SSJF FY23 Precisely z-14 Finalist Maint - SPO signed.pdf

Sole Source Justification Form

Version 7.01 Page 1 of 6

Bulletin Reference Number 23-448DOIT-INFOT-B-30390

Requesting Agency/University DoIT

Sole Source Justification Form - Part I Section I - General Information

Department/Bureau/Section: DoIT/Infrastructure Services

Need Identified Date: Jun 3, 2022 Supply/Service Need By Date: Jul 1, 2022

Project Title: Precisely FY23 - 3 year Term Maintenance Finalist for z-14

Vendor: Precisely Software Incorporated

Provide a description of the supplies or services required:

Purchase of 3 year term licensing including maintenance and support on Finalist Module, IMS On-Line Windows Interface, CICS module software from Precisely Software Inc, These 3 year term licensed products run on the z/14 IBM mainframe.

Value: Actual Value of Initial Term, this Change Order or Amendment: 383,091

Will this Sole Source amend a Professional or Artistic Services contract? Yes No

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Type: New Sole Source

Section II - Proposed Term

One-Time Purchase Term Contract

Estimated Contract Begin Date: Jul 1, 2022

Estimated Contract End Date: 6/30/2025

Number of Potential Renewals:

Length of Each Renewal in Months:

Total Value of All Renewals:

If a Term Contract, does the term, including renewals, exceed 12 months? Yes No

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Vendor will not offer less than 3-year term licensing. Annual payments are as follows: FY23 - $120,520, FY24 - $127,596, FY25 - $133,975

Section III - Funding Source Select the type of funding to be used (Check all that apply): State Appropriate Funds Federal Funds Other (Explain):

Section IV - Sole Source Justification

This purchase is economically only available from a single source primarily because it is: (If "Other" explain in one sentence)

Software License/Maintenance

Are there secondary justification(s) for this sole source? Yes No

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Bulletin Reference Number 23-448DOIT-INFOT-B-30390

Requesting Agency/University DoIT

Section V - Purchase History

Has the Agency or University Purchased these supplies or services in the past? Yes No

Term Term From Term To Value Description Contract Number Type

1 7/1/2019 6/30/2022 345,300 3 year term license with maint CIT9105820 Sole Source

2 12/23/2014 12/23/2017 353,117 3 Year term license with maint. CIC5897280 Sole Source

3 Sole Source

4 Sole Source

5 Sole Source

6 Sole Source

7 Sole Source

8 Sole Source

9 Sole Source

10 Sole Source

If more than 10, or if other comments, explain:

We're unable to locate the original contract(s) for the z14 servers. We believe this software goes back to approximately 2006. CMS/BCCS negotiated the 3 year term agreement in 2014 identified above.

Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

Purchase of 3-year term licensing including maintenance and support on Finalist Module, IMS On-Line Windows Interface, CICS module software from Precisely Software Inc. These termed licensed products run on the z/14 IBM mainframe.

The z/14 mainframe hosts applications that support critical business processes and operations for many State agencies. Finalist Module is an address verification application which allows us to be Coding Accuracy Support System (CASS) certified and get USPS discounts. The IMS- On-line Windows Interface allows access to the address files via IMS applications, and the Customer Information Control System (CICS) Module allows access to the address files via CICS applications. Finalist is embedded at an application code level in many applications from various agencies both in programs used by the citizens of Illinois as well as embedded in batch processing for address validation.

3-year term licensing including maintenance and support being procured entitles DOIT to software upgrades and patches, and 9.5x5 technical support via phone and web.

2. Provide a list and describe in detail the specifications required to satisfy the need:

Requesting to renew a 3-year term license including maintenance and support to retain usage rights to the Finalist products on the Z/14 production mainframe. Software has to integrate with the existing legacy online IMS and CICS environments as well as be stable in batch mode. Without these products, tens of thousands of batch jobs which rely on the USPS verified mailings would be required to retool customer agency business applications processes. During the interim the state would lose CASS certification which allows the state to get discounts on USPS mailed items which would have a direct impact on customers agency business and impact to mailings required to be sent to recipients of State of Illinois services.

