STATE OF MICHIGAN ENTERPRISE PROCUREMENT Department of Technology, Management, and Budget 525 W. ALLEGAN ST., LANSING, MICHIGAN 48913 P.O. BOX 30026 LANSING, MICHIGAN 48909
CHANGE ORDER #1 - CONTRACT NUMBER and CONTRACTOR RE- ASSIGNMENT NOTICE
Re-Assigning Contract Number 071B7700109 to Master Agreement Number 171180000000178 and Contractor from Trade Products to Arrow International Inc.
Arrow International Inc. Lorrie Dundon LOTT
9900 Clinton Road 517-335-5787
Program Brooklyn, OH 44144 Manager [email protected]
Robert Tekel Valerie Hiltz DTMB
STATE 1-800-527-3891 517-284-7026 Contract CONTRACTOR
[email protected] Administrator [email protected] 8618
CONTRACT SUMMARY DESCRIPTION: Charitable Pull-Tab Tickets- Michigan Bureau of Lottery INITIAL AVAILABLE EXPIRATION DATE BEFORE
INITIAL EFFECTIVE DATE INITIAL EXPIRATION DATE
OPTIONS CHANGE(S) NOTED BELOW February 1, 2017 December 31, 2022 3, 1 year December 31, 2022 PAYMENT TERMS DELIVERY TIMEFRAME Net 45 Days Per Working Papers
ALTERNATE PAYMENT OPTIONS EXTENDED PURCHASING ☐ P-card ☐ Direct Voucher (DV) ☐ Other ☐ Yes ☒ No MINIMUM DELIVERY REQUIREMENTS Per Working Papers DESCRIPTION OF CHANGE NOTICE LENGTH OF OPTION LENGTH OF OPTION EXTENSION REVISED EXP. DATE EXTENSION ☐ ☐ CURRENT VALUE VALUE OF CHANGE NOTICE ESTIMATED AGGREGATE CONTRACT VALUE 6,050,050.00 $6,050,050.00 DESCRIPTION: Effective December 11, 2017, this contract will be reassigned a new Contract Number, which shall now be referred to as a Master Agreement Number and the Master Agreement Number shall be 171, 180000000178. Any reference to Trade Products shall now be interpreted to read Arrow International, Inc. and any reference to purchase orders in this contract shall now mean delivery orders. All other terms, conditions and pricing shall remain the same per agency and contractor agreement and DTMB Central Procurement approval.
Revised 5/4/2016 STATE OF MICHIGAN ENTERPRISE PROCUREMENT DTMB Procurement Constitution Hall, 525 W. Allegan St., 1st Floor, N.E. PO Box 30026, Lansing, Michigan 48909-7526
NOTICE OF CONTRACT
NOTICE OF CONTRACT NO. 071B7700109 . between THE STATE OF MICHIGAN and
Lorrie Dundon LOTT
Trade Products
2807 Lincoln Way 517-335-5787
Program Manager Lynnwood, WA 98087 [email protected]
Valerie Hiltz DTMB
Robert Tekel STATE 1-800-527-3891 517-284-7026 Contract CONTRACTOR [email protected] Administrator [email protected] 8618
CONTRACT SUMMARY DESCRIPTION: Charitable Pull-Tab Tickets- Michigan Bureau of Lottery INITIAL AVAILABLE EXPIRATION DATE BEFORE
INITIAL EFFECTIVE DATE INITIAL EXPIRATION DATE
OPTIONS CHANGE(S) NOTED BELOW February 1, 2017 December 31, 2022 Three- 1 year December 31, 2022 PAYMENT TERMS DELIVERY TIMEFRAME Net 45 Days Per Working Papers
ALTERNATE PAYMENT OPTIONS EXTENDED PURCHASING ☐ P-card ☐ Direct Voucher (DV) ☐ Other ☐ Yes ☒ No MINIMUM DELIVERY REQUIREMENTS Per Working Papers MISCELLANEOUS INFORMATION This is not an order. The appropriate authorizing document will be a purchase order with working papers.
ESTIMATED CONTRACT VALUE AT TIME OF EXECUTION $6,050,050.00
CONTRACT NO. 071B7700109
FOR THE CONTRACTOR:
Trade Products______Company Name
Authorized Agent Signature
Roy Lister, President Authorized Agent (Print or Type)
Date
FOR THE STATE:
Signature
Jared Ambrosier, Buyer Manager Name & Title
DTMB Procurement, Commodities Division Agency
Date
Revised 5/03/2016
CONTRACT #071B7700109
STATE OF MICHIGAN
STANDARD CONTRACT TERMS
This STANDARD CONTRACT (“Contract”) is agreed to between the State of Michigan (the “State”) and Trade Products (“Contractor”), a Cleveland OH, wholly owned subsidiary of Arrow International. This Contract is effective on February 1, 2017 (“Effective Date”), and unless terminated, expires on December 31, 2022.
This Contract may be renewed for up to three additional one year period(s). Renewal is at the sole discretion of the State and will automatically extend the Term of this Contract. The State will document its exercise of renewal options via Contract Change Notice.
The parties agree as follows:
1. Duties of Contractor. Contractor must perform the services and provide the deliverables described in Schedule A – Statement of Work (the “Contract Activities”). An obligation to provide delivery of any commodity is considered a service and is a Contract Activity.
Contractor must furnish all labor, equipment, materials, and supplies necessary for the performance of the Contract Activities, and meet operational standards, unless otherwise specified in Schedule A.
Contractor must: (a) perform the Contract Activities in a timely, professional, safe, and workmanlike manner consistent with standards in the trade, profession, or industry; (b) meet or exceed the performance and operational standards, and specifications of the Contract; (c) provide all Contract Activities in good quality, with no material defects; (d) not interfere with the State’s operations; (e) obtain and maintain all necessary licenses, permits or other authorizations necessary for the performance of the Contract; (f) cooperate with the State, including the State’s quality assurance personnel, and any third party to achieve the objectives of the Contract; (g) return to the State any State-furnished equipment or other resources in the same condition as when provided when no longer required for the Contract; (h) not make any media releases without prior written authorization from the State; (i) assign to the State any claims resulting from state or federal antitrust violations to the extent that those violations concern materials or services supplied by third parties toward fulfillment of the Contract; (j) comply with all State physical and IT security policies and standards which will be made available upon request; and (k) provide the State priority in performance of the Contract except as mandated by federal disaster response requirements. Any breach under this paragraph is considered a material breach.
Contractor must also be clearly identifiable while on State property by wearing identification issued by the State, and clearly identify themselves whenever making contact with the State.
2. Notices. All notices and other communications required or permitted under this Contract must be in writing and will be considered given and received: (a) when verified by written receipt if sent by courier; (b) when actually received if sent by mail without verification of receipt; or (c) when verified by automated receipt or electronic logs if sent by facsimile or email.
If to State: If to Contractor: Valerie Hiltz Roy Lister, President DTMB Procurement, Constitution Hall Trade Products 525 W. Allegan Street, 1st FLR, NE 2807 Lincoln Way Lansing, MI 48909-7526 Lynnwood, WA. 98087 [email protected] [email protected] 517-284-7026 800-465-1700 / Cell: 905-401-0282
3 CONTRACT #071B7700109
3. Contract Administrator. The Contract Administrator for each party is the only person authorized to modify any terms of this Contract, and approve and execute any change under this Contract (each a “Contract Administrator”):
State: Contractor: Valerie Hiltz Roy Lister, President DTMB Procurement, Constitution Hall Trade Products 525 W. Allegan Street, 1st FLR, NE 2807 Lincoln Way Lansing, MI 48909-7526 Lynnwood, WA. 98087 [email protected] [email protected] 517-284-7026 800-465-1700 / Cell: 905-401-0282
4. Program Manager. The Program Manager for each party will monitor and coordinate the day-to-day activities of the Contract (each a “Program Manager”):
State: Lottery Charitable Pull-Tabs Contractor Representative: Lorrie Dundon Robert Tekel 101 E. Hillsdale Trade Products PO Box 30023 2807 Lincoln Way Lansing, MI 48933 Lynnwood, WA 98087 [email protected] [email protected] 517-335-5787 800-527-3891 / Cell: 425-876-2436
5. Performance Guarantee. Contractor must at all times have financial resources sufficient, in the opinion of the State, to ensure performance of the Contract and must provide proof upon request. The State may require a performance bond (as specified in Schedule A) if, in the opinion of the State, it will ensure performance of the Contract.
6. Insurance Requirements. Contractor must maintain the insurances identified below and is responsible for all deductibles. All required insurance must: (a) protect the State from claims that may arise out of, are alleged to arise out of, or result from Contractor's or a subcontractor's performance; (b) be primary and non- contributing to any comparable liability insurance (including self-insurance) carried by the State; and (c) be provided by a company with an A.M. Best rating of "A" or better, and a financial size of VII or better.
Required Limits Additional Requirements Commercial General Liability Insurance Minimal Limits: Contractor must have their policy endorsed to $1,000,000 Each Occurrence Limit add “the State of Michigan, its departments, $1,000,000 Personal & Advertising Injury Limit divisions, agencies, offices, commissions, $2,000,000 General Aggregate Limit officers, employees, and agents” as additional $2,000,000 Products/Completed Operations insureds using endorsement CG 20 10 11 85, or both CG 2010 07 04 and CG 2037 07 0. Deductible Maximum: $50,000 Each Occurrence
Umbrella or Excess Liability Insurance Minimal Limits: Contractor must have their policy endorsed to $5,000,000 General Aggregate add “the State of Michigan, its departments, divisions, agencies, offices, commissions, officers, employees, and agents” as additional insureds.
4 CONTRACT #071B7700109
Automobile Liability Insurance Minimal Limits: Contractor must have their policy: (1) endorsed to $1,000,000 Per Occurrence add “the State of Michigan, its departments, divisions, agencies, offices, commissions, officers, employees, and agents” as additional insureds; and (2) include Hired and Non-Owned Automobile coverage. Workers' Compensation Insurance Minimal Limits: Waiver of subrogation, except where waiver is Coverage according to applicable laws governing prohibited by law. work activities. Employers Liability Insurance Minimal Limits: $500,000 Each Accident $500,000 Each Employee by Disease $500,000 Aggregate Disease. Crime (Fidelity) Insurance Minimal Limits: Contractor must have their policy: (1) cover $1,000,000 Employee Theft Per Loss forgery and alteration, theft of money and securities, robbery and safe burglary, computer fraud, funds transfer fraud, money order and counterfeit currency, and (2) endorsed to add “the State of Michigan, its departments, divisions, agencies, offices, commissions, officers, employees, and agents” as Loss Payees.
If any of the required policies provide claims-made coverage, the Contractor must: (a) provide coverage with a retroactive date before the effective date of the contract or the beginning of Contract Activities; (b) maintain coverage and provide evidence of coverage for at least three (3) years after completion of the Contract Activities; and (c) if coverage is canceled or not renewed, and not replaced with another claims- made policy form with a retroactive date prior to the contract effective date, Contractor must purchase extended reporting coverage for a minimum of three (3) years after completion of work.
