Exhibit 2 Financial Provisions and Pricing Requirements_Final.docx

RFO DIR-CPO-STS-609

State of Texas Department of Information Resources

Exhibit 2

Financial Provisions and Pricing Requirements

Managed Network Services (MNS)

DIR-CPO-STS-609

Version 1.0

Table of Contents

Contract Change Log Contract Change Log

CCR-000XXX

Introduction The following documents comprise the entire Financial Provisions and Pricing for the Request for Offer (RFO):

a. Exhibit 2 (Financial Provisions and Pricing Requirements)

b. Attachment 2.1 (Pricing and Volumes)

c. Attachment 2.2 (Financial Responsibility Matrix)

1. This Exhibit contains the methodology and requirements for calculating and billing the Charges for all Services. Attachment 2.1 (Pricing and Volumes) includes the Successful Respondent’s submitted pricing.

2. The Successful Respondent shall follow the instructions contained within these and all other RFO and Agreement documents, including all Exhibits.

3. The Successful Respondent shall submit pricing assuming the award of the RFO stands alone and shall not assume cost efficiencies or resource synergies with other contracts currently awarded to Respondent nor assumptions related to the award of any in-flight RFOs. If DIR determines at a later date that a potential award may result in cost efficiencies, resource synergies, or similar benefits, then DIR may expressly request that Successful Respondent quantify and qualify these efficiencies and synergies.

4. All capitalized terms in this Exhibit 2 (Financial Provisions and Pricing) shall have the same meaning given them in the MSA. All Exhibit 2 (Financial Provisions and Pricing) documents hereto are incorporated by reference.

5. Successful Respondent shall perform all due diligence necessary to provide full commitment to price prior to contract execution. DIR is not obligated to adjust prices due to inaccurate assumptions made by the Successful Respondent after contract execution.

6. All Charges calculated in accordance with these provisions shall be invoiced to DIR through the Multi-sourcing Services Integrator (MSI) Information Technology Financial Management (ITFM) platform by the Successful Respondent in accordance with the applicable invoice and payment provisions set forth in Section 2 Financial Provisions below. The Respondent shall not impose any fixed or monthly required minimum fees or support level pricing for any Service or at the total contract level; in no event will DIR be required to pay Respondent for Services not consumed or utilized by DIR.

7. All Charges are expressed and shall be paid in U.S. Dollars.

8. NOTE: All days are calendar days unless otherwise noted.

Financial Provisions Fees General Payment of Charges

1. In consideration of Successful Respondent’s performance of the Services and in accordance with Chapter 2251, Texas Government Code, DIR shall pay to Successful Respondent pursuant to Attachment 2.1 (Pricing and Volumes).

2. Successful Respondent shall pay any Subcontractors the appropriate share of such payments from DIR no later than the 10th day after the day Successful Respondent receives payment from DIR.

3. Successful Respondent shall ensure that its Subcontractors pay their suppliers the appropriate share of their payment from Successful Respondent no later than the 10th day after Successful Respondent pays the Subcontractor.

DIR Cost Recovery Component

1. The DIR cost recovery component is included in the fees charged by DIR to each DIR Customer for the Services, which include the Charges plus a DIR cost recovery component as authorized in Chapter 2054.380, Texas Government Code.

Such cost recovery components may change over time, and DIR will provide Successful Respondent with thirty (30) days advance notice of a change in the cost recovery components.

2. DIR shall bill for such cost recovery components and collect same from the DIR Customers. Successful Respondent consents to DIR retaining its cost recovery component from amounts collected from DIR Customers for Services sold hereunder. Note: Cost recovery charges are handled through Invoice A (see Section 2.1.2 New Services) and not through any administrative fees charged by the Successful Respondent (e.g., Invoice B charges).

No Additional Charges

1. Unless expressly set forth in this Agreement or in Exhibit 2 (Pricing and Financial Provisions) as a responsibility of DIR, there shall be no charges, fees, expenses, or other amounts payable to Successful Respondent for the provision of Services.

2. Any costs incurred by Successful Respondent prior to the Commencement Date are included in the Charges and are not to be separately paid or reimbursed by DIR.

Incidental Expenses

1. Successful Respondent acknowledges that, except as expressly provided otherwise in this Agreement, expenses that Successful Respondent incurs in performing the Services (including management, travel and lodging, document reproduction and shipping, equipment, software required by Successful Respondent personnel, and long-distance telephone) are included in the Charges set forth in Attachment 2.1 (Pricing and Volumes). Accordingly, such Successful Respondent expenses shall not be separately chargeable or reimbursed.

