TEXAS DEPARTMENT OF

LICENSING AND REGULATION

REQUEST FOR PROPOSALS

FOR

INTERNAL AUDIT SERVICES

ISSUED APRIL 7, 2026, 4:00 P.M. CENTRAL TIME

Request for Proposal No. 452-2026-0005

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REQUEST FOR PROPOSALS FOR TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS ...................................................................................................................... I

GLOSSARY OF TERMS

1. GENERAL INFORMATION

1.1. Purpose

1.2. Schedule of Events

1.3. Successful Proposer’s / Agency Relationship

1.4. Procurement Authority

1.5. Proposals Subject to The Texas Public Information Act

1.6. Misunderstanding or Lack of Information

1.7. Rejection of Proposals and Cancellation of RFP

1.8. Ownership of Proposals

1.9. Incurred Expenses

1.10. Proposal Tenure

1.11. No Texas Department of Licensing and Regulation Obligations

1.12. Successful Proposer’s Obligations

1.13. Captions

1.14. Parts Incorporated

2. PROPOSAL PROCESS

2.1. Contact Person

2.2. Prohibition Against Unauthorized Contact

2.3. Pre-Proposal Conference

2.4. Questions

2.5. Submission of Proposal

2.6. Response Format & Contents

2.7. Letter of Transmittal

2.8. Executive Summary

2.9. Proposer’s Contracting Authority

2.10. Proposer’s Cost Proposal

2.11. Multiple Proposals

2.12. Changes, Modifications and Cancellation

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2.13. Updates to Information Supporting a Proposal

2.14. Additional Information

2.15. Proposal Evaluation and Contract Award

2.16. Site Visits and/or Oral Presentations

2.17. Protest Procedure

3. CONTRACTUAL TERMS AND CONDITIONS

3.1. Introduction

3.2. Governing Law and Venue

3.3. Contract Elements

3.4. Amendments

3.5. Non-Waiver

3.6. Clarification of Texas Department of Licensing and Regulation’s Intent

3.7. Relationship of the Parties

3.8. Payment

3.9. Assignments

3.10. Subcontracting

3.11. Approval of Staffing

3.12. Background Investigations

3.13. Compliance

3.14. Term of Contract

3.15. Termination at Will

3.16. Termination for Cause

3.17. Termination Related to Availability of Legislative Appropriations

3.18. Termination Without Penalty

3.19. No Liability Upon Termination

3.20. Warranties

3.21. Licenses and Permits

3.22. Successful Proposer Site Visits

3.23. Intellectual Property Rights

3.24. Pre-Existing and Third-Party Rights

3.25. Remediation

3.26. Accounting Records

3.27. Right to Audit

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3.28. Indemnification

3.29. Insurance

3.30. Self-Insurance

3.31. Commercial General Liability Insurance

3.32. Workers’ Compensation & Employer’s Liability Insurance

3.33. Professional Liability (Errors and Omissions) Insurance

3.34. Business Automobile Insurance

3.35. Performance Bond

3.36. Disclosure of Litigation

3.37. Changes in Ownership

3.38. Force Majeure / Delay of Performance

3.39. Taxes, Fees and Assessments

3.40. Media Releases

3.41. Advertising

3.42. Hiring of Texas Department of Licensing and Regulation Personnel

3.43. Hiring of Lobbyist, Consultant and/or Advisor; Supplemental Information

3.44. Notices

3.45. Non-Disclosure

3.46. Usufruct

3.47. Ticket Purchase

3.48. Liquidated Damages

3.49. Sanctions and Remedies Schedule

3.50. Dispute Resolution

3.51. Certifications

3.52. Preferences

3.53. Deceptive Trade Practices; Unfair Business Practices

3.54. Immigration

3.55. Electronic and Information Resources Accessibility Standards

3.56. Information Security, Data Governance, and Artificial Intelligence

3.57. False Statements; Breach of Representations

3.58. Limitation on Authority; No Other Obligations

3.59. Proposer Assignment

3.60. Code of Conduct

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3.61. Contact with Texas Department of Licensing and Regulation

3.62. Incidents and Anomalies

3.63. U.S. Department of Homeland Security’s E-Verify System

3.64. Surveillance, Intimidation, and Related Acts

3.65. Non-Exclusive Contract

3.66. No Third-Party Beneficiaries

3.67. Survival

4. REQUIRED INFORMATION

4.1. Experience of Proposer

4.2. Key Staffing Profile

4.3. Proposer References

4.4. Contact Person

4.5. Conflict of Interest

4.6. Financial Soundness

4.7. Background Investigations

4.8. Disclosure of Interested Parties

5. HISTORICALLY UNDERUTILIZED BUSINESS (HUB) PARTICIPATION

5.1. HUB Requirement

5.2. HSP Submission and Texas Department of Licensing and Regulation Review

5.3. Assistance for Preparation of HSP

5.4. Requirements for Completing the HSP Forms

5.5. Subcontracting Opportunities

5.6. Post-Contract Award

6. SCOPE OF SERVICES

6.1. Background and General Information

6.2. Internal Audit Standards to be Followed

6.3. Deliverables

6.4. Development of the Annual Audit Plan

6.5. Implementation of the Annual Audit Plan

6.6. Reporting and Related Services

6.7. Annual Audit Reports

6.8. Progress Conferences

6.9. Reporting System and State Auditor’s Hotline

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6.10. Additional Audit Reports

