Exhibit 4.0 - Business Model

Pennsylvania Department of Transportation (PennDOT)

Mainframe Services

Exhibit 4.0

Business Model

RFP 3525R03

Exhibit 4.0 (Business Model) RFP 3525R03

PennDOT Page 1

Table of Contents Introduction 1 Financial Provisions

1.1 Volume Discount

1.2 Contract Performance Incentives

1.3 Personnel Projection Matrix

2 Charges

2.1 Categories

2.2 Changes to Charges

2.3 Billing Month

2.4 Resource Unit Charges

2.4.1 General

2.4.2 Resource Unit Measurement Methodology

2.5 Deliverable Charges

2.5.1 General

2.5.2 Transition Charges

2.5.3 Request for Solution (RFS) Project Payment Based Deliverables

2.6 Rate Card Services

2.7 New Services Charges

3 Resource Unit Definitions

3.1.1 CPU Hour

3.1.2 CPU Hour – Specialty Engine

3.1.3 Allocated Application DASD

3.1.4 Application Tapes in Storage – Virtual Tape Storage (VTS)

3.1.5 RedHat Enterprise Operating System

3.1.6 Windows Server Operating System

3.1.7 Server Support Services

3.1.8 Non-Consolidated Disk Storage

3.1.9 Backup and Recovery Services

3.1.10 Hardware Service Charge (HSC) Virtualized Cores

3.1.11 Hardware Service Charge (HSC) Virtualized Memory

3.1.12 Software Service Charge (SSC)

3.1.13 USER ID and Dataset RACF (Optional Services)

PennDOT Page 2

PennDOT Page 3

Introduction

The following documents comprise the entire Business Model for the Mainframe Services Request for Proposal (RFP) with Competitive Negotiations:

• Exhibit 4.0 (Business Model)

• Exhibit 4.1 (Pricing Structure)

• Exhibit 4.2 (Financial Responsibility Matrix)

• Exhibit 4.3 (Form of Invoice and Data Feed)

This Exhibit contains the methodology and requirements for calculating the Charges for all Services, unless otherwise expressly provided in this contract.

The Service Provider shall follow the instructions in these and all other RFP documents, including all Exhibits.

All capitalized terms in this Exhibit 4.0 (Business Model) shall have the same meanings given in Exhibit 1.1 (Definitions). All Exhibit 4.0 (Business Model) documents hereto are incorporated by reference herein.

The Service Provider shall be responsible for the accuracy and completeness of the operational and financial assumptions underlying its pricing.

All Charges calculated in accordance with Exhibit 4.0 (Business Model) shall be reported to PennDOT by the Service Provider per Exhibit 4.3 (Form of Invoice and Data Feed). The Service Provider 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 PennDOT be required to pay the Service Provider for Services not consumed or utilized by PennDOT.

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

PennDOT Page 4

1 Financial Provisions

1.1 Volume Discount

The volume discount excludes all consideration of transition services.

Service Provider shall apply the volume-based discounts in Exhibit 4.1 (Pricing Structure) for the total work delivered to PennDOT. The discounts apply on an aggregate incremental tiers basis and are not applied unilaterally to the entire sum of Charges. For example, if the Monthly Charges for service types equals $2.2M, the first $1M will be discounted by the first-tier percent, the second $1.2M will be discounted by the second-tier percent, and so on.

1.2 Contract Performance Incentives

1. The Service Provider shall have the option throughout the term of this contract to propose initiatives to PennDOT that create value in areas not already identified and required in this contract. These Contract Performance Incentives (CPIs) are intended to incentivize Service Provider performance beyond the requirements of this contract. CPIs are outcomes-based performance incentives designed to reward innovation investments that create value shared between the Service Provider and the State. For example, the Service Provider may consider investing in a consumption management program designed to optimize PennDOT spend that creates value beyond the initiative's cost.

2. PennDOT may identify a business objective and solicit the Service Provider for a CPI initiative proposal, or the Service Provider may independently approach PennDOT with a proposed CPI initiative. In either scenario, the Service Provider will develop a CPI proposal that includes the following:

a. Objective and quantified outcome;

b. Acceptance criteria defining measure of success;

c. Detailed description of initiative and solution;

d. Business model, including:

i. Service Provider investment amount and description;

ii. Total value created and proposed sharing of value between Service Provider and PennDOT; and

e. Assumptions and dependencies.

3. PennDOT has the option to accept, propose changes to, or reject the proposed CPI initiative. PennDOT does not anticipate funding the CPI initiative but rather sharing the value that is created with the Service Provider. All approved CPI initiatives will be documented with a Work Order that describes the business model terms and acceptance criteria in detail.

1.3 Personnel Projection Matrix

PennDOT Page 5

1. Set forth in Exhibit 4.1 (Pricing Structure), ‘Staffing’ is the Personnel Projection Matrix. The Service Provider will staff Service Provider Personnel in a manner consistent with the Personnel Projection Matrix, and the Service Provider’s staffing for the performance of Services will not be changed without PennDOT’s prior approval.