Contractor must: (a) provide insurance certificates to the Contract Administrator, containing the agreement or purchase order number, at Contract formation and within 20 calendar days of the expiration date of the applicable policies; (b) require that subcontractors maintain the required insurances contained in this Section; (c) notify the Contract Administrator within 5 business days if any insurance is cancelled; and (d) waive all rights against the State for damages covered by insurance. Failure to maintain the required insurance does not limit this waiver.
This Section is not intended to and is not be construed in any manner as waiving, restricting or limiting the liability of either party for any obligations under this Contract (including any provisions hereof requiring Contractor to indemnify, defend and hold harmless the State).
7. Reserved.
8. Reserved.
9. Independent Contractor. Contractor is an independent contractor and assumes all rights, obligations and liabilities set forth in this Contract. Contractor, its employees, and agents will not be considered employees of the State. No partnership or joint venture relationship is created by virtue of this Contract. Contractor, and not the State, is responsible for the payment of wages, benefits and taxes of Contractor’s employees 5 CONTRACT #071B7700109
and any subcontractors. Prior performance does not modify Contractor’s status as an independent contractor. Contractor hereby acknowledges that the State is and will be the sole and exclusive owner of all right, title, and interest in the Contract Activities and all associated intellectual property rights, if any. Such Contract Activities are works made for hire as defined in Section 101 of the Copyright Act of 1976. To the extent any Contract Activities and related intellectual property do not qualify as works made for hire under the Copyright Act, Contractor will, and hereby does, immediately on its creation, assign, transfer and otherwise convey to the State, irrevocably and in perpetuity, throughout the universe, all right, title and interest in and to the Contract Activities, including all intellectual property rights therein.
10. Subcontracting. Contractor may not delegate any of its obligations under the Contract without the prior written approval of the State. Contractor must notify the State at least 90 calendar days before the proposed delegation, and provide the State any information it requests to determine whether the delegation is in its best interest. If approved, Contractor must: (a) be the sole point of contact regarding all contractual matters, including payment and charges for all Contract Activities; (b) make all payments to the subcontractor; and (c) incorporate the terms and conditions contained in this Contract in any subcontract with a subcontractor. Contractor remains responsible for the completion of the Contract Activities, compliance with the terms of this Contract, and the acts and omissions of the subcontractor. The State, in its sole discretion, may require the replacement of any subcontractor.
11. Staffing. The State’s Contract Administrator may require Contractor to remove or reassign personnel by providing a notice to Contractor.
12. Background Checks. Upon request, Contractor must perform background checks on all employees and subcontractors and its employees prior to their assignment. The scope is at the discretion of the State and documentation must be provided as requested. Contractor is responsible for all costs associated with the requested background checks. The State, in its sole discretion, may also perform background checks.
13. Assignment. Contractor may not assign this Contract to any other party without the prior approval of the State. Upon notice to Contractor, the State, in its sole discretion, may assign in whole or in part, its rights or responsibilities under this Contract to any other party. If the State determines that a novation of the Contract to a third party is necessary, Contractor will agree to the novation and provide all necessary documentation and signatures.
14. Change of Control. Contractor will notify, at least 90 calendar days before the effective date, the State of a change in Contractor’s organizational structure or ownership. For purposes of this Contract, a change in control means any of the following: (a) a sale of more than 50% of Contractor’s stock; (b) a sale of substantially all of Contractor’s assets; (c) a change in a majority of Contractor’s board members; (d) consummation of a merger or consolidation of Contractor with any other entity; (e) a change in ownership through a transaction or series of transactions; (f) or the board (or the stockholders) approves a plan of complete liquidation. A change of control does not include any consolidation or merger effected exclusively to change the domicile of Contractor, or any transaction or series of transactions principally for bona fide equity financing purposes.
In the event of a change of control, Contractor must require the successor to assume this Contract and all of its obligations under this Contract.
15. Ordering. Contractor is not authorized to begin performance until receipt of authorization as identified in Schedule A.
16. Acceptance. Contract Activities are subject to inspection and testing by the State within 30 calendar days of the State’s receipt of them (“State Review Period”), unless otherwise provided in Schedule A. If the Contract Activities are not fully accepted by the State, the State will notify Contractor by the end of the State Review Period that either: (a) the Contract Activities are accepted, but noted deficiencies must be corrected; or (b) the Contract Activities are rejected. If the State finds material deficiencies, it may: (i) reject the Contract Activities without performing any further inspections; (ii) demand performance at no additional cost; or (iii) terminate this Contract in accordance with Section 23, Termination for Cause.
6 CONTRACT #071B7700109
Within 10 business days from the date of Contractor’s receipt of notification of acceptance with deficiencies or rejection of any Contract Activities, Contractor must cure, at no additional cost, the deficiency and deliver unequivocally acceptable Contract Activities to the State. If acceptance with deficiencies or rejection of the Contract Activities impacts the content or delivery of other non-completed Contract Activities, the parties’ respective Program Managers must determine an agreed to number of days for re-submission that minimizes the overall impact to the Contract. However, nothing herein affects, alters, or relieves Contractor of its obligations to correct deficiencies in accordance with the time response standards set forth in this Contract. If Contractor is unable or refuses to correct the deficiency within the time response standards set forth in this Contract, the State may cancel the order in whole or in part. The State, or a third party identified by the State, may perform the Contract Activities and recover the difference between the cost to cure and the Contract price plus an additional 10% administrative fee. 17. Delivery. Contractor must deliver all Contract Activities F.O.B. destination, within the State premises with transportation and handling charges paid by Contractor, unless otherwise specified in Schedule A. All containers and packaging becomes the State’s exclusive property upon acceptance.
18. Risk of Loss and Title. Until final acceptance, title and risk of loss or damage to Contract Activities remains with Contractor. Contractor is responsible for filing, processing, and collecting all damage claims. The State will record and report to Contractor any evidence of visible damage. If the State rejects the Contract Activities, Contractor must remove them from the premises within 10 calendar days after notification of rejection. The risk of loss of rejected or non-conforming Contract Activities remains with Contractor. Rejected Contract Activities not removed by Contractor within 10 calendar days will be deemed abandoned by Contractor, and the State will have the right to dispose of it as its own property. Contractor must reimburse the State for costs and expenses incurred in storing or effecting removal or disposition of rejected Contract Activities.
19. Warranty Period. The warranty period, if applicable, for Contract Activities is a fixed period commencing on the date specified in Schedule A. If the Contract Activities do not function as warranted during the warranty period the State may return such non-conforming Contract Activities to the Contractor for a full refund.
20. Terms of Payment. Invoices must conform to the requirements communicated from time-to-time by the State. All undisputed amounts are payable within 45 days of the State’s receipt. Contractor may only charge for Contract Activities performed as specified in Schedule A. Invoices must include an itemized statement of all charges. The State is exempt from State sales tax for direct purchases and may be exempt from federal excise tax, if Services purchased under this Agreement are for the State’s exclusive use. Notwithstanding the foregoing, all prices are inclusive of taxes, and Contractor is responsible for all sales, use and excise taxes, and any other similar taxes, duties and charges of any kind imposed by any federal, state, or local governmental entity on any amounts payable by the State under this Contract.
The State has the right to withhold payment of any disputed amounts until the parties agree as to the validity of the disputed amount. The State will notify Contractor of any dispute within a reasonable time. Payment by the State will not constitute a waiver of any rights as to Contractor’s continuing obligations, including claims for deficiencies or substandard Contract Activities. Contractor’s acceptance of final payment by the State constitutes a waiver of all claims by Contractor against the State for payment under this Contract, other than those claims previously filed in writing on a timely basis and still disputed.
The State will only disburse payments under this Contract through Electronic Funds Transfer (EFT). Contractor must register with the State at http://www.michigan.gov/cpexpress to receive electronic fund transfer payments. If Contractor does not register, the State is not liable for failure to provide payment. Without prejudice to any other right or remedy it may have, the State reserves the right to set off at any time any amount then due and owing to it by Contractor against any amount payable by the State to Contractor under this Contract.
21. Liquidated Damages. Liquidated damages, if applicable, will be assessed as described in Schedule A.
7 CONTRACT #071B7700109
22. Stop Work Order. The State may suspend any or all activities under the Contract at any time. The State will provide Contractor a written stop work order detailing the suspension. Contractor must comply with the stop work order upon receipt. Within 90 calendar days, or any longer period agreed to by Contractor, the State will either: (a) issue a notice authorizing Contractor to resume work, or (b) terminate the Contract or purchase order. The State will not pay for Contract Activities, Contractor’s lost profits, or any additional compensation during a stop work period.
23. Termination for Cause. The State may terminate this Contract for cause, in whole or in part, if Contractor, as determined by the State: (a) endangers the value, integrity, or security of any location, data, or personnel; (b) becomes insolvent, petitions for bankruptcy court proceedings, or has an involuntary bankruptcy proceeding filed against it by any creditor; (c) engages in any conduct that may expose the State to liability; (d) breaches any of its material duties or obligations; or (e) fails to cure a breach within the time stated in a notice of breach. Any reference to specific breaches being material breaches within this Contract will not be construed to mean that other breaches are not material.
If the State terminates this Contract under this Section, the State will issue a termination notice specifying whether Contractor must: (a) cease performance immediately, or (b) continue to perform for a specified period. If it is later determined that Contractor was not in breach of the Contract, the termination will be deemed to have been a Termination for Convenience, effective as of the same date, and the rights and obligations of the parties will be limited to those provided in Section 24, Termination for Convenience.
The State will only pay for amounts due to Contractor for Contract Activities accepted by the State on or before the date of termination, subject to the State’s right to set off any amounts owed by the Contractor for the State’s reasonable costs in terminating this Contract. The Contractor must pay all reasonable costs incurred by the State in terminating this Contract for cause, including administrative costs, attorneys’ fees, court costs, transition costs, and any costs the State incurs to procure the Contract Activities from other sources.
24. Termination for Convenience. The State may immediately terminate this Contract in whole or in part without penalty and for any reason, including but not limited to, appropriation or budget shortfalls. The termination notice will specify whether Contractor must: (a) cease performance of the Contract Activities immediately, or (b) continue to perform the Contract Activities in accordance with Section 25, Transition Responsibilities. If the State terminates this Contract for convenience, the State will pay all reasonable costs, as determined by the State, for State approved Transition Responsibilities.
25. Transition Responsibilities. Upon termination or expiration of this Contract for any reason, Contractor must, for a period of time specified by the State (not to exceed 180 calendar days), provide all reasonable transition assistance requested by the State, to allow for the expired or terminated portion of the Contract Activities to continue without interruption or adverse effect, and to facilitate the orderly transfer of such Contract Activities to the State or its designees. Such transition assistance may include, but is not limited to: (a) continuing to perform the Contract Activities at the established Contract rates; (b) taking all reasonable and necessary measures to transition performance of the work, including all applicable Contract Activities, training, equipment, software, leases, reports and other documentation, to the State or the State’s designee; (c) taking all necessary and appropriate steps, or such other action as the State may direct, to preserve, maintain, protect, or return to the State all materials, data, property, and confidential information provided directly or indirectly to Contractor by any entity, agent, vendor, or employee of the State; (d) transferring title in and delivering to the State, at the State’s discretion, all completed or partially completed deliverables prepared under this Contract as of the Contract termination date; and (e) preparing an accurate accounting from which the State and Contractor may reconcile all outstanding accounts (collectively, “Transition Responsibilities”). This Contract will automatically be extended through the end of the transition period.