ATTACHMENT A PROPOSER’S COMMITMENT

ATTACHMENT B FINANCIAL COMMITMENT AND RESPONSIBILITY

ATTACHMENT C HUB SUBCONTRACTING PLAN

ATTACHMENT C-1 HSP QUICK CHECK LIST

ATTACHMENT C-2 HUB SUBCONTRACTING OPPORTUNITY NOTIFICATION FORM

ATTACHMENT D TEXAS GOVERNMENT CODE §466.155

ATTACHMENT D-1 BACKGROUND INFORMATION CERTIFICATION

ATTACHMENT E TEXAS DEPARTMENT OF LICENSING AND REGULATION VENDOR

BACKGROUND INVESTIGATION FORM

ATTACHMENT E-1 VENDOR BACKGROUND INVESTIGATION CERTIFIED LIST OF VENDOR

PRINCIPALS

ATTACHMENT E-2 VENDOR BACKGROUND INVESTIGATION CERTIFIED LIST OF

CONTRACTUALLY DEFINED VENDOR PRINCIPALS

ATTACHMENT E-3 VENDOR EMPLOYEE BACKGROUND INVESTIGATION LIST

ATTACHMENT E-4 CONSENT TO BACKGROUND INVESTIGATION AND RELEASE OF PERSONAL

INFORMATION

ATTACHMENT F SAMPLE PERFORMANCE BOND

ATTACHMENT G SCORING MATRIX

ATTACHMENT H COST PROPOSAL

ATTACHMENT I TEXAS GOVERNMENT CODE CHAPTER 552 SUBCHAPTER J ADDITIONAL

PROVISIONS RELATED TO CONTRACTING INFORMATION

ATTACHMENT J TEXAS INTERNAL AUDITING ACT

REQUEST FOR PROPOSALS FOR PART 1

INTERNAL AUDIT SERVICES GENERAL INFORMATION

GLOSSARY OF TERMS

This Glossary assigns definitions to the listed terms. The definition given to a term listed in this Glossary applies whenever the capitalized term appears in this Request for Proposals (RFP) and in any response, including a Proposal, to this Request for Proposals.

Term Definition Apparent Successful Proposer

The Proposer recommended by the evaluation committee and approved by the Executive Director, subject to the execution of a completed contract.

Business Days Days occurring Monday through Friday except for the legal holidays observed by the State of Texas. The terms “working days” and “business days” may be used interchangeably.

Business Hours The Texas Department of Licensing and Regulation's Business Hours are 8:00 a.m. to 5:00 p.m. CT, Monday through Friday, except State holidays.

Commission The Texas Commission of Licensing and Regulation is TDLR’s governing board and policy-making body made up of seven (7) public members appointed by the Governor with the consent of the Texas Senate. The Texas Commission of Licensing and Regulation may be referred to as Commission throughout this document.

Contract The agreement entered into by the Texas Department of Licensing and Regulation and the Successful Proposer, which will incorporate the contents of this RFP and the Successful Proposer’s Proposal, except as specifically provided to the contrary in the Contract and any amendments to the Contract.

Contract Award The day of the Contract announcement after the signing of a Contract between the Texas Department of Licensing and Regulation and the Successful Proposer.

Contract Term The time period when the Contract is in effect, which unless otherwise indicated includes any renewal period.

CPA Texas Comptroller of Public Accounts.

Day A calendar Day.

Executive Director The Executive Director of the Texas Department of Licensing and

Regulation or an employee of the Texas Department of Licensing and Regulation authorized to act on behalf of the Executive Director.

Fiscal Year The Texas Department of Licensing and Regulation’s fiscal year, which begins on September 1 and ends on August 31 of the following year.

Historically Underutilized Business (HUB)

A Historically Underutilized Business is a business that is certified by the State of Texas that (1) is at least 51% owned by a Service-disabled Veteran (as defined by 38 U.S.C. Section 101(2)) who has suffered at least a 20 percent service-connected disability as defined by 38 U.S.C.

Section 101(16); (2) is a for-profit entity that has not exceeded the size standards prescribed by 34 Texas Administrative Code (TAC) § 20.294, and has its principal place of business in Texas; and (3) has an owner residing in Texas with a proportionate interest who actively participates in the control, operations and management of the entity's affairs. For further explanation, see the Comptroller of Public Accounts (CPA) HUB rule definitions at 34 TAC § 20.282.

HSP The Historically Underutilized Business Subcontracting Plan (HSP) required by Chapter 2161 of the Texas Government Code and by Texas Department of Licensing and Regulation Rule, 16 TAC § 140.540 (See Attachment C).

Incident An event or occurrence.

Intellectual Property Rights

The worldwide legal rights or interests evidenced by or embodied in:

(i) any idea, design, concept, personality right, method, process, technique, apparatus, invention, discovery, enhancement or improvement, including any patents, trade secrets, and know-how; (ii) any work of authorship, including any copyrights, moral rights, reversionary rights or neighboring rights; and any derivative work thereto (iii) any trademark, service mark, trade dress, trade name, or other indicia of source or origin; (iv) domain names (v) any other proprietary or similar rights, and (vi) any applications, provisionals, registrations, renewals, continuations, continuations-in-part, or divisionals relating thereto. The Intellectual Property Rights of a party include all worldwide legal rights or interests that the party may have acquired by assignment or license with the right to grant sublicenses.

