OVERVIEW

Invitations for Bids (IFBs) and Requests for Proposals (RFPs), and the resulting contracts, may be structured on the basis of a fixed contract term (e.g. three years) plus one or more annual (or other periodic) renewals following the expiration of the fixed term. Where contracts are structured this way, at the expiration of the fixed term, it is necessary for the agency to process a contract extension. This extension requires the approval of the Office of the State Comptroller (OSC), if such approval was required for the original contract, and the submission of relevant documentation.

Alternatively, there is a streamlined process that can be used for many contracts that is intended to reduce processing time and documentation requirements. Under this streamlined process, the State agency structures the contract as a multiyear contract term covering the entire anticipated contract period (generally up to 5 years). To use this process, agencies must be able to reasonably predict the total contract amount for the entire contract term, and must reconcile the total contract amount in the final year. Delaying a new procurement cycle with contract terms exceeding five years may only occur in limited circumstances with OSC concurrence. If a contract term longer than five years is needed, a contracting entity is requested to contact OSC prior to releasing a competitive solicitation or submitting a contract transaction for approval to discuss the unique circumstances delaying a new procurement cycle through an extended contract term.

If during the contract term there is a substantial change in scope or in the contract amount, the agency must submit an amendment to OSC before the change can be made. If the scope has increased, a Contract Reporter exemption or a new procurement may be necessary.

CAUTION: An agency should not wait until the estimated five year budget is expended to alert OSC to a scope change. Agencies must continue to monitor their contracts and budgets regularly. Scope changes requested of OSC after the fact may be denied.

For information on Fixed Term, Multiyear Agreements and Simplified Renewals for grant contracts see Section 4.B - Standard Contract Language for Grant Contracts: Fixed Term, Multiyear Contracts and Simplified Renewals of this Chapter.
 

Process and Document Preparation:

REQUIREMENTS

1. Contract Standard Language Requirement
   
   To take advantage of this streamlining opportunity for contracts for services and commodities, the contract must include:
    

   • The following language which allows the State to terminate for convenience. Such language should be in addition to any contract language allowing termination for other reasons such as unavailability of funds; cause; upon mutual consent; in the event it is found that the certification filed by the contractor in accordance with NYS Finance Law §139-k was intentionally false or intentionally incomplete; or other reasons, as negotiated by the agency.
      

     “Unless modified as provided herein, this contract shall begin on _______ and end on _________ (e.g. five years or other relevant multi-year period). The State shall have the right to terminate this contract early for convenience. The State may only invoke its right to terminate for convenience on (fill in expiration date of initial contract period) and on each subsequent anniversary date of the contract (except for the contract expiration date), provided that the State has given written notice to the contractor no later than 90 days prior to the anniversary date.”

   • If applicable, the following language which specifies the price adjustment terms of the contract. Generally, OSC will not approve increases greater than five percent, except where the agency submits appropriate justification for such higher rate. There is no cap on decreases
      

     “If the contract is not terminated, prices will be adjusted up or down as of (fill in expiration of initial contract period) and on each subsequent anniversary, except for the contract termination date, in accordance with the following formula: (fill in appropriate formula based on the Consumer Price Index or other recognized national or regional index) provided however, that no increase may exceed x percent.”

2. Contract Reconciliation Process
   
   In the final year of the contract, the agency must perform a reconciliation or true-up of the contract maximum value to reflect actual expenditures. For example, a contract for a five year period with an allowance for annual termination after the initial two year period must reflect the estimated amount for the entire five year term. In the final year of the contract, if the reconciliation results in a change to the contract value, a transaction adjusting the contract amount must be sent to OSC, along with a Single Transaction Summary (STS) or AC 340-S. The agency must submit adequate documentation to support this adjustment. If the maximum not-to-exceed contract amount is increased, a formal contract amendment is required, with some limited exceptions. If the maximum not-to-exceed contract amount is to be reduced, the agency will need to create a new contract version, and in some cases a formal amendment, reducing the contract maximum amount and, if applicable, reducing the funds reservation.
    
3. Funds Reservation Process
   
   The reservation of funds and expenditures must be made against the proper fiscal year’s appropriations. It is the responsibility of the agency, throughout the term of the contract, to maintain funds reservation for the amount expected to be obligated during the period for which the corresponding appropriation is provided.
   
   Fund reservation allocations for future periods are the responsibility of the agency, but do not require OSC prior approval, with the exception of funds reservations associated to final year true-up reconciliation transactions (see Section 2.C - Contract Funds Reservation of this Chapter, for additional information).

Process and Document Preparation Specific to the SFS:

SFS users will create a contract transaction in the SFS using the appropriate Audit Type. For transactions subject to OSC approval, users will generate a STS and submit the STS with the agreement (contract) and required procurement record documents to OSC.

Process and Document Preparation Specific to Agency Bulkload System Users:

SFS users that bulkload contract transactions into the SFS must use the appropriate Audit Type. For transactions subject to OSC approval, users will generate either a STS or AC 340-S and submit the STS or AC 340-S with the agreement (contract) and required procurement record documents to OSC.

Guide to Financial Operations

REV. 04/01/2022