26. General Indemnification. Contractor must defend, indemnify and hold the State, its departments, divisions, agencies, offices, commissions, officers, and employees harmless, without limitation, from and against any and all actions, claims, losses, liabilities, damages, costs, attorney fees, and expenses (including those required to establish the right to indemnification), arising out of or relating to: (a) any breach by Contractor 8 CONTRACT #071B7700109
(or any of Contractor’s employees, agents, subcontractors, or by anyone else for whose acts any of them may be liable) of any of the promises, agreements, representations, warranties, or insurance requirements contained in this Contract; (b) any infringement, misappropriation, or other violation of any intellectual property right or other right of any third party; (c) any bodily injury, death, or damage to real or tangible personal property occurring wholly or in part due to action or inaction by Contractor (or any of Contractor’s employees, agents, subcontractors, or by anyone else for whose acts any of them may be liable); and (d) any acts or omissions of Contractor (or any of Contractor’s employees, agents, subcontractors, or by anyone else for whose acts any of them may be liable).
The State will notify Contractor in writing if indemnification is sought; however, failure to do so will not relieve Contractor, except to the extent that Contractor is materially prejudiced. Contractor must, to the satisfaction of the State, demonstrate its financial ability to carry out these obligations.
The State is entitled to: (i) regular updates on proceeding status; (ii) participate in the defense of the proceeding; (iii) employ its own counsel; and to (iv) retain control of the defense if the State deems necessary. Contractor will not, without the State’s written consent (not to be unreasonably withheld), settle, compromise, or consent to the entry of any judgment in or otherwise seek to terminate any claim, action, or proceeding. To the extent that any State employee, official, or law may be involved or challenged, the State may, at its own expense, control the defense of that portion of the claim.
Any litigation activity on behalf of the State, or any of its subdivisions under this Section, must be coordinated with the Department of Attorney General. An attorney designated to represent the State may not do so until approved by the Michigan Attorney General and appointed as a Special Assistant Attorney General.
27. Infringement Remedies. If, in either party’s opinion, any piece of equipment, software, commodity, or service supplied by Contractor or its subcontractors, or its operation, use or reproduction, is likely to become the subject of a copyright, patent, trademark, or trade secret infringement claim, Contractor must, at its expense: (a) procure for the State the right to continue using the equipment, software, commodity, or service, or if this option is not reasonably available to Contractor, (b) replace or modify the same so that it becomes non-infringing; or (c) accept its return by the State with appropriate credits to the State against Contractor’s charges and reimburse the State for any losses or costs incurred as a consequence of the State ceasing its use and returning it.
28. Limitation of Liability. The State is not liable for consequential, incidental, indirect, or special damages, regardless of the nature of the action.
29. Disclosure of Litigation, or Other Proceeding. Contractor must notify the State within 14 calendar days of receiving notice of any litigation, investigation, arbitration, or other proceeding (collectively, “Proceeding”) involving Contractor, a subcontractor, or an officer or director of Contractor or subcontractor, that arises during the term of the Contract, including: (a) a criminal Proceeding; (b) a parole or probation Proceeding; (c) a Proceeding under the Sarbanes-Oxley Act; (d) a civil Proceeding involving: (1) a claim that might reasonably be expected to adversely affect Contractor’s viability or financial stability; or (2) a governmental or public entity’s claim or written allegation of fraud; or (e) a Proceeding involving any license that Contractor is required to possess in order to perform under this Contract.
30. Reserved.
31. State Data. a. Ownership. The State’s data (“State Data,” which will be treated by Contractor as Confidential Information) includes: (a) the State’s data collected, used, processed, stored, or generated as the result of the Contract Activities; (b) personally identifiable information (“PII“) collected, used, processed, stored, or generated as the result of the Contract Activities, including, without limitation, any information that identifies an individual, such as an individual’s social security number or other government-issued identification number, date of birth, address, telephone number, biometric data, mother’s maiden name, email address, credit card information, or an individual’s name in combination with any other of the elements here listed; and, (c) personal health information (“PHI”) collected, used,
9 CONTRACT #071B7700109
processed, stored, or generated as the result of the Contract Activities, which is defined under the Health Insurance Portability and Accountability Act (HIPAA) and its related rules and regulations. State Data is and will remain the sole and exclusive property of the State and all right, title, and interest in the same is reserved by the State. This Section survives the termination of this Contract. b. Contractor Use of State Data. Contractor is provided a limited license to State Data for the sole and exclusive purpose of providing the Contract Activities, including a license to collect, process, store, generate, and display State Data only to the extent necessary in the provision of the Contract Activities. Contractor must: (a) keep and maintain State Data in strict confidence, using such degree of care as is appropriate and consistent with its obligations as further described in this Contract and applicable law to avoid unauthorized access, use, disclosure, or loss; (b) use and disclose State Data solely and exclusively for the purpose of providing the Contract Activities, such use and disclosure being in accordance with this Contract, any applicable Statement of Work, and applicable law; and (c) not use, sell, rent, transfer, distribute, or otherwise disclose or make available State Data for Contractor’s own purposes or for the benefit of anyone other than the State without the State’s prior written consent. This Section survives the termination of this Contract. c. Extraction of State Data. Contractor must, within five (5) business days of the State’s request, provide the State, without charge and without any conditions or contingencies whatsoever (including but not limited to the payment of any fees due to Contractor), an extract of the State Data in the format specified by the State. d. Backup and Recovery of State Data. Unless otherwise specified in Schedule A, Contractor is responsible for maintaining a backup of State Data and for an orderly and timely recovery of such data. Unless otherwise described in Schedule A, Contractor must maintain a contemporaneous backup of State Data that can be recovered within two (2) hours at any point in time. e. Loss of Data. In the event of any act, error or omission, negligence, misconduct, or breach that compromises or is suspected to compromise the security, confidentiality, or integrity of State Data or the physical, technical, administrative, or organizational safeguards put in place by Contractor that relate to the protection of the security, confidentiality, or integrity of State Data, Contractor must, as applicable: (a) notify the State as soon as practicable but no later than twenty-four (24) hours of becoming aware of such occurrence; (b) cooperate with the State in investigating the occurrence, including making available all relevant records, logs, files, data reporting, and other materials required to comply with applicable law or as otherwise required by the State; (c) in the case of PII or PHI, at the State’s sole election, (i) notify the affected individuals who comprise the PII or PHI as soon as practicable but no later than is required to comply with applicable law, or, in the absence of any legally required notification period, within 5 calendar days of the occurrence; or (ii) reimburse the State for any costs in notifying the affected individuals; (d) in the case of PII, provide third-party credit and identity monitoring services to each of the affected individuals who comprise the PII for the period required to comply with applicable law, or, in the absence of any legally required monitoring services, for no less than twenty-four (24) months following the date of notification to such individuals; (e) perform or take any other actions required to comply with applicable law as a result of the occurrence; (f) without limiting Contractor’s obligations of indemnification as further described in this Contract, indemnify, defend, and hold harmless the State for any and all claims, including reasonable attorneys’ fees, costs, and expenses incidental thereto, which may be suffered by, accrued against, charged to, or recoverable from the State in connection with the occurrence; (g) be responsible for recreating lost State Data in the manner and on the schedule set by the State without charge to the State; and, (h) provide to the State a detailed plan within 10 calendar days of the occurrence describing the measures Contractor will undertake to prevent a future occurrence. Notification to affected individuals, as described above, must comply with applicable law, be written in plain language, and contain, at a minimum: name and contact information of Contractor’s representative; a description of the nature of the loss; a list of the types of data involved; the known or approximate date of the loss; how such loss may affect the affected individual; what steps Contractor has taken to protect the
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affected individual; what steps the affected individual can take to protect himself or herself; contact information for major credit card reporting agencies; and, information regarding the credit and identity monitoring services to be provided by Contractor. This Section survives the termination of this Contract. 32. Non-Disclosure of Confidential Information. The parties acknowledge that each party may be exposed to or acquire communication or data of the other party that is confidential, privileged communication not intended to be disclosed to third parties. The provisions of this Section survive the termination of this Contract.
a. Meaning of Confidential Information. For the purposes of this Contract, the term “Confidential Information” means all information and documentation of a party that: (a) has been marked “confidential” or with words of similar meaning, at the time of disclosure by such party; (b) if disclosed orally or not marked “confidential” or with words of similar meaning, was subsequently summarized in writing by the disclosing party and marked “confidential” or with words of similar meaning; and, (c) should reasonably be recognized as confidential information of the disclosing party. The term “Confidential Information” does not include any information or documentation that was: (a) subject to disclosure under the Michigan Freedom of Information Act (FOIA); (b) already in the possession of the receiving party without an obligation of confidentiality; (c) developed independently by the receiving party, as demonstrated by the receiving party, without violating the disclosing party’s proprietary rights; (d) obtained from a source other than the disclosing party without an obligation of confidentiality; or, (e) publicly available when received, or thereafter became publicly available (other than through any unauthorized disclosure by, through, or on behalf of, the receiving party). For purposes of this Contract, in all cases and for all matters, State Data is deemed to be Confidential Information.
b. Obligation of Confidentiality. The parties agree to hold all Confidential Information in strict confidence and not to copy, reproduce, sell, transfer, or otherwise dispose of, give or disclose such Confidential Information to third parties other than employees, agents, or subcontractors of a party who have a need to know in connection with this Contract or to use such Confidential Information for any purposes whatsoever other than the performance of this Contract. The parties agree to advise and require their respective employees, agents, and subcontractors of their obligations to keep all Confidential Information confidential. Disclosure to a subcontractor is permissible where: (a) use of a subcontractor is authorized under this Contract; (b) the disclosure is necessary or otherwise naturally occurs in connection with work that is within the subcontractor's responsibilities; and (c) Contractor obligates the subcontractor in a written contract to maintain the State's Confidential Information in confidence. At the State's request, any employee of Contractor or any subcontractor may be required to execute a separate agreement to be bound by the provisions of this Section.
c. Cooperation to Prevent Disclosure of Confidential Information. Each party must use its best efforts to assist the other party in identifying and preventing any unauthorized use or disclosure of any Confidential Information. Without limiting the foregoing, each party must advise the other party immediately in the event either party learns or has reason to believe that any person who has had access to Confidential Information has violated or intends to violate the terms of this Contract and each party will cooperate with the other party in seeking injunctive or other equitable relief against any such person.
d. Remedies for Breach of Obligation of Confidentiality. Each party acknowledges that breach of its obligation of confidentiality may give rise to irreparable injury to the other party, which damage may be inadequately compensable in the form of monetary damages. Accordingly, a party may seek and obtain injunctive relief against the breach or threatened breach of the foregoing undertakings, in addition to any other legal remedies which may be available, to include, in the case of the State, at the sole election of the State, the immediate termination, without liability to the State, of this Contract or any Statement of Work corresponding to the breach or threatened breach.