PennDOT may withhold such approval, among other reasons, if there are good faith concerns that such changes could have an adverse impact on the Service Provider’s ability to perform its obligations under this contract. PennDOT reserves the right to change the Personnel Projection Matrix format from time to time in its reasonable discretion and upon advance notice to the Service Provider. The Service Provider will alert PennDOT to any of the following changes:

a. At any time during the first Contract Year, the number of Service Provider Personnel is five percent or more below the counts provided for such period;

b. At any time during the second Contract Year, the number of Service Provider Personnel is 10% or more below the counts provided for the applicable period; or

c. At any time during or after the third Contract Year, the number of Service Provider Personnel is 15% or more below the annual totals reflected for such period.

2. The Service Provider will provide to PennDOT, every quarter, an updated Personnel Projection Matrix reflecting the current and future counts. The Service Provider will adjust the numbers in the Personnel Projection Matrix to account for any material and sustained increase or decrease in the required level of Services above or below the Resource Units as of the Effective Date (including New Services). The Service Provider will provide its rationale for calculating such adjustments to PennDOT, which will be subject to the review and approval of PennDOT.

3. During the first 12 months following the Commencement Date any changes, material or otherwise, to the deployment of Service Provider Personnel will be reported by the Service Provider to PennDOT within five Business Days following the end of each month in which such changes occurred, and after such 12 month period, the Service Provider will report all material changes in the number of Service Provider Personnel within the 10th Business Day following the end of each month in which such changes occurred.

4. For 24 months following the Commencement Date, the Service Provider will provide PennDOT with a report by the 10th Business Day following the end of each month identifying the Service Provider Personnel terminated for cause or performance during that month.

5. PennDOT reserves the right to discontinue this Personnel Projection Matrix requirement at any point during the term of this contract.

PennDOT Page 6

2 Charges

2.1 Categories

1. The annual Charges for Service Provider Services for each Contract Year are set forth in

Exhibit 4.1 (Pricing Structure) and reflect the resources required to provide Service Provider Services. Four Service Provider Services Charge categories fully compensate Service Provider for providing Services, each designed to bundle Services with similar economic profiles:

a. Resource Unit (RU) Charges are for steady-state run services. There are two types of Resource Unit Charges:

i. Fixed Charges encompass Services with static cost structures, even during times of growth or recession. These Charges are not subject to change based on the volume of Service consumption.

ii. Variable Charges represent Services whose cost structure to deliver the Services is highly dependent on the underlying volumes of Service. These Charges are calculated by multiplying the applicable unit rate from Exhibit 4.1 (Pricing Structure) for the related contract month by the quantity of corresponding RUs actually consumed by PennDOT during the applicable Billing Month.

b. Deliverable Charges are Fixed Charges for Services paid upon delivery and PennDOT’s Acceptance of the applicable Deliverables. There are two types of Deliverable Charges:

i. Transition Charges are for Transition Service Deliverables completed and accepted.

ii. Request for Solution (RFS) Project Payment Based Deliverables are for future Projects not currently anticipated that must be agreed upon between PennDOT and the Service Provider, and require an approved solution proposal priced using the Rate Card Rates set forth in Exhibit 4.1 (Pricing Structure). RFS Project Payment Based Deliverable Charges will be billed on a fixed milestone basis.

c. Rate Card Charges compensate Service Provider for services using the Rate Card rates set forth in Exhibit 4.1 (Pricing Structure).

d. Pass-Through Expenses are for Service Provider expenses that PennDOT has agreed to pay directly to a Third Party or reimburse to Service Provider.

2. Exhibit 4.0 (Business Model) is not intended to fully describe each Service in detail but rather how the Services are charged, with Exhibit 2.1 (Mainframe Services Statement of Work), providing a description of the Services, Exhibit 3.0 (Performance Model) describing the expected performance, and Exhibit 2. 2 (Mainframe Services Solution), the Service Provider solution document describing how Service Provider intends to deliver the Services, including the required people, processes, and tools included in the

PennDOT Page 7

Charges. Exhibit 4.2 (Financial Responsibility Matrix) provides guidance on the financial responsibilities of the Service Provider and the PennDOT.

3. The Service Provider shall charge PennDOT on a monthly basis in accordance with Exhibit 4.3 (Form of Invoice and Data Feed) for a pro rata portion of the annual Fixed Charge, which shall be calculated by dividing the annual Fixed Charge specified in Exhibit 4.1 (Pricing Structure) for the applicable Contract Year by 12. Variable Charges may change on a monthly basis based on the methodology for calculating Charges. The Service Provider shall charge PennDOT for Deliverable Charges upon completion of Deliverables, but no sooner than the first month following the Commencement Date.

4. Charges may be revised from time to time by agreement of the Parties based on PennDOT’s usage, demand, and business requirements. Charges may only be modified over time in accordance with this contract, including this Exhibit. Service Provider acknowledges and agrees that the Charges (RU, Deliverable, and Rate Card), as adjusted pursuant to this Exhibit, fully compensate Service Provider for providing the Services.