Major And Prime Contracts

The following Texas Lottery Program contracts are considered major or prime contracts: lottery operations and services, scratch (instant) ticket manufacturing and services, advertising media services, lottery drawings certified public accounting services, drawings studio and production services, promotional products, internal audit services, internal control system and related services, security management system and monitoring services, risk review and compliance monitoring services, website hosting services, retailer bonus payment management services, trademark license and promotional agreements with the Dallas Cowboys and the Houston Texans, promotional and sponsorship agreement with the National Medal of Honor Museum Foundation. The Texas Department of Licensing and Regulation may add or delete major or prime contracts at its sole option.

Proposal

All information and materials submitted by a Proposer in response to this RFP. This includes the sealed Cost Proposal, Technical Proposal, and other information and materials provided to the Texas Department of Licensing and Regulation by the Proposer prior to Contract Award.

Proposer

An individual or entity that submits a Proposal. The term includes anyone acting on behalf of the individual or entity that submits a Proposal, such as agents, employees and representatives.

RFP This Request for Proposals.

SPD Statewide Procurement Division (SPD) is a division of the Texas Comptroller of Public Accounts.

State The State of Texas and its agencies, boards and commissions, officers and employees.

Subcontractor A person who contracts with the Successful Proposer to work, to supply commodities, or contribute toward completing work for TDLR.

Successful Proposer The Proposer with whom the Texas Department of Licensing and Regulation executes a contract to provide the goods and services that this RFP requires.

Texas Department of Licensing and Regulation, or

TDLR

The agency created by Chapter 51 of the Texas Occupations Code that is the primary state agency responsible for the oversight of businesses, industries, general trades, and occupations that are regulated by the state and assigned to TDLR by the legislature and oversees the Texas Lottery and Charitable Bingo Programs. The Texas Department of Licensing and Regulation may be referred to as the Department, or TDLR throughout this document.

Texas Lottery Program, Texas Lottery, Lottery

The program created by Chapter 466 of the Texas Government Code.

The Texas Lottery Program may be referred to as the Texas Lottery or Lottery throughout this document.

Works

Any tangible or intangible items or things that have been or will be prepared, created, maintained, serviced or developed by a Successful Proposer (or such third parties as the Successful Proposer may be permitted to engage) at any time following the effective date of the Contract, for or on behalf of the Texas Lottery under the Contract, including, but not limited to, any (i) works of authorship (such as literary works, musical works, dramatic works, choreographic works, pictorial, graphic and sculptural works, motion pictures and other audiovisual works, sound recordings and architectural works, which includes, but is not limited to, lottery games, game names, game designs, ticket format and layout, manuals, instructions, printed material, graphics, artwork, images, illustrations, photographs, computer software, scripts, object code, source code or other programming code, HTML code, data, information, multimedia files, text web pages or web sites, other written or machine readable expression of such works fixed in any tangible media, and all other copyrightable works and any derivative works thereto), (ii) trademarks, service marks, trade dress, trade names, logos, or other indicia of source or origin, (iii) ideas, designs, concepts, personality rights, methods, processes, techniques, apparatuses, inventions, formulas, discoveries, enhancements or improvements, including any patents, trade secrets and know-how, (iv) domain names, (v) any copies, and similar or derivative works to any of the foregoing, (vi) all documentation and materials related to any of the foregoing, (vii) all other goods, services or deliverables to be provided to TDLR under the Contract, and (viii) all Intellectual Property Rights in any of the foregoing.

1. GENERAL INFORMATION

1.1. Purpose

The Texas Department of Licensing and Regulation is issuing this Request for Proposals (RFP) to obtain Proposals from qualified Proposers to perform internal audit services.

Only Proposers that employ or subcontract individuals to perform internal audit services who are qualified in accordance with Texas Government Code §2102.006, including certification as a Certified Public Accountant (CPA) or Certified Internal Auditor (CIA) and a minimum of three (3) years of auditing experience and meet certification and licensing requirements of the Texas State Board of Public Accountancy certified public accounting (CPA) will be considered.

The Successful Proposer shall be responsible for managing and maintaining the agency’s internal auditing program and performing all other duties imposed by the Texas Internal Auditing Act, Chapter 2102, Texas Government Code.

Proposers shall provide information in their Proposals that will permit awarding a Contract in a manner that provides the best value to the Texas Department of Licensing and Regulation. A Proposer’s failure to respond in the manner required in this RFP may result in disqualification of its Proposal.

Proposers must bid on all components and submit a single Proposal for all services in response to this RFP.

1.2. Schedule of Events

The following time periods are set forth for informational and planning purposes only.

The Texas Department of Licensing and Regulation reserves the right to change any of the time periods and will post all changes on the Electronic State Business Daily (ESBD) website, https://www.txsmartbuy.gov/esbd.

Date Event April 7, 2026 (4:00 p.m., CENTRAL TIME)

Issuance of RFP

April 16, 2026 (1:30 p.m., CENTRAL TIME)

Pre-Proposal Conference (Virtual conference -see Section 2.3.)

April 23, 2026 (4:00 p.m., CENTRAL TIME) (Late Questions will not be answered)

Written Questions Due

On or before April 30, 2026

Responses to Written Questions Issued https://www.txsmartbuy.gov/esbd

1.3. Successful Proposer’s / Agency Relationship

The Texas Department of Licensing and Regulation is a part of the Executive Branch of Texas State Government. The Texas Department of Licensing and Regulation will not relinquish control over TDLR operations. The Successful Proposer shall function under the supervision of the Texas Department of Licensing and Regulation. Its operations will be subject to the same scrutiny and oversight that would apply if all operations were performed by Texas Department of Licensing and Regulation employees. Accordingly, all operations shall be conducted in adherence to applicable statutes and the highest ethical standards.

