ESBD_416625_1746640774401_454-25-0506-32903-YF.pdf

Texas Department of Insurance

Request for Proposals SIF Actuarial Assessment and Reports

RFP No. 454-25-0506-32903-YF NIGP Class/Item Codes: 946-12

May 7, 2025

Anticipated Schedule of Events

May 7, 2025 Issuance of Solicitation

May 16, 2025, 3:00 p.m., Central time Deadline for Submission of Questions

May 21, 2025 Release of Official Responses to Questions (or as soon thereafter as practical)

Not Applicable Deadline to Submit HSP for Courtesy Review

Not Applicable Deadline for HSP HUB Outreach Notification

June 9, 2025, 3:00 p.m., Central time Deadlines for Submission of Proposals Late Proposals will not be considered

June 24, 2025 Presentations by Top-Ranked Respondents (if presentations requested)

August 1, 2025 Anticipated Award Date (or as soon thereafter as practical)

NOTE: Any Addendum that adds new language or replaces any language within this solicitation controls over the original version. It is the responsibility of all prospective Respondents to routinely check the Electronic State Business Daily (ESBD) during the posting period for this solicitation for any Addenda that may be posted. TDI will not make any other announcements regarding Addenda after the publication of this solicitation.

RFP No. 454-25-0506-32903-YF

Table of Contents I. Summary

II. Specifications

A. Introduction

B. Background

C. Qualifications

D. Definitions and Acronyms

E. Roles and Responsibilities

F. Scope of Work

G. Security

H. Other Contract Requirements

I. Performance and Service Specifications

J. Schedule of Deliverables and Milestones

III. General Proposal Information

A. Contract Resulting from this Solicitation

B. Contract Term

C. Copyrighted Proposals

D. Unacceptable Terms in Respondent’s Proposal

E. Authority to Bind

F. Protest Procedures

G. Texas Public Information Act and Exchange or Creation of Information

H. Respondent Documents

I. Respondent Exceptions and Assumptions

J. Service Additions or Deletions, Change Control

K. Acceptance Criteria

L. Payments and Invoice Instructions

IV. Proposal Submission Requirements

A. Time for Submission and TDI’s Email Address

B. Respondent Identification

C. No Alterations or Withdrawals of Proposal after Deadline

D. Tie Proposals

E. Pre-contract Costs

F. TDI’s Tax Exemption

G. Attachments

H. Evaluation Process

I. Proposal Content and Format

V. Mandatory Price Sheet

A. Definitions

B. Schedule 1

VI. Terms and Conditions

A. Clauses Required by the Texas Procurement and Contract Management Guide

B. Additional Texas Procurement and Contract Management Guide Provisions

C. Additional Provisions Required by TDI

VII. Execution of Proposal

VIII. Conflict of Interest/Disclosure Statement

IX. Certification Regarding Public Nature of the Proposal

Appendix A: Sample Contract

Appendix B: Tips for a Successful Submission

I. Summary

1. Type of Solicitation Request for Proposals (RFP)

2. Issuing Office

Texas Department of Insurance Purchasing and Contract Administration

PO BOX 12030

Austin, TX 78711-2030

3. Responses to Solicitation Emailed Competitive Proposals

4. HSP Courtesy Review Not Applicable

5. Deadline for Proposals Emailed to Contracts@tdi.texas.gov no later than:

June 9, 2025, 3:00 p.m., Central time

6. Initial Contract Term September 1, 2025, through August 31, 2027

7. TDI Optional Terms One (1) two-year term or two (2) one-year terms.

8. TDI Contact Person for this Solicitation Yvette Frederick, CTCM, CTCD contracts@tdi.texas.gov

9. Proposals Submitted by Email Submit to Contracts@tdi.texas.gov TDI will use the date and time stamp on TDI’s Microsoft Outlook mailbox to confirm receipt by the deadline.

10. Proposals Submitted by Mail Not Accepted

11. Proposals Submitted by Fax Not Accepted

12. Pre-Proposal Conference Not Applicable

13. Pre-Proposal Inspection Not Applicable

14. Letters of Intent to Submit a Proposal

Not Applicable mailto:Contracts@tdi.texas.gov

15. Solicitation Addenda Notices of changes to items directly impacting the original solicitation or Proposal process will be posted on the Electronic State Business Daily (ESBD) located at www.txsmartbuy.com/esbd. TDI will post any amendment to this solicitation on the ESBD as a solicitation Addendum. It is the responsibility of an interested party to periodically check the ESBD for updates to the solicitation prior to submitting a Proposal. Each Respondent is solely responsible for verifying TDI’s receipt of its questions, if applicable, and Proposal by the deadlines specified in this solicitation.

16. Questions and Answers Questions regarding this solicitation must be in writing and must be submitted to the TDI Contact Person specified in item 8 no later than May 16, 2025, 3:00 p.m., Central time. Telephone inquiries will not be accepted. Questions must be submitted by email to the email address specified in Item 9. TDI intends to post on the ESBD answers to those questions received by the deadline on May 21, 2025, or as soon thereafter as practical.

17. Respondent Presentations TDI may request that Top-Scoring Respondents present an overview of the Services described in their Proposals.