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e. Surrender of Confidential Information upon Termination. Upon termination of this Contract or a Statement of Work, in whole or in part, each party must, within 5 calendar days from the date of termination, return to the other party any and all Confidential Information received from the other party, or created or received by a party on behalf of the other party, which are in such party’s possession, custody, or control; provided, however, that Contractor must return State Data to the State following the timeframe and procedure described further in this Contract. Should Contractor or the State determine that the return of any Confidential Information is not feasible, such party must destroy the Confidential Information and must certify the same in writing within 5 calendar days from the date of termination to the other party. However, the State’s legal ability to destroy Contractor data may be restricted by its retention and disposal schedule, in which case Contractor’s Confidential Information will be destroyed after the retention period expires. 33. Data Privacy and Information Security. a. Undertaking by Contractor. Without limiting Contractor’s obligation of confidentiality as further described, Contractor is responsible for establishing and maintaining a data privacy and information security program, including physical, technical, administrative, and organizational safeguards, that is designed to: (a) ensure the security and confidentiality of the State Data; (b) protect against any anticipated threats or hazards to the security or integrity of the State Data; (c) protect against unauthorized disclosure, access to, or use of the State Data; (d) ensure the proper disposal of State Data; and (e) ensure that all employees, agents, and subcontractors of Contractor, if any, comply with all of the foregoing. In no case will the safeguards of Contractor’s data privacy and information security program be less stringent than the safeguards used by the State, and Contractor must at all times comply with all applicable State IT policies and standards, which are available to Contractor upon request.
b. Audit by Contractor. No less than annually, Contractor must conduct a comprehensive independent third-party audit of its data privacy and information security program and provide such audit findings to the State. c. Right of Audit by the State. Without limiting any other audit rights of the State, the State has the right to review Contractor’s data privacy and information security program prior to the commencement of Contract Activities and from time to time during the term of this Contract. During the providing of the Contract Activities, on an ongoing basis from time to time and without notice, the State, at its own expense, is entitled to perform, or to have performed, an on-site audit of Contractor’s data privacy and information security program. In lieu of an on-site audit, upon request by the State, Contractor agrees to complete, within 45 calendar days of receipt, an audit questionnaire provided by the State regarding Contractor’s data privacy and information security program.
d. Audit Findings. Contractor must implement any required safeguards as identified by the State or by any audit of Contractor’s data privacy and information security program.
e. State’s Right to Termination for Deficiencies. The State reserves the right, at its sole election, to immediately terminate this Contract or a Statement of Work without limitation and without liability if the State determines that Contractor fails or has failed to meet its obligations under this Section.
34. Reserved.
35. Reserved.
36. Records Maintenance, Inspection, Examination, and Audit. The State or its designee may audit Contractor to verify compliance with this Contract. Contractor must retain, and provide to the State or its designee and the auditor general upon request, all financial and accounting records related to the Contract through the term of the Contract and for 4 years after the latter of termination, expiration, or final payment under this Contract or any extension (“Audit Period”). If an audit, litigation, or other action involving the records is initiated before the end of the Audit Period, Contractor must retain the records until all issues are resolved. 12 CONTRACT #071B7700109
Within 10 calendar days of providing notice, the State and its authorized representatives or designees have the right to enter and inspect Contractor's premises or any other places where Contract Activities are being performed, and examine, copy, and audit all records related to this Contract. Contractor must cooperate and provide reasonable assistance. If any financial errors are revealed, the amount in error must be reflected as a credit or debit on subsequent invoices until the amount is paid or refunded. Any remaining balance at the end of the Contract must be paid or refunded within 45 calendar days.
This Section applies to Contractor, any parent, affiliate, or subsidiary organization of Contractor, and any subcontractor that performs Contract Activities in connection with this Contract.
37. Warranties and Representations. Contractor represents and warrants: (a) Contractor is the owner or licensee of any Contract Activities that it licenses, sells, or develops and Contractor has the rights necessary to convey title, ownership rights, or licensed use; (b) all Contract Activities are delivered free from any security interest, lien, or encumbrance and will continue in that respect; (c) the Contract Activities will not infringe the patent, trademark, copyright, trade secret, or other proprietary rights of any third party; (d) Contractor must assign or otherwise transfer to the State or its designee any manufacturer's warranty for the Contract Activities; (e) the Contract Activities are merchantable and fit for the specific purposes identified in the Contract; (f) the Contract signatory has the authority to enter into this Contract; (g) all information furnished by Contractor in connection with the Contract fairly and accurately represents Contractor's business, properties, finances, and operations as of the dates covered by the information, and Contractor will inform the State of any material adverse changes; and (h) all information furnished and representations made in connection with the award of this Contract is true, accurate, and complete, and contains no false statements or omits any fact that would make the information misleading. A breach of this Section is considered a material breach of this Contract, which entitles the State to terminate this Contract under Section 23, Termination for Cause.
38. Conflicts and Ethics. Contractor will uphold high ethical standards and is prohibited from: (a) holding or acquiring an interest that would conflict with this Contract; (b) doing anything that creates an appearance of impropriety with respect to the award or performance of the Contract; (c) attempting to influence or appearing to influence any State employee by the direct or indirect offer of anything of value; or (d) paying or agreeing to pay any person, other than employees and consultants working for Contractor, any consideration contingent upon the award of the Contract. Contractor must immediately notify the State of any violation or potential violation of these standards. This Section applies to Contractor, any parent, affiliate, or subsidiary organization of Contractor, and any subcontractor that performs Contract Activities in connection with this Contract.
39. Compliance with Laws. Contractor must comply with all federal, state and local laws, rules and regulations.
40. Reserved.
41. Reserved.
42. Nondiscrimination. Under the Elliott-Larsen Civil Rights Act, 1976 PA 453, MCL 37.2101, et seq., and the Persons with Disabilities Civil Rights Act, 1976 PA 220, MCL 37.1101, et seq., Contractor and its subcontractors agree not to discriminate against an employee or applicant for employment with respect to hire, tenure, terms, conditions, or privileges of employment, or a matter directly or indirectly related to employment, because of race, color, religion, national origin, age, sex, height, weight, marital status, or mental or physical disability. Breach of this covenant is a material breach of this Contract.
43. Unfair Labor Practice. Under MCL 423.324, the State may void any Contract with a Contractor or subcontractor who appears on the Unfair Labor Practice register compiled under MCL 423.322.
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44. Governing Law. This Contract is governed, construed, and enforced in accordance with Michigan law, excluding choice-of-law principles, and all claims relating to or arising out of this Contract are governed by Michigan law, excluding choice-of-law principles. Any dispute arising from this Contract must be resolved in Michigan Court of Claims. Contractor consents to venue in Ingham County, and waives any objections, such as lack of personal jurisdiction or forum non conveniens. Contractor must appoint agents in Michigan to receive service of process.
45. Non-Exclusivity. Nothing contained in this Contract is intended nor will be construed as creating any requirements contract with Contractor. This Contract does not restrict the State or its agencies from acquiring similar, equal, or like Contract Activities from other sources.
46. Force Majeure. Neither party will be in breach of this Contract because of any failure arising from any disaster or acts of god that are beyond their control and without their fault or negligence. Each party will use commercially reasonable efforts to resume performance. Contractor will not be relieved of a breach or delay caused by its subcontractors. If immediate performance is necessary to ensure public health and safety, the State may immediately contract with a third party.
47. Dispute Resolution. The parties will endeavor to resolve any Contract dispute in accordance with this provision. The dispute will be referred to the parties' respective Contract Administrators or Program Managers. Such referral must include a description of the issues and all supporting documentation. The parties must submit the dispute to a senior executive if unable to resolve the dispute within 15 business days. The parties will continue performing while a dispute is being resolved, unless the dispute precludes performance. A dispute involving payment does not preclude performance.
Litigation to resolve the dispute will not be instituted until after the dispute has been elevated to the parties’ senior executive and either concludes that resolution is unlikely, or fails to respond within 15 business days. The parties are not prohibited from instituting formal proceedings: (a) to avoid the expiration of statute of limitations period; (b) to preserve a superior position with respect to creditors; or (c) where a party makes a determination that a temporary restraining order or other injunctive relief is the only adequate remedy. This Section does not limit the State’s right to terminate the Contract.
48. Media Releases. News releases (including promotional literature and commercial advertisements) pertaining to the Contract or project to which it relates must not be made without prior written State approval, and then only in accordance with the explicit written instructions of the State.
49. Website Incorporation. The State is not bound by any content on Contractor’s website unless expressly incorporated directly into this Contract.
50. Entire Agreement and Order of Precedence. This Contract, which includes Schedule A – Statement of Work, and expressly incorporated schedules and exhibits, is the entire agreement of the parties related to the Contract Activities. This Contract supersedes and replaces all previous understandings and agreements between the parties for the Contract Activities. If there is a conflict between documents, the order of precedence is: (a) first, this Contract, excluding its schedules, exhibits, and Schedule A – Statement of Work; (b) second, Schedule A – Statement of Work as of the Effective Date; and (c) third, schedules expressly incorporated into this Contract as of the Effective Date. NO TERMS ON CONTRACTOR’S INVOICES, ORDERING DOCUMENTS, WEBSITE, BROWSE-WRAP, SHRINK-WRAP, CLICK-WRAP, CLICK- THROUGH OR OTHER NON-NEGOTIATED TERMS AND CONDITIONS PROVIDED WITH ANY OF THE CONTRACT ACTIVITIES WILL CONSTITUTE A PART OR AMENDMENT OF THIS CONTRACT OR IS BINDING ON THE STATE FOR ANY PURPOSE. ALL SUCH OTHER TERMS AND CONDITIONS HAVE NO FORCE AND EFFECT AND ARE DEEMED REJECTED BY THE STATE, EVEN IF ACCESS TO OR USE OF THE CONTRACT ACTIVITIES REQUIRES AFFIRMATIVE ACCEPTANCE OF SUCH TERMS AND CONDITIONS.
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51. Severability. If any part of this Contract is held invalid or unenforceable, by any court of competent jurisdiction, that part will be deemed deleted from this Contract and the severed part will be replaced by agreed upon language that achieves the same or similar objectives. The remaining Contract will continue in full force and effect.
52. Waiver. Failure to enforce any provision of this Contract will not constitute a waiver.
53. Survival. The provisions of this Contract that impose continuing obligations, including warranties and representations, termination, transition, insurance coverage, indemnification, and confidentiality, will survive the expiration or termination of this Contract.
54. Contract Modification. This Contract may not be amended except by signed agreement between the parties (a “Contract Change Notice”). Notwithstanding the foregoing, no subsequent Statement of Work or Contract Change Notice executed after the Effective Date will be construed to amend this Contract unless it specifically states its intent to do so and cites the section or sections amended.