2.2 Changes to Charges

PennDOT may, from time to time (e.g., based on information provided by Service Provider in response to an PennDOT request for analysis for savings opportunities pursuant to MST Section 8.5(c) PennDOT Approval – Cost, Adverse Impact) propose to add, remove, or modify the methodology for charging Services and may also from time to time, by giving at least 30 days’ notice to Service Provider (or such shorter period as may be required by applicable Laws), move Charges from one Charge category to another Charge category, in each case for purposes of re-allocating the pricing under this contract without changes in scope; provided that, in any such event, the aggregate Monthly Charges for all Charge categories shall not be increased or decreased as a result of such re-allocation. Notwithstanding the foregoing, in connection with changes to Charge categories, PennDOT may also propose appropriate adjustments to reduce the existing or new Charges, as applicable, to reflect advancements or changes in technology and related changes in functionality and relative performance where applicable. If PennDOT proposes to add or remove a Charge Category or move Charges from one Charge category to another, the Parties shall agree on the Charges components applicable thereto and on corresponding adjustments to the Charges components for the remaining other Charge categories. Notwithstanding the foregoing, to the extent any of the foregoing changes are required by federal funding requirements or applicable Laws, Service Provider will implement such changes in a timely manner upon notice from PennDOT, and if such changes require the addition or removal of a Charge category, then the Charges components applicable thereto and the corresponding adjustments to the Charges components for the remaining other Charge categories shall be equitably adjusted by the Parties.

2.3 Billing Month

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

PennDOT Page 8 month based upon the actual number of days from the Commencement Date to the end of such month. 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. Any amounts payable on a monthly basis 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.

2.4 Resource Unit Charges

2.4.1 General

Resource Unit Charges consist of Variable and Fixed Charges. The Variable Charges pricing methodology utilizes Resource Units defined in Article 3 Resource Unit Definitions, with Charges calculated from the Unit Rates provided in Exhibit 4.1 (Pricing Structure). The monthly Variable Charges shall be calculated by multiplying the applicable Unit Rate for the applicable Contract Year by the quantity of corresponding Resource Units actually consumed during the applicable Billing Month. Fixed Charges are static and billed on a monthly basis, as documented in Exhibit 4.1 (Pricing Structure).

2.4.2 Resource Unit Measurement Methodology

1. In managing the provision of Services, the Service Provider shall maintain the flexibility to respond to changes in PennDOT’s demand for the Services on a day-to-day and month-to-month basis, particularly those portions of the Services where PennDOT experiences significant variations in demand. Unless otherwise provided in this contract, if the provision of the Services requires increased dedicated support, additional resources, or extended hours of service, the Service Provider shall provide such support, resources, or extended hours of service at no additional charge to PennDOT.

2. Resource Unit usage is measured on a monthly basis to determine PennDOT’s actual consumption for calculation of Charges. Starting on the Commencement Date and monthly thereafter, Service Provider will measure, track, and report usage of Resource Units. Unless otherwise expressly stated herein with respect to an RU, Service Provider will measure and determine as of the last day of each calendar month the RU volume used in determining Resource Unit Charges for such month. Upon Commencement, Service Provider shall compute Monthly Charges on a prorated daily basis.

3. The Service Provider, with PennDOT, will develop billing triggers to determine the criteria to initiate or stop billing a Resource Unit volume. These billing triggers will be documented in the Service Management Manual and, at a minimum, summarize all information related to the calculation of Charges for each Resource Unit Category, including billing start trigger, billing stop trigger, system of record, CMDB billing query, and exclusions.

4. Prior to the Commencement Date, PennDOT and the Service Provider will review the measurement tools and processes for RU measurement, as well as resulting data, to ensure that such tools and processes are appropriate, accurate, producing consistent data, and reaching all devices to be measured. Any automated system used by the Service Provider to perform invoicing and billing responsibilities will be configured to track and record all user entries, reports, modifications, and all other actions taken in relation to the

PennDOT Page 9 billing source data. Subject to the audit provisions of this contract, PennDOT or its designee may, at any time, perform an audit. The Service Provider will document the tools, methodologies, and processes used to measure, track, and report RU usage in the SMM. This documentation will be completed prior to Commencement Date and subsequently maintained as necessary when changes occur. The method and tools for measuring, tracking, and reporting Resource Units are subject to PennDOT’s written approval.

5. Service Provider will record all billable RU consumption amounts and apply the contractual rates and pricing for final billing to PennDOT per Exhibit 4.3 (Form of Invoice and Data Feed). PennDOT may require additional consumption reports for governance or other needs.

6. The Resource Unit Charges shall fully compensate the Service Provider for providing the applicable Services at the actual usage levels for each Resource Unit in a given month. In no event will PennDOT be required to pay Service Provider for volumes not consumed by PennDOT.

2.5 Deliverable Charges

2.5.1 General

Deliverable Charges consist of Transition Charges and Project Charges. Deliverable Charges shall only be chargeable to PennDOT upon PennDOT’s acceptance of the applicable Deliverable in writing. Deliverable Charges shall be itemized on the applicable Monthly Invoice in a level of detail approved by PennDOT.