1.4. Procurement Authority

This RFP and all activities leading toward the execution of a written contract under this RFP are being conducted in accordance with Texas Government Code, Chapters 2155, 2156; and 2102; and/or 2157; and State Lottery Act (Tex. Gov't Code Ch. 466), as amended; the Texas Department of Licensing and Regulation’s administrative regulations (16 TAC Ch. 140.101, et seq.); and other applicable laws of the State of Texas.

1.5. Proposals Subject to The Texas Public Information Act

The Texas Department of Licensing and Regulation is subject to the Texas Public Information Act (Act) (Chapter 552, Government Code). Proposals submitted to the Texas Department of Licensing and Regulation in response to this RFP are subject (in their entirety) to release by the Texas Department of Licensing and Regulation as public information. A Proposal, or specific parts thereof, may, however, be shown by the Proposer to fall within one or more of the exceptions to disclosure provided in the Act, or other applicable law. Marking an entire Proposal as “confidential” or “copyrighted” is unacceptable. If a Proposer believes that parts of its Proposal are confidential under the Act, it should specify the confidential information by marking “Confidential” on each page or by each paragraph containing such information prior to

May 7, 2026 (4:00 p.m., CENTRAL TIME)

Final date for submission of draft HSP forms and final date to conduct one-on-one workshops (Zoom, TEAMS or telephone conference)

May 21, 2026 (4:00 p.m., CENTRAL TIME) (Late Proposals will not be considered)

Deadline for Proposals

On or before July 7, 2026 (or as soon as possible thereafter)

Announcement of Apparent Successful Proposer submitting the Proposal to TDLR. In response to this section, Proposers shall provide TDLR with specific and detailed reasons for each item marked “Confidential”. Vague and general claims to confidentiality are not acceptable. This detail is necessary so that TDLR will have sufficient information to provide to the Attorney General of Texas, if a ruling regarding the confidentiality of such information is requested. Failure of a Proposer to respond to such notification may result in the release of all or part of the Proposal as public information. It is the Proposer’s obligation to submit briefing to the Office of the Attorney General setting forth the basis upon which the requested information should remain confidential. The Attorney General may determine all or part of a Proposal to be public information even though parts of the Proposal were marked “Confidential” by the Proposer. Additionally, see Sec. 552.0222 of the Act relating to contracting information that is considered public and shall be released.

TDLR assumes no responsibility for asserting legal arguments to the Attorney General on behalf of Proposers.

Proposers are advised to consult with their legal counsel concerning disclosure issues resulting from this procurement process and to take precautions to safeguard trade secrets and other proprietary information.

The requirements of Subchapter J of the Act may apply to this Proposal and the Successful Proposer, contractor, or vendor agrees that the Contract can be terminated if the Successful Proposer, contractor or vendor knowingly or intentionally fails to comply with a requirement of that subchapter. See Attachment I.

1.6. Misunderstanding or Lack of Information

By submitting a Proposal, a Proposer agrees that it fully understands and will abide by the terms and conditions of the RFP, and it will not make any claims for, or have any rights to, cancellation or relief without penalty because of any misunderstanding or lack of information. The Executive Director reserves the right to accept Proposals by waiving minor technicalities if the Executive Director, within his or her sole discretion, determines it to be in the best interests of the Texas Department of Licensing and Regulation. The decision of the Executive Director shall be conclusive, and subject to protest under Section 2.17 of this RFP.

1.7. Rejection of Proposals and Cancellation of RFP

Issuance of this RFP and/or retention of Proposals does not constitute a commitment on the part of the Texas Department of Licensing and Regulation to award a contract. TDLR maintains the right to reject any or all Proposals, and to cancel this RFP, if TDLR, in its sole discretion, considers it to be in its best interests to do so.

1.8. Ownership of Proposals

All materials submitted by a Proposer will become the property of the Texas Department of Licensing and Regulation and may be used as TDLR deems appropriate.

1.9. Incurred Expenses

The Texas Department of Licensing and Regulation accepts no obligations for costs incurred in preparing and submitting a Proposal. Proposals shall be submitted at the sole expense of the Proposer. All Proposals shall be prepared simply and economically, providing a straightforward, concise delineation of the Proposer’s capabilities to satisfy the requirements of this RFP.

1.10. Proposal Tenure

All Proposals shall be valid for a period of one hundred and eighty (180) Days from the deadline for submitting Proposals.

1.11. No Texas Department of Licensing and Regulation Obligations

The Texas Department of Licensing and Regulation reserves the right to select qualified Proposals to this RFP without discussion of the Proposals with Proposers. It is understood that all Proposals will become a part of TDLR’s official procurement files after the Contract has been awarded or the procurement has been terminated and will be available for public inspection except for portions that the Proposer has designated as proprietary and confidential (see Sections 552.110 and 552.305 of the Public Information Act and RFP Section 1.5 above).

1.12. Successful Proposer’s Obligations

The Successful Proposer shall always be responsible for the performance of any contractual obligations that may result from the award of the Contract and shall be liable for the non-performance of any or all Subcontractors.

1.13. Captions

The captions to the sections of this RFP are for convenience only and are not part of the RFP’s substantive terms.

1.14. Parts Incorporated

All attachments listed in the Table of Contents are incorporated into and expressly made a part of this RFP.