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STATE OF MICHIGAN
Charitable Pull-Tab Tickets
SCHEDULE A STATEMENT OF WORK CONTRACT ACTIVITIES
BACKGROUND This contract for Charitable Pull-Tab Tickets is established for the Michigan Bureau of Lottery’s Charitable Gaming Division. The Bureau of State Lottery Charitable Gaming Division (Charitable Gaming) issues licenses to qualified organizations and offers charitable pull-tab tickets to these organizations through licensed suppliers to sell for fund raising purposes. The profits Charitable Gaming generates from the charitable pull-tab tickets are returned to the State General Fund. The Charitable Gaming Division presently inventories 25 to 30 different pull-tab games with the introduction of multiple new games each year. Approximately 115 million tickets are sold to organizations each year. The number of tickets ordered for each game will be at the discretion of the State. Quantities are estimates only and the State is neither committed to nor limited to the purchasing in the exact quantities noted.
SCOPE This contract is for the production of, related services, and supplies associated with charitable pull-tab tickets for the Michigan Lottery.
REQUIREMENTS 1. GENERAL REQUIREMENTS A. The Contractor must be able to provide Deliverables/Services and Staff, and otherwise do all things necessary for or incidental to the performance of work as set forth herein which, dependent on the ticket program, may include but is not limited to:
1. Graphic design, winning ticket randomization, prize structure development, launch schedule coordination, print production, packaging, and shipment of pull-tab tickets;
2. Game specification development;
3. Game design coordination and execution;
4. Production and launch schedule oversight from design to delivery;
5. Production oversight on press when the Program Manager or designee elects not to attend press approvals;
6. Interface with existing Lottery computerized accounting, allocation and validation sub systems as required per ticket type;
7. Control over inventory and security as necessary to protect the integrity of the game;
8. Packaging and shipping; and
9. Marketing, Promotion, and Supplier training.
B. Working Papers The Contractor will be required to develop game specifications (Working Papers) under the direction of the Program Manager or designee for each game. The (Working Papers) must accurately reflect each new game.
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1. The Working Papers will include the final art for the front and back of the ticket and winning and losing symbols; prize structure; packaging and shipping information; production and delivery schedule for tickets, game data files and other required data; ticket order quantity; any optional products, features, or services requested by the Program Manager or designee, and pricing.
2. The Program Manager or designee must approve the Working Papers and issue a purchase order before ticket manufacturing begins. The Contractor must manufacture and deliver the tickets according to these Working Papers. The Working Papers for each game will become part of the contract.
3. Working Papers for the games will be generated by the Contractor in a format provided by the Lottery. Schedules will be established in cooperation with the Program Manager and Working Papers executed in order to facilitate the orderly process for the production and delivery of tickets. The cost of Working Paper creation and revision shall be included in the base ticket price.
1.1. CHARITABLE PULL-TAB SPECIFICATIONS A. Prize Structure 1. The Contractor shall work with the Program Manager or designee in developing prize structures, prize randomization, and multi-win extensions, as needed.
B. Ticket Design
1. New games require complete development of game themes and artwork. The Contractor may be required to develop no more than six new games the first year and up to eight new games each additional year. These new games may be altered from existing games offered in other jurisdictions or may be new designs.
2. Any given ticket shall not contain more winning combinations than what is intended for that ticket. Each deal of tickets shall contain the proper number of tickets and the proper number of tickets for each prize amount as defined by the executed working papers. Each bundle of tickets must contain an acceptable number of winners (typically 8 to 11 out of 50).
C. Trademark and Service Mark Searches 1. During the course of new game development for the State, the Contractor will conduct trademark and service mark searches for all game names being developed but not owned by the Contractor, and shall provide to the State a written legal opinion as to the permissible use of each game name based upon a search of registrations and applications for registration filed with the United States Patent and Trademark office, applicable state agencies and other appropriate sources.
2. New trademarks and service marks developed for the State will be the property of the State and will be registered, by the Contractor, in the name of the State at the State’s discretion. Upon approval or denial of trademark, the Contractor shall provide the Program Manager or designee with a copy of the signed registration or denial.
3. For games owned by the Contractor, the Contractor will provide a letter warranting its ownership and granting the Lottery the right to use the game name, subject to applicable licensing restrictions.
D. Proprietary and Patented Play Styles & Licensed Properties 1. The Contractor will make available for use by the State, at no additional cost, all proprietary and/or patented play styles, copyrights, service marks or trademarks held by the Contractor which include:
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Pink Panther, Elvis, Betty Boop, Garfield, Popeye, VFW, AMVETS, POW/MIA, Big Johnson, US Playing cards(Bicycle, Aviator, Hoyle, Maverick, Bee)Warner Brothers (Atom Ant, Augie Doggie, Banana Splits, Captain Caveman, Cave Kids, DC Comics-Batman, Batman: The Brave and the Bold, DC Comics-The Flash, Green Lantern, Justice League, Superman, Wonder Woman, The Flintstones, Help! It’s The Hair Bear Bunch, Hong Kong Phooey, Huckleberry Hound, The Jetsons, Jonny Quest, Looney Tunes, Magilla Gorilla, The Perils of Penelope Pitstop, Peter Potamus, Pixie and Dixie, Quick Draw McGraw, Secret Squirrel, Snagglepuss, Top Cat, Touche Turtle, Wacky Races, Wally Gator, The Wizard of OZ, Yogi Bear.
2. If any proprietary and/or patented play styles, copyrights, service marks or trademarks are developed by the Contractor during the term of this Contract, then these items also will be made available to the State at no additional cost. Additionally, if any proprietary and/or patented play styles, copyrights, service marks or trademarks are acquired by the Contractor during the term of this Contract, then these items also will be made available to the State at no additional cost, provided licensing agreements do not prohibit the State’s use.
3. The State will have the right to acquire proprietary and/or patented play styles from other sources for incorporation into games produced by the Contractor.
E. Randomization The Contractor shall implement “random but equal” industry methods that distribute winning tickets throughout the game so that winning tickets cannot be picked out by their location in a deal or a banded bundle while ensuring a reasonable number of winners will be included in any given bundle or sequence of tickets. No less than four (4) points of randomization shall be utilized and shall include: 1. Printing plates or number scrambler programs used for printing tickets shall be organized so that winning tickets are interspersed randomly among losing tickets;
2. High tier winners and hold tickets shall be randomly printed on a minimum of four (4) sheets for each deal of tickets; and,
3. The Contractor shall utilize a minimum of two (2) additional steps that further ensure randomization of the tickets.
4. Each bundle shall contain a reasonable number of winners in relationship to the winning ticket ratio.
5. Non-winning tickets shall contain a variety of several non-winning patterns of numbers or symbols to maintain the image of randomness in the deal.
F. Serial Numbering 1. Unless otherwise determined by the State, each deal of tickets shall be assigned a unique 10-digit serial number where the first three (3) digits designate the game number. The serial number must be identical for all tickets contained in a single deal.
2. Each deal within a shipment shall be numbered consecutively. There shall be no duplication of serial numbers outside a deal of tickets.
3. There shall be no omission of serial numbers in a print run.
4. Each new assignment of serial numbers for a given game must begin where the previous run left off.
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G. Bar Coding The Contractor shall have the capability to produce a barcode, interleaved code 3 of 9, depicting the serial number of the tickets contained in each deal. The Lottery requires the printing of the barcodes on each box of tickets, on the flare or seal card(s) attached to each box of tickets, and on the case labels identifying the deals contained therein.
H. Disposition of Ticket Art Files Game art files must be retained for the length of the contract, including any option years, and be made available in an electronic format and delivered to the State during a new contract transition period or as requested.
I. Ticket Production 1. Ticket Form and Stock a. The basic ticket construction is 2-ply. The front side of the ticket (side opposite the opening tabs) shall be constructed of a coated board stock.
b. The back side of the ticket shall be mill produced on .012” carbon black back opaque paper stock.
c. The stock used in the construction of the ticket shall be such that the overall bulk thickness is .024 inch, except as otherwise approved by the Lottery.
d. Tickets shall maintain their original crisp appearance and remain properly sealed during normal storage, handling, and usage for a minimum of two (2) years after Contractor shipment.
2. Recycled Content and Recyclability Deliverables. Without compromising performance or quality, the State prefers Deliverable(s) containing higher percentages of recycled materials. Tickets shall be manufactured from at least 70% recycled paper fibers.
3. Printing Methods Printing methods are at the discretion of the Contractor. All printing must be crisp and legible and meet the approved quality standards specified in the working papers.
4. Ticket Size The dimensions shall be in accordance with the measurements provided in the pricing matrix. a. For any given game tickets shall not vary in size; from ticket to ticket, from deal to deal, or from shipment to shipment. In the cutting of finished tickets, winners and losers shall be cut together so it is not possible to pick out winners from variations in cutting or from edge patterns that are caused from cutting.
b. Tickets shall be 2 9/16" X 1-7/8" or 3 7/8” x 1 7/8” or other industry standard dimension approved by the Lottery.
5. Ticket Colors The Contractor shall ensure color consistency from ticket to ticket and from deal to deal so that it is impossible to identify winning tickets due to a difference in color, the appearance, or extraneous marks on the tickets or any other distinguishing characteristics.
a. The face of the ticket (the side opposite the tabs) and the game play area (symbols and captions under the tabs) shall be multicolored using up to a 5-color process.
b. The tab side of the ticket will use up to a 2-color process.
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6. Play Symbols Play symbols and other numbers or instructions should appear on individual tickets comprising the game and any computer work necessary to generate the numbers and symbols and must be included in the bid price. Play symbols shall be as follows:
a. Colors and symbols on the play area should correspond to the same colors and symbols on the front of the ticket. The Contractor shall use a four or five color process and specify the number of colors involved.
b. Uniformly positioned and aligned on the tickets so that no part of a symbol or number remains covered when the tab is removed.
c. Symbols or numbers must not be able to be viewed or winning numbers determined from the outside of the ticket using high Intensity lamp of 500 watts or more. Protection shall be provided by using opaque paper.
d. Sufficiently legible so as to be readily discernible to a person with normal vision under normal lighting conditions.
e. All type and artwork reproductions shall be clear and sharp with no broken characters, contain no identifying marks or hairlines and shall be uniform in ink coverage.
f. A Michigan Lottery logo shall appear on the back of each ticket along with language provided by the Lottery. Tickets shall not identify the manufacturer.
7. Ticket Perforations and or Die Cut Openings a. For any given game, die-cut openings for all tickets shall not vary in size, from deal to deal, or from shipment to shipment.
b. The opening tabs shall be centered top to bottom and side to side on each ticket. Perforations and die-cutting shall allow easy opening while not permitting tickets to be accidentally opened during normal handling.
c. The size of the openings shall be consistent with previously produced charity game tickets, unless otherwise requested by the Lottery.