2.5.2 Transition Charges

PennDOT will pay Transition Deliverables completed in the month the deliverable is approved by PennDOT as part of the Monthly Invoice to PennDOT. Transition Charges will be itemized on the applicable Monthly Invoices to PennDOT in sufficient detail to delineate the specific nature of the Charges. The report will identify each Transition Charge (i.e., the relevant Transition Deliverable with which it is associated). Unless otherwise agreed, PennDOT shall not incur any charges, fees, or expenses payable to Service Provider or any third party engaged by the Service Provider in connection with the Transition Services, other than those charges, fees, and expenses specified in Exhibit 4.1 (Pricing Structure).

2.5.3 Request for Solution (RFS) Project Payment Based Deliverables

1. Payment Based Deliverable Charges apply to certain projects that may arise from an PennDOT Request for Solution (RFS) as described in Exhibit 2.1 (Mainframe Services Statement of Work). RFS Project Based Deliverables are to be used on discrete units of work that do not recur on a regular or periodic basis and have each of the following characteristics:

a. A defined start and end date;

b. Requested and approved by PennDOT;

PennDOT Page 10

c. Not an inherent, necessary, or customary part of the day-to-day (i.e., regular, not daily) Services;

d. Not required by Service Provider to meet the existing Service Levels;

e. Not otherwise part of the Services to be provided within the monthly Charges;

and

f. Requires more than 40 hours of effort (excluding hours for project management of the work).

2. Service Provider and PennDOT shall agree to the RFS Project Payment Based Deliverables using Attachment E (Form of Work Order). The Form of Work Order must be agreed upon between PennDOT and the Service Provider and requires an approved solution proposal priced using the Rate Card rates set forth in Exhibit 4.1 (Pricing Structure), Rate Card. The Payment Based Deliverables shall be associated with defined Deliverables that align with the completion of specified RFS project phases or interim Deliverables that are measurable and acceptable to PennDOT.

3. If Service Provider fails to successfully complete any Payment Based Deliverable by the date specified in the Service Proposal, PennDOT shall not be required to pay any portion of the Charges associated with the Payment Based Deliverable unless, and until, the successful completion of that Payment Based Deliverable is approved by PennDOT. The Service Provider and PennDOT agree that the Deliverable Amount shall reflect the accrued, but not yet earned, Service Provider Charges incurred in performing the RFS project related to the Payment Based Deliverable.

4. After any given Payment Based Deliverable has been successfully completed by Service Provider and approved by PennDOT, Service Provider invoice PennDOT for the Payment Based Deliverable amount. Service Provider shall not charge PennDOT for any amounts other than the Payment Based Deliverable amount.

2.6 Rate Card Services

PennDOT may, at their sole discretion, request Rate Card Services delivered utilizing the Exhibit 4.1 (Pricing Structure), Rate Card rates and the labor categories and skill sets. Rate Card Services are billable on a Monthly Productive Hours Worked basis under the following guidelines:

1. For each Rate Card resource that performs Monthly Productive Hours Worked in a given month, Service Provider shall charge PennDOT at the applicable rate in Exhibit 4.1 (Pricing Structure), which is exclusive of all travel expenses.

2. Service Provider shall not charge PennDOT in any given month for more than the maximum number of Monthly Productive Hours Worked, calculated by multiplying the number of PennDOT Business Days in the month by eight hours, unless overtime is approved by PennDOT, which is to be paid at the same rate as Monthly Productive Hours Worked.

3. Service Provider shall not charge PennDOT for Rate Card Resource overtime unless PennDOT agrees to this in advance, in writing, and on an exception basis.

PennDOT Page 11

4. Service Provider shall be unable to charge PennDOT for Rate Card Services exceeding 10% of the total Mainframe Services contract value over the life of the contract unless approved in advance by the Procurement Officer.

5. PennDOT shall not incur any Rate Card Charges for the following activities:

a. Services performed by Service Provider Personnel that have not been approved, in advance, by PennDOT per established approval processes;

b. Services performed by Service Provider Personnel providing non-Rate Card Services;

c. Project scoping, solutioning, and proposal activities;

d. Time expended by Service Provider Personnel to remedy Service Provider performance failure;

e. Nonproductive time (whether or not conducted on PennDOT Sites), such as holidays, vacation time, sick leave, time spent consuming meals, or other personal time; and

f. Time used for education, training, mentoring, travel, administrative, or management (e.g., internal meetings, internal reporting, process implementation work, time and expense accounting, performance reviews, knowledge transfer).

6. The Charges for the Service Provider Personnel performing Rate Card Services shall be calculated as the product of:

a. Rates set forth in Exhibit 4.1 (Pricing Structure); and

b. The number of Productive Hours the Service Provider’s Personnel devoted to providing such approved Services during such month.

2.7 New Services Charges

If and to the extent that PennDOT requests Service Provider to perform any New Services in accordance with the terms of this contract, the Charges shall be adjusted in accordance with the corresponding proposal submitted by Service Provider and approved by PennDOT in accordance with MST Section 10.5 (New Services), however, that to the extent that any New Services are FTE-based, the Charges for such New Services shall be subject to the terms of Section 2.6 Rate Card Services, unless the Parties otherwise agree in writing.