2. Other expenses incurred by the Successful Respondent, including taxes, shipping, packing, postal expenses, and moving expenses, are the financial responsibility of the Successful Respondent and are not separately chargeable or reimbursable.

No Charge for Re-performance

1. At no additional cost or expense to DIR and the DIR Customers, Successful Respondent shall reperform any Services (including, subject to MSA, Article 7 DIR Data and Other Confidential Information, any required backup or restoration of data from scheduled backups or, if not available on such backups, restoration by other means with DIR's reasonable cooperation) that result in incorrect outputs or that are not correctly performed due to an error or breach of this Agreement by Successful Respondent.

2. The resources required for such performance shall not be counted in calculating the Charges payable or resources utilized by DIR and the DIR Customers hereunder and Successful Respondent shall be solely responsible for any additional Pass-Through Expenses and other costs and expenses incurred by DIR and the DIR Customers in connection with such performance.

Efforts to Minimize Successful Respondent shall continually seek to identify methods of reducing and minimizing DIR's and the DIR Customers' total cost of receiving the Services (including the amount of Pass-Through Expenses and retained expenses) and shall notify DIR of such methods and the estimated potential savings associated with each such method.

Taxes

1. Pursuant to Section 151.309, Texas Tax Code, DIR and the DIR Customers that constitute State agencies pursuant to Section 2054.003, Texas Government Code, are exempt from the assessment of State taxes.

2. The DIR Customers that do not constitute State agencies pursuant to Section 2054.003, Texas Government Code, may also be exempt from the assessment of State taxes.

3. In addition, DIR and the DIR Customers are exempt from federal taxes pursuant to 26 United States Code, Sections 4253 (i) and (j).

4. Successful Respondent shall not include any taxes in the Charges except as expressly provided in this Section. Without limiting the generality of the foregoing, Successful Respondent’s responsibilities in connection with taxes arising under or in connection with this Agreement include the following obligations:

Income Taxes Successful Respondent shall be responsible for its own income taxes.

Sales, Use, and Property Taxes Successful Respondent shall be responsible for any sales, lease, use, personal property, stamp, duty, or other such taxes on Equipment, Materials, or property it owns or leases or licenses from a third party, including any lease or license assigned pursuant to this Agreement.

Taxes on Goods or Services Used by Successful Respondent Successful Respondent shall be responsible for all sales, service, value-added, lease, use, personal property, excise, consumption, and other taxes and duties payable by Successful Respondent on any goods or services used or consumed by Successful Respondent in providing the Services where the tax is imposed on Successful Respondent’s acquisition or use of such goods or services and the amount of tax is measured by Successful Respondent’s costs in acquiring or procuring such goods or services and not by DIR's or any DIR Customer's cost of acquiring such goods or services from Successful Respondent.

Service Taxes

1. Subject to items (2) and (3) below, Successful Respondent shall be financially responsible for all Service Taxes provided that DIR shall be responsible for any such tax imposed on the Services after the Effective Date.

2. Notwithstanding item (1) above, if Service Taxes imposed on the Services after the Effective Date (whether new or higher) are the result of Successful Respondent moving all or part of its operations to a different jurisdiction (e.g., relocating the performance of the Services to a new service location or Successful Respondent using an Affiliate or Subcontractor to perform all or part of the Services), Successful Respondent shall be financially responsible for such new or higher Service Taxes.

3. Notwithstanding items (1) and (2) above, if DIR shall become responsible for Service Taxes after the Effective Date (whether new or higher), the Parties shall identify and diligently seek to agree upon legally permissible means of minimizing such new or higher Service Taxes. If the financial impact of all such new or higher Service Taxes exceeds six percent (6%) of the then-current annual Charges, DIR may elect to terminate this Agreement in its entirety or to terminate any portions impacted by such new or higher Service Taxes (unless Successful Respondent agrees to assume financial responsibility for such new or higher Service Taxes exceeding the six percent (6%) threshold).

4. To the extent required under applicable Laws, Successful Respondent shall invoice DIR for any such Service Taxes and then credit DIR on such invoice (to the extent permitted by law) or reimburse or otherwise credit DIR, for that portion of such Service Taxes for which Successful Respondent is financially responsible under this provision.

