Questions and Answers for B-28401~1.pdf

Questions and Answers to Bid B-28401

1. Pages 2 (see also page 22, Section 3.1 and 3.2) – The IFB states the initial term and any renewal terms will not exceed ten years. This section further states the contract resulting from this IFB will have an initial three-year term and two 2-year renewal terms.

This is an unusually long potential contract period for a WIC rebate contract. Please confirm any options to renew will require mutual consent of the State and the Contractor. If the State is unwilling to permit mutual consent for renewals, we urge the State to limit any renewal to one 2-year additional term.

A. The ten-year term reference is a state statute 30 ILCS 500/20-60 and is required to be included for all IFBs. Per the last sentence of 3.2.1, “The contract may neither renew automatically nor renew solely at the Vendor’s option.”

Therefore, the contract renewal does require mutual consent.

2. Page 5, Section 1.2.1.1 – Please confirm the State will notify all authorized WIC vendors which company is the successful in winning the bidder, rather the awarded Vendor providing this notification.

A. The Vendor will notify all authorized WIC vendors that the company has acquired the State of Illinois Infant Formula Contract for WIC. This is (in part) why we included Attachment H – Active Vendors as of February 2022. A newer revised list will be provided to the winning bidder upon award of the contract for the purpose of notifying the WIC vendors.

3. Page 6, Section 1.2.1.3 – Please provide additional details about the separate agreement to be signed with Catholic Charities. What is meant by a separate cost proposal? How will this separate cost proposals be included in the evaluation when deciding the low bidder to this solicitation? Please confirm this separate cost proposal with Catholic Charities has been reviewed and approved by USDA and is consistent with all program regulations governing the bid solicitation and bid evaluation requirements for infant formula rebates.

A. Catholic Charities is a direct distribution vendor for the State of Illinois WIC program, as defined by USDA. A separate agreement with a separate cost proposal is to be agreed upon between the Vendor and Catholic Charities.

Catholic Charities is one of the largest WIC vendors in Illinois, but differs from retail store vendors in that it purchases its formula directly from the contracted formula Vendor using funds granted to it from the Illinois WIC program. The separate cost proposal with Catholic Charities is not considered in this bidder solicitation. USDA has fully reviewed and approved the operation of the WIC

Food Centers and Catholica Charities follows all the relevant federal rules and regulations, but it is not a part of the infant formula bid solicitation.

4. Page 9, Section A.8 –Opening of Bids – The Bulletin appears to indicate a Bid Opening date and time of May 6 at 2 pm eastern time. Please confirm the Bid Opening time.

Please also provide the location for the public opening of the bids, including street address, building, and room number. Please confirm the State will be permitting in-person attendance of the public bid opening? Please provide any additional details required for representatives who will be attending the bid opening.

A. The bid opening is May 6, 2022 at 2pm Central Time. Due to COVID, There will not be an in-person bid opening. We can, however, hold a Webex to allow bidders to witness the bid opening. The Bid opening is held through Illinois’ E- Procurement System, BidBuy. There will be no questions answered at the time of bid opening. Viewers will be able to see all bidder names that provided quotes and quote totals. A copy of the Solicitation Opening can be requested by contacting John Baumgartner at john.baumgartner@illinois.gov. Below is a link to the Bid Opening via Webex.

https://illinois.webex.com/illinois/j.php?MTID=mad7a87c9ab43eedb37456eb5eca2f21a

5. Page 9, Section A.8 –Opening of Bids – Would the State consider providing a dial-in number and/or a Web-Ex or other virtual bid opening given the continuing concerns around the COVID-19 pandemic?

A. See answer to Question #5 above.

6. Page 9, Section A.8 –Opening of Bids –Please confirm the State will read aloud the following information contained on page 1 of the Bid Sheet: Product Name Being Bid, UPC Code, Unit Size, Reconstituted Ounce Per Unit, Lowest Wholesale Full Truckload Price Per Unit, Rebate Bid Per Unit, Net Cost, and Percent Rebate, and on page 2 the corresponding data populated in columns (B), (C), (J), (K), (L), (M), and (N).

A. The bid opening will allow viewers on the Webex to see who bid and the quote total.

7. Page 13, Section A.19 – Award – Approximately how long after the bid opening date will the Award be issued?

A. There is no set time for the award. Procurement staff will review for lowest annual net formula cost and responsiveness. Notice of award will be posted via BidBuy.

8. Page 16, Section 1.3.6. Contract Transition – Please confirm all participants who are issued benefits prior to January 31, 2023 will be issued formula for the current Vendor’s mailto:john.baumgartner@illinois.gov https://illinois.webex.com/illinois/j.php?MTID=m62f33fe67a63e903cab18dfed27e12dd https://illinois.webex.com/illinois/j.php?MTID=m62f33fe67a63e903cab18dfed27e12dd products. Therefore, for participants who are routinely issued three months of benefits, these participants will receive the current Vendor’s products for January, February and March. Please confirm.

