BPM007239_Solicitation_Requirements.pdf

Rev. 03/2025

STATE OF ARIZONA

ARIZONA DEPARTMENT OF TRANSPORTATION

1655 W. Jackson St., MD 100P

Phoenix, AZ 85007

REQUEST FOR PROPOSAL

SOLICITATION NUMBER: BPM007239

DESCRIPTION: Revenue Forecasting

QUESTIONS: Inquiries regarding the solicitation are to be submitted online through the State’s e-Procurement system, Arizona Procurement Portal (APP) (https://app.az.gov/) using the Discussion Forum tab.

OFFERORS ARE STRONGLY ENCOURAGED TO READ THE ENTIRE SOLICITATION.

Kelly Greene Procurement Officer Phone: 602-712-4879 Email: Kgreene@azdot.gov

This solicitation is issued in accordance with A.R.S. §41-2534 and A.A.C. R2-7-C301 et seq., Competitive Sealed Proposals.

“An Equal Opportunity Agency”

The Arizona Department of Transportation, in accordance with the provisions of Title VI of the Civil Rights Act of 1964 (78 Stat. 252.42 U.S.C. §§ 2000d-4) and the Americans with Disabilities Act (ADA), hereby notifies all bidders that it will affirmatively ensure that any contract entered into pursuant to this advertisement, disadvantaged business enterprises will be afforded full and fair opportunity to submit bids in response to this invitation and will not be discriminated against on the grounds of race, color, national origin in consideration for an award.

Persons that require a reasonable accommodation based on language or disability should contact ADOT’s Procurement Office by phone

(602) 712-7466. Requests should be made as early as possible to ensure the State has an opportunity to address the accommodation.

Las personas que requieran asistencia (dentro de lo razonable) ya sea por el idioma o discapacidad deben ponerse en contacto con

ADOT (602) 712-7466.

https://app.az.gov/

TABLE OF CONTENTS

Solicitation No: BPM007239 Available online at

SECTION PAGE

Notice 1

Table of Contents 2

Scope of Work 3

Special Terms and Conditions 9

Uniform Terms and Conditions 19

EXHIBITS

1 - Title VI/Non-Discrimination Assurances Appendix A 36

2 - Title VI/Non-Discrimination Assurances Appendix E 37

SCOPE OF WORK

1. Statement of Need

1.1. Pursuant to the Arizona Procurement Code, A.R.S. §41-2501 et seq., the State of Arizona Department of Transportation (Department, ADOT), has a requirement for a qualified consultant (the Contractor) to create new, risk based revenue forecasting models for the Arizona Highway User Revenue Fund (HURF) and the Maricopa County Transportation Excise Tax (Excise Tax), whose collections are deposited into the Regional Area Road Fund (RARF) and the Public Transportation Fund (PTF). These models could be comprised of multiple equations that will be re-specified and re-estimated by the Contractor annually, along with facilitating a Risk Analysis Process (RAP) meeting to produce Highway User Revenue Fund and Maricopa County Transportation Excise Tax revenue forecasts for twenty-five fiscal years into the future by revenue category. The Contractor should also be able to accommodate other potential economic and financial research projects.

2. Introduction and Background

2.1. The Arizona Highway User Revenue Fund (HURF) consists of state taxes on motor fuels and a variety of fees relating to the registration and operation of motor vehicles in the state.

These collections include: gasoline and use fuel taxes, motor carrier fees, vehicle license taxes, motor vehicle registration fees, and other miscellaneous fees. HURF also receives a portion of the revenues from the tax imposed on recreational marijuana under the Smart and Safe Arizona Act passed by Arizona Voters in November 2020. These taxes and fees represent a source of revenues available to the state for highway related expenses.

2.2. In 1985, the voters of Maricopa County approved Proposition 300 to establish a half-cent (½ cent) transportation excise (sales) tax for construction of a regional freeway system within the county. The half-cent (½ cent) sales tax was approved for a period of 20 years and ended on December 31, 2005. On November 2, 2004, Maricopa County’s voters approved Proposition 400 which extended the half-cent (½ cent) sales tax for another 20 years through December 31, 2025. That sales tax extension is used for construction of new freeways, widening of existing freeways and highways, improvements to the arterial street system, regional bus service and other special transportation services, and high capacity transit services such as light rail, bus rapid transit and express buses. 66.7% of the Maricopa County Transportation Excise Tax (Excise Tax) is deposited into the Regional Area Road Fund (RARF) and the remaining 33.3% is deposited in the Public Transportation Fund (PTF). With the passage of SB 1102 during the 2023 legislative session, Maricopa County voters voted on Prop 479 in November 2024 to extend the half-cent (½ cent) sales tax again until December 31, 2045.