The presentations will be online and in-person attendance is not requested. Presentation dates and times to be arranged. The number of Top-Scoring Respondents will be determined by TDI in its sole discretion.

18. Contact with TDI Staff Upon issuance of this solicitation, employees and representatives of TDI, other than the TDI Contact Person identified in Item 8, will not discuss the contents of this solicitation with any Respondent, Potential Respondent, or its representatives. Failure of a Respondent or any of its representatives to observe this restriction may result in disqualification of any related Proposal. This restriction does not preclude discussions between affected parties for the purpose of conducting business unrelated to this procurement.

http://www.txsmartbuy.com/esbd

19. Evaluation of Proposals under Best Value Standard

Criteria Points Cost 25 Respondent’s Qualifications and

Experience

Compliance with TDI Specifications 40 Past Performance and References 0 or -10 Proposal Content and Format 0 or -5 Maximum Total Score 100

The factors listed in Sections 2155.074, 2155.075, 2156.007, 2157.003, and 2157.125 of the Texas Government Code shall be considered in making an award, when applicable.

The overall score for Proposals that fail to adhere to the format and content listed in Section IV Part I (Proposal Content and Format) may be deducted 5 points, the Proposal may be disqualified, or TDI may waive minor technicalities in accordance with Section III Part A (Contract Resulting from this Solicitation).

20. Basis for Automatic Disqualification Proposals submitted in response to the solicitation will be rejected as non-responsive and will be disqualified if they do not meet the following mandatory requirements. A disqualified Proposal will receive no further consideration.

1) Respondent must not be debarred from participation in state contracts.

2) Proposal must be submitted by the deadline stated in Item 5 above (Deadline for Proposals) of this Section.

3) The Title Page must be signed and submitted.

See Section IV Part I.

4) Each addendum to the solicitation must be included in its entirety, including the signed signature page. See Section IV Part I Item 10.

5) The Execution of Proposal must be signed and submitted. See Section VII

6) The Conflict of Interest form must be completed, signed, and submitted. See Section

VIII.

7) The Certification Regarding Public Nature of the Proposal must be completed, signed, and submitted. See Section IX.

II. Specifications

A. Introduction The Texas Department of Insurance (TDI), an agency of the State of Texas, issues this solicitation via a Request for Proposals (RFP) to solicit responses from qualified vendors for actuarial services as described in this solicitation (“Services”). TDI’s objective is to obtain the Services that represent the best value for TDI and the State of Texas according to the terms and conditions of this solicitation. The Services and requirements described in this solicitation are mandatory unless specifically described as optional.

TDI anticipates making a Contract Award to one Successful Respondent (“Contractor”) for the Services required by the solicitation. TDI reserves the right not to award a Contract for the performance of all or part of the requirements of this solicitation. This solicitation is not exclusive and TDI reserves the right to issue additional solicitations regarding the Services described in this solicitation or similar services at any time.

All Respondents are encouraged to offer their best pricing at all times.

All costs associated with the Services, as defined by this solicitation, must be included in the Respondent’s Proposal. Proposals that do not meet all the requirements or contain all the required documentation specified in this solicitation will be rejected as non-responsive and will be disqualified.

B. Background

TDI Overview TDI regulates the state’s insurance industry, oversees the administration of the Texas workers’ compensation system, performs the duties of the State Fire Marshal’s Office, and provides administrative support to the Office of Injured Employee Counsel – a separate agency.

TDI’s vision is to be a dynamic leader in responsible state, national, and global regulation; consumer protection; and market viability.

Project Overview TDI’s Division of Workers’ Compensation (DWC) maintains the Subsequent Injury Fund (SIF). Under the Texas Workers’ Compensation Act (TWCA), the SIF compensates an employee for a subsequent compensable injury for the remainder of the lifetime income benefits to which the employee is entitled (Texas Labor Code, §408.162). Additionally, the SIF reimburses insurance carriers for benefits they have paid, upon request, under specific circumstances prescribed by statute and rule.

The SIF is funded solely by death benefit payments from insurers in circumstances where a compensable fatal claim has no eligible beneficiary.

TDI seeks proposals from qualified entities for actuarial services for DWC. The actuarial work performed consists of SIF assessments, actuarial reports, expenditure analysis, solvency models, estimates of outstanding liabilities, and projections of benefits.

C. Qualifications Respondents must have the knowledge and expertise to provide the services described in this solicitation.

Each Respondent submitting a Proposal in response to this solicitation must describe in its Executive Summary how the Respondent meets the qualifications described below.

1) Respondent must have a minimum of five (5) consecutive years of experience providing actuarial services to governmental entities comparable to the services described in this solicitation.

Respondent must demonstrate experience in the following:

a) determining estimates of outstanding liabilities and prospective assessment rates;

b) analyzing and reviewing Subsequent Injury Funds (SIFs) for the insurance industry; and

c) developing solvency models that incorporate income and expenditure analysis to estimate current and future obligations.

2) Respondent must have experience with at least three (3) individual engagements for services comparable to those described in this solicitation.

3) Respondent must have qualified staff dedicated to the project.

a) Each of Respondent’s staff working on the project must have a minimum of five (5) years of actuarial experience.

b) One of the Respondent’s staff actively working on the project mustbe a Fellow of the Society of Actuaries, a member of the American Academy of Actuaries, or an enrolled Actuary under the Employee Retirement Income Security Act of 1974.