A. As stated in 1.3.6.1, “the Illinois WIC Program routinely issues formula in 3 month increments and expects the current Vendor’s products to be issued until January 31, 2023 and the State would therefore expect redemptions until April 30, 2023.” The current vendor’s formula will be issued up to the end of the day January 31, 2023, because clients would be able to redeem all their formula benefits that same day.

9. Attachment D – 2023 Rebate Bid Sheet – Please confirm container sizes for concentrate liquid formula is not limited to a 13 oz. container?

A. Correct. Please reference the Tab named FNBMMA for details. The Tab shows the Full Nutrition Benefit (FNB) and Maximum Monthly Allowances (MMA) of Supplemental Foods for Infants in Food Packages I, II and III, per USDA rules and regulations in 7 CFR 246.10(e)(9) and 7 CFR 246.10(e)(11).

Additional Questions

10. Does Illinois WIC authorize any WIC-only stores (above 50% vendors)? If yes, how many of these stores are authorized? What percentage of the WIC food volume is purchased through these stores?

A. No, Illinois does not authorize any WIC-only stores (above 50% vendors).

11. Please confirm all bidders will be notified if a protest is filed either prior to the bid proposal due date or after issuance of a notification of award. Will all bidders be provided copies of any protests that are filed, as well as the State’s response?

A. Bidders will not be notified if a protest is filed. Bidders will only be notified if a protest is upheld in which case a bid amendment will be posted. Monitor BidBuy for any such actions.

12. Does the State have written procedures governing returned formula? If a participant receives 8 cans of formula and seeks to return them for an alternative, what process is used to accommodate this situation?

A. The Illinois WIC Program does not allow clients to return formula received for an alternate formula.

13. Does the State currently issue any non-contract, non-exempt infant formula products? If yes, what products are issued? Please provide three months of issuance data for non-contract, non-exempt products.

A. No.

14. Please confirm the infant participation numbers included on the Bid Sheet include all infants receiving contract infant formula and non-contract, non-exempt infant formula.

A. Correct.

15. Does the State regularly conduct retailer inventory audits specific to infant formula? If yes, how often and roughly what percentage of authorized retailers are subjected to inventory audits each year?

A. No, there are no regularly scheduled retailer inventory audits specific to infant formula. However, based upon either a complaint, and/or a high-risk indicator, retail vendor audits of infant formula have been conducted. There was one in State Fiscal Year (SFY) 2021 and to date there have been two in SFY 2022. [Note in the next question and answer, the stock of infant formula on vendors’ shelves and in store locations, along with other food items, is monitored during routine site visits. If the vendor does not maintain minimum stock the vendor can face sanctions under the WIC Vendor Management Code at 77 Illinois Administrative Code Section 672.510 b) 1)].

16. What other activities, reports, etc. does the State engage in to prevent fraud and abuse in the WIC program? We request the State provide specific activities rather than simply citing USDA/FNS regulations.

A. Each year, to comply with USDA Vendor Management rules, at least 5% of all Illinois retail vendors receive routine monitoring visits to check inventory on WIC items, including infant formula. Illinois always meets and exceeds the minimum required visits. In SFY 2021, 568 covert compliance buys were conducted on 142 vendor locations and there were 166 routine monitoring visits. In SFY 2022, counting both completed and planned visits through the end of State Fiscal Year 2022 on June 30, there were 968 covert buys on 242 vendor locations and there were 235 routine monitoring visits.

17. In the last three years, how many authorized retailers have been sanctioned and/or disqualified based on fraudulent transactions or other instances of fraud.

A. (All counts listed here are by Federal Fiscal Year to align with the annual USDA reporting requirement.) For Federal Fiscal Year (FFY) 2020, there were 112 vendors sanctioned. For FFY 2021, there were 113 vendors. Through the end of March 2022 and to date for FFY 2022, there were 70 vendors.

18. Please confirm a bidder can submit a paper copy bid either in place of the electronic bid or as stated in A.2, in addition to the electronic bid. If paper copy is allowed, please confirm only 1 original is required or if additional copies would be needed.

A. Per Section A.9 and A.10 of the IFB. Bids must be submitted via

BidBuy only. Refer to Bid Attachment titled "Notice of Electronic Submission Only" for details.

19. If amendments are published, are they required to be signed and returned with the bid, or is checking the box on B.2 of Section 2 sufficient acknowledgement for any amendments?

A. Checking the Box in B.2 is sufficient as acknowledgement to any addendums.

20. Please identify everyone who has access to bids once they have been submitted on-line, prior to the official bid submission deadline. Please explain the steps taken to restrict access to bids to those persons identified in response to the question above.