Under Prop 479, the Maricopa County Transportation Excise Tax going into effect January 1, 2026 will deposit 63% into the Regional Area Road Fund (RARF) and the remaining 37% to be deposited in the Public Transportation Fund (PTF).

2.3. Since 1986, the Department has forecasted HURF and the Excise Tax using a comprehensive regression-based econometric model. The model and the process have evolved over the years. The model relies on forecasts of certain “independent variables” to predict future revenues. Any variability between forecasted and actual values could lead to variances in the tax forecast. In order to deal with this variability, the Department introduced the Risk Analysis Process (RAP) in 1992. The RAP relies upon probability analysis and the independent evaluation of the model’s variables by an expert panel of economists. This results in a series of forecasts with specified probabilities of occurrence, rather than a single or “best guess” forecast.

2.3.1. The current RAP is a four-step process: Identify and develop the structure and logic model of the forecasting problem; Hold a workshop with a panel of local experts to develop consensus on model logic and variables; Obtain panel input on each model variable; and Develop risk-adjusted revenue forecasts, via Monte Carlo simulation.

After completion of the process, ADOT selects one of the probabilistic outcomes to adopt as the official forecast.

2.3.2. The current HURF revenue model includes: Arizona nominal personal income, Arizona population, Arizona non-farm employment, Arizona fleet fuel efficiency (Not part of RAP Process), Arizona nominal gas price, West Coast No. 2 nominal diesel price. The current model does not include an equation for forecasting the newest revenue category, the Smart and Safe AZ Act. This is HURF’s share of the 16% excise tax on recreational Marijuana sales and is not in the model because this category came to fruition well after the current model was created.

2.3.3. The independent variables contained in the current Excise Tax model are: Maricopa

County nominal personal income growth, Maricopa County population growth, Maricopa County construction employment growth, Phoenix consumer price index (CPI), Phoenix Sky Harbor/Gateway airports passenger traffic growth, Maricopa County total non-farm employment growth, 30-year mortgage rate.

3. General Requirements

3.1. The Contractor shall possess expertise on econometric modeling, statistical projection methodologies, and a variety of regional, state, national, and international factors that influence Department revenues. The Contractor shall create new revenue forecasting models and processes to be used annually to produce HURF and RARF forecasts by revenue category.

3.2. The primary objectives of the model development are:

3.2.1. Design a robust model to produce risk-adjusted revenue forecasts at various probabilistic outcomes: Identify and develop structure, logic and the independent variables to be used in the model to address the forecasting problem. The model should be robust and designed to be utilized for many years in the future with the ability to accommodate revenue impacting events such as changes in legislation and consumer behavior, as well as impacts of climate in Arizona, to name a few. The accuracy of the long term forecast is of utmost importance and should prove to be accurate within plus or minus five percent, over a ten year forecast period.

3.2.2. Develop a sustainable, repeatable annual forecasting of the Highway User Revenue Fund (HURF) and Maricopa County Transportation Excise Tax (Excise Tax) revenue process. It should involve recruiting and retaining a panel of experts to provide forecasts of the model variables in order to produce HURF and Excise Tax revenue forecasts for twenty-five (25) fiscal years into the future by revenue category.

3.3. The primary objectives of the annual revenue forecasting process execution are:

3.3.1. Update the Econometric Models- Make necessary changes to the developed model/equations. These changes may be identified by either the Department or the Contractor and shall be updated with the final approval of the Department.

3.3.2. Conduct Risk Analysis Process (RAP) Session- The Contractor shall coordinate and facilitate an engaging, interactive, in-person Risk Analysis Process (RAP) session in Phoenix, AZ annually. The RAP session shall be held within the first two (2) weeks of August, with the date of the session at the approval of the Department. There shall be an option for panelists and observers to attend virtually. The Contractor shall recruit and retain additional, qualified panelists to participate in the session.

3.3.3. Compile the Data and Prepare Forecasts in Collaboration with the Department-

The Contractor shall compile the data collected and the information from panelists.

The data and information shall be used to prepare the initial forecasts resulting from the models. Panelists will provide their low, median, and high forecasts of each independent variable to be used in the models. The Contractor shall work closely with Department staff to prepare the final forecasts. The Contractor shall also test different scenarios as needed or as required by the Department and provide support to the Department in terms of understanding future trends, correctly interpreting the forecast models, and using the forecast models to extract valid forecast outcomes (analytical results).

3.3.4. Create Technical Documentation- The Contractor shall create a report documenting and explaining the econometric models and associated parameters, the RAP session results, and the forecasts for all revenue categories.

4. Specific Requirements

4.1. Model Development- activities that are in support of creating replacement HURF and the

Excise Tax revenue forecasting models. The Contractor shall:

4.1.1. Evaluate the effectiveness of the inclusion of various independent variables in the predictive equations for the categories of HURF and the Excise Tax.