REQUEST FOR PROPOSALS FOR PART 2

INTERNAL AUDIT SERVICES PROPOSAL PROCESS

2. PROPOSAL PROCESS

2.1. Contact Person

The sole point of contact for communications concerning this RFP will be Tammy Williams, whose email address, is as follows:

contracts@lottery.state.tx.us

2.2. Prohibition Against Unauthorized Contact

The Texas Department of Licensing and Regulation is committed to a procurement process that maintains the highest level of integrity. Accordingly, Proposers, as well as their agents, liaisons, advocates, lobbyists, legislative consultants, representatives or others promoting their position, are limited to those communications authorized by and described in this RFP. Any attempt to influence any of the participants, whether that attempt is oral or written, formal or informal, direct or indirect, outside of this RFP process is strictly prohibited.

Should allegations of improper contact be made prior to Contract Award, the Executive Director may investigate those allegations and, in his/her sole discretion, disqualify a Proposer.

2.3. Pre-Proposal Conference

Prospective Proposers should plan to attend a virtual Pre-Proposal Conference. See the Schedule of Events for the date and time. The Pre-Proposal Conference will include an overview of the RFP and a presentation on the HUB Subcontracting Plan (HSP) requirements. A question-and-answer session will also take place regarding general, technical and HSP questions. Attendance at the Pre-Proposal Conference is recommended, but not mandatory. A link to the virtual Pre-Proposal Conference will be posted on the Electronic State Business Daily (ESBD), https://www.txsmartbuy.gov/esbd in advance of the day and time listed in the Schedule of Events. TDLR intends to use Microsoft TEAMS for the conference. A link to the video of the Pre-Proposal Conference will be posted on ESBD.

2.4. Questions

Written questions concerning this RFP will be accepted and responses posted on the ESBD website, https://www.txsmartbuy.gov/esbd, according to the timetable established in the Schedule of Events. Questions received after the deadlines set in the Schedule of Events may be reviewed but will not be answered. Any addenda or amendments, whether made as a result of a prospective Proposer’s written questions or otherwise, will be posted on the ESBD website. It is the responsibility of the Proposer to check this website for any additional information regarding this RFP.

Questions shall be submitted by email by the question submission deadline to:

contracts@lottery.state.tx.us

A Proposer shall submit questions in writing and is responsible for obtaining clarification as to any ambiguity, conflict, discrepancy, exclusionary specification, omission, or error in this RFP (collectively, errors) prior to submitting a Proposal, but in no event shall be entitled to additional compensation, relief, or time by reason of any error or its later correction. If a Proposer fails to obtain written clarification of any errors, the Proposer shall submit a Proposal at its own risk; and, if awarded the Contract, the Proposer shall be deemed to have waived any claim to contest the interpretation thereof.

2.5. Submission of Proposal

Electronic Delivery Submission. Electronic responses shall be sent via email to Procurement@lottery.state.tx.us. Proposers shall place the RFP Name and Number, along with the Proposer Name into the subject line of their email. Electronic responses shall be received no later than the deadline established in the Schedule of Events. Late Proposals will not be considered. No exceptions will be made. For electronic submissions, Proposers shall submit one (1) signed original of its Proposal, one (1) copy of evidence of Financial Soundness, one (1) signed original of its Cost Proposal and one

(1) signed original of its Part 5, that shall be in a searchable and unprotected portable document format (PDF). Each PDF file attachment shall be a separate document and clearly named. The Texas Department of Licensing and Regulation takes no responsibility for electronic submissions that are captured, blocked, filtered, quarantined or otherwise prevented from reaching the proper destination server by any TDLR anti-virus or other security software. To confirm receipt of all electronic submissions, Proposers should request confirmation by e-mail.

If a Proposer submits multiple versions of the proposal document to ensure receipt, the last received version that arrives before the Proposal deadline will be considered the official version designated for evaluation by the Evaluation Committee.

All Proposals shall be organized and arranged to correspond directly with the numbered sections of this RFP, and all pages shall be numbered. For Parts 1, 2 and 3 only, Proposers may provide a blanket acknowledgment and acceptance in lieu of a section-by-section response, unless a section requires a specific detailed answer from the Proposer. For Parts 4 and 6 only, Proposers shall provide a section-by-section response to the RFP. For Part 5, Proposers shall follow the instructions for completing and submitting an HSP.

If a Proposer is claiming any part(s) of its Proposal is confidential, the Proposer shall provide a detailed response to Section 1 and mark the material as “Confidential”. A mailto:Procurement@lottery.state.tx.us

Proposer may not amend a commitment to comply with a specific section of this RFP by a later reference back to that section.

The Proposer’s Commitment (Attachment A) and the Background Information Certification (Attachment D-1) shall be signed by an officer or agent of the Proposer with authority to contractually bind the Proposer, and the attachment shall be included with the original Proposal.

Proposers are required to propose a complete solution to the RFP requirements in their Technical Proposal. Any items not specifically requested, but integral to the requested services, shall be included in a Proposal and identified in the appropriate sections thereof.

Proposers responding to this RFP shall fully and completely address all goods, services and other requirements as described by this RFP. Incomplete or partial Proposals will not be considered. A Proposer shall provide all information that the Proposer believes would be helpful in evaluating the Proposer’s ability to fulfill the RFP requirements.

Proposals that have been copyrighted by any Proposer are unacceptable and may be rejected as non-responsive.