A. Once a bid is submitted via BidBuy, it is locked and unviewable until the bid opening date/time.

21. If a vendor has trouble submitting a bid on-line, who should they contact?

A. il.bidbuy@illinois.gov or by phone at 866-455-2897

22. Please identify which documents listed in this section are required documents for bid submission.

A. Completed & Signed Offer, Completed & Signed Contract, Completed &

Signed Forms A or Forms B(if registered in the Illinois Procurement Gateway) and Completed Attachment D.

23. Please confirm all bidders will be notified of the award via email.

A. All bidders will be notified of award via email from BidBuy.

24. Please provide examples of what failure or deficiency would cause the State to reject a bid.

A. Failure to provide any of the completed documents referred to in

Question #22 would be considered non-responsive.

25. Please provide guidance as to which of the following fields should be populated in the Contract.

A. Generally, any text in “Red” is required for vendor to complete. If text is in “Green”, please disregard.

mailto:il.bidbuy@illinois.gov

26. Because this is an infant formula rebate contract and federal law requires that it be awarded to the vendor offering the lowest net cost to the State, please confirm that, in accordance with governing Federal law, this bid will be awarded based solely on the lowest net cost to the State as defined in the Federal WIC regulations and that no preferences will be applicable and no boxes would need to be populated for bid submission.

A. Award will be made to lowest net cost, responsive bidder. Preferences will not be used in consideration of bid award.

27. If a bidder has no exceptions to the solicitation, is this document still required to be submitted?

A. No. The Exceptions page is not required if no exceptions are noted.

28. Contract, Section 1.2.1.2, page 6 – Is the initial plan of action required to be submitted with a bid proposal or is this only required of the winning contractor?

A. This is only for the awarded (winning) Vendor, as defined in 1.2.1.1, “The awarded Vendor . . .”

29. Contract, Section 1.1.2, page 7 – Please amend this section to “….from the truckload wholesale unit price”.

A. Agreed to amend and add “truckload” under 1.2.2.2.

30. Contract, Section 1.2.3, page 8 - Price increase timing is confidential and proprietary. Requiring ninety (90) days advance notice would be a disadvantage to the contractor. Please revise this section to allow for notification at the same time as other customers or at least 30 days prior to any change in the wholesale prices.

A. Agree. Reduced to 30 days.

31. Contract, Section 1.2.4, page 8 - On what basis would the State deny an infant formula that was “new and improved”? Since manufacturers are not making product solely for the State, to allow the State to have “sole right to make final determination of what constitutes an acceptable replacement” is not practical. Manufacturing a product formulated for and distributed only in the State could dramatically affect a manufacturer’s ability to execute the requirements of this contract. Please remove this section. If not removed, please provide the reasons that the State feels that this provision is in the best interest of the Department, the State, WIC infant participants and the contractor.

A. Agreed to change as “new” product, not “improve” an existing product.

Product improvements to existing line are acceptable.

32. Contract, Section 1.2.8, page 10 – A price list is requested in this section to be submitted, this is not listed on Section 2 of the IFB. Is this required for bid submission and, if so, where this should this be included in the bid submission?

A. It is not required for the bid submission, and it will not be considered in the award decision-making process.

33. Contract, Section 1.2.11, page 11. Please confirm the following:

i. DHS will not issue quantities of infant formula in excess of the monthly maximums prescribed by the federal law for each WIC participant.

ii. The Contractor will not be required to pay rebates on quantities of infant formula in Excess of the federal monthly maximums.

iii. If rebates for quantities in excess of the federal monthly maximums are billed and rebated in error, the amounts associated with the over issuance and redemption will be reimbursed to the Contractor upon discovery.

iv. If any of the above statements are not confirmed, please provide a detailed explanation of why such portion was not confirmed.

A. (Note that Section 1.2.11 is not the correct citation.) This is covered under 1.2.5. Billing Errors, however, we will add this to that section:

“One example of an error is if DHS issued quantities of infant formula in excess of the monthly maximums allowed by federal law.”

34. Contract, Section 1.3.3.1, pages 14-15. The purpose of a liquidated damages clause is not to exact a penalty, but to provide a reasonable estimate of the anticipated actual harm which will occur from a breach of contract when such damages are not easily calculated. Here, if a Contractor fails to supply any Contract infant formula or fails to pay a rebate invoice, the damages are easily calculable, and therefore a liquidated damages clause is unnecessary. Further, the State has set forth a plan for dealing with such unavailability in the Risk Management section. Therefore, please remove this provision. If not removed, please confirm that this provision would only apply if every brand and form of Contract infant formula were unavailable. If not confirmed, please state all the reasons why the State would choose to exact a penalty against the Contractor before it provided other available forms and brands of the Contractor's Contract infant formula to WIC participants. If this section is not removed and given the fact that many retailers typically have ten to fourteen days of inventory on hand, please revise this section to read "The parties acknowledge that widespread unavailability of Contract infant formula exceeding 10 business days and affecting 5% or more...".