4.1.2. Develop a comprehensive list of risks to the revenue categories.

4.1.3. Develop econometric models that account for the risks identified.

4.1.4. Ensure the results of the model produce an array of probabilistic outcomes and not just a singular forecast.

4.1.5. Ensure models developed consider one-time and ongoing changes, including but not limited to the impact of the following factors on the revenue streams of HURF and the Excise Tax in future years: the impacts of climate; the increasing adoption of electric vehicles (EVs) and other alternative fuel vehicles; population growth; the increase in the adoption of telework; business cycles; public health outbreaks; inflation; trade policy; shift in driving behaviors. Factors are at the discretion of the Department.

4.1.6. Develop a process for annual forecasting using the new models. The Contractor shall:

4.1.6.1. Define what information is required to perform annual updates to the models.

4.1.6.2. Create procedures, sources, and roles and responsibilities for gathering the annual update information.

4.1.6.3. Create templates for the annual RAP Panel session. Templates shall include but not be limited to: independent variable history and baseline forecast, RAP workshop workbook for panelists, panelist input sheets and information booklets, aggregate panelist output with comparison of current year and past year independent variable forecasts.

4.1.7. Document the details of the models and forecasting process in a technical memo for internal ADOT use. The memo shall include but not be limited to: legislative updates, processes for including new funding sources or to retire funding sources no longer included in the model.

4.2. Annual Service (e.g. model maintenance; panel organization & development; forecast & report). The Contractor shall:

4.2.1. Recruit and develop a panel of experts in conjunction with the Department.

Additionally the Contractor shall be responsible, at a minimum but not limited to, the following: developing and maintaining orientation information, including the duties and requirements for potential new panelists.

4.2.2. Make annual model adjustments, ensuring recent legislative changes are considered.

4.2.3. Gather and compile data on the actuals for the independent variables used in the model in consultation with the Department, create a baseline forecast for each of the independent variables in the model.

4.2.4. Create workbooks for the panelists to use at the annual RAP panel workshop showing the actuals and baseline forecast of the independent variables.

4.2.5. Create an engaging, relevant, presentation for use at the RAP panel providing a report on the current economic environment.

4.2.6. Lead the presentation and facilitate discussion at the RAP panel.

4.2.7. Gather and compile panelist data.

4.2.8. Create comparison of forecasts of independent variables from the current year’s panel to previous year’s panel.

4.2.9. Run the models and produce revenue forecasts by revenue category at various probabilistic outcomes.

4.2.10. Finalize the forecast in conjunction with the Department.

4.2.11. Create a report to be published on the Department’s ADOT Website, the report shall explain the results of the forecasting process and the Department shall be given at a minimum, three (3) weeks to review and provide feedback.

4.2.12. Create an executive summary of the RAP panel discussion including but not limited to key take-aways and results.

4.2.13. Create a technical memo with the details of the model for internal ADOT use.

4.2.14. Conduct a meeting at the conclusion of the RAP panel process to discuss results and develop improvements to be incorporated into the following year’s process. The results of the meeting shall be captured in a memo prepared by the Contractor.

4.3. Ad-Hoc Economic and Financial Research- The Contractor shall provide the following as needed, including, but not limited to:

4.3.1. Evaluation and/or consideration of transportation funding alternatives.

4.3.2. Burn rate analysis on construction projects.

4.3.3. Cash flow analysis.

4.3.4. Develop Construction Cost Index (CCI) projections for Arizona and other regions as specified by the Department, including but not limited to the MAG region.

4.3.5. Analysis of the fiscal impact of proposed, or implemented, legislation.

5. Contractor’s Responsibilities

The Contractor shall:

5.1. Be responsible for the accuracy, quality, and timeliness of information and deliverables being provided. Deliverables shall be provided no later than the agreed upon date(s). Acceptability of deliverables is at the discretion of the Department.

5.2. Be responsible for any and all adjustments to the forecasting model, at no additional cost to the Department, in the event of inaccuracy or unacceptability of the deliverable as determined by the Department.

5.3. Acquire all outside data, forecasts, literature, software, hardware, etc. required for the project.

5.4. Create a comprehensive project plan with clear deadlines and deliverables, the Contractor shall strictly adhere to the agreed upon timeline(s).

5.5. Closely coordinate with the Department to review progress to date, present research, study findings and solicit input.

5.6. Be available to participate in various meetings and workshops and answer questions at the request of the Department.

5.7. Provide detailed invoices and progress reports. Acceptability of the invoices and progress reports is at the discretion of the Department.

5.8. Participate in meetings with Department staff as required to plan and complete the project, and/or present status report(s) and a final project report.

5.9. Be solely responsible for quality assurance/quality control (QA/QC) for all documentation submitted to the Department. Any inaccuracies shall be corrected by the Contractor at no additional cost to the Department.

