Exhibit 3.0 - Performance Model.docx

Exhibit 3 (Performance Model) State of South Carolina State Fiscal Accountability Authority (SFAA)

Request for Proposal Exhibit 3.0 Performance Model

RFP Solicitation No. 5400021069

RFP# xx Page 2 of 18 Table of Contents

RFP Solicitation No. 5400021069 Page i of i

RFP# xx Page i of ii

GENERAL

The methodology set out in this Exhibit 3.0 (Performance Model) will support the Performance Management cycle of monitoring, reporting, and improving the delivery of the Services to South Carolina Department of Administration's Office of Technology and Information Services (OTIS) and Customers.

As of the Commencement Date (or as otherwise specified in this Exhibit 3.0 (Performance Model) and its Attachments (incorporated herein)), the Service Provider will perform the Services to which Service Levels apply so that the Service Level performance will, in each month of the Term, meet or exceed, the Service Level Performance Measures.

Attachments to Exhibit 3.0 (Performance Model) consist of:

· Exhibit 3.1 (Service Level Matrix)

· Exhibit 3.2.1 (Service Level Definitions – SC.gov Services)

· Exhibit 3.2.2 (Service Level Definitions – Payment Services)

· Exhibit 3.3 (Description of Reports)

· Exhibit 3.3-A (Reports)

· Exhibit 3.4 (Satisfaction Surveys) Key Performance Indicators, Critical Service Levels, Key Service Levels, Operating Measures, One Time Critical Deliverables, and Recurring Critical Deliverables may be added or substituted by OTIS as specified in this Exhibit during the Term. For example, such additions or substitutions may occur in conjunction with changes to the environment and the introduction of new Service, Equipment, Software, or means of Service delivery – provided, however, that where such change is a replacement or Upgrade of existing technology, there will be a presumption of equivalent or improved performance.

The achievement of the Service Levels by the Service Provider may require the coordinated, collaborative effort of the Service Provider with Third Parties.

REPORTING

Unless otherwise specified in this Exhibit, each Key Performance Indicator, Critical Service Level, Key Service Level, Operating Measure, Recurring Critical Deliverable, and One-Time Critical Deliverable will be measured and reported by Service Provider monthly. The Service Provider will provide reports and data to OTIS. The Service Provider will comply with the OTIS’s tools, processes, and reporting formats. The format, layout, and content of any reports will be agreed between OTIS and the Service Provider and published by the Service Provider to the Digital Government Services Portal. The Service Provider will publish the Service Provider's monthly performance reports by the 20th calendar day of each month and available online such that OTIS is able to verify the Service Providers performance and compliance with the Key Performance Indicators, Critical Service Levels, Key Service Levels, Operating Measures, Recurring Critical Deliverables, and One-Time Critical Deliverables (for purposes of clarity, with respect to One-Time Critical Deliverables, such reporting is only required until all One-Time Critical Deliverables are received and approved by OTIS). The monthly performance reports must be updated daily throughout the month and available for review by OTIS. The monthly reports will describe any failure to meet Critical Service Levels and Key Service Levels for the month.

In addition to the reports described above, the Service Provider will also provide detailed supporting information within the Digital Government Services Portal for each report to OTIS in machine-readable form suitable for use on a personal computer. The data and detailed supporting information will include sufficient detail such that OTIS can reproduce the calculations made by the Service Provider and validate the results reported in the monthly Service Level performance reports. All detailed supporting information will be OTIS's Confidential Information, and OTIS may access such information online and in real-time, where feasible, at any time during the Term. In addition, the Service Provider will provide OTIS with direct, unaltered access to review and audit all raw data collection related to Service Levels.

The Service Provider will create and maintain detailed procedure documentation of its Service Level Agreement (SLA) measurement process used to collect SLA data and calculate SLA attainment. The process documentation must include quality assurance reviews and verification procedures. The measurement process must be automated to the extent possible, and any manual data collection steps must be clearly documented, verified, and auditable. All methods, codes, and automated programs must be documented and provided to OTIS for validation and approval. The Service Provider must ensure it tests and validates the accuracy and currency of the documentation and measurement process on a quarterly basis.