Withholding

1. Any withholding tax or other tax of any kind that DIR or any DIR Customer is required by applicable Law to withhold and pay on behalf of Successful Respondent with respect to amounts payable to Successful Respondent under this Agreement shall be deducted from said amount prior to remittance to Successful Respondent.

2. DIR shall provide to Successful Respondent reasonable assistance, which shall include the provision of documentation as required by revenue authorities, to enable Successful Respondent to claim exemption from or obtain a repayment of such withheld taxes and shall, upon request, provide Successful Respondent with a copy of the withholding tax certificate.

Tax Filings

1. Successful Respondent represents, warrants, and covenants that it shall file appropriate tax returns, and pay applicable taxes owed arising from or related to the provision of the Services in all applicable jurisdictions.

2. At DIR's request, Successful Respondent shall provide DIR with (i) written confirmation that Successful Respondent has filed all required tax forms and returns and has collected and remitted all applicable amounts, and (ii) such other information pertaining to applicable taxes as DIR may reasonably request.

New Services Procedures

1. If DIR requests that Successful Respondent perform any New Services not provided for in the scope of the RFO, but reasonably related to the Services or other services generally provided by Successful Respondent, Successful Respondent shall promptly prepare a New Services proposal for DIR's consideration.

2. Unless otherwise agreed by the Parties, Successful Respondent shall prepare such New Services proposal at no additional charge to DIR and shall deliver such proposal to DIR in accordance with the timeframes defined in the SMM, provided that Successful Respondent shall respond more quickly in the case of a pressing need or an emergency situation.

3. DIR shall provide such information as Successful Respondent reasonably requests to prepare such New Service proposal.

4. Such New Services proposal shall include, among other things, the following at a level of detail sufficient to permit DIR to make an informed business decision: (i) a project plan and fixed price or price estimate for the New Service; (ii) a breakdown of such price or estimate; (iii) a description of the service levels to be associated with such New Service; (iv) a schedule for commencing and completing the New Service; (v) a description of the new hardware or software to be provided by Successful Respondent in connection with the New Service; (vi) a description of the software, hardware and other resources, including Resource Unit utilization, necessary to provide the New Service; (vii) any additional facilities or labor resources to be provided by DIR or the DIR Customers in connection with the proposed New Service; (viii) any risks associated with the New Service and the integration of the New Service into the existing environment; and (ix) in the case of any Developed Materials to be created through the provision of the proposed New Services, any ownership rights therein that differ from the provisions of MSA, Section 8.4 Developed Materials.

5. DIR may accept or reject proposals for New Services in its sole discretion.

6. Unless the Parties otherwise agree, if DIR accepts Successful Respondent's proposal, Successful Respondent shall perform the New Services and be paid in accordance with the proposal submitted by Successful Respondent and the provisions of this Agreement.

7. Upon DIR’s acceptance of a Successful Respondent’s proposal for New Services, the scope of the Services shall be expanded, and this Agreement shall be modified to include such New Services without the need for further action by the Parties.

8. If Successful Respondent is unable to provide such New Services using its own resources (including resources it procures through a supplier or Subcontractor), DIR may require Successful Respondent to engage (as Successful Respondent’s Subcontractor) a third party approved or selected by DIR to provide such services.

9. Notwithstanding any provision to the contrary, (i) Successful Respondent shall act reasonably and in good faith in formulating such pricing proposal, (ii) Successful Respondent shall use commercially reasonable efforts to identify potential means of reducing the cost to DIR, including utilizing Subcontractors as and to the extent appropriate, (iii) such pricing proposal shall be no less favorable to DIR than the pricing and labor rates set forth herein for comparable Services, and (iv) such pricing proposal shall take into account the existing and future volume of business between DIR and Successful Respondent.

Services Evolution and Modification

1. The Parties anticipate that, as referenced in Exhibit 1 (Statement of Work), the Services shall evolve and be supplemented, modified, enhanced, or replaced over time to keep pace with technological advancements and improvements in the methods of delivering Services and changes in the operations of DIR and the DIR Customers.

2. The Parties acknowledge and agree these changes shall modify the Services and shall not be deemed to result in New Services unless the changed services meet the definition of New Services.

Authorized User and DIR Customer Requests

1. Successful Respondent shall promptly inform DIR of requests for New Services from Authorized Users or DIR Customers and shall submit any proposals for New Services to DIR.

2. Successful Respondent shall not agree to provide New Services to DIR, any Authorized Users or any DIR Customers without the prior approval of DIR.

