New Proprietary Software and Existing Proprietary Software Maintenance/Upgrade Renewals - 1507

Applicability

The policy and procedures for this topic are to be applied to acquisitions for new proprietary software and existing proprietary software maintenance/upgrade renewal contracts when competition does not exist.  Alternative acquisition methods must be chosen when competition exists (such as the Software License Program, or Small Business Option, etc.).  Competition exists typically in the form of resellers or when another proprietary software is able to meet the business need.

If competition does exist (i.e. resellers exist or another proprietary software is available) but the awarding agency needs to execute a non-competitively bid contract due to business needs, then the transaction must be processed using the Non-Competitively Bid (NCB) Acquisition Method which requires an approved NCB Justification form.

See section 4819.2 of the State Administrative Manual (SAM) for definitions of the following items applicable to this policy:

• Cloud Software as a Service (SaaS)
• Maintenance
• Proprietary Software
• Software

Competition & Advertising

Acquisitions meeting the criteria noted above (when competition does not exist) for:

• New proprietary software
• Existing proprietary software maintenance /upgrades renewals are exempt from advertising and competitive bidding up to $1,000,000.00 and may be executed without an approved NCB Justification.

Pre-Procurement Requirement Dollar Threshold

An NCB Justification is a pre-procurement requirement.  For acquisitions conducted under this policy and procedure, the dollar threshold used to determine whether the acquisition requires an NCB Justification is $1,000,000.00.  Acquisitions require an approved NCB Justification when the dollar value exceeds $1,000,000.00.

Amendments to contracts that result in the cumulative dollar value of the contract to exceed $1,000,000.00 must adhere to this policy (require an approved NCB Justification when the dollar value exceeds $1,000,000.00).

State agencies may not request an increase in their purchasing authority for this dollar threshold; the maximum is $1,000,000.00. The Procurement Division must not exceed this dollar threshold when executing contracts on behalf of customer state agencies.

Contracts

Contracts executed in accordance with this policy and procedure must not exceed approved purchasing authority dollar thresholds.

The acquisition method applicable to acquisitions conducted under this policy and procedure is as follows:

• Exempt by Policy – Proprietary - Software – NON-COMPETITIVELY BID

Acquisitions exceeding $1,000,000.00 that require an NCB Justification must be conducted using the following acquisition method:

• NCB Contract (as a result of an approved NCB or SCR Justification)

See the Purchasing Authority Policy and Procedures and applicable dollar thresholds for contracts.

Approval/ Signature Requirement

The Information Technology (IT) Purchasing Authority Contact (PAC) must approve acquisitions conducted pursuant to this policy and procedure that are under $1,000,000.00.  Approval can be accomplished in the FI$Cal system, on the contract, or via a Memorandum.

Procurement Approach

Proprietary software acquisitions (new & maintenance) must adhere to instructions found in the Procurement Approach for Exempt and NCB Contract Activities of this section.  In addition to information provided in the Procurement Approach for Exempt and NCB Contract Activities section, when acquiring proprietary software or maintenance it may be necessary to include the: State Model Cloud Computing Services Special Provisions (SaaS) as applicable. 

Proprietary Documentation Requirements

A signed letter from the software publisher/manufacturer stating that the software and/or subsequent maintenance being acquired is not available through any other source must be:

• Dated within 12 months of the solicitation.
• Maintained in the procurement file.
• Submitted with the NCB Justification (in instances where an NCB Justification is required).
• Submitted to DGS/PD with requests to conduct acquisitions on behalf of the state agency (in instances where an acquisition exceeds the purchasing authority dollar threshold).

The procurement file must also contain sufficient documentation to support the non-competitively bid nature of the contract (i.e. no resellers exist, no other software exists to meet the business need, etc.).  This documentation can be a written note by the procurement professional in the file.

Cost Reasonable Documentation

Purchases although exempt by statute or policy, must still be reasonable in cost and justification.  Procurement files shall include documentation to support reasonable pricing for all proprietary software acquisitions (new & maintenance), regardless of value.

State agencies are encouraged to use the “Techniques to determine Fair and Reasonable pricing” when documenting reasonable pricing for proprietary software acquisitions (new & maintenance).