Respondent must specifically detail the qualifications, education, training, experience, and certifications of the key staff that will provide services under any contract resulting from this solicitation.

D. Definitions and Acronyms As used in this solicitation, the following capitalized terms will have the meaning specified below.

Term Definition Agency The Texas Department of Insurance.

Agency Primary Contact The person designated by TDI to be the point of contact between TDI and Contractor for the purposes of monitoring Contractor performance and providing day-to-day interaction and instruction. Also referred to as “Contract Administrator.”

Contract The written agreement, if any, executed by the authorized representatives of the parties (the Agency and the Contractor) that formalizes the terms, provisions, covenants, and obligations, including but not limited to those contained in this solicitation, of the respective parties to the arrangement for provision of Services.

Contractor The individual or entity qualified to provide the goods and/or services sought by TDI pursuant to this solicitation and who is ultimately selected to carry out the requirements stipulated in this solicitation and any resulting Contract. Has the same meaning as “Vendor” and “Successful Respondent.”

Term Definition Contract Administrator The person designated by TDI to be the point of contact between TDI and Contractor for the purposes of monitoring Contractor performance and providing day-to-day interaction and instruction. Also referred to as “Agency Primary Contact.”

Contract Award TDI’s notice of award to the Successful Respondent of TDI’s intent to execute a contract.

Contract Execution The date the Contract is fully executed by all Parties.

Contract Term The complete period of service including any extensions and renewals that are executed by Contract Amendment.

Data Breach A security incident in which sensitive, protected, or confidential data is copied, transmitted, viewed, stolen, or used by an individual or entity unauthorized to do so, whether or not the breach occurred in transit or at rest.

Days Calendar days unless otherwise specified.

Deliverable Unit or increment of work required by the Contract, including such items as goods, services, reports, or documents.

DWC The Division of Workers’ Compensation, a division within TDI.

Electronic State Business Daily (ESBD)

The public-facing website in which applicable government entities post certain competitive procurement solicitations.

http://www.txsmartbuy.com/esbd.

Employee, Contractor Employee

Any individuals who, on behalf of the Contractor, will or may participate in any Contract resulting from this solicitation. The term includes all officers, personnel, replacement personnel, agents, contractors, subcontractors, subcontractor employees, and other representatives of the Contractor, regardless of how employed or contracted by Contractor.

Financial Interest Receiving, or the right to receive, money or other valuable property or benefits under the actual or proposed Contract; holding a position in a business such as a principal, officer, director, trustee, partner, employee, or the like, or holding a position of management; holding any of the outstanding debt of a person directly involved in the proposed or resulting Contract; or owning stock or other interest in the business.

Fiscal Year (FY) The State of Texas and TDI’s fiscal year that begins September 1 and ends August 31.

Key Deliverable A key deliverable may have a payment associated with it and will likely have an associated liquidated damage.

Mandatory Required, compulsory, or obligatory.

Offer, Proposal, or Response The documents, including any exhibits or attachments, submitted by a prospective vendor in response to a solicitation. “Offer” has the same meaning as “Proposal” or “Response,” when such terms are applicable in the solicitation document so titled as Request for Proposal (RFP).

Party Entity who enters into a binding agreement with one or more other contracting parties and thus accepts the benefits and obligations specified therein.

http://www.txsmartbuy.com/esbd

Term Definition Relative When referring to an individual, the term includes a current or former TDI employee’s spouse, father, mother, brother, sister, son or stepson, daughter or stepdaughter, mother-in-law, father-in-law, sister-in-law, brother-in-law, son-in-law, or daughter-in-law.

Respondent An individual or business entity submitting a Proposal in response to a solicitation, with an intent to contract with TDI.

Services All of the requirements, duties, schedules, locations, and other items listed in the solicitation. The term includes any other services associated with Contractor’s performance under any Contract resulting from this solicitation.

Security Incident An event that results in unauthorized, access, loss, disclosure, modification, or destruction of information resources, whether accidental or deliberate. An instance in which a user or other person circumvents or defeats the controls of a system to obtain unauthorized access to system resources or to information contained in the system.

State Holidays The State Agency Holiday schedule is defined on the Texas State Auditor’s website at www.hr.sao.texas.gov/Holidays/.

Subsequent Injury Fund (SIF) SIF is a fund established to compensate eligible employees for a subsequent compensable injury for the remainder of the lifetime income benefits to which the employee is entitled (Texas Labor Code, §408.162).

Additionally, the SIF reimburses insurance carriers for benefits they have paid, upon request, under specific circumstances prescribed by statute and rule. The SIF is funded solely by death benefit payments from insurers in circumstances where a compensable fatal claim has no eligible beneficiary.

Successful Respondent The individual or entity qualified to provide the goods and/or services sought by TDI pursuant to this solicitation and who is ultimately selected to carry out the requirements stipulated in this solicitation and any resulting Contract. Has the same meaning as “Vendor” and “Contractor.”

TDI The Texas Department of Insurance, the state agency responsible for the issuance of this solicitation.