A. Thank you for your question but the State declines to remove this section. We feel these provisions are reasonable. The provision applies to any brand or form of contract formula. If the Vendor is awarded the contract based upon its bid, the Vendor may offer to provide other available forms and brands during the term of the Contract if the need arises. The State chooses to keep the 7 calendar days.

35. Contract, Section 1.3.3.5, page 15. Please confirm that if a bidder does not submit Section 3 document of the IFB, that is sufficient for acknowledgment of complying with this section.

A. Compliance will be acknowledged by the Bidder/Vendor if no modifications are proposed.

36. Contract, Section 1.4, page 17. Is the information requested in this section required to be provided in a bid proposal or just provided by the winning contractor? If required, where should this information be provided in a bid proposal?

A. This can be provided later by the winning contractor.

37. Contract, Section 3.2, page 22. The renewals will allow this contract to be for a total of 7 years. That is a longer contract than usual. Please amend this section to only allow for one two-year extension options. If not amended, please allow the manufacturer the mutual decision on the extension options as long as the extension is agreed to at least 12 months in advance.

A. The Illinois WIC Program prefers the renewal terms as stated in the IFB.

This is covered by 3.2.1. “The contract may neither renew automatically nor renew solely at the Vendor’s option.” In addition, we agree that the second two-year agreement should be mutually agreed upon, however, the Vendor would need 18 months’ notice if not renewed for a second two-year renewal.

38. Contract, Section 4.11, pages 27-28. Please confirm the insurance requirements detailed here are not applicable to an infant formula rebate contract in which the contractor is paying the State.

A. This is standard boilerplate language. This may not apply to all.

39. Form A, Taxpayer Identification Number, page 21. In the Legal Status section of this form, if a bidder is a Limited Liability Company with a classification of Disregarded Entity, how should this form be completed?Is it acceptable to type in Disregarded Entity on the form?

A. Yes. You may type or write in Disregarded Entity.

40. Bid Sheet – The estimated average # infants by form based on a 6-month average should not include trailing decimals. Please round the infant numbers so they are a whole number.

A. Rounded averages found in cells AG9 to AH17 to nearest integer.

41. BidBuy Online Bid Submission Questions

a. General Tab

i. Since this is a rebate bid and not an exchange of products or services, can you please confirm if we can leave this section blank. If not confirmed, please provide what sections are required to be completed.

Answer: Please complete all fields marked with an *.

b. Items Tab

i. This section seems to be related to the contract length. Please confirm if this can be left blank. If not confirmed, please provide what fields are required to be completed.

Answer: Please complete all fields marked with an *.

c. Questions Tab

i. Please confirm questions are to be submitted via email and nothing is required in this tab.

Answer: Correct.

d. Subcontractors Tab

i. If vendor is not utilizing subcontractors, please confirm this tab can be left blank.

e. Notes Tab

i. Please confirm this section can be left blank. If not confirmed, please provide what information is required

f. Attachments Tab

i. For any documents not referenced on this site, such as the price list requirement, would these just be added as additional attachments in the file section?

Answer: There are 4 required documents to be submitted with bid.

a. General Question

i. Please confirm we will receive confirmation of online bid submission.

ii. If not confirmed, please provide contact information for someone who can confirm bid was successfully submitted.

Answer: You will receive email bid confirmation from BidBuy with

Bid Submission.

42. Title Page, Page 2, Section (ii) – The federal maximum for an infant formula rebate contract is typically 6 years. Please adjust your terms to not exceed 6 years in duration.

A. The Illinois WIC Program prefers the renewal terms as stated in the IFB.

43. Instructions and General Information, Page 8, Section 1.A.6. Please explain the order of precedence between Q&A responses, IFB and the State’s contract.

A. Once Q & A responses are posted in BidBuy as a bid amendment, the answers become part of the IFB and Contract.

44. Instructions and General Information, Page 10, Section 1.A.10. If submitting an online bid.

What procedures do you have in place to make sure the online bidding system is functioning properly and accepting bid submissions. Please explain exactly how much time bidders should plan for e-submissions to be received by the State. Please provide a specific contact who will be able to confirm that a manufacturer’s bid has been received by the State. How are the bids evaluated before the public reading when bids are to be sealed until the public opening and reading of the bids?

A. Bidders should not wait until the last minute to submit bids to allow for any unforeseen technical issues. Bidders will receive a confirmation email from BidBuy once their bid is submitted. Bids are not evaluated prior to the bid opening. BidBuy “locks” all bids until the bid opening date/time.

45. Instructions and General Information, Page 10, Section 1.A.10 – Please confirm Packet 4

(Minorities, Women, and Persons with Disabilities Participation and Utilization Plan) and Packet 5 (Veteran Small Business Participation and Utilization Plan) are not required for a responsive bid submission.

