RFP 45-RQ161211 NCDOR Tax System Modernization.pdf

TAX SYSTEM MODERNIZATION PROGRAM – North Carolina Department of Revenue - RFP 45-RQ161211 Page 1 of 113 May 10 2024

OFFER

The Purchasing Agency solicits offers for Services and/or goods described in this solicitation. All offers and responses received shall be treated as Offers to contract as defined in 9 NCAC 06A.0102(12).

EXECUTION

In compliance with this Request for Proposal (“RFP”), and subject to all the conditions herein, the undersigned offers and agrees to furnish any or all Services or goods upon which prices are offered, at the price(s) offered herein, within the time specified herein.

Failure to execute/sign offer prior to submittal shall render offer invalid. Late offers are not acceptable.

OFFEROR

STREET ADDRESS: P.O. BOX: ZIP:

CITY, STATE & ZIP: TELEPHONE NUMBER: TOLL FREE TEL. NO

NAME & TITLE OF PERSON SIGNING: FAX NUMBER:

AUTHORIZED SIGNATURE: DATE: E-MAIL:

Offer valid for one hundred eighty (180) days from date of offer opening unless otherwise stated here: ____ days

ACCEPTANCE OF OFFER

If any or all parts of this offer are accepted, an authorized representative of Department of Revenue shall affix its signature hereto and any subsequent Request for Best and Final Offer, if issued. Acceptance shall create a contract having an order of precedence as follows: Best and Final Offers, if any, Special terms and conditions specific to this RFP, Specifications of the RFP, the Department of Information Technology Terms and Conditions, and the agreed portion of the awarded Vendor’s Offer. A copy of this acceptance will be forwarded to the awarded Vendor(s).

FOR PURCHASING AGENCY USE ONLY

Offer accepted and contract awarded this date, , as indicated on attached certification, by (Authorized representative of the NC Department of Revenue).

STATE OF NORTH CAROLINA

REQUEST FOR PROPOSAL NO. RFP 45-

RQ161211

Department of Revenue

Contract Name: Tax System Modernization

Bid Opening Date: May 16, 2025

Refer ALL inquiries regarding this RFP to:

Name: Christopher Drew, Department of Revenue (NCDOR) Director of Procurement & Contracts

Email: Christopher.Drew@ncdor.gov

Issue Date: March 5, 2025

Commodity Code: 93161703

Purchasing Agency: Department of Revenue

Requisition No.: RQ161211

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Table of Contents

1.0 AnTicipated Procurement Schedule

2.0 Purpose of RFP

2.1 Introduction

2.2 Agency Background

2.3 Summary of Problem Statement

2.4 Program Governance

2.5 Contract Term

2.6 Effective Date

2.7 Contract Type

3.0 RFP Requirements and Specifications

3.1 General Requirements and Specifications

3.2 Security Specifications

3.3 Enterprise Specifications

3.4 Business and Technical Specifications

3.5 Oral Presentation and Product Demonstration

3.6 Value Added Services

4.0 Cost of Vendor’s Offer

4.1 Offer Costs

4.2 Payment Schedule

5.0 Evaluation

5.1 Source Selection

5.2 Evaluation Criteria

5.3 Best and Final Offers (“BAFO”)

5.4 Possession and Review

6.0 Vendor Information and Instructions

6.1 General Conditions of Offer

6.2 General Instructions for Vendor

6.3 Instructions for Offer Submission

7.0 Other Requirements and Special Terms

7.1 Vendor Utilization Of Workers Outside of U.S

7.2 Financial Statements

7.3 Financial Resources Assessment, Quality Assurance, Performance and Reliability

7.4 Vendor’s License or Support Agreements

7.5 Resellers

7.6 Disclosure of litigation

7.7 Criminal Conviction

7.8 Security and Background Checks

7.9 Assurances

7.10 Confidentiality of Offers

7.11 Project Management

7.12 Meetings

7.13 Recycling and Source Reduction

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7.14 Special Terms and Conditions

7.15 Agency Terms and Conditions

8.0 List of Attachments & Exhibits

Attachment A: Definitions Attachment B: Department of Information Technology Terms and Conditions Attachment C: Description of Vendor Attachment D: Cost Form Attachment E: Vendor Certification Form Attachment F: Location of Workers Utilized by Vendor Attachment G: References Attachment H: Financial Review Form Attachment I: Functional Specifications Matrix Attachment J: Technical Specifications Matrix Attachment K: Key Personnel and Resumes Attachment L: Staffing Plan Attachment M: Tax Schedule Matrix Attachment N: Forms Inventory Attachment O: Systems Inventory Attachment P: Interfaces Inventory Attachment Q: Implementation Roles & Responsibilities Attachment R: NCDOR IT Certification and Accreditation Policy Attachment S: NCDOR Certification and Accreditation Process Attachment T: Internal Revenue Service Publication 1075, Exhibit 7 Safeguarding Contract Language Attachment U: Security Requirements for Vendor Staff and Contractors Attachment V: NC Statutory References Attachment W: Vendor Experience

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1.0 ANTICIPATED PROCUREMENT SCHEDULE

The Agency will make every effort to adhere to the following schedule.