8. Ticket Sealing/Gluing a. Sealing or gluing the two plies of paper stock required for the construction of the ticket shall occur securely on all four edges of the ticket and between the individual game ticket tabs. b. It must not be possible to separate the top and bottom layers of the tickets without destroying the ticket validity. Glue must be applied in the register and must not cause interference or difficulty in opening the tabs.
J. Sample Tickets 1. The Contractor shall deliver to the State one box of sample tickets upon the production of each new game.
2. The box of sample tickets shall contain a variety of non-winning tickets.
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3. Each of the standard size samples shall have “VOID” printed on the ticket. The location of the word VOID shall be defined in the Working Papers.
4. The cost of sample tickets shall be included in the price per thousand saleable tickets. The Contractor will not invoice, and the State will not pay, for sample tickets.
K. Ticket Order Quantity 1. To maximize space and resources, games will be issued by the State in increments of full pallets.
2. The State shall be notified of any order that inadvertently includes a partial pallet.
3. Should the Supplier Direct Ship option be utilized, the State will consider ticket order increments recommended by the Contractor.
L. Game Inserts 1. Information sheets shall be printed similar to the standard within the industry, i.e. sized to fit within the box; generally 8 ½” x 11”, 16 lb. bond paper. It shall contain general information regarding the game: a. number of tickets
b. number of winning tickets
c. prizes
d. profit
e. winning symbol identification
f. number of completed bundles
g. number of tickets per bundle
h. number of tickets in the partial bundle, if any.
2. Extra inserts such as an accountability form or detailed game instructions may also be required in each box and will be specified in the working papers.
M. Flare Cards A flare card shall be added to the outside of each box prior to shrink-wrapping.
1. Flare cards are to be produced according to industry standard, i.e. sized to fit the top of the ticket box; printed on coated .012” SBS stock; and using up to a 5-color process (to match the ticket game).
2. The flare card will be two-sided and contain: a. ticket name
b. prize payout structure
c. graphics related to the game
d. other information deemed necessary by the Lottery
3. The label(s) containing the serial number and barcode of the corresponding deal(s) shall be adhered to the flare card.
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N. Seal Cards When a game includes seal cards, the Contractor shall produce a minimum of one seal card for each box of tickets, in accordance with game design.
1. The seal card shall contain a minimum of one window that, when removed, displays a winning number or symbol.
2. Concealed numbers or graphics shall not be viewable or determinable from the outside of the seal card using a high-intensity lamp of up to and including 500 watts.
3. Seal cards are to be sized to fit within the limitations of the size of the box. The basic seal card construction is 2-ply with the overall bulk thickness ranging from .022 to .026 inch.
4. Concealed numbers or graphics shall not be viewable or determinable from the outside of the seal card using a high-intensity lamp of up to and including 500 watts.
5. Each seal card shall be printed using up to a 5-color process (to match the ticket game) and have the same print quality required of the tickets.
6. Gluing the two plies of paper stock required for the construction of the seal card shall occur securely on all four edges of the seal card and around each window.
7. For any given game, die-cut windows for all seal cards shall not vary in size, from deal to deal or from shipment to shipment. Perforations on windows shall be constructed in a manner that allows easy opening while not permitting the inadvertent opening of a window as an adjacent window is being opened.
8. The ties on a die cut window must be of a thickness or strength to hinder “peeking” under the windows and if “peeking” has occurred, it must be readily detectable.
9. The seal card will contain the ticket name, prize payout structure, and graphics related to the game. The label(s) containing the serial number and barcode of the corresponding deal(s) shall be adhered to the seal card.
10. The Contractor shall implement a process to ensure the complete randomization of the seal card’s winning numbers or graphics from one seal card to the next.
11. For the first shipment of a new seal game, the Contractor shall provide the Lottery with up to 100 extra seal cards.
O. Packaging, Wrapping and Labeling 1. Bundling and Wrapping The Contractor shall bundle or wrap tickets into predetermined increments within a deal, unless deal size does not lend itself to traditional packaging. The Lottery and the Contractor shall mutually determine the number of tickets to be included in each bundle which shall be specified in the working papers. a. The Contractor shall bundle the tickets using such materials and in such a manner so as to securely hold the tickets during normal handling without creasing or otherwise damaging the tickets. The band shall be easily removed without causing damage to the tickets. b. The State may require that small deals and “packs” be separated in other packaging, such as sealed in plastic transparent bags or cardboard containers designed to tightly contain a row of tickets, as determined by the Program Manager and detailed in the working papers. c. A seal card might also be packed in a plastic bag along with corresponding tickets.
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2. Boxes and Box Labeling Box size is dependent on game design; therefore, actual box dimensions shall be incorporated in the working papers for each game.
a. Boxes are to be constructed of 200# test corrugated material. Boxes are to be fully packed using dividers and fillers where necessary.
b. Bundled or packs of tickets are to be placed into a box, as detailed in the working papers. Any bundles should be packed in random sequences.
c. Within each box of bundled tickets, an insert shall be enclosed indicating the number of complete bundles, the number of tickets within each bundle, and the number of tickets in the partial bundle, if any.
d. Each box shall be sealed with special tape or sticker so that the box is securely closed and opening can be immediately detected. The warning "Purchaser - Do Not Accept If Seal Is Broken" shall be imprinted on the seal or across the top of each box such that it is legible when the box is sealed.
e. The serial number(s) and barcode(s) shall be adhered to the side of the box of tickets. i. The serial number for each deal shall be attached to the side flap of each box and on the flare or seal card. ii. The serial number shall be printed on the same ply of the ticket that contains the concealed symbols. iii. Serial number omissions are not allowed.
f. The game flare card or seal card(s) shall be added to the top of each box. For games with multiple seal cards inside the box, a flare shall also be added to the top of the box.
g. Each box shall be shall be wrapped with a heat shrink process in a clear poly wrap material of sufficient gauge so as to prevent bursting while being handled or while in shipment or storage.
3. Cases and Case Labeling All cases are to be fully packed containing the prescribed number of boxes for a particular game as indicated in the working papers.
a. The case shall be constructed of 200 lb. test corrugated material with a four (4) flap cover. Case dimensions will be dependent upon the box size used in a particular game. For any new games, case weight, fully packed, shall not exceed 41 lbs.
b. The top and bottom of the case shall be sealed with a 2" width fabric or fiber- reinforced tape with a tensile strength of at least 30 lb. /inch of width and bearing no printed information. No staples or glue shall be used. The tape shall not cover labels or handwritten case numbers.
c. Label or labels shall be securely glued to one end of the case as specified in the working papers. Label information shall include: i. the name of the game
ii. case number
iii. serial number of each of the deals contained within the case
iv. the statement, "THIS CASE CONTAINS MATERIALS THAT ARE REGISTERED BY NUMBER AND WHICH WILL BE VOIDED IF STOLEN".
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d. Labels shall be color coded for easy identification of each game. If the Supplier Direct Ship option is used, the label color may be determined by the Contractor.
e. Print on labels must be large enough to be easily readable and shall be approved in advance by the Lottery.
f. Cases shall contain no labeling or printing identifying the ticket manufacturer except a shipping label where the direct ship option is used.
P. Marketing Services 1. Promotion and Merchandising a. The Contractor shall work with the State on developing promotions and educational tools for the launch of new game types, which shall include assistance with graphic design and production of catalogs, banners, table tents, and/or other promotional products.
b. The Contractor shall work with the State to provide focus group research.
c. The Contractor shall provide analysis of pull-tab strategies or techniques employed in the industry.
d. The Contractor shall include up to $3,000 each year for promotional items to provide at training meetings to encourage attendance.
2. Flyers The Contractor shall provide up to 4,000 flyers with each new game.
3. Catalogs The Contractor shall provide up to 1,500 annual charity game ticket (club) catalogs and up to 3,000 bingo ticket catalogs for each 12-month period.
4. Point of Sale Items The Contractor shall provide necessary banners, posters, table tents, or other educational tools defined for the launch of new game types.
5. Training Kits The Contractor may be asked to provide training kits for new game types to be distributed to licensed suppliers and Michigan Lottery staff. Training kits shall minimally include: flyers, scripts, and information sheets but could also include extra inserts and POS material.
Up to twenty training kits will be shipped to the Michigan Lottery along with corresponding voided tickets. Upon successful testing of the new game, the Contractor will mail the training kits to approximately 14 licensed suppliers along with their voided cases.
Q. New Game Capabilities The Contractor shall work with the State to develop games for specific target markets, games with unusual tickets, shapes or play formats, games with out-of-the-ordinary prizes and/or prize structures, or any other characteristics which set them apart from games currently being sold either here in the State of Michigan and/or other states.
R. Vending 1. All tickets must be compatible with the ticket dispensing systems currently in the Michigan pull-tab market (American Games, Technik, and Arrow) and any reasonable vending device used in the future.
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2. Ticket stock may be modified within reason, at the Lottery’s discretion, during the term of the contract.
3. Proper vending in varying humidity levels is required. Contractors should take into consideration a seasonal 100% relative humidity level in Michigan.
1.2. DEFECTIVE TICKET REQUIREMENTS AND PROCEDURES If it is determined that a deficiency or defect has occurred, the contractor will identify the extent of the potential defect to the Program Manager or designee and to any supplier that reported the defect.
A. The Contractor will be responsible for coordinating the return and credit for all defective deals of tickets and will be required to assign a quality control representative to whom licensed suppliers may contact to report defective tickets and any actual losses incurred by licensed organizations.
B. The quality control representative will be responsible for receiving defective ticket return forms from licensed suppliers; investigating the validity of the reported defects; tracking down potential problems with related tickets; and reporting all, if any, defective tickets for each month to the State. The monthly report will be accompanied by copies of all related ticket return forms and a credit memo for any amounts due to the Lottery for reported defective tickets.
C. For large-scale defect that impacts the integrity of a shipment, the contractor will make arrangements for stock pick-up and, if requested, will replace the stock within three weeks.
1.3. QUALITY ASSURANCE PROGRAM The contractor must guarantee the integrity of all tickets in accordance with the following and remedy any deficiencies.
A. Ticket Production Standards In order to maintain public confidence in the integrity and security of the pull-tab game, and to provide maximum marketability of the pull-tab tickets, the State requires that tickets be produced with the highest quality standards. A deal of tickets that does not comply with the specifications set forth in Section or 1.1, or with any of the following characteristics shall not be considered acceptable by the State.
1. An incorrect number of tickets within a deal. 2. Tickets that are not correctly randomized. 3. Incorrect serialization or barcoding. 4. Tickets that are the incorrect size or vary in thickness. 5. Tickets that are not trimmed straight or cleanly. 6. Warped or bowed or de-bonded tickets. 7. Poor Lamination quality, adhesive overruns 8. Overprint and Display print designs, lettering and/ or play symbols that are off register or that are not clear and crisply printed. 9. Color variations, fading or inconsistent opacity. 10. Color transfer or smudging 11. Play symbols that peek out or can be seen from outside of ticket. 12. Play symbols that are unclear, clipped or incomplete.