A. Packet 4 and Packet 5 are not required.

46. Instructions and General Information, Page 13, Section 1.A.21. In case of a protest, what is the procedure for submitting a protest?

A. Section A.21 of the IFB details protest procedure.

47. Instructions and General Information, Page 13, Section 1.A.19. Please confirm that there will only be one award to one manufacturer providing the State the lowest total monthly net cost as indicated on the price schedule. In the event of a tie, how will the State determine which manufacturer should be awarded the contract? Please confirm negotiation is not being contemplated for this WIC Infant Formula Bid and strike this clause. If unable to confirm or remove, please explain what is meant by “negotiation.” What terms and conditions might be negotiated? Please confirm rebate pricing will not be negotiated after bids are submitted.

A. Only 1 vendor will be awarded. In the event of a tie, a coin toss will occur to determine the awarded vendor. Rebate pricing will not be negotiated after bids are submitted.

48. Instructions and General Information, Page 15, Section 1.A.22.1.5. Explain what is considered a minor difference or deviation. Confirm all respondents will be notified of any minor bid differences or deviations.

A. This is standard boilerplate language that covers different procurement types. IFB’s will be awarded based on lowest net cost, responsive bidder.

49. Offer to the State of Illinois, Page 18, Section 2. Please confirm all the pages of the bid document that need to be notarized. Please confirm a copy of the IFB is not required to be submitted as part of a bid.

A. No document requires notarization. The Offer Section and Contract Section of the IFB are required to be submitted via BidBuy as part of the bid.

50. Offer to the State of Illinois, Page 18, Section 2.B.2 – Please confirm whether amendments must be signed and submitted with the bid submission. If confirmed, please detail the process.

Please confirm any clarifications/changes made to the IFB will be incorporated into the actual contract documents.

A. Additional Terms or Exceptions must be submitted with bid and noted on Section 3 of the

Offer Exceptions Page. If DHS Legal agrees to the additional terms and exceptions, they will be incorporated. If DHS legal disagrees, the additional terms and exceptions will not be accepted.

51. Offer to the State of Illinois, Page 21, Section 2.B.21 – As the Federal requirements contemplate that the contract award go to the manufacturer who offers the lowest total monthly net cost, will the State please strike the provisions regarding Preferences from the IFB?

If not stricken, please explain how this provision aligns with the Federal requirements that govern this bidding process.

A. Preferences will not be used in determining lowest net cost, responsive bidder.

52. Contract, Signature Page, Page 2 – Is a Certificate of Incumbency sufficient to prove that the person signing the bid is an authorized company representative?

A. A certificate is not required, a signature is all that is required.

53. Contract, Description of Supplies and Services, Page 6, 1.2.1.2. and 1.2.1.3.- Regarding WIC Food Centers, we have the following questions:

a. What percentage of formula is currently distributed through the food centers?

A. In March 2022, the last month of the rebate submitted, 14.0% of all Category 21 Formula (under contract) was redeemed thru WIC Food Centers.

b. Please describe in detail how the WIC Food Centers ensure WIC participants do not receive more than the FNB outlined by the USDA.

A. WIC Clients use the same EBT cards to redeem their formula and other food items at the Food Centers that use at retail WIC food and pharmacy vendors, thus, the same safeguards regarding the Full Nutrition Benefit (FNB) and Maximum Monthly Allowances (MMA) are followed.

c. What percentage of participants redeem their benefits in food centers?

A. Using the same data set of clients who redeemed Category 21 formula in March 2022, 13.1% of families (consisting of one or more clients) who redeemed benefits and received receive formula did so in a WIC Food Center. Note that families (clients) can redeem benefits at

Food Centers and at retail WIC food and pharmacy vendors in the same month.

d. After redeeming their WIC benefits and participants want to buy additional groceries, are they allowed to do that in the food centers?

A. As stated in Attachment C – WIC Food Center Information, “WIC Food Centers only provide foods to valid WIC EBT cardholders, and only stock WIC authorized foods.”

e. Do the Food Centers require any special labeling on product indicating the product is not for retail sale?

A. No.

f. Please confirm that the state understands that the Catholic Charities food centers will be treated as any other retail customer by the manufacturer where price is concerned.

A. The State expects the Food Centers to receive the same or better pricing as it offers to the Illinois WIC Program for the same quantities of the order. In a recent review of Food Centers’ inventory and pricing, seven (7) of the current contract formula brands and sizes were the same price or better than the rebate contract price for the same quantity size per order.

g. Please confirm that by “separate agreement” with Catholic Charities, it is meant that the manufacturer will sell directly to Catholic Charities at market pricing. No special pricing will be made available, as the special pricing is handled via the infant formula rebates.

A. As stated in response to 18 f., the State expects the Food Centers to receive the same or better pricing as it offers to the Illinois WIC Program for the same quantity size per order.

h. Can the State confirm that it conducts compliance buys at the food centers to ensure that formula is handled correctly?