5.10. Recruit and develop a panel of experts in conjunction with the Department.

5.11. Provide all deliverables in the native file format unless otherwise directed by the Department.

6. Department’s Responsibilities

The Department will:

6.1. Provide a general description of the work required, including but not limited to: format, frequency and quantity of reports, specific areas to be addressed, anticipated project milestones and timelines, and other known requirements.

6.2. Provide general directives as necessary. Be responsible for decisions pertaining to work under this Contract.

6.3. Provide timely provision of data, all relevant documents, and information.

6.4. Provide timely review and approval of the Contractor’s project plan, model, presentations, working papers, reports, and other deliverables.

SPECIAL TERMS AND CONDITIONS

1. CONTRACT TERM

The term of any resultant contract shall commence on the effective date of award and shall continue for a period of twelve (12) months thereafter, unless terminated, cancelled or extended as otherwise provided herein.

2. CONTRACT EXTENSION

By mutual written contract amendment, any resultant contract may be extended for supplemental periods of up to a maximum of forty-eight (48) months.

3. ELIGIBLE AGENCIES

This contract shall be for the exclusive use of the Arizona Department of Transportation.

4. NON-EXCLUSIVE CONTRACT

This contract shall be for the sole convenience of the Department. The Department reserves the right to obtain like goods or services from another source when necessary. The Off-Contract Purchase Authorization and subsequent procurement shall be consistent with the Arizona Procurement Code.

5. ORDERING PROCESS

The Department shall issue a purchase order to the Contractor. Each purchase order must cite the contract number. This purchase order shall be the only document required for the Department to order and the Contractor to deliver the material and/or service.

Any attempts to represent any material and/or service not specifically awarded as being under contract is a breach of the contract and a violation of the Arizona Procurement Code. Any such action is subject to the legal and contractual remedies available to the State inclusive of but not limited to contract cancellation, suspension and/or debarment of the Contractor.

6. INVOICING REQUIREMENTS

Separate invoices are required for each delivery of service and shall include at a minimum:

• Department Location’s Name and Address

• Vendor Name, Remit to Address and Contact Information

• Contract Number

• Purchase Order Number

• Invoice Number and Date

• Date the items were shipped to the Department

• Contract Line Item Number

• Line Item Description or Item or Service

• Quantity Purchased

• Line Item Unit of Measure

• Price per Unit and Total per Unit

• Date of Services provided

• Catalog or Other Discount (if applicable)

• Net Unit Price and Total per Unit (if applicable)

• Applicable taxes

• Applicable Shipping/Freight Charges

• Total Invoice Amount Due

Invoices not sent to the proper address, or not containing the necessary and required information may delay payment. A Contractor whose payments are delayed due to improper invoicing shall make no claim against the Department or the State for late or finance charges.

The Department will make every effort to process payment within thirty (30) calendar days after acceptance of services. Delivery of the service to the Department does not constitute acceptance.

The date the Department accepts delivery of services shall be the valid date for starting the thirty (30) calendar day payment period.

Payment due dates, including discount periods, will be computed from the date of acceptance or date of correct invoice (whichever is later) to the date the Department’s warrant is mailed.

7. ESTIMATED USAGE

The Department anticipates considerable usage under this contract. The Department reserves the right to increase or decrease actual quantities ordered as circumstances may require. No guarantees are made concerning actual purchases under this contract.

8. PRICE REDUCTION

A price reduction adjustment may be offered at any time during the term of the contract and shall become effective upon notice through a written contract amendment.

9. PRICE INCREASE

The Department will review fully documented requests for price increases for any contract which will or has been in effect for twelve (12) months. The request shall be submitted no less than 60 days prior to the contract renewal date. The Contractor shall provide fully documented information which supports the price increase request. Fully documented means that the request shall present detailed information and calculations that make it clear how the claimed increase has an impact on the contract unit prices. All assumptions regarding cost factors that have an impact on the requested increase shall also be clearly identified and justified. The requested price increase must be based upon a cost increase that was clearly unpredictable at the time of the offer and can be shown to directly affect the price of the item concerned. Any price increase adjustment request prior to the time of contract extension will be a factor in the extension review process. The Department will determine whether the requested price increase or an alternate option, is in the best interest of the State.

10. CONTRACT ADMINISTRATION

The contractor shall contact the Procurement Officer for guidance or direction in matters of contract interpretation or questions regarding the terms, conditions or scope of the contract.

11. NOTICES

All notices, requests, demands, consents, approvals, and other communications which may or are required to be served or given hereunder (for the purposes of this provisions collectively called “Notices”), shall be in writing and shall be sent by certified United States mail, return receipt requested, or by any other method that provides evidence of receipt, addressed to the party or parties to receive such notice as follows:

a. If intended for the State, to:

Arizona Department of Transportation, Procurement Group 1655 W. Jackson Street, MD 100P

Phoenix, Arizona 85007-3276

b. If intended for the Contractor, to the address as identified in the Contractor’s electronic vendor profile.