3. Without limiting DIR's other rights under this Agreement or applicable Law, if Successful Respondent fails to comply strictly with this Section, it shall receive no compensation for any services rendered to any person or Entity in violation of this Section.

Extraordinary Events Definition As used in this Agreement, an “Extraordinary Event” means a circumstance in which an event or discrete set of events has occurred or is planned with respect to the operations of DIR or the DIR Customers that results or shall result in a change in the scope, nature or volume of the Services that DIR or the DIR Customers shall require from Successful Respondent. Examples of the kinds of events that might cause such substantial increases or decreases include the following:

a. changes in constituencies served by, or activities or operations of, the DIR Customers;

b. privatizations, dispositions, or reorganizations of the DIR Customers;

c. changes in the method of service delivery;

d. changes in the applicable regulatory environment or applicable Laws;

e. changes in DIR's or a DIR Customer's policy, technology, or processes.

Consequence If an Extraordinary Event occurs, DIR may, at its option, request more favorable pricing with respect to applicable Charges for any functional service area specified in Attachment 2.1 (Pricing and Volumes) in accordance with the following:

1. Successful Respondent and DIR shall mutually determine on a reasonable basis the efficiencies, economies, savings, and resource utilization reductions, if any, resulting from such Extraordinary Event and, upon DIR's approval, Successful Respondent shall then proceed to implement such efficiencies, economies, savings, and resource utilization reductions as quickly as practicable and in accordance with the agreed upon schedule.

2. As the efficiencies, economies, savings or resource utilization reductions are realized, the Charges specified in Attachment 2.1 (Pricing and Volumes) shall be promptly and equitably adjusted to pass through to DIR the net benefit of such efficiencies, economies, savings, and resource utilization reductions; provided, that DIR shall reimburse Successful Respondent for any net costs or expenses incurred to realize such efficiencies, economies, savings, or resource utilization reductions if and to the extent Successful Respondent: (i) notifies DIR of such additional costs and obtains DIR's approval prior to incurring such costs, (ii) uses commercially reasonable efforts to identify and consider practical alternatives, and reasonably determines there is no other more practical or cost-effective way to obtain such savings without incurring such expenses, and (iii) uses commercially reasonable efforts to minimize the additional costs to be reimbursed by DIR.

An Extraordinary Event shall not result in Charges to DIR being higher than such Charges would have been if the rates and charges then specified in Attachment 2.1 (Pricing and Volumes) had been applied. DIR may, at its sole option, elect, for each Extraordinary Event, at any time to forego its rights under this Section and instead, apply rates and charges specified in Attachment 2.1 (Pricing and Volumes) to adjust the Charges.

Unanticipated Change

1. An “Unanticipated Change” shall consist of a material change in the technologies and/or processes available to provide all or any portion of the Services which is outside the normal evolution of technology experienced by the Services, that was not generally available as of the Effective Date and that would materially reduce Successful Respondent’s cost of providing the Services.

2. If an Unanticipated Change occurs, and if DIR requests any modifications to the Services to incorporate such unanticipated change, the Parties shall use MSA, Section 4.13 Change Control procedures to equitably adjust the Charges and other relevant provisions of this Agreement to take such Unanticipated Change into account.

Refundable Items Paid Amounts Where DIR and/or the DIR Customers have paid for a service, function, or item for which Successful Respondent is assuming financial responsibility under this Agreement, Successful Respondent shall promptly refund to DIR or such DIR Customer, upon either Party identifying the payment, that portion of such paid expense which is attributable to periods after Successful Respondent’s assumption of financial responsibility.

Refunds and Credits If Successful Respondent should receive a refund, credit, discount, or other rebate for goods or services paid for by DIR and/or the DIR Customers on a Pass-Through Expense, retained expense, cost-plus or cost-reimbursement basis, then Successful Respondent shall (i) notify DIR of such refund, credit, discount or rebate and (ii) pay the full amount of such refund, credit, discount, or rebate to DIR or such DIR Customer.

Option to Extend

1. The Successful Respondent agrees that DIR may require continued performance, not including termination assistance, beyond the initial or any renewal Term, of any of the within described services at the rates specified in the Agreement.

2. The rates for the contract year immediately prior to the extension period shall be used to determine the Charges during the extension period. This option may be exercised more than once, but the total extension of performance hereunder shall not exceed four (4) calendar months or December 31, of the then-ending Term year, whichever is later.