PennDOT Page 12

3 Resource Unit Definitions

This section sets forth the definitions for the Resource Units (RUs). RUs will be measured in accordance with Section 2.4 Resource Unit Charges above. The following Charges shall fully compensate the Service Provider for Mainframe Services:

3.1.1 CPU Hour

1. Resource Units:

a. CPU Hour

2. Resource Unit Definition:

a. CPU Hour consists of the following:

i. Application time;

ii. Authorized User usage;

iii. All time associated with database management system and transaction system address spaces (for example, DB2, CICS, IMS, TSO);

iv. Authorized User usage of SAS, FOCUS, and other similar Software products;

v. Application driven backup time; and

vi. Application development and maintenance time for PennDOT or a third party hired by PennDOT.

b. Billable Resource Units for z/16, 3931-A01 equivalent application hours will not include Resource Units which are attributable to Systems Overhead or system level work, including CPU outage or unavailability; CPU wait time; CPU un-captured time; Service Provider system operations support and administrative personnel usage (including usage for billing functions and capacity planning studies) and other Service Provider initiated activities; Service Provider caused lost batch time, usage due to a runaway process that does not result in incremental cost to Service Provider, or other usage attributable to reruns which are due to the fault of Service Provider; and the following system services where controlled by Service Provider, including different products (or with different names) providing equivalent function:

i. Basic operating system components (e.g., JES2, LLA, VLF, GRS, MSTJCL, IEESYSAS, TRACE, RASP, XCFAS, DUMPSRV, CONSOLE, ALLOCAS, CATALOG, MOUNT, IOSAS, PCAUTH);

ii. Service Provider system performance monitor, capacity management, and billing data collection tools (e.g., MICS, SMF, RMF, OMEGAMON, SLR, DCOLLECT, EREP);

iii. Service Provider system operation and support tools (e.g., SMP/E, JOB

SCHEDULER, RERUN MANAGER, CONSOLE MANAGEMENT, SAR,

RMDS, GDIF);

PennDOT Page 13

iv. Mainframe based network operations, support, access methods, and standard system print drivers (e.g., VTAM, TCP/IP, TCAM, BTAM, NETVIEW, NPM, JES328X, VPS, NETMASTER);

v. Service Provider system-managed storage tools (e.g., DFSMS, ICKDSF, TAPE MANAGER); and

vi. Service Provider Problem Management and Change Management Software.

c. Mainframe CPU utilization will be measured over applicable usage periods and will include only the TCB and SRB components of Mainframe CPU time logged via System Management Facilities ("SMF") Type 30 records for MVS systems, Power/VSE facilities for VM systems, or other applicable substitutes at the end of the month.

3. Unit of measurement: Aggregate number of IBM Application CPU hours (normalized to and quoted in terms of equivalent z/16, 3931-A01 hours) utilized during the measurement period. Resource usage for Mainframe CPU will be rounded to the nearest whole hour for measurement, tracking and reporting purposes. For billing purposes, the CPU hour should be rounded to the nearest minute. A more finite measurement may be used if agreed to in writing by PennDOT and Service Provider.

4. Costs included:

a. All Hardware/Equipment and hardware maintenance required to manage, maintain, and enhance the service.

b. All software licenses and maintenance required to manage, maintain, and enhance the service.

c. All labor and maintenance required to manage, maintain, and enhance the service.

d. Service Provider management tools.

e. Technology refresh costs including Hardware, Software, and labor

f. Core Security Services (including anti-virus vulnerability scanning, logging and

SIEM monitoring agents as specified by PennDOT),

g. All LAN costs, including Hardware, Software, and labor

h. All installation, move, add, change and discontinuance services.

3.1.2 CPU Hour – Specialty Engine

1. Resource Units:

a. CPU Hour – Specialty Engine

2. Resource Unit Definition:

a. Specialty Engine processing includes special-purpose high-performance processors for the Enterprise Class servers (e.g., zIIP (DB2)). CPU Hour – Specialty Engine consists of the following:

i. Application time;

ii. Authorized User usage;

PennDOT Page 14

iii. All time associated with database management system and transaction system address spaces (for example, DB2, CICS, IMS, TSO);

iv. Authorized User usage of SAS, FOCUS, and other similar Software products;

v. Application driven backup time; and

vi. Application development and maintenance time for PennDOT or a third party hired by PennDOT.

b. Billable Resource Units for CPU Hours – Specialty Engine will not include hours which are attributable to Systems Overhead or system level work, including CPU outage or unavailability; CPU wait time; CPU un-captured time; Service Provider system operations support and administrative personnel usage (including usage for billing functions and capacity planning studies) and other Service Provider initiated activities; Service Provider caused lost batch time or other usage attributable to reruns which are due to the fault of Service Provider; and the following system services where controlled by Service Provider, including different products (or with different names) providing equivalent function:

i. Basic operating system components (e.g., JES2, LLA, VLF, GRS, MSTJCL, IEESYSAS, TRACE, RASP, XCFAS, DUMPSRV, CONSOLE, ALLOCAS, CATALOG, MOUNT, IOSAS, PCAUTH);

ii. Service Provider system performance monitor, capacity management, and billing data collection tools (e.g., MICS, SMF, RMF, OMEGAMON, SLR, DCOLLECT, EREP);

iii. Service Provider system operation and support tools (e.g., SMP/E, JOB

SCHEDULER, RERUN MANAGER, CONSOLE MANAGEMENT, SAR,

RMDS, GDIF);

iv. Mainframe based network operations, support, access methods, and standard system print drivers (e.g., VTAM, TCP/IP, TCAM, BTAM, NETVIEW, NPM, JES328X, VPS, NETMASTER);

v. Service Provider system-managed storage tools (e.g., DFSMS, ICKDSF, TAPE

MANAGER);

vi. Service Provider Problem Management and Change Management Software; and

vii. Service Provider database management tools.