NOTICE REQUIREMENTS FOR ADDITIONS, DELETIONS, & MODIFICATIONS

OTIS will send notice to the Service Provider at least ninety (90) calendar days prior to the date that additions or deletions to Performance Measures, (which include the movement of Critical Service Levels to Key Service Levels and Key Service Levels to Critical Service Levels), or modifications to Service Level Credit Allocation Percentages for any Critical Service Levels, modifications to Critical Service Levels and Key Service Levels measurement methodologies, or additions or deletions to Recurring Critical Deliverables are to be effective, provided that OTIS may send only one (1) such notice (which notice may contain multiple changes) each calendar quarter. Movement of Critical Service Levels to Key Service Levels and Key Service Levels to Critical Service Levels does not constitute creation of new Service Levels.

The Service Provider is required to implement into its SLA performance management system all additions, deletions, and modifications OTIS makes to Service Provider Service Levels.

SERVICE LEVEL DEFAULT

A Service Level Default occurs when:

1. Performance for a particular Critical Service Level fails to meet the applicable Minimum Service Level, or

2. Performance for a particular Critical Service Level fails to meet the applicable Expected Service Level (but does not fail to meet the applicable Minimum Service Level) and has failed to meet such Expected Service Level for four (4) or more occurrences in any rolling twelve (12) month period.

Service Level Credits will not apply to Key Service Levels.

In the event of a Service Level Default, the Service Provider will provide OTIS credits as defined below:

1. Exhibit 3.1 (Service Level Matrix) sets forth the information required to calculate the Service Level Credit in the event of a Service Level Default. For each Service Level Default, the Service Provider will pay to OTIS, subject to Section 5 Earnback below, a Service Level Credit that will be computed in accordance with the following formula:

Service Level Credit = A x B x C Where:

For example, assume that the Service Provider fails to meet the Service Level for a Critical Service Level, the Service Provider's Service Level Program Revenue Earned Amount for the month in which the Service Level Default occurred was $100,000 and that the At-Risk Amount is 15% of these charges.

Additionally, assume that Allocation of Pool Percentage for the Performance Category of such Critical Service Level is 50% and that its Service Level Credit Allocation Percentage is 40%.

The Service Level Credit due to OTIS for such Service Level Default would be computed as follows:

2. Subject to Item 3, if more than one (1) Service Level Default has occurred in a single month, the sum of the corresponding Service Level Credits will be credited to OTIS.

3. In no event will the amount of Service Level Credits credited to OTIS with respect to all Service Level Defaults occurring in a single month exceed, in total, the At-Risk Amount.

4. The Service Provider will notify OTIS in writing if OTIS becomes entitled to a Service Level Credit, which notice will be included in the standard monthly reporting for Critical Service Levels and Key Service Levels as described in Section 2 Reporting above.

5. The total amount of Service Level Credits that the Service Provider will be obligated to pay to OTIS, with respect to Service Level Defaults occurring each month, will be credited on the Financial Statement for the month following the month during which the Service Level Default(s) giving rise to such credit(s) occurred. For example, the amount of Service Level Credits payable with respect to Service Level Defaults occurring in August will be set forth in the Monthly Financial Statement for September issued in October.

6. The Service Provider acknowledges and agrees that the Service Level Credits will not be deemed or construed to be liquidated damages or a sole and exclusive remedy or in derogation of any other rights and remedies OTIS has hereunder or under the Contract.

EARNBACK

The Service Provider will have Earnback opportunities with respect to Service Level Credits as follows:

1. The Service Provider will earn back a Service Level Credit for a given Service Level Default when Service Level Performance meets or exceeds the Expected Service Level Target for each of the four (4) Measurement Windows immediately following the Measurement Window in which the Service Level Default occurred.

2. Whenever the Service Provider is entitled to an Earnback, the Service Provider will include such Earnback as a charge to OTIS (indicated as an Earnback) on the same Financial Statement that contains charges for the Measurement Window giving rise to such Earnback and include such information in the Service Provider’s monthly performance reports as described in Section 2 Reporting above.

3. Upon termination or expiration of the Contract, Service Level Credits issued by the Service Provider are no longer subject to Earnback.

ADDITIONS, MODIFICATIONS, AND DELETIONS OF SERVICE LEVELS

OTIS may add, modify, or delete Key Performance Indicators, Critical Service Levels, Key Service Levels, and Operating Measures as described below by sending written notice in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above.