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Bulletin Reference Number 23-448DOIT-INFOT-B-30390

Requesting Agency/University DoIT

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

Finalist is an address data cleaning software that is proprietary to Precisely (formerly Pitney Bowes). These products are embedded into dozens of business applications throughout the DOIT customer agencies. DES is dependent on Finalist as part of their major business system applications IBIS(Unemployment Benefits System) and GFS (Benefit Funding Systems). DHS/HFS are dependent on Finalist as part of their major business system application IES (Integrated Eligibility System) and HFS All Kids. Software must integrate with the existing legacy IMS and CICS Mainframe database environments and applications. It must also be able to be utilized in batch mode for thousands of batch processing and software is CASS certified with is required for the State of Illinois to get discounts on USPS mailings.

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

At this time, DoIT must continue to procure the necessary 3-year term licensing including maintenance and support to ensure that DES, DHS, HFS and IES applications and business that service the citizens of Illinois is not put at risk.

Precisely Software Inc. is the only vendor that can supply the required software term licensing including maintenance and support because the software is patented or copyrighted and only available from holder of patent/copyright. The Finalist product has been used for 10+ years to develop mission critical applications for DES and 15+ years for CASS certifications for DHS and HFS (which now includes IES). Migration of customer agency business applications away from the Finalist software would take an extensive amount of time, resources and money for all agencies to be converted.

5. Has the Agency or University considered alternative supplies or services to satisfy their need? Yes No

5a. If no, why weren't alternatives evaluated?

At this time it is not feasible to migrate and convert agencies from this product. DOIT and customer agency Mainframe resources are at an all time low at the state of Illinois due to retirement and lack of qualified resources to backfill positions. Any change would requires supporting the current system while also standing up a replacement. Standing up a replacement would require significant external resources due to the lack of State resources with mainframe experience. The process of replacing these customer agency applications is not accomplished quickly or easily and requires significant funding, staff resources and detailed project planning. The investment required to switch products would be better spent replacing the entire mainframe system. Likely, no user agency has the current appropriation to accomplish replacing this product or replacing the mainframe.

A replacement, would involve changes to customers agency business processes and methodologies; a complete redesign of the customer agency business applications; significant investments in software, IT hardware and infrastructure, training; full-time commitment of DOIT and customer agency staff resources to complete; and continued term licensing, maintenance and support of the existing system during the conversion. External resources for discovery, design, implementation, business process reengineering, change management, training, transitioning, maintenance and operations would all be required due to running two products concurrently while standing up the new product. All of these expenses would cost millions more than maintaining our current investment in this product.

6. Are there resellers or distributors?

Yes No N/A

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Bulletin Reference Number 23-448DOIT-INFOT-B-30390

Requesting Agency/University DoIT

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

The 3-year term agreement negotiated with the vendor is an approximately 10% increase from the prior 3-year contract. This averages out to approximately 3.33% per year and represents a significant savings when compared to the current hyper-inflationary environment of over 8% this year alone. And, according to numerous economic reports, inflation does not appear to be easing significantly within the next six months or longer, indicating the savings described above will continue to increase in value over the term of this 3-year contract until inflation equalizes to the 3.33% rate within this contract.

Since this is sole source vendor, we have little leverage in our negotiating power, however based on the YoY increase we believe we have sufficiently held a reasonable rate increase for the taxpayers sufficiently below average inflation since the start of the pandemic.

Additionally, a sample of competitive bids reviewed for similar software over a similar time period showed increases all over the board, from flat (no change) to upwards of 20 percent or higher in some cases. See example 18% YoY increase on PO#s: P-19608 and P-30340.

For these reasons we believe this 3-year rate is extremely fair and reasonable.

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

Yes No

8a. If yes, please provide details regarding future obligations and/or needs:

Until the current business applications that are dependent on the Precisely Software Inc. products used by DES, DHS, HFS and IES for critical business functions are no longer required, DoIT and the other user agencies must continue subscription, maintenance and support. DoIT continues to utilize Application Rationalization for all applications and systems under the Executive Branch to quantify the usage of various applications along with vendor product dependencies. These efforts will continue to allow the State of Illinois to make better decisions about future procurement initiatives that will be more competitive in nature.