3. Such extension of services shall be subject to the requirements of the Agreement, with the sole and limited exception that the original date of termination shall be extended pursuant to this provision. DIR may exercise this option upon thirty (30) calendar days written notice to the Successful Respondent.

Invoicing and Payment Invoice

1. After the Commencement Date, and within five (5) DIR Business Days after the end of each month in which Services are provided thereafter, Successful Respondent shall meet with the MSI and DIR to review any preliminary Charges and Resource Unit (RU) volumes that Successful Respondent expects to include in the monthly feed to the MSI by DIR Customer (and any other specified breakdown) together with the resulting monthly extended charges calculated by the MSI for on-billing to DIR Customers. Successful Respondent shall provide variance explanations for Resource Unit dollar and volume fluctuations based on the thresholds established by and at the level of detail required by DIR.

2. Invoicing feeds will be in a format provided by the MSI and approved by DIR. Each Monthly billing feed shall:

a. Comply with all applicable legal, regulatory, and accounting requirements, including Chapter 2251, Texas Government Code,

b. Allow DIR and the DIR Customer to validate volumes and Charges, and

c. Comply with DIR’s and each DIR Customer’s accounting and billing requirements, including providing sufficient detail for each DIR Customer (project code or subaccount) to allocate costs to all federal and State programs in accordance with the relative benefits received and to make federal claims according to the federal cost plan of such DIR Customer.

Billing Month

1. The monthly billing period ("Billing Month”) is from the first day of the calendar month through the last day of the same calendar month.

2. If the Commencement Date of Service or any New Service occurs on a day later than the first day of a calendar month, then the first Billing Month shall be the period from the Commencement Date through the last day of such calendar month, and in that case, any amounts payable on a monthly basis shall be prorated for such month based upon the actual number of days from the Commencement Date to the end of such month.

3. In the event of termination, if the termination date occurs on a day prior to the last day of a calendar month, then the last Billing Month shall be the period from the first calendar day of the month of termination through the termination date. The termination date shall be the date specified in the notice per MSA, Article 14 Termination.

4. Any amounts payable monthly shall be prorated for such month based upon the actual number of days from the first calendar day of the month of termination to the termination date.

Billing Triggers

1. A mutually agreed upon policy and process will be established to determine the criteria that must be met to initiate or stop billing for a Service. These billing triggers will be documented in the SMM. At a minimum, the billing triggers should address the following scenarios to determine the appropriate criteria that must be met to generate a Charge increase or decrease:

a. Criteria for a variable Charge to begin billing.

b. Criteria for other optional services

c. Criteria for rate card resources to begin billing.

2. The trigger documentation should address all Services impacted by the event with reference to CMDB status where appropriate.

Credits

1. To the extent a Service Level Credit, Deliverable Credit, or other credit may be due to DIR pursuant to this Agreement, Successful Respondent shall provide DIR with an appropriate credit against amounts then due and owing.

2. If no further payments are due to Successful Respondent, Successful Respondent shall pay such amounts to DIR within thirty (30) days of the date such amounts become due and owing.

Time Limitation Unless otherwise requested by Successful Respondent in advance, and agreed by DIR in its sole discretion, if Successful Respondent fails to provide an invoice to DIR for any amount within four (4) invoice cycles (i.e., issuance of invoices) of the month in which the Services in question are rendered or the expense incurred, or such other period designated by DIR, Successful Respondent shall waive any right it may otherwise have to invoice for and collect such amount.

Payment Due Subject to the other provisions of this exhibit, each monthly invoice provided for under Section 2.1.1 General and other amounts due under this Agreement shall be due and payable by DIR under and in accordance with Chapter 2251, Texas Government Code.

Set Off Subject to Section 2.1.5 Refundable Items, DIR may set off against all amounts to be paid or reimbursed by DIR any amount that Successful Respondent is obligated to pay DIR hereunder, provided that DIR notifies Successful Respondent in writing of the amounts of, and the basis for, such set off.

Disputed Charges Disputed Amounts

1. DIR may withhold any amount of any invoice in dispute as provided in and in accordance with Chapter 2251, Texas Government Code. DIR shall comply with Chapter 2251, Texas Government Code, with respect to timely notice of such disputed amounts.

2. For invoice amounts that have been paid by DIR that become the subject of a dispute, in addition to any amounts that Successful Respondent may subsequently credit to DIR arising from resolution of such dispute, Successful Respondent shall include interest on the reimbursed amounts accrued monthly at the rate specified by the Texas Comptroller of Public Accounts in accordance with Section 2251.025(b), Texas Government Code, calculated from the ninetieth (90th) day following the date of DIR's dispute.