c. Mainframe CPU utilization will be measured over applicable usage periods and will include only the TCB and SRB components of Mainframe CPU time logged via System Management Facilities ("SMF") Type 30 records for MVS systems, equivalent facilities for VM systems, or other applicable substitutes at the end of the month.

3. Unit of measurement: Aggregate number of Specialty Engine CPU hours (normalized to and quoted in terms of equivalent z/16, 3931-A01) utilized during the measurement period. Resource usage for Mainframe CPU – Specialty Engine will be rounded to the nearest whole hour for measurement, tracking, and reporting purposes. For billing

PennDOT Page 15 purposes, the CPU hour should be rounded to the nearest minute. A more finite measurement may be used if agreed to in writing by PennDOT and Service Provider.

4. Costs included:

a. All Hardware/Equipment and hardware maintenance required to manage, maintain, and enhance the service.

b. All software licenses and maintenance required to manage, maintain, and enhance the service.

c. All labor and maintenance required to manage, maintain, and enhance the service.

d. Service Provider management tools.

e. Technology refresh costs including Hardware, Software, and labor

f. Core Security Services (including anti-virus vulnerability scanning, logging and

SIEM monitoring agents as specified by PennDOT),

g. All LAN costs, including Hardware, Software, and labor

h. All installation, move, add, change and discontinuance services.

3.1.3 Allocated Application DASD

1. Resource Units:

a. Allocated Application DASD

2. Resource Unit Definition:

a. Allocated Application DASD will be measured using DCOLLECT, or another mutually agreeable substitute, where DASD is shared, and will include:

i. Application space;

ii. Authorized User space;

iii. Temporary data sets;

iv. DASD migration space;

v. Spool space;

vi. Application recovery logs/data sets; and

vii. Application development and maintenance space.

b. Allocated Application DASD measured resource usage will exclude Systems Overhead and:

i. spare volumes;

ii. flash copy volumes;

iii. unallocated (free) space;

iv. any initial DASD migration space for conversion from any bubble/one-time migration space for technology upgrades or refresh DASD technology and/or future conversions, as required;

PennDOT Page 16

v. system product libraries;

vi. catalogues;

vii. replicated volumes;

viii. system space (e.g., temporary workspace, page and swap space, spool space, system parameter and control data sets, and error analysis space); and

ix. Service Provider-controlled system operation, support and administration data sets (e.g., scheduled system maintenance and error analysis, DLIBS, console logs, contract measurement and billing, system monitors, and system service machine space).

c. Service Provider shall use proven storage management tools and other commercially reasonable measures to use DASD efficiently and to avoid or minimize usage spikes. As part of the Services, Service Provider shall perform ongoing capacity management and planning and shall notify PennDOT expeditiously if actual DASD usage exceeds 85% of the agreed upon level of installed DASD. Should this occur, Service Provider shall use commercially reasonable efforts to identify the root cause of such increased DASD usage and implement measures to avoid increasing the level of installed or allocated DASD to the extent possible.

3. Unit of measurement: The peak number of gigabytes of DASD allocated by or to Applications and Authorized Users each month. One gigabyte will be equal to 1,073,741,824 bytes. The sum of partial Resource Unit usage in this Resource Category during a calendar month shall be rounded to the nearest whole gigabyte for measurement, tracking, reporting, and billing purposes. A more finite measurement may be used if agreed to in writing by PennDOT and Service Provider.

4. Costs included:

a. All Hardware/Equipment and hardware maintenance required to manage, maintain, and enhance the service.

b. All software licenses and maintenance required to manage, maintain, and enhance the service.

c. All labor and maintenance required to manage, maintain, and enhance the service.

d. Service Provider management tools.

e. Technology refresh costs including Hardware, Software, and labor

f. Core Security Services (including anti-virus vulnerability scanning, logging and

SIEM monitoring agents as specified by PennDOT),

g. All LAN costs, including Hardware, Software, and labor

h. All installation, move, add, change and discontinuance services.

3.1.4 Application Tapes in Storage – Virtual Tape Storage (VTS)

1. Resource Units:

a. Application Tapes in Storage – Virtual Tape Storage (VTS)

PennDOT Page 17

2. Resource Unit Definition:

Charges for the performance of all IBM Mainframe tape and backup Services, including manual tape Services.

3. Unit of measurement: Per terabyte of (i) VTS internal high-speed cache storage of application data (disk or buffer), and/or (ii) VTS media storage. One TB will be equal to 1 trillion bytes. The sum of partial Resource Unit usage in this Resource Unit Category during a calendar month will be rounded to the nearest whole terabyte for measurement, tracking, reporting, and billing purposes. A more finite measurement may be used if agreed to in writing by PennDOT and Service Provider.