Table 1. Anticipated Procurement Schedule

Action Responsibility Date

RFP Issued Agency 03/05/2025

Written Questions Deadline Potential Vendors 03/28/2025 3 PM EST

Agency’s Response to Written Questions/

RFP Addendum Issued

Agency 04/11/2025

Offer Opening Deadline Vendor(s) 05/16/2025 3 PM EST

Oral Presentations and/or Product Demonstrations by Finalist(s)

Selected Vendor(s) 06/13/2025

Offer Evaluation Agency 07/18/2025

Negotiations with Finalists Agency designees and selected Vendor(s)

08/29/2025

Best and Final Offers Deadline from Finalists Selected Vendors 9/05/2025

Contract Award Agency 10/03/2025

Protest Deadline Responding Vendors 15 days after award

2.0 PURPOSE OF RFP

2.1 INTRODUCTION

The purpose of this RFP is to solicit Offers for a modern Commercial-Off-the-Shelf (“COTS”) integrated tax system (“ITS”) and implementation services for the North Carolina Department of Revenue (“the Agency,” “State”, or “NCDOR”).

The Agency is seeking from qualified Vendors the information necessary to select a partner to replace its aging Integrated Tax Administration System (“ITAS”) and ancillary tax processing systems with a modern, secure ITS that meets the Agency’s tax administration needs and requirements with minimal customization. The Agency is looking for an ITS that is customer centric, meets the diverse needs of various agency constituencies, is scalable, continuously upgraded, and adheres to the latest security protocols. The Agency seeks to partner with a Vendor that has demonstrated experience in supporting the modernization of an organization of similar size and complexity. The Agency prefers the proposed tax solution be implemented by the owner of the product rather than a third-party system integrator.

2.2 AGENCY BACKGROUND

The North Carolina Department of Revenue is a cabinet-level executive agency charged with administering tax laws and collecting taxes due to the State. The Secretary of Revenue is appointed by the Governor. The Agency’s mission is to fund public services benefiting the people of North Carolina by administering the tax laws and collecting the taxes due in an impartial, consistent, secure, and efficient manner.

2.2.1 Current Business Landscape

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The Agency developed a Business Capability Model (“BCM”) to provide a high-level functional overview of its operations. The BCM captures current state functional capabilities by dividing the Agency’s activities into eight (8) major capabilities which cover the building blocks of tax administration in North Carolina. It is expected that the proposed ITS will support these business capabilities, associated processes, requirements, and functionalities (see Attachment I – Functional Specifications Matrix).

The eight (8) major capabilities are defined below:

a) Process Registrations, Returns, and Payments – The ability to create taxpayer accounts and receive, process, and validate tax returns and payments.

b) Manage Taxpayer Relationships – The ability to maintain taxpayer information, provide taxpayer assistance, and manage taxpayer correspondence, as well as support online taxpayer self-service capabilities.

c) Conduct Investigations and Audits – The ability to support case management of tax audits, select accounts for audit, manage audit programs and results, and execute fraud programs.

d) Manage Collections – The ability to score, track, and enforce payment from delinquent and underpaid taxpayers, as well as manage accounts in bankruptcy and debt setoffs.

e) Manage Disputes – The ability to manage requests for review and protests, issue private letter rulings, comply with public records requests and process voluntary disclosures.

f) Manage Revenue – The ability to manage revenue accounting, produce financial reports, distribute funds, and post summary financial transactions to the State’s general ledger.

g) Administrative & Technical Services – The ability to provide technical support for business capabilities, manage documents, maintain workflows and business rules, provide operational reporting and data analytics, and meet compliance requirements.

h) Manage the Enterprise – The ability to support human resource processes, train staff, buy goods and services, manage projects and innovation, conduct policy analysis, and maintain internal controls.

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Figure 1. NCDOR Business Capability Model

2.2.2 Principal Business Activity

The principal sources of revenue for North Carolina State government are through taxes administered and collected by the Agency. ITAS houses the majority of the taxes collected by the Agency including Individual Income and Sales & Use taxes, which make up over 85% of net general fund collections.

For fiscal year ending 2023, the Agency processed over $44 billion in gross collections. The Department of Revenue Certified Budget for FY2022-2023 was $179.6 million.

Table 2. Business Activity Statistics - Fiscal Year 2022-2023

Activity Volume

Gross Collections $44.6 billion

Average Daily Deposit $178.5 million

Pieces of Mail (Incoming) 2,789,629

Pieces of Mail (Outgoing) 4,752,256

Tax Returns Processed 12,525,216

Tax Payments Processed 9,516,295

Refunds Issued (all tax schedules) 3,086,698 with a value of $3.0 billion

Refunds Issued (Individual Income) 3,010,256 with a value of $1.9 billion

Refunds (Individual Income) Direct Deposited 2,313,252 with a value of $1.2 billion

Individual Income Returns Filed Electronically 5,066,429

Non-Individual Income Returns Filed Electronically 6,032,680

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Returns Filed by Paper Return (All Tax Schedules) 1,426,107

Gross Electronic Funds Transfer (EFT) Collections $38.8 billion

Distributions/Transfers to Local Governments/State Agencies

$5.5 billion

2.2.3 Organization & Staffing

The Agency staff consists of approximately 1,450 permanent positions, 100 seasonal positions, and 125 non-seasonal temporaries. In addition, there are various contractors working directly for the Agency or working for vendors that provide services to the Agency. Over 90% of staff access one or more of the legacy systems and applications included in the scope of this RFP. The Agency workforce consists of employees working in other states and throughout North Carolina. Currently, 90% of the staff are either full or part time teleworkers.