Or to such other address as either party may from time to time furnish in writing to the other by notice hereunder. Any notice so mailed shall be deemed to have been given as of the date such notice is received as shown on the return receipt. Furthermore, such notice may be given by delivering personally such notice, if intended for the State, to the Arizona Department of Transportation, Procurement Officer and, if intended for the Contractor, to the person named on the Offer & Contract Award of this contract, or to such other person as either party may from time to time furnish in writing to the other by notice hereunder. Any notice so delivered shall be deemed to have been given as of the date such notice is personally delivered to the other party.

12. CANCELLATION FOR POSSESSION OF WEAPONS ON ADOT PROPERTY

The Contractor or any subcontractors are prohibited from having weapons in their possession or on their person within the building. Weapons shall be stored securely, consistent with A.R.S. § 13- 3118, in the Contractor’s or any subcontractor’s vehicle if there are no storage amenities available at the ADOT facility. This contract may be cancelled if Contractor or any subcontractors or others in the employ or under the supervision of the Contractor or subcontractors is found to be in possession of weapons.

Possession of weapons (firearms, explosive device, knife or blade of more than three inches, or any other instrument designed for lethal or disabling use) is prohibited on ADOT property except in the manner stated above.

Further, if the Contractor or any subcontractors or others in the employ or under the supervision of the Contractors or subcontractors are asked by an ADOT official to leave the ADOT property, they are advised that failure to comply with such a request shall result in cancellation of the contract and anyone who refuses, whether armed or not, is subject to prosecution under A.R.S. § 13-1502, "Criminal trespass in the third degree; classification."

13. REVIEW OF CONTRACTOR’S WORK

Work performed by the Contractor shall be subject to periodic reviews and partial acceptance at various stages. The Department reserves the right to make such reviews and pass upon the acceptability of the Contractor’s work. Partial acceptance shall not relieve the Contractor’s obligation to correct, without charge, any errors in the work performed under this contract.

14. ACCURACY OF WORK

The Contractor shall be responsible for the accuracy of the work and shall promptly make all the necessary revisions or corrections resulting from errors and omissions on the part of the Contractor without additional compensation. Acceptance of the work by the Department shall not relieve the Contractor of the responsibility for subsequent correction of any such errors and clarification of ambiguities.

15. INDEMNIFICATION

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, officers, officials, agents, and employees (hereinafter referred to as “Indemnitee”) from and against any and all claims, actions, liabilities, damages, losses, or expenses (including court costs, attorneys’ fees, and costs of claim processing, investigation and litigation) (hereinafter referred to as “Claims”) for bodily injury or personal injury (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 its owners, officers, directors, agents, employees or subcontractors. This indemnity includes any claim or amount arising out of, or recovered under, the Workers’ Compensation Law or arising out of the failure of such 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. In consideration of the award of this contract, the Contractor agrees to waive all rights of subrogation against the State of Arizona, its officers, officials, agents, and employees for losses arising from the work performed by the Contractor for the State of Arizona.

This indemnity shall not apply if the contractor or sub-contractor(s) is/are an agency, board, commission or university of the State of Arizona.

16. INSURANCE

16.1 The Contractor shall furnish Certificate(s) of Insurance inclusive of the following requirements to the Department. Certificate(s) shall be received within Ten (10) calendar days of notification of contract award by the Procurement Officer.

16.2 Insurance Requirements

16.2.1 Contractor and subcontractors shall procure and maintain, until all of 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.

16.2.2 The Insurance Requirements herein are minimum requirements for this Contract and in no way limit the indemnity covenants contained in this Contract. The State of Arizona in no way warrants that the minimum limits contained herein are sufficient to protect the Contractor from liabilities that arise out of the performance of the work under this Contract by the Contractor, its agents, representatives, employees or subcontractors, and the Contractor is free to purchase additional insurance.

16.3 Minimum Scope and Limits of Insurance

Contractor shall provide coverage with limits of liability not less than those stated below.

16.3.1 Commercial General Liability (CGL) – Occurrence Form

Policy shall include bodily injury, property damage, and broad form contractual liability coverage.

• 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

a. The policy shall be endorsed, as required by this written agreement, to include the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as additional insureds with respect to liability arising out of the activities performed by or on behalf of the Contractor.

b. Policy shall contain a waiver of subrogation endorsement, as required by this written agreement, in favor of the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees for losses arising from work performed by or on behalf of the Contractor.

16.3.2 Business Automobile Liability

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

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

a. Policy shall be endorsed, as required by this written agreement, to include the

State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees as additional insureds with respect to liability arising out of the activities performed by, or on behalf of, the Contractor involving automobiles owned, hired and/or non-owned by the Contractor.

b. Policy shall contain a waiver of subrogation endorsement as required by this written agreement in favor of the State of Arizona, and its departments, agencies, boards, commissions, universities, officers, officials, agents, and employees for losses arising from work performed by or on behalf of the Contractor.