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

Not approving this sole source will put DOIT and customer agencies and recipients of State of Illinois services at high risk of product failure. As the Finalist product becomes out of date, there is risk to delivery of federal and state mandated letters and mailings for various services for agencies to State recipients. This will jeopardize numerous sources of federal funds; everything from grants, Medicaid reimbursements, to capital funds and more for both the state agencies and their clients. Failure to maintain a CASS certified address validation system will also lead to a loss of USPS mailing discount, costing taxpayers thousands of dollar more just to mail the same mail. Also there is potential that delivery to unverified recipient addresses could put the intended recipient 's private information at risk. Failure for this software is not an option, which means any efforts to replace it would require operating the current software until a new software is operational. The cost of replacing this software would cost taxpayer millions of dollars more than approving this contract to maintain the existing 15 plus year old software.

10. Is there any additional information you would like to add to justify this sole source?

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Bulletin Reference Number 23-448DOIT-INFOT-B-30390

Requesting Agency/University DoIT

Section VII

Requesting Department Representative

Requesting Department Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

Date Jun 7, 2022

Printed Name Rebecca Montgomery E-mail Address rebecca.montgomery@illinois.gov

Phone Number 217-670-9829

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required

I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed)

E-mail Address Van.Austin@Illinois.Gov

Phone Number 217-524-2733 Date Jun 15, 2022

Printed Name Van Austin

Agency Bureau/Division Head or University Purchasing Director and Not a Designee

SPO Approval and Signature Required

I have reviewed and understand the contents of this Sole Source Justification and agree with the State Agency or University determination.

I have reviewed and understand the contents of this Sole Source Justification and do not agree with the State Agency or University determination. As a result, the State Agency or University must explore other sourcing methods to satisfy their need.

State Purchasing Officer Signature Phone Number 217-206-0722 Date 6/15/2022

Printed Name Kassandra Wilkin E-mail Address kassandra.wilkin@illinois.gov

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Bulletin Reference Number 23-448DOIT-INFOT-B-30390

Requesting Agency/University DoIT

Sole Source Justification Form - Part II Section I - General Information

Project Title

Vendor

Initial Date of Procurement Bulletin Posting

Was a Sole Source hearing held per 30 ILCS 500/20-25?

Yes - Complete Section II and III below (Section II will only be visible when this option is selected)

No - Section II not required, go to Section III below Section III - CPO Approval and Signature Required

Based on my review, I authorize the Agency/University to proceed in accordance with the published Notice referenced above.

Based upon my review, I authorize the Agency/University to proceed with the following Changes.

Based on my review, the Agency/University is not authorized to proceed with this sole source as presented and my recommendation is that it be cancelled.

Other

CPO Signature CPO Phone

Printed Name Date

CPO E-mail

Version 7.01 Page of Sole Source Justification Form - Part I Section I - General Information Will this Sole Source amend a Professional or Artistic Services contract?

If yes, what was the original contract value?

*Sole Source may not be used for amendments for Professional or Artistic Services if the amendment would increase the value by more than 5% of the initial award or extend the term by more than 60 days.

Section II - Proposed Term If a Term Contract, does the term, including renewals, exceed 12 months?

If yes, provide a detailed justification including any economic benefit received for agreeing to a multi-year term:

Section III - Funding Source Select the type of funding to be used (Check all that apply):

Section IV - Sole Source Justification Are there secondary justification(s) for this sole source?

Section V - Purchase History Has the Agency or University Purchased these supplies or services in the past?

Term Term From Term To Value Description Contract Number Type Section VI - Business Rationale

1. Provide a detailed explanation of the need for the supplies or services:

2. Provide a list and describe in detail the specifications required to satisfy the need:

3. Provide detail explaining the justification selected in Section IV to explain why the requested supplies or services are the only ones available that can satisfy the agency or university requirements?