Figure 2. North Carolina Department of Revenue Organizational Chart

2.2.4 Current Technical Landscape

ITAS, the Agency’s core tax administration system, has been operational since October 1994. While this 30-year-old legacy tax system functions as it was originally designed, its use of the COBOL language with a DB2 database on the mainframe makes it an unsuitable and restrictive platform for the type of transformational change the Agency intends to implement.

In addition, in 2010 the Agency initiated an effort to implement a new integrated tax system using a product called Public Sector Revenue Management (“PSRM”). Limited tax types were implemented on

TAX SYSTEM MODERNIZATION PROGRAM – North Carolina Department of Revenue - RFP 45-RQ161211 Page 8 of 113 this system. The intent is to also replace the PSRM system and consolidate tax processing into one tax administration system.

2.2.5 Overview of Key Systems

In addition to ITAS and PSRM, there are various other systems and applications that support tax administration and processing, some of which are integrated and some stand alone. A number of Access databases have also been created over the years to meet business needs not provided by the tax systems. It is anticipated that functionality provided by the Access databases will be provided by the new tax system and the databases can be retired. See Attachment O: Systems Inventory for more information on systems and applications and Attachment M: Tax Schedule Matrix for tax schedule information.

2.3 SUMMARY OF PROBLEM STATEMENT

The Agency’s core tax administration systems are nearing the end of useful life and newer, more robust technologies are available to significantly improve the Agency’s ability to meet its objectives and support the expansion of electronic and taxpayer self-services.

It is increasingly difficult for the Agency to provide efficient customer service, implement mandated legislative requirements, and make significant system improvements due to weaknesses in the aging systems and the challenges of maintaining multiple applications that have been separately developed over the last 25+ years.

Maintaining multiple applications, along with the interfaces that connect them and the supporting infrastructure, requires significant technical and testing resources and hinders operations and innovation.

Any failure in existing systems could lead to a significant business disruption with a potential loss of revenue for the State.

2.4 PROGRAM GOVERNANCE

The Agency will establish a Tax System Modernization Program Management Group and Governance structure to ensure the success of the Tax System Modernization Program (“Program”). The Agency Program Governance Structure below (Figure 3) shows the anticipated Governance Structure to facilitate decision-making throughout the duration of the Program. The final Governance Structure will be established prior to Program kick-off. The Vendor is expected to adapt to the Agency’s approach to Governance and work closely with the Agency Program Executive Director and Program Leaders as well as the Executive Steering Committee and the Implementation Steering Committee.

The Program Management Group is led by the Agency Program Executive Director. The roles and objectives of the Agency Program Management Group are to:

a) Ensure consistency and standardization of processes, measurement, and communication across all aspects of the Program

b) Increase interaction of people, processes, and tools for effective collaboration, communication, accountability, and control

c) Serve as the communication channel between governance committees such as the Executive Steering Committee, the Implementation Steering Committee, and other constituency groups

d) Ensure comprehensive organizational change management

e) Resolve differences in approach, positions, opinions, and interpretations that can occur in the Program

f) Manage technical and business scope change across the project and program areas within the Tax System Modernization Program

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Figure 3. Agency Program Governance Structure

2.4.1 Executive Steering Committee

The Executive Steering Committee (“ESC”) will provide high-level oversight and act as a decision-making escalation point for the Program. The ESC is comprised of members from the Agency’s executive tiers along with the Agency Program Executive Director.

The mission of the ESC is to:

a) Measure and monitor program activities to ensure alignment with program goals

b) Approve implementation plans and associated performance indicators

c) Serve as the escalation point for decisions, risks, and issue mitigation

d) Evaluate and approve change requests over a certain cost threshold and impact

e) Ensure accountability of all program areas

2.4.2 Implementation Steering Committee

The Implementation Steering Committee (“ISC”) will provide guidance and subject matter expertise throughout the duration of the program. The ISC will be responsible for ensuring all deliverables meet the Agency’s functional and technical needs.