16.3.3 Workers’ Compensation and Employers' Liability

• Workers' Compensation Statutory

• Employers' Liability o Each Accident $1,000,000 o Disease – Each Employee $1,000,000 o Disease – Policy Limit $1,000,000

a. Policy shall contain a waiver of subrogation endorsement, as required by this written agreement, in favor of the State of Arizona, and its departments, agencies, boards, commissions, universities, 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 each Contractor or subcontractor that is exempt under A.R.S. § 23-901, and when such Contractor or subcontractor executes the appropriate waiver form (Sole Proprietor or Independent Contractor).

16.3.4 Professional Liability (Errors and Omissions Liability)

• Each Claim $2,000,000

• Annual Aggregate $2,000,000

a. In the event that the Professional Liability 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.

b. The policy shall cover professional misconduct or negligent acts for those positions defined in the Scope of Work of this contract.

16.4 Additional Insurance Requirements

The policies shall include, or be endorsed to include, as required by this written agreement, the following provisions:

16.4.1 The Contractor's policies, as applicable, shall stipulate that the insurance afforded the

Contractor shall be primary and that any insurance carried by the Department, its agents, officials, employees or the State of Arizona shall be excess and not contributory insurance, as provided by A.R.S. § 41-621 (E).

16.4.2 Insurance provided by the Contractor shall not limit the Contractor’s liability assumed under the indemnification provisions of this Contract.

16.5 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, emailed, hand delivered or sent by facsimile transmission to (State Representative’s Name, Address & Fax Number).

16.6 Acceptability of Insurers

Contractor’s insurance shall be placed with companies licensed in the State of Arizona or hold approved non-admitted status on the Arizona Department of Insurance List of Qualified Unauthorized Insurers. Insurers shall have an “A.M. Best” rating of not less than A- VII. The State of Arizona in no way warrants that the above-required minimum insurer rating is sufficient to protect the Contractor from potential insurer insolvency.

16.7 Verification of Coverage

Contractor shall furnish the State of Arizona with certificates of insurance (valid ACORD form or equivalent approved by the State of Arizona) evidencing that Contractor has the insurance as required by this Contract. An authorized representative of the insurer shall sign the certificates.

16.7.1 All such certificates of insurance and policy endorsements must be received by the

State before work commences. The State’s receipt of any certificates of insurance or policy endorsements that do not comply with this written agreement shall not waive or otherwise affect the requirements of this agreement.

16.7.2 Each insurance policy required by this Contract must be in effect at, or prior to, commencement of work under this Contract. Failure to maintain the insurance policies as required by this Contract, or to provide evidence of renewal, is a material breach of contract.

16.7.3 All certificates required by this Contract shall be sent directly to the Department. The

State of Arizona project/contract number and project description shall be noted on the certificate of insurance. The State of Arizona reserves the right to require complete copies of all insurance policies required by this Contract at any time. The certificate shall state that the insurance applies to any and all work performed for or on the behalf of the State of Arizona/ADOT shall be noted on the certificate of insurance.

16.8 Subcontractors

Contractor’s certificate(s) shall include all subcontractors as insureds 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 this contract, proof from the Contractor that its subcontractors have the required coverage.

16.9 Approval and Modifications

The Contracting Agency, in consultation with State Risk, reserves the right to review or make modifications to the insurance limits, required coverages, 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.

16.10 Exceptions

In the event the Contractor or subcontractor(s) is/are a public entity, then the Insurance Requirements shall not apply. Such public entity shall provide a certificate of self-insurance. If the Contractor or subcontractor(s) is/are a State of Arizona agency, board, commission, or university, none of the above shall apply.

17. USAGE REPORT

The Contractor shall furnish the Department a quarterly report showing purchasing activity under this contract. This usage report shall be provided in a form requested by the Department. Usage reports shall be submitted to the Procurement Officer no later than 30 days after the report is requested.

18. KEY PERSONNEL

It is essential that the Contractor provides adequate experienced personnel, capable of and devoted to the successful accomplishment of work to be performed under this contract. The Contractor must agree to assign specific individuals to the key positions.

The Contractor agrees that, once assigned to work under this contract, key personnel shall not be removed or replaced without written notice to the Procurement Officer. The Contractor shall immediately notify the Procurement Officer of key personnel changes. Replacement personnel shall be of substantially equal ability and qualifications. All key personnel changes are subject to the written concurrence of the Procurement Officer prior to any billable work being performed.

19. SUBCONTRACTORS

It is essential that the Contractor provides adequate experienced subcontractors, capable of and devoted to the successful accomplishment of work to be performed under this contract.

