated otherwise in the Special Terms and Conditions, State’s and Contractor’s respective first party liability arising from or related to the Contract is limited to the greater of $1,000,000 (one million dollars) or 3 (three) times the purchase price of the specific Materials or Services giving rise to the claim.

11.8 (2) Information Technology Warranty Inclusion of additional language:

2. COTS SOFTWARE. Provided State continuously updates software pursuant to software provider(s) request(s), with respect to applicable software provided under the Contract that are commercial-off-the-shelf (COTS) software, Contractor warrants that….

Rationale: Software updates are essential to proper software functionality.

2. COTS SOFTWARE. With respect to Materials provided under the Contract that are commercial-off-the-shelf (COTS) software, Contractor warrants that:

Rationale: IBM’s security standards prohibit penetration tests and disclosure of system logs The following are required for Contractor of any “cloud” solution that hosts State data outside of the State’s network or transmits and/or receives State data.

1. Submit a completed Arizona Baseline Infrastructure Security Controls assessment spreadsheet as found at: https://aset.az.gov/resources/policies- standards-and-procedures, and mitigate or install compensating controls for any issues of concern identified by State. Contractor is required to provide any requested documentation supporting the review of the assessment. The assessment shall be re-validated on a minimum annual basis.

State reserves the right to conduct Penetration tests or hire a third party to conduct penetration tests of the Contractor’s application. Contractor will be alerted in advance and arrangements made for an agreeable time. Contractor shall respond to all serious flaws discovered by providing an acceptable timeframe to resolve the issue and/or implement a compensating control.

Uniform Terms & Conditions

Rationale: Section 3.7 conflicts with Section 3.16 of the Special Terms and Conditions.

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

Rationale: Section 3.8 conflicts with Section 3.16 of the Special Terms and Conditions.

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

Rationale: Clarifies when invoices are due.

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

(30) days.

1. Accept a decrease in price offered by the contractor with a commensurate reduction in Contract scope

2. Cancel the Contract; or

3. Cancel the contract and re-solicit the requirements

Rationale: Clarifies that a reduction in scope will accompany the reduction in price.

Should the State Legislature enter back into session and reduce the appropriations or for any reason and these goods or services are not funded, the State may take any of the following actions:

1. Accept a decrease in price offered by the contractor

2. Cancel the Contract; or

3. Cancel the contract and re-solicit the requirements

Rationale: Clarifies that all terms and conditions in this contract may not be applicable to a subcontractor.

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

Rationale: Section 5.3 conflicts with Section 5.4 of the Special Terms and Conditions.

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

2. Reserved

Rationale: Section 6.2 conflicts with Sections 6.3, 4.7, and 11.4 of the Special Terms and Conditions.

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

2. Public Agency Language Only Each party (as 'indemnitor') agrees to indemnify, defend, and hold harmless the other party (as 'indemnitee') from and against any and all claims, losses, liability, costs, or expenses (including reasonable attorney's fees) (hereinafter collectively referred to as 'claims') arising out of bodily injury of any person (including death) or property damage but only to the extent that such claims which result in vicarious/derivative liability to the indemnitee, are caused by the act, omission, negligence, misconduct, or other fault of the indemnitor, its officers, officials, agents, employees, or volunteers."

Rationale: Section 6.3 conflicts with Section 6.4 of the Special Terms and Conditions.

The Contractor shall indemnify and hold harmless the State against any liability, including costs and expenses, for infringement of any patent, trademark or copyright arising out of Contract performance…