The role and objectives of the ISC are to:

a) Ensure the System meets the needs of the Agency

b) Enforce integration of people, process, and tools for effective collaboration, communication, accountability, and control

c) Participate in organizational change management

d) Manage ongoing risks, action items, issues, decisions, and dependencies

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e) Manage integration activities to ensure that current systems and functionality being retired are successfully decoupled, and the System is operational and tested before go-live

f) Resolve differences in approach, positions, opinions, and interpretations between the Agency and the Vendor

g) Maintain consistency and standards across all work streams and associated programs

2.4.3 Third-Party Independent Program Oversight

The Agency intends to have an independent third-party provide oversight services (Independent Verification and Validation (“IV&V”)), including deliverable reviews, quality assurance (“QA”), and regular reporting on progress during the lifecycle of the Program. The Vendor will be expected to support IV&V reviews and have ongoing and recurring interactions with the third-party independent oversight service provider for the Program, throughout its duration, with Agency collaboration.

2.5 CONTRACT TERM

A contract awarded pursuant to this RFP shall have an effective date as provided in the Notice of Award.

The base term shall be for an up to six (6) year period that includes the Implementation timeline and Maintenance, Support, and Upgrades following full implementation, and will expire upon the anniversary date of the effective date unless otherwise stated in the Notice of Award, or unless terminated earlier. The State retains the option to extend the Agreement for three (3) additional five (5)-year renewal options at its sole discretion.

2.6 EFFECTIVE DATE

This solicitation, including any Exhibits, or any resulting contract or amendment shall not become effective nor bind the State until the appropriate State purchasing authority/official, or Agency official has signed the document(s), contract or amendment; the effective award date has been completed on the document(s), by the State purchasing official, and that date has arrived or passed. The State shall not be responsible for reimbursing the Vendor for goods provided nor Services rendered prior to the appropriate signatures and the arrival of the effective date of the Agreement. No contract shall be binding on the State until an encumbrance of funds has been made for payment of the sums due under the Agreement.

2.7 CONTRACT TYPE

Definite Quantity Contract - This request is for a close-ended contract between the awarded Vendor and the State to furnish a pre-determined quantity of a good or service during a specified period of time.

The State reserves the right to make partial, progressive, or multiple awards where it is advantageous to award separately by items; where more than one supplier is needed to provide the contemplated specifications as to quantity, quality, delivery, service, geographical areas; or where other factors are deemed to be necessary or proper to the purchase in question.

3.0 RFP REQUIREMENTS AND SPECIFICATIONS

3.1 GENERAL REQUIREMENTS AND SPECIFICATIONS

3.1.1 REQUIREMENTS

Requirement means, as used herein, a function, feature, or performance that the System must provide. If the offer cannot meet the requirements, the offer will not be evaluated.

3.1.2 SPECIFICATIONS

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Specification means, as used herein, a detailed description that documents the function and performance of a system or system component.

The apparent silence of the specifications as to any detail, or the apparent omission of detailed description concerning any point, shall be regarded as meaning that only the best commercial practice is to prevail and that only processes, configurations, materials and workmanship of the first quality may be used. Upon any notice of noncompliance provided by the State, Vendor shall supply proof of compliance with the specifications. Vendor must provide written notice of its intent to deliver alternate or substitute Services, products, goods or other Deliverables. Alternate or substitute Services, products, goods or Deliverables may be accepted or rejected in the sole discretion of the State; and any such alternates or substitutes must be accompanied by Vendor’s certification and evidence satisfactory to the State that the function, characteristics, performance and endurance will be equal or superior to the original Deliverables specified.

3.1.3 SITE AND SYSTEM PREPARATION

Vendors shall provide to the Purchasing State Agency complete site requirement specifications for the Deliverables, if any. These specifications shall ensure that the Deliverables to be installed or implemented shall operate properly and efficiently within the site and system environment. Any alterations or modification in site preparation, which are directly attributable to incomplete or erroneous specifications provided by the Vendor, and which would involve additional expenses to the State, shall be made at the expense of the Vendor.

3.1.4 EQUIVALENT ITEMS

Whenever a material, article or piece of equipment is identified in the specification(s) by reference to a manufacturer or Vendor’s name, trade name, catalog number or similar identifier, it is intended to establish a standard for determining substantial conformity during evaluation, unless otherwise specifically stated as a brand specific requirement (no substitute items will be allowed). Any material, article or piece of equipment of other manufacturers or Vendors shall perform to the standard of the item named. Equivalent offers must be accompanied by sufficient descriptive literature and/or specifications to provide for detailed comparison.

3.1.5 ENTERPRISE LICENSING

In offering the best value to the State, Vendors are encouraged to leverage the State’s existing resources and license agreements, which can be viewed here:

https://it.nc.gov/resources/statewide-it-procurement/statewide-it-contracts

a) Identify components or products that are needed for your solution that may not be available with the State’s existing license agreement.

b) Identify and explain any components that are missing from the State’s existing license agreement.

c) If the Vendor can provide a more cost-effective licensing agreement, please explain in detail the agreement and how it would benefit the State.

3.1.6 ENTERPRISE, SERVICES, AND STANDARDS

Vendors should refer to the Vendor Resources Page for information on North Carolina Department of Information Technology regarding architecture, security, strategy, data, digital, identity and access management and other general information on doing business with state IT process.

The Vendor Resources Page can be found at the following link: https://it.nc.gov/vendor-engagement-resources. This site provides vendors with statewide information and links referenced throughout the RFP document. Agencies may request additional information.