No Waiver Neither the failure to dispute any Charges or amounts prior to payment nor the failure to withhold any amount shall constitute, operate, or be construed as a waiver of any right DIR may otherwise have to dispute any Charge or amount or recover any amount previously paid.

Prompt Resolution

1. In the event DIR initiates a dispute in accordance with the Service Management Manual related to a monthly invoice (DIR-Initiated Financial Dispute), Successful Respondent will promptly respond to the issue raised in such dispute, which response will include a written explanation of the charges that are the subject of the DIR-Initiated Financial Dispute, as well as any supporting documentation necessary to support Successful Respondent’s position.

2. If within one hundred eighty (180) days of the date on which DIR notifies Successful Respondent of the DIR-Initiated Financial Dispute, Successful Respondent has either (i) failed to respond to DIR, or (ii) failed to provide documentation or other evidence as to the validity of the disputed charges, then such dispute will be deemed resolved in favor of DIR and the appropriate credits will be processed and the matter will be closed.

Chargeback

1. The MSI is responsible for developing, managing, and maintaining the invoicing and chargeback system as well as developing and coordinating the associated processes for Service Component Providers (SCPs), as described in Exhibit 1 (Statement of Work).

2. The SCPs are responsible for data collection, data integrity, and providing data feeds to the MSI for SCP Invoicing and DIR Customer Chargeback purposes.

3. The MSI manages the Chargeback unit rate development process in coordination with DIR. DIR provides the methodology, but the MSI develops the calculations and maintains the process, which includes the allocation of some, or all, of a SCP’s charges into another SCP’s Charges for Chargeback purposes.

a. At a minimum the SCP data feeds shall provide detailed billing data by DIR Customer, DIR Customer account identifier, by cost center, by DIR Customer use code, by Project, by RU, by program (federal or otherwise), by Service Component, and by such other factors as requested by DIR required for chargeback, including the ability to track usage by major Application and Authorized User.

4. DIR will have the right to access, audit, and validate the measurement and tracking tools and output results to validate the Charges.

5. The MSI is the financial intermediary between the SCPs and DIR. In this role, the MSI provides and manages the Chargeback and Utilization Tracking System, Chargeback and utilization reporting, Chargeback invoice consolidation, and management of the Invoice Dispute process as outlined in the SMM.

6. A component of the Chargeback invoice consolidation responsibility is the reconciliation of the cumulative total of SCPs’ monthly invoices with the cumulative total of the DIR Customers’ Chargeback invoices.

7. The MSI provides DIR with the supporting detail necessary to facilitate DIR’s payment of the monthly invoice to each SCP.

8. The MSI uses the DIR approved methodology to allocate SCP and MSI service level credits to DIR Customers based on the nature of the credit and the impacted DIR Customers in accordance with the SMM. Service level credits are only allocated to DIR Customers once the right of Earnback has been lost or has expired.

9. The Successful Respondent develops and implements changes to comply with Office of Management and Budget (OMB) Guidance for Grants and Agreements (Title 2, Subtitle A, CFR 200) based upon chargeback requirements provided by DIR.

10. The chargeback unit rate methodologies may be adjusted as necessary to meet federal approval or to better facilitate effective and efficient charging of the Services to DIR and DIR Customers. It is anticipated the chargeback methodologies generally fall into four categories:

a. For most billable RUs, the chargeback methodology distributes charges to the benefiting DIR Customers and programs based upon proportionate usage of actual monthly consumption. This approach requires that appropriate utilization data be captured for each of these RUs and used to distribute charges to the benefiting programs identified by each DIR Customer.

b. For certain billable Charges, such as Transition Charges, it may not be possible to determine utilization attributable to specific DIR Customers. In this case, the charges associated with each milestone are to be billed in one lump sum and then distributed to the DIR Customers in the following manner, as directed by DIR.

c. Charges directly attributable to a DIR Customer should be allocated to that DIR Customer.

d. Charges not attributable to a specific DIR Customer should be allocated to DIR Customers based on a DIR approved allocation methodology.

Financial Planning and Forecasting

1. The Successful Respondent shall provide the MSI with a semi-annual forecast of Charges and usage trends by Charge category and Resource Unit category (aligned with the State’s fiscal year) as described in SMM. At a minimum, the Charges forecast must be inclusive of all Charge Categories and anticipated New Services.