Vendor The individual or entity qualified to provide the goods and/or services sought by TDI pursuant to this solicitation and who is ultimately selected to carry out the requirements stipulated in this solicitation and any resulting Contract. Has the same meaning as “Successful Respondent” or “Contractor.”

Vendor Primary Contact The person designated by the Contractor to be the point of contact between Contractor and Agency for purposes of scheduling, billing, contract management, and day-to-day management of Services under this solicitation.

http://www.hr.sao.texas.gov/Holidays/

E. Roles and Responsibilities

Agency Responsibilities Agency agrees to meet the following requirements during the Contract Term:

a) Designate an Agency representative to be the Agency Primary Contact for the purposes of monitoring Contractor performance and providing day-to-day interaction and instruction.

The Agency Primary Contact will also be the designated Contract Administrator.

b) Provide technical staff to assist with coordination between Contractor and TDI.

c) Have final approval on all schedules and deliverables.

Contractor Responsibilities Contractor must meet all the following requirements during the Contract Term:

a) Designate a representative to be the Vendor Primary Contact for the purposes of scheduling, billing, contract management, and day-to-day management of Services under this solicitation.

b) Provide the necessary staff to fulfill deliverables and requirements in accordance with the agreed-upon schedule or services.

c) Collaborate with TDI to ensure successful implementation and completion of the Services.

d) Be honest, open, courteous, respectful, and fair in all contact with TDI.

e) Identify and communicate any risks to the Service to the Agency Primary Contact.

F. Scope of Work The Scope of Work describes the service requirements and deliverables the Contractor must meet in performance of the Contract. Services/requirements that contain the words “must’ are mandatory and must be provided as specified with no alternation, modification, or exception.

SIF Assessment Contractor must perform an assessment of the SIF by reviewing the areas listed below.

a) Solvency

• Evaluate SIF trends in income flow as well as project future income flow.

• Include the Texas workplace statistics.

• Review DWC SIF information for claim years 1991 through 12/31/2025.

• Analyze claims payments from 1995 through 12/31/2025.

b) Future SIF Income 9/1/2028 through 8/31/2032

• Use fatality rates in Texas and the percentages of fatalities without an eligible beneficiary.

• Determine Workers’ Compensation subscriber fatalities.

• Include data from the fatality database for Workers’ Compensation participants from

1991 to present.

c) SIF Expenditures for 9/1/2026 through 8/31/2032

• Include expenditures for both known and not reported (aka Incurred) claims.

• Calculate prior year employment and pharmaceutical reimbursements in the SIF expenditures.

• Determine amount of reimbursement projected to be paid during the following year and any remaining assets of the SIF (subsequent year reimbursements are not included in the prior year balances).

d) Lifetime Income Benefits (LIBs)

• Calculate LIB reserves for cases in existence in the SIF system.

• Verify liability of the LIBs and the fatality rates applied to these figures.

• Project future LIB claims based on workers’ compensation injury rates in Texas and the percentage of injuries that occur to employees with a prior injury.

• Projections must be provided in both present value and cash basis.

• The 3 percent (3%) annual increase for LIB payments with date of injury after 1/1/1991 must be included.

e) Death Benefit Reimbursements

• Include carrier reimbursements for subsequently identified beneficiaries from 1/1/2011 through 12/31/2026.

f) Carrier Overpayment Reimbursements

• Include the SIF information on reimbursements of carrier overpayments of benefits because of reversed or modified orders from 1992 through 12/31/2026.

g) Multiple Employment Reimbursements

• Include the SIF information on carrier reimbursements of benefits on multiple employments paid during Fiscal Years 2015-2026.

h) Pharmaceutical Reimbursements

• Analyze and include any data relating to the SIF reimbursements of pharmaceutical services for non-compensable injuries.

i) Partial SIF Reimbursements

• Perform actuarial assessment of the amount necessary to provide for partial payment of insurer claims of income benefits based on multiple employments.

j) Legislature Appropriations

Determine the amount of appropriations needed for the next biennium, which must include:

• expenditure breakdown by LIBs, Death Benefit Reimbursements, Carrier Overpayment

Reimbursements, Multiple Employment Reimbursements, and Pharmaceutical Reimbursements;

• projections including pending and future litigation against SIF and DWC verification comments; and

• statutory provisions governing the SIF that may have made historical payment trends inaccurate with verification comments.

In its Business Proposal (see Section IV, Part I, Item 5), Respondent must describe how it will meet or exceed the requirement listed above

SIF Actuarial Reports Contractor must prepare and submit actuarial reports based upon past, present, and future trends of SIF using the information gathered in Section II, Part F, Item 1 (SIF Assessment). The reports must include the information as specified below, follow the format provided, meet DWC development requirements, and adhere to the submission dates as listed.

a) Report Format The report must include, but is not limited to, the information listed below:

• Cover letter

• Table of Contents

• Executive Summary

• Individual Sections that address the categories and areas described in Section II, Part

F, Item 1 (SIF Assessment)

• All working documents in Microsoft Excel format

• Summary of Conclusions/Synopsis

b) Report Content The report must contain actuarial analysis and include, but not limited to, the information listed below.