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3.2 SECURITY SPECIFICATIONS

A. SOLUTIONS HOSTED ON STATE INFRASTRUCTURE

The Agency Tax System Modernization Program will be required to receive and securely manage data that is classified as Federal Tax Information (FTI) as defined in the North Carolina Department of Revenue Security Policy Manual located at the following website:

https://www.ncdor.gov/documents/files/ncdor-security-policy-manual/open.

To comply with the Internal Revenue Service (IRS) Publication 1075 safeguards requirements, the Agency is required to perform security and risk assessments on its information systems using IRS Publication 1075 controls at least annually.

3.2.1 SOLUTIONS NOT HOSTED ON STATE INFRASTRUCTURE

RESERVED

3.3 ENTERPRISE SPECIFICATIONS

3.3.1 ARCHITECTURE DIAGRAMS

Vendors are required to supply high level Network Architecture and Technology Stack diagrams as part of their proposal. The State utilizes architectural diagrams to better understand the design and technologies of a proposed solution. Details on these diagrams can be found at the following link:

https://it.nc.gov/resources/statewide-it-procurement/vendor-engagement-resources#Tab-Architecture-

The provision of these two diagrams is a requirement at offer submission. If they are not supplied at that time, the Vendor’s offer will be considered non-responsive and will not be evaluated.

Vendor will be required to submit additional architectural diagrams using templates supplied by the Agency after contract award. This will be communicated to the Vendor by the Agency as needed during the Program.

3.3.2 SOLUTION ROADMAP

A Solution Roadmap defines the vision and strategic elements of the solution. The Solution Roadmap is a plan of action for how a Solution will evolve over time.

Describe the solution roadmap for your product.

a) The minimum content should include:

i) Vision for the solution

ii) High-level functionality expected for each solution release into production environment

iii) High-level timeline

iv) Description of how customer feedback is collected and incorporated into solution enhancements

b) In addition to the elements above, describe release strategies for functionality, roadmap for technical architecture, and how scalability of solution is planned.

c) The Agency prefers all proposed solution components and modules be developed and currently available. Describe any components or modules that are under development and not currently in production or available as part of the proposed solution.

3.3.3 IDENTITY AND ACCESS MANAGEMENT

The proposed solution must externalize identity and access management.

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Describe how the proposed solution will meet IRS Publication 1075 (Rev. 11-2021) 4.1 Access Controls AC-1 through AC-23 to validate and secure all components of the application including the internal-facing ITS user interface and public-facing taxpayer portal.

3.3.4 ACCESSIBILITY

a) Describe how the proposed solution complies with industry and federal accessibility standards including the following standards:

i) W3C Web Accessibility Initiative - Web Content Accessibility Guidelines (WCAG) 2.1:

https://www.w3.org/TR/WCAG21/

ii) Section 508: https://www.section508.gov/

iii) Voluntary Product Accessibility Template (VPAT®):

https://www.itic.org/policy/accessibility/vpat

b) Describe how the proposed solution is digitally accessible and compliant with the accessibility standards above, or, if not fully accessible, describe a proposed roadmap with a timeline for remediation for compliance by April 24, 2026.

3.4 BUSINESS AND TECHNICAL SPECIFICATIONS

3.4.1 CORPORATE PROFILE

3.4.1.1 Company Overview

a) Describe the Vendor’s professional track record, including company history, organizational structure, number of employees, and number of years in business.

b) Describe any specific restructuring, mergers and/or downsizing within Vendor’s organization that has occurred during the past three (3) years or is anticipated in the next three (3) years, noting potential impacts to the products and services proposed in response to this RFP, and any information relating to company bankruptcies or reorganizations due to financial hardship.

c) Describe any system implementation projects that have been delayed, stopped or cancelled, and whether any contract was terminated for convenience or cause as applicable.

3.4.1.2 Competitive Differentiators

Describe the attributes that distinguish the Vendor’s organization as the best partner for NCDOR.

Describe any special or unique characteristics of the organization which would make it especially qualified to perform the work required in this RFP.

3.4.1.3 Product Differentiators

Describe any features of the core solution that differentiate the proposed product and make it the best solution to meet NCDOR’s business needs, including any features or capabilities that are not explicitly described in the specifications of this RFP.

3.4.2 EXPERIENCE

Describe the Vendor’s relevant experience as the primary Contractor by completing Attachment W:

Vendor Experience.

3.4.3 PROGRAM ORGANIZATION

3.4.3.1 Program Organizational Chart

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Describe, preferably in chart form, the structure of Vendor’s proposed implementation team including any subcontractors and the relationship between Vendor’s Program team and the Agency’s Program team. Describe the roles and responsibilities for each of the Vendor’s and the Agency’s Program team members, identifying each position title that corresponds to the position titles and job descriptions in Attachment L: Staffing Plan.

Any proposed organization and roles/responsibilities will be subject to Agency approval.