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13. Play symbols that smear with slight moisture or normal handling. 14. Play symbols that are not in the correct position. 15. Perforation variations, positioning registration or other inconsistencies. 16. Captions that are not clear or do not correctly describe the Lottery play symbol.
Any other degradation of quality not specified above but which constitutes unacceptable quality.
B. Press Approvals Prior to a full-ticket print run of a new game, a press sample of the front and back of a ticket sheet showing winning and losing tickets must be submitted to the State for final approval.
C. Ticket Testing 1. The State reserves the right to test deals of tickets prior to the release and payment of the game. 2. The Program Manager or designee shall notify the Contractor of any defect discovered during this inspection where the product is not in accordance with the provisions of this Contract or the working papers, including, but not limited to improper shipping; defective printing, gluing, or die cuts; randomization; prize structure; and banding. 3. The contractor shall make appropriate changes. 4. In the event the Supplier Direct Ship option is used under Section 6.2, the Contractor shall ship test or promotional tickets to the Lottery as requested.
2. SERVICE LEVELS 2.1. TIME FRAMES Contractor will adhere to the following game delivery schedule:
A. Within two (2) weeks of receiving notification from the State that the prize structure, play style, and artwork for a particular game have been approved, the Contractor will deliver to the Program Manager or designee a set of draft Working Papers for the Program Manager’s review and comment.
B. Within one (1) week after receipt of comments from the Program Manager, the Contractor will deliver to the Program Manager the final Working Papers for signature (execution). Final ticket art will accompany the final Working Papers.
C. Within 45 days after receipt of executed working papers and approved purchase order, the contractor shall produce and deliver the quantity of tickets specified in the approved purchase order.
2.2. DELIVERY Delivery will be expected by the date defined in the executed Working Papers.
A. Unless the Supplier Direct Ship option is used, delivery shall be made to 101 E. Hillsdale, Lansing, Michigan 48933. Deliveries are to be coordinated in accordance with Section 6.1.
B. For tickets shipped under the Direct Ship option, delivery shall be made to each supplier’s address in accordance with Section 6.2.
2.3. TRAINING The State may request the assistance of the Contractor in speaking at and developing state-led training seminars in Michigan to provide methods for increasing attendance and ticket sales.
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2.4. REPORTING The Contractor must submit upon request, to the Program Manager or designee, the following written reports: A. Monthly Defective Ticket Report
B. Shipping Reports per Section 6.1.D.2. (Should the Supplier Direct Ship option be utilized, the Shipping Reports requirement becomes void.)
C. Defective Ticket Reporting as defined by Section 1.6.E.2.c. D. Any reports required by the manufacturer under Section 7.2.A.3 Supplier Direct Ship option. E. Any other reports specified in the game’s Working papers or deemed by the Lottery as necessary.
2.5. MEETINGS The Contractor must attend the following meetings: A kick-off meeting within 30 days of award of contract. The State may request other meetings as it deems appropriate.
3. STAFFING 3.1. CONTRACTOR REPRESENTATIVE The Contractor must appoint one individual, specifically assigned to State of Michigan accounts, that will respond to State inquiries regarding the Contract Activities, answering questions related to ordering and delivery, etc. (the “Contractor Representative”).
The Contractor Representative will also be directly responsible for coordinating and communicating the day to day operations of the Contract. The Contract Representative must respond to State inquires within 24 hours.
Contractor Representative or designee must be available for communications during the Contractors standard business hours.
The Contractor Representative for this contract will be Robert Tekel, Phone: 1-800-527-3891, E-mail: [email protected].
The Contractor must notify the Contract Administrator at least 30 calendar days before removing or assigning a new Contractor Representative
The Contractor may not remove or assign a Contractor Representative without the prior consent of the State. Prior consent is not required for reassignment for reasons beyond the Contractor’s control, including illness, disability, death, leave of absence, personal emergency circumstances, resignation, or termination for cause. The State may request a résumé and conduct an interview before approving a change. The State may require a 30 calendar day training period for replacement personnel.
3.2. KEY PERSONNEL In addition to the Contract Representative, the Contractor must appoint individuals who will be directly responsible for the day to day operations of the Contract (“Key Personnel”) ie: Production Manager, Art Director, Marketing Director, Shipping Manager, and the like. Key Personnel must be specifically assigned to the State account, be knowledgeable on the contractual requirements, and respond to State inquires within 24 hours.
Contractor’s Key Personnel or designee must be available for communications during the Contractors standard business hours.
The Contractor may not remove or assign Key Personnel without the prior consent of the State. Prior consent is not required for reassignment for reasons beyond the Contractor’s control, including illness, disability, death, leave of absence, personal emergency circumstances, resignation, or termination for cause. The State may request a résumé and conduct an interview before approving a change. The State may require a 30 calendar day training period for replacement personnel.
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Key Personnel include: Lane Gromley, Vice President of Operations- responsible for overall manufacturing of the approved game designs Jim McLean, Director of Gaming Solutions- assist in the development and implementation of marketing strategies and product launches Gary Johnston, Vice President of Marketing- provide overall strategic direction for any marketing activities
3.4. CUSTOMER SERVICE TOLL-FREE NUMBER The Contractor Representative must be available for calls during the Contractor’s standard business hours and may be reached toll-free at 1-800-527-3891 during standard business hours of 8:00 am to 5:00 pm EST.
A corporate cell phone number will be provided directly to the Program Manager so that the Contractor Representative may be reached when out of the office or after hours.
3.5. DISCLOSURE OF SUBCONTRACTORS The Contractor will not utilize subcontractors in the performance of this contract.
4. SECURITY The Contractor will be subject the following security procedures: A. Plant Storage Contractor must preclude persons who are not authorized from accessing facilities, equipment and information utilized in the production of tickets. The Contractor must provide secure, exclusive storage space, in the printing plant or other facility for the storage of finished tickets, for up to 90 days, prior to delivery to the Lottery. Space must also be provided for the storage of paper stock and other supplies needed to produce the games. The Contractor is responsible for monitoring the availability of all materials to insure that sufficient supplies are on hand to meet the delivery schedule in the Working Papers. Contractor shall notify the State within 24 hours in the event of a security breach.
B. Secured Shipping When bulk shipping, the Lottery requires exclusive use of the delivering vehicle.
1. The Contractor must place security seals and padlocks on all cargo doors of the delivery vehicle. Each seal must bear a unique number which will be recorded on the Bill of Lading and Shipping Report for that shipment. 2. Key(s) to the padlock(s) on cargo doors will be placed in a sealed envelope by the Contractor and delivered unopened to the receiver at the distribution center. 3. Deliveries that arrive with broken seals will be rejected.
C. Delivery or Entry to State Facilities The Contractors staff may be required to make deliveries to or enter State facilities. The Contractor agrees to comply with State of Michigan visitor protocol.
5. PRICING 5.1. PRICE TERM Pricing is firm for the entire length of the Base Contract Period. The Base Contract period begins on the Effective Date. Pricing adjustments will be considered in conjunction with exercising the option years. Adjustments may be requested, in writing, by either party and will take effect no earlier than the next Pricing Period. The State may seek cost savings with the exercising of the option year.
5.2. PRICE ADJUSTMENTS Adjustments will be based on changes in actual Contractor costs which must be verifiable. Any request must be supported by written evidence documenting the change in costs. The State may consider sources, such as the Consumer Price Index; Producer Price Index; other pricing indices as needed; economic and industry data;
28 CONTRACT #071B7700109 manufacturer or supplier letters noting the increase in pricing; and any other data the State deems relevant when evaluating price increases or when requesting price reductions.
Following the presentation of supporting documentation, both parties will have 30 days to review the information and prepare a written response. If the review reveals no need for modifications, pricing will remain unchanged unless mutually agreed to by the parties. If the review reveals that changes are needed, both parties will negotiate such changes, for no longer than 30 days, unless extended by mutual agreement.
The Contractor remains responsible for Contract Activities at the current price for all orders received before the mutual execution of a Change Notice indicating the start date of the new Pricing Period.
6. ORDERING 6.1. AUTHORIZING DOCUMENT The appropriate authorizing document for the Contract will be a purchase order as well as working papers for each new game.
6.2. MANUFACTURING CHANGES A. Once the Contractor’s product has been approved in writing by the Project Manager or designee, the Contractor is prohibited from changing the materials, inks, thicknesses, processes, packaging, and/or equipment used in manufacturing the tickets unless prior written approval is received from the Lottery. Tickets delivered under the contract that vary from approved specifications shall constitute grounds to reject all tickets delivered to the Lottery and may result in the assessment of liquidated damages.
B. The Contractor shall notify the Project Manager or designee in writing of any proposed change in location of the manufacturing process or any portion thereof. No such change shall be made without prior written approval from the Purchasing Operations.
7. SHIPMENTS 7.1. BULK SHIPMENTS TO THE STATE A. Transportation Shipments shall be by contractor fleet “exclusive use” truck or prepaid “exclusive use” motor freight vehicles, unless otherwise specified in working papers. For less than full trucks, Contractor shall make shipments via trucks with sealed dividers in order to secure the shipment.
Full orders are to be shipped in their entirety, not in lots.
B. Palletizing and Loading The size and type of tickets and therefore the cases will determine pallet size. Pallet size will be indicated in the executed specifications “working papers” for each game.
1. Pallets Pallets will be furnished by the Contractor and will be returned to the Contractor at the Contractor’s expense if so desired. Preformed, extruded, or alternately constructed pallets may be proposed by the Contractor; however, their acceptability will be solely determined by the State.
a. Standard size, three runner pallets that are a maximum of 42" wide and 48” long shall be used. A minimum of 4" of fork clearance is required.
b. Where wooden pallets are used, boards along the top of the pallets shall be a minimum of ¾” thick. Runner boards shall be a minimum of 4” x 1 ½” and be spaced a minimum of 14 ¼” apart. Pallets shall be of adequate construction to bear the load and survive transit. Broken or collapsed pallets and pallets with missing boards are not to be used. Shipments on pallets that do not meet these requirements will be rejected.
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c. Overall loaded pallet height from the ground is not to exceed 60", and gross weight of loaded pallets is not to exceed 2,000 lbs. The number of cases stacked on a pallet will vary depending upon the case size, weight, and pallet configuration.
2. Stacking of Cases a. The cases of tickets will be stacked on pallets in descending carton number order with case number labels facing out.
b. The highest numbered case is to be placed at the corner of the pallet with following numbered cases placed to the left of each preceding case until a complete layer of cartons has been placed on the pallet. This same pattern is to be repeated for each layer of cases.
c. A sheet of heavy paper or chipboard must be placed on top of each layer of cases except the top layer. This sheet will not extend beyond the outer edges of the cases in each layer.
d. The four corners of the stack of cases shall be protected by cardboard or equivalent corner covers, and the stack securely bound with plastic strapping to prevent shifting or tipping.
e. Each pallet load of cases will then be securely covered and attached to the pallet with clear plastic spin-wrapping.
3. Loading Pallets a. Pallets of finished tickets will be loaded with the lowest numbered pallet at the “nose” or forward end of the cargo portion of the vehicle with the highest numbered pallet at the rear.
b. A minimum of five feet clearance must be left between the last pallet loaded and the cargo doors at the rear of the delivering vehicle to facilitate unloading.