4. What are the unique features of the supplies or services that are not available in any other product or by any other vendor? Provide specific quantifiable factors/qualifications:

5. Has the Agency or University considered alternative supplies or services to satisfy their need?

5a. If yes, name the alternative vendors whose supplies or services were evaluated:

5b. If yes, what were the alternatives for each vendor and why were they unacceptable? Be specific with regard to features, characteristics, requirements, capabilities and compatibility:

5c. Explain how the market evaluation was conducted?

*This evaluation is to determine available options within a market. If the evaluation is to determine quality or best suited option, this is not the appropriate source selection. Under no circumstances shall the evaluation consist of testing alternative options. These activities must be conducted in a competitive transparent environment (i.e. IFB or RFP).

5a. If no, why weren't alternatives evaluated?

6. Are there resellers or distributors?

7. What efforts were made to get the best possible price (i.e. did the agency/university negotiate) and how did you determine the price for this purchase is considered fair and reasonable?

8. Will this purchase obligate the State to this vendor for future purchases such as maintenance, licensing or continuing need?

8a. If yes, please provide details regarding future obligations and/or needs:

9. What will be the financial or other impact to the State if this sole source is not approved and a competitive bid is required?

10. Is there any additional information you would like to add to justify this sole source?

Section VII Requesting Department Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed.

State Agency Bureau/Division Head or University Purchasing Director Approval and Signature Required I know and understand the contents of this Sole Source Justification and attest that all statements are true and correct and the fairness and reasonableness of the price was adequately confirmed. (All prior form fields will lock once this e-signature is completed) SPO Approval and Signature Required Sole Source Justification Form - Part II Section I - General Information Was a Sole Source hearing held per 30 ILCS 500/20-25?

Section II - Sole Source Hearing Details The State posted to the Illinois Procurement Bulletin a description of the State's need, the justification for the sole source decision, and information regarding the opportunity to submit comments and testify at a public hearing. Notice of the hearing was also posted outside of the hearing room 48 hours prior to the hearing.

The public hearing was conducted for the purpose of receiving testimony regarding the sole source determination. The Hearing Officer recommends the following:

The following relevant documents are attached:

Section III - CPO Approval and Signature Required 9.0.0.2.20101008.1.734229

The z/14 mainframe hosts applications that support critical business processes and operations for many State agencies. Finalist Module is an address verification application which allows us to be Coding Accuracy Support System (CASS) certified and get USPS discounts. The IMS- On-line Windows Interface allows access to the address files via IMS applications, and the Customer Information Control System (CICS) Module allows access to the address files via CICS applications. Finalist is embedded at an application code level in many applications from various agencies both in programs used by the citizens of Illinois as well as embedded in batch processing for address validation.

3-year term licensing including maintenance and support being procured entitles DOIT to software upgrades and patches, and 9.5x5 technical support via phone and web.

Precisely Software Inc. is the only vendor that can supply the required software term licensing including maintenance and support because the software is patented or copyrighted and only available from holder of patent/copyright. The Finalist product has been used for 10+ years to develop mission critical applications for DES and 15+ years for CASS certifications for DHS and HFS (which now includes IES). Migration of customer agency business applications away from the Finalist software would take an extensive amount of time, resources and money for all agencies to be converted.

A replacement, would involve changes to customers agency business processes and methodologies; a complete redesign of the customer agency business applications; significant investments in software, IT hardware and infrastructure, training; full-time commitment of DOIT and customer agency staff resources to complete; and continued term licensing, maintenance and support of the existing system during the conversion. External resources for discovery, design, implementation, business process reengineering, change management, training, transitioning, maintenance and operations would all be required due to running two products concurrently while standing up the new product. All of these expenses would cost millions more than maintaining our current investment in this product.

Since this is sole source vendor, we have little leverage in our negotiating power, however based on the YoY increase we believe we have sufficiently held a reasonable rate increase for the taxpayers sufficiently below average inflation since the start of the pandemic. Additionally, a sample of competitive bids reviewed for similar software over a similar time period showed increases all over the board, from flat (no change) to upwards of 20 percent or higher in some cases. See example 18% YoY increase on PO#s: P-19608 and P-30340.

For these reasons we believe this 3-year rate is extremely fair and reasonable.