3.4.3.2 Key Personnel

Certain Program team members have been deemed ‘Key Personnel’. For each member of the Vendor’s proposed Program team that occupies a Key Personnel position, describe the person’s background and experience by completing the Key Personnel Resume Template in Attachment K: Key Personnel Positions & Resumes.

3.4.3.3 Staffing Plan

Describe your proposed approach to staffing the implementation team in Attachment L:

Staffing Plan, including:

a) Total number of staff assigned to the Program

b) Program team member roles

c) Staffing proposed for production support during the Program and post-implementation support once implementation is completed

3.4.4 QUALITY ASSURANCE

Describe the quality assurance processes to be utilized throughout the software development lifecycle and while implementing the Program.

3.4.5 IMPLEMENTATION SERVICES & APPROACH

The Modernization Program will move forward in phases from Initiation, through all phases of implementation to Production Support.

The Agency prefers to have the ITS solution implemented in five (5) releases by tax grouping as shown below in Table 4. Attachment M: Tax Schedule Matrix provides additional information.

Table 4. Anticipated Implementation Releases by Tax Grouping

Release 1 Release 2 Release 3 Release 4 Release 5 Tobacco

Alcohol

Installment Paper

Sports Wagering

Severance

Conveyance

Motor Carrier/IFTA

Individual Income

Partnership

Withholding

Estates and Trusts

Sales, Use, and Taxes Administered like Sales & Use

Corporate &

Franchise

Insurance

Privilege

Freight Car Lines

Unauthorized Substance

Motor Fuels

Property

Information Reporting

Other

Describe an implementation plan based on your experience. It is acceptable if your plan differs from what is described above; however, the Agency seeks plans which cover all the functionality and in-scope taxes set forth in this RFP. Describe how your Cost Proposal aligns with your proposed implementation plan. Further information on the tax schedules referenced in Table 4 can be found in Attachment M: Tax Schedule Matrix.

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After each major release, the Agency prefers a warranty period of twelve (12) months for monitoring and incident response support for the ITS system release. The Agency also prefers twelve (12) months of operations and maintenance support for the entire system after full implementation. See Section 3.4.7 - Production Support Services.

3.4.5.1 Implementation Approach & Project Management

Describe the proposed approach to plan, manage, and control the successful completion of all tasks and deliverables associated with the scope and specifications in the RFP, including:

a) A description of the implementation methodology to be used in executing the Modernization Program scope.

b) Project management processes to be used during the implementation.

c) The Vendor’s recommended implementation phasing.

d) A list of key deliverables required for successful execution of the Program, including the criteria for deliverable approval.

e) A high-level schedule from the execution of the Contract through final warranty period of implementation phases, to include activities and milestones based on the Vendor’s implementation methodology, prior experience, and details provided in this RFP. This indicative project plan should be at a level of detail sufficient to provide the Agency with a clear picture of how the Vendor might execute this initiative.

f) Utilization of a project management tool and repository to support requirement and specification traceability; schedule and task management; and storage of all work products, meeting minutes, document deliverables, issues, risks, decisions, and other project documents.

g) A description of project reporting, cadence of status meetings, and a method for the recording, distributing, accessing, and storing of key meeting minutes throughout the Program, including meeting agendas for all Vendor-led meetings.

h) An approach and methodology for Program communications management, including the methods and activities needed to ensure timely and appropriate communication amongst the Program team.

i) An approach to risk analysis, risk prioritization, risk mitigation, and risk tracking/control, including tools and techniques that should be used for risk management and escalation.

j) An approach and methodology for issue management to ensure that issues are identified, evaluated, assigned for resolution, monitored, resolved, documented, and communicated, including tools and techniques that should be used for issue management and escalation.

k) A description of the process for making Program decisions and acting upon those decisions per the Program Governance structure outlined in Section 2.4.

l) An approach and methodology for change control to address changes to the project scope, cost, and schedule, including tools for tracking and approval of change requests.

Attachment Q: Implementation Roles & Responsibilities provides additional information on technical services roles and responsibilities for implementing the System.

3.4.5.2 Training and Knowledge Transfer

The Agency seeks a Vendor who will provide a comprehensive initial and ongoing training program over the course of the ITS implementation so that all the Agency staff are properly trained in the components of the ITS that are required for their specific role(s).

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Describe your approach to training and knowledge transfer, including:

a) An overall training and knowledge transfer strategy to include onsite and virtual training for technical and non-technical staff. The Agency will provide training facilities for all onsite training.

b) An approach to training needs analysis conducted to identify necessary skills by role and any special training delivery considerations.

c) A description of training methods to be utilized, including train-the-trainer, onsite instructor-led training and web-based or computer-based training (“CBT”) approaches.

d) A plan for development of the curriculum and materials required for role-based training delivery and knowledge transfer, including instructor materials, presentations, hands-on exercises, CBT modules, job aids, user guides, training data, etc.

e) A knowledge transfer plan to ensure that the Agency technical personnel have the necessary skills to operate, support, and maintain the ITS during the post-implementation period including use of the Vendor’s development methodology and tools. The plan should specify how knowledge achievement milestones are tracked.

f) An evaluation mechanism to allow training and knowledge transfer participants to provide feedback so that the Vendor can improve curriculum and materials.