C. Pallet Labels 1. A pallet label must be affixed to each pallet load of cases. The label must show the game name, the from-through case numbers loaded on the pallet, and the pallet number for the game. Pallets will be consecutively numbered for each game, beginning with the number one.
2. Where more than one game is included in the shipment, each game shall have its own set of pallet numbers. The pallet label should be affixed to the shrink-wrap on the front of the pallet (the same side as the lowest numbered case).
D. Shipment Coordination and Reports/Lists 1. Coordination. The Contractor shall provide shipment notification to the Lottery at least one (1) week prior to the scheduled delivery date. The notification must include: a. Shipment date;
b. Arrival date;
c. Game name;
d. Number of deals, cases, and pallets;
e. Delivery instructions, as they will appear on the bill of lading, including the Lottery warehouse contact names and phone numbers; and,
f. A diagram mapping out the location of the pallets within the trailer. If more than one (1) game is included in the shipment, the diagram must indicate the game name for each.
2. The shipping company shall be required to contact the Lottery warehouse at least 24 hours before delivery to verify estimated arrival time.
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3. Shipping Documents. The following items shall be included with each shipment of tickets: a. A bill of lading shall be delivered to the Lottery listing the total number of cases. This report shall include driver instructions and the Lottery warehouse phone number;
b. A computer generated manifest printed on 8 ½” x 11” paper is required listing the game name(s), pallet numbers, case numbers for each pallet, and serial numbers of the deals contained within each case.
7.2. SUPPLIER DIRECT SHIP Currently, fourteen suppliers are licensed to buy charity game tickets from the State to resell to charitable licensees. The State may determine that it would be beneficial to have the Charitable Pull-Tab tickets delivered directly to the Suppliers in lieu of having them shipped to the state for distribution. If this option is utilized, the Contractor is no longer liable for the cost of shipping tickets to the Lottery but will instead pay for the 2- to 3-day delivery of tickets to suppliers in Michigan.
The Contractor will responsible for paying the freight costs of shipping the tickets to the Suppliers which is included in the cost of the tickets.
A. Inventory for Supplier Orders 1. The Contractor shall maintain warehouse space of sufficient size to accommodate the inventory of up to 40 active games as ordered by the Lottery.
2. The Contractor will work with the Lottery in developing timelines for the release of new approved games and the closing of games.
3. The Contractor shall provide physical inventory counts to the Lottery on a monthly schedule or as required by the Lottery.
B. Filling and Shipping Supplier Orders The Contractor will be given Lottery access to view orders placed online by suppliers for filling and shipping. 1. The Contractor may limit shipments for each supplier to no less than twice per week, in accordance with a predetermined schedule. Adjustments to the schedule due to holidays may be made with a two week minimum advanced notice to the suppliers and Program Manager.
2. Each day the Contractor will be able to view online orders placed by suppliers as provided by the Lottery. Supplier orders must be fulfilled and shipped by the business day following the date the order was placed.
3. Orders will be filled using the next sequential serial numbers available. Upon fulfilling each order, the shipping information, including serial number ranges, must be entered into the Lottery web link.
4. Upon filling the order, a packing slip and invoice are generated and a copy of each must be included with the shipment and secured in a packing sleeve on the outside of the first case.
5. Unless otherwise determined by the Lottery, the Contractor shall arrange for tickets to be delivered within two business days from the date the order was shipped except for those areas of the state designated by United Parcel Service as “Shipping Zone 2”, which shall be delivered within three business days from shipment.
6. The Contractor shall provide suppliers with the ability to track orders shipped.
7. The Contractor shall continually negotiate with shipping companies to ensure best pricing on shipment. Cost of shipping shall be paid by the contractor and billed to the Lottery each month. Lost, misdirected, returned, or damaged shipments must be managed and resolved by the Contractor.
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C. Returns 1. The Contractor shall accept undelivered or refused shipments. Transactions with the shipping company shall be handled by the Contractor and credits must be applied accordingly.
2. The Contractor shall accept returned tickets (both defective and approved resalable tickets) and serve as the central point of contact for licensed suppliers and the Lottery regarding returned tickets and handling of defective tickets.
8. ACCEPTANCE Acceptance will be determined by the Program Manager or Designee. Acceptance for payment will consist of: A. Tickets produced and billed in accordance with the quantity ordered by the Lottery.
B. Any tested tickets meeting the requirements of the working papers and per the specifications outlined in 1.1 Charitable Pull Tab Specifications and Section 1.3.A Quality Assurance—Ticket Production Standards.
C. For tickets shipped as required in Section 7.1 Shipments, packages arriving in an undamaged and usable state.
9. INVOICE AND PAYMENT 9.1. INVOICE REQUIREMENTS A. For tickets shipped as required in Section 7.1 Bulk Shipments to the State, invoices may be submitted for payment once the product is shipped. The State will authorize payment once the order has been verified as received and accepted by the State. B. For tickets produced under Section 7.2 Supplier Direct Ship, invoices may be submitted once the product has been produced in a quantity pre-approved by the Lottery.
9.2. PAYMENT METHOD The State will make payment for Contract Activities via EFT.
10. PROJECT PLAN The Contractor will carry out the printing projects under the direction and control of the Program Manager and will work along with the State to manage annual goals. The Program Manager, Contractor Representative, and other key personnel will work together in: A. conceptualizing goals and evaluating the resources, time, money, and scope;
B. outlining the work to be performed, prioritizing projects, setting the schedule, and determining the resources needed;
C. assigning tasks;
D. tracking the status and progress of the project, adjusting timelines where needed and;
E. evaluating the completed tasks.
11. LICENSING AGREEMENTS The Contractor must ensure agreements for the use of all licensed properties re current and sufficient for the duration of their use by the State.
12. LIQUIDATED DAMAGES A. Defective or Non-Conforming Tickets: For the purposes of determining non-conforming ticket damages, if a single ticket in any pack(s) fails to conform to specifications, then the entire pack(s) of tickets shall be deemed to be non-conforming.
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If the result of a test or inspection by the Lottery or one of its representatives establishes that any tickets delivered are not in strict accordance with the quality standards of the contract and the requirements of the executed game specifications, the Lottery may elect one or more of the following options:
a. The Contractor, at no additional cost to the Lottery, shall issue an equal number of replacement tickets for the game or a substitution of the game within a two week time frame.
b. The Contractor may be charged $2,500.00 per game for each day the game is unavailable for sale beyond one week of launch date.
B. In the event of an unsecured delivery which causes rejection, or undelivered inventory which cannot be replaced within two weeks of the timeframe identified in the contract, the Contractor may be charged $2500 per game for each day the game is unavailable for sale beyond one week.
C. If over-redemption occurs, the Contractor shall reimburse the Lottery for all prize liabilities incurred that are attributable to over-redemption in addition to any damages with respect to the delivery of non- conforming tickets.
D. Breach of Security: a. Up to $5,000 for each person and for each incident where the Contractor fails to preclude persons who are not authorized from accessing facilities, equipment and information utilized in the production of tickets as detailed in Section 4.A.
b. Up to $5000 for each failure to preclude the unauthorized regeneration of ticket data.
c. Up to $500 per day until correctly reported for failure to report a breach of security as detailed in Section 4.A.
E. Unauthorized Removal the Contractor Representative will interfere with the timely and proper completion of the Contract, to the loss and damage of the State, and it would be impracticable and extremely difficult to fix the actual damage sustained by the State. Therefore, the State may assess liquidated damages against Contractor as specified below.
1. The State is entitled to collect $1,000 per individual per day for the removal of the Contract representative without prior approval of the State.
2. The State is entitled to collect $1,000 per individual per day for an unapproved or untrained Contract Representative replacement.
13. ADDITIONAL REQUIREMENTS 13.2. HAZARDOUS CHEMICAL IDENTIFICATION In accordance with the federal Emergency Planning and Community Right-to-Know Act, 42 USC 11001, et seq., as amended, the Contractor must provide a Material Safety Data Sheet listing any hazardous chemicals, as defined in 40 CFR §370.2, to be delivered. Each hazardous chemical must be properly identified, including any applicable identification number, such as a National Stock Number or Special Item Number.
13.3. MERCURY CONTENT Pursuant to MCL 18.1261d, mercury-free products must be procured when possible. The Contractor must explain if it intends to provide products containing mercury, the amount or concentration of mercury, and whether cost competitive alternatives exist. If a cost competitive alternative does exist, the Contractor must provide justification as to why the particular product is essential. All products containing mercury must be labeled as containing mercury.
13.4. BROMINATED FLAME RETARDANTS The State prefers to purchase products that do not contain brominated flame retardants (BFRs) whenever possible. The Contractor must disclose whether the products contain BFRs.
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STATE OF MICHIGAN Charitable Pull-Tab Tickets
SCHEDULE B PRICING MATRIX
CHARITABLE PULL TAB TICKET PRICES‐ DELIVERED TO LOTTERY WAREHOUSE Prices are based on cost/thousand tickets and include all contract requirements, including but not limited to game development, printing, packaging, shipping to the Lottery, training, and marketing per the Statement of Work, Schedule A. TICKET SIZES PRICE Small Small with Seal Card Large Large with Seal Card POINT 2‐9/16" X 1‐7/8" 2‐9/16" X 1‐7/8" 3‐7/8" X 1‐7/8" 3‐7/8" X 1‐7/8"
Order Ticket Price (price per Ticket Price (price per Ticket Price (price per Ticket Price (price per Quantities thousand) thousand) thousand) thousand) in Millions
0.1 to 0.99 $9.08 $10.69 $10.95 $13.18 1 to 1.99 $9.05 $10.24 $10.59 $12.75 2 to 2.99 $7.96 $8.64 $9.80 $11.12 3 ‐ 4.99 $7.88 $7.94 $9.30 $10.90 5 and over $7.08 $7.37 $9.12 $10.45
CHARITABLE PULL TAB TICKET PRICES‐ DELIVERED DIRECTLY TO SUPPLIERS Prices are based on cost/thousand tickets and include all contract requirements, including but not limited to game development, printing, packaging, warehousing, direct shipping to suppliers, training, and marketing per the Statement of Work, Schedule A. TICKET SIZES PRICE Small Small with Seal Card Large Large with Seal Card POINT 2‐9/16" X 1‐7/8" 2‐9/16" X 1‐7/8" 3‐7/8" X 1‐7/8" 3‐7/8" X 1‐7/8"
Order Ticket Price (price per Ticket Price (price per Ticket Price (price per Ticket Price (price per Quantities thousand) thousand) thousand) thousand) in Millions 0.1 to 0.99 $10.60 $12.29 $12.55 $14.78 1 to 1.99 $10.65 $11.92 $12.20 $14.10 2 to 2.99 $9.52 $9.65 $11.35 $12.90 3 ‐ 4.99 $9.15 $9.15 $10.89 $12.45 5 and over $8.25 $8.55 $10.25 $11.15
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