5-Attachment - Supplement_Conformance Statements_Konica Minolta.docx

Request for Proposal

Solicitation No. BPM4656

Document Management Services Arizona Department of Administration State Procurement Office 100 N 15th Avenue Phoenix, AZ 85007

Conformance Statements – Supplement 3 Exceptions to Contract Terms & Conditions

Special Terms & Conditions

X Rationale: A sixty (60) day warranty period for services is an industry standard warranty period for services.

Contractor warrants that, unless expressly provided otherwise elsewhere in the Contract, the Materials and Services will for 1 (one) year after acceptance and in each instance: (1) conform to the requirements of the Contract, which by way of reminder include without limitation all descriptions, specifications, and drawings identified in the Scope of Work and any Contractor affirmations included as part of the Contract; (2) be free from defects of material and workmanship; (3) conform to or perform in a manner consistent with current industry standards; and (4) be fit for the intended purpose or use described in the Contract.

X Rationale: Where decisions are left to the discretion of the State, such discretion should be exercised in a “reasonable” manner to ensure that such decisions are not arbitrary.

Notwithstanding that Contractor is in every circumstance responsible for hiring, assigning, directing, managing, training, disciplining, and rewarding its personnel, State may at its discretion and without the obligation to demonstrate cause instruct Contractor to remove any of its personnel from State’s facilities or from further assignment under the Contract. In such cases, Contractor shall promptly replace them with other personnel having equivalent qualifications, experience, and capabilities.

X Rationale: Where services are subject to acceptance criteria, then the criteria should be made known to the Contractor so that Contractor is able to comply.

State has the right to make acceptance of Services subject to acceptance criteria. State may apply acceptance criteria conformity to the Contract, accuracy, completeness, or other indicators of quality or other matter for which the Contract or law states a requirement, whether stated directly or by reference to another document, standard, reference specification, etc. State will not owe Contractor any payment for unaccepted Services; and State may, at its discretion, withhold or make partial payment for any rejected Services if Contractor is still in the process of re-performing or otherwise curing the grounds for State’s rejection.

12.2.1. Contractor shall: (a) notify State immediately of any unauthorized access or inappropriate disclosures, of which Contractor becomes aware, whether stemming from an external security breach, internal breach, system failure, or procedural lapse;

X Rationale: Where the State has the discretion to accept or reject Contractor’s procedures and controls, such acceptance must be “reasonable” so as to ensure that State’s rejection is not arbitrary.

Contractor’s duty to notify the State of unauthorized access or disclosures should be limited to access or disclosures that Contractor actually discovers so as to prevent Contractor from having to actively seek out such access or disclosures, which would be an unreasonable burden on Contractor.

Contractor warrants that it will establish and maintain procedures and controls acceptable to State for ensuring that State’s proprietary and sensitive data is protected from unauthorized access and information obtained from State or others in performance of its contractual duties is not mishandled, misused, or inappropriately released or disclosed. For purposes of this paragraph, all data created by Contractor in any way related to the Contract, provided to Contractor by State, or prepared by others for State are proprietary to State, and all information by those same avenues is State’s confidential information. To comply with the foregoing warrant:

12.2.1. Contractor shall: (a) notify State immediately of any unauthorized access or inappropriate disclosures, whether stemming from an external security breach, internal breach, system failure, or procedural lapse;

X Rationale: Contractor should be responsible only for its own actions and not for the actions of others.

12.3.2. “protect” means taking measures to safeguard personally identifiable information and prevent its breach that are functionally equivalent to those called for in that OMB memorandum and elaborated on in the [federal] General Services Administration (GSA) Directive CIO P 2180.1 GSA Rules of Behavior for Handling Personally Identifiable Information.

X Rationale: Where Contractor is required to comply with State policies and procedures, those policies and procedures must be made known to Contractor.

13.3.2. INDIVIDUAL MEASURES. Contractor personnel shall comply with applicable State policies and procedures regarding data access, privacy, and security, including prohibitions on remote access and obtaining and maintaining access identifications (IDs) and passwords. Contractor is responsible to State for ensuring that any State access IDs and passwords are used only by the person to whom they were issued. Contractor shall ensure that personnel are only provided the minimum only such level of access necessary to perform his or duties. Contractor shall on request, provide a current register of the access IDs and passwords and corresponding access levels currently assigned to its personnel.

X Rationale: The amount of liability is determined by weight risk (i.e., amount of liability one assumes) against reward (amount of revenue one expects to receive under the contract). Here, liability capped at 3x price of the material or service giving rise to the claim is the result of our balancing risk against reward.

13.7.1. 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.

Uniform Terms & Conditions

X Rationale: Basic tenant of contract damages is that aggrieved party is not entitled to recoup all costs and expenses but only “reasonable” costs and expenses.

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 or use by the State of materials furnished or work performed under this Contract. The State shall reasonably notify the Contractor of any claim for which it may be liable under this paragraph. If the contractor is insured pursuant to A.R.S. § 41-621 and § 35-154, this section shall not apply.

7.2.1. Of a quality to pass without reasonable objection in the trade under the Contract description;

7.2.2. Fit for the intended purposes for which the materials are used as such use is described in the Contract;

X Rationale: 7.2.1 – where State has discretion to object, the exercise of such discretion should be reasonable so as to prevent arbitrary objection.

Unless otherwise modified elsewhere in these terms and conditions, the Contractor warrants that, for one year after acceptance by the State of the materials, they shall be:

7.2.1. Of a quality to pass without objection in the trade under the Contract description;

7.2.2. Fit for the intended purposes for which the materials are used;

X Rationale: Basic tenant of contract damages is that aggrieved party is not entitled to recoup all expenses and costs but only “reasonable” expenses and costs. Moreover, where State has discretion to offset damages, the exercise of such discretion should be reasonable so as to prevent arbitrary assessment of damages.

8.4. Right of Offset. The State shall be entitled to offset against any sums due the Contractor, any expenses or costs incurred by the State, or damages assessed by the State concerning the Contractor’s non-conforming performance or failure to perform the Contract, including expenses, costs and damages described in the Uniform Terms and Conditions.

X Rationale: It is standard in commercial contracts that where a party is in default, the party should have a reasonable opportunity to cure the default before the contract is terminated. That promotes efficiency and prevents unnecessary waste of resources.

9.5.1. In addition to the rights reserved in the contract, the State may terminate the Contract in whole or in part due to the failure of the Contractor to comply with any term or condition of the Contract, to acquire and maintain all required insurance policies, bonds, licenses and permits, or to make satisfactory progress in performing the Contract. The Procurement Officer shall provide written notice of the termination and the reasons for it to the Contractor.

X Rationale: Where State has discretion to obtain products or services from alternative sources in the event of contract termination, the exercise of such discretion should be reasonable. Moreover, a basic tenant of contract damages is that the aggrieved party is not entitled to recoup all costs but only “reasonable” costs.

9.5.3. The State may, upon termination of this Contract, procure, on terms and in the manner that it deems appropriate, materials or services to replace those under this Contract. The Contractor shall be liable to the State for any excess costs incurred by the State in procuring materials or services in substitution for those due from the Contractor.

Konica Minolta Business Solutions U.S.A., Inc.

Company Name

Signature of Person Authorized to Sign

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