3.4.5.3 Organizational Change Management

Describe the approach to the organizational change management (“OCM”) process. The response should include the following:

a) Methodology to provide OCM services aligned with the scope, key strategic themes/drivers, and requirements and specifications in the RFP.

b) An approach and methodology for communications management, including the methods and activities needed to ensure timely and appropriate communication to Program stakeholders.

c) An approach to supporting the Agency in stakeholder engagement, including ongoing communications, planning, and execution. The goals are to minimize disruption, optimize adoption, and enable realization of targeted benefits.

d) An approach to supporting the Agency in OCM Change Impact Assessments in parallel with each implementation phase to help identify process or policy changes, people or cultural impacts, and any associated role or organizational changes required to enable the Agency to adopt the ITS solution successfully and fully.

3.4.5.4 Business Process Analysis

Describe the process to be used to validate the Functional Specifications contained in Attachment I: Functional Specifications Matrix and identify any changes to minimize customization and increase use of configuration functionality, include all special adaptation efforts that may be required to meet the Agency’s future State business needs. The Vendor is expected to perform a specifications and future business process validation to identify any functional gaps before configuring the new ITS to enable the processes.

3.4.5.5 Design, Configuration and Customization

The Agency desires that the ITS be configurable outside of the core code to allow for ongoing changes, such as periodic tax rate and form changes.

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a) Describe the approach and method by which the Agency’s specifications for the ITS will be validated and implemented utilizing configuration and/or customization. Further, explain the method of configuration (e.g., via scripting, XML, code tables, etc.), as well as all development languages and/or platforms utilized for customization. The Agency prefers for the customization of the ITS to be kept to a minimum to limit the effect on system upgrades and maintenance, and that appropriate procedures and controls are enforced.

b) Describe the process for review, analysis and documentation of statutory requirements, business specifications, and business rules to support design and configuration of the system.

c) Describe documentation created resulting from design sessions and any associated review and approval processes, including how gaps are identified, tracked, and resolved.

d) Describe the process for identifying, documenting and designing all reports, queries, and extracts required to support each phase of the Program.

e) Describe how business rules are written in business terms to enable operational area understanding, and where appropriate, to enable the authorized business users to make updates.

f) Describe how the business rules engine applies change control to provide management of business rule changes to the various environments.

g) Describe the process when a configuration or business rule changes including:

i) Can changes to the configuration or business rule be back dated after in production to an earlier effective date.

ii) What happens when back dating occurs? Are processes and accounts recalculated automatically?

iii) Can configuration or business rule values be deleted or deactivated?

iv) What happens when deletion or deactivation occurs? Are processes or accounts recalculated with the prior business rule value?

v) Do business rules have effective start and end dates? If so, how do the dates impact processing and calculations?

vi) What types of dates can the business rules validate against (e.g., system date, assessment date, period dates, etc.)?

3.4.5.6 Testing

a) Describe the process for testing all application components work as designed and configured, and that those components work together in an integrated process to perform their specified functions, including interfaces/integrations to legacy applications or other Third-Party external applications, and:

i) Approach for creating unit, integration (end-to-end), performance, stress, security, and regression test plans that are fully documented and repeatable

ii) Approach for performing quality assurance testing (unit, integration, performance, stress, security, and regression, where applicable) prior to handing over to the Agency for User Acceptance Testing (“UAT”)

iii) Validation with a specification and design traceability matrix and demonstrations that verify the system functionality meets the business needs as documented in system design documents

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iv) Approach for providing assistance and support to the Agency in preparing user acceptance test cases and during user acceptance testing

v) Use of testing tools to store and track test scripts and cases, expected results, actual results, defects and resolution

vi) Use of tools for automated performance, stress, or regression testing

vii) Use of tools for generating test application data in bulk (e.g., entities, accounts, periods, names, addresses, etc.)

b) The Agency prefers that UAT not overlap with performance or security testing or that such overlap be minimized. Describe how the different types of testing will be scheduled and planned to minimize any overlap.

3.4.5.7 Data Conversion and Migration

Data conversion will include data from several systems including ITAS and PSRM, RSI Portfolio Warehouse, and ancillary systems such as Modernized E-File system which processes multiple tax schedules, among other systems identified in Attachment O: Systems Inventory. The data conversion process steps are to be reviewed and approved by NCDOR prior to conversion execution. The Vendor will be expected to provide as many iterations of data conversion as necessary to resolve all errors and/or determine an NCDOR approved plan for resolving all data conversion errors. Once the Vendor is selected, a detailed data flow will be provided.