A. Since the Food Centers are operated as a grant and Catholic Charities is a non-profit, they are monitored through other methods and procedures than compliance buys.

i. How many centers receive compliance buys each year?

A. None.

54. Contract: Description of Supplies and Services, Page 8, Section 1.2. - For rebated formula, what is the redemption rate as a percentage of issuance?

A. Using the same data set to answer Question 18 of Category 21 formula redeemed in March

2022, the redemption rate was 89.3%.

55. Contract: Description of Supplies and Services, Page 8, Section 1.2.3 – Will the State be willing to change the price change notification from 90 days to 60 days or the same time as other retail customers?

A. Agree. Reduced to 30 days.

56. Contract: Description of Supplies and Services, Page 9, Section 1.2.6.1. – Please confirm that the 120-calendar day dispute period does not include disputes which may arise due to fraud or other illegal activities.

a. Confirm that the State will provide vendor redemption data to the Contractor when issues of fraud arise.

A. In Section 1.2.11 Monthly Reporting, “. . . DHS will provide documentation monthly of the actual count of the number of units sold to participants to support the infant formula rebate invoices. . .“ Then in

1.2.11.1 thirty-two (32) fields are listed that will be provided. This should suffice.

b. Please confirm the State will work with the Contractor to provide such data in instances in which rebates have been paid for contracted products based on fraudulent transactions that involve infant formula.

A. Yes, the State will work with the Contractor.

c. Please confirm the State agrees to discuss with the Contractor appropriate means for addressing payment issues identified through manufacturer audits and/or fraud-related issues directly affecting the manufacturer.

A. Yes, the State agrees to discuss with the Contractor appropriate means for addressing any payment issues identified.

d. Please confirm the State will partner with the Contractor on recovery in instances where fraud has been discovered, and it has been further determined the manufacturer was overbilled for infant formula.

A. Yes, the State will partner with the Contractor on recovery of overbilling upon discovery.

e. How many vendors have been disqualified due to fraud issues in the last five years? Please explain what occurred and how you partnered with your current contracted manufacturer.

A. 88 Vendors have been disqualified between 2016 and to date in 2022. All of these were the result of reciprocal action based upon a disqualification from the SNAP program. Since none were due to WIC program violations relating to infant formula, there was no need to notify our current contracted infant formula manufacturer about them specifically.

f. Please confirm that there is no time limit on disputes arising from fraud or other illegal activity that prevents the Contractor from being able to identify the incorrect billing. If not confirmed, please explain why such a time limit is appropriate.

A. See Section 1.2.6. Disputes for the time limits. This is per USDA Policy Memo 96-6, “All rebate disputes must be settled by closeout of the fiscal year in which dispute occurred.”

57. Contract: Description of Supplies and Services, Page 10, Section 1.2.8.1. – Please confirm that bidders should only provide a price list for the products required to bid.

A. Correct. Section 1.2.8. is not required for the bid submission, and it will not be considered in the award decision-making process.

58. Contract: Description of Supplies and Services, Page 11, Section 1.2.10.1. – An advance payment provision is not appropriate for a rebate contract because it is in effect a loan to the State – not a rebate payment. Please delete the advance payment provision in this section.

A. Agree. This was optional, however, strike the sentence in 1.2.10.1. that states: “If requested, DHS may request one (1) advance payment rebate which will require a 1% discount on the part of DHS if paid prior to fifteen (15) days from the receipt of the letter.”

59. Contract: Description of Supplies and Services, Page 11, Section 1.2.10.1. -If the thirtieth day falls on a Sunday or a banking holiday, please confirm payment made the following business day will not constitute a late payment or a penalty.

A. The State makes every effort to submit the monthly rebate invoice in the first 5 business days of the month which should allow sufficient time for the manufacturer to meet the requirement even when the 30th falls on a weekend. However, if the Vendor has any concerns about the payment, please communicate with the State WIC Program Contact listed in 5.1.8. as soon as possible.

60. Contract: Description of Supplies and Services, Page 11, Section 1.2.10.1. – Please explain the

State’s policy on accepting returned formula from participants.

A. The Illinois WIC Program does not allow clients to return formula for an alternate formula.

61. Contract: Description of Supplies and Services, Page 11, Section 1.2.10.2. - Please confirm that the contractor is permitted to withhold payment if the overbilling is not supported by the agreed upon invoice documentation to substantiate the invoice balance, and the amount in question significantly exceeds the average of the past 3 months of invoices submitted by the state (variance of greater than 100%).

A. See Section 1.2.10 Rebate Billing Procedures for payment requirements. Please see Section 1.2.5. Billing Errors and Section 1.2.6 Disputes for description of methods to resolve any discrepancies.

62. Contract: Description of Supplies and Services, Page 13, 1.3 and 1.4. Please confirm authorized vendors are responsible for maintaining adequate stock of authorized infant formulas. The manufacturer is responsible for fulfilling orders from retailers through its established distribution network.