• Written statistical calculations

• Theories and verifications summarized by state Fiscal Years

• Brief summaries of the conclusions or a synopsis of the information gathered as required in Section II, Part F, Item 1 (SIF Assessment)

• Specific actuarial findings of the assessments performed in Section II, Part F, Item 1 (SIF

Assessment)

• Other information as needed and requested by DWC

c) Report Development

• Contractor must develop and submit a DRAFT SIF Actuarial Report in the required format to DWC for review and approval.

• Contractor must cooperate and work with DWC on all aspects of developing

Contractor’s projections for the SIF Report.

• Contractor may be required to add, expand, change, or alter the report information as related to the subject matter based on the following:

o consideration of new relevant information;

o additional clarifications;

o adjustments within the scope and intent of the RFP;

o legislative inquiries and/or mandates; and o industry-based changes.

• Contractor must work with DWC to compile and provide SIF data from DWC’s existing files and formats.

• Contractor is required to make any and all changes to the SIF reports as directed by

DWC.

o DWC reserves the right to reject the SIF report(s) as many times as needed to ensure the report(s) have the necessary information and are formatted as required by DWC.

o DWC will provide final acceptance and approval of the SIF report in writing.

d) Reports Deadlines

• Contractor must provide a DRAFT SIF Actuarial Report (first draft) to DWC on August 1 of even years.

• Contractor must provide a final SIF Report on November 1 of even years.

• Contractor must provide notice to TDI in writing within 10 business days prior to the report deadline if the Contractor anticipates missing the deadline.

o Contactor must provide an alternative due date when the report will be provided to TDI in the written notice.

o Failure to meet deadlines may result in TDI assessing liquidated damages as provided in Section II Part I Item 3 (Liquidated Damages).

e) Report(s) Delivery

• Contractor must deliver the DRAFT SIF Actuarial Report electronically to the Agency’s

Primary Contract. TDI will provide the Agency’s Primary Contact and the required address information to Contractor upon Contract execution.

In its Business Proposal (see Section IV, Part I, Item 5), Respondent must describe how it will meet or exceed the requirement listed above

Status Updates Upon request by the Agency Primary Contact, Contractor must provide status updates for the actuarial work and other matters covered under the Scope of Work and resulting Contract. Statuses may be provided by telephone, in-person, virtually, or by email to the Agency Primary Contact. See Section II, Part H, Item 1.

Contractor Payments Payments to Contractor will be for actual costs incurred and in accordance with Section V (Mandatory Pricing Sheet). Final approval of payment is subject to review of source documentation to support all costs derived and charged to TDI for the services described herein.

TDI will not make payments to Contractor for any costs incurred by Contractor that were not included in the Contract. TDI will only pay for costs that are approved and allowable and in accordance with the requirements of the solicitation.

Performance Standards Contractor agrees to perform services under the Contract in a manner acceptable to TDI and in strict compliance with the standards applicable to a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries. Contractor’s performance must include all requirements of the Contract and all laws, regulations, standards, and any other requirements applicable to a Fellow of the Academy of Actuaries.

Work Product(s) For purposes of the Contract, the term “Work Product” is defined as all work papers, materials, approaches, designs, specifications, documentation, methodologies, concepts, intellectual property, or other property and/or results of the services that are developed, produced, generated, or provided to TDI in connection with, or as a result of, the services provided under the Contract.

a) Contractor must submit Work Product(s) in formats approved by TDI.

b) All Work Product(s) developed by Contractor in draft form will remain the property of

Contractor. All drafts are subject to modifications by Contractor until acceptance of the Final Work Product(s) by TDI or until termination of the Contract, whichever occurs first.

c) Within 10 business days after completion of services or upon termination of the Contract, Contractor will provide TDI all Work Product(s) produced in performance of the Contract.

d) All Work Product(s) produced in performance of the Contract are considered confidential.

Contractor may not release any Work Product(s), for any reason, without the express written consent of TDI.

e) Contractor shall have no copyright privileges for any Work Product(s), without the express written consent of TDI.

See Section VI, Part B, Item 28 (Property Rights), for additional provisions.

G. Security

General Security Requirements Personally Identifiable Information (PII) refers to information that can be used to distinguish or trace an individual’s identity, either alone or when combined with other personal or identifying information that is linked or linkable to a specific individual. Examples of PII include but are not limited to:

• name, such as full name, maiden name, mother’s maiden name, or alias;

• date of birth;

• personal identification numbers, such as a driver’s license number;

• address information, such as a street address or email address; and

• all future additions to PII as stipulated by the laws, statutes, rules, and rulings that govern

Texas data.

Security Incidents TDI defines a “Security Incident” as an event that results in unauthorized, access, loss, disclosure, modification, or destruction of information resources, whether accidental or deliberate. An instance in which a user or other person circumvents or defeats the controls of a system to obtain unauthorized access to system resources or to information contained in the system. A Security Incident may or may not turn into a Data Breach. Contractor and any subcontractors who have a reasonable belief that a Security Incident has occurred must notify TDI immediately (within one hour) upon discovery or detection. Within 24 hours of a Security Incident, Contractor will provide a Security Incident report that includes, at a minimum:

• The facts surrounding the incident;

• What mitigating actions have already been taken;

• Whether the incident is an ongoing security threat and whether additional actions or resources are needed to stop it;

• Types of information involved;

• Classification of information involved;

• The number of individuals whose information is affected;

• Whether the information was encrypted;

• Whether information systems were affected, and

• Other relevant information under the circumstances.