Additions OTIS may add Service Levels in accordance with this Section 6.1 and by providing written notice in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above. Service Level commitments associated with added Service Levels will be determined as follows:

1. The Parties will attempt in good faith to agree on a Service Level commitment using industry standard measures or third party advisory services (e.g., Gartner),

2. With respect to this individual Service Level, the period between the Statement of Work (SOW) Commencement Date and the Service Level Effective Date will be used as a validation period. The Service Provider and OTIS will review the actual Service Level Performance during this validation period. If the Service Level Performance does not generally meet the Expected Service Level target and the Minimum Service Level target, the Service Provider will create a Corrective Action Plan subject to OTIS’s approval, and the Parties will extend the validation period (reset the Service Level Effective Date) by a mutually agreed period not to exceed three (3) months. The Service Provider will implement the Corrective Action Plan and report on progress to OTIS during the extended validation period. This process may be repeated if mutually agreed by the Parties. If the Parties eventually agree that the Services must be changed (e.g., staffing or Restoration time targets) or the Expected Service Level target or Minimum Service Level target must be revised, the Parties will enact such agreed changes through the Change Control Procedures.

Modifications OTIS may modify Service Level commitments or measurement methodology in accordance with this Section 6.2 and by providing written notice in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above.

The Service Provider may propose modifications to Service Level measurement methodology for OTIS approval. Service Level measurement methodology may be modified by updating Exhibit 3.2.1 (Service Level Definitions – SC.gov Services) and Exhibit 3.2.2 (Service Level Definitions – Payment Services).

For any Service Level commitments associated with modified service levels, the Parties will attempt in good faith to agree on a modification to current Service Level commitments using industry standard measures or third party advisory services. In the event the Parties cannot agree on proposed modifications, Choice-Of-Law section of Attachment I (Proposed Contract Terms) applies.

Deletions OTIS may delete Critical Service Levels or Key Service Levels by sending written notice in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above.

Impact of Additions and Deletions of Critical Service Levels on Service Level Credit Allocation Percentages When adding or deleting a Critical Service Level, OTIS will modify the Service Level Credit Allocation Percentages for the Critical Service Levels such that the total Service Level Credit Allocation Percentages for all Critical Service Levels sums to less than or equal to Pool Percentage Available for Allocation as defined in Exhibit 3.1 (Service Levels Matrix).

If OTIS adds a Critical Service Level in accordance with Section 6.1 Additions above, but does not modify the Service Level Credit Allocation Percentages for the Critical Service Levels under this Section 6.4, then, until OTIS modifies such Service Level Credit Allocation Percentages, the Service Level Credit Allocation Percentage for such added Critical Service Level will be zero (0).

Modifications of Service Level Credit Allocation Percentages for Critical Service Levels OTIS may modify the Service Level Credit Allocation Percentages for any Critical Service Levels by sending written notice in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above. OTIS will modify the Service Level Credit Allocation Percentages for two or more of the Critical Service Levels such that the sum of the Service Level Credit Allocation Percentages for all Critical Service Levels is less than or equal to the Pool Percentage Available for Allocation as defined in Exhibit 3.1 (Service Levels Matrix).

SERVICE DELIVERY FAILURE, CORRECTIVE ACTION PLAN FAILURE EVENT

1. If three (3) Service Level Defaults for the same Critical Service Level occur in any six (6) month period, then upon such third occurrence, this will be deemed a "Service Delivery Failure." Within thirty (30) days of the occurrence of a Service Delivery Failure, the Service Provider will provide OTIS with a written plan (the "Service Delivery Corrective Action Plan") for improving the Service Provider's performance to address the Service Delivery Failure, which plan will include a specific implementation timetable and measurable success criteria. Within thirty (30) days of plan submission, or such other timeframe agreed to by OTIS, the Service Provider will implement the Service Delivery Corrective Action Plan (CAP), which will include making timely and appropriate investments in people, processes, and technology. In addition, the Service Provider will demonstrate to OTIS's reasonable satisfaction that the changes implemented by it have been made in normal operational processes to sustain compliant performance results in the future.

2. Upon the occurrence of (i) a Service Delivery Failure, or (ii) if the Service Provider fails to implement the Service Delivery Corrective Action Plan in the specified timetable or if after the implementation of the Service Delivery Corrective Action Plan performance has not consistently improved, then the Service Provider will be liable for a Service Level Credit in an amount equal to one percent (1 %) of the then-current Service Level Program Revenue Earned Amount (the "CAP Failure Credit"). The CAP Failure Credit will be applied to the Monthly Financial Statement until the Service Provider has demonstrated effective Service delivery, as evidenced by either (i) no reoccurrence of the Service Level Defaults which triggered the applicable Service Delivery Failure or (ii) in OTIS's reasonable judgment, the Service Provider has remedied the failure which caused such Service Delivery Failure.