A. Per 77 Illinois Administrative Code 672.215 the WIC Food List and Quantities and the minimum requirements are defined and also referenced in the WIC Vendor Contract. The Minimum Supply List is on the DHS WIC Program website found at:

https://www.dhs.state.il.us/page.aspx?item=125021

a. Please clarify how the State determines the average retail price.

https://www.dhs.state.il.us/page.aspx?item=125021

A. This is calculated using the Not To Exceed (NTE) price calculation process in the Illinois WIC Program’s IWIC system. Average prices for all items redeemed over a month are calculated using an algorithm in IWIC. Average prices are set for retail vendors by their Peer Groups. Peer Groups are determined by either the type of the vendor – Commissaries, WIC Food Centers and Pharmacy-only vendors are their own Peer Groups – while other retail vendors are placed in groups based on the number of their transaction registers, and if they are in a USDA RUCA-defined Urban or Rural area. For an average price to change, a minimum number of transactions must occur as defined in the system. Average prices are then recalculated each month (as needed) and revised (if needed) NTE values (that are based on those averages) are passed on to the EBT processor automatically.

b. How many times annually does the State perform pricing surveys of infant formula?

A. The State currently has an approved Shelf Price Collection Exemption from the USDA – FNS – Midwest Regional Office dated 6/28/2021 that allows Illinois to collect shelf prices electronically using its EBT system.

c. Does the State perform compliance buys to confirm that WIC authorized retailers are only allowing the purchase of the formula listed on the Food Instrument?

A. One of the options when conducting compliance buys is to determine if the Vendor will allow a substitution, or the provision of unauthorized food items in exchange for Food Benefits. This is usually not done for only formula, but it could be one of the many foods substituted. The use of the Approved Products List (APL) with only authorized UPC codes allowed to be scanned makes the practice of substitution much more difficult for the Vendor.

d. If the State is not currently performing these compliance buys, we urge the State to begin.

A. The State will take this into consideration.

e. How many vendors have been sanctioned over the course of the current contract for allowing the purchase of a formula not specified on the Food Instrument?

A. None

f. Does the State authorize vendors doing more than 50% of their sales via the WIC program?

A. No

g. Please provide what percentage of contracted formula is redeemed at over 50% vendors. Is Catholic Charities included in this number?

A. N/A. No – Catholic Charities is considered by USDA to be a direct distribution vendor.

h. Please provide the percentage of dollars reimbursed for the most recent four quarters to over 50% vendors (for rebated infant formula).

A. N/A

i. Please provide a list of all over 50% vendors.

A. N/A – Illinois does not authorize Above 50 Percent (A50) Vendors.

j. Please provide the WIC vendors’ minimum stocking requirements.

A. See this website with the link under Minimum Stock Requirements: https://www.dhs.state.il.us/page.aspx?item=125021

k. Will the States provide the Contractor with a list, including addresses, of the authorized WIC retailers in the State?

A. See Attachment H - Active Vendors February 2022.xlsx

l. What are the top 5 retail chains?

A. Using the same data set of redemption data for Category 21 formula (under contract) in March 2022 to respond to Question 18, the top 5 retail chains are: 1. Wal-Mart, 2. Walgreen, 3. Target, 4. Jewel, 5.

Meijer. If the WIC Food Centers would have been considered a retail chain, they would have ranked number 2.

63. Contract: Description of Supplies and Services, Page 14, Section 1.3.1.

Please clarify the State’s position on non-contract, non-exempt issuance. Will non-contract, non-exempt issuance be permitted?

A. No, the State will not issue non-contract, non-exempt formula.

a. Please provide the latest 6 months of data for issuance and number of infants by brand, size, and unit for all contract, exempt, and non-contract non-exempt infant formulas.

A. See Attachments E-1 and E-2, now modified to have the last 11 months’ redemptions for the first two items. The State does not issue non-contract, non-exempt formula, so there is no report.

64. Contract: Description of Supplies and Services, Page 14, Section 1.3.3. Please strike through this section as it contradicts section 1.3.4.1 on page 15.

A. Regarding Section 1.3.3, the awarded Vendor can provide alternative brands during the term of the contract if the need arises.

65. Contract: Description of Supplies and Services, Page 16, Section 1.3.6.1. – Please provide additional information regarding the transition from the current Contractor to a potential new contractor. If a participant visits a local WIC agency on January 15, 2023, what will be the "first day to use" date for the food instrument issued to this participant?

A. The first day of use for the EBT card’s first benefit month will be 1/15/2023.

a. Will this participant receive a food instrument for the existing contractor's formula or the new contractor's formula?

A. Existing, because clients would be able to redeem all their formula benefits that same day.

b. Will all participants visiting a local agency in January 2023 receive one food instrument for the current contractor's infant formula and two food instruments for the new contractor's formulas?