2.6. Response Format & Contents

The Proposer shall demonstrate its understanding of the requested goods and services, and shall address specifically in writing the Proposer’s approach to providing each requirement in this RFP. Each Proposal shall be organized in the manner described below:

a. Letter of Transmittal;

b. Executive Summary;

c. Section-by-section response to the RFP (see Section 2.5.3 above);

d. Evidence of Financial Soundness (one (1) separate PDF);

e. HUB Subcontracting Plan (one (1) separate PDF);

f. Cost Proposal (one (1) separate PDF);

g. Proposer’s Commitment (Attachment A); and

h. Background Information Certification (Attachment D-1).

2.7. Letter of Transmittal

Proposers shall submit a Letter of Transmittal that identifies the entity submitting the Proposal and includes a commitment by that entity to provide the goods and services required by this RFP. The Letter of Transmittal shall state that the Proposal is valid for one hundred and eighty (180) Days from the Day after the date that the Proposal is delivered to the Texas Department of Licensing and Regulation. Any Proposal containing a term of less than one hundred and eighty (180) Days for acceptance shall be rejected.

The Letter of Transmittal shall be signed by a person(s) legally authorized to bind the

Proposer to the representations in the Proposal. The Proposer should also indicate, in its Letter of Transmittal, why it believes it is the most qualified Proposer to provide the goods and services required by the Texas Department of Licensing and Regulation in this

RFP.

The Letter of Transmittal shall include a statement of acceptance of the terms and conditions set forth in Part 3 of this RFP that will be included in the Contract. If the Proposer takes exception to any of the proposed terms and conditions, those exceptions shall be noted in the Letter of Transmittal. Proposers shall provide specific and detailed reasons for each exception, together with suggested alternative language. Vague and general exceptions are not acceptable. Proposers should realize, however, that failure to accept the terms and conditions specified in Part 3 of the RFP may result in disqualification of the Proposal.

2.8. Executive Summary

Proposers shall provide an executive summary of the Proposal (excluding cost information) that asserts that the Proposer is providing, in its Proposal, all the requirements of this RFP. If the Proposer is providing goods or services beyond those specifically requested, those goods or services shall be identified. If the Proposer is offering goods or services that do not meet the specific requirements of this RFP, but in the opinion of the Proposer are equivalent or superior to those specifically requested, any such differences shall be noted in the Executive Summary. The Proposer should realize, however, that failure to provide the goods and services specifically requested may result in disqualification.

The Proposer shall demonstrate its understanding of the requested goods and services and shall address specifically, in writing, the Proposer’s approach to providing each requirement in this RFP.

The Executive Summary shall not exceed five (5) pages and should represent a full and concise summary of the contents of the Proposal.

2.9. Proposer’s Contracting Authority

The Proposer warrants and represents that the person named on the Proposer’s Commitment (Attachment A) has the full right, power and is legally authorized to execute the Contract resulting from this RFP on behalf of the Proposer. Commitments shall be unqualified, not limited, and fully commit the Proposer to provide the goods and services required under this RFP.

2.10. Proposer’s Cost Proposal

The Proposer shall state its pricing for all goods and services rendered during the course of the proposed Contract, including any and all costs involved that are to be paid or reimbursed by the Texas Department of Licensing and Regulation. The pricing for the required services is to be presented only in the format set forth in Attachment H of the RFP. No reimbursement is available to the Successful Proposer beyond the amount agreed to be paid for the goods and services provided. Pricing agreed to in any resulting Contract shall be firm and remain constant through the life of the contract.

The Proposer shall not disclose its Cost Proposal or other cost information in the body of its written Proposal. Including cost information in the written Proposal may be cause for disqualification.

2.11. Multiple Proposals

Each Proposer may submit only one (1) Proposal. If a Proposer submits more than one

(1) Proposal, all Proposals from that Proposer may be rejected.

2.12. Changes, Modifications and Cancellation

The Texas Department of Licensing and Regulation reserves the right to make changes to and/or cancel this RFP. TDLR will post all changes and modifications, whether made as a result of a potential Proposer’s written questions or otherwise, and any cancellation notices on the Electronic State Business Daily. It is the responsibility of the Proposer to check this website for any additional information regarding this RFP. If the Proposer fails to monitor the ESBD website for any changes or modifications to the RFP, such failure will not relieve the Proposer of its obligation to fulfill the requirements as posted.

2.13. Updates to Information Supporting a Proposal

Following the submission of Proposals and prior to execution of a Contract, the Proposer is under a continuing obligation to notify the Texas Department of Licensing and Regulation in writing of any updates or changes to information offered in support of its Proposal that might reasonably be expected to affect TDLR’s consideration of the Proposal. Nothing in this section shall be interpreted to permit the unilateral modification by a Proposer of its commitment to provide goods and services described in its Proposal as filed for the cost stated therein.

2.14. Additional Information

By submitting a Proposal, the Proposer grants the Executive Director the right to obtain any information from any lawful source regarding the past history, practices, conduct, ability and eligibility under the State Lottery Act of the Proposer to supply goods, services and to fulfill requirements under this RFP, and the past history, practices, conduct, ability and eligibility of any director, officer or key employee of the Proposer.

By submitting a Proposal, the Proposer generally releases from liability and waives all claims against any party providing information about the Proposer at the request of the Executive Director. Such information may be taken into consideration in evaluating Proposals.

2.15. Proposal Evaluation and Contract Award

The Texas Department of Licensing and Regulation intends to conduct a fair, comprehensive and impartial evaluation of all Proposals received in response to this RFP using an evaluation committee. The evaluation committee will be selected by the Executive Director and may consist of TDLR employees, or outside individuals with expertise in particular areas. In addition, General Counsel, other in-house legal counsel, and outside legal counsel may assist by advising the evaluation committee. TDLR employees and consultants may also assist in the process as technical non-voting members of the evaluation committee.