3. The CAP Failure Credit will not be subject to Earnback. The Service Provider acknowledges and agrees that the CAP Failure Credit will not be deemed or construed to be liquidated damages or a sole and exclusive remedy or in derogation of any other rights and remedies OTIS has hereunder or under the Contract. For purposes of clarity, the CAP Failure Credit is separate from and therefore additive to any other Service Level Credits due in a given month, even if the Service Level Credits are for Service Level Defaults related to the Service Delivery Failure. In no event will the sum of the CAP Failure Credit and any Service Level Credits credited to OTIS with respect to all Service Level Defaults occurring in a single month exceed, in total, the At-Risk Amount.

RECURRING CRITICAL DELIVERABLES

Certain of the Service Provider's obligations under the Contract are periodic obligations to deliver key Recurring Critical Deliverables. Exhibit 3.1 (Service Levels Matrix) sets forth the amounts that will be payable, and frequency the credit applies, by the Service Provider to OTIS in the event the Service Provider fails to deliver any of the Recurring Critical Deliverables within the required time specified in Exhibit 3.1 (Service Levels Matrix) (the "Recurring Critical Deliverables Credit"). Imposition of a Recurring Critical Deliverables Credit for failure to meet the Recurring Critical Deliverables obligations will not be subject to or included in the At-Risk Amount. The total amount of Recurring Critical Deliverables Credit that the Service Provider will be obligated to pay to OTIS will be reflected on the Financial Statement that contains charges for the month following which the Recurring Critical Deliverables Credits accrued (e.g., the amount of Recurring Critical Deliverables Credits payable for failure to deliver any Recurring Critical Deliverable(s) in August will be set forth in the Financial Statement for September charges issued in October). Under no circumstances will the imposition of the Recurring Critical Deliverables Credit described above or OTIS's exercise of any other rights hereunder be construed as OTIS's sole or exclusive remedy for any failures described hereunder.

OTIS may add, modify, or delete Recurring Critical Deliverables by sending written notice in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above, provided that after the implementation of any such addition or modification the aggregate amount of the Recurring Critical Deliverables Credits will not exceed the maximum amount of Recurring Critical Deliverables Credits set forth in Exhibit 3.1 (Service Level Matrix).

ONE-TIME CRITICAL DELIVERABLES – AFTER EFFECTIVE DATE

Certain of the Service Provider’s obligations under the Contract are one-time or periodic obligations to deliver One-Time Critical Deliverables. Exhibit 3.1 (Service Levels Matrix) sets forth the Deliverable Credits that will be payable, and the frequency the credit applies, by the Service Provider to OTIS in the event the Service Provider fails to deliver any of the One-Time Critical Deliverables within the required time specified in Exhibit 3.1 (Service Levels Matrix). Imposition of Deliverable Credits for failure to meet the One-Time Critical Deliverables obligations will not be subject to or included in the At-Risk Amount. The total amount of Deliverable Credits that the Service Provider will be obligated to pay to OTIS will be reflected on the Financial Statement that contains charges for the month following which the Deliverable Credits accrued (e.g., the amount of Deliverable Credits payable for failure to deliver any One-Time Critical Deliverable(s) in August will be set forth in the Financial Statement for September charges issued in October).

COMMENCEMENT OF OBLIGATIONS

The Service Provider will be responsible for providing measurement data in support of the Critical Service Levels and Key Service Levels on the Commencement Date. Other obligations set forth herein will commence on the Commencement Date or as otherwise specified in Exhibit 3.1 (Service Levels Matrix) referencing the column "Comm +mos**" (the “Service Level Credit Start Date”) to reflect when the Service Provider will be responsible for Service Level Credits for any failures to attain the Critical Service Level. Any Service Level Defaults prior to the Service Level Credit Start Date will not be considered in the evaluation of a Service Delivery Failure.