4. Costs included:

a. All Hardware/Equipment and hardware maintenance required to manage, maintain, and enhance the service.

b. All software licenses and maintenance required to manage, maintain, and enhance the service.

c. All labor and maintenance required to manage, maintain, and enhance the service.

d. Service Provider management tools.

e. Technology refresh costs including Hardware, Software, and labor

f. Core Security Services (including anti-virus vulnerability scanning, logging and

SIEM monitoring agents as specified by PennDOT),

g. All LAN costs, including Hardware, Software, and labor

3.1.5 RedHat Enterprise Operating System

1. Resource Units:

a. RedHat Enterprise Operating System

2. Resource Unit Definition:

A monthly recurring Charge for A Red Hat Enterprise Linux operating system license for one virtual machine instance. License supports a single virtual machine instance of any vCPU configuration.

3. Unit of measurement: Per Virtual Machine Instance.

3.1.6 Windows Server Operating System

1. Resource Units:

a. Windows Server Operating System

2. Resource Unit Definition:

A Windows Server operating system license for a virtual machine.

This Resource Unit provides the Right to Use prior versions of the Operating System. The installed version must be supported by the manufacturer and not documented as end of life. The available versions are listed as part of the server build.

3. Unit of measurement: Per Virtual Machine Instance.

PennDOT Page 18

3.1.7 Server Support Services

1. Resource Units:

a. Server Support Services

2. Resource Unit Definition:

A monthly recurring Charge for Support services for Billable Server Instances are charged by the level of service provided in the Service Tier Matrix (STM) included in Exhibit 2.1 (Mainframe Services Statement of Work). Additionally:

a. Depending on the Server’s configuration, one or more Operating System Instances may run on a single Server.

b. Operating System Instances in a clustered configuration shall be deemed to be discrete Operating System Instances.

c. Any monitoring will also include the necessary monitoring related to Disaster

Recovery service levels selected by the PennDOT.

3. Unit of measurement: Per Billable Server Instance.

4. Costs included:

a. Labor and systems management, including initial installation and setup for virtual instances, for the life cycle of the Services to support and enhance the specific environment.

b. The fully or semi managed labor costs associated with the Service requirements.

c. Service Provider management tools.

3.1.8 Non-Consolidated Disk Storage

5. Resource Units:

a. Disk Storage

6. Resource Unit Definition:

A monthly recurring Charge for server storage services in Non-Consolidated locations for storage shared by multiple Servers (e.g., SAN, NAS) allocated to PennDOT and unavailable for Service Provider re-allocation for other purposes.

The sum of partial RU usage during a calendar month for each of the RU Categories using GB as a measure described in this Section shall be rounded to the nearest whole GB for measurement, tracking, reporting and billing purposes. Storage attached to backup servers to make a temporary backup (intermediate storage) and storage for system overhead including storage from Hardware Management Consoles must be excluded from the RU volume. A more finite measurement may be used if agreed to in writing by PennDOT and Service Provider.

7. Unit of measurement: Per allocated gigabyte (Gb).

8. Costs included:

a. Labor and maintenance required to manage, maintain, and enhance the service.

b. Service Provider management tools.

PennDOT Page 19

c. Installation, move, add, change and discontinuance services.

3.1.9 Backup and Recovery Services

1. Resource Units:

a. Backup and Recovery Services

2. Resource Unit Definition:

A monthly recurring Charge for the performance of Server Backup and Recovery Services related to Billable instances, including the required backup infrastructure costs and management of intermediate storage. The unit of measurement for the RU is Data Protected, which is the amount of storage on the server that is being protected by the backup. In operational terms, this means the amount of data that would need to be returned to the server to fully restore the server, or a subset of it, depending on whether it was a full or partial backup. An instance with the primary capability of a virtual server host dedicated to PennDOT is billable for this resource unit.

Storage for system overhead, including storage from Hardware Management Consoles, will be excluded. Data backed up is billable only once, regardless of the number of intermediate copies produced as a result of the backup process and must relate to retrievable backup retained by the Service Provider at the request of PennDOT. The methodology for determining the amount of system overhead to exclude from system overhead will be documented in the SMM. At a minimum, the exclusions will include:

a. Hardware Management Console Storage – Internal capacity used for backup operation;

b. Multiple copies of backup data – Copy pools and secondary copies;

c. Intermediate backup data; and

d. Backups of system overhead data – storage for tools and operational management

(e.g., monitoring tools, hot spares, RAID protection)

3. Unit of measurement: Per Data Protected (Gb)

4. Costs included:

a. Hardware/Equipment and hardware maintenance required to manage, maintain, and enhance the service.

b. Software licenses and maintenance required to manage, maintain, and enhance the service.

c. Labor and maintenance required to manage, maintain, and enhance the service.

d. Service Provider management tools.

e. Installation, move, add, change and discontinuance services.