2. Such forecasts shall be delivered by the Successful Respondent to the MSI and DIR on the following schedule:

a. In even-numbered years, the Financial Forecast is delivered on February 1 and October 1. The February 1 Financial Forecast includes updated forecasts for the current biennium and projections for the next biennium.

b. In odd-numbered years, the Financial Forecast is delivered on April 1 and October 1.

3. The Successful Respondent shall provide DIR through the MSI ITFM a historical view of actual billed Charges and RU volumes per month as set forth in a standard report delivered through the STS Portal by the form and substance to be provided by the MSI and approved by DIR within sixty (60) days after the Effective Date. This report shall provide an eighteen (18) month rolling view of billed Services and RU volumes for the eighteen (18) months immediately prior to the month in which such report is provided.

Charges Categories

1. The Charges for Successful Respondent Services for each contract year are set forth in Attachment 2.1 (Pricing and Volumes) and reflect the resources required to provide Successful Respondent Services. The following Successful Respondent Services Charge categories fully compensate Successful Respondent for providing Services:

a. Service Charges

b. Pass-Through Charges

c. Rate Card Services

d. Transition Charges

e. Project Charges

2. Exhibit 2 (Financial Provisions and Pricing) is not intended to fully describe each Service in detail but rather how the Services are charged, with Exhibit 1 (Statement of Work), providing a description of the Services and a description of the expected performance, and the Successful Respondent solution document providing a description of how Successful Respondent intends to deliver the Services, including the required people, processes, and tools included in the Charges. Attachment 2.2 (Financial Responsibility Matrix) provides guidance with respect to the financial responsibilities of the Successful Respondent and DIR.

Resource Unit Charges

LAN

The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: The aggregate number of Customer owned ports that are remotely managed and reporting logs during the billable month.

2. Unit of measurement: Fixed fee per live port managed

3. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

WAN

The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: The aggregate number of Customer owned ports that are remotely managed and reporting logs during the billable month.

2. Unit of measurement: Fixed fee per live port managed

3. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

Wireless The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: The aggregate number of access points remotely managed and reporting logs during the billable month.

2. Unit of measurement: Fixed fee per access point managed

3. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

Firewall The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Units:

a. Extra-Small

b. Small

c. Medium

d. Large

e. Extra-Large

2. Resource Unit Definition: Per physical device or logical instance if virtual

3. Unit of measurement: Fixed fee per month

4. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

Web Application Firewall (WAF) The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Units:

a. Small

b. Medium

c. Large

2. Resource Unit Definition: Per physical device or logical instance if virtual

3. Unit of measurement: Fixed fee per month

4. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

VPN

The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Units:

2. Account

3. Site to Site

4. Resource Unit Definition: Per VPN connection configured and available for Customer using Customer provided VPN infrastructure

5. Unit of measurement: Fixed fee per month

6. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

DDI

The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Per IP address count for managed ranges using Customer provided DDI infrastructure

2. Unit of measurement: Fixed fee per month

3. Costs included:

a. Labor, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

Network Operations (NOC) The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Per port where logging was received. NOC charges shall not include devices where the related infrastructure is being billed under other Resource Units.

2. Unit of measurement: Fixed fee per month

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

Fully Managed VPN - Account The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Per VPN connection configured and available for Customer using SCP provided VPN infrastructure

2. Unit of measurement: Fixed fee per month

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

Fully Managed DDI The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Per IP address count for managed ranges using SCP provided DDI infrastructure

2. Unit of measurement: Fixed fee per month

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

c. Costs shall also include NOC services as described in Exhibit 1.

Governance Risk and Compliance (GRC) Network Assessments The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Delivery and Customer acceptance of the assessment.

2. Unit of measurement: Rate Card or Project

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

Network Vulnerability Scans The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Delivery and Customer acceptance of the report.

2. Unit of measurement: Rate Card or Project

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

Network Incident Response The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Rate card or Project as requested and approved by the Customer. If travel is required, then the Attachment 2.1 (Pricing and Volumes) Rate Card (Customer Location) rates would be used.

2. Unit of measurement: Rate Card or Project

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

Technical Field Services The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Completion and Customer approval of onsite services

2. Unit of measurement: Fixed fee per request

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

Managed Staff Augmentation The following Charges will fully compensate the Successful Respondent for Services:

1. Resource Unit Definition: Service provided as required based Section 6.4 - Rate Card Services.

2. Unit of measurement: Rate card category

3. Costs included:

a. Labor, hardware, software, management tools, and other miscellaneous costs necessary to manage, maintain, enhance, and deliver the Services.

b. All move, add, change, service termination, and associated administrative activities.