TDI Actions as a Result of Contractor’s Failure to Safeguard TDI Data TDI, in its sole discretion, reserves the right to conduct an independent investigation of all Security Incidents; Contractor will be responsible for the costs of any such investigation. In the event TDI has a reasonable belief that Contractor has not safeguarded the PII, TDI may enact the actions listed below.

1) Disconnect or suspend, in whole or in part, services provided under the Contract until Contractor has remediated all issues to the satisfaction of TDI.

2) Require Contractor, at its own cost, to provide notice that satisfies the requirements of the Texas Business and Commerce Code Section 521.053.

3) If TDI elects to send a separate notice, Contractor will reimburse TDI the costs associated with the notice. TDI reserves the right to collect such costs from Contractor if Contractor fails to reimburse TDI within 30 calendar days of TDI’s written request.

4) At TDI’s request, require Contractor to purchase, at its own cost, an identity theft protection service for all individuals whose information was disclosed without authorization. The protection service must cover each individual for a two-year period from the effective date of the identity theft protection service for each individual, must include automatic fraud alerts to the individual, and must include monitoring services. Contractor will be responsible for all costs.

In its Business Proposal (see Section IV, Part I, Item 5), Respondent must confirm its ability to meet or exceed the Security requirements described in this Part G.

H. Other Contract Requirements In its Business Proposal (see Section IV, Part I, Item 5), Respondent must affirm that it will meet or exceed the Other Contract Requirements described in this Part H.

Communication Protocols During the Contract Term, Contractor must engage in at least the regular communication identified below. Additional communications will be addressed on an as-needed basis as outlined in Section II, Part F, Item 3.

a) During development, Contractor must provide a weekly written status report to TDI. At a minimum, the weekly status report will describe the work completed during the period, action items for the next period, any identified risks, and outstanding issues.

b) During development, Contractor must engage in a weekly conference call with TDI at a mutually agreed upon day and time.

c) During operations, Contractor must provide a monthly written status report to TDI. At a minimum, the monthly status report will describe the overall project status, action items, any identified risks, outstanding issues, and invoice status.

Records Retention Contractor must adhere to the records retention requirements described in the Terms and Conditions, Section VI, Part B, Item 29 (Records Retention).

Contractor Conduct on TDI Premises Contractor must ensure that Contractor’s employees conduct themselves in a professional manner and are in appropriate business attire when on TDI’s premises. In addition, Contractor must ensure that its employees comply with all guidelines established by TDI for independent contractors required to provide services on TDI’s premises. These guidelines may address issues that include, but are not limited to, the following: building security, IT security, preservation of records, safety, professional conduct, use of State property, non-disclosure of confidential information, drug-free and alcohol-free workplace rules, and other requirements for on-site independent contractors.

Contractor Staffing TDI reserves the right to request Contractor to replace Contractor Employees whom TDI judges to be incompetent, careless, unsuitable, or otherwise objectionable, or whose continued use is deemed contrary to the best interests of the State and TDI. Upon receipt of a formal written request from the Agency Primary Contact, Contractor must immediately proceed with the replacement.

Change Control Throughout the Contract Term, changes may become necessary. Generally, contract changes will be administrative or substantive.

a) Administrative Changes – changes that are within the scope of the Contract and do not affect or alter the rights of the parties. Administrative changes will be communicated to the Vendor Primary Contact in writing from the Agency Primary Contact. Examples of administrative changes include:

• changes in billing instructions or address;

• corrections of typographical errors not affecting the substance of the contract;

• changes as permitted by the specific contract language; and

• changes in agency personnel assigned to the contract.

b) Substantive Changes – contractual changes that affect the rights of both parties.

Substantive changes will typically be executed via a Contract Amendment executed by both Contractor and TDI. Examples of substantive changes include a:

• change in the price of the contract;

• change in the delivery schedule;

• change in the quantity;

• change of deliverables (e.g., the specifications);

• change of key personnel; or

• change of any terms and conditions.

TDI and Contractor will mutually evaluate the impact of each change to the Services, schedule, and costs. The Agency Primary Contact will document whether the change is approved or disapproved and initiate the process to enact the change. All changes must be formally approved by the Agency Primary Contact in writing or by an executed Contract Amendment before the change occurs.

Legislative Changes TDI is subject to rules and regulations established by the Texas Legislature. During the Contract Term, if the legislature enacts new or changes existing statutes that impact the Services provided under the Contract, TDI will work with the Contractor and use the Change Control process (Section I,I Part I, Item 5) to incorporate new or changed requirements.

Insurance Contractor must obtain and maintain the following coverages throughout the Contract Term. All coverages must be with companies licensed in Texas with an “A” rating from A.M. Best Co. and authorized to provide the required coverages.

a) Standard Workers’ Compensation Insurance covering all individuals who will provide Services under the Contract in accordance with statutory limits; and

b) Commercial General Liability Insurance: $500,000 minimum each occurrence limit;

$1,000,000 minimum aggregate limit.