Each member of the evaluation committee will independently score each Proposal submitted in response to this RFP which conforms to the RFP in all material respects, as determined solely by the Texas Department of Licensing and Regulation. Evaluation committee members may seek, obtain, and consider the opinions of other committee members or subject matter experts (including TDLR employees, employees from other Texas agencies and consultants retained by TDLR) when evaluating and independently scoring particular areas of the Proposals.

The evaluation committee may request clarification of information or representations in a Proposal before completing the initial evaluation. Requests for clarification and responses to requests for clarification will be in writing and will become part of the evaluation record.

The procurement process will be conducted in accordance with Tex. Gov’t Code §466.101 in addition to 16 TAC §140.101 and 16 TAC Ch. 55, Subchapter C to the extent that it applies to this procurement.

At a minimum, the factors to be considered by the evaluation committee in evaluating Proposals shall include:

(i) the Proposer’s price to provide the goods or services;

(ii) the probable quality of the offered goods and/or services;

(iii) The agency’s evaluation of the likelihood of the Proposal to produce the desired outcome for the agency, considering, among other criteria:

(I) the quality of the Proposer’s past performance in contracting with the agency, with other state entities, or with private sector entities;

(II) the qualifications of the Proposer’s personnel;

(III) the experience of the Proposer in providing the requested goods or services;

(IV) the financial status of the Proposer; and

(iv) whether the Proposer performed the good faith effort required by the HUB subcontracting plan, when the agency has determined that subcontracting is probable.

The evaluation committee also may consider vendor performance reviews maintained by the Texas Comptroller of Public Accounts under Tex. Gov’t Code §2262.055.

A copy of the scoring matrix is included as Attachment G.

A written notice of Contract Award will be posted on the ESBD and sent to all Proposers immediately following execution of the Contract.

2.16. Site Visits and/or Oral Presentations

The Texas Department of Licensing and Regulation, in its sole discretion, reserves the right to conduct site visits and/or to require Proposers to make oral presentations prior to the Contract Award and may consider such presentations and visits when evaluating Proposals. Proposers will be notified in writing and will be provided with equal advance notification of site visits and/or oral presentation assignments and guidelines.

2.17. Protest Procedure

Any protest shall be governed by Tex. Gov’t Code §466.101 and 16 TAC §§ 140.102- 103 and 16 TAC Chapter 55. Should a Proposer or Prospective Proposer wish to file a protest, such Proposer may contact the Office of General Counsel for further clarification on procedures.

REQUEST FOR PROPOSALS FOR PART 3

INTERNAL AUDIT SERVICES CONTRACTUAL TERMS AND CONDITIONS

3. CONTRACTUAL TERMS AND CONDITIONS

3.1. Introduction

This part sets forth terms and conditions applicable to the procurement process as well as terms and conditions that will become part of the Contract. The Texas Department of Licensing and Regulation reserves the right to incorporate additional provisions in the Contract in the best interest of TDLR and the State of Texas.

3.2. Governing Law and Venue

The procurement process, the award procedure, and the Contract shall be governed by, and construed and interpreted in accordance with, the applicable laws of the State of Texas. Any and all actions or suits brought by a Proposer or any related party regarding this RFP or the Contract shall be brought in the state district court located in Austin, Travis County, Texas. By submitting a Proposal, a Proposer is deemed to waive the right to bring any action in any other court. This section is purely a venue provision and shall not be deemed a waiver of sovereign immunity.

3.3. Contract Elements

The Contract between the Texas Department of Licensing and Regulation and the Successful Proposer will follow the general format specified by TDLR. TDLR reserves the right to negotiate provisions in addition to those stipulated in this RFP. The contents of this RFP, as modified by published addenda or amendments, and the Successful Proposer’s Proposal, will be incorporated into the Contract. In the event of any conflict or contradiction between or among these documents, the documents shall control in the following order of precedence: the written Contract, the RFP, and the Successful Proposer’s Proposal. Specific exceptions to this general rule may be noted in the Contract.

The Texas Department of Licensing and Regulation has determined that subcontracting opportunities are probable under this RFP. Therefore, TDLR requires the submission of an HSP as a part of each Proposal, as discussed further in Part 5 of this RFP. The HSP, if accepted by TDLR, will become a provision of the Contract.

If any term or provision of this RFP or the Contract is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the RFP or Contract shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

3.4. Amendments

The Contract may be amended only by written agreement signed by both parties.

3.5. Non-Waiver

The failure of the Texas Department of Licensing and Regulation to object to, or to take affirmative action with respect to, any conduct of the Successful Proposer which is in violation or breach of the terms of the Contract shall not be construed as a waiver of the violation or breach, or of any future violation or breach. Nothing in this RFP, or the Contract, shall constitute or be construed as a waiver of any of the privileges, rights, defenses, remedies, or immunities available to the Texas Department of Licensing and Regulation, as an agency of the State of Texas. The failure to enforce, or any delay in the enforcement, of any privileges, rights, defenses, remedies, or immunities available to the Texas Department of Licensing and Regulation under the Contract or under applicable law shall not constitute a waiver of such privileges, rights, defenses, remedies, or immunities, or be considered as a basis for estoppel.