The Contractor agrees that, once assigned to work under this contract, subcontractors shall not be removed or replaced without written notice to the Procurement Officer. The Contractor shall immediately notify the Procurement Officer of subcontractor changes. Replacement subcontractors shall have substantially similar qualifications and experience. All subcontractor changes are subject to the written concurrence of the Procurement Officer prior to any billable work being performed.

20. REMOVAL OF CONTRACTOR’S EMPLOYEES

The Contractor agrees to utilize only experienced, responsible and capable personnel in the performance of the work. The Department may require that the Contractor remove from the job covered by this contract, employees who endanger persons or property or whose continued employment under the contract is inconsistent with the interest of the Department.

21. PROJECT ADMINISTRATION

The Project Manager shall be designated at the time of project assignment. The Project Manager will provide general direction as necessary and be responsible for decisions pertaining to work under this Contract.

22. TRAVEL

Travel expenses authorized in advance and incurred at off-site assignments will be reimbursed at cost, in accordance with the State of Arizona Travel Policy and the ADOT Travel Authorization Policy and Procedure hereby incorporated herein. State travel policy includes the travel reimbursement schedules. Actual receipt for travel must be submitted for reimbursement of allowable direct costs (lodging, automobile, meals, etc.). The travel policies may be accessed via the internet at the State of Arizona, General Accounting Office's website (https://gao.az.gov/travel/travel-information) and State of Arizona, Department of Transportation’s website (https://azdot.gov/business/procurement/vendor-registration).

23. CONTRACTOR SELECTION FROM MULTIPLE CONTRACTS

The Department makes no guarantee as to the amount of work to be assigned to any Contractor and may exercise its option not to utilize the services requested herein. Selection will be at the sole discretion of the Department. The Department is under no financial obligation to any selected Contractor unless the Department issues a Purchase Order for a specific requirement.

24. LICENSES, PERMITS, CERTIFICATIONS

https://gao.az.gov/travel/travel-information https://azdot.gov/business/procurement/vendor-registration

Contractor, at their expense, shall maintain in current status without any violations, complaints, or suspensions during the term of this contract all Federal, State and Local licenses, permits and certifications required for the operation of a business conducted by the contractor.

25. CONTRACT ORDER OF PRECEDENCE

In the event of a conflict in the provisions of the Contract, as accepted by the Department and as they may be amended, the following shall prevail in the order set forth below:

• Federal Terms and Conditions;

• Special Terms and Conditions;

• Uniform Terms and Conditions;

• Statement or Scope of Work;

• Specifications;

• Attachments;

• Exhibits

26. POST AWARD MEETING

At the discretion of the Department, the Contractor, at their expense, shall attend and participate in post award meetings as scheduled by the Procurement Officer.

UNIFORM TERMS AND CONDITIONS

1. Definition of Terms. As used in this Solicitation and any resulting Contract, the terms listed below are defined as follows:

1.1. “AI” means the science and engineering of making machines capable of performing tasks that are typically associated with human intelligence, such as learning and problem-solving, and includes without limitation: AI systems, classic AI, external AI, generative AI, and large language model

(LLM) AI.

1.2. “Attachment” means any item the Solicitation which requires the Offeror to submit as part of the Offer.

1.3. “Contract” means the combination of the Solicitation, including the Instructions to Offerors, the Uniform and Special Terms and Conditions, and the Specifications and Statement or Scope of Work; the Offer and any Best and Final Offers; and any Solicitation Amendments or Contract Amendments.

1.4. "Contract Amendment" means a written document signed by the Procurement Officer that is issued for the purpose of making changes in the Contract.

1.5. “Contractor” means any person who has a Contract with the State.

1.6. “Data” means recorded information, regardless of form or the media on which it may be recorded. The term may include technical data and computer software.

The term does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information.

1.7. “Days” means calendar days unless otherwise specified.

1.8. “Exhibit” means any item labeled as an Exhibit in the Solicitation or placed in the Exhibits section of the Solicitation generally containing maps, schematics, examples of reports, or other documents that will be used to perform the requirements of the Scope of Work after contract award.

1.9. “Gratuity” means a payment, loan, subscription, advance, deposit of money, services, or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value is received.

1.10. “Materials” means all property, including equipment, supplies, printing, insurance and leases of property but does not include land, a permanent interest in land or real property or leasing space.

1.11. “Procurement Officer” means the person, or his or her designee, duly authorized by the State to enter into and administer Contracts and make written determinations with respect to the Contract.

1.12. “Services” means the furnishing of labor, time or effort by a Contractor or

Subcontractor which does not involve the delivery of a specific end product other than required reports and performance, but does not include employment agreements or collective bargaining agreements.

1.13. “State” means any department, commission, council, board, bureau, committee, institution, agency, government corporation or other establishment or official of the executive branch or corporation commission of the State of Arizona that executes the Contract.