3.1.10 Hardware Service Charge (HSC) Virtualized Cores

1. Resource Units:

a. HSC - Virtualized Cores

2. Resource Unit Definition:

PennDOT Page 20

A monthly recurring Charge for virtual core(s) supporting a virtual Windows/Linux server instance. The Hardware Service Charge (HSC) shall fully compensate Service Provider for hardware purchases as provided in this provision. Each virtualized server instance will have both a Virtualized Core RU and a Virtualized Memory RU.

3. Unit of measurement: Number of virtual cores supporting a virtual Windows/Linux server instance approved by PennDOT and active and in use on the measurement date.

Costs included:

a. Hardware and hardware maintenance necessary to manage, maintain, and enhance the service environment and to provide the Service;

b. Operating System Software;

c. Software required to provide Operating System (OS) management; OS monitoring;

patch and compliance management;

d. Core Security Services (including anti-virus vulnerability scanning, logging and

SEIM monitoring agents as specified by the Security SCP);

e. LAN costs including hardware, software, and labor;

f. Technology refresh costs including hardware, software, and labor; and

g. Installation, move, add, change and discontinuance services and associated administrative activities.

3.1.11 Hardware Service Charge (HSC) Virtualized Memory

1. Resource Units:

a. HSC - Virtualized Memory

2. Resource Unit Definition:

A monthly recurring Charge for virtual memory supporting a virtual Windows/Linux server instance. The Hardware Service Charge (HSC) shall fully compensate Service Provider for hardware purchases as provided in this provision. Each virtualized server instance will have both a Virtualized Core RU and a Virtualized Memory RU.

3. Unit of measurement: Number of gigabytes (Gb) of virtual memory supporting a virtual Windows/Linux server instance approved by PennDOT and active and in use on the measurement date.

Costs included:

a. Hardware and hardware maintenance necessary to manage, maintain, and enhance the service environment and to provide the Service;

b. Operating System Software;

c. Software required to provide Operating System (OS) management; OS monitoring;

patch and compliance management;

d. Core Security Services (including anti-virus vulnerability scanning, logging and

SEIM monitoring agents as specified by the Security SCP),

e. LAN costs including hardware, software, and labor;

PennDOT Page 21

f. Technology refresh costs including hardware, software, and labor; and

g. Installation, move, add, change and discontinuance services and associated administrative activities.

3.1.12 Software Service Charge (SSC)

4. Resource Units:

a. Software Service Charge (SSC)

1. Resource Unit Definition:

a. SSC Charges shall compensate Service Provider for the Software procured on

PennDOT’s behalf, as provided in this provision, and must follow the Procurement procedures specified in Exhibit 2.1 (Mainframe Services Statement of Work), Section 2.8 Mainframe Software Procurement and SMM. The SSC is a methodology for PennDOT to obtain Software licenses, maintenance, and installation/configuration services, as applicable, for their dedicated use on Mainframe equipment utilized by Service Provider in the provision of the Services.

The types of Software that PennDOT may obtain pursuant to this methodology are in Exhibit 4.2 (Financial Responsibility Matrix.) The SSC shall be determined based on the Software expenditures that are actually paid or incurred by Service Provider and shall be purchased in accordance with the Procurement Procedures specified in the SOW and SMM. SSC must be approved in advance by PennDOT.

b. Any increase in Software expenditures due to Service Provider solution changes (e.g., hardware consolidation or re-engineering) shall be paid by Service Provider and not charged to PennDOT unless prior approval is obtained.

c. Service Provider shall use commercially reasonable efforts to obtain the lowest possible discounted prices for such Software for the benefit of PennDOT, including utilization of PennDOT purchase arrangements in accordance with this contract.

Notwithstanding anything to the contrary herein,

i. PennDOT shall have the option of procuring such Software directly from Third Parties,

ii. PennDOT shall, upon delivery and installation of such Software, be billed on a one-time basis at cost with no markup, and

iii. PennDOT shall have the option of procuring such Software directly from Service Provider under this contract only to the extent PennDOT obtains Service Provider’s support of such Software pursuant to the terms of this contract (except to the extent otherwise mutually agreed).

d. Service Provider shall provide one-time and ongoing maintenance fees upon formal, firm quotations from each independent software vendor (ISV) in accordance with the procurement process for SSC Software.

2. Unit of measurement: Actual cost in US dollars.

3. Costs included:

PennDOT Page 22

a. All Hardware/Equipment and hardware maintenance required to manage, maintain, and enhance the service.

b. All software licenses and maintenance required to manage, maintain, and enhance the service.

c. All labor and maintenance required to manage, maintain, and enhance the service.

d. Service Provider management tools.

e. Technology refresh costs including Hardware, Software, and labor

f. Core Security Services (including anti-virus vulnerability scanning, logging and

SIEM monitoring agents as specified by PennDOT),

g. All LAN costs, including Hardware, Software, and labor

h. All installation, move, add, change and discontinuance services.

3.1.13 USER ID and Dataset RACF (Optional Services)

The following Charges will fully compensate the Service Provider for Mainframe Services:

1. Resource Units:

a. USER ID and Dataset RACF

2. Resource Unit Definition: see Section 3.1.1 CPU Hour

3. Unit of measurement: see Section 3.1.1 CPU Hour

4. Costs included: see Section 3.1.1 CPU Hour