IMPROVEMENT PLAN FOR KEY SERVICE LEVELS

If the Service Provider fails to meet the Minimum Service Level for the same Key Service Level for three (3) months in any rolling six (6) month period, the Service Provider will provide OTIS with a written plan for improving its performance to satisfy the Key Service Level within thirty (30) days of the third (3rd) failure to meet the Service Level for the Key Service Level. At the Service Provider’s sole cost and expense, it will promptly implement such plan. If the Service Provider fails to implement the plan in the specified timetable, or if after ninety (90) days after any such implementation of the plan, the Key Service Level has not consistently improved, then OTIS may at its option declare that such failure will constitute a Service Delivery Failure and the Service Provider will comply with the requirements of Section 7 Service Delivery Failure, Corrective Action Plan Failure Event above.

IMPROVEMENT PLAN FOR CRITICAL SERVICE LEVELS

If the Service Provider fails to meet the Minimum Service Level for a Critical Service Level, the Service Provider will follow the Service Provider’s performance management process to provide OTIS with a written Service Level Improvement Plan for improving the Service Provider's performance to satisfy the Critical Service Level within thirty (30) days of the failure to meet the Service Level. The Service Provider will track its progress in implementing the improvement plan, and it will report to OTIS the status of such plan.

The Service Provider will initiate a Service Level Improvement Plan (SLIP) via the standard Problem Management Process when a Service Level underperforms. The Service Provider will comply with the SLIP. All SLIPs must contain information about the root cause of the Service Level miss and corrective actions. The objective of a SLIP is to identify the root cause and formulate corrective actions to move performance to acceptable levels, implement those actions, and to correlate implemented corrective actions with Service Level results. All approved SLIP corrective actions will be measured in the Corrective Action SLA results.

MEASURING TOOLS

As of the Effective Date, the measuring tools and methodologies set forth in Exhibit 3.2.1 (Service Level Definitions – SC.gov Services) and Exhibit 3.2.2 (Service Level Definitions – Payment Services) represent acceptable measuring tools and methodologies for the Key Performance Indicators, Critical Service Levels, Key Service Levels, and Operating Measures designated.

If there are any Critical Service Levels for which the measuring tools and methodologies have not been agreed upon by OTIS and the Service Provider, and for which measuring tools are not included in Exhibit 3.2.1 (Service Level Definitions – SC.gov Services) and Exhibit 3.2.2 (Service Level Definitions – Payment Services), and the Service Provider fails to propose a measuring tool for such Critical Service Level that is acceptable to OTIS prior to the date upon which the Service Provider will be responsible for Service Level performance and Service Level Credits due for Service Level Default, such failure will be deemed a Service Level Default for the Critical Service Level until the Service Provider proposes and implements such acceptable measuring tool. OTIS will not unreasonably withhold approval for the Service Provider's recommendation for an alternate tool.

Tools for new Critical Service Levels will be implemented according to the Change Control Procedures. Upon OTIS’s written notice approving a proposed alternate or new measurement tool, such tool will be deemed automatically incorporated into Exhibit 3.2.1 (Service Level Definitions – SC.gov Services) and Exhibit 3.2.2 (Service Level Definitions – Payment Services) as of the date for completion of implementation set forth in OTIS’s notification without requirement for an additional written amendment of this Contract.

If, after the Effective Date or the implementation of tools for new Critical Service Levels, the Service Provider desires to use a different measuring tool for a Critical Service Level, the Service Provider will provide written notice to OTIS, in which event the Parties will reasonably adjust the measurements as necessary to account for any increased or decreased sensitivity in the new measuring tools; provided that, if the Parties cannot agree on the required adjustment, the Service Provider will continue to use the measuring tool that had been initially agreed to by the Parties.

It is not anticipated that changes in the measuring tools will drive changes in Service Levels; rather, the need to collect and accurately reflect the performance data should drive the development or change in performance monitoring tools. The Service Provider will configure all measuring tools to create an auditable record of each user access to the tool and any actions taken with respect to the data measured by or residing within the tool. All proposed measuring tools must include functionality enabling such creation of an auditable record for all accesses to the tool.

SINGLE INCIDENT/MULTIPLE DEFAULTS

If a single incident results in the failure of the Service Provider to meet more than one (1) Service Level, OTIS will have the right to select any one of such multiple Service Level Defaults for which it will be entitled to receive a Service Level Credit and must respond to the Service Provider's reporting of the multiple Service Level Default and request for selection by notifying the Service Provider of the selection within five (5) OTIS Business days. OTIS will not be entitled to a Service Level Credit for each of such Service Level Defaults.