All of the above policies will contain endorsements prohibiting cancellation except upon 30 calendar days’ prior written notice to TDI. No later than five (5) business days following Contract Execution, and on an annual basis thereafter, Contractor will furnish proof to TDI of such coverage in the form of a Certificate of Insurance from Contractor’s insurance carrier(s) indicating the required coverages. The certificate will be addressed to TDI as the certificate holder. Contractor must provide proof of required insurance coverage via email referencing the TDI Contract number submitted to the following address: contracts@TDI.texas.gov.

Confidential Information; Non-Disclosure Agreements Contractor and Contractor’s employees must not disclose to anyone, directly or indirectly, any information designated by TDI as confidential or to information accessed as a result of the Contract resulting from this solicitation without the prior written consent of TDI. In addition, upon Contract Execution, Contractor must sign the Non-Disclosure Agreement incorporated with the Contract and must adhere to the requirements outlined in the Non-Disclosure Agreement during the term of the Contract.

Within three (3) days of receipt, Contractor must refer to TDI any third-party requests, received directly by Contractor, for information to which Contractor has access as a result of or in the course of performance under a Contract resulting from this solicitation. The provisions of this Section survive the termination or expiration of any Contract resulting from this solicitation.

mailto:contracts@TDI.texas.gov

Testing; Acceptance; Return; Revocation After award and prior to payment, TDI may conduct acceptance testing on the requested items delivered under the Contract. If the delivered and installed requested items fail to meet or exceed the acceptance criteria or any other requirement of this solicitation or the Contract, TDI may refuse to accept the requested items. If TDI refuses to accept the requested items, TDI will return such requested items at Contractor’s sole expense. If the delivered requested items meet or exceed all conditions and requirements of the Contract, TDI will notify Contractor in writing that Contractor may submit an invoice to TDI’s Accounting Program for such requested items. TDI reserves the right to revoke prior acceptance for, among other things, latent defects.

I. Performance and Service Specifications

Performance Standards The performance standards listed below are not inclusive of all requirements in this Section II or in the resulting Contract. Respondent’s Business Proposal must include a description of how Respondent proposes to measure and report to TDI the performance associated with each listed task.

Task Solicitation Section Performance Required Measurement

Period

Security Incidents Section II, Part G, Item a)

Within 24 hours of a Security Incident, Contractor will provide a Security Incident report

Each Occurrence

Status Updates Section II, Part F, Item 3

As needed per TDI request As requested

Confidential Information;

Non-Disclosure Agreements

Section II, Part H, Item 8

Within three (3) days of receipt

Each Occurrence

Performance Contractor must provide users with uninterrupted service and meet the specifications within this solicitation. If Contractor fails to meet the specifications stated in this solicitation, TDI may take the actions listed below, in addition to any liquidated damages that may be assessed. As warranted by the impact of Contractor’s failure to perform, TDI may initiate a Corrective Action Plan (CAP) following the first or second incident.

Notifications

1) First Incident

• Written notification by email of contractual terms and expectations and the harmful effects of the failure.

• Copy of action placed in TDI’s contract management file.

2) Second Incident

• Written notification by email of contractual terms and expectations and the harmful effects of the failure.

• Required acknowledgement by Contractor’s Primary Contact.

• Copy of action placed in TDI’s contract management file.

3) Third Incident

• Written notification by email of contractual terms and expectations and the harmful effects of the failure.

• Required acknowledgement by Contractor’s Primary Contact; may request Contractor’s Primary Contact to physically attend a meeting with TDI to discuss repeated incidents.

• Copy of action placed in TDI’s contract management file.

• Failure noted on the Vendor Performance Tracking System report (Texas

Government Code Section 2262.055).

• Prepare a Corrective Action Plan.

Corrective Action Plan (CAP) If Contractor repeatedly fails to deliver services or specifications as outlined in the Contract, or if TDI determines that Contractor’s failure to perform warrants it, TDI may initiate a CAP to address the performance failure. TDI may draft the CAP, or TDI may instruct Contractor to draft the CAP for TDI’s review and approval. The CAP will include:

• a description of the service failure and the harmful effects of the failure to services;

• Contractor’s root cause analysis; and

• Contractor’s plan to address the failure and correct performance, including a specific schedule and measurable success criteria.

Contractor must demonstrate to TDI the changes/corrections implemented by Contractor in normal operational processes to confirm successful completion of the CAP.

CAP Failure Event If Contractor is not able to correct the service failure as described in the CAP, TDI may take one or more of the following actions:

• Impose liquidated damages as provided in Section II Part I Item 4 (Liquidated Damages).

• Refrain from issuing payment for the amount of services invoiced until the service failure is resolved to the satisfaction of TDI.

• Require Contractor, at its sole cost and expense, to provide additional resources as necessary to identify and resolve the service failure.

• Terminate the Contract in whole or in part as provided by Section VI Part C Item 5 (Termination).

Chronic Issues If TDI determines that the performance has not consistently improved after completion of a CAP or after Contractor has otherwise corrected a service failure, or if TDI otherwise determines that a repeatable chronic service issue exists, TDI may take one or more of the following actions:

• Work with Contractor to establish a project team to manage a process improvement plan to correct the chronic issue.

• Impose liquidated damages as provided in Section II Part I Item 3 (Liquidated Damages).

• Refrain from issuing payment for the amount of services invoiced until the service failure is resolved to the satisfaction of TDI.