1.14. “State Fiscal Year” means the period beginning with July 1 and ending June 30.

1.15. “Subcontract” means any Contract, express or implied, between the Contractor and another party or between a Subcontractor and another party delegating or assigning, in whole or in part, the making or furnishing of any Materials or any Services required for the performance of the Contract.

1.16. “Subcontractor” means a person who contracts to perform work or render Services to a Contractor or to another Subcontractor as a part of a Contract with the State.

2. Contract Interpretation

2.1. Arizona Law. The Arizona law applies to this Contract including, where applicable, the Uniform Commercial Code as adopted by the State of Arizona and the Arizona Procurement Code, Arizona Revised Statutes (A.R.S.) Title 41, Chapter 23, and its implementing rules, Arizona Administrative Code (A.A.C.)

Title 2, Chapter 7.

2.2. Implied Contract Terms. Each provision of law and any terms required by law to be in this Contract are a part of this Contract as if fully stated in it.

2.3. Contract Order of Precedence. In the event of a conflict in the provisions of the Contract, as accepted by the State and as they may be amended, the following shall prevail in the order set forth below:

2.3.1. Special Terms and Conditions;

2.3.2. Uniform Terms and Conditions;

2.3.3. Statement or Scope of Work;

2.3.4. Specifications;

2.3.5. Attachments;

2.3.6. Exhibits; then

2.3.7. Any other documents referenced or included in the Solicitation including, but not limited to, any Bid or Offer documents provided by the Contractor that do not fall into one of the above categories.

2.4. Relationship of Parties. The Contractor under this Contract is an independent

Contractor. Neither party to this Contract shall be deemed to be the employee or agent of the other party to the Contract.

2.5. Severability. The provisions of this Contract are severable. Any term or condition deemed illegal or invalid shall not affect any other term or condition of the Contract.

2.6. No Parole Evidence. This Contract is intended by the parties as a final and complete expression of their agreement. No course of prior dealings between the parties and no usage of the trade shall supplement or explain any terms used in this document and no other understanding either oral or in writing shall be binding.

2.7. No Waiver. Either party’s failure to insist on strict performance of any term or condition of the Contract shall not be deemed a waiver of that term or condition even if the party accepting or acquiescing in the nonconforming performance knows of the nature of the performance and fails to object to it.

3. Contract Administration and Operation

3.1. Records. Under A.R.S. § 35-214 and § 35-215, the Contractor shall retain and shall contractually require each Subcontractor to retain any and all Data and other “records” relating to the acquisition and performance of the Contract for a period of five (5) years after the completion of the Contract. All records shall be subject to inspection and audit by the State at reasonable times. Upon request, the Contractor shall produce a legible copy of any or all such records.

3.2. Non-Discrimination. The Contractor shall comply with State Executive Orders Nos. 2023-09, 2023-01, 2009-09, and any and all other applicable Federal and State laws, rules and regulations, including the Americans with Disabilities Act.

Contractor shall include these provisions in contracts with Subcontractors when required by Federal or State law.

3.3. Audit. Pursuant to A.R.S. § 35-214, at any time during the term of this Contract and five

(5) years thereafter, the Contractor’s or any Subcontractor’s books and records shall be subject to audit by the State and, where applicable, the Federal Government, to the extent that the books and records relate to the performance of the Contract or Subcontract.

3.4. Facilities Inspection and Materials Testing. The Contractor agrees to permit access to its facilities, Subcontractor facilities, and the Contractor’s processes or services, at reasonable times for inspection of the facilities or Materials covered under this Contract as required under A.R.S. § 41-2547. The State shall also have the right to test, at its own cost, the Materials to be supplied under this Contract. Neither inspection of the Contractor’s facilities nor Materials testing shall constitute final acceptance of the Materials or Services. If the State determines non-compliance of the Materials, the Contractor shall be responsible for the payment of all costs incurred by the State for testing and inspection.

3.5. Notices. Notices to the Contractor required by this Contract shall be made by the State to the person indicated on the Offer and Acceptance form submitted by the Contractor unless otherwise stated in the Contract. Notices to the State required by the Contract shall be made by the Contractor to the Solicitation Contact Person indicated on the Solicitation, stated in the Contract, or listed on the State’s eProcurement system. An authorized Procurement Officer and an authorized Contractor representative may change their respective person to whom notice shall be given by written notice to the other and an amendment to the Contract shall not be necessary.

3.6. Advertising, Publishing and Promotion of Contract. The Contractor shall not use, advertise or promote information for commercial benefit concerning this Contract without the prior written approval of the Procurement Officer.

3.7. Continuous Improvement. Contractor shall recommend continuous improvements on an on-going basis in relation to any Materials and Services offered under the Contract, with a view to reducing State costs and improving the quality and efficiency of the provision of Materials or Services.