EXCEPTIONS

The Service Provider will not be responsible for a failure to meet any Service Level solely to the extent that such failure is directly attributable to any circumstances that excuse the Service Provider's performance in accordance with Section 7.2 Savings Clause of Exhibit 1.4 (General Provisions).

EXCLUSIONS

Any incidents or requests opened prior to Commencement Date by OTIS are excluded from SLA measurements and will be tracked separately.

Additional exclusions are indicated in Exhibit 3.2.1 (Service Level Definitions – SC.gov Services) and Exhibit 3.2.2 (Service Level Definitions – Payment Services).

PERCENTAGE OBJECTIVES

Both Parties understand that certain Service Levels may not be measured against an objective of one hundred percent (100%); for example, time (days, hours, etc.), defects where zero (0) hours/days and zero percent (0%), respectively, are the appropriate objectives. The calculations described in this Section 17 will be modified when appropriate to reflect these objectives.

CONTINUOUS IMPROVEMENT – SERVICE LEVELS

The Parties agree to the concept of continuous improvement and that the Critical Service Levels and Key Service Levels, unless otherwise noted as an exception in Exhibit 3.1 (Service Level Matrix), should be modified during this Contract in accordance with Section 3 Notice Requirements for Additions, Deletions, & Modifications above to reflect this concept. To accomplish this, Critical Service Levels and Key Service Levels will be modified each twelve (12) month period following the commencement of obligations date specific to each Critical Service Level and Key Service Level as described below:

1. Each Expected Service Level will be reset to the average of the four highest reported actual results at or above the Expected Service Levels achieved during the previous year; provided that, if fewer than four reported actual results exceeded the Expected Service Level, the Expected Service Level will be reset by taking the four (4) highest monthly actual results, replacing each such actual result that is below the Expected Service Level with the Expected Service Level, and dividing the sum of the resulting four (4) numbers by four (4).

For example, if the Expected Service Level being adjusted were 99.6%, and there were three actual results that were higher and none equal (e.g., 99.90%, 99.80%, and 99.70%), the calculation would be ((99.90% + 99.80% + 99.70% + 99.60%) / 4) = 99.75% with the subsequent reset governed by Item 2 below.

2. Notwithstanding Item 1 above, in no event will any single increase in an Expected Service Level pursuant to Item 1 above exceed ten percent (10%) of the difference between one hundred percent (100%) and the then-current Expected Service Level.

For example, if the Expected Service Level being adjusted were 99.60%, the maximum increase for that reset would be 0.04% (i.e., from 99.60% to 99.64%).

3. Each Minimum Service Level will be reset by adding to the Minimum Service Level being adjusted a sum equal to five percent (5%) of the difference between one hundred percent (100%) and the then-current Minimum Service Level.

For example, if the Minimum Service Level being adjusted were 99.40%, the increase would be 0.03% (i.e., from 99.40% to 99.43%).

4. For ease of administration, beginning with the second anniversary of the Commencement Date and continuing with every anniversary of the Commencement Date thereafter, the process described herein will be performed as of the anniversary of the Commencement Date, utilizing the previous twelve (12) months' data, replacing the Critical Service Level or Key Service Level unique dates that were based upon the commencement of obligations dates specific to each Critical Service Level.

SEVERITY LEVELS - INTRODUCTION

OTIS has adopted the ITIL framework for service management. As part of this framework, each Incident and Problem will be assessed in terms of its Impact upon the business of OTIS and Customers and the Urgency with which OTIS and Customers require the Incident or Problem to be Resolved or a work around to be implemented. The Incident or Problem will be assigned a Severity Level based on this assessment. This section sets forth qualitative descriptions of Severity Levels associated with the Services.

“Impact” is defined under ITIL as a “measure of the business criticality of an Incident, Problem or Request for Change, often equal to the extent of a distortion of agreed or expected Service Levels.” As such, it can be assessed based on the effect of an Incident or Problem on OTIS’s and OTIS Customers’ business operations. An Impact may be assessed by taking into account the number and business roles of the people affected, the business functions supported by the systems affected or mandates (e.g., regulatory, legal, or business) for provision of outputs in a prescribed timeframe.