3.6. Clarification of Texas Department of Licensing and Regulation’s Intent

It is the responsibility of the Successful Proposer to address and resolve all questions with the Texas Department of Licensing and Regulation’s designated points of contact, and to achieve a clear understanding of all TDLR requirements during each stage of the Contract Term. TDLR will use reasonable efforts to provide timely responses to questions of policy or procedure as they may affect the Successful Proposer’s performance. Key TDLR staff will be available to the Successful Proposer on a reasonable basis, but may not be available on weekends, or State or national holidays, as defined in Tex. Gov’t Code § 662.003.

3.7. Relationship of the Parties

The Successful Proposer and the Texas Department of Licensing and Regulation agree and understand that the Successful Proposer shall render the goods, services and requirements under the Contract as an independent contractor, and nothing contained in the Contract will be construed to create or imply a joint venture, partnership, employer/employee relationship, principal/agent relationship or any other relationship between the parties. Employees of the Successful Proposer will not be considered employees of the Texas Department of Licensing and Regulation within the meaning of any federal, state, or local law, ordinance, or regulation including, but not limited to, laws, ordinances, or regulations concerning unemployment insurance, social security benefits, workers compensation, or withholding requirements. The Successful Proposer shall be responsible for complying with any such laws, ordinances, or regulations, and shall indemnify and hold harmless the Texas Department of Licensing and Regulation from any costs or damages, including attorney’s fees, sustained by the Texas Department of Licensing and Regulation resulting from the Successful Proposer’s breach of its obligations under this section. The Texas Department of Licensing and Regulation will withhold indemnified losses from payments to the Successful Proposer, or, if no payments are made, the Texas Department of Licensing and Regulation will make demand of payment of indemnified losses. The Successful Proposer shall make payment within thirty (30) Days of the Texas Department of Licensing and Regulation’s demand.

3.8. Payment

All payments will be made in accordance with Tex. Gov’t Code ch. 2251 (Payments for Goods and Services). The Successful Proposer shall submit separate invoices monthly for the previous month’s services. Each invoice shall note the contract number, services rendered including internal auditor name(s), contract rate for each, number of hours provided by each, services rendered for the current billing period and date of services.

Invoices may be submitted by mail to the Texas Department of Licensing and Regulation P.O. Box 12057, Austin, Texas 78711, Attn: Accounts Payable or by e-mail to invoice@tdlr.texas.gov. Emailed invoices are preferred. Payments will be made only upon the completion of services or after the delivery of goods authorized in an approved invoice.

Under Tex. Gov’t Code § 2251.025, interest is not due on a payment until it becomes “overdue.” A payment is not overdue until the 31st day after the latter of: (1) the date the Texas Department of Licensing and Regulation receives the goods covered by the Contract; (2) the date the performance of service under the Contract is completed; or (3) the date the Texas Department of Licensing and Regulation receives an invoice for the goods or services, according to Tex. Gov’t Code § 2251.021. Services are “completed” when accepted by the Texas Department of Licensing and Regulation.

The Successful Proposer agrees that if the Texas Comptroller of Public Accounts is prohibited from issuing a warrant to the Successful Proposer under Tex. Gov’t Code §403.055, any payments owed to the Successful Proposer under the Contract will be applied towards the debt or delinquent taxes that the Successful Proposer owes the State of Texas until the debt or delinquent taxes are paid in full.

3.9. Assignments

No right or obligation of the Successful Proposer under the Contract may be assigned by the Successful Proposer without the prior written approval of the Texas Department of Licensing and Regulation, and in the event of any such approval, the terms and conditions hereof shall apply to and bind the party or parties to whom the right or obligation is assigned as fully and completely as the Successful Proposer is hereunder bound and obligated. No assignment shall operate to release the Successful Proposer from its liability for the timely and effective performance of its obligations hereunder.

Assignments made in violation of this provision shall be null and void.

Subject to the limitations on assignment contained herein, the Contract shall inure to the benefit of, and be binding upon, the successors and assigns of the respective parties hereto.

3.10. Subcontracting

The Successful Proposer is prohibited from subletting, conveying, assigning or otherwise disposing of all or any portion of the Contract, its rights, title, or interest therein, or its power to execute such agreement without the previous written approval of the Texas Department of Licensing and Regulation. If any part of the Contract between TDLR and the Successful Proposer is to be subcontracted, the Successful Proposer shall obtain prior written approval from TDLR, and each Subcontractor shall comply with all applicable requirements of TDLR and the Contract. The Texas Department of Licensing and Regulation reserves the sole right to require the Successful Proposer to terminate any Subcontractor with or without cause.

In the event the Texas Department of Licensing and Regulation approves of the use of any Subcontractor under an approved HUB Subcontracting Plan in accordance with Part 5, the Successful Proposer is not relieved of its responsibility and obligation to meet all the requirements of this RFP.

The Texas Department of Licensing and Regulation will incur no additional obligations, and the obligations of the Successful Proposer will not be reduced as a result of any such subcontracts.

The Successful Proposer agrees to indemnify and hold the Texas Department of Licensing and Regulation harmless from all claims and actions of the Successful Proposer’s Subcontractors. The Texas Department of Licensing and Regulation will withhold indemnified losses from payments to the Successful Proposer, or, if no payments are made, the Texas Department of Licensing and Regulation will make demand of payment of indemnified losses. The Successful Proposer shall make payment within thirty (30) Days of the Texas Department of Licensing and Regulation’s demand.

The Successful Proposer’s obligation to pay Subcontractors is governed by…