Digital Cigarette Stamps and Related Services

The State of Michigan Department of Technology, Management and Budget, on behalf of the Department of Treasury, issued Request for Proposal No. 210000001627 to procure digital cigarette stamps and related services for the state's tobacco tax administration program. The procurement seeks a qualified vendor to manufacture and deliver approximately 450 million digital cigarette stamps annually in four denominations on rolls formatted at either 2 stamps wide (30,000 stamps per roll) or 1 stamp wide (1,500 stamps per roll), all compatible with existing Red Stamp and USI High Speed stamping machines. Required deliverables include an online stamp ordering system with 48-hour fulfillment capability, a desktop and mobile inventory tracking and tracing system with encryption capabilities, a mobile enforcement application for compliance officers, Master Settlement Agreement (MSA) compliance software support for approximately 38 licenses annually, and comprehensive customer support services available during business hours (8:00 a.m. to 5:00 p.m. EST) with a toll-free helpline. The contractor must demonstrate a minimum of one existing contract providing digital tobacco stamps to another U.S. state (or international jurisdiction) that includes manufacturing, delivery, online ordering systems, inventory tracking, and mobile enforcement capabilities, and must establish or maintain agreements with all designated machine subcontractors (Red Stamp, United Silicone Inc./ITW, and Pro Cat) by the contract start date. Mandatory requirements include overt and covert security features on stamps, annual SOC 2 Type II testing compliance, nightly metadata uploads to the Track and Trace system for complete accounting of all stamps, and direct delivery via approved third-party carriers such as FedEx or UPS. All software and data must be hosted and supported exclusively within the continental United States with FISMA and NIST Special Publication 800.53 HIGH Controls compliance. Pricing must be firm for the entire contract period and structured around three line items: per-piece digital stamp pricing, monthly support services and systems fees, and per-license MSA compliance software costs. Technical proposals receiving 80 or more points on evaluation criteria will have pricing evaluated, with the State considering prior performance, qualified disabled veteran/service-disabled veteran-owned business status, and overall economic impact to Michigan in the award decision. The optional pre-proposal meeting was held on April 22, 2021 at 10:00 a.m. Eastern via Microsoft Teams, with written questions due in two rounds on April 23, 2021 and May 3, 2021 (both at 3:00 p.m. Eastern), answers posted by April 29 and May 7, 2021 respectively, and proposals due May 21, 2021 at 3:00 p.m. Eastern via the SIGMA VSS system, with all documents in modifiable native formats and file sizes limited to 6 MB per document.

The procurement does not specify set-aside restrictions for small businesses or disadvantaged enterprises, though the State may consider qualified disabled veteran/service-disabled veteran-owned business status in the award evaluation. No incumbent vendor or current contractor is identified in the RFP documents, indicating this is a new procurement or transition from an existing supplier. The contractor must maintain commercial general liability insurance of $1,000,000 per occurrence and $2,000,000 general aggregate, automobile liability insurance of $1,000,000 per accident, workers' compensation coverage, and privacy and security liability insurance of $1,000,000. The contract term extends five years from May 1, 2022 through April 30, 2027, with five optional one-year renewal periods, and includes a mandatory six-month transition services period prior to the May 1, 2022 start date. The contractor must provide training for approximately 40 authorized stamp ordering system users, 50 inventory system users, and 47 mobile application users. Payment terms specify undisputed invoices are due within 45 days of State receipt via Electronic Funds Transfer, with a 1% administrative fee assessed on all payments. The RFP does not provide a specific budget or award value; however, contracts equal to or exceeding $250,000 require State Administrative Board approval, indicating the expected contract value meets or exceeds this threshold, and the State reserves the right to modify estimated annual quantities of 450 million stamps based on operational needs.