• Require Contractor, at its sole cost and expense, to provide additional resources as necessary to identify and resolve the service failure.

• Terminate the Contract in whole or in part as provided by Section VI Part C Item 5 (Termination).

Liquidated Damages Contractor acknowledges that it is impossible or impractical to estimate certain damages with any degree of certainty. Therefore, the parties agree as follows:

a) If Contractor fails to deliver or perform services within the time specified in the Contract, specifically those identified in the Liquidated Damages table below, TDI may require Contractor to pay TDI as fixed, agreed, and liquidated damages, the sum set forth in the Liquidated Damages table.

b) Alternatively, if, in the opinion of TDI, delivery or performance is inexcusably delayed or repeatedly not met by Contractor, TDI may terminate the awarded Contract in whole or in part as provided by Section VI Part C Item 5 (Termination), and/or assess fixed, agreed, and liquidated damages accruing until the time TDI may reasonably obtain delivery. The liquidated damages may be assessed at the option of TDI, and if assessed, will be in addition to any other remedy or damages available to TDI.

c) The amount of liquidated damages provided in the Contract is neither a penalty nor a forfeiture and must compensate TDI solely for the inability to use or benefit from the services and is not intended to, and does not include: (i) any damages, additional costs, or extended costs incurred by TDI for extended administration of the awarded Contract, (ii) any increases in financing costs resulting from the delay, or (iii) any additional services relating to, or arising as a result of, the delay. TDI will be entitled to a claim against Contractor for its actual damages and amounts not specifically included within the liquidated damages as set forth herein. Such costs will be computed separately. Together with liquidated damages, they will be deducted from any monies due to Contractor under the Contract or paid to TDI within 30 calendar days of the notice of imposition of such damages.

d) Contractor will not be charged with liquidated damages when the delay in delivery or performance arises out of causes beyond the control and without the fault or negligence of Contractor.

e) The amount of such liquidated damages as referred to herein will be up to and including the amount specified in the Liquidated Damages table for each business or calendar day beyond the deadline that Contractor fails or refuses to meet its obligations under the Contract.

Liquidated Damages

Service Level Requirement: Section II Part F Item 2d (Report Deadlines) Expected Level of Service Compliance with reports deadlines Period of Measurement Business day Measurement Window Daily Inclusions Timely production of deliverables in a condition acceptable to TDI as required in Section II, Part F, Item 2d Exclusions • Force majeure events.

• Events determined to be caused by an entity other than or outside the control of Contractor.

Cure Period 5 business days Liquidated Damages Amount $100 per day after cure period

Service Level Requirement: Section II Part F Item 6c (Work Products) Expected Level of Service Compliance with providing TDI all Work Product(s) within

10 business days after completion of services or upon termination of the Contract.

Period of Measurement Business day Measurement Window Daily Inclusions Provide Work Product(s) as required to TDI Exclusions • Force majeure events.

• Events determined to be caused by an entity other than or outside the control of Contractor.

Cure Period 5 business days Liquidated Damages Amount $1,000 per day after cure period

J. Schedule of Deliverables and Milestones The Schedule of Deliverables and Milestones will be finalized after Contract Execution and included as an attachment to the Contract. Key deliverables are noted with a checkmark (“”).

Key Deliverable Item Solicitation Section Due Date Due To

Proof of Insurance Certificate must list TDI as the certificate holder and must list the TDI Contract Number.

Section II, Part H, Item

Five (5) business days following Contract Execution;

and Annually on September 1 during Contract Term

Contracts@tdi.texas.gov Deliverables@tdi.texas.gov

Draft SIF Actuarial Report Section II, Part F, Item 2

August 1 of even years Agency Primary Contact

Final SIF Actuarial Report Section II, Part F, Item 2

November 1 of even years

Agency Primary Contact

Key Deliverable Item Solicitation Section Due Date Due To

All Work Product(s) Section II, Part F, Item 6

Within 10 business days after completion of services or upon termination of the Contract

Agency Primary Contact

III. General Proposal Information

A. Contract Resulting from this Solicitation A response (Proposal) to this solicitation is an offer to contract based upon the terms, conditions, and specifications set forth in this solicitation. A Proposal does not become a contract with TDI unless, until, and to the extent a formal agreement is executed by authorized representatives of TDI and Contractor.

TDI reserves the right, in its sole discretion, to reject all or any part of any Proposals; waive minor technicalities; negotiate price and other provisions with all Respondents, the top-rated Respondents, or no Respondents; and award a contract in the best interests of TDI and the State of Texas. TDI reserves the right, in its sole discretion, to award the contract without discussion of response(s) with Respondent(s).

TDI’s waiver of any deviations in any Proposals will not constitute a modification of this solicitation and will not preclude TDI from asserting all rights against Respondent for failure to fully comply with all terms and conditions of this solicitation. TDI reserves the right to make any corrections or include additional requirements in the Contract prior to issuance that are necessary for TDI’s compliance, as an agency of the State of Texas, with all state and federal requirements.

Any contract resulting from this solicitation will be between TDI and Contractor who will be responsible and accountable for providing the Services. The term “Contractor” includes employees, representatives, agents, subcontractors, suppliers, and third-party service providers of Contractor regardless how employed or contracted by Contractor.