“Urgency” is defined under ITIL as a “measure of the business criticality of an Incident or Problem based on the impact and on the business needs of the customer.” As such, it can be assessed based on how quickly the business of OTIS and Customer will be affected by the loss of Service resulting from the Incident or Problem. A high-impact Incident does not necessarily have an immediate Impact. For example, a system supporting end-of-month processing (impact “high”) can be assessed as urgency “low” if it occurs early in the monthly processing cycle but may be assessed as “high” if it nears the end of the cycle. A system that supports OTIS dealing directly with Customers or that supports online, real-time transactions may always be assessed as a “high” urgency, even if it is only of moderate impact.

There may be different Service Levels associated with the Resolution of an Incident or Problem based on the assigned Severity Level.

Severity Level 1 A Severity Level 1 event is where:

1. The event is defined as (i) a life-safety event/issue; (ii) critical impact to the security of data and information systems; (iii) a business/mission critical System, Service, Application, Equipment or network component that is substantially unavailable or seriously impacting normal business operations; (iv) an error or Outage that affect either groups of people, or a single individual performing a business/mission critical function; (v) an error or Outage which negatively impacts compliance with regulatory mandated mailing timeframes, or jeopardizes privacy of information or could lead to the imposition of penalties, fines, or other financial impacts on OTIS or Customer.

2. The event is one that has a high impact on the operation of the affected Application or other Service and that cannot be circumvented (i.e., there is no workaround available), including an error or Outage which negatively impacts compliance with regulatory mandated mailing timeframes, jeopardizes privacy of information, or could lead to the imposition of penalties, fines, or other financial impacts on OTIS or Customer.

3. The event, due to the immediacy of its effect on critical business functions, requires immediate resolution.

Severity Level 2 A Severity Level 2 event is where:

1. The event is defined as (i) a department or group can use a business critical System, Service, Application, Equipment or network component, but some functions are not available or functioning as they should, and (ii) an error or Outage affects a group or groups of people, or a single individual performing a critical business function.

2. The event can materially affect OTIS or a Customer, causing a substantial impact; including missed output commitments not governed by regulatory mandates.

3. The effect of the event is such that it does not require immediate resolution.

Severity Level 3 A Severity Level 3 event is where:

1. A Severity Level 3 event is defined as a group or individual experiences a situation accessing or using a System, Service, Application or network component or a key feature thereof but the situation does not prohibit the execution of productive work.

2. The event does not materially affect OTIS or a Customer or does not cause a substantial impact but has the potential to do so if not Resolved expeditiously.

3. The effect of the event is such that it does not require immediate resolution.

Severity Level 4 A Severity Level 4 event is where:

1. The event is defined as an event that may require an extended Resolution time, but the individual or group has a reasonable workaround while waiting for the Resolution.

2. The event does not have an adverse impact on the business operations of OTIS or a Customer because (i) of either the nature of the fault or the small extent of the fault and (ii) an acceptable workaround is already in place.

3. The effect of the event is such that it does not require immediate resolution.

LOW VOLUME

Some Service Levels are expressed in terms of achievement of a level of performance over a percentage of items occurring during a Measurement Window. In these instances, if the number of items occurring during a given Measurement Window is less than or equal to one hundred (100), the following algorithm will be used to determine the number of compliant items that Service Provider must successfully complete to achieve the Service Level concerned (Minimum Compliant Items), notwithstanding the percentage expressed in Exhibit 3.1 (Service Level Matrix) as the target.

1. The number of items occurring during such Measurement Window will be multiplied by the Expected Service Level; and

2. If the product of that multiplication is not a whole number, then such product will be truncated to a whole number.

3. For example,

a. Assume that a Service Level states that the Service Provider must complete ninety-five percent (95%) of incidents within four (4) hours to achieve this Service Level.

b. The following sample calculations illustrate how the above algorithm would function to determine the Minimum Compliant Items (incidents completed within four (4) hours) to achieve this Service Level, in each case given a different number of total incidents occurring during the corresponding Measurement Window:

i. If the number of incidents is 100, the Minimum Compliant Items is 95 incidents (100 incidents x 95 percent = 95 incidents).

ii. If the number of incidents is 99, the Minimum Compliant Items is 94 incidents (99 incidents x 95 percent = 94.05 incidents, truncated to 94).

iii. If the number of incidents is nine (9), the Minimum Compliant Items is eight (8) incidents (9 incidents x 95 percent = 8.55 incidents, truncated to 8).

iv. This algorithm will be used for both the Expected Service Level and the Minimum Service Level, except that the Minimum Compliant Items for the Minimum Service Level must be at least one (1) less than the Minimum Compliant Items for the Expected Service Level.

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