A. If the New Awarded Vendor is different than the existing Vendor, the State expects to issue one (1) month of benefits for the Existing formula Vendor’s product, and then – given enough lead time – the state should be able to issue the remaining two (2) months’ benefits for the Newly Awarded formula Vendor’s product starting the effective date of the contract if the first day to use is a date in the month of the new contract’s start.

66. Contract: Description of Supplies and Services, Page 19, Section 1.8 – Please confirm this is not applicable to this rebate contract and is not required to be completed.

A. Not applicable

67. Contract: Description of Supplies and Services, Page 20, Section 2.1.2.2 – Please confirm this table does not need to be completed and the award will be determined by the bidder offering the lowest monthly net total on the bid sheet.

A. The bidder will supply these figures. Per 2.1.2.1, the vendor will “Provide the following calculations from page 1 of Attachment D – 2023 Rebate Bid Sheet)”.

68. Contract: Description of Supplies and Services, Page 21, Section 2.5.2.2 – Please confirm this does not need to be completed or that N/A is an appropriate answer.

A. Not applicable

69. Contract: Term and Termination, Page 22, Section 3.2.3 – We urge the State to make extensions mutually agreed upon by the State and the Contractor.

A. This is covered by 3.2.1. In addition, we agree that the second two-year agreement should be mutually agreed upon, however, the Vendor would need to give eighteen (18) months’ notice prior to the end of the first renewal period if the Vendor will not renew for a second two-year renewal period.

70. Contract: Term and Termination, Page 22, Section 3.3 – Please confirm these rights apply to the manufacturer as well as the State.

A. They do not apply to the vendor, however, please refer to Section 5.1.6 for vendor recourse.

71. Contract: Standard Business Terms and Conditions, Page 26, Section 4.7 – Please add pandemic and epidemic to the list of unforeseeable circumstances.

A. Any exceptions noted in the contract language can be added in Section 3 of the IFB.

72. Contract: State Supplemental Provisions, Page 33, Section 5.1.7 – Please confirm if the vendor contact needs to be completed on page 33, section 5.1.7, or is completing this information on Forms-A sufficient.

A. Vendor Contact on Forms A is sufficient.

73. Attachment A - Would the State please provide monthly participation data across the following buckets: infants receiving contract formula, infants receiving non-contract formula, infants receiving exempt formula?

A. See Attachment D 2023 Rebate Bid Sheet, Tab “Data Sheet”, cells AE7 to AF29.

74. Attachment D - It appears that the percent proportion of Fully Formula Fed (FF) infants and Partially Breastfed (PBF) infants are the same in each age group on the bid sheet (75% FF / 25% PBF). Due to breastfeeding rates declining as the infant ages, our anticipation would be that the percentage of PBF declines in the older age groups. However, this is not reflected in the Bid Sheet data because of using a total FF / PBF split in the participation data and applying across all age groups. Could the State please review this application and provide infant counts by age group / form / feeding category based on actual participation / issuance data?

A. While it is true that on the Data Sheet tab, the proportion of Fully Formula Fed (IFF) infants and Partially Breastfed (IPB) infants for the “Last 6 month average” is 75% IFF vs. 25% IPB, it is based on actual participation / issuance data. Per 7 CFR 246.16a(c)(6), only the “the participation and infant formula usage data and the standardized number of ounces by physical form of infant formula to be used in evaluating bids” must be provided. There is no requirement to provide the data by age and feeding category.

75. Attachment I – It appears there have been significant year over year declines in redemption of units in the food centers.

a. Can the State please explain the declines?

A. Yes, Catholic Charities changed to more of a just-in-time inventory plan to avoid products expiring. They went from a 4 to 6+ month inventory to at times a 1 to 4 month holding inventory. They also decreased the amount of stock that they held in the grocery centers to ensure the stock was being better rotated out for fresher products. The level of change was more gradual between State Fiscal Year (SFY) 2019 to SFY 2020, than from SFY 2020 to SFY 2021. However, due to the pandemic, they made significant extra purchases in SFY 2020 to ensure that they would have stock if there was a supply chain issue as was anticipated and seen with other WIC food products. During the pandemic in the second half of SFY 2020, they attempted to maintain levels in all items for clients and avoid as much as possible the need to remove any product due to expiration. Declining participation numbers in the program and changes in shopping patterns during the height of COVID were also factors in how clients used their benefits and engaged with the program as a whole.

b. Does the State expect the decline to continue?

A. It is difficult to say for certain, but with the new Food Center purchase and inventory procedures fully in place, we do not anticipate further declines. In fact, they may see their market share increase since they are a valuable resource for Chicago area client formula products due to their purchasing power and large inventory capability.

IL WIC Infant Formula Federal Rebate Program Questions - Abbott Laboratories Inc_.pdf