a) Describe the process for documenting the data requirements for data conversion, migration strategy and methodology, and how data conversion will align with proposed phases of implementation. The data conversion approach should address factors such as:

i) Data conversion requirements definition (i.e., number of years and data elements)

ii) Processes to identify data requiring cleansing and data cleansing activities

iii) Data governance

iv) Data mapping, timing, risks, staging, and operational impacts

v) Data conversion and matching of entities, accounts, financials, etc. that may be stored in legacy applications and proposed ITS across phases of the Program

vi) Conversion documentation such as record layouts for import files, mapping of source to target, and exceptions

vii) Testing and validation of conversion results and tax system functions as expected with converted data

viii) Performance testing of conversion process (mock conversions) and estimated implementation timeline

ix) Mock data conversions and their alignment to testing activities

x) Data conversion signoff and cutover processes

xi) Error handling and impact to existing interfaces

xii) Identification of potential and average number of data conversions (test conversions) required to ensure end-to-end data integrity and reliability.

xiii) Identification of any risks associated with data conversion

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b) Describe any tools, scripts, and automated conversion programs used for planning, evaluating, validating or executing data conversion, and performing root cause analysis for error handling.

c) Describe the methodology used to identify gaps in the data and how to minimize the data gap through automated processes and appropriate algorithms to prevent human intervention.

d) Describe techniques and methodology used to ensure no data identified in the conversion plan is left behind and all the data has been converted to the final destination and/or to an environment that requires further analysis due to exception handling and control processes.

e) Describe how data conversion and validation efforts will be coordinated with configuration and setup (i.e. prior year forms/returns, rates and applicable business rules). This description should explicitly include whether converted data will be subject to defined validation routines when loaded to the proposed solution.

f) Describe the roles and responsibilities for Vendor staff and Agency staff in support of conversion activities to include but not limited to extracting, mapping, converting, cleansing, and validating data to be converted. Identify the resource skill set needed (i.e., background, accountability, authority, and responsibility) for data conversion. Include any associated assumptions.

3.4.5.8 Production Cut-Over

a) Describe the approach, planning and execution of activities and tasks needed for successful production cut-over to the new ITS solution. The approach should include the following:

i) Turning over all system components into the production environment in a systematic fashion, including ensuring that workflows, custom programs, compiled modules (where required), job streams, other components of the production environment, and all documentation are ready and organized for the production turnover.

ii) A plan for interfacing between the ITS solution and legacy solutions and databases, if necessary, until all phases are complete.

3.4.6 TECHNICAL SERVICES

The Agency is seeking a solution based on modern technologies, including the ability to be scalable from both a platform and architecture perspective. The ITS will support multiple user interface touchpoints while ensuring compliance with security standards and ease of use for all Agency constituencies. In addition to responding to Attachment J: Technical Specifications Matrix, describe how the proposed ITS solution and implementation approach addresses the following technical capabilities.

3.4.6.1 Hosting

Describe the approach for providing hosting and management services necessary to implement and maintain the ITS as described in this RFP, beginning with the initial implementation of any ITS instance and continuing throughout the implementation and post-implementation. Managed hosting includes management of all components, for all environments, provided for the ITS, which will be located on the Agency’s MS Azure cloud subscription.

Describe:

a) Estimated bandwidth requirements.

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b) Managed hosting services (e.g., software and hardware installation, updating, patch application, monitoring, tuning, disaster recovery and backup support, emergency and planned network, system, application maintenance, etc.).

c) A detailed description outlining the shared responsibilities of Vendor and Agency for securing, maintaining, and operating every aspect of the cloud environment, including the application, hardware, infrastructure, endpoints, data, configurations, settings, operating system (OS), network controls and access rights.

3.4.6.2 Role-Based User Security

Describe how the ITS provides configurable features that can limit or restrict access to system screens and actions based on the user’s constructed role within the solution, including how a role-based security profile is attached to the user’s login credentials.

3.4.6.3 Data Warehouse

The Agency currently uses RSI Portfolio Warehouse to identify non-filers, refund fraud, and other tax compliance issues. Additionally, the data warehouse is used as a data repository for IRS data extracts along with data from Agency tax systems, other State agencies/sources, and numerous Access databases and spreadsheets. The current data warehouse contains data management, audit identification and selection, tax calculation, case management, and correspondence generation capabilities. Not all of the Agency’s data is currently housed in the data warehouse;

data is contained in multiple systems.

a) Describe how the proposed solution could integrate with the current data warehouse for predictive and descriptive modeling, data mining, forecasting, simulation and experimental design. Also describe the typical data refresh cycle.

b) For any new data warehouse included in the proposed solution, describe the data warehouse capabilities, implementation approach and proposed tools to meet the Agency’s ad hoc, analytic, data modelling, research, dashboard, tax modeling, business intelligence (“BI”) and/or reporting needs. Also describe how the ITS data warehouse would incorporate and improve audit programs and fraud detection.

Describe the following in the data warehouse design:

i) Data sources and key structures.

ii) Labeling and tracking of Federal Tax Information (“FTI”), including FTI viewed or printed.

iii) The tools, routines, configuration, integration, and setup to support the initial loading and ongoing refresh of and synchronization assurance.

iv) Compliance analytics, scoring, discovery, audit selection, and fraud detection functions to be established.

v) Reporting tools, views, queries, and dashboards.

vi) Backup, restore, and recovery methods and tools.

3.4.6.4 Interfaces and Third-Party Integrations

The Agency expects…