Pass-Through Expenses Procurement

1. Upon DIR's request, Successful Respondent shall procure products and services on DIR's or a DIR Customer's behalf by (1) purchasing the products and services on behalf of DIR, (2) leasing, or arranging for a third party to lease, such products to DIR, or (3) licensing, or arrange for a third party to license, such products to DIR. DIR shall pay directly to Successful Respondent, the supplier, third party lessor, or third party licensor, as agreed by the Parties, the purchase, lease, or license fees, as applicable, in respect of products and services procured on behalf of DIR or any DIR Customer on a Pass-Through Expense basis in accordance with this Section.

2. Unless otherwise expressly set forth in the Agreement, Successful Respondent will not add any mark-up or margin to the costs of such items procured on DIR's behalf. Except as otherwise agreed by the Parties or as otherwise provided in this Agreement, (i) all rights in and title to any products purchased by Successful Respondent on behalf of DIR or a DIR Customer shall belong to DIR or the relevant DIR Customer, as applicable, and (ii) all products shall be new.

a. Successful Respondent shall adhere to the applicable product and services standards specified by DIR or set forth in the Service Management Manual and shall not deviate from such standards without DIR’s prior approval. To the extent an authorized DIR representative specifies the third-party vendor, pricing, and other terms and conditions for procuring products or services on behalf of DIR or any DIR Customer, Successful Respondent shall not deviate from such instructions without DIR's prior approval.

Paid by DIR Directly

1. If the Parties agree that any Pass-Through Expenses are to be paid by DIR directly, Successful Respondent shall arrange that the Pass-Through Expenses are invoiced by the third party directly to DIR, and timely provided to DIR together with any documentation required by DIR to support such invoiced charges.

2. Before any such third-party invoices are submitted to DIR for payment, Successful Respondent shall review the invoiced charges and communicate with the applicable third party to correct any errors in such invoices in a timely manner and otherwise in accordance with the applicable provisions of the Service Management Manual. DIR shall pay such invoices in accordance with Chapter 2251, Texas Government Code.

Paid by Successful Respondent If the Parties agree that any Pass-Through Expenses are to be paid by Successful Respondent directly, Successful Respondent shall pay the third party invoices containing such Pass-Through Expenses on behalf of DIR. Prior to making any such payment, however, Successful Respondent shall review the invoiced charges and communicate with the applicable third party to correct any errors in such invoices in a timely manner and shall provide DIR with a reasonable opportunity to review such invoices to confirm the third-party charges are proper and valid. Following such review by Successful Respondent and DIR, Successful Respondent shall pay the amounts due and shall invoice DIR for such charges.

General

1. The Successful Respondent shall administer, and invoice DIR for Pass-Through Expenses identified in Attachment 2.1 (Pricing and Volumes) in accordance with this Section and pursuant to the applicable procedures in the Service Management Manual (SMM).

2. No new Pass-Through Expenses may be added without DIR's prior consent, which DIR may withhold in its sole discretion. For all products or services paid for on a Pass-Through Expenses basis, DIR reserves the right to (i) obtain such products or services directly from a third party, (ii) designate the third party source for such products or services, (iii) designate the particular products or services that Successful Respondent shall obtain (provided that if Successful Respondent demonstrates to DIR that such designation shall have an adverse impact on Successful Respondent’s ability to meet the Service Levels, such designation shall be subject to Successful Respondent’s approval), (iv) require Successful Respondent to identify and consider multiple sources for such products or services or to conduct a competitive procurement, and (v) review and approve the Pass-Through Expense for such products or services before entering into a contract for such products or services.

3. In addition, for all products and services paid for on a Pass-Through Expense basis, Successful Respondent shall use commercially available efforts to pass through, or otherwise provide, to DIR and/or the applicable DIR Customer(s) all benefits offered by the manufacturers and/or vendors of such products and services (including all warranties, refunds, credits, rebates, discounts, training, technical support, and other consideration offered by such manufacturers and vendors) except to the extent otherwise agreed by DIR.

4. If Successful Respondent is unable to pass through any such benefit to DIR and/or the applicable DIR Customer(s), it shall notify DIR in advance and shall not…